Joint Venture Analysis: Blue Clothing and Lojas Renner

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RESEARCH PROPOSAL
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Table of Contents
Chapter 1: Introduction..............................................................................................................3
1.0Introduction and Background............................................................................................3
1.1 Aim...................................................................................................................................3
1.2 Objectives.........................................................................................................................3
1.3 Research question.............................................................................................................4
1.4 Research Scope statement and Rationale.........................................................................4
Chapter 2: Literature Review.....................................................................................................5
2.0 Introduction......................................................................................................................5
2.1 Concept of joint venture...................................................................................................5
2.2 Conceptual framework.....................................................................................................5
2.3 Theories of market association.........................................................................................6
2.4 Factors of getting associated with an emerging market...................................................6
2.5 Advantages of entering into an emerging market............................................................7
2.6 Challenges of entering into an emerging market.............................................................8
2.7 Gap in literature................................................................................................................8
Chapter 3: Methodology Justification........................................................................................9
3.0 Introduction......................................................................................................................9
3.1 Research Approach/Design..............................................................................................9
References................................................................................................................................11
Annex 1. Ethical issues form..................................................................................................12
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Topic: Benefits and issues faced by the UK clothing company Blue Clothing to create joint
venture with Lojas Renner to enter into the market of Brazil
Chapter 1: Introduction
This proposal is for a piece of research on using of joint venture strategy by UK clothing
company namely Blue Clothing to enter into the emerging market of Brazil.
1.0 Introduction and Background
The importance of globalisation and their effects on the organisational success are analysed in
this research. Different strategies are followed by the businesses to enter into the emerging
market that can reduce their financial loss and increase the number of customers. Therefore,
joint venture strategy is explained here that can help Blue Clothing to select a clothing retailer
of Brazil to successfully enter into the Brazilian market. As there is high demand of advanced
European clothes in Brazil and low number of retailers that provide these types of clothes,
market expansion of Blue Clothing can be beneficial for Brazilians.
 Organisational background
Blue Clothing is homeware and fashion designing British organisation headquartered in
London, UK. The company designs progressive and adventurous clothing and homeware
clothes mainly for female. The company manufacture male and female products separately for
the high street (blueclothing.co.uk, 2019). The company has been operating national and
international market since 1986. However, the company faces low financial growth in 2018.
1.1 Aim
Aim of the research is to determine the risks and benefits of joint venture strategy that can be
followed by UK fashion company, Blue Clothing to enter into the Brazilian market.
1.2 Objectives
 To determine advantages and disadvantages associated with joint venture strategy for
market expansion
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 To analyse the reason for which Blue Clothing can expand their market in Brazil
through joint venture with Lojas Renner
 To evaluate the benefits and issues faced by Blue Clothing after entering into new
market
 To suggest the ideas that can be followed by them to improve market expansion
possibilities
1.3 Research question
How UK Fashion Company namely Blue Clothing can create joint venture with Lojas Renner
to enter into the emerging market of Brazil?
1.4 Research Scope statement and Rationale
Scope statement
The research analyses the joint venture strategy and its importance in expanding the market.
The risks and benefits associated with the joint venture strategy are evaluated in this research
that can help Blue Clothingto determine the effective joint venture strategy for market
expansion. Alongside, they can also identify the competitors in Brazil and a company with
which joint venture can be created. Therefore, this research evaluates the importance of
globalisation for low profit organizations to improve their profit with the help of previous
literatures.
Rationale
The topic is chosen in the research as it can help the companies to determine the joint venture
strategy to expand their business. As Blue Clothing face issues in the UK market, this
research can be effective for them to determine the market expansion strategies to increase
profit. On the other hand, it is identified that there is high demand of the European fashion
products in Brazil but there are lack of fashion retailers that sell these types of products (Liet
al., 2017). Henceforth, joint venture with Lojas Renner can help Blue Clothing to get a good
retail options to sell their designer clothes to Brazilians.
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Low profit
and lack of
demand in
the UK
To determine advantages and disadvantages
associated with joint venture strategy for market
expansion
To analyse the reason for which Blue Clothing can
expand their market in Brazil through joint
venture with Lojas Renner
To evaluate the benefits and issues faced by Blue
Clothing after entering into new market
To suggest the ideas that can be followed by them to
improve market expansion possibilities
Entity theory
and Game
theory
Primary
quantitative
data collection
Chapter 2: Literature Review
2.0 Introduction
The chapter will help in understanding the concept of joint venture strategy for entering into
an emerging market. This chapter discusses the factors which are associated with an
organisation for entering into emerging markets. The impact on several companies by
entering into emerging market would also be discussed in this chapter. The advantages as
well as challenges which might arise for an organisation if it wants to get itself aligned into a
new market economy would also be surfaced in this chapter.
