Thriving in a competitive global environment

This report assesses the market opportunities for Zalando in the Middle Eastern Region, specifically in Turkey, UAE and Egypt. It evaluates the investment environment, government policies, market potential and regional integration initiatives. The report also identifies related issues, opportunities and threats.

RUNNING HEAD: Thriving in a global competitive environment 0
Thriving in a competitive global environment
ZALANDO

Thriving in a global competitive environment 1
Contents
Introduction.................................................................................................................................................2
Plan to enhance global competitiveness......................................................................................................2
Research..................................................................................................................................................3
The market opportunity assessment of the Turkey..............................................................................3
The market opportunity assessment of the UAE..................................................................................5
The market opportunity assessment of the Egypt................................................................................7
Analysis...................................................................................................................................................8
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11

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Introduction
The global competitiveness are the products or services provided by the company to serve
international customers. It enables companies to sell products and services internationally which
increases profits and compresses the playing field in business. This report defines the market
opportunity assessment of Zalando in the Middle Eastern Region. Zalando is the internet retailer
of branded clothing and footwear for men, women and kids. It has largest collection of clothing,
accessories and shoes. The values of the company relies in the latest technology with the
exceptional customer service. The company is engaged in expanding exclusive brands offered by
its internet shop. The company want to expand in the potential markets like Turkey, Egypt and
UAE. The assessment is conducted to evaluate which of the 3 markets, the company should enter
first. In order to assess market opportunities, the investment environment, effects of the
government interventionist policies, market potential, impact of regional integration initiatives.
The report also comprises identified related issues of the markets along with the opportunities
and threats.
Plan to enhance global competitiveness
Zalando is growing on the constant basis which is evidenced by its recent acquisition in 2010 of
MyBrands, an online designer outlet. It helped company to broaden its target consumer group
along with the premium products range. Zalando is determinedly established in the European
market. The company has decided to compete in the global markets by expanding its products
range to the Middle Eastern Region. Zalando has shortlisted potential markets as Turkey, Egypt
and UAE for the expansion. Being a marketing consultant, the company has approached to assess
market opportunities in the Middle Eastern Region. The strength of the Zalando lies in its
structural advantage which is the company has lower operational costs than a brick and mortar
store (Vandevelde, 2017). The offerings of the company in the wide options make it unique in
the market. The company allows 24 hour access and 7 days a week for the customers. The
company faces weaknesses in the form of shipping times. There is no immediate fulfilment with
the ecommerce. It is considered that heavy, huge and unpreserved goods are costly to ship. The
costs are always an annoyance. Due to the safety and the fraud concerns some people are hesitant
to use credit cards for the online transactions. Permitting customers to pay using PayPal can dull
this concern (Aitken and Harrison, 1999). The show rooming has dull the difficulty of shoppers

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incompetence of customer to trace merchandise and looking at merchandise in stores. The
shoppers can look at the merchandises in stores and then uses mobile phones to place an order
with the Zalando frequently while still in the store. A plan is suggested to enhance global
competitiveness of the Zalando.
Research
Zalando is a medium sized firm and is interested in expanding cautiously and step by step. In
order to operate in the Middle Eastern Region, most prospective market is identified out of the
Turkey, Egypt and UAE. Zalando has identified Turkey to enter first and has undertook
assessment of the market opportunities.
The market opportunity assessment of the Turkey
Turkey is a dynamic economy with the constant and fastest growth. The country supports
international investors by offering accessibility to the domestic market. Turkey is the second
largest beneficiary of FDI. The country has approved a series of legislative restructurings in
order to simplify foreign investment (Wahba, 2015). The attempts of the company to join
European Union has helped to establish European regulations and trade standards (Blechinger,
et. al. 2016). The local government of the Turkey is working hard to attract FDI into textiles,
technology, electronics, shipbuilding and services like health, public transport and education.
Turkey has a developing young middle class population with the increased purchasing power and
direction towards consumption. The market of the Turkey is having over 70 million consumers.
The Turkish government has played huge role in creativities to make country a striking
destination for the security and business operations. The new commercial code of the company
has embraced significant reforms to form transparent, equal and modern environment for the
business. There are twenty regions in the Turkey which converse numerous advantages like
exemptions from custom duties, VAT and social charges (Farla, De Crombrugghe and
Verspagen, 2016).
The policies in Turkey are quite legalist in nature. If it is talked about the regulatory efficiency,
the government has reduced the time required to register a company. It is seen that the political
uncertainty and security concerns cast a shadow over the business conduct in Turkey. The
government has few price controls and sets prices for the products provided by the state-owned
enterprises. Trade is important to the economy of Turkey. The shared value of imports and

