Taiwan Home Furnishing Sector Analysis

This assignment requires a comprehensive analysis of the home furnishing sector in Taiwan. It involves examining recent performance trends, identifying key challenges and opportunities facing the industry, and forecasting its future outlook. The analysis should consider factors such as market size, consumer demand, competition, technological advancements, and government policies.

Running head: INTERNATIONAL BUSINESS MANAGEMENT
International Business Management
Name of the Student
Name of the University
Author Note

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Executive Summary
The following report revolves around the market entry and development strategies of the
organization Kelly & Windsor. In order to expand the business, the organizations have to
penetrate in the domestic market or they could expand in a foreign market. However, as the
domestic market of the organization has not been effective due to the demands in import
products in the country, Kelly & Windsor has been suggested to open up the operation in
Taiwan. Taiwan is one of the growing nations, which has observed a highest growth in
technology and economy in a very short period. Thus, as the market entry strategy, licensing and
franchising have been suggested to Kelly & Windsor. Based on the implementation and the
relevance of the strategies, the market forecast has been presented in the report.

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Table of Content
Introduction......................................................................................................................................3
Analyzing the industry environment for the products/ services- Porter’s 5 Forces analysis -........4
Considering the market for the product and services......................................................................7
Considering the strength, weaknesses, opportunities, threats of the company................................8
Considering the international strategy in the market and justifying them.....................................10
Picking the type of entry mode and justifying the entry mode with theory..................................11
Choosing the organization design and control...............................................................................12
Specifying the international marketing strategies..........................................................................13
Specifying the international human resource management options..............................................14
Forecasting.....................................................................................................................................14
Recommendation for dealing with the future issues......................................................................15
References and Bibliography.........................................................................................................17
Appendix........................................................................................................................................21

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Topic- Market Entry Strategy
Introduction
The following report is based on the market entry strategies that are supposed to be
applied to the organization Kelly & Windsor. Kelly & Windsor is an Australian manufacturer
of bedding accessories and the organization distributes a uniquely made high quality range of
luxury bedding accessories. The organization utilizes the latest production methods to the
manufacture the highest quality of luxurious products for meeting the needs of customers.
However, in the recent time, the organization in the domestic market faces some sales challenges
due to the less demands and limited customer base. The organization makes a large investment
for the enhancing the quality of products and operation but the return on investment has not been
effective compared to the cost of operation.
Considering this issue, the organization is intended to expand the business to an
international market where this deficiency of profits can be recovered by increasing customer
base and maximizing the value of brand. Working as an international business consultant, the
country Taiwan has been suggested for the expansion of Kelly & Windsor’s business. Taiwan
is the appropriate choice for market expansion because Taiwan is one of the emerging nations
with growing demands of innovative products. Moreover, economy in Taiwan is stable now;
thereby, people are heading towards an enhanced culture and lifestyle. In addition to this, Taiwan
has achieved an economic success. Since 1992, Taiwan’s GDP growth has averaged 4.5% and
this maximized the per capita income from $9,116 in 1993 to $19,789 in 2014 (Hsu and Cheng
2012). It is also observed that presently Taiwan is at the 28th position in terms of wealth globally.
Therefore, such emerging growth would certainly help the business of Kelly & Windsor. In

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addition to this, another factor selecting this country as the expansion of business is that the
small and medium size organizations have always been the backbone of Taiwan dynamic
economic expansion. Thus, at the initial stage, the organization might not be able to start the
operation with a large framework in new market; the operation might fall under the category of
small and medium size. Therefore, the organization will receive tremendous responses from the
market and government. So, the selected country is appropriate for Kelly & Windsor is suitable.
Analyzing the industry environment for the products/ services- Porter’s 5 Forces analysis -
According to Chien, Chen and Hsu (2012), the Taiwan’s private sector has benefitted
from a relatively well-developed commercial code and open market policies that facilitate the
free flow of goods as well as capital. It is also observed that small and medium size organizations
have been strong platform of Taiwan’s changing economic expansion. In addition to this, Zhu,
and Chung (2014) mentioned a sound legal framework in place to deliver a strong protection of
property rights and uphold the rule of law. It has been identified bedding and home furnishing
products suppliers have gained a tremendous momentum due to the availability of technology,
which means the organizations in the recent time have relied on e-commerce platform for selling
the bedding accessories to the customers. The industry observed a dramatic growth within a
decade.

