STRATEGY DEVELOPMENT PLAN

UBORAFASHIONS

Master's thesis

Visamäki campus, Degree Programme in Business Management and Entrepreneurship

Spring 2020

Reza Daniel Kinabo

 ABSTRACT

Master’s Degree Programme in Business Management and Entrepreneurship

Visamäki

Author Reza Daniel Kinabo Year 2020

Title Strategy Development Plan

Uborafashions

Supervisor(s) Tarja Pääkkönen

ABSTRACT
The primary research target of this research thesis is to develop business
strategies options for a start-up e-commerce business. The business
strategy analysis framework focuses on the analysis of the company’s
strategic choices, strategic position, and strategy in action. Research is
based on a practice-based approach using action research methodology,
using case study company analysis, and the author as a direct participant
for action research.

The theoretical framework of the thesis is built from different kinds of

literature related to the strategy analysis framework of internal, external
business analysis, industry analysis, and its business environment.
Strategy analysis aims attention at observing the strengths and
weaknesses of the case study company, understanding, and observing
opportunities, and threats of the external environmental factors that
influence the positioning of the company in the business environment.
This research contributes to the existing literature on developing
business strategy for start-up businesses. The kinds of literature used in
the thesis project give direction for action research and answer research
questions. The analytic tools used to provide valuable information for the
case study company and thus information is used to develop strategic
options that are implemented by the company. Empirical data is collected
through the company’s internal analysis, reports, articles of the e-
commerce industry in terms of competition rivals, analysis of most
bought products online, online shopping age groups and qualities of e-
commerce. The formulation of the company’s business strategies is the
result of the thesis. The case study company did not have a proper
strategic framework, therefore formulated strategies are aligned with the
company’s competence and existing environmental conditions.

Keywords: Strategy analysis, internal analysis, external analysis, business

environment, e-commerce.

Pages : 54 pages including

CONTENTS

1 INTRODUCTION ........................................................................................................... 1
1.1 Background Research .......................................................................................... 1
1.2 Case study ........................................................................................................... 2
1.3 Objective of study & Research questions ........................................................... 2
1.4 Justification of Research ..................................................................................... 4
1.5 Scope & Limitations of the Study ........................................................................ 5
1.6 Research Method ................................................................................................ 5
1.7 Research Structure .............................................................................................. 6

2 THEORETICAL FRAMEWORK ........................................................................................ 7

2.1 Literature review ................................................................................................. 7
2.2 Strategic Position ................................................................................................ 8
2.2.1 Macro-environment ................................................................................ 8
2.2.2 Organisation’s Strategic Capabilities ..................................................... 16
2.3 Strategic Choices ............................................................................................... 17
2.3.1 Strategy Analysis.................................................................................... 18
2.3.2 Business strategy ................................................................................... 19
2.4 Strategy in Action .............................................................................................. 23
2.4.1 Strategy Development Process ............................................................. 24
2.4.2 Evaluating Strategies ............................................................................. 26

3 RESEARCH METHODOLOGY ....................................................................................... 27

3.1 Research Purpose .............................................................................................. 28
3.2 Research Approach ........................................................................................... 28
3.3 Data Collection .................................................................................................. 29

4 ASSESEMENT OF THE COMPANY & ITS BUSINESS ENVIROMENT ............................. 30

4.1 Current State of Company................................................................................. 31
4.2 SWOT analysis for the company ....................................................................... 33
4.3 Analysis of the E-commerce Business Environment ......................................... 35
4.3.1 E-commerce in the world ...................................................................... 35
4.3.2 E-commerce Finland .............................................................................. 37
4.4 External Business Environment factors............................................................. 38

5 IMPLEMENTATION & EVALUATION OF STRATEGIES ................................................. 46

5.1 Implementation process ................................................................................... 46
5.2 Observations of Results..................................................................................... 42
5.3 Formulating Uborafashions Strategies.............................................................. 47
5.3.1 Uborafashions ‘s Strategic position ....................................................... 47
5.3.2 Uborafashions Strategic Choices ........................................................... 50
5.3.3 Uborafashions Strategic in Action ......................................................... 51
5.4 Strategy Evaluation ........................................................................................... 51

6 CONCLUSION AND IMPLICATION OF THE STUDY ...................................................... 52

 6.1 Implications of the study ................................................................................... 53

REFERENCES AND APPENDICES ...................................................................................... 54

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1 INTRODUCTION

1.1 Background research

This research-based project aims in developing strategies for an online

start-up company that has already been established and operating for a
period of fewer than two years. These strategies will be proposed for the
case study company as part of its development plan.

Stroh (2014) describes strategy as the process of understanding the

industry (its ecology) and the firm’s position in that industry (its genetic
makeup). The strategy is a fundamental aspect of every company and
start-ups. The strategy is compulsory for understanding an organization’s
operation and what is required within the organization to succeed. It is as
well it needed for understanding whether a firm can either improve its
structure of the industry or improve its position within the industry
Strategy also plays a role in understanding the external environment to
ensure long-term profit and growth. A company without a strategy is like
driving a road with a dead-end, a company needs to understand the
purpose, its destination and path took to get there (Stroh, 2014).

According to (Bovée, Thill, Mescon 2007, 209), a vision and a mission

statement are the anchors of the strategic planning process and a vital part
of an effective business plan. Strategic management gives direction to the
organization’s mission and vision. Specifying these on an organizational
level as well as for a specific functional unit clarifies the company’s current
state, objectives and where they would like to be. Both should be set up
when creating a new strategic plan but also revised whenever needed.
Vision statement refers to the organization’s long-term goals and mission
statement on the organization’s current situation in society (Kotler,
Armstrong & Opresnik, 2005, 51).

A theoretical framework for the research is based on a strategic position,

strategic choices, and strategy in action. Strategic position is based on
analysis of micro-environment, industry analysis and organization’s
capabilities. Creating a strategic development plan for the case study
company needs consideration of the company’s vision and mission
statement.( Fifield, 2008) suggest auditing the environment in which the
organization must operate is arguably the most important and most
significant data-gathering activity that any business, firm, services or even
government department can undertake. Strategic choices are based on the
business model and business strategy of the company. The emphasis of
strategy in action is to the analysis of the company’s structure and systems
towards delivering objectives and goals.
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1.2 Case study

Uborafashions is an online start-up business established by Ubora co-

operative (Uboraosuuskunta). A co-operative company in Finland is
usually formed through association of people with mutual ideas or
interest, with a memorandum guiding the rules of a co-operative (ytj,
Business information systems., n.d.). Uboraosuuskunta consists of board
members from which two decided to start Uborafashions.
Uboraosuuskunta is established in Finland and is being operated in
Finland. Therefore, Uborafashions is a sub-company to osuuskunta

Uborafashions is an online start-up company, with goals of diversifying

fashion in Finland by bringing African fashion into existing fashion. One of
Uborafashions vision is to cooperate and coordinate with talented
designers, artists, and entrepreneurs who are based on creating and
producing African products. These goals and visions are going to be
achieved through the formation of an online website. Uborafashions
markets its products on social media such as Instagram, Facebook, and
Pinterest, and kept the website as a buying platform.

Initially, there are two founders in the company responsible for the
company’s operations including marketing, procurement, and logistics.
Founders are responsible to look for professionals whom they coordinate
in ensuring that the company’s operations run smoothly, for example,
website developers and technicians, suppliers, and professional
photographers. Uborafashions has not yet engaged in hiring due to a fact
that the company being in its early stages of observation and
development.

As for most start-ups, challenges come along with developing business. In

developing Uborafashions, the company faced a lot of unfamiliar
experiences like procurement negotiations, marketing strategies,
handling logistics, lack of time and securing business resources. These
challenges partially result from the fact that business owners being new
to the business world.

1.3 Objective of study and research questions

Gap analysis is a diagnosis between the current performance of the

company for the purpose of identifying the differences between the
current state of the business and where the business would like to be in
the future. (Clearpoint Strategy, n.d. a)

The objective of the research is to develop a business development

strategic plan for Uborafashions start-up by analyzing the current
situation and develop a strategic development plan that will assist the
company with its operation and building a concrete successful strategic
plan. Creating a strategic plan for the company will diagnose the
challenges (weaknesses and threats) the company has or faces and hence
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close the gap between current state of the company to the desired state.
The strategy development plan for the case study is incorporated with
analyzing the internal and external business environment.

Research questions are formed based on the company’s challenging

situations, which led to a decision of finding suitable strategies for the
online start-up company. In a search for the company’s strategic choice,
the author must observe the company’s strength and weaknesses and as
well as analysis of business environment, which led to the synthesis of
the following research questions:

RQ1 What are best strategic choices for the

company?

RQ2 What are the strengths and weaknesses

of the company?

RQ3 What is the best strategic framework in

a competitive Business Environment?

The strategy development framework in the research thesis will focus on

research questions, RQ1, RQ2, and RQ3. A major focus of this research
topic is, therefore, Internal business analysis, external business analysis
and best strategy choice for surviving in a competitive business
environment.

The purpose of the research questions is to create strategic analytic tools

that can create clarification of the information from analysis results. New
information and clarification are key success determinants for the success
of the case-study company in fast-changing technological world and
competitive business markets.

Figure 1. Gap analysis. (Johnson, Whittington & et al, 2018, 236)

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Figure 1 of gap analysis compares achieved or projected performance

with desired performance. It is particularly useful in identifying shortfalls
(gaps). The size of the gap provides a guide of how far a strategy needs to
be changed. The vertical axis shows a measure of performance (e.g. sales
growth or profitability) and the horizontal axis shows time, today up to
the future. The upper line represents an organization’s desired
performance, it might be in terms of objectives or standards set by
competitors and business environments. The lower line represents both
achieved performances to today and projected performance based on
continuous of existing strategy into the future. The gap between
projected performance and desired performance represents
unsatisfactory measures of performance. (Johnson, Whittington & e.t al,
2017, 236).

1.4 Justification of research

According to Ries (2011), he stated that start-ups do not yet know what
their product is or what their product should be, as the world becomes
more uncertain it becomes harder and harder to predict the future. In
the initial stages of the business, many entrepreneurs face difficulties in
various factors such as finding the right market niche, competition is too
wide, lack of resources, lack of finance, time management and so on. Due
to these uncertainties is wise to have a common mission within the
management to eliminate the uncertainties and create a successful path
to a sustainable business.

Due to the difficulty of predicting the future, it is important for

entrepreneurs to create products or services that have a high assurance
of serving people’s needs. That being so Entrepreneurs must put the
effort into research to have concrete information in advance. Usually,
Entrepreneurs and start-ups rush towards starting businesses without
formulating or developing a plan and putting into consideration proper
strategies in advance. For this reason, many small companies and start-
ups tend not to succeed or survive in a business environment due to
uncertainties and lack of planning. Therefore, the author of this thesis
chose to develop a strategic plan through analyzing the current situation
of the company and its external environment, to identify the company’s
strengths and weaknesses. Interpretation of such knowledge will allow
the company to focus better on strategic execution. ([Link], n.d.)

Identifying strategic issues is relevant for any organization as it links a set

of interrelated activities in the company which clarifies the company’s
goals, operations, and direction within a specific period. The strategy
must be clear, understandable, and informative enough for the
organization. A strategy gives direction in competitive arenas; markets,
sectors, segments and technologies and also in terms of products or
services, value chains, and business models: It directs how to win in the
marketplace, gaining competitive advantage on comparison to our rivals:
 5

also shows how to get financial returns from our customers (Piercy &
Lane 2009, 39).

Subba (2009) explains how strategic planning has become a very

important part of the management function due to the influence of
external environmental factors and a systematic approach to business
management. He spots the importance of long-range strategy to be a
designing tool for providing information on an organization’s vision,
mission, purpose, direction, and objectives.

