International Management: Pandora IPO - Coursework Example

International Management: Pandora IPO Question This is a theoretical question which requires a relationship with available management theory regarding branding and product market entry strategies. In an international market environment, a multinational is forced to rethink on its current market presence strategy and possible benefits of extending its brand identity. Alternatively, new brand strategies can be assessed in place of a single-brand approach, since the global market is different from regional or local market experiences that a company enjoys. Where a positive identity opportunity presents itself in the brand presence, the company’s management can consider tapping into the brand identity across its expanded market. According to Net MBA (1), it is important that every company assesses its brand equity when making decisions to expand the business into an international market. Risks of the brand name uniformity propagation must be anticipated and appropriate response measures accordingly put in place. There are several product based decisions that the management supposed to analyze, before deciding if a single-brand strategy will be used in the realization of the global targets or if a different brand strategy will enable a strong global market entry. Much of the deliberations are supported by the business line of products in which the company deals in as well as the brand equity created in the market experience that the company can project to be sustainable in an expanded market coverage. There are several advantages of using the single-brand strategy that applies a single brand name for all products under a company’s market presentation. Firstly, the huge market that the global platform of multinational level of operation presents an equally expanded opportunity to monitor a product’s performance across the market. Secondly, the use of a single-brand strategy enables exploitation of a strong brand equity already created in the market. Thirdly, single-brand strategy enables the company to utilize its distinct market position to launch a competitive advantage over its unfamiliar rivals on the global arena. Fourthly, there are fewer market access costs due to the existing brand presence on the global market. Alternatively, keen decision making regarding single-brand strategy must be approached from the perspective of a number of disadvantages inherent to the strategy. One of the disadvantages of single-brand strategy in the global market place is the reliance on one customer mentality that a single brand name is better than others in the market. Secondly, the advantages of exploring new markets through new brand names are lost. Thirdly, it may be uncertain to work on an assumption that the brand name is strong enough to perform similarly across the global markets. Fourthly, market features of demand patterns may need a different brand presence across the market. In light of the best market type for a successful single-brand experience, there are extra benefits for the strategy when the product line is similar. A similar category of products having a similar brand works well for the market strategy that adopts a single brand across the global market. For instance, the KiMs range of snack food varieties bearing the brand name KiMs have achieved a considerable brand identity for the KiMs market across Denmark, despite being integrated into the Orkla Group of companies. Retaining the brand name KiMs was perhaps aimed at retaining single-brand benefits in the Danish market. The reason for this position is largely contributed by the observation that commodities under the same category tend to have a distinct identity in the market that can be easily identified. Taking advantage of the category of products that attract certain segment of the market enables in the creation brand identity which can be enhanced into brand equity over a period of time of market positioning (Hill, 10). When making a global entry strategy, brand identity that captures such an opportunity is important in the general intangible asset creation. In such an environment, the brand name assists the company to launch a competitive advantage over its rivals from an internal strength of the brand mainly in codifiability, teachability and complexity. Despite the possible benefits that a single brand opportunity can present to global operations of a company, other alternatives of market product design and entry should be assessed such as umbrella, multi-brand categories and the use of a family tree for brand names (Net MBA, 1). Some benefits of using these different brand names include capturing the international market segments that would rather be difficult under the same brand name. Rebranding benefits could introduce market vibrancy contributed by the fact that there is a portion of the market that is ready for new market ideas and products including new names for previously known goods. Using different brand names for different products would perhaps enhance individual brand performance when compared with a collective performance which bears the responsibility of both fast and sluggish brands in the international market. Question 2 This is an entry mode question that specifically captures the logistics of operations in the new global scope that Pandora has achieved. It seeks to establish the efficiency of the current product delivery system that enables Pandora to reach the market share so far achieved. Alternatively, a perspective of the loopholes in the logistics system is facilitated through the relevant response. Apparently, Pandora uses different channels of product distribution ranging from selling jewels through multi-brand retailers. An analysis of the channel shows that the distributors carry a limited Pandora’s products range due to the nature of their wide distribution scope that includes distribution arrangement for similar producers as well as other product lines. Alternatively, distribution is also enabled by the reliance on concept stores that exclusively sell a full range of Pandora products such as authorized dealer arrangements function for some commodities. Pandora product portfolio includes five units mainly Moments, Stories, Compose, LovePods and Liquid Silver that are designed in an in-house arrangement as well as a diversified distribution. Production