Internationalization of Luxury Fashion Textile Industry - Literature review Example

? International Fashion Textiles Marketing Table of Contents Literature Review 3 Internationalization Process 3 Resource-Based Theory 5 Psychic distance and Internationalization Process 7 Shanghai Tang: UK and China Market Perspective 8 Market Entry 8 Flagship Store 9 Target Market 10 Marketing Mix: 4Ps Framework 10 Conclusion 13 Recommendations 14 References 15 Literature Review Shanghai Tang is one of the leading luxury global brands in China. The organization was founded in the year 1994. It is the first international luxury brand (Lu, 2011, p.121). The brand is popular for providing traditional Chinese fashion statement. This part of the study will provide some theoretical aspects about Internationalization process of luxury fashion textile industry (Gillespie, Jeannet and Hennessey, 2010, p.508). Internationalization Process Internationalization process is a particular brand development process considering from the local or domestic market place to international market place. This internationalization process used to provide international activity analysis depending upon the market penetration. International environment will generate valuable experience about the learning global strategy. For an example, an organization can gain valuable experiences in order to identify the social problems in various countries (Pride and Ferrell, 2011, p.248). Based on several literatures, internationalization process can be defined as the specific process to increase the involvement of a brand or an organization in global operations. Generally, this internationalization process comprises of a sensible planning perspective, which can help the organization to make effective strategic decisions in order to improve the organizational performance. It indicates that, the organization has internationalized their business operations based on the strategy development (Hill and Jones, 2011, p.149). It generally supports the predefined long-term objectives of the organization. In a very much simple and similar attempt, the literatures have proposed s strategic planning process framework for the luxurious fast-fashion and textile organizations or brands that has internationalized their business operation around the globe. Exclusively, the initiative frameworks that have been proposed by the literatures depict the internationalization trend for the both born-global and gradual global luxurious fashion and textile organizations. An international strategic planning process allows several potential organizations to increase the incremental operation involvement in a very concrete manner (Behrens, 2009, p.71). These strategies only can be implemented after achieving significant success in the home or domestic market. It has been effectively revealed that the incremental process of internationalization planning develops by the learning via commitment over longer period of times. In this way, the fashion and textile retailers used to construct a strong base in the domestic market (Etemed, 2005, p.62). Moreover, this strategy and process help the organiza6tions to focus on the expansion of business operations on other potential geographic areas either within the country or any other potential international area. The growth of business performance level in the domestic market used to motivate the organizations to make an international footprint around the globe. Therefore, an incremental planning structure can significantly provide the luxury fashion or the textile retail organizations an effective understanding about the competency and several aspects of a local market place (Kapferer, 2008, p.34). Moreover, it helps to identify various innovative strategies that can be effective enough to implement in the international business expansion process. There are several drawbacks that exist in the incremental planning structure. The fashion and textile retailers may not be able to execute the same strategy in terms of global market. In order to support this concept, Bell et al. (2003) has argued that, in the incremental practices, the fashion or the textile retailers usually avoid the similar strategy in the internationalization processes in different geographic areas. In fact, growing a strong base in the domestic market place may not bring success for the textile organizations in long run. To fulfil the criteria, another philosophy of internationalization used to follow the dynamic strategic planning process (Graham, 2008, p.55). Following this path, the textile or fashion retailers used to achieve competitive advantages through the superior knowledge intensity from the rapid internationalization process. Hence, it can be said that, this framework used to provide a view of dissimilarities between traditional and born global fashion and textile retailers. Resource-Based Theory Resource-based theory used to address the ability of an organization to sustain and achieve the competitive advantages. The resourced based theory in an internationalization framework is concerned with the asset-exploiting investment (Barney and Clark, 2007, p.93). This resource based theory is echoed by the ownership specific advantage of Dunning that provides s framework to judge Shanghai Tang’s resources that are rare (R), valuable (V), not substitutable (N) and imperfectly imitable (I). It is important for one firm to maintain and control a distinct advantage in a valuable product or service, which