1.5 Scope and limitations of the study

The purpose of the research project is to identify effective strategies for

Uborafashions, an online start-up. For the company to operate effectively
in a challenging business environment. Therefore, the author will obtain a
theoretical framework from reliable sources, such as books, academic
articles, and journals. Because the research topic is wide, this project
research will be limited to the rational-analytic view of strategy
development. The author is going to analyze the current strategy position
of the company, acquire information on the company’s capabilities, as
well as the analysis of the micro-environment and industry analysis.

The research focus is on one company, analyzing the company’s

capabilities. The author chose the rational-analytic view of strategy
development because of its characteristics in viewing the current strategy
of an organization along with analysis of micro-environment and analysis
of the industry. The organization’s capabilities analysis is conducted using
SWOT analysis and Michael Porter’s Five Forces is used for the analysis of
micro-environment. Industry analysis is focused on the e-commerce
fashion business and an overview of Finnish Fashion Entrepreneurship.

1.6 Research method

The author is conducting practice-based research using action

methodology. The author uses this methodology because of its features
in aiming to develop some practical solutions, in order to solve the
existing challenges in Uborafashions Start-up Company and its
methodological features in the development of a solution based on a
diagnosis.
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Figure 2. Action Research process. (ScienceDirect,2005)

Using McNiff (2013) guidance of action research, this project research is

organized in the following structure:

• Identifying or reviewing the company’s problems.

• analyze aspects/ strategies a company wants to improve

• plan and act

• evaluate and take notice of what happens.

According to Kurt Lewin’s original plan of action research, he concludes

action research to have many circles based on results and reflections.
Kurt Lewin’s cycle begins with collaborative idea or plan, progresses with
series of stages of studying the problem and solutions, create and
implement an action plan for a particular context, evaluate the result,
revise the action plan based on results, and conduct another cycle of an
action plan (Willis & Edwards, 2014)

1.7 Research structure

The structure of the research has six chapters. It starts with a summary of
the thesis research that is chapter one, which has the introduction. The
chapter explains the theoretical framework where different kinds of
literature are exploited. Chapter three is a research methodology,
explaining how research is conducted. Chapter four, is an empirical
presentation of information, it includes reports from different sources
and the current situation of the case study company. Chapter five is
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implementation and evaluation, selected strategies are analyzed, and

evaluation is done. Chapter 6 is of the conclusion, suggestions, and
implications of the research.

2 THEORETICAL FRAMEWORK

The purpose of this chapter is to review the existing literature related to

the development of a strategic analysis plan for an e-commerce fashion
industry. The author is conducting the research project in such a manner
as to answer research questions. The author will explore strategic
position, strategic choices, and strategy in action, to implement the
chosen strategies for the company. Limitation to the thesis literature is
important because strategy development is a very wide topic, therefore
the strategic position is limited to analysis of micro-environment,
industry, and organization’s strategic capabilities. Strategic choice is
limited to analysis of business strategy and business model, whereas
strategy in action is limited to the management of chosen strategies
considering the structure of organization and its system.

2.1 Literature review

STRATEGIC STRATEGY
CHOICE IN ACTION

STRATEGIC
POSITION

Figure 3. The Exploring Strategy Framework. (Johnson, Whittington & et

al, 2018, 13)

Figure 3 above, the exploring strategy framework includes understanding

strategic position for the organization, assessing strategic choices for the
future, and managing strategy in action (Johnson, Whittington & et al,
2018, 12.) The linear sequence can be explained in such a manner that an
organization first understands its strategic position, analyses strategic
choices, and finally turned strategies into action.
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2.2 Strategic Position

Strategic position is concerned mainly with the impact on the strategy of

the external environment and industry, organization’s strategic
capabilities (resources and competences), organization’s stakeholders
and culture (Johnson, Whittington & et al, 2018, 13.) An understanding of
the four components of a strategic position is central for evaluating
future strategy.

Analyzing strategic position, author is analyzing the micro-environment

according to Michael Porter Five Forces, the business industry
environment, organization’s capabilities: in terms of opportunities and
threats available in a complex, changing environment. The business
environment creates both opportunities and threats to organizations.
Some organizations have been transformed by the environmental change
considering digital technology which has facilitated the massive growth of
e-commerce businesses. Although the future cannot be predicted it is
important for entrepreneurs and managers to analyze their business
environment as careful in order to anticipate and take advantage as the
environment change (Johnson, Whittington & e.t al, 2018.)

2.2.1 Macro-environment

The main objective of micro-environment analysis is to help the

organization recognize opportunities and threats that lead to success or
major developments, or failure of a company’s future implications. The
micro-environment contains variables that are beyond the control of the
organization but require analysis to realign corporate strategy to shifting
business environment (Sammutt-Bonnici & Galea, 2015.).

We live in a fast-changing world, it is important to have a warning system

or techniques that identify threats and opportunities, so we can be
prepared to adapt to changes. Johnson, Whittington & e.t al, 2018,
suggests opportunities can be gained through collaboration, networking,
lobbying, public relations, pricing, and innovation. Opportunities give
businesses possibilities to perform successfully in business activities while
threats are situations in the micro-environment that are obstacles to an
organization’s competitive advantage. Threats are also referred to as all
negative impacts that lead to business failure. For example, online books,
magazines, or online newspapers are likely to surpass traditional printing
readership (Sammutt-Bonnici & Galea, 2015). According to (Johnson,
Whittington & e.t al, 2018) explains Michael porter’s five forces is one of
analytic tool used to analyze macro-environment factors which consider
five components. Knowing competitors and how their products or
services affect businesses is an opportunity for a company.
Understanding competitive forces allow an organization to know the
intensiveness of competition in the marketplace, the power business
suppliers have, power of the consumer in relation to price and quality.
The easiness or difficulties of new competitors (entrants) to enter
 9

marketplace, how easy can consumer switch from a business product or

service to that of a competitor.

Michael Porter Five Forces

Porter’s five forces analytic tool helps to analyze the industry and identify
the attractiveness using five forces which are essential for the industries:
competitors, consumers, potential entrants, suppliers, and substitutes.
These five forces framework which is essential for most organizations can
provide a useful starting point for strategic analysis even when profit
criteria may not apply (Johnson, Whittington & e.t al, 2018).

Although Porter’s five forces are a well-known strategic tool for industry
analysis, it must be used carefully, because industry structure can be
unstable, and some can be in flux for a considerable period. The changes
associated with industry structure depends on the industry life cycle
where industry starts with small in their development or introduction
stage, then go through rapid growth. The development stage is the
experimental phase with very few small players (little rivalry) and highly
differentiated products. Five forces are likely to be weak in a
development stage and profit may actual be scarce (Johnson, Whittington
& e.t al, 2018). Five forces analysis is an essential step towards thinking
about strategy, it is about how to shift the forces to company’s favors,
and it might be able to establish unique positioning. (Magretta, 2012)

FIGURE: 4 Michael Porter’s five forces Framework. (Webster, 2014)

Competition Rival

Every organization must have a strategy in order to deliver superior

value to its potential customers .In today’s world competition has
intensified dramatically over the past decades, to maintain existing
prosperity or enhance it.(Porter, 2008) At the center of five forces
analysis is the rivalry between the existing players- ‘incumbents’-in an
 10

industry. The more competitive rivalry there is the worse it is for the
incumbents. Competitive rivals are organizations aiming for the same
costumers' groups and with similar products and services (i.e. not
substitutes). Five factors tend to define the extent of rivalry in industry or
market: competitor concentration and balance, industry growth rate,
high fixed costs, high exit barriers and low differentiation (Johnson,
Whittington & e.t al, 2018). In business industries, a high concentration of
competition is usually bad for small businesses and start-up companies,
these companies are not ready to invest high for such competition in the
market. Big companies usually have high power over small firms that
leads to an increase in the inequality of market concentration. Big
companies have the power to cut prices aggressively on products and
produce massively, resulting in most customers buying from them.

Threat of Entry

The level of entering the industry influences the degree of competition.

An attractive industry has high barriers to entry that reduce the threat of
new competitors. Barriers to entry are factors that need to be overcome
by new entrants if they are to compete in the industry. Five important
barriers are scale and experience, access to supply and distribution
channel, expected retaliation, legislations, and incumbency advantage
(Johnson, Whittington & e.t al, 2018). Barriers to entry can either be low
entry barriers or high entry barriers. Low entry barriers (industry that are
easier to enter) lower the industry’s average profitability and vice-versa.
(Magretta, 2012)

Threat of Substitutes

Substitutes are products or services that offer similar benefits or

solutions to an industry’s products or services but have a different
nature. Two important factors to bear in mind for substitutes, the
price/performance ratio and extra industry effects are central to the
substitution concept. Substitutes can reduce demand for a product as
customers have an alternative to switch (Johnson, Whittington & e.t al,
2018). Customers play an important role in the threat of substitutes; it
will highly depend on the value of products or services it has towards the
customer. For example, a customer might buy a very expensive phone
compared to a cheap phone due to the features they want on the new
phone, might be quality of pictures, memory space or being on-trend.

Power of Buyers

Buyers are powerful if they have negotiating leverage relative to the

industry participants, especially if they are price sensitive (Porter, 2008).
Buyers are the organization’s immediate customers, not necessarily
ultimate customers. If buyers are powerful then they can demand low
prices or costly products or service improvement. Buyer power is likely to
be high when some of the four following conditions prevail: Concentrated
 11

buyers, Low switching costs, Buyer competition threats, Lower buyer

profits and impact on quality. (Johnson, Whittington & e.t al, 2018).

If there are many buyers (concentrated buyers) for one product, let us
take an example of milk, total purchase buyer power is likely to increase
therefore having an advantage to shop around different suppliers hence
squeeze suppliers to lower their prices. Buyers have strong negotiation
powers to change prices from desperate suppliers. Buyers also pose a
threat of competition when they can acquire products or services straight
from the suppliers.

Power of Suppliers

Powerful suppliers catch more value to themselves by charging higher

prices, limiting quality or services, or shifting costs to industry
participants (Porter, 2008.) Suppliers are those who supply products or
services to organizations or companies. The factors that increase supplier
power are converse to those for buyers’ powers, although supplier power
is likely to be high when there are: concentrated suppliers, high switching
costs, supplier competition threat, and differentiated products. (Johnson,
Whittington & e.t al, 2018). Suppliers tend to have more power if there
are few producers and high concentrated number of suppliers, buyers
usually have fewer negotiation powers as products or services are
limited. If it is expensive to switch from one supplier to another then
buyers tend to pose with the current suppliers, example if there are high
costs of switching phone subscribers usually users tend to remain for a
long period with one phone subscriber.

Industry Analysis

Industry analysis for this research project is of the e-commerce fashion

industry, specifically ethnic products of African origin that are widely
used worldwide. Case study company is being operated in Finland;
therefore, business market concentration is within the local market in
Finland, but however because the Finnish population is so low, the
company’s products are sold online to gain the attraction of the
international market. Industry analysis’s main objective is to minimize
negative implications on the organization and exploit opportunities.
Analysis of industry helps organizations to understand environment
conditions of the business environment to gain competitive advantage
(Sammutti-Bonnici & Galea, 2015).

According to Johnson, Whittington & e.t al industry analysis can be

categorized and assessed into three phases:

• First and most generally, the industry must not be defined too
broadly or too narrowly. There is a risk a definition would include a
wide variety of actors; hence analysis would become meaningless or
excluding important competitors.
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• Second, the broader industry value chain needs to be considered.

Industries usually operate in different parts of the value chain or
value system and should be analyzed separately.

• Third, most industries can be analyzed at different levels, for

example, geographies, markets, and even different products or
service segments within them. The competitive forces are likely to be
different for each of these markets, and segments, with distinct
buyers, suppliers, and barriers, etc. In brief, it is important to
consider to both what extent a market is national, regional, or global
if product or service segments differ.

