Marketing Report: Equitek Ltd's Expansion into German Market

This individual management report analyzes the marketing strategies of Equitek Ltd., a UK-based manufacturer of bespoke saddles, as it plans to launch leather belts in Germany. The report begins with an executive summary and introduction, followed by a detailed analysis using the PESTEL framework to assess the micro-environmental factors influencing the business. It then explores various market entry options, including mergers and acquisitions, strategic alliances, and franchising. The report further examines market segmentation and targeting strategies to identify potential growth areas. Finally, it applies Porter's generic strategy model to analyze the competitive landscape and recommend appropriate marketing strategies for achieving the company's goals and objectives within the German market. The report provides a comprehensive overview of the key considerations for Equitek Ltd.'s expansion, including political, economic, social, technological, legal, and environmental factors, and offers insights into strategic decision-making for successful market entry and competitive positioning.

Individual
Management Report

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PESTEL ......................................................................................................................................3
Mode of entering the market.......................................................................................................6
Market segmentation...................................................................................................................7
Porter's generic strategy..............................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

EXECUTIVE SUMMARY
This assignment is based on different concepts and aspects of marketing and the
contribution made in activities of business organisation. Marketing strategies have been included
in this for helping the company achieve its goals and objectives. Equitek Ltd. Is a company
situated in UK. Furthermore, it is a manufacturer of besposke saddle which is considered
luxurious. It is launching leather belts in Germany in order to expand the market and customer
reach.
Furthermore, this report comprises of different parts which start with PESTEL wherein
micro environmental factors have been analysed.
The second part is about various market-entry options that can be considered by Equitek
Ltd. to enter the market. These include Merger & Acquisition, strategic alliance and many
similar routes.
Third section has elaborated about market segmentation as well as targeting which can be
considered by Equitek Ltd. for identifying those areas having greater potential. This helps in
formulating market strategy.
The last division has explained marketing strategies for achieving goals and objectives. In
this part, Porter's generic strategy model has been used to analyse the level of competition.
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INTRODUCTION
Strategic marketing is a broad concept comprising of activities such as planning,
developing and implementing of plans and strategies formulated for this purpose. It is a process
which helps the company to outperform the competitors and create an identity which helps the
people differentiate it from other entities. In this report, Equitek Limited has been chosen which
is currently operating in United Kingdom. It has its headquarters in Burntwood, United
Kingdom. It has started in 2016 and wish to expand the customer base and market segment for
which it is planning to launch leather belts in Germany. This assignment comprises of analysis of
micro-environmental factors to determine opportunities and threats, various modes of entry in to
the market, critical evaluation of market segmentation and targeting and strategies of Porter's
generic model along with choosing one to apply within the organization.
MAIN BODY
Country and company
Equitek Limited is a medium sized entity incorporated in the year 2016 and manufactures
luxury equestrian products. The business is doing well and planning to expand the business
outside UK in order to provide the products which are in high demands. The quality of goods is
premium for which it charge prices that might be little more than the prices offered by
competitors. Currently, it has very limited stores but the expansion will help it to get a strong
base in the country. It has analysed the potential in the markets of Germany which can help
Equiteck Ltd. reach more customers with its products. Since, the chosen company is from UK,
which is a European country therefore, it has knowledge about the legal as well as taxation laws.
Furthermore, EU commission has provided some directives which is also known to the company.
Therefore, it is suitable market to launch the products. Apart from Germany, there are other
countries as well which can be considered to expand the business and these are China because it
is a developing nation, America due to its dominance position in the world and India because it is
also a developing country.
However, it is imperative on the part of this company to conduct detail analysis by using the
PESTEL in order to understand the impact of various micro-environmental factors. The same has
been provided below:
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PESTEL
It refers to a tool utilised for analysing external factors which have impact on the
operations of the company. With the help of PESTEL, Equitek Ltd. can identify threats and
opportunities prevailing in Germany. The outcomes will be used for making plans and policies in
order to implement them within the organisation. The factors responsible for affecting the
business are shown with the help of PESTEL which is as follows:
Political factors- These include all the policies and plans made by the government for
the benefit of people and organisation in a country. Some of the examples are foreign trade
policy, tax policy, labour law etc. For the markets of Germany, trade is an important factor for
which the government has developed policies to ease the business dealings and reduce barriers
for international exchange of goods or services. It makes the economy attractive for investors to
invest.
 Opportunity- The government of Germany has formulated plans for making cross borders
companies to invest in the country. Stable political conditions are favourable for the
businesses which is a great factor in carrying the operations without any hurdle. This
support is constant and entities are encouraged to opt for this. Therefore, Equitek Ltd. can
easily get all the formalities done with the support of government in order to begin the
operations expeditiously. The political conditions are stable in the country as shown in
the chart.
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Fig 1. Political risk index
Source: (Political risks in Germany, 2019)
 Threat- The main aim of the government of Germany is to make new laws and existing
enactments for business organizations. In this way, government intervene too much in the
matters which may cause issues in carrying business smoothly. In the context of Equitek
