Identifying Global Business Opportunities - Essay Example

? International Business – COACH Phase One: Planning the Global Business Enterprise A. Identifying Global Business Opportunities Coach, Inc is regarded as one of the leading luxury leather goods corporation based in the United States. The company is renowned globally for the impeccable craftsmanship in its manufactured products such as ladies’ handbags, briefcases, luggage and other accessories (Coach, Inc., 2013). In relation identifying the global business opportunities for Coach, there are certain aspects that should be taken into consideration such as rivalry intensity, market competition, government policy, competition along with its value chain. It has been recognized that Coach functions in two business segments in its global operations. These include indirect and direct-to-consumer. In its global operations, these segments can be regarded as channels of distribution. Through direct-to-consumer segment facilitates Coach with instant access to consumers, thus providing it with an opportunity to understand the tastes and preferences of its wide consumer bases especially in regions such as mainland China, Japan, Hong Kong, North America and Singapore among others. This segment facilitated Coach with around 89% of the entire net sales in the year 2012. With regard to any future expansion strategy in a new market segment as well, direct-to-consumer strategy can be fruitful for Coach. In terms of its indirect segment of operations, royalties obtained from licensing of products is a major component. Moreover, wholesale channel is a critical aspect which also includes sales through online websites. One of the major prospects for Coach can arrive from emerging markets as it has already started to sell its offerings through authorized retailers and distributors in a number of new markets. Shop-in-shops option created by the company can also facilitate the growth of the company in its global business operations. The company’s e-commerce strategy is also a major beneficial aspect in its global operations. In nations such as Japan, Canada and the US, a large number of visitors prefer to use online mode to purchase the products of Coach. Coach rules the global market for its fashionable handbags as well as attractive accessories. Coach focuses on merchandising and designing through team work and through having a close collaboration its licensed business partners to ensure quality offerings. Coach uses new technologies such as social networking sites like Facebook as well as Twitter to create awareness and to enhance its customer base. Coach also ensures its compliance with its Global Business Integrity Program which can enable it to maintain its legal and ethical responsibilities thus facilitating with significant opportunities in its business operations globally (EDGAR Online, Inc, 2013). B. Analyzing International Competitors Majority of organizations are changing their operating functions to global scale. This is likely to create a fiercely competitive global fashion retail industry. The competition against the operating firms in the global market can be analyzed by the intensity of the competition and by determining the growing competition between the fashion brands globally. Coach has significant number of major competitors in the luxury fashion products industry. Coach competes in global market with Gucci, Louis Vuitton, Prada and Hermes. The competition in the fashion industry is densely intense, for having very less market-entry barriers. One of the world’s reputed fashionable luxury manufacturing product companies is Louis Vuitton. As of the year 2008, Louis Vuitton had a brand value of about €16.718 billion. One of the most competitive advantages of Hermes International S.A. is that it provides its consumer hand-made products, which ensures their uniqueness as well as quality. Gucci, an Italian luxury product designer brand, is a leading name in the global market, consequently having revenue of around €4.2 billion as of 2008 (Dickinson State University, 2011). Thus, it can be ascertained that competitors of Coach are quite dominating and established in the global market. C. Assessing the Economic-Geographic Environment An unpredictable global economic environment can have a negative impact on an organization such as Coach. Thus, the organization needs to have structured procedures and well developed business functionalities. Working in a team environment works as the backbone of Coach. Segmentation in terms of geographic perspective of the commodity in the international market is a significant part of the operating environment of Coach. In this context, it can be said that efficient segmentation can determine the demand for the product. The organization must present its products in relation to geographic segmentation with regard to the economic scenario of a particular country. In order to operate in the global business, Coach needs to utilize the benefits offered by the host nation’s government, the best way to promote the commodity in the international market, taking into account its personal political philosophy and its own resources. Economic environment relates to the aggregate demand in the economic system of the international market. The economic aspects include the governmental policy and scenario of the socio-economic environment (Karasik, n.d.). In order to operate in the global economic environment, Coach needs to keep in mind the aspects like income distribution, debtors in the international market, interest rates, inflation and per unit labor cost among others. Globally leading companies like Coach is significantly hampered by the present economic condition of a nation. It can create a risk for Coach in terms of its financial conditions. A lower level of demand for luxury products among the consumers can affect the operations of Coach and can result in lowered revenue generation (Karasik, n.d.). D. Assessing the Social-Cultural Environment To assess social-cultural environment in the global market, it is necessary to determine the value system of the society. Socio cultural factors include conventions and customs, costs structure and cultural heritage. To operate in the global market, Coach may have to deal with certain cultural barriers such as distinctiveness in company’s culture in terms of home and host country, belief system, business ethics, business practices, values, communication gap and language problem. Adhering to Societal and ethical norms is another significant responsibility of Coach in the global marketing environment. . Social and cultural effect on the environment occurs slowly having a far-reaching effect. It is quite significant for Coach to determine the early changes in terms of consumer preferences in diverse societies for the identification of the major opportunities in the global fashion retail industry. While operating in the global market, the organization has to come across different cultures, which creates a risk for it in operating in that particular environment (Raju & Xardel, n.d.). The customers’ tastes as well as preferences keeps on changing in this dynamic world. Appropriately communicating with the different groups of consumers globally is a major challenge for Coach to understand their needs and wants. Accordingly, the operating organization needs to reach the consumers’ satisfaction level to increase their sales and profit. At the same time, the organisation needs to analyse, manufacture and market its commodities as per the requirements of the consumers in different cultures so that the products are prepared in such a way that its targeted group of customers gets attracted towards the commodities. Moreover, through the strategic use of social media, Coach can also obtain feedbacks from its diverse consumer base in its international operations and can also draw their attention towards the company’s products (Raju & Xardel, n.d.). E. Assessing the Political-Legal Environment While functioning in the global market, it has been noticed that companies have to face political risk. However, in certain nations in order to reduce political risks hindering a company’s operations tax breaks are provided to companies and special enterprise zones are set up which can be beneficial for Coach in its expansion plan. The management of the international business should carefully analyse the market in context of the political and corporate policies, legal and economic environment. Political and legal environment is closely related to the socio-economic environment, one of such important tendencies is to move from the governmental-dominance towards the free market economy. This factor can affect Coach in its operations globally. Political instability in the preferred country of operations can negatively impact Coach to explore expansion and growth opportunities. Hence, it is significant for Coach to abide by the specific laws and regulations in a new foreign destination. Moreover, aspects such as copyright, patent and trademark related legal issues need to considered by Coach, as in past it is recognised that counterfeiting activities and violation of intellectual property rights have affected Coach (EDGAR Online, Inc, 2013). References Coach, Inc. (2013). About legacy. Retrieved from http://world.coach.com/legacy.aspx?loc=tn Dickinson State University. (2011). Global expansion and challenges. Retrieved from http://www2.dsu.nodak.edu/users/rbutz/International%20Business/PDF/Coach_CaseStudy_S12.pdf EDGAR Online, Inc. (2013). Coach Inc. Retrieved from http://idc.api.edgar-online.com/efx_dll/edgarpro.dll?FetchFilingConvPDF1?SessionID=2-w8FEpR9TbXeIS&ID=8787872 Karasik, V. (n.d.). COACH, Inc. (COH) Stock Analysis. Retrieved from http://leeds-faculty.colorado.edu/madigan/4820/Presentations%202011/Coach%20COH%202011%20Karasik%20Report.pdf Raju, M. S. & Xardel, D. (2009). Marketing management international perspectives. India: Tata McGraw-Hill Education. 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