战略思考对零售商国际化拓展影响分析essay

引言
 

如今我们生活在一个无边无界的世界，贸易的屏障已不再普遍存在。全世界大多数零售商开始拓展他们的业务来获取更多利润。国际业务的起源可从过去看到，可追溯到埃及的，希腊的及罗马文明。
 

对于每一个发展中的组织而言，国际化成为一项重要策略。对于其他组织而言，国际化都是成功的；但是部分零售商的国际化却失败了。因为法律、文化等变化，并非所有的零售商都能够完全全球化。本文将讨论组织全球化的策略，促使组织全球化的因素以及组织在全球扩张期间遇到的问题。
 

零售
 

零售是指通过百货商店，商场或在线向消费者销售商品或服务的过程。在供应链里，零售商总在末端。他们就是直接联系消费者的部分。
 

零售通常由以下类型的产品分类：
 

金属品零售商
 

食品零售商
 

纺织品零售商
 

国际零售：
 

“国际化是企业对其未来增加了其对国际交易直接或间接影响的意识，与其他国家创建并进行交易的过程。”(Beamish & Calof, 1990)
 

零售是一个由小范围运营构成的局部的商业部分。在1990年以前，小零售商在发达国家经济增长这方面发挥重要作用；但此后，大型零售业务在商业经济中排行最大。

 

Introduction
 

Nowadays we are living in a borderless world where the barriers to trade no longer prevail. Most of the retailers throughout the world have started expanding their business to gain more profits. The origins of international business can be seen from the past. Many traces are found in the Egyptians, Greek and Roman civilisations.

 

Internationalisation has become important strategy for every developing organisation. It was successful for all the other organisations but failed partially in the case of retailers. All the retailers are not able to get globalised completely because of change in laws, cultures etc. In this paper the strategies framed by the organisations to grow globally, what are the forces that made the organisations to grow globally and what are the problems faced by the companies during their global expansion can be discussed.

 

Retailing
 

Retailing is a process of selling the goods or services to the consumers either by the department store, shopping malls, online retailing. In the supply chain, the retailers are always at the end. They are the one who comes directly into the contact with the consumers.

 

Retail is usually classified by type of products as follows:

 

Hard goods retailers

 

Food products retailers

 

Soft goods retailers

 

International retailing:
 

“Internationalisation is a process by which firms increase their awareness of the direct and indirect influence of international transactions on their future, and establish and conduct transactions with other countries.” (Beamish & Calof, 1990)

 

Retailing is a localised commercial sector composed of small-scale operations. Before 1990 small retailers played an important role in the growth of the economies for the developed countries but after that large retail operations ranked among the largest business economies.

 

Increasingly many retailers are going for international operations. The retailers no longer prevail in the domestic market if they remain important commercial entities. For such retailers international expansion had become a necessity rather than being an option. International expansion provides opportunity growth and information as a result of commercial experience.

 

Stages in the Internationalisation process

It is very important to understand the different stages that an organisation goes through in an Internationalisation Process.

 

Market Research:
 

Market research is an important stage in the retail internationalisation by which the organisations can get an overview about the future profits and viability scenario. Much care is to be taken while conducting research because small error in the research work would lead the organisation in losing out on valuable resources.

 

Modes of Market Entry: There are many ways to enter into the international market, which ranges from exporting, licensing, franchising, strategic alliances, foreign direct investment (FDI), mergers/acquisitions. Thus, depending on experience, risk taking, commitment and resources available, firms choose between ranges of foreign market entry and make choices about whether to ‘go in alone’ or cooperate with other partners, agents, distributors.

 

Strategy
 

The actual meaning of strategy is scheme or plan of action.

 

http://www.fen.bris.ac.uk/engmgt/ps/PS4%20L1%20Role%20of%20Strategy.pdf

 

Organizational strategy is the way in which an organization uses its knowledge and other resources to achieve its economic purpose.

 

The strategy of the organisation is framed based upon the companies own capabilities, competencies, and the competitive environment. During the process of international market organisations requires resources and management capacities to fulfil their strategic intentions. The successful strategy can be known by the way it had attracted customers. In order to develop such a strategy the frame work for the developing marketing strategy can be explained but the stages of strategic planning at three different levels

 

1. Corporate mission

 

2. Corporate strategy

 

3. Actual marketing strategy

 

Role of strategy in an organisation
 

WAL-MART
 

"The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience."

