Value chain project - Friendtex

VIA University College TEKO Business and Design

VALUE CHAIN PROJECT GROUP 20

Company analysis

Marianne Jakobsen

Kirstine Knudsen

Maria Jensen

Kristi Pedanik

Adriana Dębowska

Jakub Zarzycki

11 November 2011

Value Chain Project Group 20

Friendtex 11 November 2011

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Group 20

Marianne Jakobsen

......................................................

Kirstine Knudsen

......................................................

Maria Jensen

......................................................

Kristi Pedanik

......................................................

Adriana Dębowska

......................................................

Jakub Zarzycki

......................................................



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TABLE OF CONTENT

INTRODUCTION ........................................................................................................................................... 4

PROBLEM FORMULATION ....................................................................................................................... 5

METHODOLOGY AND DELIMITATION ................................................................................................. 6

INTERNAL ANALYSIS ................................................................................................................................. 8

INTRODUCTION OF THE COMPANY ............................................................................................................... 8

TARGET GROUP DESCRIPTION ...................................................................................................................... 9

VALUE CHAIN OF FRIENDTEX .................................................................................................................... 11

Support activities ................................................................................................................................. 12

Primary activities ................................................................................................................................. 17

SW-ANALYSES ........................................................................................................................................... 24

FUTURE OF FRIENDTEX .............................................................................................................................. 25

INTERNAL SUB-CONCLUSIONS ................................................................................................................... 25

EXTERNAL ANALYSIS .............................................................................................................................. 27

THE HISTORY OF DANISH FASHION INDUSTRY ........................................................................................... 27

VALUE CHAIN OF DANISH FASHION INDUSTRY .......................................................................................... 28

Support activities ................................................................................................................................. 28

Primary activities ................................................................................................................................. 29

OT-ANALYSIS ............................................................................................................................................ 31

FUTURE OF DANISH INDUSTRY .................................................................................................................. 32

EXTERNAL SUB-CONCLUSION .................................................................................................................... 33

FINANCIAL PERFORMANCE .................................................................................................................. 34

MAIN CONCLUSION .................................................................................................................................. 38

REFERENCES .............................................................................................................................................. 39

APPENDICISES ............................................................................................................................................ 41

I. ONLINE SURVEY ............................................................................................................................. 41

II. QUESTION FOR THE COMPANY ....................................................................................................... 42



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INTRODUCTION

This report has been written to analyze the value chain structure of the Friendtex A/S. We have

visited the company head office in Herning (Denmark) on 7th of November 2011.

In today´s situation small companies contribute to local economies, even more – they are also

part of world–wide economy and industry. They can act locally but they have to participate globally

to run a business for outsourcing and competing with competitors in addition to make profit. Small

companies are like a backbone for the local industry, but still their work requires particular way of

thinking and acting to survive in fashion industry.

Refusing the idea of stationary shop or e–commerce could have devastating effects on brand´s

financial performance in the future and could not be enough for modern economy. On the other

hand, maybe we are facing here totally new concept for surviving in the future. It is the method of

sales that gains access more and more – not only due to high quality and low prices, but also due to

the homelike comfort and personal service.

High–street brands are dictating the fashion market with high production speed and very low

prices, other companies in fashion industry have to find the way to their consumers, gain their

loyalty with something else, they have to reach for their needs and desires in another way.

Choosing the right marketing strategy is relevant in this situation. Going too different from

competitors might be too risky and venturous when the economical crisis has still great influence on

economy.

It is relevant to understand the internal and external structure of a company before evaluating

their business idea or placing in the industry. Friendtex is rather a small company, they are part of

the Danish fashion industry and have to make profit otherwise it is not making any sense.



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PROBLEM FORMULATION

In this report we are focusing on the main problem and related sub–question, to make an objective

analysis about Friendtex and situation in the Danish fashion industry.

Following questions are discussed in this report:

Main question:

How does Friendtex compete in the Danish fashion industry with a unique business concept?

Sub-questions:

- How does Friendtex manage its value chain in order to create values?

- How is the financial performance of the company?

- What are the future prospects for Friendtex?

Clarifies:

This is an analysis of Friendtex business structure, value chain in the company, supply chain,

financial performance, and potential in the Danish fashion industry. Also future prospects are

discussed. It should provide a clear answer how efficient is this type of retail structure in Danish

fashion industry.

Purpose:

Friendtex differs from other companies quite a lot and it is making lot of questions, how they can

compete with other companies in the Danish fashion industry. Group 20 is motivated to make

internal and external analysis about Friendtex to acquire more knowledge about the fashion and

lifestyle industry, how the companies work in this industry and their value chains.

We are analysing Friendtex in Danish fashion industry to give precise evaluation about one

certain industry and not to go too broad.



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METHODOLOGY AND DELIMITATION

In the report of Friendtex we are used primary and secondary research methods to analyse the value

chain of the company. Various methods are used to find as lot of information as possible about the

company to have a data to rely on.

In primary research methods we used:

- Visiting the company in Herning on 7 November 2011.

- Information from the consultant of Friendtex – Anette Petersen

- Questions for the company (Appendices, II):

The questions asked from the owner of the Friendtex Jesper Rasmussen are the main source

of the analysis.

- Online survey (Appendices, I)

Questionnaire by using webpage http://www.misterpoll.com/polls/540307 was made to ask

from the people some questions related to the analysis of the Friendtex. This increasingly

popular way to ask people´s opinion was made to capture the views of existing and potential

customers.

Secondary research methods we used:

- Internet: The Internet was used as a secondary research method to find information about

the company at the beginning. It is the database to find information very fast. Although it is

always not so reliable, we were really critical what sources we used.

- Books: We used a fashion business book to find information about how fashion company

should work. We made the value chain structure based on that.

Friendtex is a Danish company and the report is focused on the Danish market. The report does not

include information about the company outside of Denmark, although the company is in other

countries of Europe. It would be too wide to make analyses on every market Friendtex is in and

therefore we are focusing on the Danish market because Friendtex is a Danish company.

Friendtex does not have any direct competitors and that is why we are comparing Friendtex to the

Danish fashion industry. We have not made a competitor analyses because they direct competitor

Friendtex had is no longer on the market.

http://www.misterpoll.com/polls/540307



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The key figures we have compared are only available from 2006 to 2008 on www.dst.dk homepage.

We contacted them to see if they had more resent numbers but they had not. Therefore we are only

comparing in this period.

We did not have the whole information about Friendtex‟s Inbound logistic and therefore we only

wrote about the information from the company visit.



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INTERNAL ANALYSIS

The internal analysis of Friendtex focuses on the value chain activities of the company. The

description of different operations in the company is given to understand core competence of

different departments – each segment is responsible of their own field. To understand how company

is acting in fashion industry is necessary to know how company works internally. We are giving an

objective evaluation of a company's current position from the combined perspectives of marketing

and financial performance. Primary and secondary activities are pointed out with determining the

business's strengths and weaknesses.

Introduction of the company

Friendtex A/S is a fashion company with quite unique business concept providing direct selling sale

at the home parties by their consultants. They do not own any retail shop as usually expected from a

company in fashion industry and sell apparel directly through consultants. Friendtex is a rather

small company in Danish fashion industry. In general they produce apparel, but only their way of

selling is different from the others.

This company grew up from an idea of selling rainwear in 1986 and has gone bigger in time

having wider range in collection and entered to 11 different markets. They are also the biggest

company in Northern Europe when it comes to selling smart fashionable clothes to women at home

parties – barely with any competitors at the same field. Although, there are still companies who are

having the same marketing strategy, but do not sell the same product. An example on that is

Tupperware.

Friendtex in EUROPE:

List of countries:

- Denmark

- Germany

- Norway

- Sweden

- Island

- Ireland

- Finland

- Latvia

- Lithuania

- Belgium

- Netherlands

- United kingdom



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Friendtex is a household name throughout Europe with its head office in Herning, the textile capital

of Denmark.1 Owning only one main warehouse makes controlling the logistics much easier.

Friendtex is sold in 9 Western European and 2 Eastern countries.

Friendtex is an innovative company with approximately 900 consultants and 50 employees at the

moment. Their vision is to offer women of all age groups the opportunity to experiment with an

exclusive range of quality designed fashion which is not available in the shops.2

Friendtex produces two collections per year – Spring/Summer and Autumn/Winter collections. It

is designed by their head designer Bettina Jonsson. Collection has classical, casual and trendy

separates, accessories and footwear. It is also nicely presented in a catalogue with styling and

clothing advices given by head designer, prices and sizes. Size range is very wide – from S to 4XL.

All styles are presented at the home parties.

The concept of a company provides a much more relaxed alternative for today´s woman – they

can buy their clothes in friendly atmosphere. It is a business with a pleasure. Even more, company

provides ethical values by supporting cancer society donating regularly to help the researches.

Friendtex owns also another company – Praxis. It is specialized for selling working clothes mainly

through mail order. Company controls quite easily the process of the production in Lithuania. Praxis

is a good partner for Friendtex in financial performance.

Target group description

In this segmentation we want to describe the end – consumer target group. The target group for

Friendtex as a business (the consultant is described in Human resource).

