Prada's International Business Expansion

This assignment examines Prada's international business expansion strategies. It analyzes the company's efforts to reach new markets, adapt its products and marketing to diverse cultures, and overcome challenges such as political instability and changing social norms. The analysis also considers the impact of globalization on Prada's operations, including cost reduction through cheaper labor in developing countries.

INTERNATIONAL MARKETING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Globalisation: Advantages and Disadvantages............................................................................1
Environmental Analysis of PRADA............................................................................................3
Competitive advantage................................................................................................................5
Conclusions/Insights....................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Marketing is one of the most important processes which are highly related with the
selling of consumer goods and services effectively. Majority of organizations these days are
adopting several marketing strategies through which they can easily reach out to their intended
target audience. There are several factors which affect the whole marketing strategies of
company such as external as well as internal factors.
In this context, international marketing is carried out by companies across their national
boundaries. It helps in reaching to the various needs and demands of customers all around the
world (Sharma, 2005). Here, the present study is based on the key concepts of globalisation and
international marketing management with including the critical evaluation and application of key
tools. In this regard, PRADA Company is taken into consideration which is an Italian luxury
fashion house. They are having their speciality in ready to wear leather as well as fashionable
accessories. The brand has emerged as a pre-eminent strategic communication device. It also
helps in the identification of retailer and its products (Moore and Doyle, 2010). Within this
respect, this study gives brief description about globalisation as well as its advantages and
disadvantages for company moving from their home territory
Globalisation: Advantages and Disadvantages
Globalization is becoming a key concept these days which helps various organizations in
expanding their business operations worldwide. It provides them superior competitive position
with lower operating costs (Ladăr and Prada, 2009). It is considered as the best approach which
can be easily attained through diversification of resources as well as creation and development of
new investment opportunities. Most of the economist believes that globalization may be the
explanation for key trends in the world economy such as low inflation and low interest rate
despite strong growth rate. Evans (2003) stated that globalization compels PRADA to adapt
different strategies based on the new ideological trends. It is the most effective way through
which they are able to balance rights and interest of both the individuals and community. With
the help of effective change, company is able to compete worldwide and easily accept the
participation of workers and government.
There are several advantages as well as disadvantages for all those companies which are
moving from their home territory to international market. PRADA is one of them and they are
the luxury global fashion retailer and they have expanded their business operations in Asia ().
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According to Moore and Doyle (2010) all the global retailers are not able to find success within
cross cultural consumption. They can easily achieve success across the globe and for the same;
they require to adopt culture branding strategies for their target market. It is highly important to
understand the cultural impact and consumption patterns of various countries.
Etgar and Rachman-Moore (2010) argues that PRADA is an international company
which is operating an ever expanding networks of stores. For the same, company is facing
several challenges due to the globalization. By going through their store expansion, company has
faced predictable duplication and that has undermined any claim of brand creativity. Moore and
Birtwistle (2004) stated that industrial development brought globalization and it is leading with
the several positive as well as negative impacts. Here, it has resulted to assimilation of western
clothing into the Asian as well as African societies. PRADA effectively has found a new way to
cut their costs and they have employed cheap labour from less fortune countries. Some of the
most common benefits associated with the globalization are as wealth equality, more efficient
market, new solutions etc. At the time of moving out from home territory to international market,
there are several challenges which company has to face such as different trade agreements,
political as well as cultural changes etc.
Lu and et.al, (2011) defines that globalization has created jobs and also improved
infrastructure. Moreover, it allows more people to live at a higher global level every day. Most of
the business can effectively make partnership between different countries and it also helps in
making better relations. It provides economic benefits with both stability and security for
countries that wish to remain peaceful and prosperous. Further, it can be stated that with moving
out from their domestic market to international market, firms can lead to more access to capital
flows, technology as well as human capital Wilkinson and et.al, (2007). On the other hand, it is
also impairing income inequalities in between the industrialized and less industrialized nations.
