International Business: Rebel Sport Limited and Group Companies - Essay Example

International Business Assignment Contents: i. Introduction about the company ii. Company’s Operations iii. Financial Standing of the Company (Rebel Sports) iv. Product Range v. Customer profile: vi. Exploring avenues for expansion vii. Focus (Targeted Country specific) a) Neighboring country b) Asian/ East Asian Country c) Other developed nations d) African Region viii. An eye on competitors ix. Trial Launch x. How to go about it a) Government Permission b) Publicity Campaigns c) Recruitment d) Reaching Out to Customers e) Gathering Feedback xi. Conclusion International Business Assignment The Company: ‘Rebel Sport Limited and Group Companies’ is the leading retailer of sporting equipment, apparel, and footwear in Australia. Rebel Sport Limited and Group Companies is a publicly listed company traded on Australia’s ASX currently holding just under 34,000 shares selling at $3.36 a share. Employing over 2,700 employees nationwide, Rebel Sport provides various stock options to employees including other standard health benefits. Operations: Starting from just one store in 1985 in Bankstown West Sydney Australia, Rebel Sport now has over 60 stores nationwide in every Australian territory and state excluding Tasmania. In an effort to achieve an edge on the competition the company gave freedom to its stores and allowed them to devise their own marketing strategies depending upon the customer profiles in respective areas. This proved to be very successful where as many of Rebel Sport’s markets are considered niche markets with very specific demands. Being able to specifically target these markets with this new marketing strategy has increased profits since its implementation only a few yeas ago. The company has also made itself available online with the launch of its new site rebelsport.com.au in late February 2005. Now it has become all the more convenient to purchase performance runners, lifestyle footwear and apparel, gym equipment, yoga clothes, junior wear, licensed jerseys, specialized team and individual sport equipment, camping and outdoor gear at the click of a mouse. Rebel Sport is associated with some major sporting bodies like National Rugby League (NRL), Cricket Australia, and Soccer NS around Australia. These sport associations have opened up various sponsorship opportunities as well as involvement within the sporting community. The company has also developed two sponsorship programs, MVP and Rebel Sport Rookies, to assist both sporting clubs/schools and individuals. In order to fulfill its commitment towards the society, Rebel Sport supports charity as well. The following are some of the charity organizations that Rebel Sport regularly donates to: Starlight Foundation, The Day of Difference Foundation, and Jeans for Genes an initiative of The Childrens Medical Research Institute of Australia-CMRI. Financial standing of Rebel Sports: Rebel Sport has recently experience a large increase in sales. The latest financial figures of the company (sales revenue for the nine months ending on 1 April 2006) indicate an increase in sales revenue by 14.5% to $272.9 million compared to the nine months ending on 2 April, 2005. This sales increase was reflected in a net profit of just under $15 million for that same period. Consequentially Rebel Sport has opened up 6 new stores during the nine month period ending on 1st of April, 2006 bringing their total store count to 62. There are no plans to open any more stores in the 2006 calendar year although another six are scheduled to open in 2007. While still holding just under 34,000 shares, Rebel Sport has seen stock prices rise from $0.82 in early 2003 to the current trading price of $3.36. This is a 400% increase in only three years. Rebel Sport has been publicly traded for thirteen years now since its first offering in November, 1993 and has seen nothing but growth over that time period. Product Range Rebel Sport Group and Limited Companies is made up of two different retailers, Rebel Sport Limited and Next Athleisure Pty Ltd (Trading as Glue Store). Rebel sport sells a wide range of sporting and outdoor goods including but not limited to sport apparel for the following activities: AFL, baseball, softball, basketball, boxing, camping, cricket, cycling, darts, golf, hockey, netball, racquetball, rugby, running, skiing, billiards, tennis, fishing, etc. Glue Store on the other hand is a branded fashion retailer stocking the world’s best brands like G-Star, Diesel, Industrie, and Mooks. In 2002 and 2003 Glue Store won FHM Casual Wear Retailer Of The Year. Glue Store retail stores are currently only in New South Wales and Victoria although the company is looking forward to expansion opportunities and hopes to one day have stores in all Australain territories and states. Customer profile: Rebel Sport Group and Limited Companies has a wide costomer profile including all ages of active and non active Australian sport enthusias. Wheather it’s the fan supporting his/her favorite team or the youth playing on the weekends, Rebel sport makes their sporting goods readily available. With the sponsorship of various professional and non profession teams Rebel Sport has opened up a large market share in the sporting market and keeps it’s costermers satisfied and coming back. With the recent introdution of Glue Store, Rebel Sport Group and Limited Companies has explored another clothing retail store broadening their costomer profile