For the end–consumer segmentation we start in the consumer unit. Here we have all the people,

who have economical, technical and physical opportunities to buy the clothes from Friendtex.

Friendtex is not too expensive and it does not demand any special technical terms to buy it so the

consumer unit for Friendtex is everyone in any age and lifestyle.

1 http://www.friendtex.com/index.php?option=com_content&task=view&id=8&Itemid=15 2 http://www.friendtex.com/index.php?option=com_content&task=view&id=8&Itemid=15



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Segmentation:

Demographic (3): 16 - 25 26 - 35 36 - 45

Gender (2): Female Male

Family life (3): Single Couples with children Couples without children

Income (3): Low Middle High

We have made a segmentation based on the above criteria.

Looking at the personal criteria for the target group Friendtex is looking for a woman in the

Violet/Rosa segment in the Minerva model. She is a bit safety in searching and thinks that traditions

are very important. She is not that impulsive but she is a woman and can be inspired to do buying

by impulse. The budget for clothes is not big, because she has to consider the family at home too.

But she is considered in quality and is willing to pay for it – good quality lives longer. Clothes

should last more than one season.

Her existence in life is comfortable and her network is very important part of her life – just as

important as her family. She loves evenings in comfortable company with her friends, family and

colleagues, but the time is sharp and it is difficult to find time for everyone.

Her wardrobe is practical and it is easy to choose the daily outfit because of the many

possibilities in mix and matching the different clothes. She is trendy but without being to outgoing,

sometimes needs also luxury. She does not have the need to wear newest clothes and latest trends,

but she has a good sense in style. Her shopping is often planed.

She lives with her children and husband/boyfriend in a small town just outside the bigger city.

She likes the safety in having a good neighbours and playmate for her children close to home. This

small society has all the basic opportunities for childcare, hobbies and the most necessary buying.

From the segmentation we found Friendtex‟s end–consumer target group:

Women in the age of 26 -35 years in a relationship, with children and with an average salary.

To estimate if the target group is realistic we will analyze it through the SOEC-model:

First we have Size. Looking at the demographics in the target group of Friendtex has to choose a

group with good buying force and a group who like to invite their network home to share a good

evening in good company and looking at clothes. We believe that the age group 26 – 35 years old



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full fill these demands. This age group is also the group where you find hard working mothers, who

do not have time to go shopping clothes.

Next point in SOEC–model is Opportunities. The target group is possible to reach. Their best

marketing plan is to make the concept of a company going mouth–to–mouth. It is like rings in the

water. Other ways to reach the target group is through different woman magazines and by using

celebrity promotion – famous people wearing Friendtex clothes.

For example the host of “God aften Danmark” Cecilie Frøkjær is often wearing clothes from

Friendtex when she is having her show. Cecile is 43 years old. In that TV-show are made interviews

with unknown people and also with celebrities from Denmark. The show covers a wide range of

stories from Strictly Come Dancing, big events, fashion and everyday stories.

Economic is not too big for their way of marketing. Good publicity from word of mouth only

cost the service in maintaining their good reputation and having trained consultants. That means

that they have to focus on after service as well as service at the home parties. Bad publicity moves

faster than good and they should try to make the experience good for the customer. They should

always keep their customers in mind and should make them postponed with a good concept.

What is more, Friendtex also has to think about Competitors. They do not have a direct

competitor with the same concept within home parties, but there are a lot of other clothing

companies which also is selling to this target group. To differ from other clothing companies

Friendtex has to remain their focus on selling their clothes in unique environments. This is their

main focus area where they can provide a different for the target group.

Value chain of Friendtex

Value Chain of the company describes the activities that take place in a business and relates them to

an analysis of the competitive strength of the business.3 The way the company performs internally

is the reflection of the infrastructure, its business strategy, its approach to different major aspects

and the financial performance.

3 http://tutor2u.net/business/strategy/value_chain_analysis.htm



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Board of directors

CEO/Owner Jesper Rasmussen

Design Department

Head of designer

Quality and testing (2)

Purchasers (2)

Sales Department

Norway, Denmark, Germany - in the

head office

Other local sales departments

Marketing Export Software and IT

Income balance Stock control

Peter Stubkjćr Sřrensen

Claus Dalgaard Kristensen

Claus Fedder Sřrensen

Support activities

Firm Infrastructure

Friendtex organizational structure consists of activities such as task allocation, coordination and

supervision, which are directed by head office. Friendtex head office is divided into typical

segments. Each segment has it specification and right aspect in company structure.

Friendtex has rather flat organizational structure. It mainly says that they do not have so many

instances or levels of intervening management between staff and managers. The structure of main

departments show, that all of the most important segments are supervised by Jesper Rasmussen the

CEO and owner of Friendtex. The company is small and they do not need head for each department,

it mainly depends on personal relationship between good workers and managers. They have

approximately 50 employees in Friendtex.

Friendtex‟s organization plan:

Every employee's feedback as well as opinion is taken into consideration. Due

to this kind of structure employees and the management interact on regular basis and

there is a very understanding bonding that takes place in the organisation.

Relaying on information included in company‟s financial reports, Friendtex has also board of

directors which include shareholders of company. Head of the company, Jesper Rasmussen, is also

part of it. The highest percentage of participation in the share of Friendtex belongs to Jesper

Rasmussen.

http://en.wikipedia.org/wiki/Management

http://en.wikipedia.org/wiki/Employees



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Design Departament

Purchasers (2)

Head Designer Bettina Jonsson

Quality and testing (2)

Designs are approved by Jesper Rasmussen

As it was said, owner of a small company have to make lot of decisions. One main advantage of

flat company structure is that there is less bureaucracy and decision making is easier. In Friendtex

the owner takes also part in decision making in design department. The collection has to make

profit and must be commercial. Jesper Rasmussen is has business background and without a

knowledge of textiles and fashion, but he has very good sense in business and what is selling or not.

He also trusts other employees but he always negotiates to find the best solution, in a company

every decision is made always has a result. (RASMUSSEN, 2011)

Design department:

Friendtex has their own IT department supervised by Torben Schlüntz. It is responsible for financial

systems and stock controlling in the warehouse of Friendtex.

In Herning (Denmark) it is located the head office of Friendtex. There is also the main warehouse.

It has space about 3000 square meters and there are stocked the available products ready to deliver.

At the beginning they had stocks in all countries where they were selling, but it was more expensive

and they reduced these costs and decided to bring stocks into one central place.

Friendtex with few levels of intervening management between staff and managers can manage quite

well its infrastructure. The main advantage of horizontal management structure is there are well-

trained and educated workers who are very productive and are also involved in decision making.

This kind of structure is suitable only for small companies and Friendtex is a small company. Flat

model of infrastructure eliminates so called middle management, so the owner of the company is

involved into lot of department and has better overview of how company is acting in general. This

organizational structure generally depends upon a much more personal relationship between

workers and managers.

http://en.wikipedia.org/wiki/Management

http://en.wikipedia.org/wiki/Employees



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Human resource

Friendtex has approximately 50 employees and it is relevant to have instance to deal with issues

related to people such as hiring, performance management, organization development, safety,

wellness, benefits, employee motivation, communication, administration and training.

To run a good business, it is relevant to have good employees, specialists who are good at their

own field. Even more, collection of Friendtex is sold through consultants – if they are not

competent enough it is disadvantage for the company. In the fashion business, it is all about team

work – good communication is basis for understanding, receiving the right information is relevant

when company is dealing with big amounts of money. Sophisticated human resource adds a lot of

value in generally to the value chain of the company.

Friendtex gives a possibility to work as consultant, who is selling the collection. So many people

would like to take this job and be self-employed. However, company sets criteria‟s in hiring sales

workers. Friendtex has over 900 sales persons in Europe.

Consultants should be women in age 28 - 40, have a family, children, maybe even other work –

they should manage to take a care about family, house and work in the same time. It is difficult task,

but women who can do it so it, are responsible and reliable also as a consultants for the company.

The consultant also should own a car and be independent, with good personality and have interest in

fashion and textiles. The requirements of the consultants are quite the same as the target group

description. It should be like that – then the consultants reach in a better way to the customer and

know their needs.

Friendtex supervises their consultants twice a year with fashion show and trends of that season

and let them know what they are selling to the customers. Friendtex has an “open house” policy - all

consultants are welcome to come and talk directly to the company. Company is dealing directly

with the consultant – they get a lot of feedback from the consultant. Most feedback and complaints

are difficult to change directly, but they all are considered and kept in mind.

Atmosphere in company is friendly – work is like second home for them. “We are fighting

together for our company” – said the head of the company. 2011 Friendtex has brilliant team and

everybody is focused on welfare of the company.

Friendtex only has at the moment one head designer. The head of the company thinks it is

enough for small company. Previously they have had many designers in design department – it was

difficult to manage so many opinions. From designer is required to be commercial, customer



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oriented, creative and with a good sense in combining design and business. Designer in Friendtex

should also be able to work in a team – otherwise they can be self-employed.

The head designer of the Friendtex is Bettina Jonsson. She is working together with two

purchasers in developing collections to the company.

