International Market based on Harvey Nichols - Case Study Example

International Market Report Table of Contents 0 Introduction 4 2.0 Situation analysis 4 2 SWOT analysis 5 2.2 PEST analysis 7 2.3 Porter five forces 9 3.0 Summary of key challenges and issues 10 4.0 Strategic options 11 BCG Matrix for growth 11 STP Analysis 11 5.0 Strategic recommendations 12 6.0 Marketing mix 13 6.1 Price 13 6.2 Product 13 6.3 Promotion 14 6.4 Place 14 7.0 Summary 14 8.0 References 16 9.0 Appendices 18 1.0 Introduction Harvey Nichols is a premier luxury fashion retailer that leads the manner in obtaining as one of the most recognizable and desirable brand in the world. The company sells beauty products, fashion accessories, food and fashionable collections for men and women. In the year 2007, the electronic commerce operation which was established inside the warehouse was success. This created opportunity for the company to centralize most of its business. Harvey Nichols is distinguished and well-known for its proficiency in premium food and wine, beauty merchandise and edited fashion merchandise. Saleh Al Hamad Al Mana, Qatari business group partnership with the Harvey Nichols to open eight international stores in Doha. The proposed plan was established to open store in the year 2017. According to chief executive of Harvey Nichols, Doha is an exciting place to increase market portfolio. The store of Harvey Nichols provides ultimate fashion experience for customers. Harvey Nichols has three small-format stores and four large-format stores within the Ireland and United Kingdom. Research states that brand name perceived by people of Qatar is on higher level. The Qatari customers translate brand awareness well. The prime purpose of the report is to assess various strategic options and marketing environment to develop international presence. Additionally, the strategy of Harvey Nichols for international growth is effectively presented in the paper. 2.0 Situation analysis The situational analysis is referred as the assemblage of strategies that are analyzed by managers on basis of external and internal environment of an organization. Moreover, it benefits to understand the business environment, customers and capabilities of organization. The business measurement tools implemented for situational analysis are SWOT analysis, PEST analysis and Porter five forces. 2.1 SWOT analysis It is a structured planning method that is useful for understanding strengths, weakness, opportunity and threats involved in a corporate venture or a project. The prime purpose of this method is to determine the effectiveness of opening store in Qatar. Strengths One of the major strengths of Harvey Nichols is its brand awareness. It is regarded as one of the most luxury and fashionable departmental stores globally. The deal struck by Saleh Al Hamad Al Mana Qatari firm to bring one of the highly famous departmental stores in the world to make its debut in Qatar. One of the beneficial strengths of opening Harvey Nichols store in Qatar is high level of existing sales and distribution networks (Table 1). There is availability of well trained employees in Qatar. This makes easier for the company lessen the recruitment procedure. The level of support from Qatari business group can benefit Harvey Nichols towards significant growth in Qatar. Weakness The country Qatar is heavily dependent upon oil and gas. This dependence leaves government revenue, exports and progression vulnerable towards the shift of global costs. The rapid rise of competitiveness in business sector can be one of the prime weaknesses of opening departmental store. The dependency on immigrant labour is on higher side. The ongoing protests on selling real fur in UK stores were one of the controversies of Harvey Nichols (Table 1). The planning made for opening of number of new shopping malls such as Mall of Qatar which is planned to be open at the end of 2016. Opportunity Online market and execution of innovative service in store are opportunities or Harvey Nichols. Le It is believed that there is a rapid upsurge of skill base in educational sector in Qatar. This can enable multinational businesses to have talented employees rather than depending upon immigrant labours. In the year 2010, the country with fastest growing economy is Qatar. The 19.40 percentage of real GDP growth resembles the rapid development of the country. Some of the analysts believe that the rise of natural gas and oil prices can benefit Qatar towards continuation of double digit growth. The key economic driver of Qatar is the industrial sector. It is believed that 78.8% of GDP of the country was resulting and occurred from the industrial sector (Kotler, 2004, p.41). Retail trade is increasing significantly in Qatar (Table 1). Therefore, it will important for the organization to capitalize on the opportunity and take the advantage of industry growth rate. Threats The rise of cost materials cost and external business risk are some of the important threats of opening store in Qatar. Furthermore, there can be risk of inflation due to price boom of assets (Table 1). 