International Market Analysis: Espirit's Australian Market Entry

This report provides an in-depth international market analysis for Espirit, focusing on its potential expansion into the Australian market. It begins with an introduction to international expansion strategies and the factors influencing market entry decisions. The report then examines Espirit's product offerings and suggests a new product, smartwatches, tailored for the Australian market. A detailed PESTEL analysis is conducted, evaluating the political, economic, social, technological, environmental, and legal factors influencing Espirit's operations in Australia. A SWOT analysis identifies the company's strengths, weaknesses, opportunities, and threats. The report also explores potential market entry strategies, with a focus on direct exporting. The analysis concludes with a summary of the key findings and recommendations for Espirit's international expansion plan. The report references various academic sources to support its claims.

Running head: INTERNATIONAL MARKET ANALYSIS
INTERNATIONAL MARKET ANALYSIS
Name of the Student
Name of the University
Author Note

1INTERNATIONAL MARKET ANALYSIS
Table of Contents
Introduction....................................................................................................................2
Factors related to the products.......................................................................................2
New product suggested to the company.........................................................................3
Target country for the products......................................................................................3
PESTEL analysis of the organization............................................................................4
SWOT analysis of the organization...............................................................................6
Potential entry strategies for the company.....................................................................7
Potential market for the company..................................................................................9
Conclusion......................................................................................................................9
References....................................................................................................................11

2INTERNATIONAL MARKET ANALYSIS
Introduction
International expansion strategy is mainly based on the entry of an organization in a
new country or market. The crucial choices related to the primary markets of that are within
the focus, the distribution of resources, value offerings of services and products, brand
positioning and channel strategy are an important part of the proper creation of the operating
model. The major reasons behind proper expansion of the operations are related to proper
growth of revenues, reduction of costs, diversification and recruitment of new talent as well
(Aguinis, Edwards & Bradley, 2017).
The report will be built on the study of international expansion based plans that have
been made by an organization. The factors that are considered for deciding the potential
market for entry are also an important part of the analysis that will be made in the report. The
organization that has been considered for analysis based on international expansion is Espirit.
The analysis of aspects related to proper expansion of the firm will be related to the selection
of an appropriate country where the products can be offered.
Espirit Holdings Limited is a producer of different items like footwear, accessories,
clothing, housewares and jewellery under the label of Espirit. The headquarter of the
company is located in Kowloon, Hong Kong. The worldwide sales that have been gained by
Espirit in the industry in 2007-2008 was around 3.25 Billion Euros. The company operates
greater than 900 retail based stores in different parts of the world and also distributes the
products to 8500 wholesale based locations. Espirit owns greater than 1.1 million square
meters of the retail space in around 40 countries (Esprit.com. 2019).
Factors related to the products
Espirit offers different apparel based products to the customers in the various stores of
the organization that function in various countries. The products that are offered to the

3INTERNATIONAL MARKET ANALYSIS
customers include, timewear, jewel, fragrances, eyewear, tights and socks, umbrellas, for
Mums, shoes and umbrellas. The products are able to accomplish the daily based needs of the
customers in various parts of the world (Esprit.com. 2019). The firm will be able to offer the
products to consumers in the area or country in which Espirit is planning to expand the
operations. The demands and needs of the customers can thereby be satisfied by offering
effective products in the new stores that will be opened by the company (Albers,
Wohlgezogen & Zajac, 2016).
New product suggested to the company
Espirit Holdings can be suggested for the development of a new product in order to
develop a new customer base in Australia. The company can offer smart-watches to the
customers in order to satisfy their demands and needs. The technological developments in
different countries are considered to be a key aspect that is able to support the company to
offer a product that is developed with the help of effective technologies (Esprit.com. 2019).
Target country for the products
Espirit has recently experienced major levels of decline in sales in the year 2018 and
the major ambition of the firm is thereby based on the methods by which the firm is able to
maintain the processes for a longer period of time. The plans based on international
expansion have been developed by the company in order to improve the revenue levels and
increase the presence of Espirit in different countries as well. The company is also trying to
find a new place in the market with the proper implementation of expansion based plans
(Bharati, Zhang & Chaudhury, 2015). The reduction that has been experienced in sales and
revenues of the firm has been able to play a key part in the plans related to further expansion
that has been developed. The target country that has been selected for proper expansion of the
organization is Australia. The changes that can be made in the image and strategies of Espirit