Technology development

The use of technology is to obtain a competitive advantage within the industry and to improve the

processes in the company. This is very important in today‟s technological environment. Technology

can be used in production, in research and development to develop new products, to administrate

and control aspects in company´s value chain.4

Process automation

Friendtex owns their own IT system and software to provide the technical support to the primary

value-chain activities lead by Torben Schlüntz. This department administrates also stock control

and does the income balance. All orders from consultants and everyday communication is running

through internet connection and software what is used, should be advanced.

Design development

New product design and development is more often than not a crucial factor in the survival of a

company.5 Market pressures for fast fashion and condensed development cycles are forcing brands

to implement lean and efficient processes in the front end design and development processes.6

Friendtex has a commercial collection and to say in the fashion business, it is better to hold that line

and not to develop in all seasons totally new and risky products. Friendtex do not want to be

trendsetter, they are rather trend follower. They have designed unique products for their customer

needs not for the latest trends. They are willing to bring in new products, but they are not in a hurry

with doing that.

Owner of the company, Jesper Rasmussen, always concerns about the designs and approves

them. He wants designers and purchasers to fight for the designs, to be sure these are the best. He

asks regularly about the quality, fitting and other aspects concerned about the product. In the end it

has to make the profit.

4 http://www.learnmarketing.net/valuechain.htm 5 http://en.wikipedia.org/wiki/Research_and_development 6http://www.3ds.com/solutions/consumer-goods/fashion-solutions/product-development/product-design-and-development/



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Quality has the major focus in the design process of Friendtex. The customers of Friendtex are

willing to pay more for a good quality. This is why products in the collection are durable and

ageless in many seasons.

Creating a collection is based on teamwork. Head designer develops with purchasers the new

products. They are getting inspiration from 2 Danish and 2 German trend agencies and also travel a

lot. Some of the products are designed from the beginning by head designer, some of the styles are

bought as ready-made supplier samples. Then the samples are ordered, fittings and comments are

done and finally full collection is produced. The final prices of the products are negotiated with

other markets also.

Procurement

In Friendtex there are 2 purchasers who work in collaboration with the designer, the purchaser often

travels alone to meet up with the supplier.

Friendtex have different suppliers to use when making a collection. Their main suppliers are from

Turkey, China, India and Italy. During the different seasons they switch by using their suppliers

because they have different advantages.

India is best at making clothes for spring and summer collections due to the light fabrics they

make. The suppliers in China are good at making heavy products such as outwear, also knitwear

and jackets. Previously Friendtex imported 80% of the collection from China, but that number is

now decreasing. Products of jersey are made in Turkey and the suppliers Friendtex use for leather

and footwear are from Italy and Cambodia.

Other companies have started to source in Bangladesh, but Friendtex is not willing to try that

market. Maybe in the future, but not at the current time The criteria Friendtex use for choosing a

supplier depends on time of production, quality, capabilities of producing different types of

products, price and minimum orders.

For a small company like Friendtex it can be difficult to get the best buying price. The quantity

amount is about 1-1.500 pieces per order and that is not much compared to the big companies in

Denmark. If the suppliers demands a minimum quantity of the order Friendtex must take a risk and

maybe have much leftovers at the stock after the season. When all the prices for the collection has

been negotiated the owner of Friendtex Jesper Rasmussen are having a look at them. He looks at the

prices to see the development and to make sure that the prices are at the lowest.



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Primary activities

Inbound logistics

Inbound logistic in Friendtex is optimized to cooperation with raw materials suppliers and near

located production facilities. Friendtex visit suppliers to control quality of materials they order and

negotiate prices of production from these materials. Friendtex negotiate prices of materials and

production process including costs of transportation, administration, handling and stock which are

managed by raw materials supplier and producer of ready garments.

Friendtex have their employees who control quality of materials. Quality controllers are working

together with purchasers to keep low prices and high quality of final garments.

Production

Friendtex outsource sewing rooms for garments they have in their catalogue offer mainly to

countries in Asia but they work with companies in Turkey and Italy.

(Rasmussen, 2011)

Friendtex have width offer of product sizes varies from S to 4XL.

Outsourced production allows Friendtex to keep low prices offering at the same time high quality.

Outbound logistics

Due to high need of controlling complex system of outbound logistic, Friendtex is centralized by

one warehouse and is managed by experienced export and logistic department.

China

•High quality garments out of heavier materials for Fall/Winter collections.

•Friendtex had 80% of production in China but they expanded on other countries

•Prduction time 5-6 weeks

India

•Producing of high quality garments out of light materials for Summer/Spring collections

•Production time 5 weeks

Turkey

•Source of fine jersey textiles

•Production time 4 weeks

Italy/Cambodia

•Leather garments and footwear production

•Production time 3-6 weeks



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Ready-made products are transported to Europe by the most accessible and affordable way. In

transportation there are used planes, ships (containers) and trucks. However, Friendtex is using

more often just shipping. Shipped containers with garments are delivered to Europe. Very often

Friendtex is sharing containers with other small companies, who also do not order enough quantities

to fill up whole container. This policy lowers costs of transportation.

In Europe Friendtex is using land transportation to deliver all Friendtex‟s orders to their

warehouse in Herning. Transportation process from production to Herning warehouse takes about 4

to 5 days, with shipping it takes more time. From warehouse in Herning, Friendtex is sending all

their available products to consultants with association of DHL/GLS packages Transport Company.

Herning warehouse is the only warehouse the company owns. Transportation fee from warehouse to

consultants are quite high. Friendtex has quantity policy – if it is ordered more, consultant only has

to pay one amount of money. If it is ordered less, then the amount of money is bigger.

Price of sending package to German consultants is 8 Euro, if consultant orders less than he/she

should sell on a single house party, Friendtex do not cover transportation costs. Friendtex is able to

cover 50% of transportation costs if consultant would order about 10 pieces of garment and if it

would take to send more than one package, consultant still pay like for 50% of one package.

Marketing and Sales

Direct selling is the type of selling used by Friendtex to sell their products to customers. Also

known as "door-to-door sales”. This is a type of business in which the company sells the product

directly to the consumer rather than through intermediaries (for instance, stores). This sort of

business is usually used by small companies that also look for proximity with the clients.

These companies usually use home-parties, internet, telephone or “door-to-door” calling to

connect with the clients, this connection is made via sellers who are employed in the company and

organize the home-parties, meet the clients or that call them. 7

In the case of Friendtex this connection with the clients is only made by home-parties. A home-

party is a social event where some companies sell their products in a client‟s home. The shop goes

to the costumer instead of the opposite; these parties give the possibility to people invite friends and

family to their homes to buy the products from a specific label (as Friendtex).

7 http://www.wfdsa.org/about_dir_sell/?fa=whatisds

http://www.wfdsa.org/about_dir_sell/?fa=whatisds



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Friendtex has consultants all over Denmark who are connected with the main-head office in

Herning. The sellers order the products to sell afterwards in home parties and get a commission

from each product. These consultants are the face of the company so each season they are trained

and presented to the new collection so they can provide all the information to the costumer.

Types of Consultants concept

There are three different consultants concept in Friendtex. Each concept is made for giving the

consultant the right concept which matches their individual dream. It is all about how successful

you want to be as a Friendtex consultants. The consultant can choose whatever they want to be a

consultant on fulltime or on part time. 8

The first concept is; Friendtex Fashion Consultant. In this concept the consultant select a range of

clothes which fit the needs of their customer‟s size, age and style. The Fashion Consultant is

required to arrange at least one home party pr. week each of the two seasons. With this concept the

consultant is control of her own business and tries to live out your dream as self-employed. The

consultant decides how much enthusiasm she will put in her work, and this will affect her earning.

As a Light distributor you also select your own range if clothes but the collection is bought with

credit through the whole season. That means that this concept is more for your spare time and not a

fulltime profession. The consultant can return 10 pieces each season and get full price returned.

Also the consultant can buy the clothes for herself and her family for the cost price - of course she

does not earn from that.

In these two concepts the consultant buys the clothes for 48 % less than the catalogue prices,

which means that they earn the 48 % for each sold item. The last concept is; Express distributor. If

the consultant have this small dream but she does not have that much time she can chose this

concept. This concept gives you more flexibility because you are only active in a limited period and

you are borrowing the collection for about two weeks. In these two weeks you arrange six home

parties and after that you are off. The consultant only earns 25 % of each sold item but they can still

buy the clothes for cost price for personal use.

Advantages of direct selling

Company:

8 http://www.friendtex.com/



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Proximity with the clients: direct selling give the company the opportunity to be closer to the

consumer and makes them able to listen to clients opinions. This they can they use in a positive way

for the company and its products: (Rasmussen 2011)

- The consumer spends an average of 2 to 3 hours concentrated in one label.

- Almost every costumer (9 out of 10) buys for an average of 120 EURO at each party.

- The company doesn‟t spend money on intermediaries (shops, rents for the shops,

employees) so all the profits go directly to the main company.

- Usually consultants from the company gain only some percentage out of their sales.

Consumer:

Consumers benefit from direct selling because of the convenience and that the service provides such

as a personal demonstration/explanation about the products, hand delivery or satisfaction

guarantees: (Rasmussen 2011)

- The consumers have access to products that are not in the market.

