LUBM304: Strategic Management in Global Context: Armani Expansion

This report provides a strategic analysis for Armani Business Solutions Ltd (ABS), a business consultancy firm, planning to enter a new international market. The analysis includes an examination of internal and external factors using SWOT and PESTLE frameworks, with a recommendation for expanding the Armani Hotel business into the Maldives. The report evaluates different market entry modes such as licensing, franchising, joint ventures, and foreign direct investment (FDI), ultimately recommending FDI due to its advantages in leveraging local resources and the Maldives' favorable FDI policies for the hospitality industry. It also discusses the adaptability and standardization of the Armani Hotel business in the Maldives, considering the country's economic reliance on tourism. Furthermore, the report would likely apply Porter's generic strategies to identify competitive advantages and develop a strategic business plan for success in the chosen market. Desklib provides access to similar solved assignments for students.

STRATEGIC
MANAGEMENT IN
GLOBAL CONTEXT

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Presenting external and internal analysis ....................................................................................3
Modes of entry in market.............................................................................................................5
To what extent the business can be adapted or standardized.......................................................7
Apply Porter's generic strategy to gain competitive advantage...................................................8
Strategic Business Plan..............................................................................................................10
CONCLUSION .............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
The global strategic management is a process of expansion which overlook the
possibilities of every location and source of competitive advantage to meet the goal of extension
(Dimitrios and et.al., 2020). Armani Business Solutions Ltd is a company having diverse
business strategy is planning to enter a new country with their kind of business unit. Armani
Group was founded by Giorgio Armani in the year 1975 and being headquartered in Italy. The
quoted company has its own brand variety in areas of luxury fashion which includes leather
goods, premium watches, jewellery, shoes, accessories, cosmetics. Armani in collaboration with
the Emaar properties established a chain of luxury hotels & resorts in several metropolitan cities
like Paris, New York, Dubai, LA, Shanghai, Seoul and Hong Kong. The report will recommend
a country where the given company can expand its business by analysing the internal and
external factors with the help of SWOT analysis. The project will further critically discuss the
modes of market-entry which can be suitable for the selected business. It will describe to what
extent the chosen business unit be standardized the selected country. The case study will apply
Porter's generic strategy so the ABS Ltd could gain competitive advantage and produce a
strategic business plan to measure the success in the chosen market.
MAIN BODY
Presenting external and internal analysis
Armani is one of the most famous brand which is well known for its fashion industry but it is
now trying to expand the business in hotel sector in order to attract customer as well as to
increase the overall growth. Along with this, the company has been available in more than 31
countries and it should now open their new business in country like Maldives. Moreover, before
introducing the business it is essential for the organization to analysis external and internal factor
present in business environment.
SWOT Analysis:
Strength: Armani has good brand image in the market area as it is one of the luxury brand in
retail sector. Although it has good customer base which has contributed in enhancing overall
growth of firm in positive manner as well as it has enhanced their revenue. Moreover, another
major strength of Armani is that it has vast business sector like fashion industry, Florist, food and

beverages, furniture and home collection (Nasi and et.al., 2022). Due to its expansion in various
business sector it is able to cover large area of market sector as well as increased overall growth.
Weakness: The company major weakness is limited global business presence as it is available
in 31 countries whereas its competitors like Dior and Dolce are covering market area of 50
countries. Due to limited market organization is not able to gain competitive advantage
(Voukkali and Zorpas 2022). Another weakness is company have higher price products thus it is
available to ultra-chic crowd and due to that it is losing out many customers which is affecting
growth pattern of brand. Although organization has been criticised by PETA for using animal fur
in clothing line and it has affected brand name of firm.
Opportunity:
The company have an opportunity to expand in new market area in order to improve their
customer base and it will lead in enhancing their customer loyalty. It also means that it need to
decrease their price of services and products in large volume (Meza and et.al., 2022). Moreover,
the market area of Maldives will be beneficial for firm as it tourist country and opening hotel
their will contribute in increasing sale of company. Although it can make use of innovative
services like it can add travel package in their hospitality services as it will contribute in
enhancing overall growth of company in effective manner. Moreover, there is a scope to tie up
with more corporate and other celebrities as it is ever growing sector.
Threat:
One of the major threat that company is facing is Covid -19 as it has affected economic growth
of many country and due to that income of customer has also been decreased (Almutairi and
et.al., 2022). That has affected taste and preferences of consumer and due to that it is targeting
low price quality services and product. Another factor that company is affecting is brand
duplicity which lowers down sales as well as brand value of company.
PESTLE
It is also known as strategic tool that helps in analysing macro factor of business environment.
Political:
This is known as policies made by government such as in time of pandemic most of the country
public authority has implemented policy like restriction on trade and due to that hotel industry
was immensely affected (Kolios and Read, 2019). There was decline in sales of this sector as it

