PESTEL analysis of International Marketing

International
Marketing

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................6
CONCLUSION..............................................................................................................................10
.......................................................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
International marketing is define as transfer of goods and services from one country to
another. In addition to this, there are several participants involved in the process of international
marketing such as multinational companies, importers, exporters as well as service companies
(Almodóvar and Rugman, 2015). This marketing report is based on Gucci which is in a fashion
industry as well as a subsidiary company. Its headquarter is situated in three areas i.e. Florence,
Tuscany and Italy. Respective company was founded by Guccio Gucci in year 1921. along with
this, this company deals in luxury brand of fashion as well as leather product of Italian. This
country operated in approximately 500 countries across the world. This report explains about
analysis of external environment with the help of PESTEL analysis of country in which is going
to expand its business as well as SWOT analysis of country in which it is currently operating. In
addition to this, it also explains about competitive advantage with aid of Porters five force
model. Along with this, with the help of model of segmentation, targeting and positioning will
aid the company to grow and retain in the market in order to get competitive advantage.
TASK 1
In order to expand business, Gucci has opened their offline store in Maldives through
which they can attract customers which will lead them in increase their sales as well as
profitability. But before an offline store, company wants to analyse their country's external
environment so that they can formulate their plans and strategies accordingly which will not
affect their function as well as operations of organisation. Along with this, they also determine
about competitive advantage that they can get while opening store. For performing these two
activities respective company has made effective use SWOT analysis and Porters five force
model which is described below:
SWOT analysis:
With the help of SWOT analysis, respective company will be able to determine it
external environment with the aid of opportunities and threats (Baker and Hart, 2016). This
SWOT analysis is explained below:
Strength Weakness
 As the respective company has its store
worldwide. Along with this, it has strong
 Respective company does not do
market research frequently and is
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distribution network through which it is
able provide its product as well as
services to its potential customers within
the time period (Brecic and et.al., 2013).
 Respective company also has low cost
structure so that their customer can get
luxury products at affordable price.
 In addition to this, Gucci in Indonesia
has a strong bond with their dealers.
These dealers not only supplies their
products to company but also helps them
in promoting their commodities as well
as training.
 Gucci in Indonesia, has a strong
financial position due to which they are
able to earn high margin of profits.
Along with this, with these profits they
are able to gather enough revenue which
is later used in future capital
expenditure.
 Respective company has a strong
presence on social media such as
Facebook, Instagram, twitter and many
more. Due to which they are able to
reach wide range of customers.
 Gucci also has strong product platform
as it product different products which
are unique and as per the latest trend.
 Respective company has a cost
advantage when it serve its customers as
compared with other competitors.
based on the data that is collected
approximately few years back.
 Respective company also lack in their
research and development part due to
which its competitors take advantage.
 Gucci does not provide performance
appraisal to their employees for their
efforts that they have applied in order
to make their task effective. This
result in decreased morale of
employees as well as it also lead to job
dissatisfaction.
 Before making any decision,
respective company need approval by
their officials. This result in decreased
efficiency of their activities which also
consumes their times as well as
money.
 Due to remain competitive at market
place, managers of respective
company does not focus on their
workers needs and desire due to which
company is not able to retain their
potential customers.
 There are times when there work load
increases and company is not concern
about their workers (Charter and
Polonsky, 2017). This results in stress
due to which staff is not able to
perform their task effectively.
 Gucci does not have control on their
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 Along with this, respective company
also has a well established IT system
through which it becomes easy for the
company to analyse its internal as well
as external operations.
quality because of they carry low
budget. For this, they are not able to
maintain consistency in their product
and it increases the chance of their
damage.
Opportunities Threat
 As there are large number of internet
user across the globe, respective
company can make effective use of it by
expanding it presence on all social
media sites (Covin and Miller, 2014).
This will help them in reaching wide
range of customers.
 As population is increasing rapidly, it
provides opportunity to Gucci
organisation to to target their potential
customers.
 Along with this, respective company can
make effective use of advance
technology through which they can
improve their products as well as
services. In addition to this, they can
modify their strategies and marketing
efforts.
 Respective company also has to incur
low cost of transportation in Indonesia
which provides them opportunities to
transfer their goods in other countries.
 As in country Indonesia, there are large
 As in country Indonesia, companies
have started producing substitutes
product due to which customers of
Gucci are switching their preferences.
This becomes a threat for the
respective company.
 As customers needs and desires
changes on regular basis. This
becomes difficult for Gucci to
understand their preferences and they
are not able to produce goods as per
requirement.
