Germand Case

Garmand Case – Group Report

Group members:

Kristianne Laurita Fure Briceno

Isabel Merrer Bjellebø

Shannin Beatrice Alexis Soto Ørstenvik

Roy Schjølberg Brevik

John Christian Martinsen

Aleksander Hesse Labori

What is the competitive position of Garmand?

Garmand is the market leader in the industry of protective clothing with a 21,5% market share. It is important to mention that their only 0,5% ahead of their biggest competitor, while the following competitors has between 15% and 6% market share.

The design of Garmand’s garments are very well finished with high quality. Their quality is superior compared to their competitors, hence their prices are about 5% to 10% higher. The companies which production is located in Asia has even lower prices. Garmand offers double lining clothing with high ventilation, which also makes the clothing more resistant to water. The competitors do not offer double lining products.

The Department of Protective Clothing uses known technology and a less qualified staff than the rest of Garmand’s department. But the modern machinery ensures that manufacturing techniques are good.

Garmand has a wide product portfolio which makes them able to offer protective clothing to several sectors with different needs. In case of large orders Garmand make specific and special products to their costumers.

Why is profit margin negative?

There are several possible answers to why Garmand’s profit margin is negative.

Garmand’s manufacturing costs are higher than those of its competitors. This is due to their local production. They have considered to move their manufacturing to countries with lower manufacturing costs, but this is opposed by the unions, because they fear it would cause redundancies.

Garmand’s prices are about 5% - 10% higher than those of the competitors. It may be possible that customers choose to purchase from the competitors in order to save money. Especially if the customers are not aware of, or not in need of the high quality Garmand offers.

The factory produces at 75% of capacity. A 25% waste of production capasity may be one of the reason for their negative profit margin. At the same time, a 100% use of capacity would only reduce production costs by 3%. Therefore we do not consider this as one of the most important factors. It also occurs that the salary among the employees is above the average in the industry.

Garmand does not invest much in brand advertising and the brand name appears only on a label inside the garments. Sales may increase if customers were more aware of their brand and quality.