Mid-term Project

Comprehensive Strategic Analysis on ECOALF

Strategy & Decision Making

Course Number: MCO204 (MBA group B)
2023-2024, Term-2

Student Full Name:

Shayantani Twisha (Student No.: 23033694)

Professor: Artur Callau

Introduction
This report delves into a comprehensive strategic analysis of ECOALF, a leading
sustainable fashion brand. It explores various facets of ECOALF’s business
including market position, micro and macro environment analysis, their mission,
vision, values, CSR policy, organization’s strength and weaknesses, opportunities,
and threats from the environment. This report aims to offer insights into ECOALF’s
strategic direction.
ECOALF
ECOALF is a sustainable fashion brand that produces clothing, footwear, and
accessories using recycled materials. The company was founded in 2009 by Javier
Goyeneche with the aim to create high-quality products while minimizing
environmental damage. ECOALF is known for its innovative approach to
sustainability, incorporating materials like recycled plastic bottles, recycled fishing
nets and recycled cotton into its products. “Fashion is one of the largest consumer
goods industries in the world and one of the most pollutant. I believe the time when
fashion was just about looking good is over. Now, more than ever it has to be about
doing what is right and feeling good about it”- says Javier Goyeneche, the President
and Founder of the company (Goyeneche, n.d.). ECOALF has stores in 12 cities
inside Spain and in 6 countries of the world. However, in this paper the focus will be
ECOALF’s industry focused strategic direction inside Spain.
Strategic Direction
The first problem someone would face while trying to find ECOALF’s mission and
vision statements is that on the official website of the company there is no clear
segment stating the mission and vision. In addition, there are different statements of
mission and vision in the company’s digital platforms (Website and Social Media).
Which may create confusion about the company’s strategic direction among the
employees and stakeholders (Appendix-1).
Mission:
After thorough exploration and careful consideration, the deduced Mission
Statement of ECOLAF is as follows-
“We exist to protect our natural resources, to create a sustainable lifestyle brand
leading change with every product”.
Assessment of Mission Statement:
A mission statement instills a shared understanding of the organization’s
fundamental purpose among employees and stakeholders. Consequently, it plays a
vital role in fostering trust that the organization’s strategic direction is firmly rooted in
its mission (Johnson, Kevan Scholes and Whittington, 2008). In simpler words, what
business is the company in, what would be lost if the organization did not exist and
how the company makes a difference. ECOLAF’s Mission is perfectly stated in
accordance with the definition of the Mission Statement.
Vision:
A vision statement focuses on the organization’s spirations for its future identity. Its
purpose is to set out a view of the future to enthuse, gain commitment and stretch
performance (Johnson, Kevan Scholes and Whittington, 2008). In simpler words,
what the company wants to achieve in the distant future. Considering the definition,
none of the ECOLAF’s Vision Statement is stated properly (Appendix-2). A probable
suggestion to ECOLAF’s Vision Statement is as follows:
Proposed Vision Statement:
We envision a world where the reckless consumption of natural resources ceases to
exist. Through creating high-quality products from recycled and sustainable
materials, we aim to lead by example, inspiring conscious action in the industry. We
aspire to meet present needs without compromising the future, prioritizing harmony
between environmental, social, and economic factors for lasting solutions.
Values:
Core values represent the fundamental principles that steer an organization’s
strategy. However, publicly stating corporate values can have negative
consequences if the organization fails to uphold them in practice (Johnson, Kevan
Scholes and Whittington, 2008). ECOALF has not publicly listed their core values.
Rather, they designed their Brand DNA, commitment, and philosophy in such a way
that the values become clear to the external stakeholders. The company dearly
upholds these values: Sustainability, Innovation, Consistency, Traceability &
Transparency, Responsibility.
External Analysis:
As mentioned previously, this paper aims to analyze the business strategy of
