Internationalisation of Fashion Company in Brazil - Research Paper Example

? Internationalization of Fashion Company in Brazil The internationalization strategy to be pursued should be chosen carefully in order to determine the best approach in the luxury fashion product market. Foreign market expansion is not a new concept. For over two decades, intercontinental development in the trend industry had been unparalleled. The emergence of super-brands has sparked intense competition. The market positioning of some brands makes them more appealing than others. Internationalization can be defined as the sourcing of goods from overseas markets. Buying from worldwide-markets is aggravated by the economic and competitive consideration. Fashion companies seek to obtain gain from low cost of labor in the underdeveloped economies. The global fashion brand has caused most of the people to look for the most successful brands like the Ralph Lauren and Carolina Herrera. The super brands have left the fashion buyers with little choice but to ignore the lesser known brands. Expansion strategies are important when dealing with recessionary pressure. The emergence of a cosmopolitan and fashion-informed consumer market has caused global expansion. At the same time, technology has enabled online transactions. This led to an amplified union in worldwide lifestyles. This allowed the fashion industry retailers to correspond efficiently with the customers in foreign markets. International fashion and design companies have succeeded partly because of design excellence, cosmopolitanism and exclusivity (Alexander & Myers 2000). The Carolina Herrera and Ralph Lauren companies have indentified their market niche. The companies target the clients who deal with accessories, garments and apparels. The companies aim at offering differentiated products of high quality (Charles & Gareth 2012). The same market is the target of the rival companies like Loewe. The future of companies like Ralph Lauren and Carolina Herrera and other fashion retailers lies in the internalization strategy. Many domestic markets have been saturated by local brand leading to lessening of profits. Intense local markets competition has caused constraints to complicate the strategic management of these organizations (Charles & Gareth 2012). The rise of global sourcing by fashion retailers and technological advances has made it easy for companies to target the global market (Chevalier & Mazzalovo 2012). Traditional obstacles are steadily being eliminated as trading blocs continue to play a crucial role in the process of international trade. Depressive economic conditions and increase in competitive strength are major causes of internationalization by fashion retailers. The pull and push macro-factors make the local marketplace emerge as less or more attractive to retailers (Hill & Jones 1998). The push factors are known to make it difficult for an organization to fit into the market. This can come from consumer culture or misunderstanding the consumer needs (Hill & Jones 1998). The push factors in the Brazilian domestic market had a negative effect on the Ralph Lauren fashion company. The macro factors in the foreign market that act as push factors can end up being resolved through intense research before entering into a foreign market (Chevalier & Mazzalovo 2012). This entails understanding the trends of consumption of a product, the consumer purchasing power and the economic situation of the country (Alexander & Myers 2000). The pull factors are known to attract a fashion retailer into new markets. This should be done after extensive research on the consumer preferences and the state of the economy. The micro factors in the organization play an important role in the ensuring a company takes important risks when moving into the international market (Charles & Gareth 2012). The modern day market dynamism demands that consumers must be fully aware of developing opportunities that can lead to increased revenues and economic growth (Chevalier & Mazzalovo 2012). This is one of the organizational strategies of increasing revenues. The financial capability of these organizations is seen through the global investments that have been made (Haig 2011). Carolina Herrera Company has invested in brand equity against major competitors. The company is constructed stores in different geographical areas with a view of reaching customers and developing the strength of the brands. Supply chain Ralph Lauren focuses on the luxury goods and has multiple sales channels. The supply chain of the Ralph Lauren Company is a shared (Williams 1992). The company uses close relationships to provide international solutions. This has challenged the way the company supplies its products. The company uses single customer packages in the process of supply. This is different from using a wholesale large shipment (Chevalier & Mazzalovo 2012). The factory outlets and store formats make the supply chain complicated. The company has a very complex supply chain network. The Carolina Herrera company is a leaner supply