cannot be replicated in order to hold the sustained competitive advantages over other potential competitors (Kuratko, 2007, p.67). Several attributes that can make a resource valuable (V) comprise an exclusive idea or new idea. While developing and selling a new product, several parts of that particular product can be copied. However, implementing new ideas or strategies that has not been implemented before can be termed as a valuable resource. Imperfectly imitable (I) and rare (r) entail that; resources are very much different comparing to the other resources. Moreover, these cannot be easily emulated. If a resource is revealed with similar benefits in a particular market place, then it can be state that, the resource is not that much valuable (Walton, 1999, p.76). Tangible resources can be exhausted but it is the intangible resources that offer a sustained and important competitive advantages. Rare (R), valuable (V), not substitutable (N) and imperfectly imitable (I) resources are very much difficult to find in a market place. Therefore, a fashion or textile retailer enjoying VRIN resources must sustain and protest them in a competitive market place (miller, 2010, p.21). The organization’s eclectic theory of Dunning has been categorized as resource based in behaviour for several years. Dunning (1988, 2000) has conceptualized several resource advantages that negatively impacted the internationalization strategy as ownership-specific benefits. The eclectic paradigm used to help the organization to explain the reason behind the investment of the organization’s in the international market. Several resources of an organization used to affect its decision making process and internationalization process. Organizations tend to globalize in two major fundamental ways, such as a global retailer or a multinational retailer. A multinational retail organization used to adapt the internationalization model to the particular culture in the expanding countries. On the other hand, a global retail organization used to maintain its general and basic format or structure while adapting the internationalization process. It can be the outcome of several resource-based advantages, such as transaction based and asset based advantages. A global internationalization model can be implemented when a specific fashion or textile retailer used to expand its business practices in overseas. The global retail organizations used to implement standard implement standard retail format. Moreover, they used to implement internationalizing using the specific resources of the particular organization. These global retailers have decentralized their management structure in order to control the global expansion activities. As there are several O-Specific resource advantages, the global retailer needs to maintain a high-level control in the internationalization process. It prevents format duplication and efficiently protects the structure secrets. This resource based advantage needs to herald the global or international involvement. On the other hand, the organization needs to have a concrete idea and understanding about the own resource based advantages before implementing successful international expansion. Psychic distance and Internationalization Process Psychic distance is a particular degree to which a culture of a specific area feels comfortable while dealing with another area’s culture. Moreover it can be operationalized and defined as various ways by different research fellows. According to Nordstrom and Vahlne’s (1992) it includes differences between the structure, language and culture of a particular country. These are generally perceived as the differences between the home country and the foreign country, where the textile or fashion retail firm originated from the home country (Johnson and Turner, 2010, p.239). The cultural influence of the global operation management has been effectively established in the academic and literature. Moreover, it can be traced to Hofstede’s (1980) cultural seminal work. The culture of the specific country has been revealed to explain more consumer behaviour variances at the specific country level comparing to the income, over the time period (Blomstermo and Sharma, 2003, p.25). Several cultural barriers are the believable component of the internationalization research. Consequently culture of a geographic area has been one of the major focuses of several internationalization studies. When an organization used to consider international or global expansion, this psychic distance generally lays an important role in the decision making process. Johanson and Vahlne (1977) have suggested that, the organization used to perform effectively in a foreign market that is very much similarly attributed to the own domestic market. Generally, the organization used to internationalize in a measured process shifting into the psychically proximate markets. Current research fellows have identified several characteristics of the psychic distance paradox. It used to occur when the organizations tend to be more specific and successful when they are trying to enter in the potential foreign market place (Buckley and Ghauri, 1999, p.25). Evans and Mavondo (2002) have argued that, the general perception of huge differences may lead a potential organization to extend the research and perception before entering into the international market place. Therefore, it increases the possibility of business success. Shanghai Tang: UK and China Market