was closed for various months. Along with this, Armani sector can face negative impact of this
policy if it expands their business.
Economical:
There has been economical slow down due to impact of pandemic and still many
countries are trying to cope up with it. Along with this, income of customer has been changed
and it is trying to spend amount in low price services. Moreover, for dealing with this factor
Armani need to give services that can be affordable by lower income people.
Social:
There are various trends introduce in hospitality services like musical events, robotic staff which
has level up the area of this sector (Achinas and et.al., 2019). Thus, Armani needs to identify
taste and preferences of the customer before launching their new services as it will contribute in
enhancing overall growth of company in effective manner as well as satisfy the needs of
audience.
Technological:
It is one of the most important factor in competitive market area as it helps in improving
performance of firm. Along with this hospitality sector should upgrade their technology as it will
improve value proposition which it offers to its customer as well as reduce extra cost at the same
time. Moreover, Armani should accept all type of payment at time of digitalization as well as it
can make use of social media and develop website of firm so that customer can book hotel from
anytime and anywhere.
Legal:
The organization follow corporate law, employment act in order to avoid intervention of
government. Although in hotel it will be following all COVID-19 guidelines to give customer
good quality of services.
Environmental:
The company will be following CSR activities so that it contributes in development of society as
well as to attract customer.
Modes of entry in market
International expansion strategy is very important as it helps in increasing performance of the
company. Along with this, different modes of entry into international business based on the size
of firm and the business environment.

Licensing and Franchising: This strategy can be used by organization that establish retail
presence in an overseas market with lower risk. It allows another person to identify risk on
behalf of organization. Moreover, in licensing agreement an overseas based business will pay
royalty and commission to make use of brand name, manufacture products and trademarks other
intellectual properties. Along with this, there certain amount of revenue is share by franchisee to
the main party (Widya Yudha and Tjahjono, 2019). This tactic has various advantage such as
low cost entry into an international market as well as licensing partner ha knowledge about the
local market. Furthermore, another advantage is to offer passive source of income and it reduces
political risk in most of the cases as well as licensing or franchising partner is local business that
allow expansion in various region with minimum investment. However, some of the
disadvantage of this strategy that it is hard to control on its licensing and franchisees partner.
Licensees can leverage the acquired knowledge and pose as future competition for business as
well as there is high chance of risk related to poor brand image due to incompetence of
franchising partner.
Joint venture: It is one of the best mode of entering into international business for companies
that do not mind sharing their brand with others. Along with this, organization that are wishing
to expand their business into overseas markets can form joint ventures with local businesses. In
this form of partnership parties share rewards, risk and cost in pre-determined proportion as both
are liable for it. This tactic is suitable on countries wherein the government do not allow full
percent foreign ownership in certain sector of business (Christodoulou and Cullinane, 2019).
The advantage of selecting this strategy is lower political risk as there is presence of the local
partner having knowledge of the local market and its business environment. Both the partners
can leverage their respective expertise to grow and expand within a chosen market. However,
disadvantage of joint venture in case of dissolution of partnership is very lengthy and
complicated legal process.
Foreign Direct Investment: It involves an organization to enter into international market
through making a substantial investment in the country. Along with this, for making use of this
techniques organization has to make use of joint venture and merger and acquisitions (Dev,
Brown and Zhou, 2018). Although this technique is used when the demand or the size of the
market as well as growth potential of the market need to increased. Moreover, thus type of
strategy has been used by companies because of restriction or import limits on certain goods and

