MK Business Analysis and Prospects

This assignment analyzes the business of MK, focusing on its financial standing, strategies for gaining a competitive edge, potential within different markets, and the impact of the fashion industry's product life cycle. The analysis suggests investment expansion to enhance the product line and capitalize on market segmentation opportunities.

International Marketing
PM305
BSc Business Management
1

Table of Contents
Introduction......................................................................................................................................4
TASK 1............................................................................................................................................4
Global Macro - PESTEL analysis................................................................................................4
Global Micro – Within the fashion industry ...............................................................................7
Porter five forces model.........................................................................................................7
TASK 2............................................................................................................................................7
Micro analysis – Within Michael Kors........................................................................................7
Porters value chain.......................................................................................................................7
Support activities:........................................................................................................................8
Brand audit ..................................................................................................................................8
McKinsey 7S framework...........................................................................................................10
SWOT analysis for Chinese market...........................................................................................11
SWOT analysis for Indian market ............................................................................................12
SWOT analysis for Russian market ..........................................................................................12
SWOT analysis for Iranian market ...........................................................................................12
TASK 3..........................................................................................................................................14
TASK 4..........................................................................................................................................15
TASK 5..........................................................................................................................................16
CONCLUSION .............................................................................................................................17
REFERENCES..............................................................................................................................18
Appendix........................................................................................................................................20
1. PESTEL Analysis for China, India, Russia and Iran.............................................................20
2. Porter five forces model on China, India, Russia and Iran....................................................22
Competitor table...................................................................................................................23
Competitor Resource Analysis.............................................................................................23
3. PORTER VALUE CHAIN ...................................................................................................24
4. Brand audit.............................................................................................................................25
Mintel - Luxury Goods Retailing - International - August 2014..........................................26
5. Core competencies and competitive advantages....................................................................35
Financial Position ......................................................................................................................36
Key advantages of Online marketing and physical marketing......................................................38
Ansoff's matrix...........................................................................................................................39
Bowman's Strategy Clock on China, India Russia and Iran......................................................40
6. 12Cs Framework....................................................................................................................43

Mintel - Environment of Russia – Infrastructure investment....................................................49
3

INTRODUCTION
International marketing is a marketing principle of satisfying various needs and wants of
different people who are residing outside national boundaries (Brush, 2015). Michael Kors is a
Limited Company which sells women and men accessories like watches and bags, jewelry,
footwear and fragrances. Michael Kors is evaluating the potential markets of China, India,
Russia and Iran with the view of investing there. They need to study different types of business
models and analyze the data provided by these models according to the business environment in
those countries presently, weighing up the pro’s and con’s before making the decision to go
ahead and invest in that country.
The business models chosen to evaluate the situation there are PESTEL, Porters 5
FORCES Model, Porters Value Chain, 12 C’s framework, Brand audit, McKinsey’s 7S Model,
GE Matrix and SWOT analysis. These models will help the company determine how best to
position their products and services.
TASK 1
Global Macro - PESTEL analysis
China India Russia Iran
Political Main impact of
political factors
upon China is that
Chinese
government does
not allow any other
country's business
to enter into China
and carry out their
business. They need
to form a merger
and alliance with a
parent company of
China and then
carry out the
business jointly
(Caroli, Cucculelli
and Pongelli, 2015).
Here, also
fashion industry
is affected by
different
political factors
that introduces
different rules
and regulation
which needs to
be followed by
firm in order to
carry out the
business
(Cavusgil and
et. al., 2014).
Russia is a
democratic
country and
thus different
laws are
formulated that
affects the
running of the
operations
within country
(Chetty, Ojala
and Leppäaho,
2015.
Political factors that
affect Iran because of
its Islamic republic and
thus aims to provide all
citizens with equal and
appropriate
opportunities (Gubik
and Karajz, 2014).
Economic Economic condition
of China has been
Economy of
India has been
Economic
condition of
Inflation rate in Iran is
13.5% in 2010 that

reformed and thus it
helps businesses to
grow and flourish
(Isa, C.M.M. and et.
al., 2012).
significantly
stable and thus
introducing
industrial
reform policies
results in
improving the
economic
environment of
country (Isa and
et. al., 2012).
Russia mainly
depends upon
natural
resources.
Thus, through
having strong
economy
situation,
business needs
to pay more
attention upon
the education of
new generation
(Johanson and
Mattsson,
2015).
affects the population
to spend much on
fashion products
(Sleuwaegen and
Onkelinx, 2014).
Social China is very
concerned
regarding
population growth
and attempts to
stabilize the
population in order
to attain results
(Sikimic, Frattini
and Chiesa, 2013).
Such factors
refer to any
change in the
trends that
would impact
the business
environment
(Sandberg,
2013).
Conversion
from society
into autocratic
structure brings
gap between
poor and rich
(Brush, 2015).
Government and
residents are not
working together and
thus it affects the
social conditions of
Iran (Schuster and
Holtbrügge, 2012).
Technological Technology growth
in China is high and
thus it provides
opportunities to
fashion businesses
to use effective
technology to carry
out operations
Johanson and
Mattsson, 2015).
Technology
significantly
influences
product
development
and thus
introduces cost
cutting
processes to
bring latest
fashion in the
country
(Sikimic,
Frattini and
Chiesa, 2013).
Russia is
having high
technological
advancements
and thus
continues to
develop its
innovation that
helps fashion
industry to
grow and attain
success
(Schuster and
Holtbrügge,
2012).
Technology is at boom
in Iran that helps in
making best quality
products at lower cost
(Caroli, Cucculelli and
Pongelli, 2015).
Environment
al
Rapid industrial
development in
China negatively
impacts upon the
As a result of
growing
urbanization it
results in health
Rapid
infrastructure
development in
across Russia
Iran is suffering from
overgrazing and
deforestation that
affects the businesses
5

environment and
thus increasing
pollution and
decreasing natural
resources affects the
fashion houses
(Cavusgil and et.
al., 2014).
problems and
creates pressure
upon
environment
which affects
the businesses
(Klebanoff,
2012).
due to the
upcoming
World Cup
2018
investment of
US$20billion
ensures
dilapidated
soviet era
infrastructure
which lacked
investment up
until now has
been updated
and is safe to
make business
possible.
Including
logistics of raw
materials and
finished goods
reaching
customers at
the earliest
(Mintel, 2016)
running in the country
(Johanson and
Mattsson, 2015).
Legal Government has
introduced different
laws in order to
support foreign
investors and
enhance the
economy of the
country (Kim, Min
and Chaiy, 2015).
There are
different legal
changes
implemented in
India such as
disability
discrimination
that directly
affects
businesses
(Sleuwaegen
and Onkelinx,
2014).
Russia also
changed its law
and order, in
order to help
people to invest
in this country
(Sandberg,
2013).
Legal regulations are
very weak in Iran as
Taliban are operating
and affecting the
businesses to carry out
the operations (Tang,
Atkinson and Zou,
2012).
Further explanation is available in the Appendix.1

Global Micro – Within the fashion industry
Porter five forces model
China India Russia Iran
Buyer power High (Samiee,
Chabowski and
Hult, 2015)
High Low Low
Supplier
power
Low Low (Sandberg,
2013)
High High
Competitive
rivalry
High High (Porter’s
Five Forces of
Competitive
Position Analysis.
2017)
High (Schuster and
Holtbrügge, 2012)
Low
Threat of new
entrants
Low Low (Sikimic,
Frattini and
Chiesa, 2013)
Low Low (Porter,
and
Heppelmann,
2014)
Threat of
substitution
High (Yunna and
Yisheng, 2014)
High High High
Further explanation is in the Appendix no.2
TASK 2
Micro analysis – Within Michael Kors
Porters value chain
Primary activities China India Russia Iran
Inbound
logistics
Value of firm
will increase.
Value of firm will
increase.
Value of firm will
moderate.
Value of firm will
decrease.
Operations Value in
international
market
increases
Value in international
market will moderate
(Doole, 2008).
Value in
international market
decrease
(Sleuwaegen and
Value in
international
market will
moderate
7