- The atmosphere is more private, giving the clients the opportunity to be with friends and

family without the anxiety and hurry of the store.

- Offer flexible schedules, the client have the opportunity to choose when he wants to meet

the consultant

- Insecure persons about their bodies and their fashion taste have the possibility to be advised

by the consultant and friends.

Disadvantages in direct selling

Company:

The market is unstable and it can be difficult to expand to new markets because of the different in

background culture. Some countries are not so open-minded to this direct way of selling. Also this

way of selling products limit the sizes of the company because direct sales works best in small

companies.

Consumer:

The consumer is limited to one label and the consultant does not always have all the clothes in the

sizes you will need. Also home parties tend to target particular group of people (according to their

financial possibilities) to afford such kind of clothes and parties.



Side 21 af 46

Product

Price

Place

Promotion

Although it is a risky and an unstable marketing, the company stays true to the unique concept and

pretend to be focused on what they do better and as also be true to their clients and consultants

instead of looking for new ways to sell the products or having the need to open a store.

Marketing

Marketing is the administration process through which goods and services move since concept to

the client. Marketing can also be defined by the combination of the 4P‟s: Product, Place, Price, and

Promotion, which we want to describe in this section.

The Friendtex 4P‟s (Granger, Sterlin 2003)

Product - The name of the company is Friendtex which

means “friends” + “textiles”= (friend)(tex). The company

defines the concept of home sales as “Friends, Fashion and

Fun”. Customers spend pleasant time with their friends or

family and at the same time they have the opportunity to buy fashionable clothes.

The main products of the company are the clothes. In the collection there are also shoes and

accessories. The Friendtex clothes are mainly design for modern, casual and elegant women.

Although the company is mainly focused on women, Friendtex also have some clothe for man in

each collection. Clothes are available in every size from S to 4XL, which also shows that the label

is concerned about different body types and different women.

The company is also very concerned about the quality of their products, not just because it is

important to please the clients but also because of the proximity that the brand has with them. In

this way the company is also able to maintain their clients and also guarantee good critics, which is

important for the type of marketing used by the company. And their products come mainly from

China but also from Turkey, India and the shoes from Italy.

Friendtex also gives the opportunity to the clients to send back the order for three weeks

(according with the law in Denmark the companies‟ only need to give two weeks) and their

products have two years of guarantee which also shows that the company is secure about their

products as well as in the relation with the clients. 9

9 https://www.retsinformation.dk/Forms/r0710.aspx?id=1419

Target

market

http://www.facebook.com/l.php?u=https%3A%2F%2Fwww.retsinformation.dk%2FForms%2Fr0710.aspx%3Fid%3D1419&h=8AQHHvgKcAQF_RKfBnoi_wU0LqEoPJ-Gdp5oiHJsNgveJTQ



Side 22 af 46

Place - Friendtex sell their products only through home-parties in over 11 countries of Europe:

Denmark, German, Norway, Iceland, Ireland, Finland, Latvia, Belgium, Netherlands and United

Kingdom. Germany is at the moment the best selling market, Belgium, Holland and Finland are

quite stable, Ireland and Island are not doing so well. Denmark is also not so good at the moment.

All of the products are stored in Herning in the main-head office of the company, they are sent

directly to the sellers of each country and after that they are sold in the home-parties.

Although the company has consultants in a big part of the Europe some of the other countries

(mainly in the south of Europe) are not opened to this concept of home-parties mainly because of

the cultural differences which makes harder the company expansion.

Prices - The prices are a mainly concentrated in the quality and type of clothes that the company

sells. Also the tables of prices are set up thinking about the concept and exclusive label. So in each

season the owner Jasper Rasmussen meets with the design department and other markets to discuss

prices for each article. Rasmussen 2011

Promotion - Word of Mouth Marketing (WOMM) is the main advertisement used by the company.

Also known as “Mouth to Mouth”; this is a way of promotion that depends mainly from the

consumer, usually used by companies that have a relation of proximity with their clients, which use

direct selling and by small companies because it is also an unpaid form of advertising.

This type of marketing consists in the word of mouth between costumers (who are satisfied with

a company) and their friends, family, neighbours, co-workers... and so on. So the most important

thing to the company is to guaranty that the consumers are happy and pleased with their products

and services so that the company gets good critics, thus gaining more clients.

It works almost like a vicious cycle: good services plus quality products – happy clients – good

critics, sharing experiences with friends, family... – more people who are willing to buy and try –

more clients – good services plus quality products...

Magazines

Friendtex uses also magazines for marketing. The company publics in magazines like Lime, from

the supermarket Netto. Also publishes some editorials in two women magazines, Femina and

Women. (Petersen, 2011)



Side 23 af 46

Celebrities

The company also does advertisement to the label through Danish famous people. Celebrities from

television, like for example the Danish host of Go’ aften Danmark (good evening Denmark) Cecilie

Frøkjær often wears clothes from Friendtex when she is hosting the show. (Petersen, 2011)

This kind of advertisement also plays a big role in the public‟s/consumer‟s desire and power, the

desire of having opportunity and power to wear clothes like the celebrities in the television. It is

almost as a mental game to people that dream of being part of some specific class in society, which

makes people want to buy more of that label and at the same way get some power.

Catalogue

The label‟s catalogue can be only acquired via internet, mail or via one of the consultants. The

catalogue has everything from the collection and shows outfit combinations and prices.

It gives customers the opportunity to take a look at the collection before the home parties and to

have an idea about prices, colours, products. Also gives the clients the opportunity to see the photo-

sessions and the outfits that stylists have chosen so they can later be used as an inspiration for their

own outfits. The head designer also gives styling tips for women with more curved body-shape.

Internet

Although Internet is not one of the main concerns of marketing to the company, Friendtex always

keep the site updated with the new collection and photo-shootings from each and every one season

so clients can be informed about everything that is going on. Also gives the opportunity to new

clients to know more about the concept of home-parties and about the style and type of clothing of

the company.

Service

Service is a big part of Friendtex policy is here that are different from other fashion companies.

They are providing a service in peoples home and give the customer an opportunity to make their

shopping in comfortable surroundings and in a good company of family, friends and colleagues.

This service is special for home parties and here Friendtex has their main focus. Test made by

Friendtex (Rasmussen, 2011) shows that an average costumer spends approximately 120 Euro and

every nine out of ten buyers some or more items at a home party. Therefore it is very important to

offer a good service.



Side 24 af 46

Friendtex most used marketing form is mouth to mouth and that is why it is very important to

give the costumer a good experience every time. Then she will go tell her friends and thereby the

word spreads. And Friendtex gets a bigger consumer group.

The law says that every item sold at a home party has to be returnable for two weeks. The limit

of time Friendtex has expanded to three weeks. This gives the costumer a longer with drawal of

their buying. Friendtex dares to expand the return period because they believe that when people

have used two to three hours on deciding they are pretty sure in their choice of clothes.

SW-analyses

Here in the SW-analysis we will analyze the direct sale/home party method of selling.

Internal Factors

Strengths Weaknesses

Good quality for fair prices

Are very depending on how the

consultants work

Inspiring catalogue online

A small company does not have big

discounts

Chose your own time for shopping -

Friendtex is coming to you

Consultant could not bring every size of

products from catalogue for the home

parties

People tell friends about good service - good

publicity

Focus marketing is mouth-to-mouth and

bad publicity travels faster than good

Unique collection with possibility for mixing Only one big stock

Opportunities for a friendly evening in

company of people you know well

Only two collections per year

Not suitable marketing strategy for

everyone

Personal sale person gives the consumer a

good service

Because of long delivery time from their

suppliers they have to buy big quantities

The strengths of the Friendtex show their uniqueness in the fashion industry. In generally they are

doing the same what all the other fashion companies do, but the ability to sell differs them from the

others. Although the company is small, they maintain their persistence and are focused on what they

are going good. If company is trying to do all, then they are nothing. They are also creating values

with maintaining their vision and not going too broad.

Company is people oriented – they are not only selling clothes, they are selling an emotion what

they receive in this kind of personal direct selling. They are really focused on what problems

women with families usually have – no time to do the shopping and buy new clothes. Friendtex



Side 25 af 46

know their needs and reaches to them. Their business potential is really unique in fashion industry

and it isone of the best advantage they own, barely no competitors in the same field.

On the other hand, it is seen also some disadvantages. Friendtex is mainly depending on how the

consultants work - they are making the profit to the company. Small company could not compete

with big high-street brands in prices and this kind of marketing could not suit to all customers.

Future of Friendtex

Looking on the key figures from Friendtex the future prospect is looking a bit unsecure. All the

numbers are going down and this development should be change to secure Friendtex‟s future. They

want to maintain a stable development in their figures. They do not have an ambition becoming a

bigger company, because they are very satisfied with their situation on the market today. This is a

realistic vision.

Friendtex know that they could not compete with big fashion brands such as Bestseller.

Therefore they want to focus on the things they are good at. They are good at being a small

company and giving their costumer a unique experience in comfortable surroundings. Here they are

good and this is what they want to focus on to make Friendtex a successful brand.

