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BSMAN3007 International Business Management
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BSMAN3007 International Business Management
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Course Code: BSMAN3007
University: Federation University
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Country: Australia
Question:
The success of Shoes of Prey results from a number of export options, which include:
-Manufacturing locally and selling online or abroad
-Exporting and selling to the third party
-Contract manufacturing and;
-Manufacturing goods abroad via joint ventures.
The company will therefore, succeed because it employs proper production and selling techniques which ensure that the process is efficient, inflation is reduced, production cost is relatively reduced, raw materials are locally provided, and the quality of products meeting the expectations of the customers. Teacher review note: These words (proper production) are meaningless in a management report. (those underline, explain) How?
Teacher review note: how? Does this reference actually support what your company does? Does it discuss your company specifically? If not then its use here is not appropriate.
The organizational structure of Shoes of Prey geographic-divisional in nature. The design is based on the needs of the corporation in relation to its regional and global markets. Some of the notable characteristics of the company are therefore:
-International business leadership
-Geographic, semi-autonomous divisions
-Brand licensing
-Converse global divisions
Answer:
Market Entry Modes and Strategies
According to Carey (2018), Shoes of Prey has a vision that is to redefine fashion regardless of whatever the future of retail fashion might be. The article is clear on the fact that Shoes of Prey did not believe on mass production for women wear and that women need not to be tied to what the market already offers. Therefore, the company developed an idea, a niche in which women worldwide could design their own footwear. Women could get their perfect shoe sizes (Bowen & De Clercq, 2008, pg. 751). Shortly, the market outcomes were perfect from market stalls to international online stores and the brands were conventionally accepted. According to the entry outcomes in some of the known markets like Australia and USA, Shoes of Prey had created something that the targeted market had liked, and that Africa and New Zealand is already yearning to have. The production line proves profitable and many investors are coming on board (Mcilvaine, 2017).
Modes of Entry
Having decided to venture into the New Zealand and African markets with manufacturing bodies in New Zealand and South Africa, Shoes of Prey intends to use “Exporting” as its main entry mode. Such is because “Exporting” offers minimum exposure of the company to the foreign market while its market-associated risks are low as well. Otherwise, the company will also try licensing.
Exporting
Under exporting, Shoes of Prey will sell through “online-only” channels to free funds previously sunk into the bricks-and-mortar operations of the company in markets like USA and Australia. By so doing, the company intends to reduce the time used to ship its product to customers in the new markets by half the time before the use of this strategy (Mcilvaine, 2017). The company has also decided to increase its design possibilities in New Zealand and South Africa owing to the existing favourable cultural implications in the two countries thereby providing a considerable trillion footwear design combinations in the context of style, material, colour, toe shape, heel height, embellishments, and width. The company has also decided to build a factory in New Zealand and South Africa as that in China, and hire thousands of specialised workers alongside working with the existing suppliers in the targeted markets to obtain equipment for shoe making as well as material to broaden its processes and machinery (Mcilvaine, 2017).
However, the company intends to merge exportation and customization as a way to increase its operational base. As a strategy, it is important in enhancing the company’s production line in New Zealand and Africa. Currently, Shoes of Prey produces its shoes in a three-storey building in Dongguan, China that is also a place known for its expertise in shoe making. However, unlike many factories that make shoes in the same area, Shoes of Prey has been unable to tap into the supply chain of the city. The company has struggled to find the appropriate mix and split of processes of production. Therefore, the management decided to incorporate an internally developed software to authenticate every customised shoe as being fully ‘lean’ and correctly manufactured as per the client’s request. The software is yet to be employed in South Africa and New Zealand production lines (Mcilvaine, 2017).
From such observations, it is clear that Shoes of Prey will employ indirect and direct exporting, and cooperative manufacturing, to reach to its target audience in the mentioned markets. Otherwise, it is recommendable that the company to continue entering into marketing agreements with African and New Zealand investors and other marketing stakeholders to deploy its distribution networks in the two new lines of production in the same way as D&B’s to reduce the risks associated with methods of market entry (Van der Zwan, Hessels & Sanders, 2013).