(Brush, 2015). Onkelinx, 2014). (Sandberg, 2013).
Outbound
logistics
Collection and
storage of firm
will increase
(Christopher,
2016.).
Collection and storage
of firm will increase
(Prajogo, Oke and
Olhager, 2016. .).
Collection and
storage of firm will
moderate (Chetty,
Ojala and
Leppäaho, 2015.
Collection and
storage of firm will
decrease (Caroli,
Cucculelli and
Pongelli, 2015).
Marketing and
sales
Growth Growth (Stadtler,
2015.)
Decline Equilibrium
Service Satisfied
customers
Satisfied customers Neutral Unsatisfied
Support
activities:
Procurement High (Stadtler,
, 2015. )
Input of resources is
high
Low Moderate
Human resource
management
Skilled Skilled Skilled (Monczka,
Handfield and
Patterson, 2015.
)
Unskilled
Technological
department
High
technology
Upgrading technology
(Value Chain Analysis.
2017)
High technology Poor technology
Infrastructure Developed Growing Developed Underdeveloped
Further explanation is in the Appendix no.3
Brand audit
China India Russia Iran
Brand
proposition
Gain (Ke,
Lennox and
Xin, 2014. )
Gain Decline Neutral
Brand
strategy
Easy Difficult
(Omnamasivaya and
Prasad, 2016. )
Easy Difficult
Brand
association
High Low High (Ahmed, M.I.
and Che-Ahmad, A.,
2016.)
Low

Brand
strength
High quality
product
Minimum quality
products
High quality products Low quality
products
Brand identity Specific
design and
logo
Attractive design and
logo
Recognizable
(Monczka, Handfield
and Patterson, 2015.
)
Ineffective
Brand
development
strategy
High
((Czinkota and
Ronkainen,
2013).)
Moderate High Low (Tajik,
M. and
Ramezani,
2016)
Brand
personality
High Moderate (Luxury
Goods Retailing –
August 2014)
Low Low
Brand
positioning
Premium class
people
Middle class people Premium class people
(Papadopoulos and
Heslop, 2014).
Middle and
low class
people based
on income
level
Further explanation is in the Appendix no.4
Resource Based View
Valuable
 Within the Russian market, Michael Kors is required to develop value creating strategy.
 In Chinese market, focus should be made on feasible strategy so that competition can be
reduced (Johanson and Mattsson, 2015).
 In India, the value factor requires cost factor so that to secure future investment
(Papadopoulos and Heslop, 2014). For success and competitive advantage, Michael Kors should develop competitive
strategy in Iranian market (Klebanoff, 2012).
Rare
 Prices should be affordable in Indian market so that people can buy the products.
 Michael Kors needs to focus on strategic facets in Russian market so that the level of
average profit can be enhanced (Cavusgil and et. al., 2014).
 In Iranian market, Michael Kors has to utilize all the resources optimally (Czinkota and
Ronkainen, 2013).
9

 Business could be expanded in other areas of China.
Inimitable
 This can be a source of competitive advantage for Michael Kors in Indian market.
 Business will grow more in China if competitors would not follow the same product
process (Johanson and Mattsson, 2015).
 Knowledge based resources should be applied in Russian market. Focus should be there on quality products so that Iranian customers could not resist
buying it (Kim, Min and Chaiy, 2015).
Non – substitutable
 Competition would increase in Chinese market due to duplication of products.
 Michael Kors will have to focus on marketing strategies in Indian market due to huge
availability of substitutes (Sandberg, 2013).
 However, in Russia, Michael Kors should add discounted features in the business
practices
 Profits are dependent on the economic stability of Iranian market.
As illustrated in the Appendix no.5
McKinsey 7S framework
Dimensions China India Russia Iran
Strategy Michael Kors
should emphasize
on competitive
strategies (Sikimic,
Frattini and Chiesa,
2013).
Michael Kors
needs to focus
on marketing
strategies for
business
expansion
(Sikimic,
Frattini and
Chiesa, 2013).
To enhance
sales, product
differentiation
strategy can be
applied
(Johanson and
Mattsson,
2015).
Innovative strategies
should be developed
(Sikimic, Frattini
and Chiesa, 2013).
Skills Ability to meet
competition
(Cavusgil and et. al.,
2014).
People need to
be more
innovative
(Klebanoff,
2012).
Focus on
promotion
aspects
(Cavusgil and
et. al., 2014).
Ability to create
competitive
advantage
(Klebanoff, 2012).
Structure According to
competition,
business policies
and systems could
be transformed
(Doole, 2008).
As per the
country,
organisational
structure
should be
changed
Changes needs
to be done
according to
economic
structure
(Sleuwaegen
Michael Kors should
emphasize on proper
management of
work (Sandberg,
2013).

(Brush, 2015). and Onkelinx,
2014).
Style Authoritarian style
can be adopted
(Tang, Atkinson and
Zou, 2012).
Business
should be
conducted
through
leadership
facets
(Johanson and
Mattsson,
2015).
Democratic
leadership can
be adopted
Participation should
be there from every
employee (Johanson
and Mattsson, 2015).
Staff More innovation is
required (Klebanoff,
2012).
Employees
need to be
more capable
(Sikimic,
Frattini and
Chiesa, 2013).
Consideration
should be there
on legal
dimensions
(Doole, 2008).
Employees must be
capable to develop
success aspects of
business (Johanson
and Mattsson, 2015).
Systems Decentralized
system (Mintel,
2016)
Centralized
system
Sharing of
communicatio
n should be
appropriate
according to
organisational
systems (Kim,
Min and
Chaiy, 2015).
Hierarchies should
be developed.
(Zlatkina, Amiez,
and Petrides, 2015)
Shared
values
Focus on client
preference (Mintel,
2014)
Core values of
customers
should be
considered
(Mintel, 2015.
Handbags –
UK January
2015)
Corporate
culture can be
developed so
that people can
follow work
ethics (Kim,
Min and
Chaiy, 2015).
Emphasis on
customer beliefs.
Further explanation is in the Appendix
GE matrix
 According to high, medium and Low scores, Michael Kors can determine in which
market it should invest. New opportunities are available in Indian market; hence medium
term investment can be employed here (Sandberg, 2013).
 According to the external market forces, Michael Kors can enhance the level of business
investment in Iranian market (Keillor, Hult and Babakus, 2015).
11

 Competition is more in Chinese market; therefore it is essential for Michael Kors to
invest less (Schuster and Holtbrügge, 2012).
 The opportunities of success are high in Russia; therefore Michael Kors should expand
the business units. On the basis of market attractiveness, investment can be decided.
SWOT analysis for Chinese market
Strengths
 Cheaper and lower wages
 Plenty of natural resources
 Developed infrastructure (A Swot
analysis 2017.)
Weaknesses
 Inadequate financial sector
 Inequality in rural and urban areas
 Education level is poor (Xingang,
Jiaoli and Bei, 2013.)
Opportunities
 Availability to develop technical reach
of business
 Financial infrastructure could
underpin business practices (Lu, Shen
and Huang, 2011).
Threats
 Technical glitches
 Competition (Lu, Ye and Jewell, 2013)
SWOT analysis for Indian market
Strengths
 Liberalization policy could assist
Michael Kors to grow more.
 Skilled human resources could be
employed for business functions.
 Huge demand for goods and services
(Kumar and Bansal, 2015).
Weaknesses
 Due to vast industrial sickness, Michael
Kors is unable to achieve the
determined objectives.
 Inadequate and poor quality
infrastructure cost (PATIL and Shinde,
2016.
 Time delays
Opportunities
 Since, India is a developing nation;
therefore Michael Kors has the
possibilities to develop in the same
country.
 Growing competition (Banumathi
and Nadarajan, 2016.)
Threats
 Heavy competition from Chinese
market
 Power crisis of Indian market could
affect the virtuous growth level (Dalal
and Malik, 2015).