The case study company is operating in an e-commerce business

environment, that is a broad definition. Uborafashions’ e-commerce
business is focusing on ethnic products especially clothing and
accessories from Africa, therefore narrowing down its industry. The value
chain for case-study company is of the same for ordinary e-commerce
business platform that includes internet, website, purchase, supply,
logistics and returns management. Markets for Uborafashions are in
Finland and on the internet, where potential customers in the different
geographical background can be able to access the products.

Fashion Industry

The fashion business is concerned with the design, production,

distribution of apparel and textile. It essential involves change defined as
a succession of short-term trends or fads. The ideology of the fashion
industry is evolved around seasonality; the interest is in developing new
products for customers at the expense of existing products. Product
presentation is entirely dependent on season and fashion, a fashion or
seasonal product hits the market a bit later its unsaleable or will have low
sales. Spring, summer, and autumn are grouped to be a major season of
marketing the garments (Babu, 2019).

To be effective in fashion industry business knowledge about the industry

must be acquired, understand, and identify competitors, and have a
general understanding of the business. Consumers in today’s fashion
industry hold decision power of where to purchase according to the level
of satisfaction in their needs and wants. Fashion is a global industry in
which companies face the dilemma of producing ephemeral products
that must seduce customers each time, and the products need to provide
continual profits. Fashion apparel consists of clothes for women, men,
children, and accessories, such as shoes, glasses, scarves, gloves, ties,
belts, jewelry, and watch. Fashion apparel and accessories account for
the influential global economic sectors. Textile and clothing sectors were
valued at $1.7 trillion in 2012; Figures for 2010, adding footwear and
luxury goods, suggest its value reached $ 2.5 trillion. These data indicate
Fashion Market to be one of the largest industries worldwide (Le, 2017.).
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The fashion industry grows so fast in this 21st century, there are fashion
shops all around town centers and as well on the internet. Fast fashion is
growing rapidly from young designers to experts. This is one of the
biggest challenges in the Fashion industry, competition has become so
high due to fast growth and easy penetration in the market industry.
Fashions trends change every year, this change might create challenges
for small fashion retailers or start-ups who have limited resources and
budget. It is hard to keep up with new fashion trends as it requires high
financial investment. For this reason, is important for entrepreneurs or
businesses to have a general understanding of the fashion industry, in
order to know competitions, costumers and challenges. Customers
search for personal values from fashion benefits, the representative
aspects of these benefits refer to extrinsic advantages provided by the
product and give an account to customer’s needs for social approval and
personal expression (Le, 2014). Most customers want to keep with
updated trends, this is likely with millennials and post-millennials who
spent more of their time online and updating their social media. The
benefits are relevant to the fashion industry for the expression of non-
verbal communication (Le, 2014.).

A business model in Fashion Industry varies, and each company responds

differently to dynamics in the fashion business in terms of fashion styles,
trends, distribution and selling of clothes to its customers. Most of the
company tends to follow the latest trends and new entrants try to
produce in relative to quality over quantity, more sustainable ways in
other terms Slow fashion. Slow fashion model is a more ethical and
sustainable approach supply, using local resources and longer product
lives. Slow fashion model goes beyond sustainability it is engaged in
transparency supply management, incorporates ethical and socially
responsible initiatives but still maintains creativity fashionable products
(Chavan, 2018.)

Finnish Fashion Entrepreneurship

Finnish fashion firms have the potential of gaining international success

and financial profitability due to the high quality of fashion Education
offered in the country. Recognition and importance of design and Fashion
in Finland are both institutional and international: Aalto University,
Helsinki University of Technology just to name a few are internationally
recognized for generating innovative and eager young designers.
(ThisisFinland, n.d.)

Finnish Fashion industries have been lacking producing competitive

companies with strong global sales, although neighboring countries like
Sweden and Denmark with similar socio-economic conditions have
managed to grow their Fashion Industry with many young brands.
However Finnish Designs are praised globally, and Helsinki was appointed
as World Design Capital, the lack of Finnish Fashion in the international
market is peculiar (Tervilä, 2015.)
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E-commerce Industry

E-commerce Business incorporates internet-based business activities that

use specific service providers. It is important for an E-commerce business
to have a guarantee of good Access Provider that will ensure access to
the internet. Search Engine is the other important aspect in E-commerce
Business, potential customers ought to find products or services easily
through search engines; firms are to be aware of creating easy and well
accessible keywords of their line of products or services (Kütz, 2016).

E-commerce differs from tradition business through handling its

operation, one operates online while the other uses brick and mortars
(physical place). However, for both gaining success and maintaining
business operations, the need for traditional principles of strategies is
applied. Customers of digital business use devices such as mobiles,
laptops, desktop, tablets etc., to view and purchase services or products
online.

Developing a digital business requires a fusion of existing approaches to

business, marketing, and supply chain management and information
systems strategy development. Companies that have a successful
managed transformation to digital businesses have done so by applying
traditional principles of business strategy (Chaffey, 2015).

An important aspect of digital business strategy is that they create new

digital channels strategies for organizations (Chaffey, 2015, 188.) It is
important however for any organization to define or have clear goals and
approaches for utilizing existing digital channels, which creates efficiency.
Some of these strategies are customer relationship management (CRM),
supply chain management (SCM), social media strategy, mobile
commerce strategy, digital channel, e-procurement strategy, etc.
Depending on the organization’s resources, there are various types of
digital channels strategies that are impossible to operate at the same
time. Therefore, is important for an organization to have a roadmap and
prioritize a suitable digital channel strategy.
 15

Figure 5. E-commerce Process Diagram ([Link]).

Ecommerce systems, as figure 5 above replace all forms of paper systems

which makes it faster, efficient, and less costly. In an e-commerce system,
customers are provided with information, marketing, payment services,
transactions, etc. E-commerce transactions as figure 5, show it begins
with a client/customer towards a need, searches it in a website, collects it
to a shopping cart, fills payment options pay for product or service and
receives a receipt of payments. E-commerce business transactions must
provide a customer with a secured e-commerce transaction to keep
customers loyal and building a wider customer base.

Mourya & Gupta ( 2014) explains the success of e-commerce business are
keeping customers satisfied, integrating a website with traditional
business (like mentioning a website in print advertising, press release and
other business documents), understanding market needs, consideration
of affiliate marketing, search engine optimization and participate in
banner and exchange network. Customer satisfaction comes with
answering customers’ emails promptly and personally, providing
customers with assurance and a sense of real business is operated.

It is important for Uborafashions to be aware of using the e-commerce

business model and have enough knowledge of important factors of
building a successful e-commerce business platform. By using this
business model, Uborafashions has the advantage of providing customers
with flexible shopping hours, gaining new potential customers through
global visibility. However, the company must identify risks and

challenges that are associated with e-commerce business model, such

risk is; security risk ( data theft such as stealing accounts or credit card
numbers), identity theft (third-person acting under company’s name and
 16

conducts business activities under company’s name), late deliveries of

products, higher logistics costs, etc.

2.2.2 Organisation’s Strategic Capabilities

Organization’s s strategic capabilities are made of its resources (e.g.

materials, staff, knowledge, etc.), and competences (technical,
managerial, communication, etc.). The fundamental factor is the
capability of an organization regarding its strengths and weakness, and
how an organization’s capabilities are adequate to the challenges of the
environment and demands of its goals (Johnson, Whittington & et al,
2018).

The SWOT analysis provides a general summary of strengths and

weaknesses explored in an analysis of capabilities and competences.
This analysis is useful for the development of strategic options and asses
future course of action (Johnson, Whittington & et al, 2018, 98.)This
Strategic analytic tool is important for companies in mapping out a
current position before developing a strategic plan for future direction
and growth (Gartenstein, 2018).

SWOT Analysis framework has two distinct components of the internal

environment and external environment. The internal environment is the
strength and weakness of a business which is based on organizational
functions (resources, capabilities/competency, and competitive
advantage). The external environment is the threat and opportunities of
a business, which focuses on identifying market opportunities and
threats through competitor’s resources, industry environment and
general environment (Sammutti-Bonnici & Galea, 2015.)

FIGURE 6. SWOT ANALYTIC TOOL DIAGRAM

Internal analysis of any organization is critical in identifying the source of

the competitive advantage. It identifies the resources that need to be
developed and sustained to remain competitive. For a company to gain
competitive advantage it must possess the quality of uniqueness and
generate profit above the industry average (Sammutt-Bonnici, & Galea,
2015.).
 17

In conducting a SWOT analysis, it important to prioritize helpful matters

that focus on strengths and weaknesses that differ in relative terms
compared to competitors or comparable organizations and leave out
areas where organizations are equivalent to others. The second
fundamental factor is focusing on opportunities and threats that are
directly relevant to specific organizations and industry and leave out
general factors. The third is summarizing the results and drawing a
conclusion (Johnson, Whittington & et al, 2018, 99.)

2.3 Strategic Choices

The strategic choice analysis involves the business strategy and business
model that a company could use to adapt to its market. Business strategy
is used by businesses to compete in marketplaces; therefore,
consideration of price, trends, and quality is important in the fashion
business.

Strategic choice is concerned with options for strategy in terms of both

directions in which a strategy might move and the methods on which
strategy might be pursued (Johnson, Whittington & et al, 2018, 14.) For
instance, a Case study company can decide to choose directions of
diversifying into new products, transform existing products and markets
through radical innovation, or enter new markets. These directions can
be pursued by different methods example forming alliances with an
organization that might help its new strategy, could pursue its strategy on
its own or the organization could acquire business that is already active in
product or market area.

Strategic analysis is important in deciding the best options for the

company’s strategic choices. Strategy analysis depends on the results of
analyzed data of the internal and external environment Strategic analysis
seeks to determine alternative courses of actions that fit company’s
mission and objectives. (Amit, 2010)

Strategic choices are made of the business models and business

strategies and are only made once an understanding of management and
its organization is completed. Business environmental conditions
influence strategic choices decisions on companies, whether the business
environment is dynamic or static. Environmental conditions determine
whether organizations should invest in batches or massively. A business
model describes value proposition for customers and other participants,
an arrangement of activities that produces this value, and associated
revenue and cost structure (Johnson, Whittington & et al, 2018, 162).
 18

VALUE CREATION
[Link] needs &problems
[Link] customer & segement market
3. value and other participants

VALUE CAPTURED
VALUE CONFIGURATION
[Link] & selectionof 1. Revenues streams & payments
resources and activities [Link] structures & drivers
2. Linkages between system of [Link] of values between
activities stakeholders
[Link] what participants
perfoms what activities.

Figure 7. Business model components. (Johnson, Whittington & et al,

2018, 162)

In figure 7, the first emphasis is on value creation; a segment that

addresses customers’ needs, problems, and other participants. The
second emphasis is on the value configuration of resources and activities
that produces the value. Value capture explains about revenues and cost
structures. The business model for Uborafashions is e-commerce fashion
business, which creates the value of purchasing African products that are
mostly available in Africa, therefore Uborafashions creates opportunities
of these products to be available all around the world. Uborafashions
website platform provides activities for the customers and the sellers.
These activities are configured in the web platforms where sellers list,
present pictures, and prices for the products and thus customers are
offered selections. Both sellers and customers capture value from the e-
commerce fashion business.

2.3.1 Strategy Analysis

A strategy is a continuous process that requires careful management and

it is only effective when it delivers an increased advantage to the firms
and its shareholders. Strategy can be segmented and clarified into three
different categories which are implemented simultaneously and but
affect the organization differently: Business strategy, Functional strategy,
rand corporate strategy (Thind, 2017.).MacLennan (2010), states for a
strategy to be complete and efficient it must incorporate the following:

• Long-term objectives/mission/purpose/goals
 19

• Plans or policies to achieve this

Figure 8. Different forms of Organisational Strategy (Chaffey, 2015).