Licensing
Theoretically, Van der Zwan, Hessels & Sanders (2013) believe that international licensing is about multinational organizations making agreements with other firms in the target market to give the smaller firms legal rights to use or sell the property of the multinational organization or the licensor. In relation to the same, Kimmorley (2014) explains that Shoes of Prey intends to give licensing rights to African and New Zealand ventures the legal rights to sell in the name of Shoes and Prey. It means that the company will less focuses on the novelty factor and more on fashion. It also means that the company has a passion for ensuring that shoes look and feel beautiful using online designing tools that will be employed in the South African and New Zealand production lines. Apart from that, Shoes of Prey will spend time sourcing the right leathers from renowned leather producing companies like Italy to meet consumer specifications in New Zealand and Africa. On the contrary, with licensing rights given to startup ventures, the company intends to initiate technological inventions. The company’s sales channels will also change because the employment of technology and the available market cultures in New Zealand and Africa make entry into the two markets easy and simple (Kimmorley, 2014).
Strategies
Shoes of Prey employs the Naïve rule of market entry mode go for “Licensing” and “Exportation” as the specified as the identified means of entry. However, some of the entry strategies include:
Improved business etiquette and understanding foreign market customs
Understanding the fluctuation of foreign currencies and;
Understanding foreign market laws and conventions
Improved Business Etiquette and Understanding Foreign Market Customs
Even before launching its production lines in New Zealand and South Africa, Shoes of Prey will perform a market research on the existing market cultures in New Zealand and South Africa among other African countries like Liberia, Egypt, Ghana, and Nigeria. Shoes of Prey will also inspect cultural implications of starting its production lines in the named markets then weigh to venture or dismiss the project. Also, Shoes of Prey will improve its business etiquette which includes improving the manner in which internal communication within its operational structures occur, improving the efficiency of operational meetings, as well improving team play to increase production and distribution. Therefore, Shoes of Prey will ensure that it recognizes the new markets’ existing market cultures and their influence on business operations before establishing its operations (Cunha, 2013, pg. 4).
Understanding the Fluctuations of Foreign Currencies
In this case, Shoes of Prey will go for market stability factors such as supply, demand, and competition all of which determine currency fluctuations. On the same, Shoes of Prey will perform a detailed analysis of the identified markets concerning their historical economic trends, currency movements, and then be able to predict the possible market behavior. This strategy will be employed by Shoes of Prey to understand the market trends in the foreign soils (Daly, 2015). The company will also negotiate marketing contracts with local investors before venturing into the identified markets to determine the existing values of currency and exchange rates. After entering the new markets, Shoes of Prey will unlock its product delivery dates and currency rates to avoid market speculations (Gordon & Davidsson, 2013).
Understanding Foreign Marketing Conventions and Laws
The New Zealand International Trade Laws require foreign companies and investors to pay 15% tax on their annual generated revenue among other trade regulation protocols. On the same, most African countries have national trade unions that recommend local companies to have larger market portions. Having gone through the trade laws and regulations in the identified markets and employed local attorneys to provide marketing oversight for the identified markets, Shoes of Prey intends to comply with New Zealand’s tax regulations as well as employ licensing technique to curb African trade union laws (Daly & Cobb, 2017).
Market Analysis
According to Karniel, Reich, and Yoram (2017) as well as Baumol (1990), many multinational organizations penetrate new markets having examined the markets and exploited the available niches (pg. 894). In line with Karniel, Reich, and Yoram’s argument, Shoes of Prey determined that New Zealand is a country of vibrant culture. Women are swayed by fashion and trend, though most are choosy and mean. On the contrary, 80% of African women are trendy and insatiably fashionable New Zealand, I particular, has a total population of 4.7 million with a labor force of 2.4 million. The rate of unemployment is 5.7 % and the country’s GDP per capita is approximately 54,407 New Zealand dollars. In the fashion sector, the annual retail sales is approximately 3.7 billion New Zealand dollars while the domestic market value is about 5.1 billion New Zealand dollars. Apart from that, the country’s annual consumer expenditure on footwear and clothing: is about 6.2 billion New Zealand dollars (FASHION UNITED, 2018). Regarding competition, the two identified markets are already infiltrated with companies like Nike, Sketchers, and Clarks among others. However, Shoes of Prey comes with a new approach, “customizable design” which gives customers a new dimension of product purchase (Malakooti & Behnam, 2017).
