International Marketing of Transit Clothing - Assignment Example

PESTEL Analysis To make any strategic, investing or business decision it is important to gather the relevant information so that decisions are better. This requires complete information about the market especially the economic scenario and other environmental factors that have a role in an economy so that the business plans accordingly (Gooderham & Nordhaug, 2003).. The PESTEL analysis for Transit Clothing looking to enter Vietnam is as follows Political Environment This helps to determine the role of the government in the industry, the degree of interference that the government has in the daily affairs, the different laws prevalent in the country with respect of tax, labor, and environment and so on. This helps to determine both the positive and negatives about the economy from the government perspective and helps to understand the role that the government looks to carry out. Clothing presents a huge opportunity in Vietnam an even the Vietnam government is keen to look at developing the clothing industry and is ready to provide different type of subsidy to support the industry. The government has also looked to provide tax relief so that more and more people get attracted towards it (Jeffrey, 2003). The economy further has a stable government and has elections every five year. The fact that the Vietnam economy has seen an increase demand of clothing exported from Australia provides an opportunity where the different players can look to take advantage of the political situation and develop a market for its products and services. Proper government regulations which are presently seen between the Australian and Vietnam government will further give a boost and help to strengthen the relationship thereby ensuring better trade relations. Economic Environment With an increase in the real disposable income of Vietnam & Australia people have started to spend more on durable like clothing. The population has witnessed an increase in their purchasing power which has ensured that people purchase more and more clothes and other durables and have replaced the old ones with the new ones (Jeffrey, 2003). The fact that the Vietnam economy has seen an increase demand of clothing exported from Australia provides an opportunity where the different players can look to take advantage of the political situation and develop a market for its products and services (Peng & Luo, 2000). He only concern is that the economy has witnessed wide spread fluctuation in the exchange rate which is a concern for the economy as it has resulted in speculation activities and also made it difficult to carry international business easily. Along with it the rise in inflation rate has reduced the purchasing power and needs to be looked in so that better strategies are developed to deal with those as it will provide an opportunity through which the business improves. Socio-Cultural Environment This factor focuses on the cultural aspects of the country, age distribution, population growth, safety measurements etc. Vietnam has a huge population of youngsters and people who are young; which has generated the required urge to purchase new clothes and to remain modern with changing times. Transit Clothing because of it sheer quality and design will be preferred by Vietnam as the products presented by the company will be accepted by the culture if Vietnam and matches the taste and culture of Vietnam (Jeffrey, 2003). A look at the Hofstede Cultural Dimension for Vietnam shows the following Hofstede’s Cultural Dimensions Home Country Host Country Managerial implications Collectivism Vs Individualism High High Need to understand people requirements Power Distance Low High Ensure a match between all Uncertainty avoidance Moderate Moderate Need to look towards dealing with the differences Time orientation High High Have to ensure that the working is as per the desired mechanism Quality Vs Quantity of life OR Femininity vs Masculinity Masculinity Masculinity Have to stress on understanding human behavior Thus, the socio-cultural factors shows alignment and provides an opportunity through which proper methods will ensure that Vietnam accepts the clothes being imported from Australia and will provide a wide opportunity to involve in international trade. Technological Environment Research & Development determines the long term sustainability of an industry as an organization which changes with changing times is able to bring the required transformation through which business improves. Transit Clothing is one of the most preferred and developed brand and has looked to maintain the high standards in the clothing industry. This has become possible due to the fact that the different offerings are as per the industry demands and are prepared by using the most advanced technology. Further, Vietnam is constantly striving to improve their research and development activities so that better strategies can be formulated which will support development in the clothing industry (Jeffrey, 2003). The analysis shows that more that 90% of the people use technology in some form and the growth in the use of smart phone which 50% people use has increased the need for electronics products and clothing as the younger generation want to keep themselves updated and work according to changing times Environmental Analysis Climatic condition has a huge role in the success of an economy as having a nice and conducive environment provides an opportunity where new launches and developments can be carried out effectively. Vietnam as a country experiences extreme weather conditions which provide an opportunity for the marketers to identify the requirements of the customers so that based on it proper services can be provided to the customers. This will help Transit Clothing to determine the type of clothes that people will require in different weather conditions and can look to provide those to the people (Cohen, 2007). It will also require regular checks to ensure that the product quality is fine and regular market research will be required to understand the different requirements of the customers based on the changing climatic conditions. Legal Environment The process of conducting business gets affected by the different taxes which an economy imposes and has a role in