SWOT analysis for Russian market
Strengths
 Well planned economy
 Large availability of natural reserves
(Shi, 2016)
Weaknesses
 Authoritarian government
 High spending on public services
 Limited access to foreign finance
(Klebanoff, 2012)
Opportunities
 Trade links with India and other BRIC
countries could assist Michael Kors to
expand more (Doole, 2008)
Threats
 High public debt
 Legal issues could generate at the time
of trading with different countries (Liu,
Sun and Hao, 2014).
SWOT analysis for Iranian market
Strengths
 Michael Kors can grow more due to
economic stability of Iran.
 People have adequate purchasing
power (Badr and Taghvafard, 2016)
Weaknesses
 Usage of local products among people
 Cost of employment is high
 Inadequate trade practices
(Teimourpour and Heidarzadeh
Hanzaee, 2014)
Opportunities
 Huge availability of financial
resources
 Well educated people can buy the
products of cited entity (Nikjoo and
Saeedpoor, 2014).
Threats
 Political instability
 Changes in oil prices could affect the
entire economy (Behboudi, Panahi, and
Zamzam, 2014)
BCG matrix for Michael Kors
Cash Cow
 The stage of cash cow depicts that Michael Kors needs to invest little so that large
amount of cash can be generated. That further can be used for other business practices.
Thus, in Indian market, the company needs to spend less in fashionable accessories (and
et. al., 2012).
 However in Russia, a specific market segment can be selected to introduce the products
for generating cash (Paliwoda and Thomas, 2013).
13

 At Iran, people prefer to buy luxury products; hence this can augment the level of
profitability and cash (Sleuwaegen and Onkelinx, 2014). In Chinese market, Michael Kors should invest little because of the competitive facets.
Star
 Michael Kors has the availability of larger market share in Indian market because fashion
industry is growing rapidly (Isa and et. al., 2012).
 However, in Russia, the market is growing; hence the business needs to have more
investment (Akaka, Vargo and Lusch, 2013).
 At Iran, market share of the business will increase due to industry benefits. In China, the level of investment can assist in grabbing adequate market share (Johanson
and Mattsson, 2015).
Question Mark
 Michael Kors has small market share in Russian market.
 However, it can grow more in Indian market due to minimum competition.
 In Iranian market, resources will be required to achieve market share. Michael Kors has the potential to grow more in Chinese market place (Sikimic, Frattini
and Chiesa, 2013).
Dog
 Michael Kors can tie up the capital to operate business in Russian market.
 Substantial cash is not required to manage business in Indian market (Nahavandi, 2016).
 Strategic policies should be developed in Iranian market (Brush, 2015).
 Michael Kors has small market share in Chinese market place due to huge competition.
TASK 3
Through carrying out all the above business models in particular the country screening
using the 12 Cs framework (Illustrated in Appendix 6), it can be stated that scope of Indian,
Iranian and Russian economy is growing while, Chinese economy is at boom stage. The
concentration of India and Iran on fashion consciousness is low, as compared to China and
Russia. The channels of distribution for India and Iran are not as good as China, Russia has
dilapidated infrastructure however the government has committed US$20Billion investment to
improve infrastructure before 2018 World Cup, so distribution channels will improve there
(Mintel, 2016). Capacity to pay of India is GDP $3.1 trillion while for Russia it’s the lowest of

the four being examined at GDP $1.5 trillion as compared to China GDP $5.2 trillion and Iran
GDP $2.5 trillion. Thus, China has high capacity to pay the loan amount. The cultural buyer
behavior in India is medium and Russia is also medium as compared to China it is high and in
Iran it is low (Samiee, Chabowski and Hult, 2015). Consumption figures show sales potential
size of market is high in China that is of 1.3 billion as compared to other countries i.e. India,
Russia and Iran.
After searching Mintel Market data, the researcher found that consumers bought luxury
products from local department stores, Wangfujin, Pacific, InZone, Xinmate and third party
websites like eBay and Net-A-Porter rather than official brands website, what this means is that
fashion conscious consumers in China are buying their Michael Kors products from third parties
thereby MK is losing revenue to competitors because it was not directly placed in those local
department stores there in China. (Mintel, 2014).
If Michael Kors focuses upon targeting China market as it is suitable for investment as
there are various potential customers within the country as compared to other countries i.e. India,
Russia and Iran. Therefore, it is essential for MK to target premium class customers in order to
enhance the sales and revenue of the firm (Sikimic, Frattini and Chiesa, 2013). Through carrying
out proper market research of the business environment it has been assessed that Russia, India
and Iran are not suitable as per the taste and preferences of consumers while China is the most
suitable option for investment and thus MK should enhance sales and profitability of the firm in
market.
TASK 4
Michael Kors should undertake Joint venture, this merger and alliance market entry
strategy so that they can enter into selected international market. It is considered as the best
strategy that would be applicable within MK in order to improve the business performance in
Chinese market and enhance the market share (Skarmeas, Zeriti and Baltas, 2016). This entry
strategy has been chosen because the Chinese government does not allow any other foreign
brand to start its operations in China without collaborating with its parent companies. Therefore,
MK has already identified HK Ltd as a partner in the region (as per the information shared in the
15

assignment) and collaborates with them so that they can mutually produce the brand and also
maintain company's brand image in market. It is the best possible way through which business
should target local high class customers in order to enhance the sales and revenue in market
(Cavusgil and et. al., 2014).
Thus, it is recommended as the best market entry strategy, is to continue with the alliance
and expand beyond Beijing and Shanghai (Mintel 2015) and thus enhance the sales and market
share of firm. It is also named as joint venture in which company carried out its business with
other firms already operating in China. Selecting such market entry strategy helps in identifying
the market that aims to carry out its business operations in Chinese market so that best results
and success can be attained (Morschett, Schramm-Klein and Zentes, 2015).
(Source: Brush, 2015)
TASK 5
Product: Products are nothing they are just for fulfilling consumer needs and demand.
While, entering in China MK should understand the culture of consumers there. Michael Kors
need to understand socio-cultural environment of china such as their belief, attitude, norms and
their values through this they will easily able to enter in market situation (Fletcher and Crawford,
2013). In this organization also need to understand consumer buying behavior because every
person has different perception so that from this they can sell their product in the market and
earn maximum revenue for company. Product of Michael Kors is unique the result will be
consumers find the product attractive and sales will increase (Gubik and Karajz, 2014).
Price: Michael Kors should understand price differentiation before entering in China.
Price discrimination will lead to impact on buying behavior of person and will result in profit
margin of company. For organization determining price is very important because they have to
consider all factors which may affect working and buying decision of consumer, the higher the
price would indicate higher quality to the Chinese consumer, and quality is what they value

highest (Felzensztein and et.al., 2014). Price of everything will depend on their custom and
values of consumer because in festive season consumer will buy more goods so price will
increase and it impact on buying power of consumer (Kim, Min and Chaiy, 2015).
Place: Michael Kors needed to identify proper place so that they can sell off their
product easily in competitive market because many organization are already working in China
related to this product. So the firm needs to identify before selling of their product this will help
in reducing in time and cost to the organization, local department store as listed in Task 3. Place
of every product need to be specific so that consumer can be attracted and they can easily reach
the product which they want to purchase (Katsikeas, 2014). Brand of product should be well
established before getting their final consumers (Sandberg, 2013).
Promotion: Michael Kors should promote their unique product with different techniques
and different promotional tools such as by T.V., radio, newspaper, online and from different
social media (Burgess and Steenkamp, 2013). Promotion also play important role in socio
cultural and buying process of China consumer because promotion through ads are given at time
of festive season, when offers are there in company (Schuster and Holtbrügge, 2012).
CONCLUSION
It can be articulated from the report that each and every business enterprise focuses upon
entering into international businesses. Thus, it is essential for an enterprise to identify the
opportunities within new markets and make the investment accordingly. Different frameworks
have been applied in relation to Michael Kors entering into China market and attracting premium
class Chinese customers and offering them high quality products or services. Also, business
focuses on adopting merger strategy as it focuses upon entering in China market and thus it has
to merge with other fashion companies prevailing in market so that they can run the business
jointly. Thus, it would assist firm to enhance the sales and market share up to a great extent.
17