Marketing Factors
Improved Technology
Africa is on the verge of technological development, with countries like Egypt and South Africa leading the notch. New Zealand on the other hand, is technologically superior thereby giving the company a head start when it comes to launching its products. For instance, Shoes of Prey will find a conducive platform in both markets to establish its online website with a designer interface for its custom shoes. Therefore, online shoppers in the identified markets will have a chance of coming up with their own shoe designs (Karniel Reich & Yoram, 2017).
Consumer friendliness
Women in Africa and New Zealand, like any other part of the world are addicted to looking good, addicted to footwear, and long to design their own outfits because the available market is unable to provide perfect products in the market. Therefore, Shoes of Prey will provide them with a unique opportunity of buying the exact design of shoes they desire without hustles, an idea that clients gladly embrace (OECD, 2015).
Good business culture
New Zealand and Africa, particularly Liberia, Egypt, Ghana, Nigeria, and South Africa, have economies that are business oriented charged with growth of their organizational cultures. Such cultures provide flexible working conditions and schedules. Apart from that, the cultures uphold proper work ethics and good working relationships to ensure overall economic growth. Such a culture lines with Shoes of Prey’s work doctrines, which promote employee motivation and ambition. Shoes of Prey also ensures that workers balance their normal life and work to promote self-motivation (Jr Sidney & Hill, 2017).
Venture Success
The success of Shoes of Prey results from a number of exporting options, like:
Manufacturing footwear locally and selling online or abroad
Exporting and selling footwear to third party and;
Forming manufacturing contracts with Chinese experts
The company will therefore, succeed in its new markets because it would employ strategic sales and manufacturing techniques discussed in the above sections (Gordon & Davidsson, 2013). Production and marketing in the identified markets will be efficient enough to generate a large income revenue (Hill, 2016).
Operational Strategy
To ensure absolute success in the new markets, Shoes of Prey will employ a number of operational strategies. Such strategies will also help the company to fight for its spot in the markets. Such strategies include:
Proper service and good designs
Quality management
Capacity design and processes
Service and Good Design
“Footwear Customization” is the strategic decision that Shoes of Prey has adopted to produce its footwear products. The objectives of this strategy in terms of operational management is to ensure that the design of products align with the requirements of the clients, goals of the business, and capabilities of the organization. Therefore, Shoes of Prey focuses on shoe designs based on market preferences and advanced technology (Hill, 2016).
Quality Management.
In every product and process of manufacturing that Shoes of Prey goes through, the company ensures that quality is emphasized. As a result, the company intends to have customers satisfied by meeting their custom quality regarding the products delivered. The operations management sector of the company ensures that the issue of quality is addressed by meeting high standards of quality and the application of TQM (Total Quality Management) (Devall, 2017).
Capacity Design and Processes
Shoes of Prey uses the strategy of “Capacity Design and Processes” to prioritize its production efficiency and streamlining. This operational strategy ensures adequate, efficient, and effective production. Therefore, the operations management of this company ensures that continuous improvements are applied to ensure that the goals of production and supply are met concerning market dynamics (Van der Zwan, Hessels & Sanders, 2013).
