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
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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
- Become familiar with customs offices and legal policies. These rules and regulations can make or break your business. You should also carefully consider the local currency, cultural barriers and any other items that might deter the success of your business. Some goods or services may even face special tax rules or other fees that can greatly impact your profits in the international market.
Entering an untapped international market can strengthen a business tremendously—but what if the costs outweigh the benefits for the market itself? China has long been an important player on the global stage, but recent advances in manufacturing, natural resources, and energy production have catapulted the expansive country to the forefront of international trade. Currently the world’s fastest growing major economy, China is set to eclipse the United States as the world’s largest economy by 2016. Among various domestic and international plays, one of China’s most fascinating uses of its
After I read this case, I can say that exporting is more profitable to Cameron because they can do whatever they want at any time. This means that Cameron can earn the profit that it deserves, and it will be only to itself. In other words, if Cameron continues exporting, it can maintain its independence to manage better quality products at its own responsibility. Then, in the other side, the cost advantages will be higher because of the results of the size of the operation and the cost of the unit; what it is a benefit because in a long-term the economies of scale will work to determine better
The reason of the creating competitive pressure to firms is that which from the enhancing the quality but decreasing the price synchronously. The key of success is that the firms and organizations which treat “Global Sourcing” as a weapon fighting with its competitors.
With bringing your factories to foreign countries you get cheaper labor land and can avoid many taxes.
Esquel, one of the leading cotton-shirt-manufacturers in the world came from China and it supplies lots of clothing brand such as Banana Republic, Tommy Hilfiger, Hugo Boss, Brooks Brothers, Abercrombie and Fitch, Nike, Nordstrom and Lands’ End, in addition to private companies (Plunkett Research, Ltd.). However, due to the high demand of the US apparel stores for Chinese products, the low cost, which was the main reason why raw materials are being purchased from China, have increased. China’s competition is huge, with Vietnam, the Philippines, Malaysia and Sri Lanka also producing material at cheap prices (Plunkett Research, Ltd.). The US apparel stores can instead purchase from these other Asian countries. It is hard to determine the exact number of suppliers in this industry; but, in general, majority of them are in Asian countries that can provide low-cost raw materials to US-based apparel stores. Therefore, the US apparel stores may acquire higher net profi
As a result, their businesses may have a difficult time competing with those particular products made in China. If they match China’s prices, the domestic businesses may have minimal profit at best. Consumers would benefit from the import surplus due to having more choices in the market and allowing for a lower overhead by buying cheaper electrical machinery products.
A firm 's international marketing program must generally be modified and adapted to foreign markets. This international marketing program uses strategies to accomplish its marketing goals. Within each foreign nation, the firm is likely to find a combination of marketing environment and target markets that are different from those of its own home country and other foreign countries. It is important that in international marketing, product, pricing, distribution and promotional strategies be adapted accordingly. In order for an international firm to function properly, cultural, social, economic, and legal forces within the country must be clearly understood.
and the foreign distributor, often ensure an extensive portion of the financial costs are absorbed by
worldwide to serve the customers and is famous for the variety of products that it provides in the
With economic globalization, international trade is developing and growing at an unprecedented rate. After China joined the WTO, international trade tariffs reduced significantly;many non-tariff barriers were also reduced. However, some countries have adopted some new trade restrictions in order to protect their industries and markets. The ‘green barrier’ policy is a kind of trade protection means which has been frequently used by the developed countries since the 1990s, it has created unequal trade relations for a vast number of developing countries and caused huge economic losses to these developing countries. It has become the new obstacle for international trade. Briefly, the problems are: first, an increase in the cost of enterprises, affecting the international competitiveness of enterprises and second, the implementation of ‘green trade’ barriers hindering the development of the Chinese export trade. This essay will examine these problems in more detail and seek to offer possible solutions.
* The Russian economy is discouraging foreign investments, but the producers needed that money to update technology, modernize infrastructure, develop marketing and packaging solutions, develop dealer and distributor networks and so on.
In 1950 they established their first overseas subsidiary in Great Britain. Now, their global reach serves customers in more than 180 countries and coupled with their dealer locations, they serve more than 500 locations world-wide. This type of global presence is fundamental to their success in the global
Companies can decide to go global or to enter international markets for various reasons, and these different objectives at the time of entry that enable the business to produce different strategies and the performance goals, and even forms of market participation.
Roberto Goizueta switched from localization strategy to global standardization strategy because during his initial control over the Coca Cola Company in 1980’s, the Coca Cola brand has already been marketed to more than 76 countries in the world and the subsidiaries were managed individually by the local management to match with the local taste and preference. This practice has given bad impact on the company profit as there were a lot of duplication of functions, smaller scale of production runs and too much of the customization which limits the ability of the firm to capture the cost reduction.The benefit of Global Standardization is the company will enjoy increased profitability and profit growth by reaping the cost reduction through economies of scale(produce in large quantity), learning effect (the production efficiency is improving from time to time as the worker become expert after repetitive sequence) and location economies (product’s value creation is done at the optimal location/environments). So by having the Global Standard, the product is produced at the most economic price and will create better perceived value for money spent by the customer.