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exports equals 47% of GDP. The tariff rate is 3.2% whereas nontariff obstacles obstruct trade. In
general, it can be said that the government policies do not considerably interfere with the foreign
investment. In fact, the investors face bureaucracy and variation in the legal and regulatory
environment. The financial reforms of the Turkey has enhanced transparency and
competitiveness in the business environment (Ghaffour, Bundschuh, Mahmoudi and Goosen,
2015).
Turkey experienced a robust economic growth following the global crisis. It is a developing
nation with strong economic potential offering numerous business opportunities for the
companies. Turkey is also a gateway to the markets of the European Union. The country has over
75 million customers which makes it one of the most popular markets. Turkey has qualified,
accessible and economical workforce. 60% of the population purchases foreign goods and has
recently experienced a significant increase in the standards of living. The country has legal
framework which is very close to the European standards. There is significant tax policies along
with the incentives for the foreign companies. Turkey maintains a transparent and efficient
public sector and the government takes several initiatives and administrative reforms. The
government here seeks that the business thinking to develop business in Turkey should
particularly deal in the activities like consumer goods, IT, infrastructure, energy, transportation
and more (Braeman, 1983).
The regional integration is a procedure through which adjacent states enter into an agreement to
upgrade assistance through common institutes and rules. The purposes of the agreement range
from economic ton political to environment. It is usually in the form of political economy where
commercial interests are focused. The power of the Justice and development party has prompted
the emergence of a new Turkish foreign policy doctrine in 2002. The principles focus the policy
of zero problems with neighbors. It is more of autonomous foreign policy. Turkey as a regional
leader has made efforts to improve bilateral relations with neighbors and conducted initiatives in
the region. The country even implemented ‘zero problems with neighbors’ policy and tested
capacity to deal with the regional instability (Caiazza and Volpe, 2015). It even redefined the
Turkey’s foreign policy principles and rediscovered Western allies.
Turkey has conspicuous split between the east and the west of the country with the investment
opportunities, economic development and infrastructure. There are no standardized financial

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reporting standards which highlights the varied nature of the corporate practice in the country.
But there are sufficient opportunities in the Turkey market as the large and young population is
urbanizing and has enhanced disposable income. The growth of the capital market will initiate
challenges to the e-commerce industry. Zalando can have threat in the form of experimenting
new markets (Joffe, 2014). Turkey has first generation shopping malls which encourages
international and luxury brands.
The market opportunity assessment of the UAE
UAE government emphases on variation and seeks to encourage development of the private
sector as an economic governance of the state. There are various ingenuities, regulations and
laws implemented in the country to develop an encouraging environment for the foreign
investment. UAE upholds a position as the foremost trade and investment hub for the geographic
region. There is ease of doing business in UAE (Sbia, Shahbaz and Hamdi, 2014). The
multinational companies cite the UAE’s political and economic stability, growing capital
markets, GDP growth, absence of the corporate and personal taxes are the positive factors which
contribute to the investment atmosphere in the country. The country is continued to attract
foreign investment mainly on the finance, wholesale and retail trade. The regulatory and legal
framework of UAE errands local over foreign investors and the foreign investment continued to
grow. The government in UAE maintains no barrier to the venture in the form of sponsorship
and distribution. UAE is already home to the various multinational companies (Chaisse and
Bellak, 2015).
The government interventionist policies governs the business in the country along with
governing the consumer rights and free zone in which the business operates. The business in
UAE is governed by the free zone authority. The government intervention policies affect to the
company as it focuses on creating environment more conductive to the foreign investment. The
intervention policies can affect Zalando as it provides strong and basis for corporate regulation in
UAE. The government also upgrades its federal legislative framework to closely work with the
international organizations. But there are foreign investment laws eliminates a great part of the
supervisory and executive complications to entice foreign investment (Liu, Zhu and Zhang,
2018). The government intervention policies creates a unified regulatory framework like
investment procedures, registration and licensing. It also treaties with the advantages, tax