even further. Glue Store targets a popultion that enjoys a whole separate set of name brands and fashion. With the use of both companies Rebel Sport Group and Limited Companies has managed some market stability while still sticking to what they do best, retail clothing. Exploring avenues for expansion Now that Rebel Sports feels quite secure and experienced enough on the home-ground it can very well start thinking about crossing the borders and entering the fiercely competitive international arena. Strategies to be adopted for global foray needs to be finalized with an eye on international competitors. The major question now is which of the three strategies (multi domestic, global or international, or transnational) should Rebel Sports opt for, while entering the international arena? After thoroughly evaluating the advantages and disadvantages of the three strategies, we believe that using a transnational strategy would be the most beneficial to Rebel Sport. Rebel sport has a tough competition in the international arena from the likes of Adidas, Nike etc., which are already established brands in many countries. The product ‘Sport wear’ is one in which consumers have almost similar needs and preferences worldwide and not many ‘location’ benefits can be realized. Moreover, in the sporting arena, often there are long-term agreements with sporting wear companies in the form of sponsorships etc. It is not easy to persuade the teams for a change, and therefore using a multi domestic strategy makes local responsiveness a high-pressure task. Similarly, a global strategy puts the company in strong pressures for cost reductions in order to compete with the existing brands. Therefore, going for ‘global’ and ‘multi domestic’ strategies is not only costly but a risky proposition as well. Hence, both these strategies are ruled out. On the other hand, a transnational strategy allows for the attainment of benefits inherent in both global and multi domestic strategies. With the World Cup Soccer round the corner, Rebel Sport can very well make its presence felt by ‘being visible’ to players and sports lovers from across the globe. Thereafter, the company can set up a joint venture with some local brand/ organization so that Rebel Sports is benefited from local firms knowledge, and can share costs/ risks with the local partner. After some time the company must go for a market research to study the psychology of the new consumer as how he thinks, feels, reasons, and selects between different alternatives (e.g., brands, products). If the market research points out towards further scope for localization, the company can very well strengthen its presence by setting up its own subsidiaries in the near future. If Rebel Sport receives positive feedback by its customers internationally, it should set up its subsidiaries in a few more countries that are as big into sports as Australia is. The countries we have in mind include Brazil, England, France, and Germany. Rebel Sport offers a wide range of sporting apparel and equipment to cater to every sporting need. It is guaranteed that customers will always find the gear they need. In addition, Rebel Sport is the official sporting goods retailer for the major sporting bodies across Australia including: National Rugby League, Cricket Australia, Soccer NSW, and the Australian Tennis Open. It is a worthy and loyal provider to these major sporting bodies, and should further expand and form partnerships with major international sporting events such as the upcoming World Cup, Wimbledon, and the ICC-Cricket World Cup. Focus: Country specific: Now comes the crucial part of preparing strategic moves with an eye on the country/ies where Rebel Sports wants to commence its operations. Strategic decisions are concerned with the issue of setting a direction for the organization to move or the course the organization will follow. Though very crucial, yet preparing ‘strategic moves’ for future often is not based on hard fact, but on presumptions. The company is to take stock of the country, it’s demographic profile, customer’s needs etc. Maslow’s hierarchy of needs says that the driving force for human actions is an urge for ‘satisfaction of one or the other need’. These needs go on changing depending upon a number of factors. Therefore, Rebel Sports will have to be very specific in its strategy considering; i. Whether it is a neighboring country: In case of a neighboring country, at times, some delicate balancing act is required to be done. For example relations between Australia and New Zealand, the competitive rivalries and political equations are to be taken care of, because these very political equations become a deciding factor while seeking permissions from the respective governments. The logistics too are different in case of immediate neighbors. ii. If it is an Asian/ East Asian Country: Asia pacific region can be termed as the home region for Rebel sports. The demographic composition will be somewhat known to the company. The company must know even the types of governments and changes taking place during the last couple of years. In case of China the company will have to be price sensitive, for the simple reason that today China has taken on the likes of USA and UK head on. Some of these countries have even complained to WTO about the ‘dumping’ being done be China in these countries. Crux of the matter is, China has exploited very well the availability of ‘Cheap Labor’ coupled with an eye on quality. India is a vast