Corporate strategy is concerned with the overall purpose of the

organization, business strategic unit defines how to compete successfully
in a particular market and Functional strategy which is also known as
operational strategies is concerned in achieving corporate and business
unit strategies (Chaffey, 2015 ). Functional or operational strategies can
be referred to as marketing, finance, human resource, supply chain
management, etc. The strategic analysis involves defining the industry
which useful and essential for competitive analysis, customer needs and
understanding the problems in the industry. Strategy analysis involves
conducting research on the company and its operating environment to
formulate a strategy (Warner, 2010.)

The author will choose a strategy that fits Uborafashions after a thorough
analysis of the internal and external environment is completed. The three
strategies business strategy functional and corporate strategy align
automatically together with each other although business strategy
focuses on seeking competitive advantage in the markets (Johnson, G.,
and Whittington. & e.t al. 2018). For a business strategy to be effective,
functional strategy and Corporate strategy must be incorporated in
developing a company’s strategic plan. Management needs to develop
and implement Functional strategy for each operating area such as
human resources strategies and marketing strategies. Management is
responsible for functional strategy so as it is for corporate strategy, acting
as a high level of defining overall mission goals and direction of the
company.

2.3.2 Business strategy

The understanding business market determines the ability to identify

value-creating opportunities for business, intelligence knowledge in
developing sales (Amit, 2010). Organization management is another
important stage in strategic customer management, where business
intelligence is applied. Intelligence is based on two sets of logic;
 20

competitive advantage can only be achieved through an understanding of

the intense market knowledge and internal issues of the company in
operation with updated information like market research studies,
customer relationship systems, etc. (Piercy & Lane, 2009).

Identifying internal business challenges for Uborafashions, the company

has a benefit in developing techniques, tools needed to tackle the
existing and predicted internal business challenges. However, for the
company to succeed in business then it is important to acquire business
intelligence knowledge. Uborafashions can allocate its limited resources
efficiently once it defines the business market and hence tailors its
market activities to the right audience.

Digital Business Environment

Understanding online elements for website organization’s environment is

a key part of environmental analysis in developing digital business
strategy development. The environment is continually monitored as
changes are continuously in a business environment.

Figure 9. Digital business environment (smartInsights,2014).

Above figure 9, shows a presentation of a digital business environment

consisting of two components, micro-environment, and macro-
environment. The micro-environment contains organization as a core
participant who can be affected by suppliers, competitors,
intermediaries, and customers. The macro-environment is affected by
technological factors (i.e. innovations, trends, etc.), International and
within-country factors (economic, legal constraints, culture, etc.), and
society (i.e. public opinions, moral constraints, ethical constraints, etc.).
 21

Knowledge of opportunities and threats presented by changes in a digital

business environment is essential for those involved in defining business,
marketing, and information system strategy (Chaffey & et al, 2015, 38).
There are various analytic frameworks can be used to analyze the macro-
environment of the e-commerce business. Information on e-commerce
strategy is influenced by the immediate marketplace of micro-
environment which is shaped by the needs of customers and services
provided to them by competitors (Chaffey & et al, 2015, 39.) Businesses
must have capabilities to innovate and gain a competitive advantage in
their business operating environment through observation of changes
within their marketplace. Thereafter evaluating alternative strategies,
select, review, and implement appropriate strategies. Analysis of the
digital marketplace is a key part of developing long-term and short-term
digital marketing campaigns or plans, analysis helps to define online
ecosystems (Chaffey & et al, 2015, 42).

Digital Marketing

Digital Marketing refers to awareness of products and services through

digital channels such as social media, email, search engines, digital
televisions, websites, radio channels, and mobile apps. Digital marketing
uses the advantage of analyzing and recognizing its products
electronically that differs from the traditional ways of marketing, thus
clarifying what works and what does not work. Thanks to technology
consumers are no longer bound by what is offered within the
geographical area but they can view and buy anything through digital
channels.

It is relevant for customers to receive the right message, as customers are

more likely to pay attention to personalized and meaningful messages. In
digital marketing, focusing on the customers is what matters to the
brand; traditionally using digital channels is buying mass audiences and
the possibilities of the audiences viewing and engaging in the products. In
the 21st century, most of the businesses have introduced digital
marketing sales funnels that enable ways to view, measure and plan
digital marketing efforts. The digital sales funnel is usually
grouped/divided into four different sections called AIDA: Awareness,
Interest, Decision and Action as depicted in figure 10.

Awareness can happen when audiences are visiting the company’s

website or through traffic sources like social media, search engine
optimization, SEO, search engine marketing, SEM, or
paid advertisement. Interest should arise when audiences are searching
for more information or solutions to their problems. Most of these users
are converted to subscribers. The objective in the interest-stage is to
make the audiences to follow and sign up. Audiences make the
decision on whether the products suit their needs. At this stage, the
audiences are looking for the credibility of the product or service.
Free consultations, marketing emails, demos, and free trials can help and
 22

motivate in making the decision. The last phase of the funnel (Figure 10)
called action is where purchase or inquiry is being made. The customer
either decides to click on the purchase button or signs the quotation.
Mostly reviews and referrals are made at this last stage (Yeo 2016.)

Figure 10. Improving your digital marketing efforts (Yeo 2016)

Growth strategy

Developing a small company or start-up to succeed in the next business

level can be associated with several risks. However, each new step of
growth brings more opportunities. Therefore, in choosing stages of
growth, one choice after the other must be made to reduce risks. A
growing business requires ongoing operations in an environment of
continually emerging business challenges, increase revenues and
profitability (Kumar, 2016).
 23

Figure 11: The Ansoff Matrix (Kumar, 2016).

Figure 11 above illustrate different growth strategies techniques used by

businesses to grow their businesses. Ansoff Matrix helps an organization
to analyze risks associated at each stage, the idea is each time a business
moves to a new quadrant (vertically or horizontal) risk increases.

Mindtools (n.d.), explained Ansoff Matrix in following four stages:

1. Market penetration in the lower left quadrant is with the lowest risk
out of the four stages because of the focus in expanding sales with the
existed products into an existing market.

2. Product development, in the lower right quadrant, is slightly riskier

because of introducing new products into existing market.

3. Market development, in the upper left quadrant and is done by

putting existing products into an entirely new market.

4. Diversification, in the upper right quadrant and is the riskiest of four-

quadrant due to the introduction of new products into an entirely
new market. Business growth is an advantage in business for so many
reasons such as taking advantage of new opportunities, increase sales,
and expand products or services. Identifying the right opportunities
for growth requires an understanding of the current performance of
any business.

2.4 Strategy in Action

Strategy in action simply means how strategy is formed and implemented

his concern with organizational structure, systems, and strategic change
(Johnson, Whittington & et al, 2018, 15). Organizational structure key
factor is how does it support the successful performance of the company,
systems are planning, and performance systems required to support the
 24

way strategies are implemented. Strategic change involves putting

strategies into action, how is led and comprehensiveness of a change.

In terms of strategy in action, an organization must assess the type of

structure needed to organize various activities and future growth,
organization‘s systems adequate to allow strategies to be implemented
effectively and its growth development what changes are necessary to be
managed.

Organizational Structures

The development of strategies requires organizing strategies, which

include structures and systems. Managers are involved in identifying
levels and roles in organizations, as well as appointing responsibilities. If a
start-up involves more than one person, responsibilities must be divided
between different people. Functional structures divide responsibilities
according to the organization’s primary specialist roles such as
production, research, and sales. Functional structures are relevant to
small or start-up organizations or larger organizations who have retained
narrow, rather than diverse product ranges. However, this type of
structure has pros and cons. Pros include senior managers has direct
involvement in operations, hence provides clear definitions of roles and
tasks, increasing accountability. Cons involve overburden of operations in
senior managers as organizations expand and become more diverse
(Johnson, Whittington & e.t al, 2017, 209).

Systems

Organizational structures must be supported by systems, which are the

muscles of organizations. Systems help ensure control over strategy
implementation. Small organizations or start-ups can rely upon direct
supervision while large or complex organizations must apply more
elaborate structures and systems to be effective over time.

2.4.1 Strategy Development Process

A strategy is formed after careful observation of a process over a period.

Strategy can be developed from a learning experience or formed by
founders and managers. Managing strategy in action is how strategies are
formed and implemented, the emphasis is practicalities of managing
(Johnson, Whittington & e.t al, 2018).

According to (Johnson, Whittington & e.t al, 2018), three issues for
strategy in action are:

• Structuring an organization to support a successful performance.

Structure matters for who is in charge and accountable

• Systems are required to control the way in which strategy is

implemented. Planning and performance systems are important in
 25

getting things done. It is important to ensure that strategies are

implemented according to plan.

• Leading strategic change is typically an important part of putting

strategy into action. The fundamental key point here is the speed and
comprehensiveness of change.

The strategy development process provides a framework that follows a

logical sequence to ensure activities intended for the development of
strategies are followed. The strategy development process is a
continuous improvement process that involves a series of steps.

Figure 12. Strategy Development framework

Strategy development framework as presented in figure 12 above

depends on a series of stages:

1. strategy analysis depends on scanning or analyzing internal and

external environment. This stage is done in both during the strategy
development process and continuous process to respond to
competitors.

2. Strategic choice, that is understanding the company’s vision and

objectives, then selecting the best strategic choice which is suitable
for a company’s operation and needs.

3. After strategies are developed, they need to be put into action. When
the implementation stage is complete, control and monitoring are
required to adjust to operational problems accordingly.

Johnson, Whittington & e.t al. 2018 specify two approaches of developing
strategies, rational-analytic view of strategy development and emergent
strategy approach. He defines these approaches in the following way:

I. Rational –analytic view of strategy development is the conventional

account. Here strategies are developed through a rational and analytic
process, led typically by top managers. The typical plan begins with
statements of overall strategy and mission, vision, and objectives.
 26

Then there is macro-environment and industry analysis followed by a

capability analysis.

II. The emergent strategy is the alternate broad explanation of how

strategy develops. In this view, strategies often do not develop as
intended or planned but tend to emerge in an organization over time
as the result of ad hoc, incremental, or even accidental actions. Good
ideas and opportunities usually come from practical experience at the
bottom of the organization, not just from management at the top.
Learning from experience can be as valuable as planning in advance.
This emergent view strategy is usually associated with Henry
Mintzberg.

In the case of this research project, it is obvious for Uborashions to

develop its strategies using a rational-analytic view due to its essence of
looking at the organization’s overview in its mission, vision, and
objectives, also the factor of analysis of the business environment.
Achieving this approach for Uborafashions as a start-up company is
preferable because the company has not gained any business experience
in the industry it wants to operate in.

2.4.2 Evaluating Strategies

Evaluation is fundamental to strategy. First, it is important to evaluate

the performance of the existing strategy; then evaluate new strategic
options. The gap analysis is used to determine any possible shortfall
between the existing performances and strategic objectives. (Johnson, G.,
and Whittington. & e.t al. 2018). Strategic evaluation comes in hand after
an assessment of the project or plan on whether the implementation of
the strategy is as per the strategic plan. The evaluation must consider
whether the objectives of the company are appropriate and attainable
with given resources, major policies and strategies are lined with the
company’s objectives. Strategic evaluation should be based on the
company’s environment and not on the best way thought to be.
Obtaining reliable and accurate information concerning strategic
evaluation can be quite difficult; therefore, it is important to obtain a
reasonable source of situation-based knowledge, to be up to date and
efficient management information system (Subba, 2009). Subba 2009 has
categorized different criteria for evaluating strategic alternatives,
although he critics the difficulty of using the three criteria
simultaneously:

a. Criteria of suitability: It measures the extent to which the proposed

strategies fit the situation identified in strategic analysis. The situation
should indicate the list of important opportunities and the threats
that the firm faces and weakness and strength that the firm has. In
this criterion evaluation of suitability is also called consistency. The
selected strategies should overcome the difficulties identified in
 27

strategic analysis; it needs to exploit environmental opportunities by

using a company’s strength.

b. Criteria of feasibility: asses the practical implementation and working

of the strategy. At this stage of the strategy, and implementation
needs to address if the company has enough financial resources to
implement the strategy, availability of marketing skills, enough
technology to compete effectively, ensure of availability of managerial
and operating skills.

c. Criteria of Acceptability: this stage the firm's asses the strategy to

decide whether the consequences of proceeding with the strategy are
acceptable.