chain compared to Ralph Lauren. This made the company to have to have an edge over the rival company in Brazil. The factory outlets and number of stores across the world affect the cost of supplies. SWOT analysis Strengths The internal assessment of Ralph Lauren identifies the company’s strength. The company has been able to implement value-creating strategies using its own capabilities, competencies and competitive advantage (Haig 2011). In order to meet the demands of the clients, the company has aligned its core competencies. Through the competencies, company is able to maintain competitive advantage over the major competitors (Onkvisit & Shaw 2004). The company has premium product lines. The company has been able to expand products offerings. The company has included jewelry, home furnishings and fragrances. The polo emblem is widely known and highly regarded in the fashion industry. The company is keen to invest in style, sophistication and flamboyance. Ralph Lauren has been expanding across the global market leading to increased revenues. The consistency and style has earned the company a large consumer following. The company enjoys high brand recognition. Ralph Lauren is a classic style and has allowed the company to expand its products portfolio into markets that go beyond clothing (Moore & Birtwistle 2004). The company has expanded to home furnishings. The high consumer margin has allowed a larger profit margin than most of the rival companies in the market (Onkvisit & Shaw 2004). The powerful brand equity has reduced the price sensitivity and maintained good performance. Ralph Lauren has changed its infrastructure which aims at reducing costs. The company has a respectable history (Charles & Gareth 2012). The company has consistently set the fashion standards for over two decades. Ralph Lauren products have remained in high demand. The customers are expecting new fashion lines. The company has a low debt ratio to capital ratio (Worth 2007). This provides financial strength for future growth. Weaknesses The company over-depends on stores for sales. This means that the company shares housing with competitors. This impacts the company negatively. The company has high dependence on manufacturing. Competition has brought limitations in the manufacturing in cases of high demand. This can potentially reduce the revenues of the company or lose customers to competitors. The product quality of the company is high and this sometimes hinders the process of manufacturing. Opportunity Polo has opportunities in brand extension, international expansion and specialty retail. International expansion is one of the most viable opportunities of the company. The company hopes to make a strong presence in South America. Threats Increasing international competition is hurting the company. Ralph Lauren is competing with major brands in the department stores. At the same time, new product lines are getting introduced, especially in women-ware. The presence of superior brands in the market pose a real threat to both Carolina Herrera and Ralph Lauren companies. The fragile global economy has affected the ability of Ralph Lauren to have stability in the South American developing economies. Porter’s five forces model Rivalry among the fashion retail industry is growing steadily. Ralph Lauren has introduced new products with a competitive edge. The company is entering into new markets like interior decorating. Acquisition has enabled the company to expand the consumer base around the world (Williams 1992). The use of technology has opened new chances for reaching the global market. The statistic management team is aggressive when it comes to opening new stores and online marketing. The cost of expanding to new markets is not as high as expected. The strong reputation makes it difficult to match the Ralph Lauren brand. New entrants pose a threat in the fashion retail industry. However, the diversification of Ralph Lauren means it is difficult to significantly concede the consumer support they enjoy. The company has been dominant when it comes to global operations and manufacturing. The company has heavily invested in innovation of quality fashions. This has caused the company to remain a market leader when it comes to marketing strategy and quality products. Some companies try to mimic the Ralph Lauren products with minimal success. The Polo emblem remains a strong force of appeal. Bargaining power of buyers affects the profitability of the company. The Argentinean market had a weak purchasing power; this became the push factor for Ralph Lauren. Ansoff matrix Market penetration The process of internationalization must take into account the dynamics of internationalization. While some companies succeed in the international market completion, some fail to make profits. Market penetration demands that fashion retail company’s conducts research into new markets (Williams 1992). Ralph Lauren and Carolina Herrera are committed to entering into the Brazilian and the greater South American market. However, the Argentinean crisis had a profound