The value of a successful brand is for Friendtex not a big brand which has a big earning. The

important values for Friendtex are to do something good and do it right. Therefore they take it

slowly and are not interested in taking too many big risks. They are not looking for new markets in

new countries but they want to have more customers in the market they are already on. As the CEO

of Friendtex told (2011), they have big opportunities to expand their existing market because every

consultant has a circle of acquaintances and this circle of people also has a circle of acquaintances.

The circle is going to be bigger when Friendtex educate more consultants and this is their plan for

the future of Friendtex.

Friendtex‟s main goal is to maintain a well functional company not only be making money but

also with providing earning with their heart in it. They want to maintain their flat and open structure

in the company where everyone is equal. They are not only selling clothes they are also supplier for

their consultants to live their small self-employed dream.

Internal sub-conclusions

In the internal analysis of Friendtex we looked through all the stages of value chain activities of the

company. Friendtex is a small Danish fashion company and differs from others in that industry with



Side 26 af 46

very unique way of selling clothes at the home-parties. Their main focus in general is to reach to the

clients in very pleasant way.

The whole value chain of the company with different activities show that Friendtex is

structurally working as fashion company should work. Although the structure is flat the company is

well organized and all of the departments cooperate in a healthy and stable way to reach the goals

and manage the production of the collection. They are too small to compete with others, so they do

their own thing. They are doing what they are good at.

Friendtex is very into business, but there is more than that. The company is creating also values

in doing business. Big amount of money is donated in regular basis to help cancer society. It shows

that they really care about other things also, not focused only making profit.

The target group of Friendtex is mostly modern women in age of 26 – 35 with family and lack of

time to do shopping to find affordable clothes in good quality.

Friendtex is trying to maintain the position they have at the moment in the fashion industry. They

do not want to expand to other markets, mainly want to get better on those markets they are at the

moment.



Side 27 af 46

EXTERNAL ANALYSIS

By analysing the external part of the value chain we have decided to look at the textile industry in

Denmark. The reason for this decision is that Friendtex is a company with direct sale, and they

actually do not have a direct competitor at the moment. Before they were in direct completion with

Green House, but this company is no longer on the market.

The following description is about the Danish clothes industry in general and the business of direct

sale. Through the value chain we will describe the different elements and make the external part of

the SWOT-analysis. In the end we will look at the future for the Danish textile industry.

The history of Danish fashion industry

The Danish fashion has been growing since the 1960‟s and in 1960-1965 the export doubled from

DKK 250 million to DKK 500 million, the industry is now the fourth most successful export

industry in Denmark. The most of the industry today has outsourced the production and some other

operations development because they have been under pressure from low salary abroad. Danish

fashion industry are today focusing on design and branding.

The Danish industry has also been through hard times. First time was in 1975 were the speed

adapted. There was a huge competition abroad and it was not before 1990 that the Danish fashion

showed its‟ face to the world and became a huge player on the fashion market. Brands as Bestseller

and the IC Company pushed forward both international and national. Also a couple of Danish

designers have been influencing the Danish designs by promotion themselves abroad.

Another reason for the growth of the Danish industry and business is the interest from the

political side and not only from the press. During the recovery the Danish fashion industry has

established a network organisation in 2005. The primary task for this organisation is to promote the

growth and to grate awareness of the Copenhagen Fashion Week. 10

Direct sale (home party) in Denmark11

Direct sale in Denmark has been a part of the sale channel for many years. It started in the end of

World War II by selling grocery such as milk and bread to small country houses. In the 60‟s the

sales method took off when the foreign company Tupperware launched their products and was

10 http://www.danishfashioninstitute.dk/23572/DANISH%20FASHION%20HISTORY 11 http://www.disafo.dk/ (Direct Sales Association)



Side 28 af 46

invited into people‟s home. The first couple of years Tupperware meet a lot of resistance because

they had to fight against prejudices and peoples protection of their privacy.

Today direct sale is a growing business with new companies every week. The reasons for that is the

good relationship the consumer gets with the seller who also has a huge knowledge of the products

they are offering. Especially products such as skin care, cosmetics, clothes, natural products and

cleaning articles are popular to sell at direct sale.

Value chain of Danish fashion industry

Support activities

Firm Infrastructure

The firm infrastructure in a company depends on how the firm is organised. There can be different

variations depending on the structure of the organisation.

Examples on different structures design could be; Simple structure, where there only is one level

and everyone is reporting back the CEO. This type of structure only works in small organization or

companies. Another design could be; Bureaucracy where there are more layers. Every department

has an under-CEO who has the responsibility for the department and then this under-CEO rapport

back to the CEO. A problem about this structure is that there can be very long from the lowest level

to the top and therefore the company has a long communication line. Matrix structure is also a type

of organize a company. In this structure everyone has to bosses to rapport to, the project manager

and the CEO of your own department. This structure makes everyone work together across the

company not only with their own department (Robbins et al. 2010).

Human Resource

The department of Human Resource is very important in every company and also in a textile

company. The things that are focused on in HRM are things as; job analysis, training and

development, conflict solution, personal audit and relationship. All these things are help functions

to get a better outcome such as productivity, improved worklife, satisfaction and motivation.

In the textile industry there are lots of processes to be carried out and which require successful

staff. Also their way of thinking is a bit different than other industries because there is different



Side 29 af 46

process and they are forced to think very creatively. That often requires a good and skilled HR-

manager to manage these different processes12

.

Technology Development

The technology development of a textile company depends on which kind of products they are

producing. Especially quality is a huge subject in this area. Some companies are more focusing on

price and that can lower the quality (Workshop, Value Chain, 2011). If the company is small they

sometimes use a trend-bureau who can forecast the new trends - few companies have their own.

Procurement

Many Danish fashion companies are a member of BSCI (Business Social Compliance Initiative) -

like „Code of Conduct`. It is an organisation which was founded in 2003 – it was founded to make

some ground roles for buying procedure.

They are against child and forced labour and are providing demands about safety, environment,

workingtime and salary. Especially big clothing companies are becoming members of this

organization. One of the biggest chains in Denmark „Dansk Super Marked‟ is a member of BSCI13

.

Dansk Super Marked is a huge chain in Denmark who also is making a lot of textiles products for

Bilka, Føtex, ect.

Primary activities

Inbound logistics

Some companies have their own quality departments were the products are being tested. These tests

can be quality and quantity control and also washing test. In this process the products are being

place on the stock and are giving a number to identify the placement when the products are being

sold. A keyword is lean – which is used also in the outbound. The process has to be as narrow as

possible to be profitable.

Operations

The production of Danish fashion industry was huge during the 1960‟s but since then it has gone

downhill. Today almost all production is outsourced. A reason for that is the Danish companies‟

12 http://www.fibre2fashion.com/industry-article/1/63/role-of-hr5.asp 13 http://www.dsg.dk/da/Ansvarlighed/DS_og_det_globale_ansvar/Pages/FAQomBSCI.aspx



Side 30 af 46

lack of competitiveness when it comes to competing with the low salaries from East-Asia. This has

caused the Danish sewing fabrics to close down. Today the biggest import country is China.14

Outbound logistic

In this activity an order for a certain product is received and the process of outbound can start. The

outbound varies from company to company depending on which type of distribution they have

(Workshop, Value Chain, 2011). Also in this activity it is very important to focus on lean in every

process to be sure that everything has a minimum costs.

Marketing and sale

In every company there are a lot of focus on marketing and sale, because if the customers do not

know about the product how they should buy it. The way of selling and advertisement depends on

the end-customers and in which way it will be the most effective way of reaching the target group

of the product. A good thing to know when to make the marketing champagne is who the decision

maker of buying process is. This person is the one the company should be focusing on but also the

persons who influence the final decision (Workshop, Marketing, 2011).

The Danish fashion industry cannot compete with other countries on price, but Denmark is very

good a promoting brands. Therefore marketing is a very important part of the Danish value chain

because it is here Danish brands can differ from other brands. Danish brands know the important of

selling more than just a product - you have to sell need for the consumer and thereby give the

product value for the consumer.

Service

The service activities are also a part that depends on which company in the textile company you are

dealing with. In generally the service part do not have a huge impact on the industry. There are

always the laws to follow when it comes to service in store but after the sale it is up to each

individual store to make extra guarantee for the consumer. (Workshop, Value Chain, 2011)

14 http://www.cleanclothes.dk/index.php?option=com_content&view=article&id=84:hvor-blev-de-danske-syersker-

af&catid=42:outsourcing-om-eu-og-den-globale-tojindustri&Itemid=81



Side 31 af 46

OT-analysis

Here in the OT-analysis we will analyze the direct sale/home party method of selling.

External Factors

Opportunities Threats

A change in the law of shop-closing Laws about direct selling

The personal consumption is raising and

people buy more clothes

Too many companies are selling by home

parties, the costumers are tried off home

parties.

A change in young people‟s buying

behaviour

Finance crises, people do not want to use

money on quality

The opportunities in the SWOT-analysis can be a change in the law about when shops have to close

in the evening. It will give an advantage for the home parties, because the costumer will find it

difficult to reach the shops in time before they close. Therefore making home parties is a good

alternative where everyone can relax after a day of work.