2.2 PEST analysis The political, economic, social and technological aspects are used in strategic management procedure to assess market for particular organizational or commercial entity. These macro-environmental factors would enable Harvey Nichols to understand direction of business operation, market growth and business position. Political factors According to Qatar, it has emirate type of government which developed in to constitutional monarchy. The country does not support any kind of elections and political parties. This resembles the fact that opening renowned departmental store in Doha, Qatar has to face minimal level of political issues (Table 2). It is believed that political factors can eventually determine the outcome of successful company (Haig, 2011, p.12). Economic factors The economic opportunity available for department store like Harvey Nichols is free trade zone. The increase in international trade is one of the prime economic factors of opening store in Doha. Moreover, the company should nullify the variation and fluctuation price policies of the assets (Table 2). Social factors Some important social factors are career attitudes, age distribution, population growth rate, emphasis on safety and health consciousness. Until the year 2012, it is believed that the rapid economic expansions in Qatar can double the population. In addition to this, demand for high quality and differentiated products is also increasing among the citizens due to favourable economic environment of the country (Table 2). Technological factors The technological factors are rate of technological advancement, technology incentives and automation. Moreover, these factors can heavily determine the outsourcing decisions, minimum level of efficient production level and barriers to entry. One of the prime examples of impressive rate of evolvement in technology sector is winning bid for FIFA world cup in the year 2022. Between the year 2010 and 2014, the IT sector is regarded as fastest growing segment in Qatar. By the year 2014, it is estimated that estimated spending of IT services is believed to go beyond 151 million U.S dollars (Table 2). It is promised in next period that there would be rapid development in sectors like communications, education, healthcare and financial services (Copley, 2007, p.61). 2.3 Porter five forces It a framework implemented to evaluate the level of competition within business strategy growth and an industry. Threat of new entrants There are existence of company with high customer loyalty and high brand value. It is totally difficult for any new firm to enjoy instant success in Qatar without partnership (Table 3). Threat of substitute products Some of the potential factors are quality deprecation of product from Harvey Nichols and buyer tendency to substitute (Cheverton, 2006, p.87). It reduces threat of substitute (Table 3). Bargaining power of suppliers The source of power for any business is suppliers of services, labour, components and raw materials. Huge availability of suppliers reduces supplier’s bargaining power (Table 3). Bargaining power of customers Harvey Nichols heavily relies on new and existing customers to purchase their product via stores and online. The opening of new store in Qatar can be beneficial for Harvey Nichols. This is mainly due to the fact that the product differentiation leaves varied opportunity for buyers (Burrow, 2011, p.18). It reduces customer’s bargaining power (Table 3). Intensity of competitive rivalry The introduction of similar product from different multinational firm can create strong rivalry in Doha. There have been rapid rate of diversification in high-technology, financial services, tourism and gas in Qatar. The country is on process of development (Burgemeister, 2003, p.31). This becomes opportunity for multinational departmental stores like Harvey Nichols to expand their brand image across borders. It increases degree of industry rivalry (Table 3). 3.0 Summary of key challenges and issues The key issues that Harvey Nichols need to address is the lack of control on monetary policy and majority of workforce are expatriates. The three different legal regimes such as the Qatar Science and Technology Park, the Qatar Financial Centre Company Regulation and The Commercial Companies Law determine the establishment of business in Qatar. It is believed that foreign investment is only permitted by The Foreign Investment Law with a partner in Qatar. Furthermore, the partner of the foreign investment must own 51 % of the business share. The outlet of Harvey Nichols will be opened at Doha Festival City Mall. This is the first international departmental store that symbolizes the start of battle to attract other big players in the retail market (Bruce and Hines, 2007, p.62). Any occurrence of controversy and mishap can open door for other biggest names in retail industry to capture market in Doha. 4.0 Strategic options This part will recommend strategic options for organization. BCG Matrix for growth The BCG growth-share matrix is one of the vital growth strategies to determine present chances for international growth. The four categories of this model are