Cambridge Satchel Company – Small Company:

According to Afrifa (2016), Small and .

Medium Enterprises (SMEs) plays
important role for socio economic
development of nations. There are
more than 4.9 million SMEs operating
in UK and are generating combined
turnover of £3.3 trillion. These SMEs
are boosting the financial growth and
workforce needs within UK. (Boost
Capital, 2017).

Figure 1: SME Landscape in UK (Boost Capital, 2017).

Figure 1: Number of SMEs in UK based on employees (Rhodes, 2018)

According to Rhodes (2018), Small

and Medium Enterprises are defined on
the basis of their size and annual
turnover. The small firm have
employees ranging from 10 to 49.
These small firms can generate
revenue less than £50 million.
This is the reason that Cambridge The company was established by Julie Deane in the
Satchel Company was selected as year 2008. They are highly famous within British
small company from UK. This small market for producing leather products such as
company employees only 38 people leather bags called as Satchel. The recently
including directors (2), managers (6), generated the annual revenue of £11.4 million in the
and employees (30). year 2018. (Cambridge Satchel Website, 2018).

They operate from their head office in

Cambridgeshire UK. The manufacturing of
leather products is done purely in UK from
their Leicester factory. The company only
designs the leather products, after that
supplier from China supplies the quantity of
leather raw material to them. They are
currently adopting the e-commerce
mechanism for selling their products online,
whereas they have different shops in different
cities of UK such as London, Cambridge,
Leicester, Edinburgh, and Oxford.
Figure 3: Headquarter location of Cambridge Satchel
(Cambridge Satchel Website, 2018).
Company

According to Higon (2012), performance of This is the reason that 6 managers under the
SMEs has grown remarkably with the supervision of their director manage all the
advancement of ICT technologies. The e- key operations. These managers are not only
commerce features such as online shopping, managing the accounts, manufacturing,
social media networks, and mobile apps investment, and sales operations. Their
have helped SMEs to compete with larger shops are relatively smaller in size due to
companies in same market. Moreover, Singh selling only the satchels for men, women,
(2011) identified that strategic coordination and children. Although, brand image is very
within supply chain helped SMEs to get high as compare to other leather brands, but
affordable raw material from large still they are recognised as small company
producing countries like China, Bangladesh, due to revenue less than £50 m and
India, and others. The company is employees less than 50. (Afrifa, 2016;
considered as small because they believe in Cambridge Satchel Website, 2018).
technological development.
Financial planning:
According to Dearman et al. (2018), The research conducted by Bradford (2015)
financial planning is very crucial for all kind identified that new start-up businesses require
of businesses, whereas it plays important role capital investment on easy conditions. But, it
during the start-ups of small businesses. The is rather more important for small companies
importance of financial planning is to regulate the investment crowd funding by
associated with financial control achieved protecting their investors.
through budgetary control procedures. The In contrast, Mason and Harrison (2015)
feasibility of any business is analysed by identified that small companies starts mostly
measuring the variance between the without acquiring any major investments, but
estimated budgeted income and expenses. they gets investment when their businesses
It also helps in attracting financial starts performing well in market. This is the
institutions and banks to get loans for new key reason that Julie Deane started the
business ventures. There are different ratios Cambridge Satchel Company by using her
calculated during the financial planning or savings of £600. The company was founded
estimation of financial growth such as return on the basis of simple idea without
on investment (ROI), return on capital considering the investments or business
employed (ROCE), gearing ratio, and others. financial planning. (Telegraph, 2018).
(Abor, 2017).
 Figure 4: Financial parameters of Cambridge Satchel Company (Craft, 2018)
Figure 4 clearly indicates that despite of initial investment of £600, they have clearly progressed in terms of
their total assets from £4.4 million to £6.83 million in the year 2017. (Craft, 2018).
However, their total liabilities increased from £1.6 million to £2.43 million in the year 2017. The income sta
Gal, Net-á-Porter, and Moleskine. (Insider Media Limited, 2015).

Figure 5: Funding and liabilities of CSC (Craft, 2018).

Figure 6 clearly indicates that CSC moved from capital equity based company to debt
oriented firm during 2014-15. This is the reason that revenue, net income, and gross profit
margin decreased immensely. But, paying off the current liabilities helped them to stabilise
again within UK market. (Insider Media Limited, 2015).