Another opportunity for home parties can be a change in young people‟s buying behaviour and

thereby expand the current costumer segment. Today it is more the middle-age woman who goes to

a home party to buy clothes. If the behaviour changes then maybe younger woman from the age of

20-25 could be interested in going to a home party.

A threat can be if too many companies are offering home parties then the costumers can be filled up

and then get enough/tired of home parties. This does not necessarily has to be home parties with

clothes, but if you get an invite for a home party (one week with cosmetic another week with

clothes) you do not want to go all the time. Also the costumer can be felling pressed to buy from

home parties. Too much pressure can have a huge impact on the buying because the costumer has

an unpleasant experience.

Today there are some laws about home parties and direct selling but if the government increase

the laws then it can have a huge impact on the business method. A new more strict law can harm the

industry.



Side 32 af 46

Future of Danish Industry15

The coming season

According to a press release on the 3 August 2011 from Danish Fashion and Textile the future

situation for the industry looks very bright. 54 % of the members of Danish Fashion and Textile

(350 companies) has experienced an improvement of the first half of 2011 and about 62 % are

expecting good figures of the last half of 2011. Looking at the employment only 5 % of the

companies are seeing layoffs and about 30 % are thinking about hiring more people in the autumn.

The markets

The market with the biggest impact on Danish export is Germany and Sweden. Spain is again being

a huge player to the Danish export market and also countries like Italy and France are growing.

Despite the growth in Southern Europe the Danish companies are not doing very well in the East

European countries even through the economic in these countries are growing.

The future

2010 2011*

Total turnover 23,6 billion 27,4 billion

Export 21,9 billion 25,4 billion

* Numbers in 2011 is calculated from the expected improvement (+16,1 %) DKK.

The turnover in the Danish fashion industry was in 2010 over 23,6 billion DKK and the 21,9 billion

DKK of them was from exports. The first four month of 2011 has improved by 16,1 % and expert

are predicting that it will continue the whole year. The analysis has calculated that if the tendency

will continue the turnover will be over 27 billion DKK in 2011. Hopefully if the predictions are

right the Danish fashion industry will hit a record.

15 Danish Fashion and Textile – Press Release www.dmogt.dk

http://www.dmogt.dk/~/media/Files/dmt/dokumenter/Engelsk%20side/PRESS%20RELEASE_Prognosis%20on%20the%20Danish%

20fashion%20industry_Aug%202011_Dansk%20Fashion%20and%20Textile.ashx

http://www.dmogt.dk/



Side 33 af 46

External sub-conclusion

During the external analyzes we discovered that the history of Danish fashion industry has gone

through some major development steps. The industry started out as a productive industry with lots

of sewing factories around Denmark - especially in Herning and the nearest small towns. Today we

see all the productive parts getting outsourced because of the increased competition from East-

Asian countries which provide lower salary.

To stay in the fashion business the industry has been forced to developed new focus areas such

as design and marketing. In these areas the Danes has specific competences. The Danish designer

knows the important of selling more than just a product. Brand and value have a big impact on the

consumer‟s choose of which product they want to buy. The marketing part is a part of this

promoting process in which the consumer recognize the value.

The future prospect of the Danish fashion industry is very bright. According to the Danish

Fashion and Textile the Danish fashion industry is the fourth biggest export industry and therefore

has s big impact in the Danish economy.



Side 34 af 46

FINANCIAL PERFORMANCE

Key Figures

2010 2009 2008 2007 2006

Net Turnover

11.100.169

10.666.339

12.563.258

11.713.876

15.707.942

Profit before interest

2.556.242

2.250.270

3.777.876

8.655.224

3.891.198

Profit before tax

5.138.072

2.623.314

6.051.833

10.042.973

7.022.666

Interest expenses

264.512

481.054

650.919

805.624

787.840

Total assets

13.742.492

11.605.419

13.167.258

25.926.311

23.340.741

Owners' equity

8.308.693

5.903.000

7.679.073

12.256.767

9.433.216

Total debts

5.433.799

5.702.419

5.463.116

13.621.719

13.007.899

ROI

18,60

19,39

28,69

33,38

16,67

PMR

23,03

21,10

30,07

73,89

24,77

ATOR 0,81

0,92

0,95

0,45

0,67

ROE

61,84

44,44

78,81

81,94

74,45

ROD 4,87

8,44

11,91

5,91

6,06

Based on the Annual Rapports from 2006 - 2010

Comment on the profitability

ROI: The profitability in Friendtex is better in 2010 than in 2006, because the ROI has raised from

16,67 to 18,60. That means a percentage point rise on 11,5 %. But there has been a big change

going through the years from 2006 till 2010. From 2006 till 2007 there were a big rise but after that

it has been going down again. The ROI is in 2010 on a satisfying level compared with the market

rate on approximately 5 %. The improved profitability shows that Friendtex‟s earning has

developed favourable compared to the company‟s invested capital - from 2006 till 2007 even more,

but still favourable over the whole account period.



Side 35 af 46

PMR: The yield interested profitability is among other things caused by the reduced earning ability

because PMR has gone down from 24,77 in 2006 to 23,03 in 2010. That means a percentage point

drop on 7,02 %. This has affected ROI a bit negative. In 2007 Friendtex had a very good earning

ability but this has gone down forwards 2010 where it has dropped down a bit from 2006 but is

more stable compared to the other years. The reduced earning ability means that Friendtex‟s income

has developed unfavourable compared to the company‟s costs - but still it is more stable going now.

ATOR: The improved profitability is caused by the reduced capital adaptability because of the

ATOR‟s rise from 0,67 times in 2006 till 0,81 times in 2010. That means a percentage point raise

on 20,9 %. This has affected ROI positively. The improved capital adaptability shows that

Friendtex‟s activities has developed in a favourable way compared to the company‟s invested

capital.

ROE: The ROE has in the analyzed period developed unfavourable because it has dropped down

from 74,45 % in 2006 till 61,84 % in 2010. That means a percentage point drop on 16,9 %. Again

from 2006 to 2007 they had a rise but after 2007 it has been going down again.

ROD: ROD has dropped from 6,06 % in 2006 till 4,87 % in 2010. That means a percentage point

drop on 19,6 %. ROD is just under the market rate on approximately 5 % which is a bit

unsatisfactory and Friendtex should defiantly turn over this development from loosing on working

with debt till winning.

Conclusion

The profitability has shown a bit of fluctuation in the analyzed period. But overall it has improved

from 2006 to 2010. That is caused by a combination of the earning ability small drop and the

improved capital adaptability which now shows a very stable level. Friendtex should turn over the

development of going down to have a more stable economic.



Side 36 af 46

Compared to the industry turnover

Friendtex

Net Turnover 2006 2007 2008

Indexes 100 75 80

Textile

industry

Net turnover 2006 2007 2008

Indexes 100 99 96

Compared to the industry we can see that everyone suffered a turndown in the years 2007 - 2008.

This is probably caused by the finance crises and people are more unsecure about their economy

and therefore they are not using the same amount on clothes in this period. In Friendtex they had a

bigger turndown than the industry in general which is caused by the size of the company. A small

company is more influenced by such crises then bigger companies are.

Friendtex 2006 2007 2008

PMR 24,77 73,89 30,07

Textile

industry 2006 2007 2008

PMR 6 6,7 3,8

According to the above chart over the PMR we have compared Friendtex to the textile industry. The

chart shows the development of how huge part of the turnover is becoming earning. The textile

industry is very stable but has had a drop from 2007 to 2008 which is caused by the financial crises.

Friendtex is not stable they expand to a big new market (Rasmussen, 2011) which made it rise. But

also Friendtex was affected by the financial crises and caused by the small size of the company it

0

20

40

60

80

100

120

2006 2007 2008

Net turnover

Index

Friendtex net turnover compared with the

industry

Friendtex

Textile Industry

PMR

Textile Industry

Friendtex

1 2

20

40

60

80

Year

Percent

2006 2007 2008



Side 37 af 46

made a drastic drop. The bigger difference between Friendtex and the industry is the size of

Friendtex Company. That why they were more affected of the financial crises.

Friendtex 2006 2007 2008

ROE 74,45 81,94 78,81

Textile

industry 2006 2007 2008

ROE 14,2 15,9 1,2

The chart shows the yield of the capital invested in the company. The textile industry has a drop in

2008 but otherwise both the industry and Friendtex has a stable development. Friendtex is at a

higher level because they do not have huge volume of money fasten in big assets as a lot of the

companies in the fashion textile industry have.

ROETextile Industry

Friendtex

1 2

20

40

60

80

Year

Percent

2006 2007 2008



Side 38 af 46

MAIN CONCLUSION

In conclusion it is clear that Friendtex has taken their part in Danish fashion industry with profits

which may not be so remarkable in comparing to general achievements in the industry. They would

like to maintain as a small business in the market. They are focusing on their unique concept of

selling and running a business.

It is essential for Friendtex to stick to values they find important. The concept of home parties

connects the relationships between consultants and clients. In this way they allow their consultant

creating a close base with customers and giving opportunity of spending time creatively for both

parts. Because Friendtex is owned in a significant part by its‟ CEO it does not allow to violate

values they created during the years in business. Offering high quality of service, good relations

with consultants and being aware of what they produce. As noted before Friendtex create this

special value of service between consultant and clients and furthermore they proudly support cancer

treatment research. They find it very important to make business with “heart” (Rasmussen, 2011).