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Figure 1: Growth of home furnishing products in Taiwan
(Source: Zhu, and Chung 2014)
However, the industry environment of Taiwan has been discussed with Porter’s five forces
model in the following.
Porter’s five forces analysis
Bargaining power of customers- (Moderate)-It has been observed that as the economic
position in Taiwan is stable, the customers tend to prefer high quality of products. The country
has many small and medium size organizations selling the same categories of products but the
due to the factor of quality, all organizations do not receive the similar attention from the
customers (Chiou et al. 2011). Even though, the customers many choices but they look for the
quality. Thus, the bargaining power of the customers with respect to bedding accessories is
moderate. However, it is expected that bargaining power of customers might increase as the
country has the potential to attract the foreign brands.

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Figure 1: Porter’s Five forces analysis of Taiwan business environment
(Source: Pai and Tu 2011)
Bargaining power of suppliers- (High)-The bargaining power of suppliers is high
because Taiwan’s home furnishing sector has many players but the small and medium size
organizations with quality of product are crowding the market (Pai and Tu 2011). The number of
suppliers is less compared to the number of players in the market. In addition, the demands of
products are high but the market observed an absence of suppliers. As the result, the bargaining
power of suppliers is comparatively high.
Industry rivalry-(Less) Even though, there are many small and medium size
organizations in the field of home furnishing products, the rivalry among the large organizations
is less. The industry hardly has a large size organization that covers the wide the market. The
present dominating organization in the sector is Daddypops Co. Ltd, Protune Wooden Co., Ltd
Porter'sFiveforcesBargainingpowerofcustomers-(Moderate)-Bargainingpowerofsuppliers-(High)Industryrivalry-(Less)Threatsofentrants-(Moderate)Threatsofsubstitutesproducts-(High)-

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and others (Lee et al. 2011). Due to such poor presence of strong players in the market, the
rivalry among the competitors is less. This would certainly provide a significant opportunity for
the organization Kelly & Windsor.
Threats of entrants-(Moderate) The threats of new entrants in the sector is high because
the industrial environment in the recent time has been effective for the new businesses and due to
economical stability, the nation is largely dependent on the technology. The technology is
rapidly developing in the country and this is probably because of government’s interest toward
the technological improvement (Chuang and Lin 2013). Due to the stable economy and
availability of technology, the multinational organizations are trying to enter the products.
Threats of substitutes products- (High)-As discussed earlier, home-furnishing sector in
Taiwan has small and medium size players to meet the requirements of the customers. In
addition to this, the retail organizations in Taiwan also provide bedding accessories (Boestel,
Francks and Kim 2013). On the other side, due to the technological advancement, the small and
medium size enterprises started developing better quality of home and bedding accessories.
Nonetheless, the quality always creates a separate space in the mind of the customers. Therefore,
Kelly & Windsor has the opportunity for creating a strong brand image in the market.
Considering the market for the product and services
In order to enter a particular market, it is necessary for the organization to focus on a
particular market. However, Taiwan is a growing market and the choice of people is leaning
towards the innovation. Thus, the major focus of Kelly & Windsor should be on the large metro
cities- Tier I and Tier II cities such as Taipei, Taichung and Kaohsiung. The people in large cities
have the highest per capita income than the sub-urban areas of the country. In addition to this,

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these regions have the easy options for transportation and people lead a classy nightlife. Thus,
Kelly & Windsor should focus on such urban families who can afford the price for such
luxurious products. In addition to this, as the economy of the nation is growing, the purchase
habit of people switch to average quality of products to supreme quality of products. Therefore,
to penetrate in such dynamic market, the organization needs to maintain their unique quality of
products. Hence, Liang et al. (2014) commented that it is mandatory for all organizations that
enter a new market, to develop and maintain a unique product portfolio, which helps to
differentiate the firm from others in the sector. When it comes to target market, the organization
put the attention to the married women who often prefer to decorate the home with luxurious
bedding accessories. In this context, Berthon et al. (2012) commented that luxurious brands often
appeal to unique groups. Therefore, while focusing on a particular market, the quality should be
the first priority.
Considering the strength, weaknesses, opportunities, threats of the company
SWOT analysis of Kelly & Windsor for entering Taiwan
Strength
 Kelly & Windsor has strong brand
presence in the market due to the prime
quality of products and services
(Kellyandwindsor.com 2017).
 Even though, it is an Australia brand,
the due to advanced promotional
strategies, the organization has created
Weaknesses
 High cost of operation but limited
profits in the domestic market
 Limited market share in the existing
market, as Australian bedding market is
dominated with imported product
 Limited customer base for Kelly &
Windsor due to high import business in

