True Religion and Premium Jeans Company

Executive Summary

The dynamics experienced by companies as they go through various stages of development are always complex and vary from one organization to another. Challenges and dynamics can be either categorized as being influenced by internal processes or influenced by external economic variables. In large organizations where various processes run concurrently, situational analysis becomes an almost impossible venture. Furthermore, critical analysis is also imperative as some of the realized challenges are only symptoms of underlying problems. In the same perspective, organizations that seek further growth and expansion ventures need to continuously take stock in all perspectives. This is important in coming up with effective strategies that will stand the test of time. Most managers face major challenges when seeking to conduct a situation analysis of a company. However, various analytical tools in the contemporary business world guide managers towards the holistic analysis of an organization. The tools use various strategies and approaches in cutting across all processes and departments to provide in-depth analysis on the diagnosis and possible solutions. The analytical tools can also be used by companies that seek to evaluate their progress periodically. The case of True Religion represents dynamics that are commonly faced by companies that spend so much time struggling to gain momentum, and then a sudden opportunity appears, full of promises in terms of expansion and profits.

Background Information

A brief history of the company reveals that from the onset the company faced many challenges in terms of financing, management and objectives. However, the company still managed to put a mark in the Jeans manufacturing industry worldwide by 2005. The idea of stylish Jeans was pioneered by Calving Klein in the 1970s. Previously, Jeans were only considered as tough clothing meant to withstand working conditions. Fashion and style are very dynamic aspects that may take any direction just from a slight tough from an influential quarter. The story of Calvin Klein is just but single piece of evidence. First the company designed a pair of Jeans that was tight-fitting. It was controversial during this time, but it is obvious even in journalism and media that controversy sells. Then the company sought the services of the famous Brooke Shields to wear the Jeans. Furthermore, Brookes confided to consumers that there was nothing between the tight-fitting Jeans and her. These two strategies created a new fashion and saw the birth of a new industry that would earn investors and entrepreneurs million of dollars. It only needed a model and a designer.

Since, its inception the Jeans industry has always been steered by the ability of designers to continuously appeal to consumers by their creativity. Companies have stalled due to their inability to keep pace with the ever fashion hungry consumers. Others, have prospered by bringing new styles to the market. Analysis of the Jean manufacturing industry reveals that it is a lucrative business that involves adding value to basic cotton. As technology advanced, it however become evident that manufacturers needed to blend cotton with various fabrics to provide the kind of texture and look that looked stylish and appealing to consumers. However, as the cotton industry became more established various producing countries such as Brazil began to cry foul regarding the subsidies the U.S. provided to its farmers. However, these complaints had not materialized to action by 2008. Due to difficult economic times and the ever-falling cotton prices, the U.S cotton industry was not able to take advantage of the ability to produce denim as the Chinese had. The production cost in China was favorable to manufacturers and the cotton farmers were able to organize themselves and take advantage of the economies of scale. The Jeans manufacturing industries in the U.S. have also seen various producers using varied sources of cotton as a way of establishing uniqueness in the industry. Some manufacturers prefer cotton from countries like Japan while others such as True Jeans prefer to remain loyal to local cotton producers.

As players increased in the Jeans industry, manufacturers began employing various strategies to stay ahead of their competitors. The strategies ranged from minimizing production costs via various methodologies to the luring of consumers via efficient distribution channels, and also the blending of Jeans with other fabrics to make them more comfortable and stylish to wear. Various manufacturers experimented with fabrics such as spandex and cashmere. The general realization was that blended products sold much better even though it meant that production cost went up and subsequently the selling price increased. The implication is that consumers preferred style even when it meant digging a little deeper into the pockets. Such consumer habits are important marketing indicators and invaluable information towards future expansion in terms of market size and segment.

The confidence in the market stirred ambitions in producers. This was evident due to the attempt by some producers to establish life brands in their line of production. The establishment of life brands is beneficial due to the fact that consumers establish loyalty to products that goes beyond just the use of the product. Furthermore, with life brand producers can ensure successful growth initiatives with minimal effort, immunity from the market fluctuations and the possibility of obtaining higher profit margins. According to Singh, the current market in the U.S. is full of competition and companies that seek to establish themselves in their respective industries need to re-evaluate their option in terms of management and expansion prospects. (169).