Friendtex‟s can promote above mentioned values by not being profit focused as other brands in the

industry. Staying small and true to their values are factors for the financial stability and growth of

the company. Friendtex maintain to be stable financially despite unstable way of sales and financial

crises in 2008. Thanks to centralizing head office and warehouse they minimized expenses which

increased after the crisis. Friendtex also stabilize their profits by owning a sub brand; Praxis which

is very economical stable. Also the background of CEO influences when it comes to manage the

financial issues.

As mentioned in the section about future of Friendtex we believe that they have a bright future if

they keep on focusing on their good values and unique selling concept. They should stay on the

market they are already in, but try to expand their range. Compared to the Danish fashion industry

Friendtex has a good base because the industry is developed in a positive way.

Friendtex is focusing on the thing they are good at which is direct selling. They know they cannot

compete with the big fashion company on the market when it comes to cheap prices and the retail

part. Therefore they want to be on the market with their unique concept and they want to stay that

way. This focus area is what creates value for the company‟s value chain.



Side 39 af 46

REFERENCES

Webpage

DANISH FASHION INSTITUTE (2010) Danish Fashion History [WWW] Available from:

http://www.danishfashioninstitute.dk/23572/DANISH%20FASHION%20HISTORY

[Accessed 04/11/11]

DIRECT SALES ASSOCIATION (2011) Et historisk perspektiv [WWW] Available from:

http://www.disafo.dk/

[Accessed 04/11/11]

FIBRE 2 FASHION (2011) Role of HR (HRM) in Textile [WWW] Available from:

http://www.fibre2fashion.com/industry-article/1/63/role-of-hr5.asp

[Accessed 04/11/11]

DANSK SUPER MARKED (2011) FAQ om BSCI [WWW] Available from:

http://www.dsg.dk/da/Ansvarlighed/DS_og_det_globale_ansvar/Pages/FAQomBSCI.aspx

[Accessed 05/11/11]

CLEAN CLOTHES CAMPAIGN DANMARK (2010) Hvor blev de danske syerske af? [WWW]

Available from:

http://www.cleanclothes.dk/index.php?option=com_content&view=article&id=84:hvor-blev-de-

danske-syersker-af&catid=42:outsourcing-om-eu-og-den-globale-tojindustri&Itemid=81

[Accessed 04/11/11]

DANISH FASHION AND TEXTILE (2011) Biannual barometer for the Danish fashion industry

[Press Release] Available from:

http://www.dmogt.dk/~/media/Files/dmt/dokumenter/Engelsk%20side/PRESS%20RELEASE_Prog

nosis%20on%20the%20Danish%20fashion%20industry_Aug%202011_Dansk%20Fashion%20and

%20Textile.ashx

[Assessed 04/11/11]

FRIENDTEX (2011) Bliv forhandler [WWW] Available from:

http://www.friendtex.com/index.php?option=com_content&task=view&id=3&Itemid=4

[Accessed: 09/11/11]

KØBELOVEN (2011) Bekendtgørelse af lov om køb, [LAW] Available from:

https://www.retsinformation.dk/Forms/r0710.aspx?id=1419


https://www.retsinformation.dk/Forms/r0710.aspx?id=1419



Side 40 af 46

WFDSA (2011) What is direct selling? [WWW] Avaliable from:



Workshops

Value Chain Workshop by Carsten Mølbæk Jensen

1 November 2011

Marketing Workshop by Rene Claus Jensen

1 November 2011

Books

Robbins, S. P., Judge, T. A. & Campbell, T. T. (2010). Organisational Behaviour. Prentice Hall

Granger M., Sterlin T., Fairchild publications, INC New York (2003)

Fashion Entrepeneurship – retail, business, management

Interview

RASMUSSEN, J. (2011) Company visit at Friendtex head office, Friendtex‟s CEO,

Herning on 7 November. Available from: Notes of interview (Enclosed no. 2) [Accessed 8-9/11/11]

PETERSEN, A. (2011) Interview with Friendtex Consultant, Friendtex Fashion Consultant,

By phone on 1 November. Available from: Notes [Accessed 08/11/11]




Side 41 af 46

29%

71%

Have you heard about company Friendtex?

Yes No

49% 51%

Do you know the concept of "home

parties"?

Yes

No

83%

2%

2%

13%

From where you prefer to buy your clothes?

From Store

From FashionConsultant

From catalouge

Other82%

18%

Are you willing to pay more for better quality

of clothes?

Yes

No

APPENDICISES

I. Online survey

Team number 20 made a research by using webpage http://www.misterpoll.com/polls/540307 to

ask from the people some questions related to the analysis of the Friendtex

This survey was available in the internet 03.11.2011 – 09.11.2011. It was advertised through

Facebook and we got 55 responds to this survey – 25% of the people who answered were from the

Denmark, 75% were foreigners. 11% of people who answered were younger than 18, 64% of them

were between 19 and 22, 18% were 23 – 25, 3% were 26-36 and 1% were older than 47.

11%

65%

18%

4% 0% 2%

Your age is…

…-18

19-22

23-25

26-36

37-47

47-…

http://www.misterpoll.com/polls/540307



Side 42 af 46

II. Question for the Company

Used as the main source in the rapport

7 November 2011, Herning (Denmark)

Support Activities

FIRM INFRASTRUCTURE

- Question: Could you please explain your Company structure? Who is in charge? Employees and

their assignments?

Answer: Friendtex has 30 employees Friendtex don‟t own or rent any warehouses. They send all orders

directly from where they stock all products in a 3000 square m warehouse next to head office located in

Herning. They own a IT software adopted to their company. This software is also used for their other

company Praxis. IT department are run by two specialists, who also control income balance, stock control.

In the head office is working also 3 persons from Germany. They are controlling German market. Sales

department (Located in the Herning for Norway, Germany and Denmark Markets). Other sales departments

are situated where the market is. 2 buyers, 2 constructors, 2 people responsible for quality and garment

testing, 2 people in stock for return department, 1 head-designer.

- Question: What buildings/warehouses/factories your company owns to run the business?

Answer: Friendtex sends all their orders straight from their warehouse they have in Herning located with

head office to lower stock costs.

- Question: IT system – outsourced or your own field?

Answer: They own an IT system adapted to their company. This is also used for their other company

Praxis. IT department are run by two specialists, who also control income balance and stock

HUMAN RESOURCE MANAGEMENT:

- Question: How do you hire you employees? Which criteria are considered?

Answer: Consultants should be women, end 20...30+, should have time, work for Friendtex as a hobby,

own a good network (family, friends, and colleagues). Need a care, should have interest in textile and

fashion industry. Outstanding personality. 100% control of their own finance. Own a car. Designers should

be commercial and understand the needs and desires of customers.

- Question: How do you supervise/train your consultants? Answer: They have training courses. In every new season (twice a year) when they have new collection it

is presented - fashion show, where the consultant get the overview of latest trends and can ask question

about the new collection.

- Question: How is the communication between consultants and company?

Answer: Day-to-day orders from stock. Company is dealing directly with the consultant - get a lot of

feedback from the consultant. Most feedback is difficult to change. Personal feedback - no use! It is all

about the consumer. Friendtex has an “open house” policy - all consultants are welcome to come and talk

directly to the company. Consultants have to pay handling fee to the company for delivering the products

from warehouse to them.

- Question: How many designers do you have? How is the working process divided?

Answer: Bettina Johnson is the head designer and she is working together with two purchasers to develop

the new collection. Jesper Rasmussen is always part of the final decisions, he is always concern about

designs them to be commercial. Friendtex finds it very important to develop their own style - to make it

unique, because they could not compete with the bigger brands. Men collection is developed together with



Side 43 af 46

other companies. They have too small quantities and too small to fulfil orders to suppliers. Friendtex is

working the same way as a fashion company works, although they have different way of selling.

Working process:

- Inspiration (Trend agencies, travelling etc)

- Design process

- Friendtex sends samples or own designs for suppliers and order proto samples. Samples are sent to

suppliers for outsourcing.

- Then the fitting is done, and comments are made. If needed, sample is sent back. Sometimes the

suppliers do not send proto sample in that material or in that way, it should be. It slows down the

design process, because buyers and other members of the company do not know, how the final

product should look like then.

- Supplier does the correction and will send the shipment sample. Finally the sales sample.

- Logistics and communication between company and suppliers.

- If everything approved then production.

TECHNOLOGY DEVELOPMENT:

- Question: Do you buy ready-made-products into your collection or design all the items yourself?

Answer: Friendtex is buying samples from competitors and design them in their own unique way –

everybody is doing the same way in this business. Friendtex is buying ready–made designs from suppliers,

but there is no guarantee in uniqueness, suppliers are cheating – other companies can also buy these

samples and add them into their collections.

- Question: Quality – how designers choose fabrics? Where do you get them from?

Answer: Quality is very important to Friendtex – it is considered in choosing fabrics and samples.

Friendtex head of designer, purchasers are visiting different fairs and get hangers of fabrics from suppliers.

Main suppliers for Friendtex are from Italy, Turkey, China and India.

