Expanding Business Internationally: A Case Study of Vurdu Fashion Limited

This document is a case study on Vurdu Fashion Limited's decision to expand their business internationally and the effectiveness of the decision. It includes a PESTLE analysis of Germany, Porter's five forces analysis of the fashion industry, and the implementation of Porter's generic strategies and Bowman's Strategy Clock.

Global

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
In a competitive market, each and every business organisation wants to expand their
business with the aim of generating larger profitability. For attaining the same, firm needs to
serve best quality products to its customers as per their needs and wants. By keeping customers
satisfied, organisation can easily increase their competitive image at market place (Summerfield,
2014). When a company expand their operational activities then they have to analyse market and
political condition. As it provide huge opportunities in-front of company through which firm can
easily capture larger marker share from its rivals and established their competitive image as well.
Current report is based on Vurdu Fashion Limited, is a small Textile manufacturing company
operate their business in Tottenham. The main focus of this company is to capture larger market
share by serving best quality of products to its customers. Along with this, company is also
considering moving its production in Germany with the hope of establishing its successful brand
image. Furthermore, this project is also discussed about evaluating the assessing the decision to
internationalise is effective or not for business organisation.
MAIN BODY
As per today's globalised world, the main focus of business organisation is to operate
their business at international in order to enhance their brand presence. By expanding its
operational activities in another location may help in providing opportunities and path in which
firm can improve their brand image at the same time also capture larger market share from its
competitors as well. For attaining the same time, it is important for organisation to analysis
external factors through which they can improve the possibilities of attaining competitive success
at market place (Keegan, 2017). In context of this, Vurdu Fashion Limited going to expand their
business in Germany in order to attain competitive success by delivering best quality of products
to large number of customers. The main focus of company in moving their production in new
location is to capture consumer attention towards its services. For this, company is also
responsible for analysing the market and its political condition so that they can easily take
appropriate decision to operate their activities at international level. Thus, it is crucial for
company to implement PESTLE analysis of specific country and Porter's five forces analyse to
measure the competitiveness in industry. With the help of this company can easily take right
decision to expand their business at international level.
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PESTLE analysis or Germany:
It is refers to a management tool that support business organisation to assess as well as
analyse all the external factors that impact over its image at the time of expanding their
operational activities. By using this tool, organisation can improve its positive brand image and
at the same time also may reduce any kind of negative aspects. In context of Vurdu Fashion
Limited, they also expand their business in Germany with the aim of attaining competitive
success (Rastogi and Trivedi, 2016). This is the tool which is used by the different organisation
to identifying the external activities and make changes to achieve desirable outcomes. For the
organisation like Vurdu fashion limited the management must conduct proper research and
improvise the plan in order to create a better image in the mind of customer. The external
environment of Germany must be analysed closely as to figure our the needs and wants of the
consumer as to provide satisfactory service. Here is the pestle analysis which is explain down
below in detail manner.
Political factor: This factor consist of government rules as well as regulation for
conducting business activities smoothly. For the expansion in Germany Vurdu fashion limited
have to understand the political environment of the nation for proper functioning of the firm.
Germany have democratic and republic government which is beneficial for the company to
expand the business effectively. Along with this nation consists of different fundamental
structure through which it is easier to operate the business effectively. Apart from this,
government provide monetary support to firm in order to expand and explore the business
effectively. Majority of the production is done in Germany and the workers of Vurdu have
demand fair working condition as well as safer work environment. The nation has stable
governance and they have change the law to provide the minimum wage as to achieve desire
aims and objectives effectively.
Economical factor: This include the Gross domestic product, inflation, disposable
income, per capita income and tariff rate while doing business. In the context of Germany have
comparatively low rate of raw material which make ease for the firm to keep there price low
(Sridhar and et. al., 2016). The nation is developed and the people have high disposable income
to spend money on fashion and clothing. Which make the lager market for the Vurdu to expand
the business effectively in the limited time frame. Apart from this, as the economy of the firm
increase around the world and the Germany have highest rate of middle class income group
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people which make easier for the organisation to run and operate there business for the longer
time duration. Recently the government of Germany have changed the tax norm with the
passage of time as this impact the economical stability for the firm effectively.
Social factor: As the name suggest the social factor consist of individual beliefs, working
culture and background. For the nation like Germany there are around 82 million resident which
means it is the largest EU country in terms of population. This nation is describe as the modern,
multinational country which have open door policy for the business. The people are very
adaptive and fashion enthusiastic which is beneficial for the company like Vurdu to earn more
profit for the company. The society is molded by the different in person lifestyle. Hence there
some traces of various kind of ethnoculture diversity which create a better opportunity for the
organisation to run business smoothly. Along with this there are different kind of event and
fashion event take place in this event which is useful for the firm to tapped the larger audience
present in the market in the limited time frame.