Marketing Strategy of CSC:

According to Jones and Rowley (2011), small However, Kenny and Dyson (2016) analysed
companies have limitations in terms of that marketing is directly linked with
marketing and advertising their products and entrepreneurial thinking by understanding the
services. There are different factors that key needs and demands within any particular
restrict the marketing management within market. In this context, Julie Deanne’s idea of
small companies such as lack of resources, manufacturing school satchel from pure
lack of workforce, regulations, and lack of leather justifies her entrepreneurial and
funding. In addition, Taiminen and marketing skills. She came across this idea
Karjaluoto (2015) analysed that digital after struggling to get good quality school
marketing channels have improved the way bags for her children. She approached the
in which SMEs can market and advertise Scotland based retailer and extracted
their products in local and international information about manufacturer of Satchel in
markets. There are two types of marketing UK. She then started the business with initial
channels such as above the line (TV order of 20 satchel selling on her online
advertisement, Newspaper ads, Billboards, website. But, now they adopted public
and others) and below the line (digital media, relations, digital marketing, and other tools
leaflets, and others). for marketing. (Cambridge Satchel, 2018).

According to Mitchell et al. (2015), retail branding is very crucial for survival of SMEs in
niche marketplace. The e-commerce facilities helps in adopting retail branding strategies such
as online purchase websites, social media networks, online communities, mobile apps, and
online word of mouth (WOM). The retail branding is linked with increasing the awareness
about the availability of good quality products and services. In addition, Taiminen and
Karjaluoto (2015) identified that social media networks help in selecting the target market,
market segmentation, and product positioning.
According to Cambridge Satchel Website (2018), they are highly active on social media
networks such as Faceook, Twitter, Snap Chat, and LinkedIn. There are more than 25,000
followers of Cambridge Satchel Company on Twitter and Facebook. The products and
services have been liked by more than 1 million people in UK as shown in figure below:
 Figure 7: Social media presence of Cambridge Satchel Company

Despite of five shops in different regions of UK, they mainly focus on their e-commerce
operations through their website. Their website is not online managing the orders but it also
helps in marketing their products such as promotions, blog, news, loyalty programme, and
others. There are different promotional offers provided on their website such as 10% student
discount, 10% CSC club discount, 10% Apprentice discount, and 25% on Emily product
discount. The news room updates about the upcoming products and events of CSC, whereas
website content is linked with social media networks. The social media posts bring them
directly to their website. (Cambridge Satchel Website, 2018).
The unique selling point (USP) is the key The WOM strategy also helped them to
characteristics of any company that advertise their products in different
differentiate them from their competitors in communities. The Google advertisement
any specific market. The USP of CSC is helped them to improve their online WOM,
linked with nationalist sentiments within whereas they managed to get 4 million views
their products. The company was started with for their Google advertisement. (The drum,
key aim to manufacture high quality leather 2012).
satchels in UK. (Cross et al., 2015). They adopt competitive advantage strategy of
Also, quality of their products is relatively diversification by producing products of all
higher as compare to other competitors. The price ranges. They have satchels ranging
target market was selected as working class from £30 to £500 depending on size and
professionals from UK. The market features. The price of their product is
segmentation was selected as lower high comparatively high as compare to other
class population of UK such as managers, brands such as Max, Michael Kors, and
directors, models, doctors, and others. They others. But, marketing communication is
positioned their product in UK market by very strong that helps in justifying the value
competing on the basis of quality and value for money in their products. (Cambridge
for money instead of price. (Cambridge Satchel Website, 2018).
Satchel Website, 2018). Moreover, RSM International Entrepreneur
According to Kenny and Dyson (2016), of year 2013 award for Julie Deanne and visit
public relation is very important tool of of 10 Downing Street helped in improved the
marketing to improve the overall brand brand image of CSC. This directly improved
image. There are different strategies adopted their competitive advantage as compare to
to improve public relations such as events, competitors in UK. (Business Award Europe,
sponsorships, community investments, and 2018).
social causes. In the case of CSC, nationalist
sentiment of UK based firm providing
employment facilities helped in improving
their public relations. They marketed their
products as pure UK manufactured which
helped them to gain trust of their customers.
(Cambridge Satchel Website, 2018).

Growth Strategies:
According to Love and Roper (2015), growth In contrast, Carbo‐Valverde et al. (2016)
strategies within SMEs are mainly depending on argued that small companies needs to first
their quality of product, innovation, and financial focus on market penetration strategy
parameters. The innovative products helps small within existing market due to limitations
companies to grow within their current market, of finances. The new market entry
whereas it also helps in entering new markets to strategy must be adopted for innovative
exploit foreign market opportunities. In addition, purposes such as shift of manufacturing,
Ansoff’s product/market growth matrix identified potential value of product, and high
four key strategies of growth such as market demands in foreign markets. But, this is
penetration, product development, market all possible with sufficient finance either
development, and diversification as shown in generated from profit or investments
figure 8. (Gurcaylilar-Yenidogan and Aksoy, from financial institutions.
2018). During the initial 5 years, Cambridge
Satchel Company focused on market
penetration and product development
strategy. Their innovative product was
key factor within their product
development strategy. (Cambridge
Satchel Website, 2018).
They initially started selling products
online by adopting e-commerce strategy,
but then shifted their strategy towards
Mortar and Clicks. They are currently
operating with five shops in different
Figure 8: Ansoff’s product/market growth matrix
regions of UK such as London,
(Gurcaylilar-Yenidogan and Aksoy, 2018).
Edinburgh, Oxford, Leicester, and
Cambridge. The market penetration
However, Bianchi and Mathews (2016) identified
strategy is aligned with their marketing
that advancement of ICT technologies have
practices and helps them to understand
provided improved ways for small companies to
the need to exist in specific region of UK.
not only penetrate and develop their existing
(Cambridge Satchel Website, 2018).
markets, but they can also enter new markets
with ease.

