SWOT Analysis of Carter’s Inc
A SWOT analysis of Carter’s Inc. indicates the rewards and risks involved in any venture that this company intends to undertake. SWOT analysis is an analytical framework that enables companies to know the challenges that they are facing and new markets that are most promising. Through this analysis, businesses get new ways of re-evaluating their market positions. Ideally, the result of SWOT analysis is data that is more accurate and usable in the creation of solid plan for addressing the threats and weaknesses of a company while positively exploiting or highlighting opportunities and strengths.
Carter’s Inc. is a young children and babies’ apparel marketer in the United States. This firm owns two major brand names in the apparel industry; Carter’s and the Oshkosh. It operates via five segments and it offers different product categories such as play clothes sleepwear and baby accessories. By January 2015, this company had about 18,000 wholesale locations, 855 company-operated stores, and numerous websites.
A detailed SWOT analysis of Carter’s Inc
Among the strengths of Carter’s Inc is the position that it holds in the market as one of the leading baby category brands. It sells apparel for babies ranging from newborns to two years old. Its market share is about 29.8 percent. Additionally, the company has established strong relationships with specialized as well as leading sourcing agents from different parts of the world including Asia. This enables it to quickly source materials in order to meet its operating requirements while providing capacity for future growth.
There are several weaknesses of this company which if not addressed appropriately will affect its profitability adversely. For instance, this company has a significant exposure to Asia and Japan. Most of its production materials are sourced from Japan and Asia. This means that if there is a disaster in this region, there could be a price increase or supply shortage because of a breakdown in transportation lines or closure of factories leading to great loses for Carter’s Inc. Additionally, Carter’s is exposed to interest rate and currency risks. Since the company sources most of its materials from overseas, a fluctuation in exchange rates’ values can have a significant negative impact on this company. Finally, this company is largely exposed to cotton price fluctuations. Cotton is one of the major manufacturing materials for the company. In the financial year 2010, cotton prices comprised of 40 percent of the price of goods sold due to the high price of cotton.
Carter’s has successfully sourced materials via its strong network of specialized and leading sourcing agents across Asia. Having established this network, the company can source more materials cheaply within a short notice. This presents an opportunity for this company to expand its growth in relation to its brands. Additionally, this company has an opportunity for growth in terms of license agreements. It sells its license agreements to different retailers. This gives it an opportunity for growing its clothing lines which clearly is an opportunity for generating future revenue.
Competitors are the main threats of Carter’s Inc. Young children and babies’ clothing market has stiff competition generally on the basis of product quality, selection, price, service and convenience. Despite being one of the leading brands in young children and baby sector with a 29.8 percent market share competitors with superior products, excellent customer service and cost leadership can enter this market taking away its market share. Additionally, threat and competition from new entrants mean that Carters can also face increasing shipping costs and this could cut its profitability significantly. This could have adverse effect on its dominance in the young children and baby clothing market because it risks having its cost leadership taken away.
When and how SWOT analysis of Carter’s Inc becomes important
Carter’s SWOT analysis is simple but important framework when this company wants to analyze its strengths as well as weakness while identifying opportunities that it can exploit and threats that it is facing. This analysis is important because it enables the management of this company to focus its strengths while minimizing threats and taking advantage of the available opportunities.
Carter’s Inc can use its SWOT analysis to start strategy formulation and to understand competitors in order to take a successful and coherent competitive position.
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