 Changes in interest rate, exchange rate
creates threat for respective company
due to which they are not able to
stable their financial as well as
economic surroundings.
 Increase in the price of raw materials
is also a being threat for the company
which will increase their price of
manufacturing (Dabija and Pop,
2013).
 Not focusing on employees need,
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number of tourism which provides Gucci
to attract customer which result in
increase company's market share.
 At the time of recession, spending power
of people in Indonesia increases which
result in increase in sales and
profitability of respective company.
respective company will not be able to
retain their potential employees which
will decrease efficiency of company.
Hence from above SWOT analysis, it easily implies that this examination will help
respective company to large extent in order to analyse their external environment. In addition to
this making effective use of swot analysis company will be able to prepare strategies as well as
formulate plans in order to sustain in the market for long duration.
Porters Five Force Model:
This model help large scale companies in gaining competitive advantage at marketplace
which helps them in enhancing their position as well as make their brand more stronger (De-
Mooij, 2019). This model consists of five factors which every business takes into concern while
expanding their business in other countries. These factors are explained below:
 Bargaining Power of Suppliers:This sectors reflects about bargaining power of
suppliers in which they either sell their products at high price or sell low quality of raw
material to their buyers. This bargaining affects sales of buyers which directly or
indirectly affect sales as well as profitability of company. Suppliers bargaining power
becomes stronger in case when there are availability of more buyers but suppliers are less
and in case when there are high chances of switching price of raw materials. In terms of
Gucci company, as it is going to expand their business in Indonesia, instead of having
less bargaining power of suppliers in country, respective company will increase their
bargaining power. This is because they manufacture their products by their own so there
are more chances that they will be having high bargaining power of suppliers. This is
because respective company produces their products that are not easily available at
market place. This feature increases their chance of high bargaining from suppliers.
 Bargaining Power of Customers: This sector explains about power of buyer in order to
demand low price or high quality of products from industry manufactures due to which
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customer bargaining power becomes strong (French, Farrell and Gordon, 2012). There
are various situation which makes customer bargaining power strong such as when there
is only few buyer, in case when customer but products in large quantities and many more.
In respect of Gucci, producing their products by their own it makes their product different
as well unique from other companies. This helps them in attracting more buyers which
makes their bargaining power weak. As respective company is expanding their business
in Indonesia, their focus is on innovation as well as product differentiation which will aid
them in making them different from other companies. Along with this, in order to not to
lose their customers make their consumer base stronger they put their efforts in such way
that their potential customer must get products as per their requirement from their store.
 Threats of New Entrants: In this stage, focus of new companies to enter into market
place is to give tough competition to existing companies and replace them (Galan-
Ladero, Galera-Casquet and Singh, 2015). When there is new entrance of any industry,
profits of existing industry begins to fall. Due to this, it becomes important for existing
firms to create high obstacle for new companies to enter into market. There are situation
when threats of new entrants is high such as new companies can easily enter with low
amount of capital, government regulation is not there and so on. In respect of Gucci
organisation, in order to explore it business in Indonesia it take advantage of economies
of scale which they have within the industry through which they are able to get cost
advantage. Along with this, in order to retain in market for long period, company focus
more on innovation of their products so that its gets differentiated from new entrants. For
this, they focus on marketing their goods so that they can create brand awareness as well
as can build their brand image. This will aid them attracting customers as well as they
will not lose their existing customer.
 Threat of Substitutes:It means that the situation when buyers have many options to buy
a single product from different market at different price. This creates a threat for existing
companies to lose their customers. In terms of Gucci, company is going to operate its
business in Indonesia and in order to avoid the threat of substitutes respective
organisation focus on providing better quality of products with different features. This
will help their potential customers in differentiating the goods with other companies
commodities. Along with this, to retain their customers and do not affected by substitutes,
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respective company will conduct market research of Indonesia so that they can determine
customer preferences and produce goods accordingly.
 Competitive Rivalry:In this sector it is determined how competitive a company is and
how long it can sustain in market to maintain their position (Homburg, Fürst and Kuehnl,
2012). This competition rivalry increases in a situation when there is low consumer
loyalty, products are homogeneous, growth of industry is slow and so on. In such a
competition, companies have compete effectively with their competitors for increasing
their market share that result in low profits. In regards of Gucci, there are effective
competitors in Indonesia who will give tough competition to competitors. By taking into
concern the competition, Gucci has to produce their goods which are high in demand in
the country as well as manufacture such products through which they can attract
customers in their store. Therefore, by producing goods unique as well as different and
marketing products effective, respective company will be able to sustain at market for
long duration (Jiang and Wei, 2012). Along with this, they will also able to enhance their
position in market which will increase their goodwill and will also improve their sales
and profitability.