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25

APPENDIX
Global Macro
1. PESTEL Analysis for China, India, Russia and Iran
Political influence: Main impact in fashion industry is decision made by government policy,
legislation issues like labour law, workers rights, health and safety, child labour etc., if there
is change in taxation rate by government than fashion industry also need to modify their
prices. Therefore, by this political factors will affect their development and need to modify
cost of product according to changes made by government. India being the largest
democratic country is greatly influences by political factors such as government policies,
interests etc. Further, political system of Iran affects the citizens with equal and appropriate
opportunities. China formulates different political influences that affect the rules and laws
within a country. Russia also develops open foreign relationship strategy in order to develop
effective political condition.
Economic influence: This impacted fashion industry when there is slow economic growth,
during recession time there is decrease in purchasing power and no disposable income in a
household, decrease in employment rate will lead to unemployment so, buying of fashion
clothes will reduce. So, employment rate in country may consist of equality and this will
increase in purchasing of fashion clothes. In Indian economy it has been significantly stable
as the introduction of industrial reform policies. Iran also contains transition economy with
large public sector and centrally planned so that it affects the operations of firms. China
economy has been reformed and opened that helps in improving the economic condition of
country. Russia has strong economic situation that helps in education the new generation.
Social influence: Factor which has impacted more in social influence is socio culture trend,
highly educated nation and concerned on health and safety. This may affect fashion industry
because customer are educated therefore, they ask question regarding what material is used,
their processing method, and youngster are influenced by taste and trend of celebrities.
Subsequent changes in customer behavior and knowledge will affect fashion industry. Social
factors affects the changes in trends that impacts the business environment. Within Iran
government and people are not working together and Taliban are forcing to strengthen its

base and affecting social factors. China has high population factor that affects the
employment trend in the country. Social changes within Russia affects the income structure
in the country and develops gap between poor and rich people.
Technological influence: Every organisation in today's time is impacted with technological
factor because there is full expansion in online sector, availability of resources and
communication technology because if fashion industry does not shift from traditional street
place to online businesses than organisation sale will be affected. Technology also
influences product development and introduces fresh cost cutting processes in India. Iran is
focusing upon improving its technology and thus brings innovations so that best results can
be attained. In the technological factor China is high as it brings innovative products in
market. Technology wise Russia is rich and thus it develops various crucial projects that
helps in developing the country.
Environmental influence: In fashion industry rise in Eco consumption product has
impacted more to fashion industry in accordance with environmental influence. Due to
global warming there is difficulty in selling winter clothes therefore, organisation need to
focus on Eco friendly product. While, if industry does not focuses on environmental factors
flood, drought then production of Eco product will be difficult and this will decrease in
demand and will affect fashion industry. Due to growing urbanization and industrialization,
India is greatly affected by environmental pressure groups, noise controls and regulations
upon waste control and disposal. Environment of Iran is affected by different factors that
contributes to poor air quality and pollute the environment. In China water scarcity issue is
high and thus it influences the environment of the country. Environment in Russia affects
the business to grow.
Legal influence: Main impact of legal factor which covers legislation issues like labour law,
wages Act, and safety law etc. however, legal factors are not assumed for influencing
fashion business because they lead to significant changes. Therefore, due to limitation in
scope in all factors so impact will be considerable on changes in fashion industry. Indian
government also introduces legal changes such as minimum wage increase, disability
discrimination that affects the businesses. Legal factors within country is also affected as
Fashion businesses requires different legal rules and regulations that affects the operations
of firm in market. China government has developed certain essential laws that helps foreign
27

investors to invest within country and thus enhance the economy of the country.
Implementing different legal factors helps in transforming Russia in order to match with the
current legislation.
Global Micro
2. Porter five forces model on China, India, Russia and Iran
Such approach determines how the competitors are giving tough competition in market in
order to attain high profitable growth within firm. This framework gives a very effective
analysis, the results of which are as follows-
 Buyer power- It is high as buyers possess high variety of choices in fashion industry to
select from therefore it is essential for business to maintain its quality so that customers
can be attracted. Here, buyers possess the ability to minimize or decrease the prices of
products they pay through going to other similar competitor selling fashion products. In
India and China it is high while in Russia and Iran buyer power is low.
 Supplier power- It is high as the supplier possesses the ability to enhance the cost of
their product or service and thus achieve desired success. It is high in Russia and Iran
while it is low in India and China as there are various suppliers available in market.
 Competitive rivalry- It is high as the intensity of the competitive activity might get
affected from the business received by firm. Therefore, it is essential for enterprise to
identify the competitiveness and then produce attractive products in order to remain
effective in fashion industry. It is high in India, China and Russia as there are various
competitors available in market while in Iran it is low as fashion businesses are not that
much in the country.
 Threat of new entrants- It is low as entering into any business requires investment and
thus threat pose by new entrants in the market is high. Therefore, fashion industry
requires an effective strategy to overcome competition and thus give tough competition to
rivals. It is low in India, China, Russia and Iran as it requires huge investment.
Threat of substitution- It is low as fashion could not be substituted with other therefore, the
threat posed by the possibility of substituting a product or service in one market with something
else. It is high in all the 4 countries as threat of substitutes is available.

(Source: Gubik and Karajz, 2014)
COMPETITOR TABLE
Competitor product analysis
Michael Kors
BAG
CALVIN KLEIN
BAG
RALPH LAUREN
CORPORATION
HAND BAGS
Sales 4718 million
(Hollensen, 2015)
4123 million
(Mukherjee, 2016)
3000 million (He, Zha
and Li, 2013)
Launch 1981 1968 1967
Quality High High High
Cost Pound 300 Pound 280 (Kim,
Minand Chai 2015)
Pound 250
Target sector Premium class
segment( (Kulkarni,
Raut, and Dhere,
2013)
Premium class
segment (Schuster,
and Holtbrügge 2012)
Premium class
segment
Competitor Resource Analysis
Michael Kors
BAG
CALVIN KLEIN
BAG
RALPH LAUREN
CORPORATION
HAND BAGS
Sales 4718 million (Kim,
Minand Chai 2015)
4123 million 3000 million
(Jeziorski and Segal,
2015)
Sales growth 28% on 2010 22% on 2010 13% on 2010 (Kim,
Minand Chai 2015)
Net income 839.1 million 751.2 million 645.2 million (Doole,
29

(Ballesteros-Pérez and
et. al., 2013)
(Safiullin, Safiullin
and Noskova, 2013)
2008)
Assets 2690.7 2487 21458 (Ballesteros-
Pérez and et. al., 2013)
Brand ranking 2 20 (reference) 30 (West, Ford and
Ibrahim, 2015)
Years in operation 35 48 (Sleuwaegen and
Onkelinx 2014)
49 (Asmussen and
Foss, 2014)
Employees 9184 1001-5000 (reference) 23000 (He, Zha and Li,
2013)
Countries 456 233 (reference) 123
3. PORTER VALUE CHAIN
Primary activities:
Inbound logistics: This will help Michael Kors in receiving, storing and distributing of
inputs internally. In this company supplier relationship is key factor because this lead to creation
in value of firm. In India and China value of firm increases while in Russia it is moderate and
Iran it decreases.
Operations: Michael Kors will need in transformation of activities and need to change in
input and output process therefore, by this they can sold to customer easily and through company
system will help in creating value in international market. Value of firm in international market
in India and Iran is moderate while in China it increases and Russia it decreases.
Outbound logistics: These activities will deliver Michael Kors product and services to
their final consumer. Therefore, things like collection, storage may be internally and externally
of company. Collection and storage of firm will increase in India and China while it remains
moderate in Russia and the same will decrease in Iran.
Marketing and sales: Michael Kors benefits and offer will help in beginning of
company values. There has been high growth in India and China while there is decline in Russia
and equilibrium in Iran.