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exceptions and assurances for the foreign investors as well as rights and duties (Sbia and
Alrousan, 2016).
UAE has well established political system along with the liberal trade regime. The country
continues to be relevant and attractive to the businesses around the globe to do business. UAE is
the fastest growing e-commerce industry. There are significant opportunities in the UAE market
due to the young adult population which are engaged in making purchases online due to the ease
of convenience. On an average, 40% of the total population is made up of young adults. The 50%
of the total population fall into this segment. This segment is influenced by the social media and
anticipated to adopt modern shopping options (Coskun, 2001). This number is expected to grow
as more and more are likely to go online.
The UAE has significant potential for the economic growth. The neighboring states enter into an
agreement with the host country in the regional integration initiative. UAE is a member of the
WTO since 1996. UAE shares appropriate economic relationship with the neighboring countries.
It is also negotiating a trade agreement with China to develop the trade and service sector
(Dumludag, 2009). It helps to develop the industrial and service sector of the UAE. The country
is also negotiating agreements with some neighboring countries to lessen barriers and for the
liberalization of the services, trade and agreement. All these agreements evidence to the internet
penetration in the UAE as it stands at 99%. In UAE almost 85% search for the product online out
of which 63% made a purchase on-line (Yeung and Coe, 2015).
The foreign investors felt concern over weak dispute resolution, mechanism, the laws and the
lack of regulatory in the UAE. Add on, the foreign companies are essential to have a national
mediator with 100% UAE national ownership. The law in the UAE also requires foreign
principals to sell their products in the UAE only with the help of exclusive commercial agents
(Crescenzi, Datu and Iammarino, 2017). The business friendly policies in the UAE create
opportunities for the Zalando as it encourages entrepreneurship and startups in the country. UAE
offers an encouraging environment for the fresh and young e-commerce businesses to flourish
and grow. It is also successful in attracting capable talent from around the globe (Maghyereh,
Awartani and Al Hilu, 2015).

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The market opportunity assessment of the Egypt
The investment climate in Egypt has improved remarkably in 2017. The country has promoted
foreign direct investment has witnessed significant structural reform. The investment law in the
country offers a new framework to offer investors more investment related rules and streamlines
procedures. The country has witnessed many ups and downs in the recent years. There was never
a better time for investing in Egypt. It is because of the vast amount of potential specifically due
to the largest consumer market the country has. The Egyptian economy can be appealing to the
foreign investors by building successful partnership with them (Ozturk, Joiner and Cavusgil,
2015). It has emerged as a favored location for investment. The country has trade opportunities
due to the close ties with the Europe. It is a best place to invest in both downstream and upstream
sectors. The network in the Egypt is a great online resource for the small and medium businesses
looking for investors. The opportunities can be Egypt can be made by simply registering on the
network. It is not necessary to uproot and relocate to a city in order to conduct a successful
business. The business can be setup easily with the help of the on-line platforms. There is no
need of the physical stores. The goods can be easily delivered to the customers by making
purchases online.
The government intervention policies enhances investor’s confidence and do not distort the
market. There is emerging trend in the Europe for the governments to intrude in the foreign
takeovers in order to defense the national interests. The country averts loss of key strategic
industries which causes underlying tension. The government in Europe intervenes to prevent
takeovers in the key industries. Europe relies heavily on the foreign investment and favors pro-
trade approach. The government can prohibit Chinese and foreign investments to direct link
between the foreign investor and the target. The government can raise concerns about foreign
investments. The government has power to give a non-binding opinion on such investments. The
European government can even carry out review of foreign investment affecting the interest of
the country (El-Diftar, Jones, Ragheb and Soliman, 2017).
The government in Egypt is implementing various transformational reforms and gradual
renovation of confidence and constancy. It has even started to produce positive results. The
efforts of the government remains difficult due to high inflation and attrition of the real incomes.
The market in Egypt is growing at the rate of 15% which makes one of the fastest growing