Hence, from above five points of porters model, Gucci will be able to explore its fashion
business in Indonesia. In addition to this, it will also provide competitive advantage to respective
company if they maintain their position at market. Along with this, they also manufacture
different as well as unique products so that their potential customers do not switch to other brand
for buying that product. In order to spread brand awareness in the country, Gucci must market
their product so that customer able to identify their brand. Therefore, with the help of porters five
force model, respective company will be able to formulate their strategies and plans which will
help them in increasing their sales as well as their profitability ratio.
TASK 2
PESTEL analysis:
This analysis help in examining external environment such as political, economic, social
and other factors which influence operations as well as activities of a company (Khang and et.al.,
2016). The factors which of PESTEL analysis is explained below:
 Political:These factors such as bureaucracy, trade control, tax policy and many more
affect economy of country. These political factors does not affect business in Maldives as
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government of respective country adopt themselves according to new policies and
regulation. In addition to this, government of Maldives, assist private business to expand
their business and carry it to higher level. As the respective company is a private
company so it has a advantage to opens its offline store in Maldives. This implies that
political changes will not affect much the functioning as well as operations of
organisation especially for private sector enterprise. This is because government of
Maldives makes sure not to affect business of private sector. Therefore, it can be said that
political changes does not influence environment of business in Maldives.
 Economic:It is referred to the changes in interest rate, taxation rate, change in population
and other economic factor which affect on economy of country (Kunczik, 2016).
Maldives is a country which is taxation free but they only charge taxes when any
business sell their products that is related to plastic as well as packaging. Other than this
condition, business operating in this country sell their products and services tax free.
Taking this thing into consideration respective company can open their offline store in
Maldives. It is because being one of the luxurious fashion industry, company can sell
their products without charging tax. Along with this, clothes as well as accessories of
Gucci will be affordable to their customer as well as they will able to build strong
customer base. In addition to this, it will also enhance sales as well as productivity of
respective organisation.
 Social:It is define as those sectors of societies as well as communities which help a
company to target their potential customers. In addition to this, these customers help
organisation to know their preferences and desires as per latest trend. Along with this,
company is also able to understand what customers expect from their organisation. In
respect of country Maldives, people over there focus more on spending rather than
saving. This is one of the biggest advantage for a company to open their business in the
country (Lamore, Berkowitz and Farrington, 2013). As Gucci can expand their business
in Maldives and focus on youngsters more because this will help them in increasing their
sales as well as profitability. Therefore, respective organisation can build a strong chain
of customer which will aid them in their growth as well as development.
 Technology:The most crucial factor for a company to grow is to make effective use of
advance technology so that it can modify their product, strategies, plans and other
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activities of business . This will help them in acquiring more customers as well as they
will able to retain their existing customers (Narteh and et.al., 2013). In regards of country
Maldives, business operating there effectively use advance technology so that they can
make their products more attractive, strategies more effective and other activities of
company more better. This is one of the biggest benefit to Gucci company who are
exploring their fashion industry in Maldives so that they can help their customers to get
brand new luxurious products. This will assist in improving standard of living of people
and through this they will be able to build strong chain of customers.
 Environmental:It explain about those factors of environment which are echo friendly as
well as those products which does not affect the environment . Maldives country focus
more on products which are echo friendly as well as healthy products. This is because it
makes easy does business to sell their commodities to their customer. Gucci organisation
can take this factor as their opportunity as before launching any product respective
company can take into concern this factor and produce their goods accordingly.
Producing such products which are healthy as well as echo friendly, Gucci will able to
enhance their sales which will help them in make their brand image more stronger.
 Legal: This factor is based on laws that is framed by government in order to run business
in legal manner. Maldives is strict in following rule that is framed by their government so
that business in respective country can run successfully without interference of
government (Parry, 2016). In order to open an offline store, Gucci need to follow all the
rules and regulations of government of Maldives. Along with this, there are some
formalities that are required to be fulfilled by private companies so that they can perform
their transaction properly around the world. These formalities are essential because
government mainly focus on private companies, their working as well as operations.