4INTERNATIONAL MARKET ANALYSIS
are important factors that have affected the expansion plans of the company (Cândido &
Santos, 2015).
PESTEL analysis of the organization
The fashion industry is facing many difficulties in the last few years and the
disruptive events have a key influence on the ways by which the organization has gained
success in the market. The internal sources and factors have also been able to influence the
fashion industry and different companies as well. The fast growth of the segment is
considered to be a major aspect that has a major impact on the processes of the organizations
(Engert, Rauter & Baumgartner, 2016).
Technology has been able to play a key part in the levels of influence that it has on the
tastes of the consumers. The segment of fast fashion has depicted huge levels of growth in
comparison to the luxury fashion industry. Consumers are also inclined towards the fast
fashion brands or organizations that operate in Australia. The PESTEL framework will be
applied in order to study the external environment based factors that have an influence on the
fashion organizations (Frynas & Mellahi, 2015).
Political factors – The political situation of a country can be considered as a major
source of uncertainty that has an impact on the operations of fashion organizations. The
political environment of Australia is highly stable in nature and the country is able to offer an
effective business environment to the fashion organizations (Helfat & Martin, 2015). The
competitiveness of the business environment in Australia is able to play a key part in the
methods by which international organizations can maintain their operations and increase their
presence as well. The organizations that enter Australia are able to implement the right types
of technology in order to drive innovation. The political shifts however need to be taken into

5INTERNATIONAL MARKET ANALYSIS
consideration by Espirit for the development of policies that can influence the organization
(Hitt, Ireland & Hoskisson, 2016).
Economic factors – The fashion retail industry is influenced deeply by the economic
condition and growth. The economic viability is able to affect the prices that are set by the
organization for different products. The levels of capability of customers to pay the price for
products are affected by economic condition. The prices of property in Australia are quite
high based on the levels of income of the individuals. The demands based on retail properties
are quite high in the country and Espirit will have to pay more for the development of stores
in different parts of Australia (Hitt, Li & Xu, 2016). The increase in levels of population can
have an impact on the demands for diverse products that are provided to the consumers in
Australia. The costs based on living in various cities like, Adelaide, Melbourne, Perth and
Brisbane are higher in compared to the other cities. However, the business related costs in
Australia are lower in comparison to the other developed countries (Hohenthal, Johanson &
Johanson, 2015).
Social factors –The society in Australia is divided into three major classes that
include, working class, middle class and upper class. The wealthiest class of Australia
constitutes around 5 to 10 percent of the total population of the country. The growth of
middle class in the country is mainly based on the growth of non-manual occupations. The
working class of Australia has also started increasing in the last few years due to increase in
entry of different organizations. The education levels of individuals of Australia have a
positive influence on the choice of products. The fashion industry in the country has started
growing and the organizations like Espirit can attract huge number of customers from various
parts of the world (Jarzabkowski & Kaplan, 2015).

6INTERNATIONAL MARKET ANALYSIS
Technological factors – The new technologies are helpful in creation of new
processes and products that can be offered to the customers in Australia. The developments
that have taken place in the proper usage of technologies are able to offer major levels of
benefits to the customers. The Commonwealth Scientific and Industrial government research
and development is a firm that is able to support the growth of technologies in the country.
The government of Australia provides funds in order to support the research and development
related activities that are performed in the country. The technological capabilities can be used
by Espirit in order to improve the products to customers (Rugman & Verbeke, 2017).
Environmental factors – The environmental aspects have an influence on the climate
change and the variations that take place in the climate as well. The major variations that
have taken place in the climate in Australia will have an impact on the regulations and
production processes that are developed by Espirit. The demand based patterns of consumers
are also influenced in a huge way by the changes that take place in the environment (Sousa &
Tan, 2015).
Legal factors –The legal changes that take place in Australian business environment
are influenced by the sanctions of United Nations Security Council. The bilateral sanctions
that are made for Australia are considered to be important factors that influence overseas
buyers and the partners as well. Espirit needs to understand the legal environment in order to
develop the company policies (Trigeorgis & Reuer, 2017).
SWOT analysis of the organization
Opportunities – The positioning of the brand name of Espirit is quite strong and has
an impact on the levels of awareness of the organization. The contribution that is provided by
wholesale and retail operations of Espirit is quite balanced in nature. The portfolio that has
been developed by Espirit in order to provide the products to consumers include kids’