Perspective This part will elaborate several facts and internationalization process analysis of Shanghai Tang. Market Entry Change of ownership has become one of the important aspects for the organization. Due to this change, the organization has able to enter and operate effectively in the western market. The original and basic idea of Shanghai Tang was to develop the products in Chinese market and export the finishing products to the UK market. The international marketing strategy has changed due to the entry of Richemont in the organization (Behal, 2013, p.1). The procedure has become very much westernized. The process has made it easier for the consumers of China to accept the brand. Richemont’s entry has resulted highly sophisticated marketing strategy. This was all about promoting a statement about the standardize lifestyle. Presently the organization is not only selling the men’s, women’s or kids wear. The organization is selling something more than these basic things, such as luxury, trends, traditional Chinese elements and colour in global market place. These things have reflected the traditional story of china through their clothes, jewelleries and other appeal elements. They have entered in several potential global places. Recently the organization has started to introduce flagship stores in several geographic parts of the globe (Easey, 2009, p.81). The organization has introduced own store in London. Effective Chinese art in fashion with reasonable price level has increased the brand value of the organization in UK market. Flagship Store Shanghai Tang is one of the successful international clothing chain organizations. The organization was founded in the year 1994 by a business man named David Tang. Richemont has acquired the controlling stake of David Tang in business. The organization has its physical presence in several potential geographic areas around the globe, such as Bangkok, London, New York, Beijing, Paris, Madrid, Tokyo, Macau and Las Vegas. After 17 years of successful business operation, the organization has closed its first flagship store in Hong Kong. The total area of this flagship store is 6,300 sq. ft. The reason behind this failure was raising rent of that operating place. It was situated in Pedder Building of Hong Kong. However, the organization has planned and set up several project units to show its presence in the central part of the country. In the year 2012, another flagship store of the organization in the Central area has opened on the busy and potential Duddell Street. The name of this flagship store is Shanghai Tang Mansion. The total area of this store is almost 1400 square meter. This is the largest branch of Shanghai Tang (Jones, 2008, p.152). The store has designed by the best designing agency in Shanghai named MVW. Target Market Shanghai Tang is one of the leading luxury fashion retailer. The organization used to provide both trendy and traditional luxury Chinese clothes. The organization is very much popular in the Chinese market. The organization used to target the people of well academic background and high income group. People of all age group are the potential target audiences of this organization (Chevalier and Lu, 2011, p.49). As they provide quality traditional products along with reasonable price level, therefore, the brand recall and brand image of this organization is quite impressive and high in the competitive market place. In terms of UK fashion market, the people of UK love to consume traditional clothes. Moreover, according to them shopping of traditional fashion and luxurious clothes is a kind of social ritual. Major of the UK people never mind to pay more against the quality products. The organization also has targeted same customer group in UK similar to the Chinese market. Therefore, it can be said that, the target customers in both UK and Chinese market are the people of sophisticated personalities, standard income and all age group. Marketing Mix: 4Ps Framework David Tang; the founder of the organization believes that, product consumption behaviour does not move with the economic development of a nation. It depends upon the effective product, pricing and promotional strategy. In order to judge the effectiveness of the organization’s marketing strategy, a 4Ps framework of marketing mix strategy has been implemented. Product The organization uses natural raw materials, such as natural silk, natural cotton. Moreover the organization follows traditional Chinese trends and styles. They used to provide same styled and designed products both in UK and Chinese market. At the early stage of business operation, according to several fashion experts, Shanghai Tang has used overpriced and mini Chinatown strategy. After this, slowly and gradually the organization had decided that each and every product collection will reflect a traditional Chinese related theme (Hollis, 2008, p.46). It has turned as an effective strategy and both UK and Chinese customers have appreciated this product strategy. Price The organization has used premium product pricing strategy in both UK and Chinese market based on the high quality of the products and usage of the natural raw materials. Due to the intense competition in Chinese market and huge currency differentiation comparing to the UK market, the organization has implemented slightly low pricing strategy in China. Place The organization has maximum presence in the Asian market. In London, the organization has established their