 

- Sam Walton (1918-1992)

 

Wal-Mart was created in 1962 by the late Samuel Moore Walton (Sam Walton) and it was ‘built’ on his three basic beliefs; respect for the individual, service to the customers and striving for excellence (www.walmartstores.com). These Philosophies are ‘religiously’ nurtures into the hearts and minds of employees who are more known as associates in Wal-Mart.

 

Wal-Mart is the largest retailers operating nearly 3,121 stores in different parts of the world. Nearly 75% of its operations are in USA. It has operations in many countries with the names like Walmex in Mexico, Asda in the United Kingdom, Best price in India.

 

Wal-Mart’s Innovative business strategy
 

Wal-Mart’s uniqueness comes from a business strategy as radically innovative as those of the Pennsylvania Railroad, Standard Oil and General Motors of the 19th and early 20th centuries, according to Nelson Lichtenstein, a labor historian at the University of Californian at Santa.

 

Wal-Mart’s sophisticated distribution system and information technology to track inventory has significantly improved its efficiency and productivity –making it far more profitable than other retailers.

 

International expansion of Wal-Mart
 

Wal-Mart was entered into international markets by a belief that it could achieve competitive advantage abroad by applying its role of technology, logistics and human resources with its terrific buying power with multinational consumer goods suppliers. Wal-Mart’s strategy has been to acquire companies and convert them into the Wal-Mart stores

 

Generic Strategy
 

Analysis of Wal-Mart’s global strategy is complex and mystifying. To redefine that, does Wal-Mart have a global strategy is the argument. Analysis of the value adding activities supporting the generic strategy shows clear elements of cost focus.

 

Source: Adapted from Porter, 1980.

 

Transnational Model
 

A transnational strategy combines global and local strategy features in order to gain competitive advantage according to the indications of globalisation driver analysis. Analysis of Wal-Mart applied with the transnational model framework reveals us the true picture of Wal-Mart. considering the changes in the macro-environment and the globalisation drivers; we can understand the following pressure for globalisation and localisation. There are strong globalisation forces with the concentration key value adding activities and the emergence and presence of global brands and advertising. Centralised decision making and global sourcing also add to the pressure of globalisation. Acting on the localisation force which is significantly weaker compared to the globalisation forces are the local variations to the marketing strategy and local product variations. Both signify the importance of localisation despite the globalisation of markets. The global core competence/ distinctive capability, global generic strategy, integration and co-ordination of global activities, differentiated architecture and participation in key markets are all elements of Wal-Mart’s global strategy. On the basis of the Transitional Model, Wal-Mart appears to be a transnational company.

 

Global Strategy Options Local Strategy Options

 

Transnational Strategy

 

Source: Transnational model adapted from Stonehouse, et. al., 2002.

 

Failure of Low price strategy in Korea and Japan
 

“Wal-Mart was a typical example of a global giant who failed to localise its operations in South Korea…” [1] 

 

In the year 2006 Wal-Mart had faced a loss over $10 mil-lion compared to 2005, this made the Wal-Mart to pull down its operations in the year before it decided to pull its operations [2] 

 

In the year 2002 Wal-Mart had invested on Seiyu a Japanese super-market which hasn’t made any profit on an annual basis. In the year 2007 it had announced a loss of Y20 billion [3] . All these failures are due to the Low-price strategy of the Wal-Mart.

 

IKEA
 

IKEA, a Swedish furniture retailer is known for its cheap prices and high quality products. IKEA is a global successful organisation with over 200 stores in countries around the world with profits increasing rapidly. IKEA has effectively implemented a marketing strategy and placed themselves in a position to overcome its competitors. Its marketing and competitive strategy of high quality products at cheaper prices which is implanted in the culture starts at the design process and continues through all manufacturing, production and distribution stages until it is received by the customers so that they can achieve their promise to produce products which are affordable for as many people as possible.

 

The Company
 

IKEA began in the early 1940’s, when Ingvar Kamprad the founder of IKEA sold general household products which people demanded. Due to his success he opened up a showroom and began designing his own furniture range which led to innovation and low costs. The real success came when they realised they could flat pack the furniture so transporting goods to IKEA and for the customer would be easier. This differentiation was their marketing tool which made them a household name on global scale.