The first evidence of entering new markets can In addition, Love and Roper (2015)
be identified from CSC move into USA and identified that exporting strategy is
China. They have established partnership with easiest way to enter new markets without
Alibaba who are China’s largest e-commerce getting affected by the trade barriers,
service provider. The CSC adopted the exporting tariff, and regulations. The exporting
facility while entering into Chinese market. strategy helps in quick entry into markets,
Instead of shifting the manufacturing into China, whereas partnerships with big brands can
they maintained their nationalist sentiments in help in positioning within any specific
their products and expanded their manufacturing market.
in UK. They have also opened counters in Similarly, Lincoln and McCallum (2018)
different shops in China such as Shanghai's Lane identified that small companies doesn’t
Crawford and Beijing's Galleries Lafayette. have sufficient finances to adopt
(China Daily, 2015). Greenfield or Brownfield market entry
strategies. Therefore, exporting strategy
is highly suitable for small companies to
expand their operations at global level.
On the other hand, CSC is focusing on
expanding their operations in different
regions of UK such as Scotland, Ireland,
and North East. They are focusing on
market penetration strategy by promoting
their products in large communities/cities
such as Newcastle, Birmingham, Dublin,
and Glasgow. They are also planning to
Figure 9: China e-commerce store of CSC start marketing campaign in these regions
about the value of product, whereas they
Similarly, they have entered into US market by are targeting audience through
accepting the $21 million investment from Index entertainment channels such as TV shows
Venture. They opened only one store in US and others. (Cambridge Satchel Website,
market but mostly focused on trading through e- 2018).
commerce platform. (Guardian, 2014).

Recommendations to improve competitiveness:

Based on the analysis on three key segments It is highly recommended to shift their
of financial planning, marketing, and growth, manufacturing unit into countries like China,
there are different recommendations that can Bangladesh, South Korea and others to
help in improving their competitiveness in control the costs and expenses incurred with
UK and foreign markets. their products. They mainly need to focus on
There are no direct competitors of CSC in countries with abundance of leather raw
UK market due to innovative product, but material, whereas African countries can
still there are different indirect competitors provide sufficient leather raw material for
such as Michael Kors, Gucci, Prada, TK their manufacturing process. (Kumar, 2016).
Max, and others. The competitive advantage They also need to understand the difference
is mainly depending on two key aspects such between the good and bad debt. The good
as product price and brand image. (Kapferer debt is an investment that will grow in value
et al., 2018). or generate long-term income. Bad debt is
The small companies mainly focus on cost considered as the debt incurred to purchase
leadership strategy to gain competitive things that quickly lose their value and do not
advantage. This is only possible by generate long-term income. (Bradford, 2015).
minimising the expenses and limiting profits
from sales. The nationalist sentiment is not The current CEO Julie Deanne operates with
enough to gain competitive advantage, there no loan or liability strategy, but still they
are different aspects that need to be required investment from Index Ventures to
considered with product development such as enter US market. (Guardian, 2015).
quality, value for money, and brand
recognition. (Cambridge Satchel Website, But, it was considered as bad debt due to
2018). decline in their net income and revenue in
Similarly, competitive advantage depending next two years. However, still there are
on product price requires companies to shift different investment opportunities that can be
their manufacturing units in countries with considered to expand their business such as
cheap labour, high natural resources, and Public Share Awards, and Long term bank
easy global delivery. The recent Brexit loans for 20 years. (Cambridge Satchel
decision limits the options of UK companies Website, 2018).
to enter EU markets such as Germany,
France, and Italy. (Henninger et al., 2017).
Besides acquiring good debt, they mainly
need to conduct market research about other
potential markets with high demands for
luxury products such as Middle East,
Australia, Hong Kong, and South Korea.
Their partnership with Alibaba in China can
be expanded into these countries. The global
network of Alibaba can be utilised to capture
market shares in potential markets. Also,
secondary manufacturing unit in China can
help in improving the delivery time for CSC.
This will help in improving their overall sales
and revenue. (Cambridge Satchel Website,
2018).
Word Count: 2933 words

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