of the products that Pandora presents to the market is alternatively conducted at centralized facilities in Thailand in a coordinated manner. In view of handling of finished products, direct distribution and subsidiary channeling have been used in the market by Pandora. These distribution outlets are diversified into point of sale units, concept stores, shop-in-shops, Gold, Silver and White Level points of sale and travel retail outlets. According to the Pandora (10), over 10,000 outlets points have been used to distribute the products as diversified into the various points of sale. Under the diversified market design in which the Pandora products are distributed is expanded to capture various market ends. The advantages therefore include a varied market coverage that has enabled diversified market penetration. It is also advantageous that the new geographical markets are flexibly targeted by such points of sale as franchise and independently operated distribution channels. The disadvantages of the market channel include undefined market coverage approach since their strength in ensuring sustainable distribution cannot be coordinated. Concept stores operate under the sole financing of Pandora which is an extra marketing cost. However, in light of the huge opportunity that the Company obtains from operating its own product distribution, close monitoring of distribution is facilitated. It is therefore clear that the sensitive line of product operation that the company deals in needs constant control and coordination due to the valuation of the unit products and the associated risks. Perhaps the timeliest change that the company needs is to engage in more secure market distribution engagements that considerably increase market presence. Emerging markets should have a different approach such as strategic market alliances and franchises. By involving franchises and similar outsourcing arrangements, it is important that the benefits of market coverage diversification are captured within the safety perspective. International market identification will eventually enable Pandora to adapt to a particular distribution strategy that will facilitate the complete market positioning. It is therefore an important element that Pandora exercises caution in determining the effective channel of distribution in light of the sensitivity of the industry. With the diversification of the market to capture newer product lines in the distribution strategies, it might prove to be applicable for certain products to be channeled though certain channels. For instance, high value units of jewelry could specifically be better in a concept store strategy due to coordination and reduction of pilferage risks. On the other hand, if Pandora engaged in franchises with world best known retailers that operate across the world, it could present the market in Denmark with the opportunity to capitalize on the already established logistics. Such a setting would eliminate the third party arrangement which is difficult to control under international business monitoring strategy. In a franchise, the legal consideration becomes known to the global market making the products readily available and easy to advertise through the retailer. Alternatively, distribution through franchises by multinationals is a common practice in Denmark. This is a new product distribution opportunity presented to Pandora in the Danish market. Consideration of how costly the franchise arrangement would be could however act as a hindrance to the implementation. Question 3 The Advantages and Disadvantages of Outsourcing the Production of Sunglasses and Watches for Pandora The company plans to outsource the production of non-jewellery products to other partners. The company predicts that if these partners of non-jewellery products fail to offer Pandora with goods in time or offer them with goods that vary in quality, then the company will; (a) miss sale opportunities, (b) fail to get returns on investments, (c) the perception of offering quality product can become tarnished, and (e) the brand may become tarnished. The company has terminated contract with the original outsourcing partner due to quality concerns; the company had sought to launch PANDORA-branded sunglasses. The company is not sure if the quality concerns will addressed effectively when they seek new outsourcing partners (Pandora 16). There are a number of disadvantages of outsourcing the production of sunglasses and watches for Pandora and they include; (a) variation in the quality of products – this led to the termination of a contract of an outsourcing partner, (b) loss in strength of the brand DNA and bad perception from the customers especially for low quality products, (c) miss sale opportunities, and (d) the failure to get returns from the investments. Pandora plans to outsource assembly, after-sale service, and the procurement of non-jewellery products to third parties who have a longstanding reputation and experience in those fields; the company will work close with them in the development phases, quality testing, and in design. The outsourcing of the non-jewellery products will permit the company to focus on the competence in jewellery and evade the allocation of resources to the technical parts of sunglasses and watches (Pandora 52). The company plans to control the design process of outsourcing of the non-jewellery products such as sunglasses and watches and this will ensure that the products are consistent with the brand DNA and that they meet the standards for style and quality (61). The advantages of outsourcing the production of the sunglasses and the watches is that the company will; (a) focus more on the jewellery competence, (b) evade the allocation of resources to the technical aspects of the sunglasses and watches, and (c) be able to meet the standard style and quality desired by the company. The Best Way to Organize and Govern Outsourcing The best way to organize and govern the outsourcing in order to achieve competitive advantage is the use of the following strategic objectives. These strategic objectives include accomplishing efficiency in the present operations, managing the risks, and innovation adaption and learning. Efficiency in the current operations can be achieved by exploiting and expanding the potential scale economies in its activities and the sharing of market, business, and