Problem Statement

There are various levels and aspects of an organization that need to be put into perspective every time a situational analysis is conducted. The characteristics of the Jeans industry in the U.S. are peculiar in that it is more a fashion industry than it is a manufacturing industry. Therefore the dynamics present are much more complex than the dynamics experienced in conventional manufacturing companies. True Religion will have to put these aspects into consideration when seeking to solve its current problems and when seeking to venture into future expansion undertakings.

True Religion in its own sense is being faced by both historical challenges that have for a long time been ignored. True Religion came to be incidentally to a degree out of the expectations of the founders. As a result, the company was not created from solid management foundation practices. This is apparent due to the fact that the managers tended to deal with challenges after they had occurred and there was little or no effort to undertake prognosis measures or at least use predictions. For instance, the initial idea by Lubell and his wife to launch two Jeans brands soon faded due to the fact that perhaps the couple overlooked certain financial aspects or failed to make calculated financial predictions. Lubell had the idea but he did not know how to execute his ideas and make them fruitful. Although, the company was later to venture from the financial challenges the underlying problems had not been addressed. The major challenge facing True Religion is the failure to make calculated future predictions, lack of long-term problem-solving initiatives and refusing to take competitive advantage that is well within their reach.

Situational Analysis


True Religion is operating in a very competitive industry where success is not only determined by the ability of the company to continuously design. A SWOT analysis of the company would help to bring out various aspects of the company and provide recommendations towards even greater growth and expansion prospects. Tracing back from the genesis of the True Religion line of Jeans, it is observable that the company has managed to carve a niche for itself in the industry. Three years only after the inception of the company, True Religion had already managed to become leading Jean’s producers selling products in renowned stores like Nordstrom, Neiman- Marcus, and Saks Fifth Avenue. The company was able to achieve this gargantuan feat with minimal marketing because of the designs it was producing. True Religion also enjoyed the steering of a leader who had both the vision and the mission to steer the company to greater heights. Lubell had managed to keep the designs of the company at par with market requirements thereby ensuring that consumers always sought after the brand. This served as a major strength in the company since there was always the market for their goods. Furthermore, the company had also managed to maintain a superb brand. Branding is specifically an identified concept towards gaining market advantage over competitors. A company that has an already established brand in the market has an easier time obtaining and maintaining shareholders. Branding is also an important aspect because however much a company can invest a lot in ensuring that it has a solid brand, it will always pay off in terms of reduced expenditure in subsequent marketing initiatives. True Religion enjoyed an already established brand due to the continuous stylish products that they provided to the market. The True Religion case is comparable to the case analysis of Dell PC manufacturing company that was started by a young college student at the confines of his Dormitory (Hitt, Ireland & Hoskisson 87). Initially, the founder of Dell, Michael Dell, concentrated on upgrading IBM-compatible computers by increasing their speed and memory. Barely a year later, was Dell already making his own branded computers. Revenue totaled $ 6 million within the next year and there was no looking back for Dell as he later dropped out of school. The company soared to extreme heights at an extreme rate and analysts were already projecting bright future for the company. By 2003, the company had established enough itself in the market and had prospects of diversifying into other areas such as Televisions, Digital Jukebox and USB drives. Furthermore, the company also sought partnerships with other already established companies such as Microsoft and Kodak. These moves were purely optimistic and strategic and provided evidence that the company had already established itself in the industry. The same growth prospects were experienced by True Religion and the company managerial did not hesitate to take advantage of the situation. The alignment of the company in terms of taking advantage of opportunities available is amazing. For instance, True Religion managed to take advantage of an opportunity to go public via a reverse merger, without having to pay for the investment fees to the bank.