market for sporting goods. It’s a cricket crazy nation like Australia. So cricket is an uniting factor. If the likes of Ricky ponting and Adam Gilchrist are household names in India, Sachin Tendulkar and VVS Laxman are well known in Australia. Other sports like Hockey, Tennis and Formula-I racing too are becoming popular in India as well. But it is equally true that together with domestic brands couple of international brands (Nike, Reebok etc.) have a big presence in India. Rebel sports needs to prepare similar profile about other countries wherever it wants to expand. iii. Any Other Developed Nations: If Rebel Sports plans to head towards Europe, western nations, then the East-West equations, the unstated cold-war tactics come into play. Though United State of America keeps prefers to have a level playing field for its business tycoons while entering in other nations, yet it is very protective about its business interests at home. And the fact that it is in a position to influence some other nations as well makes it a brave decision to enter USA. It is therefore advisable for Rebel Sports that before entering US and the likes the company must consolidate its position in the Asian region itself. Moreover entering a market at the far end of the globe involves more costs, which in turn brings the company at a price disadvantage vis-à-vis the domestic companies. iv. African Region: This particular region takes pride in producing good marathoners, footballers and cricketers. But the economic conditions in some nations do not permit then to go for very costly sporting goods. Rebel Sports will have to start in these nations with philanthropy first. An eye on competitors: When analyzing some of Rebel Sports’ competitors, on the domestic front, Amer Sports seemed like the obvious place to start with. In 2005 Amer Sports achieved their target of becoming the worlds No. 1 Sports Equipment company, and maintained good profitability. Their major achievements were strong organic growth and the acquisition of Salomon. Amer Sports too is now a market leader in its own right by a good margin in the world of sporting equipment. They have now reached the milestone they set for themselves a few years ago. It has been a challenging year for Amer Sports but the organization has achieved some incredible things on a worldwide level. Amer Sports country organizations have been fighting for market shares, and customer service has been a priority. Their continuation of product improvements and over-all brand values are helping them generate long-term shareholder value. In 2006, they plan on growing to status of a 2-billion Euro company. Another competitor that should be looked at is Pacific Brands Sporting Goods. While they are not as successful as Amer Sports, Pacific is quite successful on the domestic front, supplying much of Eastern Australia’s sporting good needs. As one of the leading sporting goods suppliers, Pacific continues to grow each and every year. With over one hundred years of history, Pacific Brands Sporting Goods has begun trying to develop their international game this past year. It has seemingly not been working out for them, especially in China where they have had a net loss, damaging their profits for 2005. Even though their overall profits were up and had a robust growth domestically, Pacific Brands was still savaged by the market. They saw their market shares get sliced by nearly eight cents in one week, and this trend continued all throughout the year. When asked about the profits vs. market share problem, chief executive Paul Moore said that the company was going to go back to its roots and improve their domestic sales and production. This is one important lesson Rebel Sports can take prior to entering the international scene, because it is said ‘a wise person learns from his own mistakes while a smart person learns from other’s shortcomings’. On the international scene the biggest sporting goods competitor has to be Nike Inc. Co. Company’s Presidents Mark Parker and Charlie Denson know how to run a successful business, overseeing nearly ninety percent of Nike, Inc.’s total revenue. In nearly three decades, they’ve not only seen Nike, Inc.’s annual revenues grow from $149 million to nearly $14 billion. Nike is able to turn adversity, pressure and competition into energy and opportunity, which is a strength for any athlete, team or business. Sporting goods is a competitive market. There are always new companies trying to get a piece of the proverbial pie. Nike has been able to turn that pressure and ­competition into the force that drives them to do their best. Nike’s newest slogan is ‘Evolve Immediately’, and to be a force in the industry like they are, a company needs to evolve at such an incredible rate to stay afloat. The scariest number involving Nike Inc. took place this past year when they saw their international profits rise an enormous twenty-two percent. Obviously, going global works for some more than others. Another impressive international company is the ADIDAS Corporation. Having just sold the rights of the Salomon name to Amer Sports in 2005, ADIDAS kicked off 2006 by acquiring one of the bigger competitors on the market REEBOK. After a series of dip in profits for couple of years, ADIDAS bounced back in 2005 in a big way by having their biggest profit year in the last decade. Along with Nike Inc. and Amer Sports, ADIDAS is planning for another big year with soccer’s World Cup right around the corner in Berlin, Germany. Becoming