Strategic Organizational Expansion onto the Global Market - Driza Bone - Case Study Example

Management Name: Course: Tutor: Institution: Date: Table of Contents Table of Contents 2 1.0 Introduction 4 2.0 PESTL Analysis 4 2.1 Political Factors 5 2.2 Economic Factors 5 2.3 Social-Cultural Factors 6 2.4 Technology Factors 6 2.5 Legal Factors 6 3.0 SWOT Analysis 7 4.0 Conclusion 8 5.0 Recommendations 8 5.1 Unique products 9 5.2 Corporate Social Programs 9 Bibliography 11 Executive Summary This report offers a review of strategic organizational expansion onto the global market. In this regard, the report reviews key internal and external macro economic factors for consideration. As such, it applies both the SWOT and PESTL analytical tools. In order to develop a practical approach, the report reviews the proposed Driza Bone Brazilian venture. Under the PESTL analysis the organization establishes success factors under the political, economic and technology factors. However, it registers challenges under the social and legal macro environment factors. Moreover, a SWOT analysis establishes the organisations strengths in brand loyalty but weaknesses in high production costs. Further it establishes potential competition threats as well as untapped Asia and African garment industries opportunities. Under its recommendations, the report recommends development of unique Brazilian garments as well as marketing through CSR s key venture success alternatives. 1.0 Introduction The global market is experiencing increasing business challenges. In this regard, previously monopoly markets have developed and evolved onto perfect competition markets as a result of both technology and globalization changes. As such, it has become imperative for organisations to venture and expand into new market segments in the industry. As such, internationalization and expansion onto global market has emerged as a key success and market sustenance criteria for a majority of the organisations. However, expanding into these markets requires an evaluation of a firms both internal and external environments in order to enhance the development of ideal and appropriate expansion strategies. This report reviews the Driza Bone, garments industry stakeholder with extensions in Australia and UK, proposed venture in Brazil (“Driza Bone”, 2014). As such, the report evaluates the market macro economic factors under the PESTL analysis tool, as well as the organizational status through a SWOT analysis. Conclusively, the report offers recommendations through which the organization can successfully venture into the Brazilian market. 2.0 PESTL Analysis Strategic marketing as a new management approach seeks to develop not only operational short term goals but also long term strategic business objectives. In this regard, Liu, Xu and Zhang (2010, 227) stated that such strategies success is influenced by market external factors on the macroeconomic label. In order to evaluate such external factors likely to influence Driza Bone Company proposed Brazilian venture, this report applies the PESTL analysis. 2.1 Political Factors A political analysis of the Brazilian economy reveals that the country I among the democratic Latin American nations. In this regard, the nation has a relatively stable political system offering room for economic growth and investments. Moreover, the nation’s political system is receptive and supportive of foreign investments. As such, the nation has an existing political goodwill for foreign investments. Therefore, based on the above analysis, this report establishes that the existing political stability and goodwill will play vital role in reducing market venture challenges for Driza Bone Brazilian venture. In addition, the political goodwill will reduce on the initial capital venture requirements due to the subsequent development of a lean and supportive legal and taxation system for ventures in the garments industry. 2.2 Economic Factors As already discussed, the economy has a high foreign direct investment (FDI) ventures. As such, this implies that the economy has increased capital flows stimulating increased money circulation and subsequent earnings in the market. Consequently this implies that the garment industries, especially Driza Bone products, which are part of luxury, are bound to acquire an increased demand with increasing market earnings. Therefore, there is both a present high demand as well as a potential increased demand into the future. However, an evaluation of the taxation system in the economy demonstrates an investment challenge. Currently, as Erikson (2009, 35) stated, the economy charges a 15% corporate tax, an amount higher than counterparts with equal economic developments such as Portugal and Ireland. Therefore, the high taxation rates are likely to reduce on Driza Bone profit margins leading to low returns on investment. 2.3 Social-Cultural Factors A socio cultural analysis on the organization establishes that the Brazilian society has existing social inequality issues, spanning form the societal and civilization emergence. In this regard, although with a high per capita income, income and wealth are unevenly distributed. As such, statistics demonstrate that 19% of the population lives below the poverty line (Medeiros, 2006, 15). Therefore, though with a high population and GDP, Driza Bone venture is likely to face demand challenges in the market, as a majority cannot afford the organizational products. However, on a positive note, the report analysis establishes that with the initiation of social collective programs, the society is rising from poverty. As such, this presents future market saturation with middle class consumers who will in turn increase the overall organizational products demand 2.4 Technology Factors The global market has in the last decade encountered increased cases of destructive technology. In this regard, the Brazilian market has been no exception. As such, the economy has encountered increased technology application in the market. Therefore, this has facilitated the expansion of the online business platform with an increased young population resulting to online shopping for their clothes and other wears. Therefore, this presents the organization with an increased market expansion potential and capability through its online portal. 