ECOALF inside Spain with a focus on the industry rather than business environment
specific factors. To do so, as an External Analysis tool, Porter’s Five Forces have
been chosen over PESTEL. Because Porter’s Five Forces primarily focuses on
analyzing the competitive dynamics within a specific industry, that are directly
relevant to formulating competitive strategies. It helps to identify the sources of
competitive pressure points and devise strategies to position the company favorably
within the industry. “Five Forces Framework is particularly useful in understanding
the attractiveness of particular industries or sectors and potential threats from
outside the present set of competitors” (Johnson, Kevan Scholes and Whittington,
2008). While PESTEL analysis identifies potential impacts of future trends and
focuses on the broader external environmental context encompassing- Political,
Economic, Social, Technological, Environmental, and Legal factors, Porter’s Five
Forces encompasses the immediate competitive environment. Five Forces analysis
is more directly linked to strategic decision making within an industry (Johnson,
Kevan Scholes and Whittington, 2008).
Main Competitors of ECOALF:
Based on the web search results, following are the top competitors of ECOALF in
Spain in terms of sustainable fashion-
CHNGE: Clothing brand with a high social impact with strong values in activism and
sustainability (wearop.com, n.d.).
Girafon Bleu: First clothing brand to donate part of its profits to save and protect
giraffes. The products are 100% organic cotton and have ecological messages
(wearop.com, n.d.).
Lucy and Yak: This is an independent, organic and recycled clothing brand for girls
with a strong commitment to sustainability (wearop.com, n.d.).
HoMie: This is an Australian activist brand and non-profit organization operating in
Spain. They support young individuals impacted by homelessness or hardship
(wearop.com, n.d.).
North Hill: This brand is known for its sustainable and creative clothes (wearop.com,
n.d.).
Our Legacy: This is a Swedish brand operating in Spain and known for their custom-
developed fabrics and reuse of materials (wearop.com, n.d.).
Psychic Outlaw: This brand creates sustainable, handmade clothing using recycled
vintage and antique textiles (wearop.com, n.d.).
Afends: This brand is committed to sustainability, and they encourage conscious
choices and aim to make positive impact (wearop.com, n.d.).
Porter’s Five Forces Analysis for ECOALF:
Threat of New Entrants: As ECOALF operates not only in fashion industry but also
in sustainable fashion industry, barriers to enter this industry is moderate. Brand
loyalty is high for ECOALF because they are working for a cause and people who
believe in the same cause are loyal to the brand. Capital requirement to get into a
sustainable fashion industry is more than the capital required to get into the fashion
industry in general. As the world shifts towards a more sustainable eco-friendly
paradigm, the government policies are becoming more and more pro-sustainability
and pro-environment. Access to the distribution channel is high. And lastly, switching
cost is moderate. Therefore, ECOALF faces a moderate threat of new entrants due
to the growing emphasis on sustainable fashion and the potential for new eco-
friendly brands to enter the market. However, ECOALF being one of the pioneers
having strong focus on sustainability, may have a competitive advantage in terms of
brand recognition and customer loyalty.
Rivalry Among Existing Competitors: ECOALF has about 9 competitors, who
operate in the different segments of sustainable fashion domain. “Global Sustainable
Fashion Market size was valued at US$ 7.8 Billion in 2023 and is expected to reach
US$ 33.05 Billion by 2030, growing at a Compound Annual Growth Rate (CAGR) of
22.9% from 2023 to 2030” (www.coherentmarketinsights.com, 2024). The Europe
market is ranked as the second largest market globally for sustainable fashion,
capturing more than 25.8% of the market share by 2023. This growth is fueled by a
strong demand for premium sustainable fashion brands and the EU’s rigorous
regulations on sustainability (www.coherentmarketinsights.com, 2024). Each
sustainable fashion brand has high brand loyalty. ECOALF operates in an industry
with growing emphasis on sustainability and eco-friendly practices. The intensity of
competitive rivalry is comparatively low considering the product differences, and the