 

IKEA a Swedish retailer offers a large range of stylishly designed, functional home furnishing products at low prices. This is the single idea at the heart of everything IKEA does, including the way they produce, buy products and the way they sell them in IKEA stores around the world. They produce high quality products at low prices and this is done by cost-efficient and innovative methods.

 

 Marketing Strategy
 

IKEA ‘s marketing strategy is to “offer a wide range of well designed ,functional home furnishing products at prices so low that as many people as possible will be able to afford them”(IKEA 2005).Customers  are encouraged to share the IKEA experience  which builds up IKEA’s brand name. To achieve the overall marketing strategy they must have smaller strategies which can be obtained through segmenting the market by offering different products to different people. For example IKEA hopes to expand in the future with smaller high street stores which would sell plants, candles and other home furnishings. This would mean that it would easier for people to reach an IKEA store who were unable to do so before.

 

 IKEA offers different ranges of products for example the Kimme chair which is popular among young teenagers as it is inexpensive and is made out of brightly coloured plastic and therefore is aimed at the youth. Whereas the P?ang chair is popular among the more elderly as this is an expensive chair with a soft cushion and thus meets the needs of the older user. This is just one example but IKEA tries to market each product at a different target market therefore IKEA carries out multi segment targeting.

 

 Geographical segmentation is when the market is divided into different geographical units such as cities, countries and towns. IKEA has done this by having stores all over the world.  The success of IKEA is due to paying attention to geographical differences in needs and wants. IKEA has expanded on a global level with its blue and yellow stores that are located on out of town sites. However after acquiring Habitat this gave IKEA access to trade with new customers segment who is less willing to travel In making this shift they have also realised the European trend towards town centre shopping centres.         

 

Growth Strategy
 

IKEA’s growth strategy is to expand current stores in to larger stores or by opening 19 more new stores around the world, for example in Italy and USA (IKEA 2005). Each store will have similar qualities yet both countries are different so IKEA products will have to be targeted differently as each country has a different values, culture and norms which results in different needs of the customer. IKEA wants to maintain its low price strategy by finding efficient production methods, concise designs while exploiting economies of scale.

 

Human Resource Management Strategy
 

In IKEA, it is believed that “their way of managing people has universal appeal” (Hodgetts & Luthans, 2003). IKEA managers overseas clearly explain to employees and middle-level local managers the reasons why things are done in that way. (Hodgetts & Luthans, 2003).

 

Briefly, IKEA’s management style is described as informal, open, and caring (Hodgetts & Luthans, 2003).

 

-  Lack of hierarchy

 

-  No title on the business cards

 

- Managers to be close to their co-workers

 

- HR executives responsible for answering "How should we treat people who are part of us?" (Merisler, 2004)

 

Problems Arising from International Development
 

France
 

The main challenge for IKEA management in France was the French tendency to judge informality as a sign of weakness, or indecisiveness. French people are accustomed to formal rules and strong hierarchy.

 

To make things clear to employees, formal communication platform was developed in France to spell things out in facts and figures by comparing IKEA’s benefits with those of competitors. Also, more formal training programs are being developed because in France “learning by doing” is not perceived as a credible way of developing competency (Hodgetts & Luthans, 2003).

 

Germany
 

One other problem for IKEA was the fact that the Swedish notion of “taking on responsibilities for yourself”, the core stone of their work policy, was not perceived in the same way by Germans, who have a tendency to adhere very closely to precisely defined rules and instructions (Hodgetts & Luthans, 2003).

 

USA
 

IKEA’s expansion in to the U.S market was a bold developmental decision. Firstly, because the cultural specific requirements for home furnishing were considered different than the European markets, secondly the American market had come to be known as the “graveyard” of European retailers. From an historical perspective the venue seemed unlikely to succeed. But somehow, IKEA seemed confident that going about it the IKEA way would prove their exception. IKEA faced many challenges when braking in to the U.S market, and developed strategies to overcome these obstacles. But the most important challenge for IKEA was the issues of management, culture and Human Resource Development. Although American employees perceive IKEA as being more employee-orientated than average American employers, some of the cultural issues were the fact that the manager roles in IKEA are subtle and that IKEA managers tend to have a long term approach to management. There were few written procedures for the workers, so the golden rule for managers was to help people understand why things were done in a particular way. This was viewed as indecisiveness by American employees new to IKEA, that were more used to rules and procedures spelled out clearly and managers who take responsibility for quick decision making (Hodgetts & Luthans, 2003).