international trade. Different laws such as consumer related laws, health and safety related laws, employment laws etc affects a company’s demand of products and has a role in determining the future demand for a product or services. The fact that is difficult to patent clothing it creates legal issues for the business (Jeffrey, 2003). Further, the imposition of different taxes like corporate tax, GST and others increases the prices of clothing and creates complexity for the business. In addition to the different requirements pertaining to employees like labor laws, working hours and compensation has to be followed to ensure that the work is carried out without any hurdle from any side. Competitive Audit The overall analysis of the external environment for Vietnam; shows stability and growth policies for the clothing industry. In addition to it the change in the mind set and increasing disposable income along with population size makes Vietnam a prospective destination where Transit Clothing can look to grow their business. This has been matched by improved trade relations between Australia & Vietnam and the already established link and network where international business in the field of clothing is being carried out. It highlights that Vietnam has brought the required changes in their style and provides an opportunity to further develop trade relations between Australia & Vietnam. SWOT Analysis The SWOT analysis helps to identify the favorable and unfavorable factors that an organization has to deal with while looking to improve their business. This analysis helps an organization to understand its strength and the different opportunities that the business has. This thereby helps to deal with the weakness and provides an opportunity through which threats can be reduced. This helps to improve the process of future decision making and creates a positive impact on the long term development of the business (Mason and Gerard, 2007). It helps to provide the required direction through which business is able to reduce the risk and develop a path through which the chance of success in the future increases. The SWOT analysis is as Strengths Increase demand clothes supplied from Australia as the tax structure ensures that the product is cheaper Transit Clothing provides a wide range of products to choose from Transit Clothing follows a strategy of first mover advantage and makes constant changes in their design, colour and others effects to stay ahead of competition and provides customers something new (Zhang & Pearce, 2006). Transit Clothing has a strong presence in the market due to the quality products being offered by them. Transit Clothing has developed their research and development centre which looks to provide new and better products. Transit Clothing has a strong financial base which provides an opportunity to invest and develop better products and services. Weaknesses The amount of clothes that can be imported or exported to Vietnam has a limit which might affect the business. Further, operating profits of Transit Clothing fluctuates due to the nature of business. Transit Clothing relies on third parties for some of its products as they are outsourced raising doubts on quality Transit Clothing lacks proper economies of scale which has thereby increased the cost of their products Opportunities Economic environment Increase in the disposable income of Vietnam provides an opportunity to attract people towards the brand Offering different type of products based on the taste and preference of Vietnam Transit Clothing by gaining economies of scale can reduce their cost and look to gain a competitive edge in cost Launching of products based on different needs and requirements of different regions will help to spread their business (Witt & Lewin, 2007). Technological environment Using development in technology to develop new products Legal environment Conducive legislation and laws that encourage foreign investments Threats Vietnam experiences very extreme conditions which increases the risk for the business Further, government regulations and policies keep’s changing which is one of the major threats to the organisation. Transit Clothing in new to Vietnam so that acceptance of a new product might take time as the presence of older players increases the risk for the business Price of raw material is on the rise which affects the cost of production and makes the products costlier and affects the sales of the company (Mathews, 2003). The SWOT Analysis provides an understanding of the different factors which is both internal and external to the business and highlights the manner in which the performance can be affected. To achieve both the long term and short term objective it is important that Transit Clothing looks to develop the required business fundamentals and looks to shape their performance based on the different factors which affects their business. This will help Transit Clothing to develop the required structure through which they will be able to use their internal resources in the best possible manner. This will also multiply the manner of gaining productivity and will reduce the risk and thereby ensure that Transit Clothing of moving into Vietnam doesn’t backfire and is able to take the opportunity to develop its business overseas. References Cohen, E. 2007. Leadership without borders: successful strategies from world-class leaders.John Wiley & Sons, Inc Gooderham, P. & Nordhaug, O. 2003. International Management Cross-Boundary Challenges.Blackwell Publishing Jeffrey S. 2003. Strategic Management of resources and relationships, John Wiley & Sons, Inc Peng, M. Luo, Y. 2000. Managerial Ties & Firm Performance in a transition economy. The nature of micro-macro link. Academy of Management Journal, 43 (3), 486-501 Mathews, A. 2003. Competitive Dynamics & Economic Learning: New Players in the 21st Century. Asia Pacific Journal of Management, 12 (1), 115-145 Mason A. and Gerard S. 2007. Strategic Management-A Dynamic Perspective, Pearson Witt, M. & Lewin, A. 2007. Outward Foreign Direct Investment as escape response to home country institutional constraints. Journal of International Business Studies, 38, 579-594 Zhang, F. & Pearce, R. 2006. The Growth & Strategic Orientation of Multinational R&D in Vietnam. Retrieved from Business Source Read More