boutique in the Salone Street that is situated in the Central London. In Hong Kong, Shanghai Tang has introduced their largest flagship store in the Central area. This specific shopping mall is enriched with several luxury brands. Moreover, the organization has implemented decentralize manufacturing stores in order to ease the business operation. Implementation of vertical integration in the distribution and supply chain system has increase the efficiency of the supply chain and distribution network (Anhold, 2012, p.173). Promotion In terms of visual merchandising, there are huge differences in the store-design, such as interior design, decoration and window display. In terms of Chinese stores, the snake-filled window used to represent the year of snake. On the other hand, in terms of UK store, Shanghai Tang has implemented few Chinese traditional designs. The in-store design is very much simple comparing to the stores of China. In terms of Celebrity endorsement, the organization has used Chinese celebrities in order to represent their brand in China. On the other hand the organization has not appointed any UK spokesperson or celebrity. The organization has implemented discount vouchers and seasonal sales in both China and UK market. In terms of PR, the company has organized some public event. The organization has invited several opinion leaders and journalists to discuss about the brand attributes in front5 of the public. Effective employee and customer retention is the example of impressive PR activities of Shanghai Tang in both UK and Chinese competitive market. They have differentiated their product line basis on the corporate identity. They used to sell specific products in specific places according to the trend and attractiveness of the market. Social Media Social media is an important platform that can be easily accessible through internet. In terms of social media promotion, the organization has a strong online presence. The organization used to post their product and service information frequently in the social media networking sites, such as Facebook, Twitter and YouTube. It has increased the brand awareness of Shanghai Tang (Hoffman and Coste-Maniere, 2013, p.262). It is feasible that, Facebook is majorly restricted in China. Only people of Hong Kong have the access to Facebook. Moreover, effective and strong online presence has made customer service process of the organization very much effective. Moreover, in terms of both UK and China market the organization has started to access to the smart phone or mobile apps. The organization has effectively introduced own Smart Phone app, which is known as City Chic. This Smart Phone app is used to deliver the images of new collection. In order to attract the people of young generation the organization has opened a social media account named Pinterest. This application is effectively loved by the people of young generation. It has eased the buying process of the both domestic and international buyers. All these strategies have provided the brand the young and hip vibe. It is highly recommended that, the organization need to increase its Facebook communicating people in market. It will help the organization to increase its brand awareness more effectively in the competitive UK market place. Conclusion Shanghai Tang is one of the successful fashion retail organizations around the globe. The organization has its strong presence in several potential geographic areas around the globe. It is the luxurious fashion brand (Ibscdc, 2006, p.1). The organization has implemented premium pricing strategies for its high quality and traditional styled Chinese fashion products. Their distribution structure is vertically integrated. It has increased the efficiency of the business process of Shanghai Tang. Strong online presence and impressive social media promotional strategy has bought huge success towards this brand. Recommendations Though the organization has achieved huge success in both UK and Chinese market place, several recommendation plans and suggestions have been provided in order to increase the efficiency of the business process. The organization should introduce low end products. It will help them to attract the people of middle income level. The organization can merged with several famous local designers in UK and Chinese market. It will help Shanghai Tang to expand their product line. Therefore, people can choose variety of products if they will to consume the particular brand. The organization should focus on the opening their outlets in other developing countries around the globe. The organization already has become popular and successful, but introduction of new boutiques in other developing countries will help the organization to maximize local Chinese consumers’ base in various countries. Controlling and maintain the production and distribution cost will help the organization to cut down the unnecessary business operation cost. It will help them in many ways. The organization can maximize their business profits and can generate more revenue. Moreover, they can fund their maximized profit in several projects. Last but not the least; the organization can do sustainable business practices. Organizing several environmental and social sustainable programmes will increase the brand reputation in both UK and Chinese market. References Anholt, S., 2012. Brand New Justice. London: Routledge. Barney, J., and Clark, D., 2007. 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