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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