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developing country in the globe (Uchihira, Ishimatsu and Inoue, 2016). The private sector in the
Egypt is dominated by the excess of small and medium businesses which represents good
marketing opportunity for the Zalando. The country even provides credit developments and
enhancements to access credit for the foreign companies. Egypt has even launched appropriate
improvements to revive its economy and attract foreign investors from various industries
(Rickne, 2003).
The regional integration initiatives has moved Egyptian economy more towards a more liberal
trade regime. Egypt has come in agreement with the Europe in 2004. Europe elevated all the
trade barriers to Egyptian industry. Whereas Egypt has committed to remove trade barriers in the
12-15 years transitional period. Egypt has even signed various free trade agreements in order to
help its exports. The country has also signed bilateral trade agreements to offer improved market
access. It also participates on the trade preferences system of the Islamic corporation. The
country is even continued to reform process with a view to make its customer’s esteem more
efficient and transparent. It has already facilitated some changes to activate the authorized
economic operator system. Egypt has even accepted WTO code of good practices for the
adoption and the application of standards. The technical regulations are also issued by the
country (Salacuse, 2017).
Egypt is capable as an emerging market and dignified to offer good returns for the foreign
investment. However there are some risks causes to the businesses making expansion in the
country. A number of regulations, subjective decision-making, high market transaction costs and
unresponsive commercial court system can cause problem to the company (Sayar and Wolfe,
2007). The corruption and fraud are also some serious concerns in the country. It adds significant
inefficiencies to the commerce. Islam is practiced in the majority of the population of the Europe
and plays significant role in the culture and society. Zalando has to manufacture products as per
the requirements of the society otherwise it can fail to capture the target segment in the country
(Sherwood, 2016).
Analysis
From the above analysis it can be concluded that Turkey is the most prospective market where
Zalando should take decision to enter first. As e-commerce in Turkey is growing fast. It is

Thriving in a global competitive environment 9
expected to reach 50 billion Turkish Liras in the online retail industry by 2018. It represents that
e-commerce is expected to grow 18.5% by the end of 2018. The country has conscious consumer
profile that adapts to the digital environment rapidly. It has been confirmed by the global retail
and e-commerce companies entering in Turkey with the awareness of the potential. The foreign
players in the Turkey indicates that ecommerce sector have huge growth potential (Deichmann,
Karidis and Sayek, 2003). The internet retailing in Turkey is unremitting to register stronger
current value growth than the store based retailing. It is due to the increasing corporate
investment in the online operations and growing consumer preferences for the online shopping.
Some factors like increasing internet penetration, consumer awareness and consumer trust are
contributing to the stronger performance of the ecommerce companies. The non-store retailing
and the internet retailing due to the corporate investment in the online operations has capitalize
increasing consumer preferences for the online shopping. The market entry strategy appropriate
for the Zalando to enter in the market of Turkey is explained below.
There are significant opportunities for the companies to enter in the Turkish market. Zalando can
make use of joint ventures or exporting to enter in the market of Turkey.
Joint ventures: The joint ventures are the method of partnership which results in the formation of
a 3rd independent managed company. In this process, two companies agree to work together in
the particular market. So Zalando can enter in the joint ventures with the local company of the
Turkey in the particular markets of the Turkey (Tatoglu and Glaister, 1998). The risks and profits
are shared equally between both the companies. This market entry strategy is suitable for the
Zalando as the local company of the Turkey will be already known to the environment of the
country and the preferences of the consumers. It can help to attain basic information of the
market in Turkey.
Direct Exporting: The direct exporting is the process of marketing directly into the market of
Turkey. Zalando can establish a sales program turn to agents to signify them in the market. The
agents and distributors work closely with the interest of the company. They can become the face
of the company. So it is important for the company to choose agents and distributors in a wise
manner. They should be handled the way same as the key staff person (Tate, Ellram, Schoenherr
and Petersen, 2014). It represents a greater degree of control over the aspects of the transaction
and helps in knowing customers.

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Conclusion
Zalando is growing on the persistent basis which is evidenced by its growth over the years.
Turkey is most suitable for the Zalando to make expansion out of the Middle East companies.
There is more trend of the non-store retailing and the internet retailing due to the corporate
investment in the online operations. It has even attracted the interest of the consumers in the
Turkey. The methods chosen to enter in the market of Turkey are direct exporting and joint
ventures. Both of these marketing strategies are risk free for the company. After Turkey, Zalando
can enter in UAE and then Egypt. The foreign investors felt concern over weak dispute
resolution, mechanism, the laws and the lack of regulatory in the UAE. Egypt is also a
developing country and cause some risk to the company in order to conduct business operations
in the country.

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