International Marketing Opportunity Analysis of Harvey Norman - Case Study Example

International Marketing Opportunities Name Class Unit Introduction Harvey Norman is a large retailer with their headquarters in Australia. The company has more than 270 stores in different parts of world which deal with discounted furniture, beddings and electronics. The company operates as Harvey Norman though in some instances they operate as Domayne and Joyce Mayne. According to the company website, ownership of land in which third of stores are located is by Harvey Norman. The company has a leasing and franchising system. Harvey family owns over a third of the business. The business was first opened in 1961by Gerry Harvey and Ian Norman. The company has been able to take advantage of the globalization. This has enabled the company to have branches in Asia, New Zealand among other places. The company have been able to take advantage of its dominant market position and seized opportunities. The company has been able to take a lead in their computer sales which are in the electronic sector. The company overseas operations are predominantly operated under the Harvey Norman brand name (Harvey Norman, 2012). This report will analyze the global opportunities for Harvey Norman to enter into the Chinese market. This will be achieved by analyzing Harvey Norman international marketing potential and the Chinese potential market. Harvey Norman SWOT Analysis Strengths Harvey Norman is one of the largest retailers in electronics and the electronic goods. The company have enjoyed great presence at home and other countries such as Singapore and New Zealand. The company have been able to make high sales due to their attractive promotional offers. The company have a global presence in more than 270 stores and a workforce of over 10,000 (Harvey Norman, 2012). Their presence in the global market gives them an upper hand in future expansion (Kolar & Andrej, 2007). Harvey Norman have been able to create a strong brand name hence enjoys brand awareness among the consumers. Weakness The company was once under criticism over dealing with illegal market practices. This acted to tarnish their company image. The retail market has a stiff competition which makes their growth slow (Kolar & Andrej, 2007). Opportunity In order to win more customers, the company can employ tactics such as selling high quality products at a lower price than their competitors (Hague, Nick & Carol-Ann, 2013). The company can also expand their market to include lifestyle products. The expansion can rely on the company strong brand name in marketing. Threats The consumers are very conscious on the quality of the products being offered and the brand name matters a lot. There is also a challenge to maintain the consumers in the company due to competition (Kolar & Andrej, 2007). There has been a continuous decrease in electronic prices over the years. By capitalising on the company strengths and exploiting the opportunities, Harvey Norman has high chances of continuous growth in the industry (Gomel, 2013). The entry into Chinese market should be done with emphasis being on strengths and opportunities and reducing weakness. Micro environment analysis Rivalry The company main competitors are Davis Jones limited, Woolworths and Myer Holdings. These are large retailers with worldwide presence. The retailing business is highly competitive and hence high rivalry. Due to fact that most of the competitors are large, there is a semblance of rivalry. Other competitors in the industry are Safeway, Action and Flemings (Harvey Norman, 2012). Power of the suppliers There is reduced competition in the suppliers due to fact that suppliers are few. The suppliers, thus have great bargaining power in the retail market (Harvey Norman, 2012). Threat of new entrants In order to enter into the retail market, there is a need for a lot of capital. Very few new entrants can manage to enter into the market and compete with Harvey Norman (Harvey Norman, 2012). Most of the economies have been lagging making it impossible for new entrants. For economies that are doing well, there are high chances of new entrants as the consumer and electronic goods have a ready market. Threat of substitutes Technology is very relevant in today’s market, hence threat of substitute is very low. The only challenge would be the possibility of the technology becoming irrelevant in the future. Though highly unlikely, this can lead to the collapse of the demand. At the moment, there is no threat to the substitute in the market (Harvey Norman, 2012). Consumer power Consumers in the electronic market have low bargaining power. Due to reduced competition in the market, there are high chances of price setting. This leads to the consumers being put in poor position in bargaining (Kolar & Andrej, 2007). Chinese market analysis According to Gomel (2013), China has been having a rapid economic growth. This has made many companies to consider investing in china. Chinese government has also been in the frontline in making the business environment more conducive for multinationals (Yongqin, 2013). In order to be able to analyze the potential for the Chinese market for Harvey Norman, there is need to use PEST analysis. Political The political aspects look at the law, regulations and the government policy which have influence on the business. Since Chinese government initiated the economic reforms in 1978, there has been rapid growth (Yongqin, 2013). There has been liberalization of foreign direct investment and the industrial production. The country’s job sectors have been