products as well as manufacturing locally will avoid import duties. The advantage of this
strategy is it helps in leveraging low cost labour and cheaper material to reduce manufacturing
cost towards obtaining a competitive advantage over competitors.
Recommendation for strategy
Out of the three entry modes Foreign Direct Investment (FDI) is the recommended and
most preferable mode for the Armani Hotel as the biggest advantage is that the company could
use the raw materials rather than transporting them from different parts of the world. Maldives
have a policy of 100% FDI for the hospitality industry which helps them to face the tough
competition and design the hotel according to the need of the audience by using innovative
technology. It fosters the economic growth for both the recipient nation and the country
investing. To expand the market outside the domestic border FDI helps to avoid the tariff and
non-tariff barriers regulating the trade. The cost of transportation is also reduced due to the more
investment with the company. The given organisation become more competitive by obtaining the
service of skilled employees in the market which would aids the hotel to achieve success. The
one of the biggest advantage of FDI over licensing and joint venture is that it provides protection
against the possible interlopers (Harrington, 2022). It also allows to exchange the technology in
the form of capital input. The quoted company implement this mode of entry because of the
demand and growth of the market that needed to be increased. This would help to avoid the
import duties and to leverage low cost labour for the hotel's growth and future success.
To what extent the business can be adapted or standardized
The Armani Group has a diversified business all over the world. The report would
discuss the Armani Hotel business to plan for an expansion in the Maldives as they are already
operating in different metro-cities around the globe. The GDP of Maldives has primarily
dependent on the fiscal revenues, foreign exchange earnings and economic growth. The
Maldives hospitality industry is the best yielding market in Asia. The political, social and
economic factor are mainly framed keeping in mind to boost up the hotel industry which
develops the infrastructure of a company. This business could be easily adapted in the Maldives
due to the huge amount of capital with the Armani group.
The growing number of visitors from each part of the world from 2010 witnessed a
consistent increase in the percentage growth of the particular industry. The biggest challenge that

could be faced by the Armani group is related with the competition from the different
international hotel brands which are already having the name. Maldives is being segmented into
resorts, hotels, safari vessels, marina and guest houses. In the present time, the guest house
segment has seen an immense growth, gaining more momentum in the hospitality industry.
100% Foreign Direct Investment (FDI) in the hotel industry attracts many investors in its
territories which assist the Armani group to design and architect the property in such a manner
to provide a combined feature of vessel and guest house. The exchange of different culture helps
to promote each nation's language, customs, norms etc. The quoted company would be able to
better perform in this geographical area due to the brand name existing all over the world i.e.
Dubai, Asian region and many more. To adapt and standardize, the given hotel extent is
dependent on the following factors i.e. the target market, nature of service, market position,
environmental and organisational factor which aids to institute the hotel name in the Maldives.
Apply Porter's generic strategy to gain competitive advantage
In the current turbulent and competitive environment, strategy plays a paramount role for
an effective business plan. Framing strategy helps to determine the market taste and industry
niche (Kaliappen and et.al., 2019). To perform better in the industry an organisation have to
chose one of the Porter's generic strategies. Following are the strategies available to the Armani
group:
 Cost leadership: The first among the Porter's generic strategy is cost leadership which
aids to gain competitive advantage by launching the product or service of the lowest
price within the given market. The cost advantage could be achieved by outsourcing the
resources rather than by developing or manufacturing it (Nyokabi, 2019). The different
methods to reduce the cost is by using innovative technology and raw-materials of low
cost. Armani is planning to develop a luxurious hotel & resort in Maldives which is
tourism investor place on the globe. The average price per night cost is relatively high
due to one of the bucket-list and soon-to-be- wed honeymooner's destination on the
planet. The success of the tourism industry in Maldives relied on various factors i.e. the
current political role had resulted in introducing number of tourism taxes which support
the developmental needs. The another factors are social, economical and technological

one which assist the hotels to be cost effective. It is comparatively difficult to launch a
product or service at low price in Maldives.
 Differentiation: The another generic strategy of Porter's is differentiation in which an
organisation put its efforts on creativity, innovation or uniqueness while launching
product or service. This strategy includes high-switching cost with a wide customer
loyalty as the service or product offered is rare and difficult to substitute (Tavitiyaman
and et.al., 2018). This strategy is followed when the company is providing a unique
value to the audience through high quality, strong customer support or different
features. The differentiation strategy is based on two fundamentals i.e. R&D and
marketing to attract the customer so to match the company's mission. Armani could use
this strategy as to expand its luxury hotel chain in Maldives require a huge investment
with a relatively high pricing of the hotel booking. The pure elegance, simplicity and
comfort reflecting the signature style resulting in stay with Armani philosophy which is
characterized by excellence in service.
 Focus: In this strategy the primarily goal of the firm is on a particular or narrow
segment of the market. The company is focusing its resources on the specific group of
customers such as elder, teenager, kid. The other factor which affect the focus of the
company are the type of product, geographical area, service line, customer's
characteristics, service specification (Xia and et.al., 2020). Armani company could rely
on this strategy because they have chosen the hotel business to expand in the Maldives.
It could help to focus on the particular section of the society as the destination is not a
go to place for every person. Although, it is a tourist place but the selected crowd
preferred to visit the place. Mainly, this strategy has two variants i.e. cost focus which
provide a cost advantage to its target segments and differentiation focus seeks to target
specific focus.
The one of the generic method to obtain competitive advantage is a combination of
differentiation and focus Porter's strategy because the Armani hotel is planning to expand the
chain in the new country i.e. Maldives. With the characteristics of both the strategy the Quoted
company would be able to identify or segment their customer's base and the brand name of the
Armani provides an edge to the competitive market prevailing in the Maldives which helps to
establish their hotel in that geographical area. The cost-leadership strategy would not be opted