True Religion also managed to attain international expansion in an amazing fashion and speed. The American market had already become too small for the many Jeans companies targeting the market. Therefore, it was strategic for True religion to expand their customer base by seeking for international market. Fashion is a worldwide phenomenon that when manipulated properly can easily spread to different areas with little effort. Aspects such as tourism and globalization are major steers of fashion. Furthermore, the beauty pageants conducted in fashion cities of the world also act as publicity of fashion trends. Venture into the international market expanded the consumer base of True Market and the boldness with which the company that was began humbly faced giants in the industry such as Diesel. The fact that True Religion placed a mark in the international market is also evidence that the company was fairly keeping pace with the fashion needs of consumers across the world. The fact that True Religion has managed international recognition and also realized a good command in the Jeans industry is a major lifeline for the company. (Hitt & Ireland, p. 128).


However, True Religion requires quality management. The company’s ventures on ensuring quality products had earned it recognition from the Woman Wear Daily magazine. This says a great deal about the way the firm carries its management and operations. True Religion required quality management which would also act as a way forward for Other Jeans Companies. To be focused are some major points that True Religion puts emphasis on quality management. In addition, a way of integrating some of these into True Religion’s operation for the purpose of raising its standards to look like those of quality products will be another point of focus (Barca, p. 153).

Quality management begins from the pinnacle of the firm. These are president of the firm and people who are immediately after him in power or management. This team usually has weekly meetings to monitor matters concerning service and product delivery, customer satisfaction, profits and other matters concerning the well-being of the firm. This has over time ensuring a check on any arising issue on the company’s chain, thus efficient running. This management check can be integrated into True Religion’s management to ensure that no wrong issue arises, goes unnoticed and grows without the intervention of the managers. The management of True Religion will also be more efficient with this strategy and avoid careless management style that might collide with the employees (Hitt et al, p. 47).

The management of True Religion has also established standards by which the employees should use for solving problems arising from their customers. They contain well-laid steps to be taken that will always ensure satisfaction from the customers. Such strategy is a plus for the company because it gives confidence to the customers, thus maintaining them. Such a strategy can be integrated into True Religion’s system to ensure that the employees follow well-laid procedures so that the case where they do what they feel is right is eliminated completely.

True Religion has a criterion it uses in the employment of new employees. This criterion has the procedure that before the potential individuals are selected, they should first meet a specified level of standards. After the selection, the potential employees are properly oriented before being put in training whereby they train as they do the actual job. This ensures proper grip on the content of work to be encountered by the workers. Such a criterion can be integrated into all departments with incredible effectiveness. This will eliminate the issue of poor training explained among the shortcomings of other Jeans Companies. True Religion firm has a well-laid system of planning in the manner in which it carries out management. The planning has ensured order at all levels of management and working all the way from the president to the lowest-paid employee. Implementation of a plan or schedule within other Jeans Companies can ensure that the chain of command adheres. This will therefore, result in a flawless running of the organization in implementing its goals as highlighted in a section above. This planning can also engulf the aspect of teamwork (Singh, p. 147).

The last aspect about quality management that one might look at in True Religion is the emphasis on quality outcomes. True Religion has a policy declaring nothing but quality results to its customers. This is to maintain the customers’ confidence in the chain of hotels it has and to draw more customers. The enactment of such a policy into Other Jeans Companies will ensure the attainment of the goals it has set for itself. These are just some of the aspects that True Religion implements in order to maintain quality management. Many more policies and strategies are implemented, making it a world-class firm. This is clearly evidenced by the expansion it has made even beyond the United States (Hill & Jones, p. 69).

Since, its inception one negative aspect is clearly outlined. True Religion has not been able to properly integrate the dynamics operating in the Jean manufacturing industry within its strategies and expansion prospects. As the company took advantage of the expansion and growth prospects, it did not take into account the fundamental aspects of the fashion industry. In fashion industry, a single strategy can steer a company to great heights. However, in the same sense it is also possible for a company to stall just after a single wrong act or the lack of making an action. For instance, in 2006 the stock of True Religion was hitting highs of $24 a share and six weeks later, the price for the same shares had fallen to a whooping below $ 16. Looking at some of the events that perhaps led to the sudden change might shed light on the issue. The company had apparently misjudged its current market situation and it paid dearly for the error. The move by designers at True Religion to shift to more basic styles due to the increasing production prices was apparently due to the thought that the company had already established a life brand in the market. The company had also ignored the possible reaction of stakeholders due to such a strategy. The company also began to lose some of its most important international markets. A closer look at these circumstances depicted a managerial that had become reluctant with the current position of the company, and decided to take unwarranted moves backed by insufficient analysis and market consideration.