3 RESEARCH METHODOLOGY

A research thesis is conducted using a practice-based approach in the

development of strategies for the case study company. Practical activities
of the thesis are conducted using action research from the period case
study company is being established to the end of accomplishing the
thesis. Action Research is a research method that analyses and observes a
style or manner of checking satisfactory levels in organizations. It is
frequently used for improving practices and conditions. It can either be
for checking part of the organization’s critical reflection or in response to
professional development review (McNiff, 2013).

Figure 13. Action research process. (ResearchGate, 2013)

 28

Figure 13. above represent the process of action research that involves
series of activities of an organization in its current state to reach to a
desired state .As goals and objectives of the company changes so as the
process, it all begins from the start thus creating circular repetition of
activities that includes planning, diagnosing, evaluating and acting. The
circular motions each is based from ideas and reflections from previous
circle. However, along any series of activities there are risks or challenges
along and those are unexpected events.

3.1 Research Purpose

The purpose of the practice-based research is to develop effective

strategies for Uborafashions Start-up Company. These strategies are a
gap that exists in the company at its current state towards accomplishing
in reaching its desired state. The development of effective strategies will
consider the company’s mission, visions, and capabilities within the
business environment. For the company to operate effectively in a
challenging business environment. The current situation of the case study
company will give results on what kind of developing strategic plans the
company must incorporate for its success along with its mission and
objectives.

3.2 Research Approach

A research approach in this action research is participatory action

research. It means three important fundamentals of research, action
and participation are joined by the participant (Lawson, Loretta & [Link],
2015).

Figure 14. Participant as an observer. (MeasuringU,2015)

Participatory action research figure 14 includes the researcher as a

participant observer collaborating with other participants or researchers
 29

working together to understand a problematic situation and change it.

(Lawson, Loretta & [Link], 2015).

Practice-based research is conducted by careful measures of the action

research method managed by the author as a participating person.
Action research is based on the author’s participation at HAMK’s start-
up business school course, to learn the fundamentals of starting a
business and all relevant information on establishing the business.
Action research is as well achieved from observation of different
literature that supports research questions, and observation of the
company’s operations from the time is being established to up to date.
However, taking characteristics of action research, the development of
strategies is going to be a continuous improvement as a business
environment change so as technology and trends.

The research approach consists of two parts, theoretical and empirical.

The theoretical part includes kinds of literature and concepts relating to
the research questions. The theory is constructed through an analysis of
a company’s strategic position, choices and actions that will determine
which strategies to implement in the case study company. Empirical
includes the participation of the author in the master’s degree program
of Business Management and Entrepreneurship, and observations of
the company’s goals and objectives in formulating the suitable research
study for the company.

3.3 Data Collection

Walliman, (2017) explains data comes in two forms, secondary data, and
primary data. Primary data are derived from observations, experience,
records close to the events. Secondary data are written sources that
interpret or record primary data. The data collection used by the author
in this research is through exploring kinds of literature, articles of
strategy development and observation of the current situation of the
company. Data is collected in a structure of analysis of the internal and
external business environment. In such a manner the author can be able
to evaluate strengths and weaknesses in the internal business
environment, such as opportunities and threats of the external business
environment.

It is important to concentrate on certain variables when collecting data

(Walliman, 2017). Internal business environment variable includes the
organization’s capabilities that include determination of a company’s
strengths and weaknesses. Michael Porter’s Five Forces analysis
determines five variables: competition rivals, supplier’s power, the threat
of new entry, buyer’s power, and the threat of substitute, and with an
industry analysis in the fashion industry and e-commerce industry.
 30

4 ANALYSIS OF THE COMPANY & ITS BUSINESS ENVIROMENT

The purpose of this chapter is to conduct an empirical assessment of

Uborafashions business in its current state and business environment. In
its current state Uborafashions resources and capabilities is analyzed. The
resources in terms of staffs, suppliers, funds, customers, and distribution.
Capabilities in terms of management skills, procurement skills, marketing
and sales skills, financing skills, innovation skills, and customer relations
management skills. These are determinants for Uborafashions
competitive advantages in the business market for long-term survival.

Research questions

Analysis of the Company & business

environment

Analysis of the evidence

Figure 15. Process of analyzing the evidence.

In the process of developing the company, the author as participant-

observer detected factors that would provide the company with useful
information to accomplish its mission and visions. Therefore, research
questions were formulated to conduct a thorough analysis of the
company and its business environment. However, analysis of the
evidence is a fundamental factor in understanding if the initial challenges
are solved or not, and what further research plans the company must
conduct. Figure 15 shows the process that led us to this chapter of
analysing the evidence.

Analysis of the company and its business environment uses the results
from Michael Porter Five Forces, SWOT analysis and other environmental
factors like technology, social and economic. Based on these
observational results the company can make result-driven decisions
according to the evidence and analytics. The presentation of results is in
the form of content and tables. Analysis of the company in its current
state will give an overview of conducting a SWOT analysis whereby the
company’s strengths and weaknesses will be outlined. Micro-
environment analysis using Michael Porter’s five forces will give an
insight into threats and opportunities of e-commerce business
environment.
 31

4.1 Gap analysis

Figure 16. Stages of Business Life cycle. (Business2community,2014)

During the development of businesses, there are several stages of

business passes to reach maturity. Reaching maturity means
accomplishing some of the company’s missions, visions, and objectives.
However, along the developments of businesses is associated with
threats from the external environments and weaknesses from the
internal environment. Closing the gaps of threats and weaknesses
provides an opportunity for the company to reach its desired state as
shown in figure 16.

Uborafashions means of closing the gap between projected performance

and desired performance is through tackling the challenges existing
within the organization and business environment thus will lead towards
choosing the right strategies. Uborafashions’s decision in choosing the
right strategy is based on the organization’s understanding of key drivers,
expected changes in the environment, and its capabilities. However,
these factors provide opportunities but also place constraints in the
future direction of the organization.

As shown in figure 16 Gap analysis is essential in identifying the company

position in terms of:
a) Current position (where the company is?).
b) Future objectives, mission & visions.
c) How the gap is going to be closed.
 32

4.2 Current State of Company

Uborafashions is selling fashion apparel that includes women and man’s

wear, the company offers custom-made, styling consultation and
measurement services to its customers. A mission is statement aims to
provide employees and stakeholders with clarity about what the
organization is there to do (Johnson, Whittington & e.t al, 2018).

Uborafashions mission is to own an online fashion brand business which

is aiming to provide space for small independent business vendors.
Company’s business vision is to enable potential customers to easily
access or obtain their products through a trustable brand and platform.
Uborafashions is intending to work close with shareholders to provide
potential customers with high quality services and products

Operations

Uborafashions is operating online and has secured a website under

[Link]. The company’s objective is to build a strong
and trustable brand first then break even with sales and continue to
improve over time. Uborafashions decisions in operating online are due
to facts that people in this generation spend most of their time being
online and social media. Another fact is the elimination of geographical
limitations and making it easier for new potential customers to reach the
company’s products and services easily.
Company staffs are only founders, for now, some based in Finland and
Tanzania. Founders based in Finland focus on business management,
marketing, coordinating, and searching for skillful contractors and
founders in Tanzania deals with procurement and shipping of products.
Uborafashions has been coordinating with other firms in Finland such as
web construction and web design firms. Company’s operation process in
such a manner that products are designed and produced abroad, stored,
and shipped from the country of production to customers. Customers
receive their products within 14 days from the day an order is been
placed. Customers can either choose available products available on the
website or request custom-made products. A marketing plan is arranged
through photoshoots and events such as fashion shows, festivals, etc.
Due to the lack of employers, founders divide different tasks withing
themselves and are usually responsible for the main operational areas of
the company. It has been quite a big challenge finding time to handle the
company’s operation while founders are fully-time employed.
Uborafashions is conducting its affairs with stakeholders who are
connected in one way or another to meet the company’s objectives. The
chain of connection starts with producers/suppliers to targeted
customers.

Know-how and competences

 33

Founders of the company are fully committed to handling the business

with great care. They have invested their time in studies of master’s
degrees in Business Management and Entrepreneurship in the Häme
University of Applied Science and another founder is in the master’s
degree Programme of International Business Management in Turku
University of Applied Sciences. Founders know and understand
succeeding and mastering business operations is not one day learning
experience, it takes and needs time, and it is a continuous improvement,
that needs commitment. That is why they believe achieving a solid
background in education is one of the key successes to their start-up
business. Founders have been attending programs from Ensimetri and
Tre-start when invited. Under these programs, a great value of
information has been received that helps in the development of the
company. They can search for vendors, as most of their products are
available in East Africa. Founders speak the language used by East
Africans and are aware of the culture. This is an advantage in business
negotiations, agreements, and contracts. In its development stage, the
company cannot place itself as a more superior or favorable to other
existing business but it has the advantage of learning similar existing
businesses; this can give the advantage to learn and observe what works
and also to distinguish its products and services. The main competitive
advantage the company can have is to be different from existing
businesses.

Resources

Uborafashions being a start-up company depends mainly on founders’

income, manpower and time. the company lacks capital, human
resources such as labor-power. However, the company possesses strong
enterprises that are determined to achieve the company’s goals and
mission. Founders invested their own money and time to conduct the
operation of the company. And to avoid risks in its initial stages the
company has decided not to loan money from investment institutions.

4.3 SWOT analysis for the company

In the case of the Uborafashions business, its business life cycle is in the
development stage. Observations of the company will rely on the
functional structure of the organization compared to its competition
rivals’ analysis of the company will determine the company’s strengths
and weaknesses, together which Michael Porter’s Five Force that
determines opportunities and threats will help to formulate the
company’s strategies. The development stages of the company require a
lot of effort for a company to succeed and sustain its
operations. Uborafashions products that are new in the market for this
reason usually sales are very low. The incorporation of Michael porter’s
five forces assists in conducting an external business environment to
analyze the five components: competition rivals, power of substitutes,
supplier’s power, buyer’s power, and the threat of new entry.
 34

E-commerce business has some opportunities and threats. Having a

website provides a company with opportunities such as reaching
potential customers world-wide if marketing activities are conducted
properly and efficiently, products are visible to customers 24 hours, etc.

However, e-commerce business has various threats like security risks,

system rundowns, identity threats, etc. It is important for Entrepreneurs
to know and understand other factors that will determine opportunities
and threats like technology, economic, social, political, and ecological
factors.