effect on Ralph Lauren. The Ralph Lauren failed to capture the trend and the economic reality of the Argentinean market. Carolina Herrera used the internationalization and market penetration strategy to increase revenues in the Brazilian market (Moore & Birtwistle 2004). The strategic team launched new products that target the Brazilian market. The products are designed to be relevant to the Brazilian culture and fashion industry (Williams 1992). Consequently, the company increased sales without having to drift from the original product-market strategy. The Ralph Lauren brand offers quality products. However, the product was too expensive for the argentines. This was primarily because of the economic crisis. Product development Carolina Herrera is keen to introduce new products in the Brazilian market. As a result, the company had an extremely competitive entry into the international market, especially in Brazil. Ralph Lauren is a dominant brand that is inspired by innovation (Worth 2007). However, the company needs to develop products for all social classes. Most of the quality products of the company cannot be bought by the poor class (Moore & Birtwistle 2004). Both companies have embarked on aggressive protection of the market share and product gains. Innovation and technology remain at the center of these leading brands. Product development in the fashion industry must address the consumer needs in a sustainable way. This can lead to increased productivity and turnover. Market development Internationalization must incorporate market development skills. New markets have new needs. The Ralph Lauren had an inaccurate assessment of the Brazilian consumer market (Worth 2007). Carolina Herrera Company was able to expand the customer base in the same South American market. The company invested in aggressive campaigns to spread the existing products into new markets (Hill & Jones 1998). The Carolina Herrera company strategic team applied cross-cultural fashion industry techniques to appeal to the South American market. Market development is crucial in expanding to new markets. The company introduced new products (Tungate 2012). This has caused the existing customers to have a wider selection scope which minimized the effects of the competing fashion brands in Brazil. Ralph Lauren had a decreased market development outcome while Carolina Herrera gained market share. Diversification Ralph Lauren has diversified its current products. This is in a bid to consolidate the consumer base. The two fashion companies are using forward, backward and horizontal integration in the process of diversification (Tungate 2012). Strategic management in an organization demands proper timing and an acute understanding of the consumer market (Moore & Birtwistle 2004). The Carolina marketing mix is vibrant and pays attention of the needs of the youthful market. Diversification is an organizational risk. Therefore, sound assessment and research is vital. Ralph Lauren, an important company in the fashion industry for many decades failed to perform as expected in the Brazilian market. Diversification of products and pricing must primarily focus on the consumer needs. In conclusion, Carolina Herrera is said to have close to two thousand stores in Brazil. Brazil has suffered under high rates of inflation in the past. The economic instability had affected the purchasing power of the Brazilian market. Ralph Lauren is a strong brand in the fashion industry. The strategic management of companies is keen to expand their consumer. In organizational strategic management, the pull and push factors, Ansoff and SWOT analysis play a crucial role in the process of internationalization. References Alexander,, N., & Myers, H. 2000. The retail internationalisation process",. International Marketing Review,, 17,4, 334-353. Chevalier, M., & Mazzalovo, G. 2012. Luxury brand management: A world of privilege. Singapore [u.a.: Wiley. Charles W. L, W. H., & Gareth , R. J. 2012. Strategic Management Theory: An Integrated Approach, 10th ed. New York: Cengage Learning. Haig, M., & Haig, M. 2011. Brand success: How the world's top 100 brands thrive and survive,10th ed. London: Kogan Page. Hill, C. W., & Jones, G. R. 2010. Strategic management theory: An integrated approach. Mason, OH: South-Western/Cengage Learning. Hill, C. W., & Jones, G. R. 2013. Strategic management: An integrated approach. Mason, OH: South-Western, Cengage Learning. Moore, C., & Birtwistle, G. 2004. Creating an international luxury fashion brand. International Journal of Retail & Distribution Management, 32,8, 412-422. Onkvisit, S., & Shaw, J. J. 2004. International marketing: Analysis and strategy, p. 4. New York: Macmillan Pub. Co. Tungate, M. 2012. Fashion brands: Branding style from Armani to Zara,3rd ed. London: Kogan Page. Williams, D. E. 1992. Motives for retailer internationalization: Their impact, structure and implications,. Journal of Marketing Management,, 8,3, 269-285. Worth, R. 2007. Fashion for the people: A history of clothing at Marks & Spencer 1st ed. Oxford [u.a.: Berg. Read More