2.5 Legal Factors A legal evaluation of the Brazilian economy offers a mixture of both positive and negative aspects. On one hand, the economy has established appropriate foreign investment incorporation regulations. In this regard, the development of these rules has reduced the overall investment costs in the market. However the nation is highly infected by corruption. As such, it lacks an appropriate regulatory framework through which to curb the vice. Consequently, this exposes the business to the risk of unfair treatment as well as unjust competition. In addition, the nation has strong labour regulations governing employee issues such as wage rates as well as other privileges. As such, this is bound to increase the overall costs for the proposed venture, adding up to its overall start up costs requirements. 3.0 SWOT Analysis In order to accurately evaluate organizational internal factors as well as establish its potential and capability, it is imperative for organisations to conduct SWOT analysis. Lee and Sai (2000, 69) argued that the SWOT (strengths, weaknesses, opportunities and threats) analysis in an organization facilitate an evaluation of not only internal potentials, but also external market risks and performance success possibilities. The table below offers a SWOT analysis review for Driza Bone Company. The SWOT analysis above reveals that despite the organizational strengths in the presence of a brand reputation as well as product variety, its continued reliance on natural fibres poses an environmental threat as well as an increased product costs weakness. However, it lists growing global demand as untapped markets in Asia and Africa As opportunities for future expansions (“Driza Bone”, 2014). 4.0 Conclusion In summary, this report offers a critical review of Driza Bone strategic expansion onto the Brazilian market. As such, the review evaluates both the organizational internal SWOT analysis as well as the Brazilian macro environment through a PESTL analysis. On one hand, a PESTL analysis establishes an existing political goodwill, growing economy, social inequality, destructive technology online shopping revolution, and favourable FDI regulations. On the other hand, SWOT analysis lists strengths such as brand reputation, weaknesses such as high production costs, opportunities in growing global markets, as well as threats in increased global competition. Conclusively, this report argues that the proposed Driza Bone venture in Brazil is viable and worth roll out 5.0 Recommendations Based on the PESTL and SWOT analysis developed by this report, the report develops two key implementation recommendations through which Driza Bone can successfully venture into the Brazilian garment industry. Among the offered recommendations include unique products production as well as corporate social programs initiatives 5.1 Unique products The report analysis establishes that the Driza Bone Company relies on the supply and distribution of its standardized fashion design products. As such, the overall organizational products are standard and similar, hence their high production and selling prices (“Driza Bone”, 2014). However, as evidenced under the Brazilian market social analysis, the market has a high inequality and poverty levels. Therefore, this implies that the society ability to demand and consume the organizational standards products is significantly reduced. Faced with this challenge, the organization should apply the argument developed by Trott (2001, 118). The author argued on the need for increased products localization in the market. As such, the organization should consider developing products unique to the Brazilian market. As such, although retaining the organizational brand quality and standards, the developed products should be produced at low costs. Consequently, this would enable the larger population with below average earnings and opportunity to demand the products thus increasing on sales. Through increased sales quantities the organisations despite operating at low profit margins, would facilitate high overall profit gains. 5.2 Corporate Social Programs Vancheswaran and Gautam (2011, 87) argued on the merits of CSR programs to organizational ventures successes. In this case, the authors stated that organisations employing CSR programs as part of their marketing strategies registered increased market influence and gains. Through this approach, the organisations not only overcome market discontents, but also create long term consumer relationships. The report analysis establishes that the Brazilian market is increasingly growing concerned on the environmental implicates of the adoption and use of natural fibres such as wool (“Driza Bone”, 2014). In addition, the threats analysis establishes stiff competition from multinational competitors. Therefore, the organization should seek to employ unique marketing strategies different from competitors. Through the initiation of CSR programs, the venture will establish strong social relationships with the Brazilian society, encouraging the development and evolution of loyal consumers. The establishment of a strong loyal consumer base offers the venture an opportunity to expand into the market through the establishment of minimal constant earnings to offset start up operational costs. Bibliography Driza Bone. “Organizational Overview.” Author. http://www.drizabone.com.au/ (Accessed August 21, 2014). Erikson, Kristina. (2009. Entering the Brazilian market: A guide for LEAN consultants. Hamburg: Diplomica-Verl Lee, S. F., and On Ko Andrew Sai. 2000. Building balanced scorecard with SWOT analysis, and implementing "sun Tzu’s the art of business management strategies" on QFD methodology. Managerial Auditing Journal 15, (1): 68-76 Liu, Ying, Cong Xu, and Yizhou Zhang. 2010. An analysis on the international competitiveness of china's traditional medicine industry based on the SWOT model. International Journal of Business and Management 5, (7) (07): 225-229, Medeiros, Marcelo. 2006. The rich and the poor: The construction of an affluence line from the poverty line. Social Indicators Research 78, (1) (08): 1-18, Trott, Paul. 2001. The role of market research in the development of discontinuous new products. European Journal of Innovation Management 4, (3): 117-125 Vancheswaran, Annapurna, and Vinayshil Gautam. 2011. CSR in SMEs: Exploring a marketing correlation in indian SMEs. Journal of Small Business and Entrepreneurship 24, (1): 85-98,153 Read More