different sustainable initiatives by the different brands. Therefore, the threat in terms
of ‘Rivalry Among Existing Competitors’ is low.
Bargaining Power of the Customers:
As mentioned earlier, there is a growing demand for sustainable fashion products
across Europe, especially in Spain. The survey suggests, by 2022, around 40% of
fashion consumers’ purchase behavior shifted moderately towards sustainable
fashion brands. Another statistic shows that the number of online fashion shoppers
is 13.5 million (Tighe, 2024). Therefore, around 5.4 million buyers are leaning
towards sustainable fashion and there are not many competitors in this field yet. The
bargaining power of the customers is inversely proportionate to the number of
customers. Also, the products of ECOALF are not standardized, rather, they are
unique and serve a unique cause. This factor also reduces the bargaining power of
the customers. This indicates, overall ECOALF’s customers’ bargaining power is
less and the threat is also less.
Bargaining Power of the Suppliers:
According to ECOALF, they cannot transform the fashion industry alone- “We need
to work hand in hand with our suppliers and collaborators” (ECOALF, n.d.). ECOALF
works with suppliers who share the same values and meet the required standards.
And to guarantee this, the suppliers accept and comply with ECOALF’s Code of
Conduct. 100% of their suppliers have endorsed the external Code of Conduct,
encompassing suppliers being responsible for 80% of the turnover (ECOALF, n.d.).
This situation indicates that the suppliers are trustworthy partners of ECOALF and
the industry represents the primary source of revenue for the suppliers. Hence,
suppliers have little bargaining power, and the threat level is low for ECOALF.
Threat of Substitute Products:
Even though there are a lot of substitute fashion products available in the market,
there are not many substitutes of eco-friendly sustainable fashion products or
brands. Because of the high growth rate of this industry, new companies may enter
the market, however, being the market leader, ECOALF has the competitive
advantage and the brand loyalty of the customers.
Internal Analysis:
As an internal analysis tool, the VRIO (Valuable, Rare, Inimitable, Organized to
capture value) framework has been chosen for this paper because the objective
here is to analyze and attain the competitive advantage over the long term. It is a
valuable internal analysis tool as it offers a structured approach for evaluating a
company’s internal resources and capabilities identifying competitive advantages
(Johnson, Kevan Scholes and Whittington, 2008). This will help in identifying
competitive positioning, resource prioritizing, and decision making based on the
strengths and weaknesses of ECOALF.
Value of strategic capabilities: For an organization aiming to cultivate a
competitive edge, it must possess capabilities that hold value for its customers.
Simply having capabilities that distinguish it from other organizations is not
inherently a foundation for competitive advantage. It should be carefully considered
which of the organization’s activities are particularly vital in delivering such value
(Johnson, Kevan Scholes and Whittington, 2008).
Rarity of strategic capabilities: If a company possesses a unique or rare
capability, a competitive advantage might be achieved. However, three crucial
considerations must be taken into account regarding the sustainability if competitive
advantage based on the rarity of competencies-
- Transferability Ease: the rarity of competencies may hinge on ownership and
the ease with which they can be transferred.
- Sustainability: rare competencies may not remain rare and can be temporary.
Therefore, alternative sustainability factors should be considered.
- Core Rigidities: rare capabilities may become ‘core rigidities’, which may be
challenging to modify and potentially detrimental to the organization and
constraining innovation and adaptation to change market demands (Johnson,
Kevan Scholes and Whittington, 2008).
Inimitable strategic capabilities: Achieving sustainable competitive advantage
through inimitable strategic capabilities entails identifying capabilities that are likely
to endure and are challenging for competitors to replicate or acquire. This advantage
is often shaped by how resources are utilized to cultivate competencies in the
organization’s activities (Johnson, Kevan Scholes and Whittington, 2008).