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its digital presence in the internal
market
 The brand has a strong technological
base which enables them to
manufacture and deliver a high quality
of bedding accessories
 Due to the strong market presence, the
organization gained the ability of
keeping its focus on the export
businesses
Australia in terms of home furnishing
and bedding accessories
 As the organization depends on the
exports, the customer services need
improvement. The organization needs
to strive to provide outstanding
customer services and sales support in a
timely manner.
Opportunity
 The unique product profile and
enhanced brand image provides
significant opportunity for further
developing the business in a new
market. In order to get in a new market,
the organization needs to come with a
unique profile of product that creates a
strong positive image in the mind of
customers.
 Taiwan is one of the emerging and
potential markets for Kelly & Windsor,
as the people are adopting a more
enhanced culture and lifestyle. Thus,
Threats
 The brand position in the existing
market is affected in Australia, as the
people are buying the imported
products. This is a threat for Kelly &
Windsor because if a brand loses its
presence in a domestic market, the
brand reputation might also be affected
in the global market.
 Threats of new entrants in the proposed
market are also high, which clarifies
that Kelly & Windsor must strive hard
to build a strong position in the market.

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people in Taiwan might embrace its
unique products.
 As the profits in existing market is
limited, the organization might face the
difficulty in terms of strength and
capital, to create market presence in the
international market
Table 1: SWOT analysis of Kelly & Windsor
(Source: Kellyandwindsor.com 2017)
Considering the international strategy in the market and justifying them
Among different international strategies, the organization Kelly & Windsor could rely on
two particular strategies such as global strategy and transactional strategy. Under the global
strategy, the organization could standardize its products and services across the national markets.
This means Kelly & Windsor has the unique bedding accessories products; thus, to sell the same
products, the company could implement the global strategy to compete in all markets in Taiwan.
For each market, the organization will have a strong centralized control through franchising. If
the sales of the products are high, the organization could locate value added activities if it is able
to the lowest cost (Sousa and Filipe Lages 2011). When the business is standardized, the
company could open up its R & D network in Taiwan, as the chosen country is technologically
developed.
Transactional strategy
This strategy helps to achieve both global efficiency as well as the regional responses.
Hence, the difference that brings competitive edge to the company is, Kelly & Windsor has an

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unique quality of products; the other home furnishing organizations do not provide such
designed and stylish products. With such unique product portfolio, the organization enters the
other Asian nations and the company keeps the same quality of products in each market (Hitt,
Ireland and Hoskisson 2012). The packaging and labeling of such products could be with the
regional languages but the contents and the internal models are same for each market.
Picking the type of entry mode and justifying the entry mode with theory
Licensing- It is observed that licensing is relatively sophisticated arrangements where an
organization transforms the right to use a product or sell the products to another organization
(Ahsan and Musteen 2011). It is particularly relevant if the purchaser of the license has a strong
and large market share in the market where the licensor wishes to enter the market. Here, the
licenses can be for production or marketing. Therefore, to enter the proposed market- Taiwan
needs to select a purchaser who has strong market presence and market share. In addition to this,
it would be effective if the purchaser sells the similar products.
Franchising- According to Morgan, Katsikeas and Vorhies (2012), Franchising is a
typical North American technique for rapid market expansion but it helps to gain traction in
other parts of the world. This market entry strategy could work well for the organizations that
have a repeatable business model. Kelly & Windsor has a unique product profile as well as a
strong brand recognition, which can certainly be used internationally. This strategy is effective
for Kelly & Windsor because, it might not be possible for the company to establish a large
manufacturing infrastructure at the initial stage of operation. Moreover, as Taiwan is
technologically developed, the organization could get its job done by the franchisees. This means
Kelly & Windsor open the doors for the franchisees to adopt its business models. In return, the