Table 1. SWOT ANALYSIS ON COMPANY’S RESOURCES

RESOURCES STRENGTHS WEAKNESSES

Staffs/ Founders are the only Little time to execute
employees staffs several operations within
three people
Finance Founders invest their Limited operations, hence,
money, therefore strict it limits company’s growth.
measures on money
allocation is applied.
Customers Unique and high quality of It is difficult for first few
company’s products years for start-ups to have
segments our customers. stable customers, know
them, manage, and
maintain customers.
Suppliers Founders have solid Suppliers are not reliable,
networks with many delays of products
suppliers.
Distribution Presence of webstore is a Due to limitation of time,
major step in distribution founders cannot manage
channel and presence of social media presence
social media like Instagram most of the time.
and Facebook

SWOT analysis of the company’s resources (table. 1) indicates the

company’s strengths are the production of high quality and unique
products, good networking with suppliers, the presence of a website as
its major distribution platform. Founders are determined and dedicated,
they invest money and time into the company. However, the company
has weaknesses like lack of working staffs, limited operations activities
like marketing events due to low budget, targeting potential customers
take time and a lot of efforts which company’s lacks, suppliers can be
unreliable sometimes.
 35

Table. 2. SWOT ANALYSIS OF COMPANY’S CAPABILITIES

CAPABILITIES STRENGTHS WEAKNESSES

Management good educational background Lack of experience
skills
Procurement skills Suppliers are known already, Distance makes it difficult to
therefore procurement control and review production
becomes easier of products.
Marketing& sales Basic knowledge Lack of experience
skills
Financing skills Many available online software Dependence on external help
Innovation skills Founders has decision power Lack of innovation team
on creativity and change of
designs products or services
Customer Webstore has CRM tool Management still in learning
relationship process
management
(CRM)
Technical skills Small technical issues are Depends on external help for
handled within company major issues

There are many capabilities that e-commerce must possess to succeed

and maintains the business. Factors like website structure create a
friendly user experience, improves SEO (Search engine optimization) and
chances of showing up in google search. However, a company must
possess various capabilities to survive in a competitive business
environment. Uborafashions possess several capability strengths such as
management skills, procurement skills and some basic knowledge of
marketing and sales. Table 2. shows Uborafashions has several
capabilities weaknesses such as marketing & sales skills, financing skills,
CRM, etc.

4.4 Analysis of the E-commerce Business Environment

4.4.1 E-commerce in the world

According to Forbes e-commerce is expected to become the largest retail

channel by 2021. However, future adoption is not evenly distributed
across the globe. E-commerce is already leading in Asia-Pacific with a 13%
penetration rate but will not reach the top in Western Europe within the
next 5 years. (Grant, 2018)

Referring to the PostNord report of 2018, E-commerce in Europe is

expanding as 250 million Europeans say to regularly shop online. It is
clearly becoming each year consumers’ growing shopping habits which is
 36

a trend that is emerging. It is important for e-sellers to adapt their

offering to more international consumers, who seek the best offers in
terms of everything from products to simplicity, delivery, and service.
Arne Anderson an e-commerce expert at PostNord points out tips
regarding logistics and e-commerce; fast delivery, accuracy, and
transparent information (precise) being very important to customers. In
this report Olof Källegren who is the market information manager
outlines six tips for successful e-commerce in Europe to be:

• customer services, offering services in local language.

• Good understanding and complying with legislation and regulation.

• Payments options preferred by customers.

• Website adapted to local conditions

• several deliveries option

• simple returns

PostNord report reveals Clothing and Footwear to be the most bought

products online, followed by home electronics and books/audiobooks in
Europe. Report claim consumers are influenced by low prices especially
long-distance consumers. The number of consumers shopping abroad is
high in Nordic countries. Consumers buying habit in terms of age group
seems to be younger people shop online more than older people.
Frequent online buyers are within the age group of 18-29 years, followed
by the age group of 30-49 years of age within a range of 70 percent and a
drop-down in age group 50-64years. The age group of 65-79 years is the
least of age group buying online (PostNord, 2018).

Uborafashions must operate in the advantage of reports, surveys and

statistics data that has been made by other organizations. PostNord
reports explain the success of an e-commerce business and reveal the
most bought products and online shopping age group. This is an
opportunity for Uborafashions to observe the information and compare
results from various sources.

E-commerce for Western Europe is a mixed bag, the UK being placed on

top with the largest channel in 2019 followed by France and Germany.
These countries make the three biggest e-commerce Markets in Europe.
UK’s rapid adoption of online grocery led it to the top compared to
Germany and France (Grant, 2018).

According to figure 16 below shows a timeline forecasting digital buyers

worldwide from 2014 to 2021. The figure shows the number of buyers
increasing each year and b 2021 to reach 2.14 billion people worldwide.
Purchasing online has become a common practice among many people
around the world (Statista,2018). Current e-commerce statistics state
 37

that 40 percent of worldwide internet users have bought products or

goods online via desktop, tablet, mobile or other online devices. This
amounts to more than one billion buyers and is projected to continuously
grow (Statista, n.d.).

Figure 16. Number of Digital Buyers Worldwide from 2014 to 2021

(Statista, n.d.)

Amazon and eBay are the most popular and dominant marketplace in
Europe. Alibaba moving slowly from Eastern countries and expected to
take over the dominance of the US marketplace giants Amazon and eBay.
Most cross-border shopping in Europe is Amazon followed by
Alibaba/AliExpress, in which one of the four customers shops in Amazon
(EcommerceNews-Europe,2018).

Although e-commerce is not evenly distributed across the globe, the

Internet has increased visibility of designers in the African continent,
from small retailers into large recognized and respected designers. Most
of the designers have been able to generate their awareness and
maintain recognition through celebrities wearing their designs. Nigerian
being the largest continent’s consumer market, its revenue has doubled
each year since 2010. Africa continent has also its own e-commerce
marketplace platforms such as Jumia and Konga that helps vendors from
Africa to market and sell their products (CNN Style, 2017).

4.4.2 E-commerce Finland

Revenue on the e-commerce market in Finland is US$4,986m in 2018 and

is expected to increase by 6.9% in annual growth rate (CAGR 2018-2023)
with the result of the market volume of US$6,974m by 2023. The fashion
industry is the largest market volume segment by US$ 1,588 by 2018.
 38

Apparel seems to be the largest selling segment with a volume of

US$988m in 2018. (Statista, n.d.)

Finland has the highest internet and broadband penetration internet in

the world. E-commerce has become popular and fast-growing, driven
primarily by a greater variety of goods and lower prices. According to
Euromonitor, 84% of Finn’s shops online, spending an average of $3,770
per capita with purchases of home technology and clothing leading the
way. Finns rely heavily on foreign retailers for online purchases, giving
foreign retailers opportunities to acquire customers. 54% of all online
shoppers in Finland purchases abroad. Underestimating the importance
of marketing has been the most common mistake of online marketing.
The most successful companies have been the ones promoting their
products or website by identifying the right target groups through a mix
of advertising channels including paid advertisements and social-media
and email. PostNord surveys show most sales generated from foreign
online shops come from women’s clothing and accessories ([Link],
2018).

A research conducted by Paytrail in 2017 indicates growth of e-commerce

despite Finland being in recession on crisis of the late 2000s. This fact of
growth paints a picture that both Finnish customers and Finnish
companies have taken in e-commerce. Paytrail research suggests that; it
is important also to for Finnish e-commerce companies to continually
develop the technology into more customer preference, easier to use and
safe buying experience, otherwise Finnish companies have a risk for
potential customers to look to the foreign web shops for better deals.
Demographics of online shoppers in Finland according to Paytrail report
are of 25-35 years old shop most online, and 66-74 years shop the least.
The most striking fact is most Finns shops online using mobile phones and
data shows 70 percent choose the internet because it is time saving and
73 chooses because it is always open (PaytrailbyNets, 2017).

Other sources of online shopping are presented by [Link], revealing

statistics survey in Finland shows 47 percent of shops online to buy
clothes and shoes, 39 percent admission tickets and 35 percent
accommodation services ([Link], 2019). Most commonly, Finns use
internet with their mobile phones 80 percent. Four out five (79 percent)
uses the internet several times per day in 2019 within the age group 16
to 89 years, and those under 45 everyone did so almost every day
([Link],2019).

4.5 External Business Environment factors

Apart from Michael Porter’s Five forces that affect the business
environment, there are other macro-environment factors that has a
greater or lesser impact on organizations, industries, and public sectors.
These factors if analyzed properly can determine threats and
opportunities to organizations, these factors are political factors,
 39

economic factors, technological factors, social factors, ecological factors,

and legal factors (Johnson, Whittington & e.t al, 2018).

Economy

At the EU, level Finland is a firm supporter of trade liberalization, and

more competitive EU, and supports efforts to boost free trade and the
single (and the digital single) market. Finland has been speaking for a
stronger, more unified, and ‘fairer’ union as best serving the country’s
interest. Finland remains committed to a single currency, strengthening
Economy and Monetary union, common security, and defense policy, and
supporting closer integration of the EU (GOV. UK, 2018).

The economy is affected by the currency exchange rate, interest rate and
fluctuating economic growth around the world. It is important for an
organization to understand how its market is affected by the prosperity
of the economy. The key concept of analyzing micro-economic trends is
the economic cycle. Despite the possibility of unexpected shocks,
economic growth rates have an underlying tendency to rise and fall in
regular cycles (Johnson, Whittington & e.t al, 2018).

In a bad economy, it is hard for any business to survive due to the fact
most customers are not able to support themselves financially. A bad
economy can either be caused by economic fluctuations causing people
to lose their jobs, high-interest rates on credit cards and loans. This might
affect customers to spend less on recreation goods, sports, and cars.
Understanding the economy will help companies to spot threats and
opportunities (Sherman, 2018).

Social

Social factors can influence the specific nature of demand within the
overall economic growth rate in organizations and industries. A social
element can also shape the network character of an organization within
the environment, such social elements are demographics, distributions,
geography, and culture. However social networks have strategic
significance especially foreign firms in penetrating the density of network
(Johnson, Whittington & e.t al, 2018).

Our society is continually growing and changing, changes can be seen in

taste, fashion, and social media. Social networking has become more
popular in the younger generation especially on mobile phones and
computers. The younger generation prefers to shop more online and
older perhaps prefer to stick more in traditional methods. Changes in
social factors are very important for business in understanding and
focusing on these changes to apply environmental analysis depending on
the nature of the operations (Pestleanalysis contributor, 2015).
 40

Technology

Technology today has changed most businesses and created

opportunities, like creating completely new business niches that have not
been existed before. Technology has reduced the need of business
owners to open new mortar and brick, instead, they run their companies
from their smartphones, laptops, and tablets. Operating costs have
lowered in businesses, sales operation of products and services are
through webpages. The cost of starting a new business has dropped
drastically in recent years, no need to travel to meet clients, owners can
operate their business online. And instead of hiring bookkeepers or
assistants, Entrepreneurs can find software handles all the early-stage
functions they need. Security on the technology point of view has
brought up some positives and negatives impact, having so much
information on the internet-connected servers' means is susceptible to
theft. Businesses must put significant efforts into securing their
businesses. This has opened opportunities for tech specialists in
cybersecurity arenas. Technology has made it easier to reach customers
through social media and the internet. Many businesses today oversee
their own customer outreach. (Faris, 2018)

Legal

European Commission (EC) expects e-commerce businesses to follow

legal regulations for e-commerce. These mandatory elements to be
followed are Pre-contractual information that is provided should inform
users regarding products/services, technical information, terms of use as
well how client information will be used. Post-contractual information
that is provided should provide means of payment notifications after the
products/services have been purchased within 24hours. Withdraw period
that is provided should state clearly directives on consumer rights where
a consumer has 14 calendar days to exercise the right to withdraw when
not satisfied with their products/services, otherwise the user will have a
longer period of 12 hours. Cookies, a provider must have cook policy
informing users that cookies are being used upon accessing the website.
Data protection, users must be provided information on the storage of
their personal data, how their personal data is being used and options for
cancellations of their data (European Commission, n.d.)

In Finland, the Ministry of Employment and economic is responsible for

the regulation of economic activities. The ministry is also responsible for
regulating certain businesses that require licenses, such as real estate
agencies and debt recovery services, as well as special regulation of
companies that sell travel packages and provide accommodation.
(Ministry of Employment and Economic Affairs, n.d.). There are no legal
obstacles to prevent e-commerce financial transactions in Finland.
 41

However, businesses are to offer suitable or secure payment options to

their customers. Four most important payment methods in Finland are
Debit/Credit card, direct payment via bank, invoice, and PayPal. It is very
important for Finns to be assured about the safety of the payment
methods as Finns are extremely concerned about safety ([Link],
2018).