True Religion has the chance of integrating into other Jeans Companies, a move that might see it rise into higher status and levels. This will thus make it a recognized organization, not just due to its name but for the quality services it offers. True Religion has for a long time been preferred by consumers exclusively for the fact that it has a good grip on quality products. This has been clearly revealed by highlighting some of the strategies it tools to enable the processes which keep it running. Discussed also are the ways in which other Jeans Companies could integrate some of these strategies within themselves in order to attain quality products. Total Quality management is critically essential when it comes to the running of any organization, institution or company, whose purpose is providing services and product delivery with high-quality standards.

Marketing strategy is very important factor for any business and it may determine success or failure regardless of the size of the business. Marketing is a process that involves planning and implementation of aspects such as pricing, promotion and distribution of strategies, goods and services in order to create a brand of goods that will be pleasing to the consumers. There are various strategies implemented by different businesses to arrive at the objective of marketing products but most important consideration is the effectiveness of the strategies in terms of increased sales.

True Religion should also take advantage of an advertising company to market its products anew amid increasing competition from other producers. The advertising company should be able to propose new marketing strategies for the company and the president is being faced with some major concerns including the huge amount of money that the company will have to invest towards re-establishing its stance in the market. Furthermore the advertising agency will also propose the whole amount and the portion that should be allocated to consumer marketing alone. This will give True Religion the chance to make an analysis to establish whether the advertising is cost-effective.

The company is a clothing manufacturing company that makes medium to high premium Jeans clothing. Past analysis provides evidence that both the premium and the medium clothing have the capacity of performing equally well in terms of market penetration. But this will only be maintained when effective and long-lasting strategies are formulated. In the financial year ending 2005 the company had a total of $75million and pre-tax profits of $3.7 million. The company should employ a new sales policy where the company’s own sales should be done by the company’s own salespeople. This will ensure that the company can have an impact on all its outlets. Furthermore, a significant amount of money should be allocated to promotional expenditures. The company should divide promotional expenditures into: sales expense and administration, cooperative advertising programs with retailers, trade promotion and consumer advertising. The key problem facing the company is that the company is adamant to try new marketing strategies because the current strategies are the ones that have been used since the company was established and the company is also reluctant to try out modern marketing methods such as the internet. Furthermore the company has strict marketing policies and the total amount spent on marketing especially consumer marketing seems to be little.

The current financial position of the company considering that their financial trends have been and are still following the marketing dynamics and the managerial feels that increase of allocation towards marketing will affect their contribution by 20%.The current marketing strategies of the company include the fact that the company targets consumers from 12-45-year-olds, who like the company president points out are attracted by the quality of goods sold by them. The company has also restricted its sales campaigns to a few salespeople because the company believes that it is possible to manage few people ensuring that the standards of the company are not lowered. The distributors and the company’s departmental stores are distributed all over the country which means that the company is strict about the image and the brands sold being careful that they are not changed or corrupted by other ideas.

The company’s promotional strategies can be observed from the kind of marketing strategies employed. The company concentrates on particular people mostly in corporate organizations therefore very little allocation is given to direct consumer marketing. However huge allocation has been granted to corporate marketing. Evidenced by the fact that the company strives so much to ensure that they maintain their image is proof enough that the company’s brand is strong enough. However the company only targets the middle-aged Americans so it implies there is a section of Americans that are yet to be reached. In essence the brand may be strong but demographically the strength is not evenly distributed and there is a wide room for improvement.

The amount of sales by clothing retail stores is increasingly growing and in 2003 it exceeded $1 billion. Further research conducted indicates that there is still significant work that needs to be done in terms of marketing and consumer sensitization to strengthen the market. Most consumers still harbor fears of transportation costs and risks. Furthermore only a given section of the demographics which are people from the age of 30-60 buys clothing more. This means that young Americans above the age of 30 and have the purchasing capacity are still reluctant consumers. The current consumer relations with clothing manufacturers are fairly good but consumers still complain of poor after-sale services such as transportation which means that sometimes the clothing may reach the consumers when certain parts are damaged. The current changes being observed in the consumer demographics is that more and more young Americans are willing to buy clothing because they are able to go through education system faster and therefore secure jobs giving them the purchasing power and it is a recommendation that young Americans be given more attention when marketing.