market costs, and investments (Eriksen 5). The risks can be managed by looking at the risks that emerge from policy-induced or market changes in a comparative advantage of a number of countries, balancing the scale with operational and strategic flexibility, and the development of side-bets and options and portfolio diversification of the risks. Innovation adaption and learning can be achieved by getting benefits from the experience (innovation and cost reduction), learning from the society differences in the managerial and organizational systems and processes, and from the shared learning within the organizational components in a number of markets, businesses, and products (Eriksen 5). Pandora can effectively organize and govern the outsourcing of the production by utilizing the mentioned strategic objectives. The strategic objectives will offer them a competitive advantage within the market. Having a competitive advantage over the competitors will lead to increased loyalty from the consumers and increased returns from the investments. The products produced will meet the standard quality and design desired by the company. Question 4 Key Features of Pandora’s New Product Development Process Design and creativity are important elements in the product development process. Utilizing the knowledge and the serious attention to the trends in style and fashion, the company designers seek to gain foundation from the prior collection success in order to design products that showcase the PANDORA brand DNA. The development of the jewelry collections entails the product ideology development, the development of product prototypes, and the design of the product models. The process of development of the jewellery product follows one of these processes; main track product collection development, fast track product development or product line development (Pandora 61). Product Line Development It is the process of creating a new collection. The first step is to develop the theoretical parameters for new product or collection. An analysis of the sales data is done to make sure that there is a purchasing trend that shows the demand for the new product. The extent of the recommended product range is determined and the product roadmap (it defines the characteristics of the product and offers definition on how the product is projected to fit within the portfolio) is established (Pandora 61). Main Track Product Collection Development It is the process of developing additional products within the existing collections. The collections are updated twice in a year (fall and spring) but the production is a continual process. The company develops semi-annual launch of periods 12 to 14 months, from the product design and development to its launch (Pandora 61). The company reviews the sales trend and sales data advice from its sales and marketing department. The review and the design ideologies decide the kind of product to be developed further and the ones to be shelved off. Finally, the design team gets and approves the product prototype that is created in Thailand and refers to the sales and marketing department for its launch (Pandora 62). Fast Track Product Development It is used for the designing of particular products or making particular modifications on the design as requested by the sales team. This allows the company to respond quickly to the emerging trends in the market (Pandora 62). The Coordination of the Activities Pandora combines the product management and in-house design capabilities in collaboration with external expertise. The company holds quarterly workshops in which latest trends are showcased by the external advisors on luxury and fashion trends. The external creative consultant performs monthly visual consistency controls so as to make sure there is consistence in the product visual merchandising, marketing, and design. In other words, the external creative consultant controls majority of the virtual activities related to the design, visual merchandising, and marketing. The company is involved in the non-jewellery product development process (Pandora 62). Though the company does not plan to non-jewellery products such as sunglasses and watches; it controls the design process and works closely with the outsourcing partners. This is to ensure that the outsourcing partners deliver non-jewellery products that are consistent with the brand DNA and meet the standards for style and quality. The in-house product manager also oversees the development, distribution, marketing and the design of the future watch products or collections (Pandora 62). Effective Coordination Mechanisms That Are Likely To Be Effective For Pandora Development of the New Product There a number of coordination mechanisms that Pandora can use in order to effectively develop new products. These coordination mechanisms are formal and structural mechanisms. Pandora can: Departmentalize or group the organizational units, for example, it can create different departments within the production. This will assist in shaping the formal structure of the company (Eriksen 3). Decentralize the decision making process through the formal authority hierarchy. Each decision and in particular innovative decisions are important for the company. Formalize and standardize the company through rules, standard procedures, job descriptions, policies and instruments such as charts and manuals (Eriksen 3). Plan – the planning can be done in a number of ways such as budgeting, scheduling, functional plans, and strategic planning. Control the output and behavior – this can be achieved through the use of technical reports, direct supervision, sales and marketing data, and financial performance (Eriksen 3). There are coordination mechanisms that Pandora can use though they are subtle and informal; they include lateral or cross departmental relations, informal communication and socialization (Eriksen 3). Works Cited Eriksen, Bo. Organizational Forms for Multinational Firms – Choice of Structure. Syddansk Universitet, Denmark. 6 April 2011. Lecture Notes. Hill, Charles W. L. International business: competing in the global marketplace. New York, NY: McGraw Hill Higher Education, 2010. Print NetMBA, “Brand Equity,” 2010. Web. http://www.netmba.com/marketing/brand/equity/ (15 June 2011) Pandora. Pandora – Offering of up to 47, 981, 480 Ordinary Shares. Denmark, 2010. Print. Read More