Five Elements of Porter’s Competitive Forces

Competition Rivalry

Referring to reports from Statista and Forbes, amazon stands out with a
high number of sales and success in the e-commerce market.
Marketplaces like Amazon, eBay, Alibaba, etc has a wide range of apparel
including African ethnicity products but also there are some independent
websites at the international level such as [Link]
[Link] etc, which has similar products and services compared
to Uborafashions start-up. In the local level market, there are few online
shops in Finland that sell African products such
as [Link] [Link] etc.

Threat of Entry

In e-commerce industry threat of entry is very low this is because of no

need for high investment or capital and human resources required to
start a business. However, it is quite difficult for developing businesses to
build a potential customer base, brand image and maintain being a
success for a long period of time without high investments in marketing
campaigns.

The products of Uborafashions are manufactured in Tanzania so the

transport costs to other Scandinavian countries compared to Finland are
similar, and do not pose a significant threat to the cost structure of the
distribution of their products. VAT, tariffs, and other regulations related
to exporting from Tanzania to Scandinavian countries might present
issues in the beginning. According to the World Trade Organization
(2018), the import tariffs for clothing businesses to Denmark, Sweden,
and Iceland are the same as Finland but in Norway, they are a bit lower.
All in all, the trends in trade are similar in Finland, Denmark, and Norway,
towards European Union countries, showing recovery from the recession
by an up-climbing curve. Norway is still stalling behind, but Iceland has
been in an increasing trend since 2010 (World Trade organization, 2018).
If the regulations become overwhelming, Uborafashions can distribute
goods from Finland which is export within the European Union and thus
less heavily regulated. If the company finds true demand and a loyal
customer base in Scandinavian countries, it can also consider wholly
owned subsidiaries, also called Greenfield ventures, to establish a
 42

concrete store in the desired country. This way they do not have to give
away their core competence, like the design to their competitors and will
remain in charge of the company (Nugent, 2013).

Power of Buyers

Due to technological factors, the bargaining power of buyers in e-

commerce is very high (Notesmatic,2017). Customers nowadays are well
informed via the internet, social networks, etc, making the most brands
to work hard to retain their customers, invest highly in customer services
and technology. According to Johnson, G., and Whittington. & e.t al.
2018, if the bargaining power of buyers is high it leads to the demand of
low prices in products and services. Therefore, Uborafashions must put
so much effort into marketing and advertising their products and services
to gain new customers. It is important for a company to also work in
customer relation maintenance after they acquire few customers.

Power of Suppliers

There are several concentrated suppliers in African products ethnicity in

Africa. Therefore, the bargaining power of suppliers is depending on e-
commerce founders’ decisions on where to acquire their products and
what is most demanded by customers.

Threat of Substitutes

Because of no expenses in switching costs of products, e-commerce

businesses are likely to suffer a high threat of substitutes. Customers can
easily switch to e-commerce retailers’ businesses or physical retailers.
Uborafashions can earn competitive advantage through procuring unique
and quality products, good customer services, good customer experience,
and low prices.

4.6 Observations of SWOT analysis

Strengths
Uborafashions basing on slow fashion production has an advantage in
producing more ethical and sustainable products. No language barriers
position the company to the advantage of building good networking with
reliable suppliers and negotiate a price according to demand from
customers. Presence of website positions Uborafashions in favourable
conditions for their potential customers to shop 24 hours and removes
the limitation of location, meaning Uborafashions can reach potential
customers worldwide. Possession of strong management skills gives
advantage to the company to maintain business and its operation
activities.

Weaknesses
 43

Having no workers means founders must work around the clock to fulfil
the company’s visions and objectives, it might lead to some operations
not being performed effectively; In the long-term might lead to slow
growth of the company. Low finance prevents the company from high
investments and some operations which require a high budget,
Uborafashions is likely to face is lack of high investments and capital can
prevent the company to compete with existing prices of the competitors ,
and when competitors tends to rise or lowers prices. Lack of marketing
and sales skills limits the company to reach its potential customers and
increase the company’s profit. The customer is a king of any business,
therefore the company lacking CRM skills loses benefits of ensuring
customer satisfaction.

Opportunities
Analysis reports from PostNord 2018 showed, online shopping trend is
increasing each year, this is an opportunity for Uborafashions company as
it operates through a website. Reports showed the age group of 18-29
years spend most of the time online, followed by the age group of 30-49
this means Uborafashions can use this opportunity for building a
marketing strategy with a focus group. It is presented in the reports
Finland to have the highest internet and broadband penetration, it means
our customers will not experience any technical difficulties when they are
browsing to the website pages. Most EU-countries share a common
currency; therefore, customers do not need to worry about conversion
rates, and cost structure distribution to Finland is the same as those of
Scandinavia countries. No legal obstacles to E-commerce businesses
provide companies with more assurance of conducting their businesses.

Threats
Uborafashions is likely to face a low growth rate in the market due to
facts that the company is in the development stage and it cannot
compete with incumbents who have been in business for a long period of
time. Therefore, it means Uborafashions will be associated with low
profitability rates and price competition. Customers always look for
better deals, with Amazon, eBay, and AliExpress being very popular and
dominant in the marketplaces; it reduces chances of potential customers
from visiting new web stores. Economic factors such as economic
fluctuations or recessions reduce the chances of customers to buy luxury
goods. Social factors such as change of trends influences most potential
customers to purchase similar products. Technological factors have some
advantage as well as some disadvantages such as cyber theft, identity
theft etc.
 44

4.7 Reflections of Micro-environments

Table 3. Presentation of Michael Porter’s Five Forces for E-commerce

Business.

COMPONENTS HIGH LOW

Competition Rivals yes no

Threat of New Entry yes no

Threat of substitute yes no

Power of suppliers no yes

Power of Buyers yes no

Table 3 above represents results of Michael Porter’s Five Forces in E-

commerce business industry. The following components of Michael
Porter’s five forces are determined by following factors:

1) Competition rivals is determined by number of competitors, quality

differences, switching costs, customer royalty etc.

2) Threat of New Entry is determined by time and cost of entry, barriers

to entry, specialist knowledge, technology etc.

3) Threat of substitutes is determined by cost of change.

4) Power of suppliers is determined by number of suppliers, uniqueness

of services, cost of change etc.

5) Power of buyers is determined by number of customers, price

sensitivity, ability to substitute, cost of change etc.

Results from table 3 are presented after careful analysis reports from
existing kinds of literature which gave an insight into the e-commerce
business environment. The results show there is high threat of
competition rivals, new entrants, the threat of substitutes, and the power
of buyers. However, it indicates opportunities for the power of suppliers
which means business owners can negotiate purchasing products from a
few available suppliers.
 45

Table. 4 External Factors Affecting Businesses.

EXTERNAL FACTORS THREATS OPPORTUNITIES

Customers 250 million Europeans

shops online regularly.
(PostNord report 2018)

Products Influenced by prices Clothing & footwear

(Most bought products
in Europe)

Technology Finland has high

internet and broadband
penetration.

Buyers 18-29 years of age shop

the most online in
Europe followed by 30-
49years of age.
However, in Finland
shopping age group is
between 16-45 years.

Economy Fluctuations of Same currency in many

economy. European countries.

Table 4. represent some of reflection summary from different reports.

The findings and further researches will provide the company
clarifications on opportunities and threats of the business environment.
With such knowledge of the information the company can implement
strategies that are more suitable and favours the company from risks of
the business environment.
 46

5 IMPLEMENTATION & EVALUATION OF STRATEGIES

5.1 Implementation process

Implementation of Strategies for Uborafashions is derived from

observation results of SWOT analysis, business environment analysis,
industry analysis of e-commerce and navigation analysis of Porter’s five
forces of a business environment. MacLennan, 2010 defined strategy
implementation as actions that move the organization along its choice of
the route towards the goals-the fulfillment of its mission, and
achievement of its vision.

Mission

Uborafashions mission explains the nature business of the company, its

purpose and why it exists. Uborafashions mission is to build an e-
commerce business platform by coordinating, collaborating with
international independent talented designers or vendors. Uborafashions
believes that everyone should be able to express and communicate
through fashion.

Vision

Uborafashions vision is to create fashion diversity, build a brand that

celebrates individuality, uniqueness, trendy styles through innovation of
Finnish Fashion industry.

Towards the process of implementing strategies for Uborafashions

consideration of company’s mission and vision must be incorporated to
achieve efficient and successful strategy. Strategic implementation is a
crucial stage of strategic planning; it can lead to failure or success of
company’s vision if not done properly. A business mission, objectives, and
visions play an important role in the strategy implementation step and it
is because selected strategies contribute in achievement of the
company’s missions and objectives (Subba, 2009). Success
implementation of e-business starts with the formulation of an
appropriate structure for running an e-business project. It is important
that designs ensure successful delivery for the eventual use of the e-
business initiative and must be capable of delivering the desired business
functionality in a timely manner and within a budget (Watt,2003).

The strategy implemented by Uborafashions must fulfill the

characteristics of the business model, which is e-business. The company
must successfully deliver operations within the company’s budget and
capabilities. Uborashions must formulate strategies that will eliminate or
reduce weaknesses and threats. Remarking Uborafashions visions and
objective of creating an e-commerce platform that has a business model
of collaboration with talented designers, retailers or vendors who
requires a business platform to sell their products. Strategic
 47

implementation is usually aligned with several issues like organizational

structure, behavioral considerations, projects, procedural,
production/operations, and human resources, financial and marketing.
Strategic Implementation has different requirements depending on the
issue implemented (Subba, 2009).

5.2 Formulating Uborafashions Strategies

Uborafashions as a company designs products, arranges photoshoots for

the products and uploads the selected photos for website display.
Founders of the company conducts its operation from perspective of
produce and sales. Founders were not aware of how important it is to
incorporate strategy before performing the operations. However, the
company has clear vision and mission. The rational analytic view of
strategy development is implemented as it incorporates the company’s
mission, vision, and objectives. Johnson, Whittington. & e.t al. 2018
describes a rational analytic view of strategy to have the following traits:

• Led by managers/founders

• Begins with statements of overall strategy and mission, vision, and

objectives.

• Macro-environment and industry analysis followed by capability

analysis.

• Strategic options are evaluated, proposed ahead of the others.

• The final elements of the strategic plan are putting the resources in
place and addressing the key change processes.

Because business strategy seeks to build a competitive advantage in the

markets (Johnson, Whittington. & e.t al. 2018), therefore Uborafashions
must formulate strategies that will put the company in favorably
conditions in a competitive environment. The company strategy
implementation is organized into three categories: Implementation of
strategy according to positioning, choices and according to the
company’s structure and system.

5.2.1 Uborafashions ‘s Strategic position

Micro-environment analysis indicates e-commerce business has many

competitive rivals, low barriers of entry therefore business market could
be concentrated. Improving competitive advantage and marketing
strategy continually could help the company expand in its business
market. As economic circumstances and customer’s preferences change
so as marketing strategy must be flexible. Building a niche is ideal for a
concentrated market, Uborafashions could distinguish their products
through creatively crafting stories of product originality, designers and
 48

crafters who make the products and possibilities of changing the lives of
the designers and crafters by giving them opportunities.

The best suitable strategy for Uborafashions according to internal

analysis is the strategic alliance. Internal business analysis results
demonstrated the company’s lacking investment, resources, experience,
innovation skills, marketing skill, time, etc. Uborafashions collaboration
with such businesses who have the ability to invest in products, have
long-time experience and has the ability to innovate new products, this
strategy will provide Uborafashions company with an opportunity to8
respond quickly and be flexible towards accelerating changes of
customer’s preferences, technology, and competition. The strategic
alliance will supplement Uborafashions critical skills, experience, and
reduce risks and costs. Uborafashions analyzed the fashion industry in
Finland and the e-commerce fashion industry. Referring to the
researched reports, Finnish fashion industry has failed to expand the
fashion business due to underestimating the international market and
know-how knowledge. As uborafashions operates in Finland it has
consider international markets and possessing enough knowledge of the
fashion industry.