Service: Michael Kors are maintaining values in relates to product and services which
they are offering to their customers. In India and China there are satisfied customers while in
Iran there are unsatisfied customers and in Russia customers is neutral.
Support activities:
Procurement: Michael Kors is following acquisition of inputs and resources for their
company. Input of resources is high in India and China while there is low input in Russia and
moderate input in Iran.
Human resource management: Organisation consists of all activities such as recruiting,
hiring, training and development. There are skilled workforce in India, China and Russia while
there is unskilled workforce in Iran.
Technological department: Michael Kors consist of equipment, hardware and software
for transformation of input and output process. In India there is upgrading technology while in
Russia and China it is updated and high technology. Further, in Iran it is poor technology.
Infrastructure: Within, Michael Kors there are many department for functioning and
developing of products such as quality control department, legal, finance and public affairs for
maintaining of inward and outward process. In India infrastructure is growing while, in China
and Russia it is developed and in Iran it is underdeveloped.
4. Brand audit
Brand proposition: Michael Kors need to provide innovation in products so that they can
enhance in involving life-style and working environment. In India and China it gains high brand
proposition while in Russia it declines and in Iran is neutral.
Brand strategy: By using of different strategy company may position their brand in
international market for achieving profits and popular. It is difficult in India and Iran while in
China and Russia it is high.
Brand association: Michael Kors need to provide reliability, innovation and tendency to
their consumers. It is low in India and Iran as compared to China and Russia it is high.
Brand strength: Brand strength can be build through collecting of attributes, loyalty and
by developing devotion in customers. In India, the company sells minimum quality products
31

while in China and Russia firm sells high quality products on customer demands and in Iran it
sells low quality products.
Brand identity: Michael Kors can be identified by providing high quality of products and
innovative products and designed of logo through this brand identify of company can be
recognize. In India it is attractive design and logo while in China it is specific design and logo as
compared to Russia where recognizable and in Iran it is ineffective.
Brand development strategy: By developing strategies such brand extension and loyalty
of brand are consist of core values for Michael Kors customers. In India it is moderate and in
China and Russia it is high and in Iran it is low.
Brand personality: Developing a lifestyle in mind of customers will lead to increase in
personality and freedom for every customer. In India it is moderate and in Iran and Russia it is
low and in China it is high as compared to other countries.
Brand positioning: Michael Kors is positioned its brand name for premium class people
because quality and price of product is very high and it also consists of differentiation of product
features and innovation in their product range. Company positions its brand among premium
class customers in China and Russia while in India it focuses upon middle class people and in
Iran it focuses upon middle and lower class people based in their income level.
Mintel - Luxury Goods Retailing - International - August 2014
The Consumer – Where They Buy
Key points
Today’s luxury consumer buys across channels and across markets (i.e at home and
abroad).
On the whole, department stores and online (either a brand’s official site or a third party
website) are the two most popular channels, although patterns do vary by country.
Although there are exceptions people that buy online tend to be younger than average, and
there are no clear patterns in relation to affluence.
People that buy from department stores tend to come from across the age spectrum, except
in the US where they are older.
People that buy from multi-brand specialists (eg. jewellery/watch specialists, clothing
specialists, perfumeries) tend to be older than average.
Americans are much more likely to buy luxury goods overseas than consumers from the
other countries surveyed.
What we asked

This section of the report examines the results of research conducted by GMI and QQSurvey on
behalf of Mintel into where people buy luxury products. The interviews were conducted online.
A sample of 2,000 internet users aged 16+ was used in the UK, France, Italy, Spain and
Germany and aged 18+ in the USA. In China the sample was 3,000 internet users aged 20-49.
Respondents in all the surveys were asked the following question:
“Please select where you purchased the luxury branded item(s) you bought in the last 18
months.”
The response data is presented in this chapter and in the Appendix – The Consumer: Where They
Buy by various demographic breaks and other lifestyle characteristics.
Technical note
The survey base for the US (aged 18+) is slightly different to the UK and mainland Europe (aged
16+). Although in theory that means the US data is not strictly comparable with the European
countries, in practice it probably makes little difference.
However, the base for China is significantly different (the age distribution of respondents is
much narrower at 20-49 years old) so the China figures throughout this section are not directly
comparable with the other six countries.
The other factor to consider when interpreting these results is that while internet users in the UK,
US, Germany and France approximate quite well to the population at large, in Spain, Italy and
China it’s a more select, and most likely more affluent sample because of lower penetration of
broadband across the wider population.
Multinational and multi-channel
Today’s luxury consumer buys across channels and across markets (i.e at home and abroad).
But there is considerable variation in the patterns of shopping by country, reflecting not only
differences in retail infrastructure but outbound tourism activity as well. For instance, the
Americans are particularly prolific buyers abroad while the Chinese like duty-free stores. The
VAT rates on luxury goods are particularly high in China, which is why those that can afford to
travel abroad to buy do so. Even though there are limits on what the Chinese can bring back in to
the country these local sources suggest regulations don’t always tend to be rigidly imposed at
present.
Key analysis: in general brands continue to move away from wholesaling to direct retailing, in
order to have greater control over their image and operations. This has tipped the balance of
power further in favour of the brand owners and away from third-party retailers such as
department stores or multi-brand specialists. Spain is an exception, with El Corte Inglés still
very dominant in its home market.
33

FIGURE 48: Where they bought luxury goods by country, May 2014
Base: internet users aged 16+ (aged 18+ in the US and aged 20-49 in China) who have bought
luxury branded items in the last 18 months
US 526 users, Spain 647 users, Italy 651 users, Germany 442 users, France 440 users, UK 425
users, China 1,634 users
UK France Germany Italy Spain US China
% % % % % % %
Online:
Online – from the official brand’s
website
44 28 33 27 23 37 31
Online – from another website (eg
Net-A-Porter, eBay, other third
party site)
32 23 36 25 22 26 32
Bought in-store in country:
Standalone brand store (eg Louis
Vuitton, Burberry)
20 33 24 38 27 31 30
Department store 39 33 40 30 55 37 46
Multi-brand specialist shop (eg.
jewellery/watches, clothing
specialist, perfumery)
19 27 22 33 24 21 30
Duty free shop 15 10 11 7 6 6 26
Other type of store (eg Outlet
store)
12 7 9 16 11 10 4
Bought in-store abroad:
Standalone brand store (eg Louis
Vuitton, Burberry)
9 10 9 10 8 31 15
Department store 13 11 13 15 11 37 18
Multi-brand specialist shop (eg.
jewellery/watches, clothing
specialist, perfumery)
10 8 9 10 7 21 13
Duty free shop 8 9 12 7 6 6 29
Other type of store (eg Outlet
store)
2 3 7 4 4 10 2
Source: GMI/QQSurvey/Mintel
Leading channels
If we look at the two most popular channels in each country, the differences are quite striking.
But in the majority of countries direct retailing by the brands takes the number one slot, whether
through their own physical stores or official websites.
But this is not the case in Spain, Germany and China where department stores are the leading
channel. Indeed El Corte Inglés is especially dominant in Spain, while in Germany the big names
are Karstadt and Kaufhof along with premium flagships KaDeWe (Berlin), Alsterhaus

(Hamburg) and Oberpollinger (Munich), until recently also part of the Karstadt stable.
Key analysis: we see no reason why brands will row back from their increased selectivity
towards third-party retailers, and this should perhaps be a warning sign to such providers:
department store chains that undertake frequent discounting or that don’t invest enough in
premium store environments, for instance, may find themselves losing out on supply.
FIGURE 49: First and second ranked channels where they bought, by country, may 2014
Base: internet users aged 16+ (aged 18+ in the US and aged 20-49 in China) who have bought
luxury branded items in the last 18 months
US 526 users, Spain 647 users, Italy 651 users, Germany 442 users, France 440 users, UK 425
users, China 1,634 users
Most popular channel % Second most popular channel %
UK Brand's official website 44 Domestic department store (eg.
Harrods, Selfridges, House of
Fraser, John Lewis)
39
France Domestic standalone brand
store/domestic department store
33 n/a as joint first place na
Germany Domestic department store (eg KaDeWe,
Karstadt, Kaufhof)
40 Third party website 36
Italy Domestic standalone brand store 38 Multi-brand specialist 33
Spain Domestic department store (eg El Corte
Inglés)
55 Domestic standalone brand
store
27
US Brand's official website/domestic
department store
37 n/a as joint first place n/a
China Domestic department store (eg
Wangfujin, Pacific, InZone, Xinmate)
46 Third party website 31
Source: GMI/QQSurvey/Mintel
Luxury online
The online channel for luxury has grown rapidly in the last few years and either official brand
sites or third party sites feature in the top two most used channels in five of the countries
surveyed.
Italy and Spain are the exceptions, and we think this reflects the relative lack of online
development in both markets. Although internet sales are now growing fast from a lower base we
think it could take time before more Spanish and Italians feel confident to buy luxury goods
online.
At the other end of the spectrum, official brand sites are the leading channel for luxury goods in
the UK, ahead of department stores. In Germany and China third party sites are slightly more
popular than official sites, which may perhaps point to more people buying second-hand.
35