VRIO framework for ECOALF:

Resources, Valuable? Rare? Inimitable Is the Firm
Capabilities, or (Imitation Organized to
Competency Costly)? Capture Value?
Use of sustainable Yes Yes Yes Yes
materials
Pioneering Yes Yes Yes Yes
sustainability initiatives
Supplier relationship Yes Yes No
Certificates Yes Yes No
Innovation Yes Yes Yes Yes
Care for environmental Yes Yes Yes Yes
impact
Strong CSR Policy Yes No
Brand Reputation Yes Yes Yes Yes
Design and creativity Yes No
Partnership and Yes No
collaboration
Customer relationship Yes No
Global presence Yes No
National presence Yes Yes No
E-commerce website Yes No

From the VRIO framework presented above, it is clear that ECOALF’s strengths lie
in-
The use of sustainable materials- they utilize a wide range of sustainable
materials like PET bottles, organic cotton recycled tires, recycled nylon etc.
(ECOALF, n.d.).
Innovation and research- ECOALF developed over 400 recycled fabrics with high
quality and low environmental impact, showcasing the capability to innovate and
create sustainable materials.
Care for environmental impact- the company actively manages environmental
impact of its products, measuring factors such as water usage and CO2 emissions
showcasing its care for the environment.
Pioneering sustainability initiatives- ECOALF has been a trailblazer in
sustainable fashion, being the first fashion company from Spain to receive B
Corporation certification and leading ranking for environmental responsibility in
Spain. By being the pioneer, ECOALF has positioned itself as an industry leader in
sustainability.
Brand reputation- ECOALF has built a strong brand reputation over the past
decade for its commitment to sustainability and eco-friendly practices, which
resonates with environmentally conscious customers.
Whereas their weaknesses are- lack of global presence, lack of unique design and
creativity, lack of penetration in their home-country, and lack of e-commerce
presence.
SWOT analysis for ECOALF:
Based on the Porter’s Five Forces analysis, the threats of ECOALF are- limited
number of suppliers, emerging competitors in the sustainable fashion industry,
threats from the media. On the other hand, the opportunities presented by Porter’s
Five Forces analysis are- global expansion opportunity, growing demand for
sustainable fashion, e-commerce growth, partnership and collaboration
opportunities, government regulations and policies in favor of sustainable fashion.
And from VRIO Framework analysis, the strengths of ECOALF are- use of
sustainable materials, innovation and research capabilities, care for environmental
impact, pioneering sustainability initiatives, brand reputation. On the other hand, the
weaknesses of the company from VRIO framework are- lack of global presence,
lack of unique design and creativity, lack of penetration in their home-country, and
lack of e-commerce presence.
TOWS Model for ECOALF:
Strengths Weaknesses
Opportunities SO: WO:
1. global expansion using 1. ECOALF does not
their brand reputation have a strong global
and values. presence, but they
2. Increase sales amidst the have the opportunity
growing demand for for global expansion.
sustainable fashion. 2. ECOALF operates in
3. Collaborate with limited capacity in the
government and different e-commerce field.
brands to promote There is opportunity to
sustainable fashion. grow through e-
4. Expansion and emphasis commerce and
on e-commerce platform. increase their sales.
3. They can take the
advantage of the
government
regulations and
policies supporting
sustainable fashion
and open more stores
inside Spain to
 increase their visibility
and establish a
stronger foothold.
Threats ST: WT
1. Tackle the threat of 1. In the wake emerging
emerging competitors competitors, not
using the strength of their having a strong e-
brand reputation and commerce presence is
pioneering sustainability a problem.
initiatives. 2. Having limited number
2. Tackle the threat of of suppliers with
negative publicity from growing number of
media by promoting their competitors is also
values and initiatives for another problem.
sustainable environment. 3. As the number of
competitors grow,
ECOALF needs to
work on their designs
and creativity to have
the competitive edge.

