Global Trade Distribution Processes - Dissertation Example

Global Trade Distribution Processes Introduction Due to increased globalization relating to industrial supply chains, it is imperative that there exists an efficient supply chain and management that is aligned with the processes of the global trade. Determining the appropriate level of procrastination and the design of supply chain globally are linked with the requirements of their individual governments and the existing web of trade agreements (Helpman 2001).In addition, cross border, trade is complex and the process of trade are faced with many uncertainties that are time and cost consuming. When considering global sourcing such matters should be considered. For analysis, PANDORA, a company that sells jewelry internationally is analyzed. PANDORA The company continues to enter new geographical markets is expanding its presence in already existing markets. The company use a distinct strategy concerning entry into a market for every new market and aims to promote the sale of its jewelry products and establish itself in a very short time with efficient brand positioning in the market. In markets that are well developed, PANDORA develops its market presence by using the current retail outlets that are available to it. However, in emerging markets, the company uses branded points of sale of the company, which are directly operated, and franchise in nature. For example, in 2009, PANDORA was able to gain access to a variety of markets and also prepared entry in other markets. The markets included-Croatia, Indonesia, China, UAE, Turkey, Taiwan, Serbia, South Korea, Ukraine, Philippines, Japan, Malaysia, Italy and Russia. A number of the markets were recorded to have high market potentials. In each of the potential markets in the different countries, PANDORA adopted different strategies to enter the market. In Russia for instance, PANDORA gained entry into the market by entering into a Master Distribution and Franchise Agreement with the country .It was programmed in such a way that the expansion of the retail market was based on a cluster strategy linked to geographical locations with an aim of optimizing the exposure of the brand. Focus was initially placed on St. Petersburg and Moscow and in 2010, 6 other concept stores were unveiled. PANDORA gained entry into the Italian market in July 2010.This was a big step because by doing so, it had gained entry into a market that is termed as Europe’s biggest market for fine jewelry. The company was based in Milan, their strategy involved visual merchandise, and a team of sales representatives with an aim of covering the market through the use of points of sale that are multi brand. PANDORA was planning to sell products through 362 white stores, 70 silver stones, 7 gold stores, 1 concept store, and 12 shop-in shops. It also gained access to other markets such as Japan by entering into a Master Distribution and Franchise Agreement with Japan.AS of 2010, the company was expecting to pursue the entry by enforcing a key city strategy, which would anchor the stores that had been established in Osaka and Tokyo. The other Asian market was China and PANDORA entered into agreements in 2010 which were four Master Franchises and one store was opened in the third quarter of 2010,Expansion strategy were to be focused on Guangzhou, Beijing, Hangzhou and Shanghai. The company policy to break new markets is by pursuing a global brand strategy, which is focused on establishing brand perception consistency in all the available channels of communication and markets in order to necessitate the vision of making PANDORA the world, has most known jewelry brand. The marketing and branding techniques used aim to improve the sales volume of jewelry sold. This is done by establishing a brand identity that inspires people, growing an emotional attachment of PANDORA’s products to the public, enhancing brand awareness that improves interest in the company’s product range and by reaffirming its position as a major player in the industry through its provision of luxury products. Starting from 2010, PANDORA continued its brand building awareness in new markets by emphasizing on its products’ quality and affordability. This was achieved through a campaign of using brochures, print, TV, digitally and points of sale, which acted as the principle communication channels. It is due to its communication efforts and marketing strategy that the company has been able to be a recognizable global presence in jewelry matters. It has also increased PANDORA’s brand awareness globally and enhanced awareness in areas that already boosted its presence. The company continues to pursue other avenues such as continued investment in a high scale of visibility and brand messages that are coordinated at multiple levels-locally, nationally and internationally. The supply of marketing materials to distribution sub centers are based on a brand manual that is global (Sherlock 2008). Other features include the supply of materials to third party distributors, franchises, and points of sale that are monitored and controlled from the headquarters of the company in Denmark in order to make sure that brand messaging is clear and develop brand development in many markets across the globe. PANDORA’S online presence had increased by over 100% as of 2010 and it was reported that of its