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franchisees would return a certain amount of the profits to the organization. This mode of entry
is certainly effective for Kelly & Windsor as the initial stage operation, the organization need not
to invest a large amount. This strategy will also help to gain the brand recognition from the target
market.
Justifying with the theory - Dunning’s eclectic theory
The electic paradigm is one of the significant theories of in economics and it is also
known as the OLI model or OLI framework. This theory is further developed form of the
internalization theory. The market entry strategies Licensing and Franchising is appropriate for
Kelly & Windsor because the organization could gain ownership advantages, which is the first
element of OLI framework. The firm has the unique product portfolio, which is certainly
different from the existing firms in Taiwan. Thus, through franchising, Kelly & Windsor could
generate the competitive advantages with the unique business model and here, the company does
not have to make investment on the direct operation. In addition to this, the organization will also
have the opportunity for gaining location advantages because the firm would focus on the
crowed metro cities of Taiwan and hence, the company could gain benefits from the modern
lifestyle of people. In addition to this, Kelly & Windsor could also organize the creation as well
as the exploitation of its core competencies- technology and innovation in product
manufacturing.
Choosing the organization design and control
In order to operate the functions in a foreign market, the organization Kelly & Windsor
needs to have centralized organizational design, where the high level of managers of the
organization will make the strategic decision as well as pass them over to lower level of

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management for implementation. This means that the senior management such as the leaders,
senior executive will form the strategies and convey them to all levels of the firm. This means
under franchising strategy, the strategic control will supervised by the senior level of
management.
Organizational control
The managers and executives tend to monitor as well as regulate how efficiently and
effectively, the operation is being performed. The managers also take the responsibility of
observing how the members are performing the activities required for achieving the
organizational goals. However, the organization needs to have to control in three different
segments such as market control, bureaucratic control as well as Clan control (Kang et al.
2012). For market control, the organization could set an external market mechanism to develop
internal performance benchmark and standard. Likewise, for bureaucratic control, Kelly &
Windsor could use centralized authority to implement the rules to control the large set of
activities. Similarly, for the clan control, the company needs to develop the culture in which
shared values among the organizational members can be stored to idealize the preferred
behavior.
Specifying the international marketing strategies
Vision statement for the new market
The vision of Kelly & Windsor is to create a strong brand presence in the global market
providing the unique quality of products and leveraging the unique business models. The
organization wants to provide the customers with the highest quality of products that go beyond
their expectation.

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Specifying strategy
To create a strong organizational position in the market, the organization needs to select
global international strategy. After the initial stage in the new market, to further penetrate in the
market, the organization needs to deliver the same product with the highest and unique quality
(Nielsen and Nielsen 2011). This means by maintaining quality of products, the company could
gain attention from their target markets. It is observed that Taiwan has many small and medium
size players, which means that there is a level of competition. Thus, to remain different from
others in the sector, the organization needs to provide something –innovative design of products
that is not provided by others in the sector. This would also help the organization to promote the
brand and gain popularity from the market.
Specifying the international human resource management options
When the organization is entering a new market with its own business model and
spreading across the market through franchising, the organization needs to be aware of its human
resource policies and terms (Hitt, Ireland and Hoskisson 2012). If the organization prefers to take
help from the franchising, it could provide certain guidelines for selection and recruitment to the
franchisee. This helps to build and retain the organizational model and culture. The franchisee
should be instructed to hire people from the local regions only. Based on the market conditions
and industry demands, the recruitment policies should be developed. Throughout the
organization, a centralized human resource culture needs to be developed. On the other side, if
the organization hires people from the local market, the firm could gain support from
government and regulatory bodies and labor union.

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Forecasting
It is expected that the organization Kelly & Windsor could achieve almost 10% of market
share in Taiwan’s home furnishing sector by selling its products and services through franchising
and licensing. However, it is not possible for an organization to achieve break-even point in the
first year of operation. Nonetheless, it is expected that after two years of operation, the
organization is expected to reach the break-even point. In addition, the organization could
achieve its expected market share after third of year of operation. The expected profit and
revenue figure has been provide in the following.
2017 2018 2019 2020
40%
75%
84%
94%
12%
38%
47%
53%
Market Forecast
Revenue Profit
Graph 1: Market Forecast
(Source: Self-Made)

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Recommendation for dealing with the future issues
At the initial stage of operation, the organization is instructed to depend on franchising
and licensing for understanding and having control over the operation. However, after a certain
time of operation, the organization might face the challenge from the competitors. Certainly,
Taiwan is economically and technologically developed nation, where innovation is the
permanent trend. Thus, to deal with such issues, after few years of operation, the company needs
to establish its own manufacturing plant and terminate the contracts of franchising. Hence, the
cost of operation could be a big challenge for Kelly & Windsor. In addition, the company needs
to apply cost leadership strategies, where it could cut down the cost of operation, such as cost
of manufacturing and developing the finished products. This means by using the technology, the
company could limit the human resource cost and maintain the same quality in the product
portfolio.

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