Comprehensive Analysis on Veja Sneakers case study 27
Veja is a company that was started in 2005 by two friends just after graduating from business school. The two friends went on a world tour, after having previously done internship in vey ‘corporate’ organizations, to find more fulfilling ways to do business. From the case, Morillion ( one of the founders) says that “but now we could never work for any other company since Veja allows us so much freedom to do what we want and strive for our dreams”. Francois Morillion and Sebastien Kopp had a dream to build a different brand.
Veja’s Vision and Mission
Veja doesn’t have a particular set of words put together to describe their vision and or Mission. The vision of the company is set in the founders’ hearts and not written on paper. The two founders have lived their whole lives as an example of what their company is all about. From my research though, it is clear that Kopp and Morillion set out to bring cultural change in the fashion market and hopefully in the whole world. The two are on a mission to create a sustainable supply chain by ensuring traceability of the production materials and traceability of the final product also. They have done this by ensuring transparency in their production process and especially by monitoring the source of the rubber, cotton and the tanning of the leather.
Fair Trade Law
Veja received certification under the ILO early on in the life of the company. Fair trade laws provide standards for production and manufacturing. To point out a few;
Opportunity for the disadvantaged producer- this being the reason why Veja opted to operate in Brazil, Oliberte in Addis Ababa and SSeko in Uganda so as to create employment opportunities for the nationals of those countries
Transparency and accountability- this means that there is full disclosure on operations of the company. It points more on ethics and corporate governance of the organizations
Fair trade practices- to mean having concern for the small producers/ suppliers. Most of the ‘big’ firms that do not use fair trade principles will squash the small producer by paying them minimal price for their produce. Veja is seen to have paid their workers in Brazil 16% above the legal minimum wage in that country.
No child labor/forced labor- a practiced mostly common in Asian and parts of Africa, child labor is not only unethical but also denies the child basic human rights. Use of forced labor ( slavery) a practice still well alive in the 21st century is looked down upon by the ILO.
The manufacturers operating in the eco-fashion industry are regulated by the ILO principles and are therefore certified on compliance. Veja is seen to have gone over and above the need for certification when it came to all the matters aforementioned.
Eco-fashion is a term used to mean to show that production of the clothes or shoes has been produced using recycled materials or materials that have been produced without use of chemicals. This is the industry sub-segment that Veja chose to operate in since the founders wanted to create a brand that ensured sustainability of the natural resources.
Eco-fashion has grown over the years and the Ethical Fashion Show is still holding events with one being held in Berlin, Germany in January 2018. In the recent years consumers have become more aware by use of social media and the exhibitions like the fashion shows. The greater the awareness, the more vocal the consumer becomes and the better it is for companies like Veja since their vision of creating sustainable yet fashion-forward brads is being realized.
The eco-fashion world had to make a ground- breaking entrance into the world of fashion else they would have been crashed by the ‘contemporary’ fashion brands. Producers like Veja did not use advertising because they believed it was up to the consumer t choose. The consumer doesn’t need the product benefits shoved down their throats but need o make a conscious decision t support the eco-friendly lifestyle. The eco-fashion producers are mainly small scale and do not have the huge budgets to spend on advertising and PR. The collaboration with other eco-friendly producers has assisted to bring the small brands to the fore front. However, big designers like Nike still run both eco-friendly and non-eco-friendly lines
Strengths of Veja
Veja founder Morillion speaking at the LHForum in 2013 points out the strengths that he believes have brought the company this far.
Supply chain control
The fact that Veja is able to account for the source of cotton that they use, the rubber source and the leather tanning and cattle rearing process is very outstanding and has been able to propel them so far in a short period. They have 100% control on their materials and production process. Veja is still owned by only the two founders and they take control of the shoe designs in collaboration with other designers.