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products, casual product and men’s products. Espirit operates many stores in diverse parts of
the world along with an employee strength of 15000 employees (Sousa & Tan, 2015). Espirit
has the opportunity to tap the growing levels of population and their levels of earnings as
well. The market of casual wear has also depicted major levels of growth in the last few
years. This is considered to be an opportunity that is mainly provided to the organization in
order to improve the stages of revenues. The production and manufacturing based costs can
also be quite low in different countries or international markets. The organization will be able
to improve the profit margins that are gained with the help of sales of the various products
(Tulung, 2017).
Threats – Espirit has a limited level of presence in Europe and this has an influence
on the operations of the organization and levels of profitability as well. The intense level of
competition that is developed in fashion industry is able to offer chances related to choice to
the customers (Trigeorgis & Reuer, 2017). The intense levels of competition that have been
developed in the fashion retail based industry are considered to be a major threat that is faced
by Espirit. The leading brands that are able to offer competition to the operations of the
organization include, Levi’s, Provogue and Wrangler. The threats faced by Espirit are also
based on the fake or cheap imitations are also considered to be significant aspects that have
an effect on the profitability of the company (Wolf & Floyd, 2017).
Potential entry strategies for the company
The potential market entry based approaches that can be used by Espirit in order to
start the operations in Australia will be mainly based on the ways by which the firm can
improve its presence in the country. The various approaches that can be applied by Espirit in
order to start the processes are as follows,

8INTERNATIONAL MARKET ANALYSIS
Direct exporting – Direct exporting is considered to be a method that helps the firm to
gain direct entry into the country. The company will use resources in order to distribute the
products and services to the customers in Australia (Yayla et al., 2018).
Licensing – Licensing is considered to be another major market entry method that can
be implemented in order to transfer rights of using the products or services to another. This
method can also be applied by Espirit in order to start the operation in Australia.
Franchising – Franchising can be considered as a process of fast expansion that can be
used by the organizations. The franchise model mainly requires two major caveats that are
able to collaborate in order to continue the operations (Yoboue, Yi & Antwi 2017).
Partnering – Partnering is related to the entry of organizations in the foreign markets
and different parts of the world. Partnering is also based on different forms that include,
simple arrangements to the strategic alliances.
Joint ventures – Joint ventures are considered to be a form of partnership agreement
which mainly involves creation of a company with the help of joint operations with the local
organizations (Zachary et al., 2015).
Piggybacking – This is considered to be a method that helps the firm to enter the
international market based arena. The uniqueness levels of products and services are
considered to be an important part of the implementation of this process.
Greenfield investments – The application of greenfield investments mainly need high
levels of involvement in the international business operations. The organizations in this case
purchase the land, build the facilities and also operate the businesses in the foreign market
(Wolf & Floyd, 2017).

9INTERNATIONAL MARKET ANALYSIS
The operations of Espirit can be started in Australia with the support of joint venture
based market entry method. The organization needs to plan its entry with the help of an
effective joint venture with a local company. This will reduce the requirement of high levels
of investments in starting the project (Trigeorgis & Reuer, 2017). The partner organization
will also offer major levels of support to Espirit in order to develop its processes and position
in the country within short periods of time. The customers in Australia will also be analysed
easily with the support that is provided by the local partner. The local organization that is
currently operating in Australia will also be able to provide its resources so that Espirit can
maintain its operations in a profitable manner (Albers, Wohlgezogen & Zajac, 2016).
Potential market for the company
The fashion retail market is considered to be a major potential market segment for
Espirit in order to enhance the levels of presence. The potential segment of the market is able
to play a key part in proper improvement of the revenues of Espirit in the industry. The
consumers in Australia will be able to play a key part in the enhancement of the position that
had been developed in fashion industry (Sousa & Tan, 2015). The Australian operations of
Espirit will be significant in reducing the impact of decrease in revenue levels of the firm in
the market. A joint venture is thereby considered to be best option for Espirit in order to
sustain the revenues in the potential market segment for improvement of the declining sales
levels in various countries (Yoboue, Yi & Antwi 2017).
Conclusion
The report can be settled by stating that Espirit will be able to maintain the revenue
levels in the fashion retail industry with the support that is offered by the international
expansion based operations. Australia has been chosen as the destination for expansion of
Espirit due to the opportunities that are provided by the country. The partnership with a local

10INTERNATIONAL MARKET ANALYSIS
organization will also play a major role in improvement of the revenue levels. The decline in
sales that is experienced by the organization will also improve with low amount of
investment that is made by the organization.

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organization design perspective. Journal of Management, 42(3), 582-614.
Bharati, P., Zhang, W., & Chaudhury, A. (2015). Better knowledge with social media?
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rate?. Journal of Management & Organization, 21(2), 237-262.
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1281-1312.