online membership. Additionally, PANDORA’s online users spent more time in every visit, which was reported to have increased by 50%.This was coupled with the fact that its online presence in social network sites like Facebook had experienced increased viewership by up to 20 more times and it also launched an application that would increase traffic to the retail stores which was successful on the iPhone. The company continues to raise focus on its agenda to translate its marketing strategies to digital format. It hopes to also establish consumer relationships by engaging with them on a digital platform through e commerce, its official website, and social media or through the PANDORA Club. PANDORA’s strategy for distribution is formulated in such a way that it emphasize on maintaining control of the brand’s image while its marketing strategy in the wake of PANDORA’s growth, is partly reliant on maximizing opportunities brought by the strengths of distributors in a third party capacity in appropriate cases. In other cases however, PANDORA has entered new markets by using third party distributors and in due process has taken control of the distribution process through the operations of PANDORA or by acquiring the business of the distributor and in other cases, acquiring the distributor. Regardless of the advantages and financial benefits that are available to enterprises that directly deal with the retailers by having full control of the market, PANDORA prefers to use third party distributors in particular markets. The arrangements between PANDORA and third party distributors are controlled by master franchise agreements and distribution agreements, which give the third party distributors the right to promote and sell exclusively PANDORA’s array of products to retailers in pre-established geographical locations and during specific periods. Walmart There is in stark contrast to a company such as Walmart. Recent reports suggest that the company has stocked products in more than 70 countries and controls more than 11,000 stores in over 27 countries and an estimated average sock of $32 billion. The magnitude of its size means that it has to have an effective supply chain strategy and management system. The company uses a business model that is based on removing costs from supply chains in order to enable their customers enjoy a better expenditure capacity of their money (Straubhaar 2007). It is arguably the biggest retailer chain globally evidenced by its unparalleled turnover and profit margins. The company has been aided by its strategy of eliminating links in the supply chain, which is achieved by working directly with the manufacturers of their products. One of the tools used to achieve this is by using the strategic vendor partnerships and many of the company’s vendors are offered long term and high quantity purchases in very low prices (Czinkota 2004). It has also streamlined the management of the supply chain in such a way that the warehouses, global suppliers, and retail stores form a kind of network that is almost seen by outsiders as being one big firm. Walmart makes use of cross docking as a logistic practice for the purpose of replenishing stock without delay and error. There is a direct transfer of goods from the warehouses to truck trailers without charging extra storage costs and the process continues up to the when the products reach their destinations. No storage charges in any of the terminals are charged back and forth. Cross docking is responsible for curtailing the transportation cost. Additionally, it gets rid of inefficiencies caused by delayed transportation, and secures the stock. Walmart has been described as having the largest IT infrastructure among private companies globally. It places great emphasis on the use of technology to predict demand, track stock levels, manage customer interactions, develop effective transportation routes, and service response logistics. It developed Retail Link and Bentonville database and by using a global satellite system, Walmart is linked to analyst who predict demands of suppliers and display real time data on sales relating to cash registers and to Walmart’s distribution centers. Recommendations One of the solutions to global trade is implementing the SAP GTM software, which can be used to aid in the management of strategic enterprise, data warehousing, financial accounting, and business intelligence. This can be useful to PANDORA in predicting available markets and the estimated costs that are expected to be incurred in new territory instead of relying on third party distributors. By utilizing such software, the company will control the market solely. Others include myCommTrde that is responsible for delivering inventory to organizations and NTT DATA that is used to manage seasonality, commodity relevant data, and quality. References Helpman, Elhanan .,2001. Understanding Global Trade.Cambridge, Mass.: Belknap of Harvard UP. Print. Czinkota, Michael R., and Bob Donath.,2004.Mastering Global Markets: Strategies forToday's Trade Globalist. Mason, OH: Thomson/Southwestern. Print. Sherlock, Jim, and England London ., 2008. TheHandbook of International Trade a Guide to thePrinciples and Practice of Export .2nd ed.London: GMB Pub. Print. Straubhaar, Joseph D.,2007. World Television fromGlobal to Local. Thousand Oaks, Calif.: SagePublications. Print. Read More