question marks, stars, cash cows and dogs are based on combination of relative market share and market growth rate. Initially, the market share of Harvey Nichols store in Qatar will be at question mark stage. It is primarily because large sum of money is being invested towards opening of store in one of the biggest shopping complex in Qatar. It is revealed that the attractive market for high-end Western retailers is Qatar. Most of the revenue generated from Qatar is from oil and gas. Qatar is in number one position in terms of gross domestic product. This is prime reason which provided opportunity for Harvey Nichols Company to plan for opening store in Qatar. According to Hisham S Al Mana, Harvey Nichols will help to provide great dining and shopping experience for people in Qatar. After analyzing question market categories, it is critical for company to determine whether it is right invest money for opening store in Qatar. The market future provides vivid explanation that it can generate greater rate of cash (Brown, 2009, p.91). STP Analysis The segmentation, targeting, positioning is frequently used marketing model in modern marketing processes. This model enables Harvey Nichols to establish link between overall markets and chosen market i.e. Doha. The identification of all segments in service and products is helpful for the development of segmentation. The organization should consider age, lifestyle, gender and income level of the segmentation. Some useful measurable segments are profitable distinct for one another and accessible. Some important factors which determined the international growth are taking international seriously; value the opportunity and putting customer first (Brierley, 2005, p.52). Both male and female with high income background aged between 25 and 60 are major target customers. The execution of perceptual map is vital for positioning of a company. Harvey Nichols opened store in Doha based on huge economic growth of the country. But the position of service, firm and product is vital for the growth of a company. The execution of perpetual map can be effective marketing tool in determining the level of competition based on international growth. It will be positioned as high price-high quality products (Belch and Michael, 2005, p.45). 5.0 Strategic recommendations The process implemented for market entry mode is joint venture. Joint venture is one of the categories of equity mode. In joint venture, both parties come together to work on one project and invest equally in the project on terms of effort, time and money. Harvey Nichols partnership with Saleh Al Hamad Al Mana is a joint venture. This Qatar business group can benefit Harvey Nichols to diversify their business portfolio. The joint venture strategy for foreign market entry modes is to generate greater profits, increase productivity and grow business quicker. The prime reason behind partnership to have quick access to distribution networks and new markets, furthermore, it can benefit Harvey Nichols to have greater resources such as finance, technology and specialized staffs. The market selector for business growth is Doha, Qatar. This is primarily due to the fact that the economic growth of Qatar is astounding. The transformation of abundance of hydrocarbon wealth in tourism infrastructure, educational institutions and model health facilities provides positive attitude to the foreign business community (Baker, 2012, p.78). It is also believed that Qatar has supreme level of disposable income. The significant growth of the country has motivated Harvey Nichols to open new store in Qatar through partnership. 6.0 Marketing mix It is business tool used by marketers and often associated with price, product, promotion and place. 6.1 Price The price determines the survival and profit of any company. It is crucial for marketers to set price based on other elements of marketing mix. According to Autumn Winter catalogue in the year 2006, the lowest prices products in different section of Harvey Nichols are 75 pound of Waistcoat Diesel, 215 pound of ankle strap by Marc Jacobs and 425 pound leather clutch bag. The highest price of product is worth 3895 pound tulle strapless dress. This predicts the fact that price will focus on high income level of Qatari customers (baker, 2001, p.21). 6.2 Product The products are intangible service and tangible goods that satisfy the demands of consumers. The target market of Harvey Nichols is people with high fashion sense and high income level. This resembles the fact that products of this company are primarily based on high income level of customers. As it is known that, Qatar has one of the highest disposable income levels in the world (Arnold, 2002, p.45). Therefore, product must of highest quality. Additionally, products would be focused on people aged between 19 and 45. The Organization should try to adopt and implement differentiation business level strategy to offer high quality differentiated products at cost based pricing as the social demand of these products is increasing significantly and income level of the people is also increasing. It will support the competitive differentiation strategy. 