Conclusion:
Based on TOWS model, the strategic recommendations to the company are as
follows:
- Massive global expansion in in the horizon for ECOALF. They should take the
advantage of their trailblazing traits and needs to invest in global expansion to
be the market leader in other countries, especially in Europe and America as
well.
- They need to look for more suppliers so that they the suppliers do not gain the
high bargaining power amidst growing number of competitors.
- They need to come up with unique marketing and promotional strategies in
the coming years to take advantage of the pro-sustainable fashion policies
and regulations to increase their sales.
- Leveraging on their pioneering feature and brand value, they should expand
on having a stronger presence on e-commerce platforms as e-commerce
trend is upwards.
In conclusion, the strategic recommendations derived from TOWS model provide
ECOALF with a roadmap for future growth and success. By implementing these
strategic recommendations, ECOALF can reinforce its position as a leader in
sustainable fashion, expand its global footprint, and capture new opportunities in the
evolving market landscape.
Appendix:
1. Mission: following are the three different missions that one will come across
while exploring the strategic direction of ECOLAF:
- Founder’s Mission: Javier’s mission was to create the first generation of
recycled products with the same quality and design as the best non-recycled
products on the market (Goyeneche, n.d.).
- Mission Statement on ECOLAF’s Facebook Page: We are passionate about
putting an end to using natural resources in a careless way (Facebook Page,
2019).
- Official Website (Landing Page: Purpose #actnow): We exist to protect our
natural resources, to create a sustainable lifestyle brand leading change with
every product (ECOALF, n.d.).
2. Vision: following are the three different visions that one will come across while
exploring the strategic direction of ECOLAF:
- Founder’s Vision: ECOALF was born in 2009 with a vision to stop carelessly
using natural resources.
- Vision Statement on ECOLAF’s Facebook Page: We create clothing, footwear
and accessories made entirely from recycled and sustainable materials with
the same quality, design, and technical properties as the best non-recycled,
non-sustainable products. We want to lead by example and inspire conscious
acting across the industry.
- Official Website (Landing Page of the Brand DNA: Purpose #actnow): We
meet our current needs without compromising those of the future generations.
We seek long-term solutions that ensure the future of humanity, basing our
decisions on the balance between environmental, social, and economic
outcomes.
Reference list

ECOALF (n.d.). Personas. [online] ECOALF. Available at:

https://ecoalf.com/en/pages/personas [Accessed 4 Feb. 2024].

ECOALF. (n.d.). Planeta. [online] Available at: https://ecoalf.com/pages/planeta

[Accessed 10 Feb. 2024].

ECOALF. (n.d.). Propósito. [online] Available at:

https://ecoalf.com/en/pages/proposito.

Facebook Page, E. (2019). Facebook. [online] www.facebook.com. Available at:

https://www.facebook.com/ECOALF/posts/our-mission-and-our-vision-mission-we-
are-passionate-about-putting-an-end-to-usi/2279392608764452/ [Accessed 28 Jan.
2024].

Goyeneche, J. (n.d.). Historia. [online] ECOALF. Available at:

https://ecoalf.com/en/pages/historia.

Johnson, G., Kevan Scholes and Whittington, R. (2008). Exploring corporate

strategy. 8th ed. Harlow Financial Times Prentice Hall.

Tighe, D. (2024). Evolution of sustainable shopping in Spain 2022 | Statista. [online]

Statista. Available at: https://www.statista.com/statistics/1378151/shift-to-buying-
sustainable-products-spain/ [Accessed 4 Feb. 2024].

wearop.com. (n.d.). Brands Like ECOALF: Best Alternatives 2024 | WEAROP.

[online] Available at: https://wearop.com/brands-like/ecoalf/ [Accessed 4 Feb. 2024].

www.coherentmarketinsights.com. (2024). Global Sustainable Fashion Market Size

& Share Analysis - Industry Research Report - Growth Trends. [online] Available at:
https://www.coherentmarketinsights.com/industry-reports/global-sustainable-fashion-
market#:~:text=GLOBAL%20SUSTAINABLE%20FASHION%20MARKET%20SIZE
%20AND%20SHARE%20ANALYSIS%20%2D%20GROWTH.