There are several existing competitors of PRADA as it is a luxury fashion brand such as Dolce
and Gabbana, Jimmy Choo, Juicy Couture, Versace and fake Prada. Presence of these brands
within different countries might lead to inhibit the customers of Prada. For the same, they might
face huge competition to attract foreign investment that leads to a “race to the bottom” in which
countries dangerously lower environmental standards. Making customers loyal with the existing
competitors is one of the biggest threats faced by fashion retailers.
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Environmental Analysis of PRADA
At the time of international expansion of business of PRADA there are various
environmental factors which hamper their business growth. However, existence of these factors
leads to present several challenges in front of organizations. It can be presented by PESTLE
analysis of PRADA group such as:
Political factors: This is the most effective factor which might leads to hamper the
overall growth and performance of company. Due to the changing political conditions it is highly
essential to follow all the policies, rules and regulations as per the government norms of different
countries. PRADA is one of the biggest brands which are moving further for expansion of its
business internationally (Arnold, 2003). At this time, they require to follow tax policies or
government involvement in trading agreements. One of the major issues faced by them is related
to the cheap labour within Asian countries due to the political instability. At the time of moving
out from any domestic market to international one PRADA requires to establish Anti-
counterfeiting trade agreements (ACTA). However, good effective international relations for
trade help in making better agreement. In addition to this, by being part of EU helps in making
easy trade with same currency within the Europe. In this regard, it can be stated that due to the
political instability of various countries company might leads to face several challenges.
Economic factors: It is considered as a major factor due to which includes various
factors related to the economic growth rates as well as level of employment, unemployment,
interest rate, monetary policies, inflation rates etc. These are some of the most common factors
which highly affect the whole working capabilities and business operations of company (Gnizy
and Shoham, 2014). At the time of recession PRADA have to face several difficulties as people
are not investing in any of the fashion brand. All the above given factors vary from country to
country such as interest rate on products as well as inflation rate. By being a part of
globalization, PRADA has faced several difficulties regarding exchange rate such as USA, EU
and Asia etc. They have gone through the geographical expansion in Middle East, UAE and
Saudi Arabia. Here, company have found big market opportunity die to thriving economic
conditions.
Technological factors: These factors are having huge impact on the performance as well
as customer base of company. It refers to the rate of new inventions and development within the
area and field of information technology. PRADA is having their good presence in online
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marketing. Here, as per their digital presence they have founded that 65% numbers have
increased in spending on luxury goods expects by 2015. In addition to this, their digital presence
has changed the perception of people towards shopping. PRADA is able to communicate with
their customers about all their creative ideas and make them satisfy (Bruce and et.al, 2004).
Through technological innovations they are able to make their purchase process easy and also
able to enhance their sales. Through this, company becomes available to anyone all around the
world.
Social factors: These are the factors which highly affects the international growth of
PRADA. Due to the changing needs and demands of customers it is highly difficult to cope up
with the customer’s desires as per the changing culture and traditions. Fashion area is one which
is changing very rapidly and it is considered as a huge problem for fashion retailers. PRADA has
made several changes in their whole processing of business operation in past many years (Moore
and et.al, 2007). Prada’s product range was huge and they are providing different range products
on the basis of demographic and physiographic segment of people. Due to the increasing
population and changing culture PRADA is facing huge difficulties.
Legal Factors: At the time of international business expansion in different countries
PRADA requires to comply with all the legal norms of those countries. They need to follow
labour law as per the country standards. This law is highly inflexible but it is totally secure.
Within this regards, it can be determine that counterfeiting is another major problem which
reduces their brand image and creates a big prestige issue for all customers. Counterfeit products
have posted a big threat to Prada (Wheeler and et.al, 2004). Due to this, it is essential for them to
follow up effective laws and rules regarding copyrights etc. on the basis of different countries.
Environmental factors: There are various factors which cover issues such as limited
natural resources, waste disposal and recycling procedures etc. It is highly essential for PRADA
to maintain all the environmental constraints so that effective results can be attained easily. At
the time of international expansion they might leads to face problem regarding climate change,
energy waste, reservation of all the natural resources etc.