Key analysis: we estimate that around 2% of the market for new luxury goods was generated
online in 2013 (see the Online chapter), much lower than our consumer findings in this
chapter might suggest. However, we think this disparity between online shopper numbers and
share of the market is due to people being prepared to purchase second- hand and lower value
luxury items online but preferring to use physical stores to buy high value items like fine
jewellery and watches.
FIGURE 50: Where they bought luxury goods online, by country, May 2014
Base: internet users aged 16+ (aged 18+ in the US and aged 20-49 in China) who have bought
luxury branded items in the last 18 months
US 526 users, Spain 647 users, Italy 651 users, Germany 442 users, France 440 users, UK 425
users, China 1,634 users
Source:GMI/QQSurvey/Mintel
Who buys where
The next set of charts looks at the average age and affluence of those that have bought online or
from physical stores in their home country. These findings should be treated with a degree of
caution as some of the sub-samples are small, albeit still usable.
The charts are a good indicator of overall trends and the relative importance of each channel.
But, given the different make-up of demographic breaks in some countries, it would be
misleading to compare the axis numbers.
Overall these results show that:
Although there are exceptions people that buy online tend to be younger than average, and there

are no clear patterns in relation to affluence.
People that buy from department stores tend to be of average age overall (suggesting a good
spread of ages) apart from in the US where customers are older.
On the whole, people that buy from multi-brand specialists (eg. jewellery/watch specialist,
clothing specialist, perfumery) tend to be older than average.
China
FIGURE 51: China: Where they shop for luxury in China, by age and affluence
* affluence represents gross monthly household income on 1-4 scale, where 1 = <10,000 RMB, 2
= 10,000-16,000 RMB, 3 = 16,000-24,000 RMB, 4= 24,000+ RMB
Bubble size represents usage in past 18 months. Cross-hairs represent average age and affluence
of total sample
Source: QQSurvey/Mintel
France
37

FIGURE 52: France: Where they shop for luxury in France, by age and affluence
* affluence represents gross household income on 1-3 scale, where 1 = <€30,000, 2 = €30,000-
49,999, 3 = €50,000+ Excludes ‘Prefer not to answer responses.
Bubble size represents usage in past 12 months. Cross-hairs represent average age and affluence
of total sample
Source: GMI/Mintel
Germany
FIGURE 53: Germany: Where they shop for luxury in Germany, by age and affluence
* affluence represents gross household income on 1-3 scale, where 1 = <€30,000, 2 = €30,000-
49,999, 3 = €50,000+ Excludes ‘Prefer not to answer responses.
Bubble size represents usage in past 12 months. Cross-hairs represent average age and affluence
of total sample.
Source: GMI/Mintel
Italy

FIGURE 54: Italy: Where they shop for luxury in Italy, by age and affluence
* affluence represents gross household income on 1-4 scale, where 1 = <€15,000, 2 = €15,000-
29,999, 3 = €30,000-49,999, 4= €50,000+ Excludes ‘Prefer not to answer responses.
Bubble size represents usage in past 12 months. Cross-hairs represent average age and affluence
of total sample.
Source: GMI/Mintel
Spain
FIGURE 55: Spain: Where they shop for luxury in Spain, by age and affluence
* affluence represents gross household income on 1-4 scale, where 1 = <€15,000, 2 = €15,000-
29,999, 3 = €30,000-49,999, 4= €50,000+ Excludes ‘Prefer not to answer responses.
Bubble size represents usage in past 12 months. Cross-hairs represent average age and affluence
of total sample.
Source: GMI/Mintel
UK
39

FIGURE 56: UK: Where they shop for luxury in the UK, by age and affluence
* affluence represents gross household income on 1-3 scale, where 1 = <£25,000, 2 = £25,000-
49,999, 3 = £50,000+ Excludes ‘Prefer not to say’ responses.
Bubble size represents usage in past 12 months. Cross-hairs represent average age and affluence
of total sample
Source: GMI/Mintel
US
FIGURE 57: US: Where they shop for luxury in US, by age and affluence
* affluence represents gross household income on 1-5 scale, where 1 = <$50K, 2 = $50K-
$74.9K, 3 = $75K-$99.9K, 4= $100K-$149.9K, 5= $150K+.
Bubble size represents usage in past 12 months. Cross-hairs represent average age and affluence
of total sample
Source: GMI/Mintel

Measuring Brand Strength Interbrand
Market Highly competitive H
Stability Long established brand depends upon innovation and market growth H
Leadership Market leader/innovation (Keller, K.L., 2016. Reflections on
customer-based brand equity: perspectives, progress, and priorities.
AMS review, 6(1-2), pp.1-16.
)
H
Profit trend Profitable, high brand image H
Support Requires investment H
Geography Selected markets ((Sleuwaegen and Onkelinx 2014)) M
Protection High requirement of protecting customer data L
Result Strong brand name H/M
Sales per market, growth per market territory
41

5. Core competencies and competitive advantages
Core competencies Competitive advantage
Consist of different reputation and image in
international market.
Leads to development in technological
advancement.
Help in knowing of national domestic product
which leads to increase in experience (West,
Ford and Ibrahim, 2015).
Through competitive advantage brand value of
organisation can be strongly developed.
Consist of Vision and mission with profile
management people.
Profits of competitive advantage are higher
than industry profit (Asmussen and Foss,
2014).
Exist of Personnel and people.((Asmussen and
Foss, 2014).)
Creation in strong financial position of
company.
Resource based view
 As per the entire discussion of Indian market, Michael Kors has to develop numerous
strategies so that value can be created in competitive market place. Prices should be kept

affordable so that customers of MK can purchase it. The market would assist MK to
enhance the competiveness. However, competition would create more issues for MK
(West, Ford and Ibrahim, 2015).
 To reduce the competition level from Chinese market, MK should focus more on feasible
strategies. The opportunities of expansion and diversification are also high in Chinese
market.
 Prices and product availability should be considered in Russian market so that people can
be persuaded for the same. Employees have to focus more on encouraging business
prospects (Asmussen and Foss, 2014).
 Competitive advantage can be acquired through expanding the business in Iranian market
and this can also develop success facets of the business.
Financial Position
43

(Source: Perry and Kyriakaki, 2014)
KEY ADVANTAGES OF ONLINE MARKETING AND PHYSICAL
MARKETING
Online marketing Physical marketing
With the use of online promotional activities
Michael Kors will be able to update its
consumers live. (Vinerean, S., Cetina, I.,
Dumitrescu, L. and Tichindelean, M., 2013.
The effects of social media marketing on
online consumer behavior. International
Journal of Business and Management, 8(14),
p.66.
)
These physical outlets cannot be ignored by
customers; they are visible and gather attention
of consumers (Bullard, 2016).
Videos, animated images etc. can help to gain
attention of service users. People will take
interest on these colorful pictures and videos so
it will enhance the sales of the organisation.
It is the less costly medium. Newspaper,
pamphlets advertisements etc. are less
expensive sources. It has lower ongoing cost.
It is the cheapest way to promote the brand,
company can contact with mass audience with
the use of online marketing techniques. Face
book, Twitter etc. are popular sites which use
by most of the public. Organisation can
communicate with public with these mediums
at minimum cost. Apart from this company
needs not to invest much amount in physical
outlets, building etc.(Kuitunen, 2014.)
Customers can come to physical, outlets and
can examine the products closely then they can
make their decision so it is fair medium and
build loyalty towards the organisation. Persons
can exchange the products immediately from
stores. (Fujihira, Kubacki Pang, B. and Rundle-
Thiele, 2015.
)
It is the two way communication medium, so
response can get immediately, Michael Kors
45