Target Market Considerations and Capital Commitments
On capital commitments, the company intends to allocate approximately $3.9bn to commence the New Zealand and South African production line projects. The first face (New Zealand phase) is set to begin in February 2019 while the second phase (African) will commence in January 2020. After the first phase is commenced, the company plans to increase its sales by about 70% within a span of 4 years (i.e. 2019-2023); with the second phase’s sales increasing by 50% in a span of 6 years (i.e. 2020-2026). Apart from that, Shoes of Prey projects to dominate the shoes market of New Zealand and Africa with around 67% market share come 2026 (Hair, Et al., 2018). On market considerations, the company understands that it has to meeting the personal footwear needs of African and New Zealand women. Therefore, market research studies need to consider available products and prices within the sectors of production (Hill, 2016).
Corporate Objectives and Strategies
Shoes of Prey’s global business strategy involves focusing on direct-to-consumer business models that ensure online sales as well as offline operational stores. The company still intends to open new markets in other countries such as New Zealand having opened manufacturing operations in China. Concerning internationalization, Shoes of Prey has ventured into expanding abroad with the basis of such expansion being online. The company having based its operations globally is planning to become sustainable. The company has also undergone an expansion process and thus, attempting to ensure that the world achieves zero emission. The idea of zero emissions would be achieved by coming up with products that are biodegradable and or reused without any form of post or pre-consumer waste. The innovation and growth strategy for the company is linked to its sustainability intentions. As a result, the company is struggling to ensure that the global sustainability plan is achieved (Blowers, 2016).
Organizational Design
The organizational design of Shoes of Prey will help the business venture to achieve its operational abilities in the new markets. The company will therefore employ an “open”, geographic-divisional structure that will ensure that workers access one another and corporate, offer departmental workshops, as well as improve cross-departmental working atmosphere and encourage innovation (Buckingam–Hatfield, 2017).
Organizational Features
Since the organizational structure to be employed is geographically divisional in nature, the design will be based on the needs of the corporation in relation to its regional and global market operations. Some of the notable characteristics of the national organization will include:
An international leadership framework with each production line having a CEO and other management titles.
Semi-autonomous departments and divisions
Brand branches
However, the design will also allow the allocation of branches and branch managers within the identified countries. These managers will make decisions on local operations such as marketing and product distribution. The local branches will have:
Branch managers
Shoes of Prey brands
A finance department
A local HR department
A merchandising and product department
A legal and administration department
A local brand marketing department and;
An operations department
Staffing Policy
Shoes of Prey will constantly review its HR operations to ensure that workers are treated fairly concerning the local trade union doctrines. To ensure that the workplace environment is conducive and friendly, the management will conducted both offline and online interviews with employees to gauge their attitudes on how they are treated within the identified organizational structures. Such will also determine their dissatisfaction levels and appropriate mechanisms incorporated to boost their esteems. Workers will also operate under flexible routines to give them time to balance their normal life and work. Therefore, employees won’t absolutely operate from their offices but also work from home (GWA, 2017).
Scope for Expansion
The company intends to expand its operations by venturing into the African and New Zealand markets by developing production lines in New Zealand and South Africa. In addition, it intends to increase its focus on women footwear that is likely to generate approximately $20 billion in revenue come 2020. Otherwise, women footwear stores are already operational in Shanghai, California, and Australia. However, the company will use online penetration since it is the most effective way of getting to target markets (Acker, 2017, pg. 142).
Conclusion
Finally yet importantly, it is important to note that the main channel that Shoes of Prey will uses to market its products is the Internet. As mentioned before, Shoes of Prey, like most multinational organizations, will do exporting (Griffin & Pustay, 2015, pg. 12). On the contrary, it will mainly employ indirect exporting because it offers minimum exposure of the company to the foreign markets. Apart from that, foreign markets associated risks are low. Since Shoes of Prey has several online and offline stores, the organization will sell its products to clients through marketing agents and local branches (Acker, 2017, pg. 139).
Reference
Acker, J., (2017). Hierarchies, jobs, bodies: A theory of gendered organizations. Gender and Society, 4 (2), 139–158.
Baumol, W., J., (1990). Entrepreneurship: Productive, unproductive, and destructive. Journal of political economy, 98(5), 893-921.