2.1 Concept of joint venture
A joint venture is termed as an agreement of contract among multiple organisations which
undertake an economic activity which is subject to joint control (Kwok et al., 2018). Joint
control states an agreement in which none of the organisations in association has single
control over the economic decisions which are taken as a whole. As per the present global
market, the possibility of joint venture is quite feasible and required due to the changing
trends in the business activities in the recent times.
2.2 Conceptual framework
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Risks and
benefits of joint
venture
strategy that can
be followed by
UK fashion
company, Blue
Clothing to
enter into the
Brazilian market

2.3 Theories of market association
Entity theory
This theory states that all economic activities which are held by a business are separate for
different companies in joint venture. However, the main focus is the same which is
enhancement of profit. Under the entity theory, it has been stated that the company operations
are not alone responsible for all the liabilities of an organisation.
Game theory
Game theory is a theoretical framework for depicting the competitive environment in an
emerging market. This theory is instrumental in identifying the exact requirement of
inventory as well as resource which are essential for entering an emerging market (Kotabe
and Kothari, 2016). Moreover, game theory is the strategy of depicting the optimal decision-
making of definite variables which are essential for understanding the market situation.
2.4 Factors of getting associated with an emerging market
The factors of emergence of an organisation into an emerging market are as follows:
1. Agreement
The agreements among the companies in joint venture are completely defined regarding the
time span of alliance, governance as well as performance norms. For instance, Fenchurch is
an organisation in the UK which has made strategic alliance in the Brazilian market in which
it has set the norms as per Brexit regulations.
2. Alignment
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The successful joint ventures have found to be sharing their objectives. The risk or reward
strategies of partners are aligned for ensuring that it serves a value addition process for all the
companies in joint venture.
3. Development
As opined by Rottig, (2016), the relationship as well as the strategic partnership among the
companies in joint venture is developed by virtue of frequent communication. This
communication sets the benchmark for understanding the areas of strengths and weaknesses
for the individual companies in joint venture. For instance, Frost French is an organisation
which has strengthened its communication with cloth wear companies of Brazil in joint
venture stratification for understanding their business regulations.
4. Flexibility
The companies in joint venture strategy are aware of the potential distinctions in business
culture as well as decision-making process. This knowledge is instrumental for making the
strategies based on the limitations of companies in strategic alliance.
2.5 Advantages of entering into an emerging market
The advantages of entering into a joint venture strategy into an emerging market for an
organisation are as follows:
1. Accession to new distribution networks
As per the view of Li et al., (2017), an organisation can increase its sales value vehemently if
it is able to manifest itself in newer regimes of distribution networks. For instance, the
Monsoon Accessorize has been able to increase its sales value by 9.9% in the fiscal year of
2018-19 by entering into the Brazilian market which has a high demand for rain cloth wear.
2. Increment of capacity
Joint venture strategy increases the net capacity of an organisation which helps it in creating
more awareness among the public regarding its product range. In the case of Morlands, it has
been witnessed that after joint venture strategy by entering into the market of Brazil, the
company has been able to increase its total number of stores by 36%.
3. Cost as well as risk sharing
As stated by Bosoet al., (2016), Joint venture strategy helps an organisation to share the brunt
of burden of risk which is involved in business stratification. If an organisation faces issues in
managing its operations or if there is a deficit in funds, then it can share it with its partners in
joint venture of an emerging market.
4. Accession to greater resources
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The resources such as human resource, technology as well as financial aspects of an
organisation are obtained by strategic alliance with an organisation in an emerging market.
2.6 Challenges of entering into an emerging market
1. Unclear objectives
According to Kotabeet al., (2017), there is a fair probability of a conflict among the
companies which have a strategic alliance due to lack of communication. For instance, in
case of the joint venture of High and Mighty with multiple companies of Brazil, it has been
witnessed that the lack of a common objective has resulted in making the operations of High
and Mighty redundant for some of its stores leading to its net value reduction.
2. Difference in level of expertise among the companies
It is a common phenomenon that the levels of expertise as well as experience among the
companies in joint venture vary adversely. This variation can affect the timing of operations
conducted by these companies. An organisation with higher level of expertise is expected to
complete an operation faster compared to an organisation with lower expertise. This creates a
gap in operation timing which affects the business partnership among companies in an
emerging market.
3. Difference in culture and management style
The working culture as well as style of management among the companies in strategic
alliance in an emerging market is a great issue in cooperation. For instance, Jaegar has not
been able to identify the culture as well as management style of companies in Brazil with
which it has strategic alliance. Due to this the company suffered a loss of 2.9% of its
operating income in the fiscal year of 2018-19 (Lynch and Jin, 2016).
2.7 Gap in literature
Detailed research has been conducted on the association of companies in the emerging
market of Brazil. However, no focus has been given on the global scenario.
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Chapter 3: Methodology Justification
3.0 Introduction
Methodology section analyses proper research methods and designs that will be followed to
successfully carry put the primary research. Research methodology will help the research to
collect primary information in order to determine the importance of joint venture for Blue
Clothing to enter into the market of Brazil.
3.1 Research Approach/Design
Research methods and justification
Research methods include research philosophy, research design and research approach.