- Question: How is a collection developed? Seasonal explanation

Answer: Designer has to know customers needs and desires to develop new collection. In some cases it is a

challenge. Head of the company and purchasers collaborate with head designer, inspiration comes from

visiting inspiring places/cities and inspirations from trend agencies.2 collections are designed per year.

Designer does the sketches, samples are ordered, samples are sent to suppliers for outsourcing, proto

samples are received, fitting are done, samples are approved, sales-samples and shipmen samples are

received, production is done and shipped by plane or by plane and trucks or by sea.

Design process is a mix of operation:

- Friendtex sends samples or own designs for suppliers and order proto samples. Samples are sent to

suppliers for outsourcing.

- Then the fitting is done, and comments are made. If needed, sample is sent back. Sometimes the

suppliers do not send proto sample in that material or in that way, it should be. It slows down the

design process, because buyers and other members of the company do not know, how the final

product should look like then.

- Supplier does the correction and will send the shipment sample. Finally the sales sample.

- If everything approved then production.

- Question: What is your niche or uniqueness in design?

Answer: Friendtex is not a trend setter, they are trend follower. They mostly do not have the latest must-

haves in their collection, rather unique items to have their own timeless style.

- Question: Do you communicate with you clients when developing a new collection?

Answer: Complains of customers are usually considered if more than one customer is complaining and told

through consultants to the company. Head of designer has capability to design commercial collection which

should suit to wide range of customers. Size range is quite wide – from S to 4XL, clients with more curves

also find clothes from collection.



Side 44 af 46

PROCUREMENT:

- Question: How the buying process looks like in your company? How purchasers work in your

company?

Answer: In Friendtex there are 2 buyers/purchaser – they work in a team together with the head of

designer. In The company it is all about teamwork – and therefore in a collaboration.

The purchaser is on travelling meet up with suppliers from all over the world.

- Question: How big are the volumes – items in collection, orders (fabrics etc).

Answer: The order volume is about 1500 pieces – and if the styles sell then they make a repeat order of

500-600 pieces. They look at the previous collection to see who well they sold last times – and then they

calculate some figures to find the quantity. They uses size breakdown to decide which sizes they want. The

most sold sizes are M and L. Friendtex is rather a small company and the volumes comparing with big

companies are quite small. Usually they order less, ship together with other companies.

- Question: Suppliers - which criteria are you using to choose suppliers? How often you change them,

negotiate?

Answer: About the supplier they are focusing on good and high quality. When the consultant is selling to

their friend they must be sure that the quality always is perfect.

Suppliers differ from each other by amount of production, capabilities of producing different types of

products, demand of quality, time for production etc. They have suppliers in China, Italy, India and Turkey.

China for knitwear and jackets. India spring/summer collections. And Turkey they use for jersey products.

Sometimes they also use Cambodia and Italy – that is most for leather products, footwear.

They Do NOT use Bangladesh as many others – they are not willing to take the risk at buy at that market

yet. They could not allow production to be 7-8 months and minimum orders are also too big for them.

Suppliers change in different seasons. For example India is good supplier in spring – summer period due to

nice embroideries they make and light fabrics they have.

In recent times FRIENDTEX purchased 80% of the styles from China – now it has changed. It is necessary

to do there some styles. They are good at jackets, heavy things like outerwear and knitwear.

Primary activities

INBLOUND LOGISTICS:

- Question: Warehouses? Where do you store your products? How you manage with the

transportation?

Answer: The products of the company are all stored in the head-office in Herning. The transportation is

send from the main-head office to all of the sellers around Europe. Transportation is cheaper by land

comparing with shipping or delivering by plane. Their main partner in managing transportation in supply

chain is DHL.

- Question: From where you buy the raw material?

Answer: Mainly China, more or less 80% of the products. Turkey is growing up in the production of jersey.

India has a lot quality in summer period. Italy and Cambodia are more known in leather products.

- Question: Where you outsource the sewing and other procedures for production?

Answer: Mainly in China, but also in Turkey and India. Almost 80% of the clothes are made in China.

Then Turkey is growing up. India mainly for Spring/Summer collections. Shoes come mainly from Italy.

- Question: Operation time? Delivery time?

Answer: Depending on the place where the clothes are made. Usually from China the operation and

delivery time takes from 6 to 5 weeks. Turkey takes more or less 4 weeks. Always have to include

delivering time.



Side 45 af 46

OPERATIONS:

- Question: How much time it takes from pattern to a garment? How long is that process?

Answer: The production takes about 6-8 weeks in Asia – and about 4 week in Turkey

The freight they use is sea, sea-air and air – and for turkey they use truck. The freight depends very much

on the situation. If they are in a hurry they will have to send it by air.

Sometimes they often split a container together with a competitor to have the most profitable way of

sending it home

- Question: Who designs your labels and do you have special package, tags?

Answer: Friendtex – do not use any special kind of packages. They have their own label and tag, where is

written size of the product. When the costumer gets the clothes it is handed over by the consultant. That is

only in a plastic bag.

If in Germany they consultant often steam the clothes and delivery on a hanger.

OUTBOUND LOGISTICS:

- Question: Who is paying the transportation – company or consultant?

Answer: Depending on the quantity, the consultant may pay more or less. If the consultant orders a small

package he has to pay for all the transportation. If the consultant orders 3 or more packages he has to pay

for half of the costs of the transportation.

- Question: From production to warehouses? What transport you are using?

Answer: The Company use car, trucks, containers, planes and ships. Transportation is cheaper by land

comparing with shipping or delivering by plane. Their main partner in managing transportation in supply

chain is DHL.

- Question: What are you going with the “left-over” – clothes what anyone has not bought?

Answer: The left-over‟s are prejudice for the company. The company tried already to find some solutions

but without any positive result.

- Question: Amounts of ordering and shipping? Time?

Answer: The company send the boxes the day after the order from the seller. Usually the company prefer to

send big amounts of products because of the expenses.

MARKETING AND SALES:

- Question: What channels do you use to advertise your company? Which one is the best in your

opinion?

Answer: Company prefers the advertising through consultants. The advertising is when customers talk

about Friendtex – mouth-to-mouth.

- Question: Do you have trainings/sale training/trend overview etc. for your consultants to make the

selling process more efficient?

Answer: Friendtex supervise their consultants twice a year with fashion show and trends of that season and

let them know what they are selling to the customers. Friendtex also started to build a showroom into their

main office.

- Question: Competitors? Do you know competitors, who are doing the same thing as you are?

Answer: Friendtex do not have so many competitors. One competitor was company Green House, but they

are in bankrupt now.

Some other companies have the same marketing strategy – Tupperware. Tupperware turnover in last year

seals all over the world was 10 billion USA dollars. This is a role model for Friendtex – to reach in that

level.



Side 46 af 46

- Question: Cultural difference. How you choose markets you are entering?

Answer: This kind of business can be successful only in Denmark, Sweden, Norway, Finland and

Germany. People are more open for invite friends to home and spend time with them there. It is difficult to

open market for example in Italy, France, and Latvia.

In Denmark there are rather smaller companies and sales are not that good. They are still suffering in

financial crisis.

Germany is doing quite well and earns good profit. Belgium, Netherlands – stable markets. Ireland, Island

– They are doing not so well.

Infrastructure is different. In Germany are Friendtex products also sold in very small shops in small towns,

in Denmark small towns doing not have these kind of shops at all.

Packing clothes. For example – in Denmark the product is sent just in a plastic bag to the customer, in

Germany it has to be ironed and stay on a hanger.

- Question: How much money you pay for promotion in general? Celebrity promotion?

Answer: The one promotion which company has it is conversation of customers – mouth-to-mouth.

Information from mouth to mouth is the best promotion for Friendtex.

Friendtex advertises themselves in lot of magazines and newspapers. Their head designer owns good

contacts in Danish fashion business – fashion editors also use their products in fashion magazines.

- Question: Packing – it is also advertised for you?

Answer: Friendtex do not use advertising on bags. Consultants pack clothes on transparent bag. For

example – in Denmark the product is sent just in a plastic bag to the customer, in Germany it has to be

ironed and stay on a hanger.

- Question: Franchise? It is relevant to your company?

Answer: They had franchise companies selling their clothes in starting the business, but they wanted to

have their own companies to do that.

- Question: Do you have customer database? Do you keep in mind old customers or focus on new

clients?

Answer: Company has phone number to customers. When new collections start, consultants call to them

reminds about new catalogue and ask about term for home party. Customers are friends, family so they do

not stop coming for meeting with Friendtex. Also consultants can make home party with one group of

people 2 times per year (2 collections) so they are focused on looking for new customers.

SERVICE:

- Question: Do you offer some kind of guarantee to your products?

Answer: Due to high quality of service and product, customer will have opportunity in 3 weeks for return

for 100% of money he spend on product.

- Question: How can clients pay for the garments? Only with cash?

Answer: Clients need to account with consultant and consultants have certain period of time to transfer

money on Friendtex bank account for garments they have sold.

- Question: Any free service for clients? Discounts?

Answer: It depends on Friendtex‟s consultants. They are organizing home parties for clients.

Value chain project - Friendtex

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