Студенческий сайт КФУ - ex ТНУ » Учебный раздел » Учебные файлы »Менеджмент

Critical analysis of market entry strategy of Bershka BSK Espana S.A.

Тип: контрольная работа
Категория: Менеджмент
Скачать
Купить
Critical literature review. Apparel industry overview: Porter’s Five Forces framework, PESTLE, competitors analysis, key success factors of the industry. Bershka’s business model. Integration-responsiveness framework. Critical evaluation of chosen issue.
Краткое сожержание материала:

Размещено на

Размещено на

Critical analysis of market entry strategy of Bershka BSK Espana S.A.

Abstract

The report critically analyzes the Norwegian apparel market evaluating its attractiveness suggesting potential market entry for Bershka BSK Espana S.A. The report starts with the critical literature which describes tools and frameworks used for analysis. The next part of the report concentrates on the evaluation of the apparel industry. For the purpose of analyzing the major forces impacting the company's profitability level and the intensity of rivalry, Porter's five forces framework was used, following the PEST analysis to estimate the external environment of the company. Competitors analysis was then conducted to determine key competitors and their position on the market. Detailed analysis of key success factors was used with the evaluation of company's ability to meet those factors. Then, the report focuses on the company's overview including its business model and forms of development. To evaluate company's competitive advantage Porter's generic strategies framework was used followed by integration-responsiveness framework to analyze company's strategy. The next part of the report reviews the issue of market entry strategy constituting the base for conclusions and recommendations. The results of the report suggest that Norwegian apparel market is an attractive destination for the company due to the favorable forces influencing the environment. The structure of the company's business model is another factor suggesting that the expansion on this market can be successful. However, there are some aspects the company should take into account before entering this market like the power of advertisement or the possibility of online shopping.

The aim of the assignment is to critically evaluate the Norwegian apparel market and analyze the potential market entry strategy of Bershka BSK Espana S.A.

Critical literature review

Companies decide to expand their businesses on overseas markets due to different motives such as gaining access to new markets, decreasing risk resulting from diversification in different countries, balancing losses in one country by earnings in other country or gaining greater profit from large investments to name a few (Rodriguez et al 2010). Yip (2003) in turn, groups different motives into four drivers of internationalization distinguishing market, government, cost and competitive drivers. However, as Conconi et al (2013) note, companies face also significant uncertainty when internationalizing as they are often unaware of local and legal regulations, unsure of the extent of demand or adequacy of their products to local preferences. Therefore, it is important for companies to perform market evaluation in order to obtain as much information as possible to decide whether to enter a particular market or not (Graham 2004).

In order to evaluate the apparel market, PEST analysis was used to take a closer look at the external environment in which the company will operate what will allow the company to take advantages of opportunities and lessen the threats (UW, n.d., Papers4You. Com, n.d.). Kotler points out (1998) that the analysis enables to comprehend the market, company's position and both its potential and directions of operation. Jurevicius (2013) sums up that «the outcome of PEST is an understanding of the overall picture surrounding the company». In addition to PEST analysis, Porter's five forces framework was also used to evaluate the environment of apparel industry since the framework allows to categorize and analyze major forces influencing the intensity of industry rivalry and its profitability level (Jurevicius 2013).

In order to define the company's competitive advantage, Porter's generic strategies have been used. Porter (1998) claims that by skillfully aiming at the cost leadership, differentiation or focus strategies a company can achieve substantial and sustained competitive advantage over its competitors.

Furthermore, the appropriate entry market strategy is another issue with which international companies have to struggle (Hill 2012). Young et al (1989) in turn, emphasizes that this choice can have a significant influence on a company's performance when operating on a new market and also stresses that this decision is one of the most complex a company can face. According to Hill (2012, p. 486) «the various modes for serving foreign markets are exporting, licensing or franchising to host-country firms, establishing joint ventures with a host-country firm, setting up a new wholly owned subsidiary in a host country to serve its market and acquiring an established enterprise in the host nation to serve that market». Each of these strategies has advantages and drawbacks. The extent of those advantages and drawbacks is related to a number of factors involving transport costs, trade barriers, political risk, economic risk, business risk, costs as well as company's strategy. Young et al (1989) also emphasizes that control is one of the crucial factors influencing the success of a company in a new market.