Hence, from above factors of PESTEL analysis, it implies that Gucci can open their
offline store in Maldives as they will benefited for various factors such as political, economic
and many more. Only in case of fulfilling all legal formalities of Maldives, respective company
will face some issues. Along with this, respective company will be able to grow as well as
develop their business in respective country. Gucci will be able to maintain their luxurious
position in Maldives as people of this country spend more rather than saving. Along with this, in
Maldives, Gucci will be able to develop strong customer base through which they will be able to
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understand needs and preferences as per current trend. This data will help them in producing
goods as per requirement.
Segmentation, Targeting and Positioning:
STP is defined as approach in modern marketing which is used by organisation while
entering into new or existing market (Pop and Iorga, 2012). This model is used when
organisation create marketing communication plans which helps them in prioritising propositions
and developing and delivering appropriate message in order to engage with various audiences. It
is three stage procedure which firstly determine types of consumers exist then selecting the best
one and finally implementing segmentation through optimising goods and services for that
segment and communicating distinguish to consumers. Here, Gucci is planning to expand their
offline store business in Maldives so it has to do STP for serving their consumers. In order to
grow and sustain in the competitive market respective company has made use of STP model. It is
explained as follows:
Segmentation: This is defined as types of consumers having various need and demand. It
comprises of dividing market into small segments which consists of individuals who are on same
lines and products. It creates small groups under large market for bringing consumer together
having similar needs, requirements and interests (Ramanathan, Ramanathan and Hsiao, 2012).
Gucci has to segment market on considering various factors so that they provide goods and
services to consumers. There are various segmentation that respective company can look forward
while launching business in Maldives. It is described below:
 Demographic Segmentation:Respective company need to keep in mind personal
characteristics such as gender, occupation and many more. Gucci has to produce their
goods and services while taking into concern these sectors so that they can fulfil their
needs and provide them products and services as per the requirement.
 Geographic Segmentation:As launching business in Maldives, respective company has
kept in mind the geographic segment of Maldives. The people of Maldives have strong
spending power and this can provide them big benefit which will result in their increased
sales as well as profitability ratio.
Targeting: It is define as process of selecting those market area where they can acquire wide
range of customers (Saren, 2013). As per targeting marketplace, organisation advertise their
product in order to create brand awareness. In respect of Gucci company, they are aware about
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the segment of Maldives through which they will be able to know which market they can target
which will in their growth. With this, respective company will focus on those market where they
usually people of Maldives but their fashion clothes. Along with this, in order to attract
customers they can launch campaign, advertisement on social media, provide offers to their
potential customers and so on. This technique will help respective company to enhance their
sales and also build strong relation with their customers.
Positioning:The last stage of STP model is about focus of positioning of product through which
an organisation will be able to customers views regarding their goods as well as services
(Schniederjans, Schniederjans and Schniederjans, 2015). Proper positioning of product will help
company in gaining competitive advantage. In regards of Gucci, company has to place their
product in the way which will exactly gets matched as per the preferences of customers. Along
with this, before positioning any product respective company has to keep in mind the three basis
of Positioning i.e. functioning, symbolic as well as experimental. These factors will help Gucci
in determining products and services as per customer demand, factors of brand that can fulfil
consumer self esteem and which can also connect to the emotions of customers. Therefore, if
respective company make proper positioning of their product as per customer desires as well as
preferences, it will lead them in increased sales as well as profitability.
Therefore, with the help of STP model, it will become easy for respective company to
know the segment of respective country such as their geographical segment, demographic
segment and many more. Along with this, they will also able to understand which customer they
have to target which will aid their growth and development (Shank and Lyberger, 2014). In
addition to this, as per the preferences of customer they will able to know the positioning of their
product as per customer desires and made effective use of factors of positioning i.e. systematic,
symbolic as well as experimental.
CONCLUSION
Hence, from above marketing report it can be concluded that in order to expand business
in other country, company must analyse their external environment with the help of PESTEL
analysis which will help them in understanding the working culture of respective country. Along
with this, to gain competitive advantage and sustain in market for long duration, organisation
must focus on customer needs as well as preferences. In addition to this, they should also focus
on producing goods which are heterogeneous and unique so that company will not be able to lose
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their potential customers. Therefore, with the help of theory of segmentation, targeting and
positioning, firm will be able to grow to sustain in order to get competitive advantage. These
models will help company to expand their business and explore market of respective country
which will aid them to enhance their sales as well as earn high margin of profits.
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Online
International Marketing – Introduction. 2019. [Online]. Available
through:<https://www.tutorialspoint.com/international_marketing/international_marketing_introduction
>.
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