can solve quarries of customers. This will build
trust of consumers on the brand.
Market attractiveness
Michael Kors is attracting towards the China market because it has mass area, people are
very much educated so they prefer to purchase branded items. So it will be the best option
instead of other countries. According to the growth of GDP it is found that income level of
population is high than other countries. People have well settled job so premium customers are
high in such market. By this way Michael Kors will be able generate high revenues. Sales of
bags will get increased in this market.
Ansoff's matrix
Market penetration: Fashion industry uses this strategy when there is increase in sales of
existing product in current market. At fashion industry, market penetration is offering product at
cheaper price with quality therefore, industry has applied quality control method which
guarantee customer satisfaction and are increasing their popularity globally in international
market.
Market development: It helps fashion organisation for identifying new segments and new
users for company product in international market. Therefore, organisation makes slight changes
for adopting new cultural and new market.
Product development: Fashion industry may consist of offering of new and innovative
products to their existing customers. Furthermore, developments in product the industry need to
do research and need to introduce Eco-friendly products and provide full range of product.
Diversification: For fashion industry, this is very risky method because developing of
new and entering in new market is very difficult. Therefore, organisation needs to focus on bags
so that they developed good strategy.
Bowman's Strategy Clock on China, India Russia and Iran
Bowman's strategic clock is the model that assesses what options for strategic positioning
i.e. how the product should be positioned to give it the most competitive position in the market.
 Low price and low value added- It is not considered as the competitive position for the
firm. The product is not differentiated and the customer perceives very little value in spite
of low price. Business offers products in China, India, and Iran at low prices as compared

to Russia as there is more fashion awareness among people. But it does not add value to
customers.
 Low price- Business lying within fashion industry positions themselves as the low cost
leaders in the market so that they can attract different customers through this way. It is
the strategy for cost minimisation in order to attain successful economies of scale. Profit
margins set upon each product are low but the high volume of output can still generate
high profits. China and India focuses upon low price products and thus fashion business
aims to target them low price products as compared to Russia and Iran where low price
products are not demanded.
 Hybrid- In such position it involves certain element of low price that too with product
differentiation. Main aim of business is to persuade customers that there is good added
value through the combination of reasonable price and acceptable product differentiation.
Here, in India and China company aims to sell products at low price but of high quality
so that they can target potential customers as compared to Russia and Iran where high
price products are demanded.
 Differentiation- Main aim of differentiation strategy is to offer clients the highest level
of perceived added value. Within fashion industry brad plays a crucial role as per the
product quality. However, a high quality product contains strong brand image in market.
Fashion businesses provides highly differentiated products in China and India which are
demanded among consumers. But within Iran and Russia, businesses does not do so.
 Focused differentiation- Such strategy focuses upon positioning the business at highest
price level in which customer purchases the product because of high perceived value.
However, such positioning strategy undertaken by luxury fashionable brands in order to
focus upon premium prices and target high class customers. Businesses mainly focuses
upon China and Indian market as they are highly potential so that customers can be
retained for long term. While, within Russia and Iran business does not concentrates upon
focused differentiation so that it affects the business performance.
 Risky high margins- It is a high risk positioning strategy that leads the fashion industry
to failure. With such strategy businesses sets high prices without offering anything extra
in terms of perceived value. Risks are being taken in Indian and Chinese market so that
47

high profit margin can be gained. While, the same is not undertaken in the case of Russia
and Iran.
 Monopoly pricing- However, when there is a monopoly in market there carries out only
one business offering the product. Therefore, within the fashion industry there are several
businesses offering similar products. Fashion businesses are focused upon setting
monopoly pricing in Russia and Iran as there are not many competitors while, in India
and China it could not be as there are various competitors.
 Loss of market share- It can be assessed that position is considered as the disaster in
competitive market. Therefore, it is essential for businesses working in fashion industry
to introduce unique products to possess more better options. For instance, if businesses
carry out effective marketing in India and China then market share can be enhanced and
vice versa. Further, in Russia and Iran without effective marketing loss of market share.
Illustration 2: Bowman's Strategy Clock
(Source: Klebanoff, 2012)

6. 12Cs Framework
China PEST
Political factors
 Legal issues
 Extensive government legislation
 E-commerce
 Taxation policies (Kuitunen,
2014.)
Economic factors:
 High saving habits
 Availability of skilled labourers
 High opportunity for export business
 High GDP
 High inflation
Social factors
 Demographic changes
 High literacy
 Improved lifestyle
 Collectivist culture
Technological factors
 Technological advancement
 Intranet and extranet
 Distribution mechanism via web
technology
India’s PEST
Political factors
 Tax policies
 Interest of politicians
 Deregulation policy
 Foreign trade legislation
 Political stability (Yunna and
Yisheng, 2014.)
Economic factors:
 Interest rate (Zalengera and
Gondwe, 2014.)
 Reduction in license arrangements
 Liberalization
 Rising foreign investment
Social factors
 Social trends and culture
 Work attitude
 Income distribution
 Demographic factors
 Religious freedom
Technological factors
 Advancement of ICT
 3G and 4G technology
 Online operations (Zlatkina, Amiez,
and Petrides, 2015)
Russia’s PEST
Political factors
 Political rules and regulations
 High rate of corruption
 No political freedom (Zlatkina,
Amiez, and Petrides, 2015.)
Economic factors:
 Unemployment policies
 Customer confidence
 Inflation
 Monetary policies
49

Social factors
 Income distribution
 Labour mobility
 Lifestyle changes
 Improving demand towards fashion
Technological factors
 New inventions (Shabanova,
Ismagilova and Akhmadeev, 2015.
 )
 Technological obsolescenceChanges
in mobile technology

Iran’s PEST
Political factors
 Anti-counterfeiting trade
agreements
 Political laws and regime
Economic factors:
 WTO and UN Security council
regulations
Social factors
 Rising domestic consumption
 Cultural differences
 Growth in demand(Shabanova,
Ismagilova and Akhmadeev, 2015.
Technological factors
 Technological changes (Allahyari,
Damalas, and Ebadattalab, 2016.)
 High R&D
 Social media presence
China India Russia Iran
Concentration 9,596,960 km2 3,287,263 km2 17,098,246 km2 1,648,195 km2
Channels of
distribution
Here more
channels are
available with
developed
technology
though this is
very fast.
(Zlatkina, Amiez,
and Petrides,
2015.
)
In India,
distribution
channel is little
slow because no
developed
technology is
used.
Distribution is
done by more
upgraded
technology.
(Abazov, Abbott,
and Atkins,
2014.
)
Distribution in
market is done by
Dubai and
Turkey.
Capacity to pay GDP $5.2 trillion GDP $3.1 trillion GDP $1.5 trillion GDP $2.5 trillion
Currency Yuan is stable.
(Bayraktar, 2014.
)
Rupee is very
fluctuating.
Ruble is
moderate.
Iranian rial is also
fluctuating at
high. (Athari,
Mirzaee and
Ostadi, 2014.
)
Cultural buyer
behavior
High Medium
(Solomon, 2014. .
)
Medium Low
Contractual
obligation
Taxation laws,
China securities
Regulatory
commission and
Trade union act,
Foreign trade and
compensation act.
Unilateral
(Yongpradit and
Twarek, 2016,
) termination,
Civil law, women
rights and drug
law.
51