Internationalization is a complicated process demanding preparation and adequate research in order to be successful. There are lots of frameworks and analysis making this process easier allowing companies to predict how much profit they can gain. Last but not least, entry market strategy is also crucial for the company's success therefore it is important to choose such a strategy that will be adequate to the conditions and the environment on particular market.

Apparel industry overviewstrategy industry market

In the past years Norway's apparel market recorded growth both in volume and value sales which both amounted to 2.4% on average providing a constant growth year by year (Appendix 1 and 2) (Euromonitor, 2013a). High level of GDP per capita standing at US$101,518 together with low unemployment rate totaling 3,5% in 2012 sustained the strong national economy and contributed to the positive development of the market inspiring consumers to increase their expenditure on apparel (Euromonitor, 2013a; Euromonitor, 2013b; Euromonitor, 2013c). In the following years up to 2017 the Norwegian economy is expected to continue its progress with growing real GDP on average by 2.4% (Appendix 3). Both volume and value sales are expected to grow each year by 1.7% and 1.6% respectively (Appendix 4 and 5) (Euromonitor, 2013a; Euromonitor, 2013h). Growing GDP per capita, stable low unemployment rate, rising disposable income and positive changes in volume and value sales terms will continue to provide constant development of the apparel industry indicating the optimistic and positive forecast performance for the following years (Euromonitor, 2013a; Euromonitor, 2013b; Euromonitor, 2013c).

Due to rising disposable income, Norwegian consumers have more money to buy clothing especially that apparel serves as a way of expressing their personality (Euromonitor, 2013a; Euromonitor 2013d). However, they are quite highly influenced by media and icons and this trend is expected to increase. Young consumers will remain the most sensitive segment to price changes (Euromonitor, 2013a).

Store-based retailing remains its dominant position in apparel distribution channel with apparel specialist retailers being on top and contributing to 76.7% of apparel sales in 2012 (Appendix 6). However, increasing interest in using internet retailing is expected to continue taking shares from store-based retailing (Euromonitor, 2013a).

The Norwegian apparel market is dominated by international brands among which H&M, Cubus, Kappahl and Dressmann are the main competitors holding altogether around 24% of total apparel market value (Appendix 7) (Euromonitor, 2013a).

From the perspective of doing business, Norway is a highly attractive destination for capital investment being ranked 6th for the Ease of Doing Business in 2013 with small but rich population (Euromonitor, 2013b; Invinor, 2013). The corporate tax rate amounts to 28% which is above the Europe average (Appendix 8). However, Norwegian corporate tax rate is a flat tax and is to be reduced to 27% in January 2014 (Invinor, 2013).

Porter's Five Forces framework

Porter's Five Forces has been used to further analyse the Norwegian apparel industry. The framework can help the company with better understanding of the structure of the industry and revealing the most important aspects of the competitive environment as well as industry's current profitability (Porter, 2008). In order to clearly define the following forces, the buyers will be taken as individual consumers while textile producers and workforce as the suppliers.

Summary

Although Norwegian apparel industry is quite fragmented, its moderate growth within past years helps to abate the intensity of rivalry. Due to the liberalization of international trade, suppliers' power is weakened by the competition from producers in low-wage regions. In spite of the lack of switching costs, buyers' power is weakened due to their susceptibility to branding and advertising. Since demand patterns change rapidly, companies, while attempting to maintain market share, aim to gain customers by utilizing brand positioning and running marketing campaigns. Low entry barriers together with moderate capital requirements creates h...

Другие файлы:

Marketing analysis and strategy company Indes
Current situation and market condition in which is Indes, offered services and company problems. Segmentation of the market and an industry condition....

Marketing Planning and Strategy
Marketing Planning and Strategy is designed for courses at the junior/senior-level in marketing strategy, business unit strategy analysis, strategic m...

Stock Market Strategies That Work
Making significant money in the stock market isn't a given. However, investors can greatly increase their odds of success by knowing the basics of how...

Trend Forecasting with Technical Analysis: Unleashing the Hidden Power of Intermarket Analysis to Beat the Market
Market methods from the last century won’t work in this one and Louis Mendelsohn’s breakthrough book takes technical analysis to a new level. Mendelso...

A critical evaluation of infrared analysis and mass spectrometry in forensic science
Nature of infrared analysis and nature of mass spectrometry. Summary of the uses in forensic analysis. Critical comparison of infrared analysis and sp...