Technological factors: It is one of the major factor that directly affect the business and
its entire activities. As, Germany is well known for its advancement in the technological field.
Mainly, Germany is consider the 5th most known technologically advanced nation wherein
company can easily execute their activities in smoother way. This factor provide opportunities to
Vurdu Fashion Limited in operating their business as it can easily serve their best quality
products to its large number of customers. Advancement of technology support in establishing
positive and famous brand image in market place.
Legal factors: In Germany, its legal landscape directly contributes in promoting the
establishment of business venture by both foreign investors and citizens as well. As its legal
framework is also strict that support business organisation in making their brand image more
ethical. If Vurdu Fashion Limited expand in Germany then it is effective place wherein firm can
easily run their operational activities and also will get success. By following all the rules and
regulation established by Germany government can contributes in developing positive and
competitive image at market.
Environmental factor: Global warning and climate change is major threat for Germany.
In context of international area, Germany is the forerunner in energy and climate policies and at
the same time also seeks to attain ambitious emission reduction goals. Along with this, it also
find itself particularly depended over the natural resources. As Germany also take steps to ensure
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that they reached a high level of environmental protection that make them in more competitive in
market place.
Porter's five Forces analysis of fashion industry in Germany:
It is consider as an important approach that used by company to determining how
competitive a given market is and how profitable it may be for a business organisation. Mainly, it
determine the attractiveness and profitability within the industry that directly contributes in
establishing positive and competitive image. In context of this, Vurdu Fashion Limited is going
to expand their business in Germany as it is crucial for company to evaluate the industry analysis
that directly contributes in improving the performance level of company at market place.
Buyer power: In market place, bargaining power of customers is very little because there
are several alternative companies and option are there that capture customers attention. In this
regards, high level of competition and availability of different brand and options make various
option in-front of customers (Mathooko and Ogutu, 2015). This is the reason that customers are
easily attracted towards the company. Thus, it is important for Vurdu Fashion Limited to produce
unique products within the aim of inviting large number of customers. As they serve their
products at affordable cost so that customers can easily buy its products and at the same time
also increase its overall profitability level at market place.
Supplier power: In fashion industry, suppliers have a high bargaining power as they
provide raw material at high costs. As company buy their raw material from numerous suppliers
as that dominant position and can also decrease the margins. Due to this, company can reduce
their profitability level at market place. In this context, Vurdu Fashion Limited is responsible for
building efficient supply chain with different or multiple suppliers so that they can easily buy
raw material from suppliers. Along with this, company also use quality raw material for
producing quality products at minimum price. This can be contributes in increasing the
profitability level of company and also increase customer base.
Competitive Rivalry: In fashion industry, there are number of companies that give higher
competition by providing very similar products to its customers at cheap rates. It may create
issues in-front of company as its customers base get reduced. His is the reason that Vurdu
Fashion Limited needs to developing a sustainable differentiation within their production and
products as well. With the help of this, they can easily increase their performance and at the
same time also capture larger market share from its competitors.
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Threat of new Entries: It is also consider as an important aspect that define that in fashion
industry, there are various new entrants that includes innovation within their products and also
serve their services at lower pricing strategy. In this, the main aim of new entries is to capture
customers attention by serving quality products to its customers. This can be put negative impact
over the Vurdu Fashion Limited and its performance as well. In this regards, company needs to
bring innovation within their products so that large number of customers get influenced and buy
company products and services. With the assistance of this, firm give strong competition to the
brand and established its competitive image.
Threat of substitution: It is related when a new products and services are meet a similar
customers needs and wants then the other company is suffer. In a fashion industry, number of
companies serve same clothing products to its customers and provide them at lower cost. This
can be reduce the profitability of Vurdu Fashion Limited (Aithal, 2016). Due to this, company
also reduce its brand image and their customers base as well. For overcoming this type of
competition, Vurdu Fashion Limited make quality product high so that customers get easily
attracted. This will contributes in retaining customers for longer period of time and also make
them loyal towards the company and its services.
Porter's generic strategies:
It is also refers to the effective strategy that define how a business organisation pursues
competitive advantage across its selected market scope. As it help in providing competitive
advantage to company in increasing its positive performance at market place. In context of this,
Vurdu Fashion Limited also implement this type of strategies that directly provide direction to
company in attaining competitive advantage from its competitors at global market place.
Mainly, it includes various strategies such as:
 The Cost Leadership Strategy: This type of strategy is also play a crucial in developing
positive image at market place. In this, organisation focus in setting low cost producer
that is consider as a source of cost advantage. With the help of this strategy, Vurdu
Fashion Limited can easily increase their profitability by reducing its cost. In this firm
serve quality products to its customers as per their needs and wants by reducing its
product cost. This will directly contributes in improving positive image of company and
also attain competitive edge from its rivals.
