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Armour Garments

In: Business and Management

Submitted By boning143
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Case Study: ARMOUR GARMENTS COMPANY

BACKGROUND OF THE CASE

The Armour Garments Corp. (AGC) was established in 1954 in the Philippines as a manufacturer of high quality undershirts. It had two popular brands, namely: “Armour” and “Marca Troca”. The company started out by copying popular styles and designs from Hongkong. The first ten years was quite profitable. The company grew from 25 workers in 1954 to about 250 workers in 1967. The company sells all of its products to wholesalers in Divisoria who distribute the product all over the country. The products are manufactured in white color only and are generally of superior quality being twice more durable than other brands in the market. Undershirts are worn as a matter of habit to avoid the direct contact of users polo shirts with the body. Product sales is seasonal. Business usually peaks twice a year: in June, with the opening of classes and in December, with the Christmas rush.

In the mid 60’s more and more undershirt factories opened. The company faced serious threats in its operation since the Divisoria middlemen were not loyal to brands. All along, AGC was banking on its institutional pride and goodwill being the pioneer in the industry. While sales of the company did not decrease, it also did not substantially increase with the growth of the population. However, this did not bother management since the cash flow was good. No major investments were made during the period. It was business as usual so to speak.

In 1971, the market for the undershirt suddenly took a downturn. It was no longer fashionable to wear undershirts. Moreover, more and more marginal factories sprouted up and were willing to compromise on price and payment terms with the middlemen. For the first time in its history, the company was astounded.

It introduced a new brand “Blossom” which was of exactly the same

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