The Veja brand ranges from adult sneakers to kids sneakers and even bags. This diversification has allowed Veja to grow their market and even attract new consumers. Celebrity endorsements (which go unpaid) from starts like Emma Watson have brought the brand into the lime light. From my research, I found that Veja doesn’t use advertising and will not pay a celebrity or blogger for endorsement. T is evident that the founders still believe in the choice of the consumer and want the consumer to see beyond the item and understand the greater good they bring by purchasing te eco-friendly product
Concern for Staff and community
Veja has gone over and above in creating relationships with the staff. The more than considerable pay makes the workers very motivated. They have tried to ensure that they have quality family time and have built their capacity also by allowing the staff to visit both France and Brazil so as to have a feel of the brand.
The community in Allegro has benefited from the fair prices that the company buys the materials from them and have been able to improve their lives altogether. The good pay has also prevented destruction of the forests so as to rear cattle.
The founders loved sneakers. They knew about the market to target so as to make the impact they needed. Even now, the millennial have a particular fashion sense and sneakers are still ‘cool’. Veja knew that that was a market that was very responsive to fashion trends and therefore placed them strategically to meet the needs of the millennial at that time
Values and Principles of Veja
The company has certain valued that are evident throughout the case. These values are:
Use of ecological inputs
Compliance to Fair Trade Practices
Respect of workers’ dignity
Profit making theory
This is a theory that is used by all companies. The theory of making profit states that businesses are in the business of making profits.
Veja has been able to make profits from when it was founded in 2004 to date. This is possible even with the high production costs and labor costs. Veja has been very strategic in its operation and will only produce goods ordered six months in advance. This means that there is no wastage and no bad/dead stock
Veja has outsourced most of its operations and this has made it possible to increase profits over the years.
The use of the Price, Product, Place and Promotion is evident in this case. Veja knows the Price of the raw materials used and all costs incurred in production. They use this information to set a consumer friendly price that is even cheaper than some other non-ethical brands. The founders well understand the brand they are making and have ingrained their personal values in the brand. The location of their firm also says a lot about cost cutting measures being undertaken. Promotion of the product relies heavily on word of mouth but also the use of the fashion shows s what brought the brand into the lime light.
Ethics and Corporate Governance
Veja has maintained ethical practices in all its dealings. They have ensured that the production process was eco-friendly and that the supply chain is traceable. The corporate issues have been easy to work on since the founders maintain almost full control of the entity
Veja has put in place measures to ensure that the source of raw material is sustainable. This has made their production process flow easy and predictable. This means that they know exactly where the materials come from, when they will be coming and from whom they will be coming.
Challenges Veja is facing
The reliance on organic cotton is also a challenge since nature is not under the control of man, no matter the caution taken.
The high cost of organic material used in comparison with the costs that the non-ethical producers incur in their production.
Veja, like other producers in the ethical fashion industry, has to invest heavily in Research and development to improve on production methods and remain transparent in production.
Consumer conception of the eco-brands is still not at par with how they perceive the conventional brands. The awareness has grown now in the recent years as compared to when the Veja brand was created but still not at par with conventional brands
The eco-fashion brand is growing steadily but in the western world only. The raw materials all come from the developing worlds but they developing world seems to know little of the final product. Veja had a dream of having their sneakers selling in stores right next to the big brands like Louis Vuitton. They don’t seem to believe that there is a market in Africa and Asia for their brands. They need to diversify into the other markets too.
The ‘No Advertisement’ policy in Veja also seems to be a draw back since it does not help to create awareness. The awareness needed is not only of the brand but of the benefits of the supply chain. Advertising would allow for the market to better understand the transparency in sourcing and production.
From my analysis and research, I have also found that Veja is still fully owned by the two founders. This is working for the company so far but it might not be so in the future. The eco-fashion brands need to collaborate more so as to create more. The need for this industry to keep developing needs more collaboration.
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Sustainable Business/social impact. Retrieved from https://www.theguardian.comRamshae, E. (2017) This French sneaker brand will make you rethink the fashion industry
Retrieved from http://coveteur.comSharma,N. (2017) Fashion with conscience why sustainable fashion is the next retail frontier.
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