Research philosophy is used in the research to identify the nature of knowledge and it helps to
collect scientific data. In four types of research philosophies, positivism research philosophy
will be chosen in this research. This research philosophy will be used in this research as it will
collect scientific and true information from the natural phenomenon (Kumar, 2019).
Therefore, it will be effective for collecting information whether joint venture strategy is
effective for market expansion for Blue Clothing. Other philosophies will not be useful as
these philosophies cannot collect data from natural phenol and not effective for collecting
primary quantitative information.
Research approach assumes research plan for data collection based on the observation and
hypothesis. There are two different research approaches such as deductive and inductive
approaches. Deductive approaches will be chosen for this research as it can collect primary
quantitative data from the research question, hypothesis and subjective theories (Fletcher,
2017). As there are multiple theories related to partnership and joint venture and business
expansion, this approach will be efficient for this research. Inductive approach will not be
selected as there will not need of creating new theories based on observations.
Research design helps the research to create detailed data collected procedures (Cuervo‐
Cazurra et al., 2017). As primary quantitative data will be collected for this research,
descriptive design will be selected. It will help the research to collect data based on the
research questions and in-depth analysis of quantitative data will be possible. Other designs
will not be selected for this research as these will provide biased responses and data would not
be collected effectively.
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Data collection methods and justification
Primary and secondary data will be collected for this research. Secondary data will be
gathered from journals, news articles, books and company websites. Primary quantitative data
will be collected here and no qualitative data will be gathered. Survey method will be used to
collect quantitative data and for this purpose, staff of Blue Clothing will be taken to complete
the survey. In this method, online close-ended questionnaire will be sent to the staffs and
questionnaire will be filled with their responses. Random non-probability sampling will be
used to choose survey participants.
Quantitative data collection process will be selected for this research as it will be helpful to
determine the importance of joint venture with Lojas Renner for Blue Clothing. He numerical
statistics of quantitative analysis will help the study to gather perfect information about joint
venture for UK fashion organisation. Qualitative process will not be effective as this data
collection will depend on emotional perspective of the participants (McCusker and Gunaydin,
2015).
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References
blueclothing.co.uk Blue Clothing. 2019. Home. Available at: http://www.blueclothing.co.uk/
[Accessed 26 Jun. 2019].
Boso, N., Oghazi, P., Cadogan, J.W. and Story, V., 2016. Entrepreneurial and market-
oriented activities, financial capital, environment turbulence, and export performance in an
emerging economy, pp234-250.
Cuervo‐Cazurra, A., Mudambi, R., Pedersen, T. and Piscitello, L., 2017. Research
methodology in global strategy research. Global Strategy Journal, 7(3), pp.233-240.
Fletcher, A.J., 2017. Applying critical realism in qualitative research: methodology meets
method. International Journal of Social Research Methodology, 20(2), pp.181-194.
Kotabe, M. and Kothari, T., 2016. Emerging market multinational companies’ evolutionary
paths to building a competitive advantage from emerging markets to developed
countries. Journal of World Business, 51(5), pp.729-743.
Kotabe, M., Jiang, C.X. and Murray, J.Y., 2017. Examining the complementary effect of
political networking capability with absorptive capacity on the innovative performance of
emerging-market firms. Journal of Management, 43(4), pp.1131-1156.
Kumar, R., 2019. Research methodology: A step-by-step guide for beginners. California,
Sage Publications Limited.
Kwok, F., Sharma, P., Gaur, S.S. and Ueno, A., 2018. Interactive effects of information
exchange, relationship capital and environmental uncertainty on international joint venture
(IJV) performance: An emerging markets perspective. International Business Review, pp.23-
32.
Li, H., Yi, X. and Cui, G., 2017. Emerging Market Firms' Internationalization: How Do
Firms' Inward Activities Affect Their Outward Activities?. Strategic Management
Journal, 38(13), pp.2704-2725.
Lynch, R. and Jin, Z., 2016. Knowledge and innovation in emerging market multinationals:
The expansion paradox. Journal of Business Research, 69(5), pp.1593-1597.
McCusker, K. and Gunaydin, S., 2015. Research using qualitative, quantitative or mixed
methods and choice based on the research. Perfusion, 30(7), pp.537-542.
Rottig, D., 2016. Institutions and emerging markets: effects and implications for
multinational corporations. International Journal of Emerging Markets, 11(1), pp.2-17.
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Annex 1. Ethical issues form
Section 1: Basic Details
Project title: Benefits and issues faced by the UK clothing company Blue Clothing to create
joint venture with Lojas Renner to enter into the market of Brazil
Student name:
Student ID number:
Programme:
School:
Intended research start date:
Intended research end date:
Section 2: Project Summary
Please highlight all research methods that you plan to use as part of your project:
• Interviews:
• Questionnaires:
• Observations:
• Use of Personal Records:
• Data Analysis:
• Action Research:
• Focus Groups:
• Other (please specify):
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