 

INDITEX
 

"The wonderful thing about fashion is it will always do the opposite of what you think," said James Aguiar, co-host of the "Full Frontal Fashion," a television program.

 

Inditex is a largest Spanish corporation group of textile design organization. Inditex is known as Industria de Dise?o Textil. It is one of the world’s largest fashion retailers having trade with USA, Mexico, France, UK and many other countries. The brands in the Inditex group are

 

1. ZARA,

 

2. Pull & Bear,

 

3. Massimo Dutti

 

4. Kiddy's Class

 

5. Brettos, Lefties

 

6. Stradivarius

 

7. Deep Blue Jeans.

 

Among these brands Zara is more demanded brand because specialized for families where they can the clothing’s for the people in the family in a single place. Zara is the first brand of the INDITEX group. Inditex group has started expanding globally mostly with the acquisition of the clothing retailers in the respective country.

 

Motivations for going abroad
 

According to their motivations of moving internationally, firms can be divided into 4 categories.

 

1. Resource seeking

 

2. Market seeking

 

3. Efficiency seeking

 

4. Strategic Asset seeking

 

Among these categories firms uses one or more of these motivations. In case of Inditex especially for the Zara it had used market seeking and efficiency as their main motivation to grow international.

 

Efficiency seeking
 

The main aim of the Inditex group is to trade with more countries at the same time. They keep on changing their strategies from country to country according to the marketing conditions prevailing in the country. So that they can gains more profits and increase its market share.

 

Strategies
 

The strategies formulated by the company keeps on changing but they follow maintains a common objective of gaining profits. It has main control on all of its operations since the all its subsidiary strategies are derived from the own main strategy. In these days it had even developed other strategies like joint venturing (j&c), mergers and acquisitions (m&a).

 

Inditex group has maintained control over the operations by its owned subsidiary formula. It started developing new strategies like joint ventures, franchising to expand its business globally.

 

Wholly owned subsidiary
 

Wholly owned subsidiary is formula practiced by the Zara. It is also known as green field investment in which any organisation acquires any other foreign company completely or partially and taking care of all the cost incurred in the maintenance of the organisation.

 

There are many advantages in this type of strategies because the absolute control prevails in under the control of one organisation and there is a flexibility to adapt to the market demand and the decisions can be taken without the consolation of the partners by which the company can maintain trade secrets. Out of these advantages there are many other disadvantages like the company is alone has to bear the losses if business doesn’t run well in the other country and governments may think as a negative impact to their economy as the whole business is been maintained by the foreign company.

 

Failures of Inditex group during its expansion
 

In the year 1998 Inditex has entered into the Latin American America from Argentina which is having same clothing preferences like Europeans. It started framing many new schemes by which it started suppressing all the other competitors prevailing in the market. Though it had kept huge investment initially it doesn’t fetch a lot initially but now a days it had became one of the most prosperous world-wide. If the company failed to take the risk it would have failed to get absolute success in the Latin American continent. In the later time it started expanding into the others parts of American continent.

 

Franchising
 

In this strategy, the contractor provides a standard package of products, systems and management services; grants permission to use a certain product, including a special name of trademark (Rodrigues, C 1996).

 

Initially while entering into the others companies every organisation faces many problems from the rules and policies of the local government. To avoid that Zara had used franchisee strategy by which it can minimise the risk. It had applied this strategy while entering into the Israel where there is a problem between Jews and Palestinians. (www.galeon.hispavista.com, 16-03-1998).

 

Problems faced by the companies during international expansion
 

Problems with strategic issues in today’s volatile environment

 

Complexity

 

Uncertainty

 

Require an integrated approach

 

Affect relationships and networks

 

Involve change

 

Flexibility

 

Are the current strategies suitable?
 

One of the main problems is managerial understanding of strategy.  As Hamel and Prahalad explain, ‘many Western companies believe strategy is built on three component elements:

 

1. The concept of fit or the relationship between the company and its competitive environment

 

2. The allocation of resources among competing investment opportunities

 

3. The long-term perspective in which “patient money” figures prominently.’

 

Most have the viewpoint that strategic investments are those that require a large commitment of resources, but many fail to recognise their internal resources.  Surely, it would be more advantageous to leverage the resources already in existence before you allocate them.