PRC labour
contract law.
custom law and
international law.
Communication There are many
communication
channels.
(Charushnikova,
Grigor’ev and
Fedoseev, 2015.
)
Here, traditional
communication
channels are
involves more
because of aged
people.
For reaching out
target customer
through social
media.
Communication is
involved through
T.V. only.
Commitment In China,
Entrepreneurs
will have more
ability due to
increase in
population size.
Moderate because
here, despite
population size,
the people
purchasing luxury
goods are less.
In Russia also
medium because
population size is
not too much and
not to less.
(Bayraktar, 2014.
))
Low because
population size is
very less.
Choices This country
offers high
potential to new
entrepreneur.
(Mori, and Lokar,
2016, )
In India moderate
potential for new
entrepreneur.
In Russia High
potential for new
entrepreneur.
In Iran very low
potential for new
entrepreneur to
come in market.
Cultural High literacy rate,
increasing
demand and
improved
lifestyle.
Change in work
attitude and
increase of aged
population.
Here, cultural
consist of
literature, music
and sports.
(Epuran, Ivasciuc,
and Micu, 2015)
Low rate of
literacy, impair
life.
Consumption High market
share because
population is 1.35
billion. (Gyepi-
Garbrahand
Binfor, 2013)
High market size
because of
population 1.2
billion and also
with increasing in
spending.
Low market share
because
population is less
over here that is
143.5 million.
(Wang, and Yu,
2014.)
It consist of low
market size
because less
population that is
77.45 million.
Caveats Changes in
regulation,
external factors
and fluctuating in
money.
Changes in
international
regulation, and
fluctuating in
money.
Changes in
inflation and
fluctuating in
currency.
Changes in
regulation,
external factors
and fluctuating in
foreign currency.
Through evaluating the 12 C's framework it can be stated that scope of Indian, Iran and
Russian economy is growing while, Chinese economy is at boom stage. Further, concentration of

India. Iran and China on fashion consciousness is low. Further, in China it is high. In order to
identify the channels of distribution research is required within India, Russia, China and Iran.
Capacity to pay of India is GDP $3.1 trillion while of Russia is GDP $1.5 trillion as compared to
China and Iran. Thus, China has high capacity to pay the loan amount. The cultural buyer
behavior in India is medium and Russia is also medium as compared to China it is high and in
Iran it is low. The sales potential size of market is high in China that is of 1.3 billion as
compared to other countries i.e. India, Russia and Iran. Also, the sales identified in different
countries is high in China i.e. $6.5b as compared to other competitive countries. Also,
competition is high in China while it is low in India and Iran and moderate in Russia.
Marketing 7 P's
China India Russia Iran
Product Favorable
(Hofman,
and
Newman,
2014.)
Unfavorable Favorable Unfavorable (Yunna and
Yisheng, 2014)
Price Differentiati
on in price
Similar price
(Kulkarni, Raut,
and Dhere, 2013.)
Price Skimming Low price
Place Monopoly Competitive
market
Monopolistic
(Epuran, Ivasciuc,
and Micu, 2015)
Duopoly
Promotion Social
media
Newspapers Digital technology TV
Physical
evidence
Shopping
malls
(Alshaher,
2013.)
Stores Online Outlets (Abedi, Rahmani
and Rostami, 2015. )
Process Easy Complex Easy Tough
People Skilled Skilled Skilled Unskilled
SWOT analysis
Strengths: Michael Kors has developed resilient and segmented brand on basis of
women and men section in China. This company is providing high quality of product and they
consist of good suppliers too. At company availability of product consist of wide range and has
covered all sizes. However, for earning maximum profits at Iranian market, their products can be
53

purchased through online because they are providing services to their user and they are
promoting their products through celebrity factors.
Weaknesses: A Michael Kors main weakness is brand dilution because high brand
products don’t provide discount and bargaining to customers of India. Company is not known as
globally it need to expand their bushiness internationals for becoming more popular. Jet set of
organisation does not need to set for lower income group at China.
Opportunities: Try to become more popularly in international market like Russia and
Iran so that they can earn extra profits. By using of profits try to buy more competitors brands
and developed them so that by this market will be expanded. Try to develop products for men
and children too because now they increases in lifestyle in branded things. Creation in sub brand
at China will also help in developing of their major brand.
Threats: Organisation need to increase in textile prices so that they may force brand to
charge more product at Russian market. Cancellation of contracts between different
organisations will need new partner and incur losses in Indian market. Generation gap with
Michael Kors is also a big threat for an organisation.
BCG
Stars: Bags are star of Michael Kors products because they consist of large market share
in fast growing segment in fashion industry because no other organisation provide these type of
bags and quality in Iran. Therefore, for generating cash, they need to provide innovation time to
time because fashion industry market is growing rapidly and they need investment too.
Question mark: These are product which may provide high return to fashion industry of
India but at same time they are taken out of market because they provide uncertainty results to
industry. Major problem of question mark in fashion industry is amount that has been invested
will be return at end and it may be wasted completely.
Cash cow: As fashion market is not growing in Russia, then cash cow get maximum
advantage by generating maximum profit due to high market share. Therefore, for fashion
industry cash cow are one which required less investment and they provide high return to
organisation. Thus, from higher return fashion industry can used that amount in other businesses
which are stars, dogs and Question mark.
Dog: These are that product which fashion industry doesn't require to generate high
amount of cash and also not required for higher investment. Therefore, these are concerns with

negative product because amount which has already been invested can be used at other place.
While, here fashion industry of Iran need to think again about product so that market share of
product increases.
McKinsey 7S framework
Current Situation Future Situation Gap analysis
Strategy (Singh,
2013. )
Differentiation
Market leadership
MK enjoys high brand
image in market
among premium
customers
Leadership status
Competition increases
by adopting innovative
technology (Naipinit,
Kojchavivong, and
Sakolnakorn, 2014. )
Company targets to
overcome competitors
to enhance sales and
revenue.
Structure Follows hierarchical
structure (Gyepi-
Garbrahand Binfor,
2013)
CEO needs to give
opportunities to other
people while entering
international market.
Follows new
management structure
(Teimourpour, and
Heidarzadeh Hanzaee,
2014)
Systems Relies on 3rd party
suppliers (Tajik, . and
Ramezani, 2016.)
Produces reliable and
high quality products
Improving quality
management systems
Shared values Innovation (Tang,
Atkinson, and Zou, ,
2012)
Encourages staff
(Dixon, 2014. )
Developing cultural
workplace (Value
Chain Analysis. 2017.)
Skills Attractive designs Innovative Licensing with other
companies
Staff Excellent designers Hire more skilled
workers with high
knowledge and work
experience.
Providing incentives to
employees (Alshaher,
2013.)
Style Vision and mission To survive in pressure Localize leadership
55

focused (Solomon,
2014)
condition (Stadtler,
2015. )
GE matrix
 The level of investment can be determined on the basis of industry attractiveness and
business units. These are also other aspects through which competitive advantage can be
acquired. Business units of MK can be expanded to different markets through analysing
the situation of external market environment.
 MK has the capability to enhance the product line; therefore the level of investment
should be increased according to the business prospects. This can also assist the business
entity to expand the product line and services.
 MK can also emphasize on medium term investment if the business has the opportunities
to earn as much money as it could from different market entities. Thus, it can be said that
according to industry standards business prospects can be enhanced.
 Similarly, MK should also focus more on market segmentation which depicts its
competency to meet the demands of customers.
Product life cycle
Product life cycle is an important model which describes the stage of products from
which goods gone through. It has main four stages; introduction, growth, maturity and declining.
In introductory stage is that in which product has just come in to the industry, in the growth stage
inventory start to earn profit, in maturity stage it has gained maximum returns and in the last
decline stage product start reducing its sales and gradually get eliminated from the market.
Fashion industry is now in the growth stage. Trends are continuously changing; needs and wants
are changing rapidly so fashion sector has many options to innovate its products according to the
current trends. By this way industry will earn more revenues and it will enhance the business of
the related companies.
(Source: Isa, C.M.M. and et. al., 2012)

Mintel - Sports Tourism Worldwide - December 2012
Mintel - Environment of Russia – Infrastructure investment
Host cities selected for World Cup 2018
In early October 2012, FIFA announced that 11 cities and 12 stadiums have been selected to host
the 64 matches of the 2018 World Cup Russia. The local organising committee has confirmed
that the cost of staging the event would be almost US$20 billion – nearly double the figure
initially estimated by Vladimir Putin when Russia was awarded the tournament in December
2010.
The host cities will be Moscow, St Petersburg, Kaliningrad, Nizhny Novgorod, Kazan, Samara,
Saransk, Volgograd, Rostov-on-Don, Sochi and Ekaterinburg. The announcement of
the 2018 World Cup host cities almost six years ahead of the event allows Russian stakeholders
to get started on preparing the infrastructure to accommodate the football fans who will
arrive in 2018. Stadiums in Moscow, St Petersburg, Kazan, Sochi and Saransk are already under
construction, with others to follow soon.
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