Tommy Hilfiger Essay

2255 WordsFeb 8, 201410 Pages
Tommy Hilfiger Case Study: EC 2102 This essay it will examine the economic, social and political issues that shaped Tommy Hilfiger on a global environment. First it will investigate why Hilfiger decided to sell internationally rather than concentrating on the domestic market and secondly it will analyse if operating globally affected the prices for Hilfiger’s merchandise. Analysing the prices will lead to a conclusion which will reveal if it has created any problems for the Hilfiger’s organisation. ‘In the United States clothing sales in general have been growing less than 5 percent per year, much slower than in foreign markets’ (Daniels et al, 683:2009). This is evident if you look at the clothing industry figures from 2011 to 2012. In…show more content…
It is clear that focusing sales in the domestic market would have been disadvantage to Hilfiger. Invested internationally to create more demand and make use of the resources is fundamental in foreign direct investment. This would have prompted Tommy Hilfiger to sell on an international basis rather than focusing purely on the domestic market. ‘Larger firms are able to capture “ economies of scale” and hence produce goods more cheaply than smaller and presumably less efficient firms’ (Brown, D & Swanson, L 2003: 234). This is apparent, with ‘Tommy Hilfiger and its partners operate over 350 stores worldwide’. (Tommy Hilfiger, 2012). By becoming a larger firm and having a large number of stores worldwide will secure the economies of scale. This has a variety of benefits for the Tommy Hilfiger which will help lower production costs and with the extra profits, Hilfiger may want expand further to capitalized on new markets. In addition, with stores worldwide it may help reduce the risks of depending on one market to support the long term future of the Hilfiger’s corporation. These benefits for the Hilfiger business can be associated with Dunning’s eclectic theory which looks at the collective view of the benefits engaging in Foreign Direct Investment, (FDI), (Gilpin,R 2001). One of the rewards in FDI the location specific advantages which includes, greater market opportunity,
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