marks & spencer entering Australia for the first time
The tasks are executive summary (about a page), Marketing control plan (contingency plan, expansion plan) and conclusion (around 300 words).
It’s about marks & spencer entering into Australia for the first time. will open the first store in Sydney and then in Melbourne and gold coast. In contingency plan, you have to write the action that M&S would take if there’s sth happened.
the task are; executive summary, conclusion, Control plan (contingency plan, expansion plan)
it’s about marks & spencer entering Australia for the first time
the first store will be in Sydney and then in Melbourne and gold coast.
THE TASK IS 1200 WORDS
Business entry strategies determine the success rates of most organizations in foreign markets. Mark and Spencer is a UK multinational apparel company that can successful enter any market given its massive resources and marketing strategies. The Australian market has several apparel businesses that are already in the market and it would require appropriate entry strategies for M & S to successful penetrate the Australian market and establish its presence (Kotler & Armstrong, 2010). The Australian apparel market is very competitive and it is dominated with such firms as Sass & Bide, Wayne Cooper, Zimmerman and other competitive firms that M & S has to contend with when they enter the Australian market. The apparel market generates close to $11.5 billion dollars every year. Most of the apparel in Australian market is imported mostly from China, which accounts for about 70% of the textiles imports. Australia has two major seasons for retailers, winter, and summer (Export.Gov, 2015). The best entry strategy would be through franchising or licensing. These strategies would allow M & S to weigh the success rate of the Australian market before investing fully in the market (Kristinsson, 2013). However, the entry of South African company, Woolworths in the Australian market in 2014 would most likely complicate the introduction of the M & S brand in the market and which comes hardly less than one year since the Woolworth brand was introduced in Australia (Export.Gov, 2015).
Marks and Spencer (M & S) is a British apparel brand that is based in the city of Westminster in London. It is popular for its luxury brand of clothes that attract the upper fashion industry lovers for all apparel needs including sports ware, casual, and official office clothing. Founded in Leeds by marks and Thomas Spencer, M & S earned more than $15 billion in revenue sales in 2014 and has employed over 83,000 employees. The Australian economy
Australia economy is very vibrant and has a steady GDP growth while the income distribution is well spread hence it is a potential destination for any organization that is interested in expanding its trading activities in a sustainable economy. Compared to UK, Australia is relatively lower in terms of GDP per capita, hence, more feasibility studies are required before venturing into the Australian market.
Source: (Federal Reserve Economic Data, n, d)
Market Entries Strategies Available to Marks and Spencer
The best option to enter Australia is through such strategies as Franchising or Licensing. Allowing a company to operate under as a franchise of M & S would allow it to capture the local market faster and to adopt marketing strategies that are effective and which resonate well with the players in the market. Franchising has largely being underexplored in the international market. It has however been successfully utilized in North America while its success rate has been attributed to its replication business models that act also as the marketing strategies for the franchised business units. The operation guidelines for the franchise units are fixed but their adaptability to suit local tastes have been the major strengths franchised business models. The format of the franchise units forms the company’s brand however, in the apparel industry most fashion designs and consumer tastes are similar given that fashion trends follow particular patterns (Kristinsson, 2013).
The other form of business entry that M & S can adopt is licensing where the company can allow its apparels to be manufactured under license from its main office and it may also include quality supervision and control operations. Licensing allows a company to enter international market through low intensity of market participation mode through adaptation of foreign products for consumption in the local market. Licensing agreements include considerable autonomy in terms of local tastes, designs, and colors. The major advantage of this mode of entry is that the international licensor avoids such issues such as import barriers, tariffs or enjoys some tax incentives that are applicable to local investors as licensed firms are basically owned by local investors but remit certain amounts as license fees to the company’s parent company. The disadvantage of licensed firms is that most decisions especially those pertaining to products designs have to be sanctioned by the parent company. As such, it is an entry method that is not very popular in fashion industry but may be applicable in other industries such as digital or automobile industry that require more coordination from parent companies especially when assembly lines or workshops. However, the major drawback against licensed firms is that licensed firms in most cases create major risks as they pose as threats to parent companies especially where design secrets have been revealed and the international licensor may imitate or steal the licensed technology or design (Smith & Taylor, 2004).
To establish a shop in Sydney, M & S would have to identify a potential investor who can finance and operate a franchise as per the requirements of the M & S head office in Westminster in London. Market development requires a lot of investment in advertisement and market differentiation in order to position the new product successfully in the market. M & S would need to conduct a study in customer behavior and taste. Shopping trends, seasons and purchasing patterns in Australia are critical when identifying the right entry mode for the market. Franchising entry method is popular with replication strategy where replication can override the disadvantages of entering the market as demonstrated in emerging markets. Replication strategies are adopted in situations where rapid expansion of business is expected shortly after market entry. For example, M & S plans to expand to Melbourne and Gold Coast shortly after successfully launching its entry in Sydney. Replication of the franchise units can be undertaken jointly when a single investor can finance several franchise units in different locations. But several investors can be invited to apply for the franchises depending on the decisions and policies of M & S. Currently there are over 1100 franchisors in Australia operating over 65,000 franchise business units together with another 8000 units that are company owned. Retail franchise units that are non food business units account for 27% of all the franchise units. The Franchising sector in Australia is regulated by the Australian a code conduct for all franchised units involving disclosures, franchise agreements and dispute resolution processes and procedures (Export.Gov, 2015).
Following the entry of Woolworth apparel brand in the Australian market in 2014, product loyalty to the newest brand in the market may be difficult to match as the advertising strategies adopted by M & S may take time to create a parallel brand (Lemon & Mark, 2006). The only option for M & S would be to adopt aggressive marketing strategies that would differentiate the market in favor of M & S brand and position it as a viable alternative (Kotler et al, 2012). In case the franchising option fails then licensing option should be adopted. It would be the only viable contingency option that would be applicable.
The entry strategies adopted by M & S would succeed if they are marched with effective and aggressive marketing strategies that would introduce and position the product in the market hence be able to create successive product loyalty (Blythe, 2008). Franchising market entry strategy has been successfully adopted by most companies in many parts of the world especially by multinational companies like MacDonald’s it is the most recommendable strategy for M & S currently.
Blythe, J. (2008) Essentials of Marketing, 4th Edition, Essex; Pearson Education Limited
Export.Gov (2015) Market research In Australia Retrieved December 31, 2015 from http://export.gov/australia/marketresearchonaustralia/index.asp
Federal Reserve Economic Data (n, d) Economic Division, Federal Reserve Bank of St. Louis, retrieved December 21, 2015 from http://reserve.stlouisfed.org/fred
Kotler, P. & Armstrong, G. (2010) Principles of Marketing, 13th edition, London: Pearson Education Ltd.
Kotler, P., Keller, K. L., Brady, M., Goodman, M. & Hansen, T. (2012) Marketing Management, 2 Ed. Essex: Pearson Education Limited.
Kristinsson, M. (2013) Top 12 Australian Clothing Brands, Clothing Brands and Lifestyles Retrieved December 31, 2015 from http://clothinglook.com/australian-clothing-brands/
Lemon, K. N., & Mark, T. (2006) Customer lifetime value as the basis of customer segmentation. Journal of Relationship Marketing, 5(2), 55-69.
Smith, P.R. & Taylor, J. (2004) Marketing communications, an integrated approach, 4th edition. London: Kogan Page Limited.