6.3 Promotion Promotion elements that can be implemented by Harvey Nichols are sales promotion, sales organization, public relations and advertising. E-commerce can be another form of digital marketing introduced in Qatar. The company chooses to advertise on newspapers and magazines that emphasize on attracting customers that pays attention towards latest trend of fashion. The Qatar business group buys Valentino (Aaker and Joachimsthaler, 2000, p.98), Italian fashion giant for 857 million dollars. This signifies the trendy promotional activities in emerging market like Qatar. 6.4 Place The Doha Festival City mall is the biggest shopping mall to be constructed in Qatar. The store of the mall is focused on exclusive edit of hospitality services, home ware, beauty, fashion and children wear (Aaker, 2004, p.18). Harvey Nichols have effectively selected commerce centre in the middle of the cities like Doha, Qatar. 7.0 Summary This can be concluded that opening upmarket fashionable store, Harvey Nichols in Qatar can be viewed as increasingly important step towards development of international presence. The chief executive of Harvey Nichols, Stacey Cartwright also stated that the significant growth of the country is one of the prime reasons behind the opening of store in Doha. The focus on diversification, rapid growth of economy and introduction of international businesses has provided opportunity for potential foreign business investors like Harvey Nichols to start business in Qatar. It can be believed that the accelerated development of economy in Qatar has ensured Multinational Corporation like Harvey Nichols to invest on international growth. The execution of micro, macro and SWOT analysis reveals the opportunity and strengths of opening store in Qatar would be beneficial for foreign investor like Harvey Nichols. The key aspect of marketing mix is that target audience is high income level customers. Therefore, it can be determined that the plan of opening store in Qatar would be successful for further development of global presence. 8.0 References Aaker, D. A., 2004. Brand Portfolio Strategy. New York: Free Press. Aaker, D. and Joachimsthaler, E., 2000. Brand Leadership. New York: Free Press. Alpen Capital., 2015. GCC Retail Industry. [PDF]. Available at: < http://www.alpencapital.com/downloads/GCC_Retail_Industry_Report_January_2015.pdf>. [Accessed on March 30, 2015]. Arnold, D., 2002. The Handbook of Brand Management. London: Century Business. Baker, M. J., 2001. Macmillan dictionary of marketing and advertising. 2 ed. London: Macmillan Press Ltd. Barker, N., 2012. Integrated marketing communications. New York: McGraw-Hill. Belch, G., and Michael, G., 2005. Advertising &Promotion-An Integrated marketing Communications Perspective. London: McGraw-Hill. Brierley, S., 2005. The advertising handbook. London: Routledge. Brown, L., 2009. Marketing and Distribution Research. New York: Ronald Press Company. Bruce, M., and Hines, T., 2007. Fashion marketing. London: Routledge. Burgemeister, S., 2003. Market analysis. Berlin: GRIN Verlag. Burrow, J., 2011. Marketing. Stamford: Cengage Learning. Cheverton, P., 2006. Understanding Brand. London: Kogan Page. Copley, P., 2007. Marketing communication management. London: Sage. Friedman, T., 2007. The World is Flat. Stamford: Cengage Learning. Haig, M., 2011. Brand Failures. London: Kogan Page. Hollensen, S., 2007. Global Marketing. London: Routledge. Knight, G., 2008. International Business. London: Sage. Kotler, P., 2004. Marketing essentials. London: Prentice-Hall. 9.0 Appendices Table 1 SWOT analysis Strengths Weaknesses Brand awareness Availability of trained employees Support from Qatari business group Dependence on gas and oil Competitive in business sector Shift of global cost in Qatar Opportunities Threats Qatar fastest growing economy Rise of skill base in educational sector GDP growth Risk of inflation Rise of material cost (Friedman, 2007, p.24) Table 2 PEST analysis Political factors Economic factors Social factors Technological factors Qatar does not support political parties. Opening renowned departmental store in Doha, Qatar has to face minimal level of political issues. Free trade zone will help the organization to capitalize on economic opportunities. Increase in international trade in Qatar. The company should nullify the variation and fluctuation price policies of the assets. Population growth rate. Health consciousness. Demand for high quality and differentiated products. Technological advancement. Fastest growing IT sector. These factors can heavily determine the outsourcing decisions, minimum level of efficient production level and barriers to entry. By the year 2014, it is estimated that estimated spending of IT services is believed to go beyond 151 million U.S. dollars. (Knight, 2008, p.82) Table 3 Porter five forces Threat of New Entrants Low. Buyer’s Bargaining power Low. Supplier’s bargaining power Low. Threat of Substitutes Low. Industry Rivalry High. (Hollensen, 2007, p.28) Figure 1 Size of the Luxury Fashion Market in terms of Retail Trade (Alpen Capital, 2015, p.13) Read More