Ltd., it must consult government for every decision or action related to trade.
Economic factors- There are variables such as interest rates, tax rates, law, wages,
inflation, labour, demand and supply etc. These have direct connection with business and should
be considered for making decisions. Germany's economy is growing rapidly and gained a strong
position by earning surplus amounting to $130billion from the free global trade. There is huge
scope for household and personal products in Germany's markets.
 Opportunity- Germany offers huge benefits for making investment in household and
personal products. The government wish to have more investment due to which it has
increased ease of doing business. Equitek Ltd. can cover all those areas where household
and personal products are difficult to reach. The GDP of the country is stable from last
few years which is about few years.
Fig 2. GDP rate in Germany
Source: (GDP in Germany, 2019)
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 Threat- The fluctuations in the business cycle may bring period of inflation which may
cause adverse effect to entities. This may enhance the costs of labour and other related
elements. Therefore, Equitek Ltd. can hire cheap labours and prevent making investment
at the time of inflation.
Fig. 3- Downfall of German economy
Source: (Economic conditions, 2019)
Social factors- These are the attitude, beliefs and values of people living in a society.
Factors included in this are distribution, age, and similar elements. Germany has seen huge jump
in immigration from all over the world and majority are from England. This can create
favourable market for Equitek Ltd.
 Opportunity- The ratio of young people as compared to aged ones is just double. When a
person starts to getting older, the need for household and personal products arise so as to
make their lives much easier. In this way, Equitek Ltd. can make increased sales. The
employment level in the country is stable even after cutting the jobs by different
organisation.
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Fig. 4 Age ratio
Source: (Age ratio, 2019)
 Threat- There are huge number of people who still rely on buying goods or services from
the physical outlets which have been existed from a long time. Also, majority of the
population are against using leather products. This can create dilemma for Equitek Ltd.
regarding the success of the plans.
Technological factors- These include advancements, developments of new technology
which can be used in the business operations for achieving goals and objectives. German
government has analysed the potential in switching to digital mode for conducting trade
smoothly. This can increase the attractiveness of the market leading to good infrastructure and
technological facilities.
 Opportunity- Germany is growing very fast which need advance technology to compete
with other economies. Furthermore, there are limited entities are into the business of
production of leather, this can help Equitek Ltd. to fix economical prices and give cut
throat competition to other entities.
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Fig. 5- Innovation index
Source: (Technology factor in Germany, 2019)
 Threat- German market is entirely new to Equitek Ltd. and this may require huge
investment in order to expand the business. Therefore, it must plan and make decision
effectively for the application of its profits and retained earnings.
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Fig. 6 – Investment in Germany
Source: (Investment in German, 2019)
Legal factors- The laws in the legal system of a country are included in this factor.
According to statues, there should be fair competition and trade practices along with equal
opportunities. There are different levels before the incorporation of a business for which
permission should be obtained by Equitek Ltd. Opportunity- With the policies for free global trade, the number of formalities and legal
requirements are low and the whole procedure is easy. This is a positive point in
conducting the business in German markets.
 Threat- The main issue for every business is to understand external factors which may
create impact on the operations of the entity. Equitek Ltd. may have to change plans and
policies according to the modifications taking place outside the company.
Environmental factors- These factors are related to nature, environment or ecology of
places where human being are living. Every organization use resources which are extracted from
the nature. With the imbalance in the nature because of industrialisation, the level of pollution
has increased in Germany and other countries as well.
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 Opportunity- Production of leather products with the use of latest technology can lower
harm on the nature as Equitek Ltd. can deposit the goods at one place from where it can
deliver to the locations from where orders have been received. Therefore, the level of
pollution in the air and other areas are what the government wants.
 Threat- With the increase in environmental issues, the government of Germany has made
strict rules and regulations for controlling such activities. This can cause additional
problems for Equitek Ltd. as it has to abide by the applicable statues in order to avoid any
legal consequences.
Mode of entering the market
A business entity needs a way to enter the new market therefore, different entry modes
are there which can be used. It is a strategic matter for which decision should be made with great
caution. In order to start business in Germany, Equitek Ltd. should opt for a suitable mode by
considering the costs, time, benefits and so on. Some of these have been elaborated below- Merger & acquisition (M&A)- It involves two words viz. Merger which is refers to
combination of two companies into one and acquisition is done when one company is
taken over by the other. It is done to attain synergy for creating increased revenue and
profit. By using this M&A, Equitek Ltd. can become stronger and competitive within the
German market. It is believed that, combination of two companies can create more value
as compared to one. However, the disadvantage for Equitek Ltd. can be that growth may
be affected adversely. This strategy can be used to enter the market of China because of
growing competition it would be tough for it to buy a place for incorporating the
business. Strategic alliance- It refers to an agreement executed between two individual businesses
for achieving some common goals. There is no creation of new entity such as joint
ventures or partnerships. However, the resources are shared with each other leading to
greater efficiency. If Equitek Ltd. use this mode, then it can select any local company for
using the resources in an optimal manner. On the contrary, it is difficult to find a
company of German origin who can share the resources with Equitek Ltd. Franchising- In this mode, there are two parties viz. Franchisor and franchisee in which
the former prepare some guidelines which are required to be follow by the latter in order
to carry the business. There is a fee which is to be paid for the continuation of this.
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