The major shortcoming with the marketing strategy used by the company is that it concentrates on a particular section of the demographics. Furthermore the company is holding to past marketing policies. The advantage of this kind of approach is that it gives a company confidence in terms of sales and the ability to predict future finances. However the major disadvantage is that the company will not be able to explore the full extent of its potential in terms of consumer base and marketing strategies. The major recommendation is that the company should bring new marketing ideas on board so that the company can take advantage of the current marketing strategies. The company should also expand its marketing portfolio in terms of salespersons and budgetary allocation. Marketing is an important aspect of any company because it sensitizes consumers to the existence of the product in the market. Furthermore it is through marketing that a company can create a long-lasting relationship with the consumers. For Banes Manor it is apparent that marketing has been given much importance since its inception. However the times are changing so are the playing field and the players and the company needs to be more aggressive in its marketing strategies.


The knowledge of threats is an important aspect of any company as it enables the company future projections and undertakes risks in a calculated manner. The major threat for True religion is the volatile market that it is operating in governed by peculiar consumer preferences. It is difficult for the company to be completely certain that a given Jeans design will appeal to consumers. This is even more difficult when the company has a history of inconsistency. Even the most established companies in the Jeans and fashion industry are always of the fear of losing style. In a time when True Religion is already facing financial difficulties and stiff competition losing style might just be the greatest threat to the company. The Jeans industry has companies that have already established themselves in terms of market and fashion. Therefore, it is upon True Religion to take into perspective the competitors.

VRIO Analysis


Value analysis of True Religion reveals that there is inconsistency between the capacity of the company to take advantage of the available opportunities, and the capacity of the company to gather resources to neutralize the threats that face the company. The company’s ability to take advantage of expansion, growth and financial opportunities gives the impression that it is in control. The managerial is always required to keep at pace with economic dynamics surrounding it and the industry in general. True Religion managed to take advantage of the dynamics in the fashion industry by coming up with Jeans designs that appealed to the consumers. Furthermore, the company took advantage of the reverse merger. However, when it came to utilizing resources to maintain the supply of quality products to consumers, ensuring the confidence of stakeholders with the products and maintaining its profits even in the face of increased production costs, the company performed below average and below its capacity. The company had managed to gain a good command of the local and international market. Therefore the company had enough resources in terms of consumer base to push through the challenges that it was facing without interfering with the quality of the production. After the move by designers of True Religion to reduce production by eliminating the complex process that led to stylish products, it became apparent where the confidence of the shareholders and consumers lay. The foundation of the company had been for the years held strong by fashion. Apparently, the managers and analysts in the company had for the years left this important consideration to fade away. The implication is that the company was not fully aware of the resources at its disposal to deal with threats.


Although True Religion at some point realized the importance of professional management, it was too late for a company that had already made huge signs of progress. Furthermore, the consideration of employing a professional manager only came after it became apparent that the company was facing major challenges. The company had been principally been under the control and influence of Lubell since its inception. Lubell’s dreams had managed to nurture the company through all the challenges faced by young companies until the company became fully established. However, Lubell seemed to monopolize the operations of the company and since it became apparent that it would take more than dreams and vision to steer the company even further. Furthermore looking at the employee base of the company reveals that there is understaffing. However, the major challenge lies in the lack of a professional managerial team.


True Religion has both the capacity and the resources to reproduce the results it had during its debut as a Jeans manufacturing company. This is a major strength for the company, but that can only be tapped when the management is fully aware of the proper channels and strategies to employ. The ability of a company to consistently produce positive results even in the face of the challenges is not only important to shareholders, but also demonstrates a solid organizational culture steered by visionary and prudent leaders. Imitability also demonstrates knowledge of the consumer’s needs and the various aspects governing their dynamic preferences. True Religion is currently not in a good position of making any calculated future predictions in terms of consumer preferences due to the poor knowledge of the market, except that the market loves style. Therefore, it would be difficult and immensely costly, although achievable to maintain Imitability.