less strict. This has made it possible to reduce unemployment, which can create chaos for foreign investment. There has been great improvement in consumer protection and enhancement of open market. China has a good international relationship with many countries, which makes it possible for multinationals to operate. The political environment is also conducive which makes it easy to do business. Harvey Norman has a good political environment in which they can conduct their business in China (Gomel, 2013). Economic factors Capital, cost, demand and supply are all affected by the economic factors. For example, when there is recession in the economy, small competitors can enter into the market and compete with others. When there is high demand in the economy, the company is able to operate at a low capital cost, hence more profitable (Jančič & Klement, 2002). Chinese economy has been growing at a very fast rate in all sections. The Chinese reforms have been able to make the country economy market oriented (Gomel, 2013). The Chinese economy gives Harvey Norman high chances of success in the china. Environmental factors The environment of business operation can affect the organisation (Ghauri & Sarah, 2008). The Chinese capital markets are government controlled. The Chinese labor market has adequate skills which can be able to offer cost effective labor to the companies (Gomel, 2013). The country has also been trying to focus on an environmental friendly society. The market environment in China is conducive for Harvey Norman operations. Social Chinese society is characterized by unequal income distribution (Li, 2013). There is a huge income gap between the rural and urban dwellers. The income difference among the population can act to hinder the economic growth. The Chinese lifestyle has been changing rapidly. There has been an increase in single households. The work attitudes aiming the population are more flexible where work and leisure are balanced. There has been increase in education where the government has encouraged learning. The living conditions are improved as the government has worked in enabling a sustainable and friendly working environment (Gomel, 2013). The social environment is conducive for companies such as Harvey Norman to operate in the country. Technology The Chinese government have spent a lot of revenue in research and development (Li, 2013). This has led to high innovation and technology in the Chinese market. The Chinese market have reduced energy use through conservation and reduced emission technologies. Use of high technology has enabled china to save a lot of revenue in energy. The countries have also been spending a lot in information technology investment. This makes it possible for multinationals to operate in the Chinese market through technology which enhances communication. The technology use enables the companies to hold online meetings, operate e-commerce and keep strong communication with other business overseas (Gomel, 2013). Harvey Norman can rely on the Chinese technology in their operations. Analysis There has been an increase in the living standards in the Chinese market. The five market areas that have been identified to have high consumptions are Shanghai, Beijing, Zhejiang, Tianjin and Guangdong (Li, 2013). Due to higher incomes, the Chinese consumers have been able to live good life hence high market for convenience such as electronics and clothing. Harvey Norman has high chances in the Chinese market as the consumers are ready to accept foreign goods and services (Gomel, 2013). The country has open economic zones where it would be easier to set up a business as the areas possess better facilities (Winston, Robert, Philip & John, 2013). Conclusion By analysing the company and the Chinese market, Harvey Norman should expand to China as they have high chances of success. The company should utilise its strengths such as its strong brand name, international presence and capital together with the opportunities to venture in the Chinese market. There is also need to reduce their weakness as they prepare to enter into the Chinese market. The main threats lie on the competitors and decreasing prices on the electronic goods. China has a fast growing market with a lot of business opportunities. PEST analysis on the Chinese market shows that with proper strategic planning, a company can be able to reap benefits. There is need for Harvey Norman to have a correct strategic planning that will enable them to take advantage of the market environment in china. References Ghauri, P. N & Sarah, P 2008, Globalization. London: Dorling Kindersley. Gomel, G 2013, The Chinese economy recent trends and policy issues. Berlin: Springer. Hague, P. N., Nick, H & Carol-Ann, M. 2013, Market research in practice: how to get greater insight from your market, London, Kogan Page. Harvey Norman 2012, Company profile, Retrieved 18 August 2014 from, http://www.harveynormanholdings.com.au/pdf_files/Company_Profile_2012.pdf. Jančič, Z & Klement, P 2002, ‘Mutuality of marketing and corporate identity session 5: Marketing’, An Enterprise Odyssey: Economics and Business in the New Millennium. Vol.2, no. 1, p. 1765-1780. Kolar, T & Andrej, T 2007, ‘Marketing as warfare, revisited’. Marketing Intelligence & Planning. Vol.25, no. 3, p.203-216. Li, Y 2013, Chinese Economy in Disequilibrium. Dordrecht: Springer. Winston, W., Robert E. S., Philip K. S & John P. D 2013, Market Analysis Assessing Your Business Opportunities, Hoboken, Taylor and Francis. Yongqin, W 2013, Demystifying the Chinese Economy Miracle, Hoboken, Taylor and Francis. Read More