Peter roberts watches expanding in HONG KONG - Essay Example

Hong Kong Watch and Clock Industry Overview Hong Kong remains one of the leading exporters of watches and clocks around the world, being only second to Switzerland and ahead of Japan. Among the most exported items in this category include the battery-powered watches which accounts for over 56% of the exports (HKTDC Research, 2015). In addition, Hong Kong also exports various components of watches including the cases and watch straps just to mention a few. This paper seeks to analyse the external/Macro-environment and Internal/Microenvironment for a possible entry of Peter Roberts watches.

External/Macro-EnvironmentThis analysis will use the PESTEL framework in describing the external/macro environment of Hong Kong. PESTEL analysis (Porter, 1980) focuses on the external forces that play a key in role in a firm’s ability to produce and sell. Political Analysis for Peter Roberts WatchesThe political analysis relates to the political context of a country and governments often use them to influence the business operations. According to (Porter, 1980), these factors include trading policy; international relations and taxation policy just to mention a few.

Hong Kong is relative a stable and thus offers an excellent environment for international investors to conduct business. However, the imposition of 30% tax on international companies while letting local companies free could pose challenges to Peter Roberts watches in terms of competition (HKTDC Research, 2015). Economic Analysis for Peter Roberts WatchesPorter (1985) posits that economic factors have a significant effect on business and, in particular, the national economy where the business is located.

The economic factors influence business largely in terms of income, interest rates, and general demand. Kotler et al. (2013) argues that high-interest rates discourage investment whereas high inflation affects employee wages. Hong Kong is a rising, stable economy with low inflation rates; consequently, this will be more appealing to Peter Roberts Watches to conduct business. Social Analysis for Peter Roberts WatchesPorter (1985) describes social factors as encompassing factors such as population growth rates, social attitudes, and social demographics among others.

The significance of these factors is in their ability to affect the demand for a firm’s goods. Hong Kong’s population has a significantly large proportion of its population composed of the Y-generation (Lenway & Murtha, 1994). This generation is fashion conscious and has a high affinity for trendy products. Peter Roberts Watches firm’s ability to produce a variety of watches including fashion will ultimately appeal to this population hence market (Peter Roberts, 2015). Technological Analysis for Peter Roberts WatchesTechnological factors are critical in increasing the pace of product manufacture and cost reduction.

Hong Kong is fast becoming a technology-driven country following its relatively well-developed technological infrastructure. Peter Roberts Watches is a highly innovative company with unique brands of watches such as the unique chronograph with five central hands (Peter Roberts, 2015). The conducive technological infrastructure in Hong Kong will provide an incentive to Peter Roberts Watches to produce even higher quality watches and hence remain competitive in the market (Teece & Shuen, 1997).

Environmental AnalysisThe environment/ecology plays a critical role in business, and this includes the various aspects such as climate patterns, weather and temperature changes. Hong Kong has a great climate with normal range temperatures. As a result, these may not interfere with the raw materials for the production of watches. Peter Roberts Watches, therefore, has a greater chance of establishing itself in Hong Kong. Legal Analysis for Peter Roberts WatchesHKTDC Research (2015) observes that legal factors are a country’s legislations, which directly or indirectly affect business.

The factors include employment law, the anti-trust law, and advertising standards among others. Hong Kong has its set of rules that international companies have to comply with when conducting their business in the country. This might be quite challenging for Peter Roberts Watches especially in getting right all the sets of regulations in Hong Kong. Internal/ Micro-Environment AnalysisIn conducting the internal analysis for Peter Roberts Watches, this paper will use the SWOT framework. SWOT framework simply assists a firm’s managers to understand their organization and the market.

The framework contrasts the organization’s “Strengths and Weaknesses” with “Opportunities and Threats” in the market (Kotler et al. 2013). StrengthsPeter Roberts Watches has established itself as a strong and appealing brand following its ability to produce high-quality watches. The ability of Peter Roberts Watches to be highly innovative and produce unique watches offers the company a competitive advantage (Barney, 1995). The company also has a highly competent team with excellent marketing strategies; consequently, this will be critical in attracting customers in Hong Kong.

WeaknessesAlthough Peter Roberts watches produces excellent and high-quality watches, the company’s high prices will be a limiting factor. The fact that the company has a low global presence may limit its market (Peter Roberts, 2015). Lastly, while Peter Roberts Watches has positioned itself in producing watches for the high-end social class. The strategy may play to its disadvantage in Hong Kong where a majority of the people are middle-income earners (HKTDC Research, 2015). OpportunitiesPeter Roberts Watches are of significantly high quality and are made of high-quality materials.

This will leverage the company’s products against the local brands. The company’s decision to go international will provide the company with enormous opportunities to establish its brand and target the youth market segment across the globe (Peter Roberts, 2015). The fact that the company has diversified its products to include sports watches, fashion, and corporate watches present a massive opportunity to sell its products (Peter Roberts, 2015). ThreatsPeter Roberts watches have a major hurdle to overcome in Hong Kong, and that is the local brands.

Firstly, the local brands have first movers’ advantages hence it will be quite difficult for Peter Roberts watches to gain ground (Barney, 1995). Secondly, the local brands have a 30% tax exemption of which Peter Roberts watches will have to pay; consequently; this will disadvantage the company (HKTDC Research, 2015). In addition, local brands such as Casio, Rado, and Titan have created a niche market in Hong Kong; consequently, this will present difficulties for Peter Roberts Watches’ acceptance.

ConclusionHong Kong provides an excellent environment for international companies to establish. Peter Roberts Watches has an opportunity to enter the Hong Kong foreign market; though he faced stiff competition that has established niches for themselves. In order to succeed, Peter Watches may consider using a disruptive innovative strategy combined with the low-cost model. ReferencesBarney, J.B., 1995. Looking inside for competitive advantage” [Online]. Academy of Management Executive, 9 (4): 59-61.

Kotler, P, Keller, KL, Koshy, A, Jha 2013. Marketing management: a South Asian perspective, Pearson, IndiaLenway, S., & Murtha, T., 1994. The state as a strategist in international business research. Journal of International Business Studies. 25(3): Peter Roberts, 2015. Peter Roberts Watches, [Online] Available at http://www.peterrobertswatches.com/ (Accessed 8th April 2015). Porter, M.E. (1985). Competitive advantage: Creating and sustaining superior performance. New York: Free Press.Teece, D.J., & Shuen, A., 1997. Dynamic capabilities and strategic management,” Strategic Management Journal, 18 (7): 509-533HKTDC Research. 2015. Watches and Clocks Industry in Hong Kong [Online].

Available at http://hong-kong-economy-research.hktdc.com/business-news/freepdfdownloadservlet?articleID=1X001DHG&LANGUAGE=en (Accessed 8th April 2015).