Currently, True Religion needs an intensive re-evaluation of its mission and objectives, and the ways with which it seeks to achieve the mission and objectives. Looking at the situation in which Dell is may give a rough idea of what lack of action would imply. Apart from the fact that Dell was still considered one of the leading countries in the PC production industry, the company was being faced with various lawsuits and cases of mismanagement. The implication is that the opportunities are immense, but the company has not mastered the art of utilizing the resources to its advantage. Had Dell been aware that the frequency with which consumers buy new computers or the need for consumers who already own computers to buy new ones would soon wane, perhaps the managerial would have taken the required steps to face the challenge. The automobile industry provides evidence that even for products that exhibit low utilization frequency and are long-lasting, companies can still thrive. However, the current organization of True Religion greatly limits the capacity of the company to take advantage of resources at its disposal. Limitations come in form of human resources, capacity building, managerial and financial situations.

Alternative Analysis

An alternative analysis method that can be employed for the case of True Religion is the Balanced Score Card. The balanced scorecard is a tool that allows a company to analyze its position as well as evaluate its progress through each step. In addition balanced scorecard has defined metric tools to ensure that evaluation is measured with a heightened degree of accuracy. True Religion can choose a single approach from the perspectives and use it to harmonize all the other perspectives. The balanced scorecard has the advantage of ensuring that all the perspectives are brought together and their influences with each other taken into perspective. Eventually, True Religion will be able to realize its lost consumer preference and reduction profits. Another alternative analysis method is the fishbone analysis which is majorly known to be crucial in identifying the real problem and guiding towards the most appropriate solution.


The major areas of concern for True Religion are optimizing internal processes and guiding the gathered energy towards ensuring consumer satisfaction. Internal business processes are significant for the success of any company, but it is always ignored by most managers due to the subtle nature with which it operates. For instance, in the case of True Religion, the managerial was not professional enough for the company and the company continued to employ managerial styles it used during its young years for the growing company. Furthermore, the company had not taken objective-driven steps to expand its employee base. Internal processes also involve quality assurance. The company should establish a solid and professional quality assurance team to prevent such an occurrence that saw the neglecting of quality in order to reduce production costs. True Religion seems to have been consumed so much by the major sales it was making and the speed with which the company was able to penetrate the international market. The staffing procedure should be reviewed with major objectives of acquiring a professional management team. In addition, True Religion should also invest considerably in market research and analysis. This will strengthen the ability of the company to make future predictions and take calculated risks with the minimal loss and optimized benefits. Furthermore, knowledge of the market will allow the company to make prognosis of problems before they escalate to levels that are costly or even destructive.


Situational analysis is an imperative management tool as some of the challenges faced by companies are only symptoms of underlying problems. In the same perspective, organizations that seek further growth and expansion ventures need to continuously take stock in all perspectives. This is important in coming up with effective strategies that will stand the test of time. Most managers face major challenges when seeking to conduct a situation analysis of a company. However, various analytical tools in the contemporary business world guide managers towards holistic analysis of an organization. The tools use various strategies and approaches in cutting across all processes and departments to provide in-depth analysis on the diagnosis and possible solutions. The analytical tools can also be used by companies that seek to evaluate their progress periodically. Analytical tools should be used in consideration of various aspects of a company due to the fact that companies experience different challenges. Furthermore, it is prudent to use customized versions of the analytical tools to fit specific characteristics of an organization. Some companies also prefer to use more than one analytical tool for better results.

Works Cited

  1. Barca, Mehmet. Econimic Foundations of Strategic Management. Burlington: Ashgate, 2003.
  2. Hill, Charles & Jones, Gareth. Strategic Management Theory an Integrated Approach. Canada: South Western Cengage, 2008.
  3. Hitt, Michael & Duane Ireland. Strategic Management: Concepts and Cases. 8th ed. Canada: South Western Cengage Learning, 2009.
  4. Hitt, Michael, Ireland Duane &Hoskisson, Robert. Strategic Management: Competitiveness and Globalization. Canada: South Western Cengage Learning, 2009.
  5. Singh, Maninkat. Strategic Management and Competitive Advantage. New Delhi: Global India Publications, 2002.

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