Market Analysis of Turkey, UAE and Egypt for Zalando's Expansion

University
Unit Title: Thriving in a Competitive Global Environment
Unit Coordinator: Rukeya Suleman and Colin Knapp
Unit Code: MAR023-6 Assignment Title: Individual Report
Name

Table of Contents
Introduction 3
Background of the study: 3
Objectives of the study: 4
Research Question: 4
Addressing the question 4
Research 4
Analysis 14
Conclusion 18
Conclusion: 18
Recommendations: 18
References 20
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Introduction
Background of the study:
Zalando is an e-commerce site specializing in branded clothing and footwear for men, women
and children. Established in Germany by Robert Gentz and David Schneider in 2008, the
company is currently headquartered in Berlin. Within a very short time Zalando has been
successful in becoming the largest footwear seller in Europe. Apart from footwear it also sells
clothing and accessories. One of the major reasons for its popularity among customers was
because it housed a large number of international brands. With its aims at expanding, Zalando
included children’s clothing in its inventory in 2010 and subsequently, in 2011 it started selling
exclusive perfumes. Also, in 2010 Zalando acquired the online designer outlet MyBrands. This
significantly increased the target consumer base of Zalando and also the range of premium
products it offers.
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Figure 1: Audit of the company regarding its resources and capabilities (Statement of
financial position)
(Source: Zalando.com, 2018)
After being firmly established in the European market, Zalando aimed at expanding globally.
However, a global expansion always comes along with certain inevitable risks that the
organisation has to handle efficiently. Therefore, in order to face risks in manageable
proportions, the management of Zalando has narrowed down its target markets to three countries
namely, Turkey, Egypt and UAE. The aim of the current research assignment shall be to
determine which market among the three above mentioned countries shall be the most suitable
for Zalando to enter. A number of factors pertaining to the above countries shall be put to
analysis in order to find out which one shall be the most profitable. However, merely
determining the country to expand into shall not be enough. After the selection procedure is over
the next task for the management of Zalando shall be to formulate an effective market entry
strategy that shall not only be able to ward off the imminent risks but also aid in the earning of
profits in the new market. The market strategy shall be one of the most important aspects of the
report as entering a new market shall involve a lot of investments for Zalando and it has to be
ensured that appropriate provisions for the returns on investment are created.
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Objectives of the study:
The objectives of the study are as follows:
● To determine the investment environment and market potential of the three countries of
Turkey, UAE and Egypt.
● To figure out the best country for Zalando to enter into.
● To devise the most appropriate market entry strategy that can be taken by Zalando in
order to expand into the respective country.
Research Question:
The following research questions shall be the most relevant to the current research project:
● What are the market conditions along with political situations prevailing in Turkey, UAE
and Egypt?
● Based on the above factors, which country is the most appropriate one for Zalando to
enter into?
● What shall be the best market entry strategy for Zalando depending upon its resources
and the nature of its business?
Addressing the question
Research
In case of Turkey: -
Investment environment:
Turkey has highly competitive environment and investment conditions, has strong industrial and
service culture and is highly friendly to all kind of business with an average time of 7.5 days for
setting up a company or new business (Seker et al. 2015). Turkey has strong and skilled labour
force, has sound economic performance, liberal and innovative investment climate, is centrally
located among all the other Middle East nations, has developed infrastructure and facilities for
welcoming new investments and it can be termed as the energy corridor with good connection
with Europe (Çanakçi, 2015). Thus, it can be said that Turkey has a developed market in order to
welcome different kind of investment forms and proposals.
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Figure 2: Development in Turkey
(Source: Dumludag, 2016)
Effects of government interventionist policies:
The country is the second biggest reformers among the OECD nations on the basis of the various
restrictions on the Foreign Direct Investment since 1997. Turkey has the lowest tax rates among
all the other nations in the Middle East region (Tekin and Tekin, 2015). Turkey has
disinflationary and tight fiscal measures taken up by the Government which is backed up with
couple of structural reforms which have ultimately aided in creating a favourable business
environment in the country (Gürkaynak et al. 2015).
Figure 3: Credit growth rates (borrowing and lending) in Turkey as per the Central Bank
(Source: Kalyoncu et al. 2018)
For providing environment to setting up of new ventures, the Government has kept on decreasing
the interest rates on business loans with the help of Central Bank since the year 2002. However,
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