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Competitive advantage
With its small beginning as a leather handbag company, PRADA had grown into an
upper class and highly fashionable apparel company. In this rapidly changing time period
customers choice regarding their fashion sense are also changing day by day. In order to meet
out these changes company have adopted several competitor strategies. It helps them in gaining
higher competitive advantage and making their customers more loyal. According to Arnold
(2003) with regards to international expansion PRADA company began within in Italy and now
it can be found all over the world as per their private PRADA boutiques to various departmental
stores.
Moore and Fernie (2004) stated that fashion is a day to day big name industry and the
main value proposition of PRADA Company is its innovation, elegance and luxury style. It is
regarded as one of the best points due to which company is able to attract huge base of
customers. It helps them in enhancing their market share as well. However, industrial
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development brought globalization which has affected the total development of various
organizations. For the same, PRADA has faced several problems regarding counterfeiting as well
as exploitation of workers.
According to Gnizy and Shoham (2014) within the area of international business
landscape, majority or multinational corporations are able to develop an international
competitive advantage. It can be easily attained by them with the help of several production
driven benefits. PRADA is a well Italian fashion firm which is able to develop a particular
international competitive advantage. Nowadays even the trendiest and fashion freak people
cannot live up to latest trends. However, there is significant difference between male and female
clothing.
Within woman clothing market, large size apparel has remained more popular than any
other segment. However, PRADA is facing huge competition and some of the major competitors
of company are Gucci, Jimmy Choo, Juicy Couture, Versace etc. Burberry is another one of the
biggest and most likely brands of customers. These all brands had given huge and tough
competition to PRADA. For the same, it is essential for them to adopt various strategies which
help them in enhancing their market share and attaining higher competitive advantage as well.
By evaluating its competitive advantage it has been founded that there are several future
and growth trends. In this respect, one of the most common future trends is related to the men’s
apparel and green clothes. (Ladăr and Prada, 2009) stated that all the intellectual and big fashion
fiestas are the main audience of company. They mainly demands for the unique and quality
product services as well.
The top most superior strength of PRADA is its quality designs and it is the major factor
due to which company is able to attract worldwide consumers. However, the Miuccia, a high
profile collector of contemporary arts had made a great contribution to give right direction as
well as maintaining high quality standard. (Sharma, 2005) stated that with its unique design
Prada’s influence on fashion is enormous and company have become more influential
worldwide.
Due to the fierce competition in the luxury industry, Prada stands out for its competitive
strengths in the marketing. In this concern, technology plays a most important role in attaining
them higher competitive advantage. All their customers are having unusual experience at Prada’s
epicentre stores like New York, Los Angeles and San Francisco in American etc.
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Conclusions/Insights
From the above whole study it has been concluded that International expansion of
PRADA helps them in enhancing their consumer base as well as sales margin. Company is
serving its business operations from past so many years but they are having huge potential to go
even further. However, manager of PRADA needs to enhance its brand awareness in order to
make more number of people aware about their product range and categories. For the same, they
require to update their website in order to include the countries with high purchasing power. It
has been identified that PRADA is having most powerful fashion companies of the world.
Fashion is an industry of art and it requires fulfilment of desires and needs of consumers
in a more effective way. By filling customer’s needs company can easily reach out to their target
audience and make them satisfy with their products. In addition to this, it is being concluded that
PRADA needs to expand their product line by plus women. It helps them in increasing their sales
margin as well. For the same, they need to develop more effective and appropriate strategies.
In order to go through the international business expansion in more number of countries
they might leads to face several difficulties as per the changing social norms and political
instability of country. For the same, company should add different language for all its customers
to choose their products such as Chinese, Japanese and French. Globalization has affected their
whole business operations and develops various opportunities for them. It has provided them a
new way to cut their costs and they have employed cheap labour from less fortune countries.
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REFERENCES
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