a successful sporting goods business takes a lot of start up capital and effort, but becoming a successful global sporting goods company takes the right strategy more than anything. Pacific Brands is realizing this now after a miserable year of global sales. Sometimes the best way to go is to stay at home and maximize profits from the people who count on you everyday like Australia does with Pacific Brands. Nike and ADIDAS have been in the game for a long time and you would be hard pressed to find anyone under the age of sixty who does not know who they are and what they do. What they do is supply the world with sporting goods, a language that connects country to country and friend to foe. Trial Launch: Now comes the big moment when after having analyzed the environment, having done the SWOT analysis the company prepares the route map for the launch. Again the actual methodology depends on the country/ region the company is heading towards. The best moment for the launch happens to be when some sporting event is underway. World cup soocer in Germany provides a window of opportunity to establish itself in the European region. Though such launches require prior agreements with the organizers, yet the business community is quite familiar with a number of other ways, like announcing some grand shows involving soccer players, announcing some prizes for best sporting talents in the region, announcing some contests and game-shows for the sport-lovers etc. Similarly ICC Championship Cricket Tournament is slated to be held in October in India, which could provide Rebel Sports an opportunity to enter the vast Indian market. Asian games are to be held in Doha (Qatar), again an opportunity for Rebel Sports to become ‘known’ to international customers. Such trial launches have a big advantage, they provide an easy escape route in case the company feels that the market is too hot to handle. Launches coinciding with sporting events give an extra inch of publicity. The company has to do a realistic feedback analysis regarding the acceptance of its brand and the reactions of competitors. Accordingly the company is to plan its future strategy. It can even keep the doors of alliances open with other companies after such trial launches. How to go about it: Having chalked out its strategy and steps to be in taken towards expansion in other country Rebel Sports will have to; Seeking Government Permission: Permission/ clearance is to be sought both from Australian and target country, depending upon the type of plan. Plan Publicity Campaigns: This is a media age. Media campaigns are almost a necessity now. Moreover in these types of sporting figure having an image of demigods, things become little easier (though little costly) for companies like Rebel Sports. Also for example, Indian Films are very much popular not only within India but in the subcontinent as well. The sheer numbers of Indian migrant community in almost every country in the subcontinent makes Film stars too an obvious choice to launch such campaigns. Recruitment: On whatever scale the company wishes to launch its campaigns in any country/ region it needs to have some minimum workforce. The strategists can be from Australia but the ground level workers have to be from the target country. For this the company can get in touch with some HR consultants, providing staff on contract basis, to avoid any long-term obligations. Reaching Out to the Customers: Having done all the spadework the company is now ready to approach the customer. An international brand has to be seen in the market place in a manner befitting its reputation. Therefore local level tie-ups with some show rooms, shopping malls help in a big way. The showrooms/ Shopping malls are to be extended some lucrative offers for them to display Rebel Sports products prominently and to recommend these products to the customers (if the company has already launched a media campaign things become much easier). Gathering Feedback: Now is the time to take stock of its operations in the newer market. Simple business proposition states, the company has to be ready for some losses initially, that’s exactly what Rebel Sports is supposed to do. And then study the business proposition over a period of time. A couple of months is enough for the company to plan its future. Conclusion: New avenues for business are explored when environment demands increase in pace of activity. Strategists feel more satisfied and comfortable with the prospects of growth from expansion. Rebel Sports has an experience of more than 20 years in this field so it can very well plan a strategy for opening stores in other countries as well. Today, rules of business success have changed. Innovation and the art of mastering the technological edge have emerged as the new competitive advantages. Information technology and improvements in global telecommunications are giving international firms more flexibility to shape their global strategies. Rebel sports made good use of the information age by starting online training of its staff and thus channeling the inherent creative talents of all individuals in the right direction, a recipe for success. It is therefore the time for going International. (HARVARD REFERENCE THESE ROSOURCES) Resources: http://www.marketingpower.com/mg-dictionary-view2057.php http://www.referenceforbusiness.com/management/Tr-Z/Transnational-Organization.html http://www.consumerpsychologist.com/ http://cursos.itam.mx/bcondon/MBAIB/MBAIB7.ppt Read More