Converse Final

INTERNATIONAL BUSINESS AND GLOBAL STRATEGY

COMPANY BACKGROUND

Founded in 1908 by Marquis Mills Converse

Converse is acquired by Nike, Inc in 2003.

Distribution strategy:

Company owned retail stores

Licensing

Others (wholesale, online)

Across 100 countries

PRODUCT PROFILE

Consumer goods

Converse is primarily a range of casual canvas footwear.

Reached maturity stage in home market.

TARGET MARKET PROFILE

End user of product

Young people both sex

Sport players, rock n roll fans

Contrast end users from foreign VS domestic

North America & Western Europe

South America & South Asia

SWOT ANALYSIS

Strengths- Global brand- Research and development- Differentiation- Sponsored athletes - Gained value coverage and brand value-Diversified range of sports products

Weaknesses- Company’s income heavily depend on footwear- The limitation of the product used in informal occasion only- Price sensitive- Profit margin

Opportunities- Expand internationally- Youth in India and China- Develop new product line

Threats- The fluctuation of currencies- “Copy cat” product

COMPANY’S INTERNATIONAL INVOLVEMENT

The company used several methods to enter new market

Nike owned retail stores in host countries

Nike has a lot of subsidiaries all around the world

Nike Inc closed a joint venture with Alpargata, a local footwear manufacture and retail and formed Nike Argentina in 1994.

Nike outsources all its production to manufacturing partners mainly in Asia, including China, Indonesia, Taiwan, India, Thailand, Pakistan, Philippines and Malaysia

PORTER’S FIVE FORCES

Suppliers- Number of suppliers- Size of suppliers- Unique product- Ability to substitute

Substitutes- Substitutes performance- Cost of switching- Buyer willingness

Competitive Rivalry- Number of competitors- Differentiation- Diversity of competitors- Switching cost

Buyers- Number of customers- Buying volumes- Brand identity- Price elasticity

Barriers to entry- Time and cost of entry- Knowledge- Economies of scale- Technology- Cost advantages

GLOBAL READINESS OF CONVERSE

The company have to answer many questions to determine whether the company ready to expand aboard and suggest an entry mode strategy

After analyzed global readiness of converse we suggested to enter foreign market with these three entry mode

-Foreign sales branch

-Foreign sales / marketing subsidiary

-Company owned retail store(s)

GLOBAL MARKET SEARCH

GLOBAL MARKET SEARCH

Best Markets: India and Canada

4. IN-DEPTH MARKET ANALYSIS

India competition analysis:

2 companies: Action Shoes, local company providing footwear for the whole family, three decades of experience

Fila Ltd, italian brand with a european design and high quality shoes

Canada competition analysis:

2 companies: ASICS, best quality material to get long life shoes, sales average growth of 22%, personalized service

New Balance, shoes fit, perform properly and look good. Marketing budget has been tripled to reach young people

4. IN-DEPTH MARKET ANALYSIS

Financial and Market entry conditions:

Main criteria: Financial, Labour, Infrastructure, Market Channel Condition and Legal Environment.

India: Labour and Market Channel Condition strength

Canada: Infrastructure and Legal environment strength

BEST TARGET MARKET-INDIA

ENTRY MODE AND MARKETING STRATEGY

Product/Market Strategy

the product to be marketed like some existing product or something related to local environment.

Marketing Goals:

Create market recognition.

Gain market share.

Gain and maximise profit.

Pricing Strategy

Penetration/ Marginal Cost

PROMOTION STRATEGY

Magazines and News papers- Print media

Outdoor-bill boards Bill boards and poster system is widely used for promotion in India.

TV

Internet

DISTRIBUTION STRATEGY

Intensive distribution

The distribution strategy in India would need to be an intensive situation through many shops. Situation where suppliers and distributors enter into an agreement that only allows the named distributor to sell a converse footwear.

This is necessary in order to get to all the nooks and crannies of India

CONVERSE DISTRIBUTION STRATEGY IN INDIA

Corporate Owned Retail Shops

Why? Maximization of company’s own product and integrity maintenance

Pace setter for other company distribution outlets like.

PROJECTED PROFIT & LOSS

Year 2013 2014 2015

Unit/Sales 802,900.00 860,250.00 992,000.00

No of Stores 1.00 6.00 12.00

Net Sales 802,900.00 5,161,500.00 11,904,000.00

CGS 434,000.00 2,511,000.00 5,059,200.00

Gross Profit 368,900.00 2,650,500.00 6,844,800.00

Other operating expenses

132,000.00 792,000.00 1,584,000.00

Net profit 236,900.00 1,858,500.00 5,260,800.00

CONCLUSION

Readiness of Converse for expansion

Best target Country : India

Entry Mode : Corporate Owned Retail Store

Marketing Strategy with aggressive promotion

Profitability in two years

RECOMMENDATION

Market Entry to India

Aggressive promotion

Vertical Integration

Strategic alliance

Product standardisation

Marketing Communication

Any Questions