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The Internationalisation Process of Hugo Boss - Case Study Example

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This paper is an exploration of the internationalization process of Hugo Boos that revealed its reactive approach used the similar strategies of other luxury fashion firms (wholesale distribution) that did not account for a number of highly important considerations…
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Download file to see previous pages Formed in 1923 by Hugo Boss as a clothing manufacturer in Metzinger, Germany, the company emerged from bankruptcy in 1931 with six sewing machines (Vangkilde, 2013). That same year, it began manufacturing varied clothing items for the Nazi Party which aided in it becoming profitable (Vangkilde, 2013). The post-war period saw the company operated by Hugo Boss’ son-in-law, Eugen Holy in 1950 who focused on work uniforms and men’s suits as a supplier (Vangkilde, 2013). The latter area (men’s suits) proved to be highly profitable and the company expanded its ready-made suits into a branded line under Eugen Holy’s sons’ (Jochen and Uwe) in 1969 (Zentes et al. 2017). This lead to the company also introducing branded fragrances, sponsorship deals for exposure (Formula 1 and the Davis Cup) and the production of other branded lines (Zentes et al. 2017). Today, the company is a global operation with 2.7 billion Euros in sales that is distributed through company stores, department store outlets and digital channels (Hugo Boss, 2017). This study will delve into the patterns and process of internationalization for the company. Subsequent sections will explore its approach, competitive aspects, selection of market entry and other factors. These will aid in understanding the strategies, models, and theories utilized and how these might be or will be successful in the future. As an international fashion retailer, the company’s domestic operation represents its strategic planning and administrative center (Hugo Boss, 2017). Its 2012 Annual Report (Hugo Boss, 2012, p. 30) stated that is own retail distribution channel represented “the importance of mono-brand points of sale is growing significantly”. The company’s 2017 Annual report (Hugo Boss, 2017, p. 32) provided the following “Over the last few years, the share of sales generated by the Group’s own retail business has grown substantially. Today, it accounts for 63% (2016: 62%) of Group sales…The Group is increasingly linking its physical retail stores with its e-commerce business.”  Increased internal control over product sales optimizes operations, manufacturing process, re-supply, and fashion releases. A key example is Zara (that is in the Inditex Group that includes Zara Home, Massimo Dutti, Bershka, Oysho, Pull and Bear, Stradivarius and Uterqüe totaling over 7,000 stores) that has become the world’s largest fashion retailer (Olanubi, 2017). In citing the success of Inditex, an article in The Telegraph (Ruddick, 2014, p. 1) pointed to “the connection between stores, the in-house designers, and its factories.” This concentration of the company’s control over the retail sales process provides it with direct feedback on customer preferences and changing trends that is basically not possible from wholesale operations (Ruddick, 2014). Styles that are not moving can be quickly phased out and replaced by new or more variations of existing styles (Wheelwright, 2010). This minimizes manufacturing exposure, inventory carrying costs and lines subject to discount because they are not moving (Wheelwright, 2010). This is a key formula in the Zara model that allows the company to reap a profit margin of 28 percent (Olanubi, 2017) as opposed to the industry average of 5 percent (Lohrey, 2017). ...Download file to see next pagesRead More
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