Blowers, A., (2016). The Time for Change. In planning for a Sustainable Environment, Blowers A (ed). Earthscan: London
Bowen, H., P., and De Clercq, D., (2008). Institutional context and the allocation of entrepreneurial effort. Journal of International Business Studies, 39, 747–767.
Buckingam–Hatfield, S., (2017). Gender and Environment. Routlege: London
Carey, M., (2018). Shoes of Prey founder reveals start-up is facing ‘struggles’. Retrieved on 26 Oct 2018. At: https://www.news.com.au/finance/business/retail/shoes-of-prey-founder-reveals-startup-is-facing-struggles/news-story/6c9054362df612cf610d89b09721fc94
Cunha, L., (2013).”Manufacturing Pioneers Reduce Costs by Integrating PLM &ERP”.Onwindows.com, 2(10), 2-7
Daly, H., (2015). Sustainable Growth: An Impossibility Theorem. In Valuing the Earth: Economics, Ecology Ethics, Daly H, Townsend (eds). MIT Press: Cambridge, Mass.
Daly, H., & Cobb, J., (2017). For the Common Good: Redirecting the Economy towards Community, the Environment and a Sustainable Future. Green Print: London
Devall, B., (2017). Simple in Means, Rich in Ends. Green Print: London.
Fashion united, (2018). Fashion industry statistics New Zealand. Retrieved on Accessed on 26 Oct 2018, at: https://fashionunited.nz/fashion-industry-statistics-newzealand
Gordon, S., R., and Davidsson, P., (2013). Identifying important success factors in new venture creation. Australian Centre for Entrepreneurship Research. BUSINESS CREATION IN AUSTRALIA PAPER #8. Queensland University of Technology. Brisbane, Australia.
Griffin, W., R., & Pustay, W., (2015). International Business: A Managerial Perspective, Student Value Edition. Texas A&M University. 8th Ed., (3) 11 – 14
GWA, (2017). Importance of emergency response training. Retrieved March 19, 2018, from https://www.dmp.wa.gov.au/Safety/Importance-of-emergency-response-7935.aspx
Hair, J., Anderson, R., Tatham, R., and Black, W., (2018). Multivariate Data Analysis, 5th Edition. New York: Prentice Hall.
Hill, S., (2016). “A winning strategy”. Manufacturing Business Technology. Risk management — Principles and guidelines on implementation. International Organization for Standardization.
Jr Sidney & Hill, (2017). “How to Be a Trendsetter: Dassault and Shoes of Prey Customers Swap Tales from the SOP Front”. COE new set. ISO/DIS 31000.
Karniel, A., Reich & Yoram, (2017). Managing the Dynamic of New Product Development Processes. A new Product Lifecycle Management Paradigm. Springer. ISBN 978-0-85729-569-9.
Kimmorley, S., (2014). Here’s How Shoes Of Prey Built Its Astounding Business By Getting To Know Its Customers. Business Insider Australia. Retrieved on 26 Oct 2018, at: https://www.businessinsider.com.au/heres-how-shoes-of-prey-built-its-phenomenal-business-by-simply-getting-to-know-its-customers-2014-9
Malakooti & Behnam, (2017). Operations and Production Systems with Multiple Objectives. John Wiley & Sons. ISBN 978-1-118-58537-5.
Mcilvaine, H., (2017). How Shoes of Prey delivers made-to-order shoes in two weeks. Internet Retailing. Retrieved on 26 Oct 2018, at: https://internetretailing.com.au/how-shoes-prey-delivers-made-order-shoes-two-weeks/
OECD, (2015). The Changing Consumer and Market Landscape. Consumer Policy Toolkit. Washington, DC, Version 1.0, 15
Van der Zwan, P., and Hessels, J., and Sanders, M., (2013). Entrepreneurial activity, industry orientation, and economic growth. SCALES, SCientific Analysis of Entrepreneurship and SMEs (www.entrepreneurship-sme.eu). Zoetermeer, April.
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