due to the high-pricing of hotel services as it is known for as the island nation. With the Covid-
19 pandemic being endemic the rise in the tourists due to concept of “one island, one resort”
attracts the international audience (Adam, 2020).
Strategic Business Plan
Background: Armani business solution is trying to expand their business sector through opening
hotel in market area of Maldives as it will contribute in building global presence. Moreover, for
sustaining in business environment and to reduce competition it is important to adopt
diversification.
Business Objective:
 To expand business in new market area.
 To improve profitability of firm.
 To enhance customer satisfaction.
Market analysis
It is one of the crucial business method as it allows in identifying external and internal factor that
can impact on firm in negative as well as positive way.
SWOT
 Strength:
Good brand image in market area has helped firm in increasing their customer base as
well as sales of the organization.
 Weakness:
The company has been involved in PETA controversy which has diminished its brand
value in market. Along with another weakness is its only sell high price services and
products that has lead in loosing potential customer.
 Opportunity:
Armani have an opportunity to expand in new market area and to maintain good global
presence. It will be expanding in Maldives which will contribute in increasing their sales
through attracting large customer (Narasimhan and Zhang, 2020).
 Threat:
One of the major threat organization is facing is COVID -19 as it has shifted taste of
customer and due to that company has to come up with innovative idea in order to deal
with the issue. Moreover, another threat is duplication of product and due to that

organization brand value will decrease.
PESTLE Political: The company need to follow all polices implemented by government otherwise
it will negatively impact on productivity of company. Economical: Armani will be opening their venture in Maldives which has good
economic rate and it will help the organization to attract customer with good disposal
income (Kolios and Read, 2019). Social: Now days there are various trend going on in hospitality sector like event and
travelling package. Armani will be following customer taste and preferences in order to
increase their sales in positive manner. Technological: The organization will be making use of digital marketing for attracting
customer as well as to enhance their brand value. Legal: Laws like Company and employment act will be followed by Armani so that it
can avoid illegal work ad law suits.
 Environmental: For developing the society CSR activities will be followed by company
as well as it will be making use of environmental friendly products.
Market Segmentation:
 Segmentation of customer has been divided on the basis of their income as most of the
services of company will be luxury. Along with this, the company will be segmenting
consumer on mid-market in order to increase their sales (Nasir and et.al., 2022).
 Targeting: The company will be targeting audience like families, leisure travellers and
corporate as well as honeymooners. The service of company is mainly hospitality so
selecting such customer will contribute in increasing overall sales.
 Positioning: The company will be positioning their organisation in prime location so that
it can give their customer luxury services. Along with this, Maldives is one of the best
market area for Armani to expand as it is prime location and very famous among
travellers.
Marketing Mix Product: The company will be giving their customer variety of luxury services to their
customer such as robotic staff and travelling with accommodation. Price: It will be making use of competitive pricing strategy in order to sell their services.

 Place: It will be opening in market area of Maldives so that quality services can be given
to customer.
 Promotion: It will be making use of digital marketing like social media sites for building
awareness in firm.
Funding sources
The company will be gathering funds through angle investor and financial institution by taking
loan so that it can invest in new marketing segment.
Monitoring and Controlling
For measuring success of company KPI tool as it will help in tracking strategic business
outcomes. Along with this, it will help team to focus on important aspect.
CONCLUSION
The report has been concluded by recommending the internal factor which includes
strengths i.e. huge capital investment & weaknesses i.e. lack of loyal customer's & expensive
room rates. The external factor includes the opportunity and threat which are continuous
expansion and huge competition respectively. Project was described into different modes of
entry into international business i.e. licensing & franchising, joint venture and FDI. The case
study has been summarised that the Armani hotel group could easily adapt the Maldives as a
chosen geographical area to expand. The report has been applied Porter's generic strategy and a
combination of differentiation and focus strategy helps the quoted hotel to gain the competitive
advantage. In the end, the case study was produced with the strategic plan to measure the success
and improvement required in the near future.