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 The Differentiation Strategy: This strategy focus on making products and services
different and more attractive from their competitors. It may help in inviting as well as
influencing customers towards the company and its offerings. In context of Vurdu
Fashion Limited, company is responsible for analysing market trends by undertaking an
appropriate research and development. By this, firm can serve high quality and unique
products and services to its customers in order to make customers more satisfied. This
type of strategy support business organisation to stay agile with their new and innovative
product development process that can assist in inviting large number of consumers over
company products and services. It support in increasing overall profitability level at
market place and at the same time also achieve higher success.
 The Focus Strategy: It is based on the particular niche market and it is crucial for
company to effectively understand the unique needs of consumers that develop uniquely
low cost or well specified products within the market. In this, the main focus of Vurdu
Fashion Limited is to build strong brand loyalty within their customers by delivering
them best quality of products and services. With the help of this, company can easily
increase its profitability level and also develop a strong customers base that make brand
image of company more strong and competitive as well.
Among these strategies, Vurdu Fashion Limited is use The Differentiation Strategy as it
is one of effective way to introduce new and innovative services that help in making customers
more satisfied. This will directly contributes in establishing its competitive image by serving
unique and best quality of products to its consumers as per their requirements.
Boweman's Strategy Clock:
It is consider as an important model that used by the company in analysing the
competitive position in market place as compare to its competitors. Mainly, it is also effective in
exploring the option for strategic position that help in providing the competitive position in the
market place. One of the main purpose of this strategy is to provide information that business
have variety of options to position its products in market to attain competitive success. In
includes various positions such as:
 Low price and low value added: It is consider as a competitive position for business
organisation as it focus on serving quality products at low prices. By this, company can
make their image competitive and also improve their performance.
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 Low price: Business positioning itself to be low cost leaders within the market in which
profit margin of product is low but at the time of right volume of output can easily
generate profitability at market place.
 Hybrid: This position includes some low price elements but also some product
differentiation. One of the main purpose of this strategy is to added values for customers
and provide them at a reasonable price. It directly support in capturing larger market
share from its competitors.
 Differentiation: Under this position, company offer high quality of products to its
customers in order to make them satisfied. This will assist in developing high brand
awareness and loyalty. With the assistance of this, company can expand their business
and attain competitive success at market place.
 Focused differentiation: One of the main aim of this position is to serve highest price
level wherein customers only but the products from the company. This type of strategy is
commonly used by luxury brand wherein they only target premium customers to increase
their overall sales. By this company can easily sustain in market for longer period of
time.
 Risky high margins: It is considered as a high risk positioning strategy in which
organisation set high price without delivering anything extra in context of values. If
customers buy the same continuously then company increase their profitability level at
market place. Thus, it is crucial for company in developing as well as selling affordable
products to established its competitive image in market .
 Monopoly pricing: In monopoly market, only a single business offer the products with
the aim of influencing customers taste and preferences. In this regards, it doesn't need to
be concerned about the value that consumer get in the product. As they has only choice to
buy products or not. In this regards, monopoly company are regulated to effectively
prevent them from setting products price as per their wish.
 Loss of market share: This type of position is refers to the process for disaster in
competitive market. As company set a middle range of product price that is low
perceived value. By this, organisation can easily invite many consumers that directly
support in improving competitive advantage.
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From these strategies, Vurdu Fashion Limited use differentiation position wherein they
focus on delivering unique and different products. This will support in improving the customers
base and also established its competitive image at market place.
CONCLUSION
From the industry analysis, Germany is a best place wherein Vurdu Fashion Limited
easily expand their business and also attain higher growth. In this company focus on their
products and its quality that help in meeting customers needs and wants. This will directly
contributes in establishing positive and competitive brand image at market place.
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REFERENCES
Books and journals
Summerfield, M.A., 2014. Global geomorphology. Routledge.
Keegan, W.J., 2017. Global marketing management. Pearson India.
Rastogi, N. I. T. A. N. K. and Trivedi, M. K., 2016. PESTLE technique–a tool to identify
external risks in construction projects. International Research Journal of Engineering and
Technology (IRJET). 3(1). pp.384-388.
Sridhar, R. and et. al., 2016. A Political, Economic, Social, Technological, Legal and
Environmental (PESTLE) approach for assessment of coastal zone management practice in
India. International Review of Public Administration. 21(3). pp.216-232.
Mathooko, F. M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management.
Aithal, P. S., 2016. Study on ABCD analysis technique for business models, business strategies,
operating concepts & business systems. International Journal in Management and Social
Science. 4(1).
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