Global Business Plan: How Gap Would Do as a Business in France - Essay Example

Module 11: Product Target Market Planning for Foreign Markets Known as the fashion center of the world, France is the home of many designers, like Marithe and Francois Girbaud, who have produced lines of stylish jeans. The cost of a Pair of designer jeans can top $150 US dollars. Some young working adults can afford the cost, yet will not spend so much on a regular basis. Many companies that design and manufacture affordable jeans, offer variety in style, fit and color. Though terms such as ‘relaxed fit’ and ‘low rise’ were initially introduced by well known designers, others soon followed with similar options. The target market for jeans today includes more segments than in previous decades. Jeans were first worn in Paris, though quickly adapted to American lifestyles, particularly for those who worked in manufacturing, construction, farming and other trades. Teens soon began wearing jeans as a fashion statement. In France, jeans are an integral part of a teen or young adult’s life. They are now worn to many events and for many occasions. Those who were teens in the 60s and 70s when jeans were first introduced have now rediscovered the various new options such as relaxed fit. In France, two separate segments of the clothing market can be distinguished. For the 40+ and 50+ adults, the new features that accommodate natural changes in body contour are a welcome option to the skinny jeans or tight fight desired by the younger generation. ‘Relaxed fit’ styles are most in demand for this segment, possibly with some variation in color offerings. This segment may not purchase as often as the younger segment, as they are accustomed to wearing other types of clothing for work, social functions and other occasions. The moderate climate of France permits its residents to wear’ nearly every day of the year. Temperatures range from 28 to 45 degrees F in January. In July it ranges from 63 to 75 degrees F. The segment that includes teens and young adults tends to select jeans with more variety in style and color. “Jeans in various colors like red, white and pink are in vogue” (Fibre2fashion.com). Singer Beyonce has also started designing her own line of clothing with her mother, to be offered by House of Dereon in Paris. This helps set the stage for American clothing companies to introduce their products in France. Young females often choose the ‘skinny jean,’ dressing them up with silks, satins, sweaters or long jackets. This segment is budget conscious, so pricing similar to Gap brands sold in the US are likely to be widely accepted in French culture, as an alternative to the more costly designer labels. Gap brands such as Banana Republic and Old Navy offer variety in style, color and price. Such features are welcome by most teens and young adults across the globe. Module 12: Designing a Global Distribution Strategy Distribution of Gap jeans products in France will depend on where manufacturing occurs. Serious consideration should be taken for opening manufacturing facilities in France for a variety of reasons. One is in eliminating international shipping costs that may be passed on to customers. Another is in the availability of technology in manufacturing of even the most stylish or ornate jeans. “High tech is rescuing a moribund industry of France: Tatting and old lace” (James, 1993). Distribution by delivery truck to various French Gap stores from manufacturing facilities is easier to schedule, easier to alter and overall more flexible in meeting store customer needs. France has sufficient infrastructure to support such activities. Technology will also allow for communications beyond typical phone or fax. Communications in shipment details from manufacturer to retailer can be streamlined with online JIT methods. CIRAD, a French agricultural research agency “has been working on cotton for many years, notably on production conditions and the continued sustainability of the production chain worldwide. It works on development, within a network of partners in industrialized and developing countries.” (France Diplomatie). France will support the cotton industry even more by manufacturing Gap brands. It has good working relationships with numerous cotton suppliers. Module 16: Measuring International Business Success In conducting a cost/benefit analysis, Gap should consider manufacturing products in France, as opposed to using current sites. There are many cities and highly populated regions in which Gap stores can sell their product lines. Business taxes are reasonable at 33% compared to the 38% in the US. There are some additional tax incentives for scientific research and development. Social Security tax of 3.3 % “is applied where the income taxed at the standard rate is greater than €2,289,000” (Regulation 29139/92/EC, 1992). Sales tax on goods and services other than agricultural, food, hotels, books and restaurants is 19.9 %, so pricing consideration must allow for some of the difference. Gap is already involved in the production of organic cotton product, so extending its research efforts in France may be a viable option. This is viable primarily because France has established long standing relationships with cotton suppliers. Research efforts do not offer much in financial gain, though they offer increased sustainability to the nations that produce cotton, increasing the revenues earned by organic crops grown in healthier soil. It also creates awareness as Gap offers t-shirts made of organically grown cotton fabric. This is a great way to initiate conversation about green methods in France. The Federation of European Direct and Interactive Marketing states that “consumers are concerned about environmental waste” (Campanelli, 2006). Gap can bring production to France in a manner that promotes environmental friendly processes. Its current California offices use innovative techniques such as planting local grasses on the roof to help insulate and keep the buildings cool. Production facilities could certainly benefit from the “under-floor ventilation system that stores cold night air near the foundation and then uses it to cool the building throughout the day” (gap.com). France certainly appears to be politically motivated as well, in efforts to develop sustainable energy. “It came as somewhat of a surprise when, within a week of taking office, Sarkozy hosted a meeting focused on sustainable development and the environment, a gathering attended by his appointed minister of the environment Alain Juppé and by scientific experts” (Strebel, 2007). Analysis suggests that the benefits of Gap expanding into France outweigh the costs. Business tax is lower than Gap is accustomed to. France has established supply chains for cotton, which are constantly improving. The nations seems politically open, if not encouraging toward energy alternatives and sustainable programs, drawing support from citizens and government alike. Though transcontinental shipping costs are eliminated in opening a production facility in France, initial construction and set up costs must be considered. Gap also has an opportunity to encourage current efforts that France has undertaken, in helping nations like Chad to develop better cotton production methods. Financially, Gap has an opportunity to provide products desired by much of the French population, at a lower cost alternative to the well known designers. Considering all factors of expanding into France, the Gap plan is a “go.” References Campanelli. (2006). FEDMA outlines Green Practices. Dm News. Retrieved August 3, 2007 from http://www.dmnews.com/php France Diplomatie. Retrieved August 3, 2007 from http://www.diplomatie.gouv.fr/en/ministry_158/scientific-xhibitions_3456/cotton- the-thread-of-time-markets-and-cultures_5630/index.html Gap Inc. Sustainable Buildings. Retrieved August 4, 2007 from http://www.gap.com/sr_enviro_bldgs.shtml.htm James, J. (1993). Iht.com. Retrieved August 3, 2007 from http://www.iht.com/articles/1993/09/23/lace.php Regulation 29139/92/EC. (1992). Retrieved August 3, 2007 from http://www.afii.fr/France/DoingBusiness/db_2004_taxation_en.pdf Strebel, H. (2007). Does President Sarkozy Know How to Act? Retrieved July 3, 2007 from http://greenoptions.com. Read More