Uborafashions Marketing Strategy

Randazzo (2014), suggests that before creating a marketing strategy first

step is conducting a situation analysis. He defines situation analysis as a
process of gathering data that details the currents situation state of the
organization and its environment. Success in marketing strategy depends
on knowledge and a good understanding of the market, industry, and
competition (Randazzo,2014). Enough knowledge of these three along
with disruptive changes and challenges within a business environment
will help companies to gain a competitive advantage in the business
industry. Marketing segmentation is viewed as an analytic process of
effective marketing strategy which helps in building the gap between
diverse customers’ needs and availability of business resources. The
emphasis of the process is driven by customer’s needs, business strength
over competitors, and enables a better and effective targeted marketing
program to be developed (Dibby, Lyndon, William & Ferrell ,2013). Not
knowing potential customers is a big risk to any business’s lifecycle, it
prevents from tailoring the right products and services to the customers,
hence blocking the insight of reaching potential customers.

Marketing segmentation is the right choice in proper allocation of

resources and effective marketing activities. Using market segmentation
enable Uborafashions to build a bridge between customer’s diverse
needs and the availability of business resources. Marketing segmentation
can be achieved through three phases, segmenting, targeting, and
positioning (Dibby & e.t al,2013). Segmenting means Uborafashions will
divide potential customers into smaller groups like age, behavior, income,
 49

etc. Targeting involves a selection of groups to advertise to and

positioning is the ability to convince consumers regarding products
relative to competitors.

Forming strategy Alliances for Uborafashions

Companies can decide to work together in a strategic alliance to form a

collaboration with only partial changes in ownership, or full ownership
changes, and a parent company remain distinct (Johnson, Whittington &
e.t al, 2018, 197). Building collaborative relationships with other talented
designers, vendors, or retailers, etc., will eliminate barriers of finances,
limited human resources, and limitation to a high capital investment of
products for Uborafashions. Collaboration is a form of working in
association with others for some form of mutual benefit (Human, 1996).
Collaboration between two parties will bring value to Uborafashions as it
will be able to achieve some of the goals and objectives that would be
too difficult to achieve on its own. Since collaboration strategy is a new
strategy for uborafashions, then company first will need to set the
following steps between the collaboration partners:

• Creating trust between business partners by creating two ways of

negotiation agreement that suits both sides. Through this step then
objective and goals will be defined clearly.

• Recognize and understand the shortcomings that will be established

through business collaboration. By doing so advanced plans will be
made to eliminate or reduce collaboration shortcomings.

• Organize the collaboration process through creating a business

environment that works for both sides, define the responsibility of
each part.

• Decision on collaboration tools is important, both sides must agree

means of managing the collaboration relationship and keeping the
communication open without any delays and difficulties.

International Marketing

Uborafashions must implement strategies that will meet the demand for
people’s needs in the company’s products and services across the globe.
Uborafashions has possibilities of reaching potential customers across the
globe with the presence of a website and social media marketing.
Therefore, it is easier for Uborafashions to incorporate Global web
strategy as an international marketing strategy, which means the
company must improve customer experience by adding different
languages to the website. Because preference and habits of customers
differ in foreign countries, therefore market research and in-depth
customer survey is necessary. Consideration like market share, culture,
language, and customer behaviors must be researched well enough.
 50

5.2.2 Uborafashions Strategic Choices

Strategic choices are made of business models and business strategies,

the emphasis is on Uborafashions business model and the gap analysis
between the current business model and that of the future. Fashion e-
commerce is a business model for Uborafashions; however, the company
must put its efforts into creating or adding value to products and services
of the company. According to industry analysis, micro-environment, and
the organization’s capabilities analysis the business strategy choice is
growth strategy and digital strategy. Growth strategy is chosen due to the
company being in the development stage and digital strategy is chosen
because Uborafashions uses the e-commerce business model.

Uborafashions uses the fashion e-commerce business model, and the

start-up company can start creating and testing the value propositions for
improvement; this can be achieved through analysis of competitors’
products and services, Uborafashions can innovate unique products
services that are different from competitors. It is important that the
company makes clear headlines on the benefits of the products to
customers, images or graphics that capture the message to customers
are very important.

Digital Marketing Strategy for Uborafashions

There more potential customers can be reached through digital

marketing than traditional marketing. Since Uborafashions uses an e-
commerce business model then incorporation of digital marketing
strategy is suitable for the company. Quality content can help
Uborafashions improve rankings in search engine results pages. Video
content can help the company to reach a wide variety of customers, such
digital marketing can be used with different platform such as YouTube
platform, Instagram, Facebook, Pinterest, etc.

Growth strategy for Uborafashions

Uborafashions growth strategy plan entirely depends on the company’s

financial situation and the competition. The company is initially executing
growth strategy through diversification which is very risky due to
products being new and entering a new market needs a lot of research.
Market research through this growth strategy is depending on
determining if customers in a new market will like the product.
Uborafashions growth strategy must consider market and product
expansion, this is because basing in Finland alone will not create a room
of growth for the company. Therefore, market expansion will allow the
company to attract new potential customers.
 51

5.2.3 Uborafashions Strategic in Action

Uborafashions is operating with a functional structure, which means

founders have direct involvement in the company’s operations. This can
either be an advantage or a disadvantage. The advantage of this
structure is that it provides a clear definition of roles and tasks,
therefore allows accountability. However, disadvantages follow with
rapid changes like trends, or one founder gets sick or disruptions in
operation. When founders are in control of all operations in the
company, they become overburdened or too concerned with narrowed
functional interest. Uborafashions best interest is to implement a
strategic alliance but with full control in operating activities.

Uborafashions’s operation relies on direct supervision from founders.

This means founders decide what to be executed taking into
consideration the company’s budget, and availability of time of
stakeholders. Uborafashions decided to execute chosen strategies using
a rational-analytic view, which considers the company’s mission, vision,
and objectives, and the business environment analysis. After reviewing
the results, the company’s focus is on forming alliances with
experienced designers, manufacturers in creating unique and quality
products. The company will put more effort into digital marketing to
increase visibility and attract potential customers. A growth strategy will
be implemented to increase market share. Entering foreign markets
companies need to study the selected market carefully and investigate
how it affects their current cost structure like transport cost, trade
barriers, political or economic risks. Uborafashions online selling
platforms will emphasize on low-risk endeavors.

5.3 Strategy Evaluation

Uborafashions chose strategies according to the results from a situational

analysis of the company, using the company’s capabilities for building a
suitable and effective strategy. Company’s strengths and weakness has
been identified using SWOT analysis, therefore the basis of building
strategies had focused on the found results. Opportunities were
identified from reports and surveys of different sources such as Statista,
PostNord, Paytrail, Euromonitor, where the e-commerce business
environment was analyzed using the sources. The result showed, e-
commerce industry is a fast-growing industry and expected to grow more
in the coming years. However, the e-commerce industry is a very
competitive industry that is a threat to the Uborafashions company. This
analysis ensured the right strategies to be chosen for the company.
Michael Porter’s Five Forces helped in analysis the five components
which helped in determining opportunities and threats for the company
along with other environmental factors such as technology, economic
and social factors
 52

Uborafashions chose the criteria of suitability in the evaluation process

due to the nature of the chosen strategies. The chosen strategies have
considered the company’s mission, vision, and objectives, as well as the
company’s strategic position, strategic choices, and possibilities of
managing strategy in action were prioritized. A successful strategy will
ultimately depend on how it is delivered. Evaluation of strategy is
continuous whenever strategies of the company changes.

6 CONCLUSION AND IMPLICATION OF THE STUDY

The Practice-evidence research was based on analyzing Uborafashions

start-up e-commerce with the purpose of developing strategic plans for
the company. The theoretical background of the thesis was created from
the three fundamentals of strategies: a strategic position, strategic
choice, and strategy in action particularly focusing on the organization’s
capabilities, micro-environment, and industry analysis. Organizational
capabilities analysis was conducted using SWOT analytic tools, and micro-
environment analysis were carried out using Michael Porter’s Five Forces.
The fashion and E-commerce industry were analyzed using different kinds
of literature.

The environmental analysis demonstrated a case study company

Uborafashions lack proper strategic frameworks. Due to the fact
Uborafashions is in the development stage of the business life cycle,
means a lot of efforts must be implemented to make the company
successful. In the development stage, the growth strategy is suggested
for Uborafashions, with a consideration of product development and
market penetration. The results from the internal environmental analysis
demonstrated the company must incorporate strategic alliance and
marketing strategy. Industry analysis demonstrated e-commerce fashion
to have a highly competitive rivalry and low barriers of entry; it means
the industry is saturated and the company must have unique products of
high quality and better customer services. However, reports indicated
millennials and post-millennials to be the potential buyers who spend
most of time online. Once the company knows its niche market then it is
easier to focus on right allocation of resources and effective marketing
campaigns to reach potential customers, hence save resources.

The results of research questions, the company’s strategic choices,

strengths, and weaknesses of the company, a strategic framework in a
competitive business environment yielded several strategies. However,
due to the company’s limited resources, the strategies will be prioritized.
The strategies found to be the best for the company is a strategic
alliance, marketing strategy, growth strategy, international marketing,
and digital marketing strategy. Further research will be needed after the
company incorporate these strategies and measure their performance.
 53

Customers are a key success for any business, driving sales, and profit in a
company. Uborafashions must commit into marketing and content
creation. Digital marketing campaigns should be one of the company’s
core priorities. Founders should invest into listening to digital marketing
podcasts and reading up to date marketing tips. It is quite important as
well for founders to determine and identify marketing campaigns that
drive traffic to the site. Increasing marketing promotion and campaign
strategies can help uborafashions reach new potential customers as well
as increase brand value. Product promotion and campaigns can be
through digital marketing like social media, events, networking,
etc. There are several open-market events in Finland that are arranged
throughout a year such as DesignonTampere, mahdollisuuksien tori,
[Link]/ . Uborafashions can choose few of these events
to participate and analyze the most bought products from the events.
From this analysis result, Uborafashions can focus on which products to
procure. Proceeding with low-risk actions, by entering the Finnish market,
Uborashions can build knowledge about the target market, and slowly
gain high market share. Once knowledge is gained buying then
Uborafashions can build recognition through participating in different
international events like trade fairs in different countries.

Uborafashions must analyze the situation of the company from time to

time to update strategic plans for the company. Business environment
changes most of the time, so uborafashions must analyze these changes
and put into consideration effective plans or techniques to adopt.

6.1 Implications of the study

Strategy development has positive implications for companies or start-

ups for setting up directions and outlining the company’s goals. It serves
the right purpose in the allocation of resources and setting up priorities.
Developing strategies for Uborafashions or any start-ups places company
in favorably positions to avoid mistakes or risks of following unplanned
objectives and goals.

The internal and external analysis helps businesses to understand and

identify factors affecting businesses. The SWOT analysis provides
knowledge to a business to understand its position much better in terms
of the company’s weaknesses and strengths. The internal analysis
provides the business ability to acquire and managed resources and
deliver value to customers using unmatched ways from competitors.
Internal analysis reveals the preparedness of the organization and takes
advantage of business growth opportunities. Michael Porter’s Five Forces
helps businesses to understand the competitive forces of the business
industry, enables the company to know the attractiveness and challenges
of the business industry. It helps businesses to understand the
importance of buyers’ and suppliers’ powers. Observation and
understanding of this knowledge help a company to formulate effective
 54

strategic plans. It prepares the organization to cope with the business

environment in the best ways.

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