Saint Petersburg State University Graduate School of Management INTERNATIONALIZATION OF “ZARA” Course: International Business Strategy Professor: Andrei Yu. Panibratov Group project by: Roman Shapurko Elena Shatalova Yulia Shmeleva Petr Dimitrov Asya Lipovetskaya St Petersburg 2013
Saint Petersburg State University Graduate School of Management Agenda • Theoretical insights: - Influencing factors - Types of strategies - Theoretical model • Zara case study - Profile - Mexico, Japan, India, Russia • Main findings 2
Saint Petersburg State University Graduate School of Management Factors influencing choice of market for internationalization Market potential of the country for internationalization Distances Cultural Administrative Geographic Choice of geographical market for internationalization Economic [Malhorta, Sivakumar, Zhu, 2008] 3
Saint Petersburg State University Graduate School of Management Types of International Strategies Type of IMS Global Strategy Multinational Strategy Glocal Strategy Standardized Adapted Partly adapted Characteristics Marketing - mix Value chain Concentration of elements Dispersion of elements Not significant dispersion of elements Relation to international branch High integration High autonomy Partly autonomy [Svensson, 2001]
Saint Petersburg State University Graduate School of Management Factors influencing the choice of entry mode • Host country uncertainty factors, i. e. cultural, administrative, economic distances • The uncertainties with the biggest influence, are cultural and institutional uncertainty ü The bigger the cultural distance, the smaller is the corporations’ willingness to choose higher-control mode of entry, and vice versa ü So the greater the cultural distance between home and host countries, the more MNEs rely on licensing or JVs rather than on WOS ü MNEs choose high-control mode when political uncertainty and legal uncertainty are low
Saint Petersburg State University Graduate School of Management Theoretical model of interrelation of geographic markets’ characteristics, corporate international strategy and company performance in entered markets Cultural distance Administrative distance Geographic distance International strategy Company performance results Economic distance Market potential of the country to enter Based on [Theodosiou, Leonidou, 2003; Katsikeas, Samiee, Theodosiou, 2006; Malhorta, Sivakumar, Zhu, 2008] 6
Saint Petersburg State University Graduate School of Management The main findings from theory analysis • 7
Zara Case Study
Saint Petersburg State University Graduate School of Management Zara Case Study • A Spanish company • One of the first-rate global clothes brands, being number 48 in “ 100 best global brands” 2010 • First «Zara» shop opened in Corunia, Spain in 1975 • Today: 1395 shops in 74 countries all over the world • Goal: : to make fashionable clothes affordable to the mass-sector of consumers 9
Saint Petersburg State University Graduate School of Management Chosen countries’ distances characteristics Markets Mexico Japan India Russia Medium High: government eff. is higher in Spain High: government effectiveness in Spain is better High Distances Cultural Administrative High: government Low: government eff. is higher in eff. is lower in Spain Geographical High Economic High: GDP per capita is higher in Spain High: GDP per capita is lower in Spain High: GDP per capita is higher in Spain
Saint Petersburg State University Graduate School of Management Analysis of chosen international strategy in Mexico Market Relation of distance to chosen strategy Performance results • FDI: Own stores • Relatively low cultural distance – low degree of product adaptation MEXICO • High geographic distance– prices increase (slight excess of the European level - by 10%) • High economic distance - forced positioning in a narrower segment. • High growth rate of the number of stores in Mexico. • Despite a more narrow audience, attracting the most fashionable and most creditworthy customers. 11
Saint Petersburg State University Graduate School of Management Analysis of chosen international strategy in Japan Market Relation of distance to chosen strategy Performance results • Joint Venture with BIGI • Low growth due to intense • Relatively low cultural distance – JAPAN competition with brands from small degree of product adaptation different price categories. • High economic distance - conscious positioning in a narrower segment (prices exceed the European level by • Lack of attraction for the selected target audience. • Mismatch with global positioning 80%). 12
Saint Petersburg State University Graduate School of Management Analysis of chosen international strategy in India Market Relation of distance to chosen strategy Performance results • Joint Venture with Tata Group INDIA • The relatively high cultural distance - more attention to product adaptation • Network popularity among consumers - high growth rates. • High economic distance – offer products • Price advantages compared to with prices well below the prices for key competitors. similar products in Asian countries, the emphasis on cheaper products, commitment to global positioning. 13
Saint Petersburg State University Graduate School of Management Analysis of chosen international strategy in Russia Market Relation of distance to chosen strategy Performance results • Franchising: Stockmann company • Relatively low cultural distance – RUSSIA product mostly the same as in home market • High economic distance – positioning as more luxurious than in home market 14
Main Findings
Saint Petersburg [State University Graduate School of Management Main Findings • The choice of the market for the internationalization is affected by many factors; • After the market is selected, company chooses entry mode and international marketing strategy • Performance of the company in the international market is directly dependent on the extent to which the characteristics of the chosen market correspond to the chosen strategy Distances Choice of entry mode Company’s actions High cultural distance Joint venture, franchising Product adaptation and promotion High geographic distance Joint venture Production chain dispersion and approximation of production area to distribution area; price adaptation High economic distance Joint venture, franchising Price adaptation; changes in positioning 16
Thank You For Your Time ! 17
Saint Petersburg [State University Graduate School of Management Distances Calculations Cultural Distance where Iij 1 и Iij 2 – Hofshtede evaluations of i-th dimension of culture in the country j 1 and the country j 2 Geographic Distance = distance between 2 capitals in km Economic Distance = difference in GDP per capita in 2 countries Administrative distance = the difference between the valuesof Governance Indicators (calculated annually by the World Bank) for 2 countries 18
Saint Petersburg [State University Graduate School of Management Values of Distances Market Mexico Japan India Russia Cultural 76 67 83 63 Administrative -33 (government effectiveness in Spain is higher) 2 (government effectiveness in Spain is lower) -24 (government effectiveness in Spain is higher) 50. 7 (government effectiveness in Spain is ) Geographic 9036 km 10660 km 7951 km 3444 km $30582 (GDP per capita in Spain is higher) $18066 (GDP per capita in Spain is higher) Distance Economic -$15268 $10683 (GDP per capita in Spain is higher) Spain is lower) 19
Скачать презентацию Saint Petersburg State University Graduate School of Management
IBS_Zara_powerpoint_final.pptx