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Giordano Entered a Contract Joint Venture with Real in Germany, Why This Form Was Chosen Than Other Forms of International Market Entry Method?

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Threats & Opportunities
During 2000 & 2001, Giordano had been facing a serious of challenges, like intensifying competition, rising unemployment rate, which had increased to 4.5% in March 2001. Moreover, economic growth in Asian countries was predicted to drop during that period of time. The management believed that the Group profit was at risk if the growth of its two major markets, Hong Kong & Taiwan, slowed down in consequence.

Giordano management decided to continue its multi-region development strategy and, as a result, the Group made its debut in Germany through a joint venture in March 2001. Germany is an important gateway for the Group to enter into the European Union (EU) consumer market. Through this venture, the Group also …show more content…

The illustrations will be given below.

1) Exporting
The company produces their products in their home market and then sells them to customers overseas.
Reasons for not choosing this mode:
 The Group still needs to find ways to distribute its apparel
 Prospect of exports of clothing is not encouraging
 Further intensify of export competition with Chinese enterprises and other low-cost overseas suppliers like Eastern Europe and the Mediterranean
 Consignments of textiles and apparel imported into Germany require a certificate of origin because certain quotas apply to low labour-cost countries (like China).
 Non-EU manufacturers should be aware of the costs associated with exporting such as customs duties, value-add tax and distributor margins which have a direct effect on prices of their goods and consequently their competitiveness.

2) Licensing
Here Giordano might grant the company in the foreign market a license to produce the product, use the brand name, trademark, etc. in return that they will receive a royalty payment. The Group can enter the market very quickly. However, the control over the use of asset is less, especially when Giordano wanted to promote its brand through this expansion; the reputation of its brand is difficult to control. In addition, if Giordano wanted to keep its customer-orientated image, they may need to invest extra money on staff

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