Exploring the UK Cosmetic Market: A Joint Venture Report for Farmec

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INTRODUCTION
This study is based on conducting research that is focused on globalization and its impact.
The joint venture strategy used by multinational companies to enter the foreign market is to
be explained here in this report, what are the challenges that Farmec will be facing when it
will enter in the UK market (Salvador and Chisvert, 2011). The opportunity that Farmec
Company has in the UK market is to be discussed so this study is important for discussing
the potential revenues and opportunities for Farmec in UK market, what will be the
challenges it will have to face for joint venture strategy in the UK economy and whether this
strategy of joint venture is appropriate for the Farmec company or not all this is to be
discussed here in this study (Cahn and Donald, 2010).
For entering into the market of UK what will be the prior roles and tasks which are
mandatory to perform in order to make a lawful entrance in the country (Davies and
Johnston, 2011). The research will start from conducting the secondary data and then the
analysis of the data collected through secondary means will be done, then after the data will
be collected through primary data collection method, since in the previous report the
secondary data was collected and analyzed now in this report the primary data will be
collected and analyzed with the tools to measure the data collected Cahn and Donald,
2010). After recording and interpreting the data collected, the analysis will be done to find
the result of the study; this result will be defining the core or the essence of the study
(Cleary et al., 2014). The main aim of the study is to analyze the market condition of the UK,
whether the strategy of the joint venture will be feasible for penetrating for Farmec. The
strategy is having various complications and various opportunities for Farmec (Beamish,
2013). The opportunity is that the Russian company Farmec will be able to expand its scope
and area of function, there will be an increase in the revenues, customer base, profits and
the goodwill and brand image of the company will also be enhanced. The Russian market
has been captured and the company Farmec have been yielding very good profits there so
for expanding the scope it has to increase its business across the international borders and
in the UK it is trying to penetrate with the strategy of a joint venture. The study will be
including both the qualitative and quantitative collection of data, the qualitative collection

through secondary data collection method and quantitative data through primary data
collection method will be done in this report (Silverman, 2016).

CHAPTER 2 LITERATURE REVIEW
According to killing, (2017) the joint venture strategy is very much used by the companies in
the international market especially the American companies’ use this strategy to launch
themselves in the international market. The joint venture strategy has been proven to be
very successful and many companies have used in their routine strategy despite their own
huge brand goodwill. This study was conducted to study the 37 joint venture partnerships
for mostly for western European companies as through joint venture the company can
specify its conditions and can change the contract of partnership according to their specific
needs and wants. Although there is a significantly high rate of failures in joint ventures the
companies still prefer to partner and launch themselves in the foreign market through joint
venture because of many qualities and expertise of the local companies. In this joint venture
strategy both the companies work as partners and collectively take decisions on how to run
the brand and run the management of the newly formed partnership company. The joint
venture partnership is very common in every type of industry but is very popular in the
manufacturing industry where the technology is provided by the foreign company and the
local company delivers the same to the local market as it has its contacts.
According to Wu et al. (2015), research the cosmetic products that are famous and
appropriate in the eastern market will not be appropriate in the western market this is
because of the changes in climatic condition and change in the skin type of the consumers
using the products especially in the time of promoting the luxury brands for cosmetics and
makeup. The research shows that there is a rise in demand for the cosmetic products in the
UK and the rising in demand is a major attraction for the foreign companies and the local
companies to grab the untouched market of the country and use their strengths to capture
the market in the cosmetic industry. The basic motive of this research is to compare the
demand and the changes in requirements of luxury brand cosmetic products in the UK and
eastern market. The focus is extended to the increasing demand of the consumers especially
the young generation that has their specific requirements from the products and luxury
brands in fashion. The study defines the strategies to enter the market in a specific market
segment and the importance of joint venture for understanding the consumer market. This

research was conducted on the respondents of the age group of 18-26, which is the young
consumer population that prefer buying the luxury brand.
According to killing (2013), this study is focused on the joint venture strategy of the
companies that are planning to launch in the international market. The percentage in joint
venture partnership may differ from company to company and this percentage may depend
on the holdings in the capital as well as the goodwill of both the company in the foreign and
local market, the stronger the negotiation, the better will be the ratio of partnership. Joint
venture strategy is very famous but has some limitations about the profit sharing so many
companies after some time part their ways and end their partnership. The failure of a joint
venture partnership is also because of the decision making and management of companies
is disputed between both the companies. The more shareholdings more will be the power
to take the decisions so the conflicts regarding who will have the highest power and
authority to take decisions to occur in a joint venture.
According to mac, (2014), the study focuses on the UK market and the cosmetic industry
contribution in the UK’s economy and the contribution is £20 billion and this cosmetic
industry is very dynamic and vast thus 25% of the products are disposed and renewed each
year. The colour cosmetic is the ones that have the contribution of £ 1.6 billion in the total
cosmetic industry sector and more than 90% of the UK’s women population is into using the
cosmetics especially the colour cosmetics thus the companies have a very large consumer
market and scope in the UK market. Mac is the 7th largest brand in the world in the cosmetic
industry and has a large market share in the world as well as in the UK market. This brand
has used celebrity endorsement strategy to launch itself in the UK market and found its
opportunity in the UK market and hence it has its high-quality products that are unique and
very attractive it has managed to grab the attention in the UK market. The cosmetic industry
is very lucrative and the new entrants have very innovative products and offer the products
at very competitive prices so there is always been a threat from these small companies. And
for other companies to compete they have to lower their prices making it very difficult to
survive.

CHAPTER 3 METHODOLOGY
QUANTITATIVE RESEARCH METHOD
Primary data collection means collecting the data from the original source not from the
researches done earlier. This means actually collecting the data from the people either
through face to face interaction or in the form of a questionnaire. The primary data
collection can be done through various tools like survey, interviews, experiments,
observation etc. but the most popular and most common method for collecting the primary
data is the survey through asking questionnaires. There are many ways to choose the
sample for a survey the survey hence can be done through random sampling survey or
stratified sampling etc. the most popular sampling is done either through choosing the
random sample or by using demographic factor as the basis to choose sample (Liddy et al.,
2011).
Here primary data collection method is used because the actual and new data will only be
gathered from actual interaction of the people, for conducting a research on Farmec
company and its joint venture strategy the survey is necessary here as the secondary data is
old and is not that much appropriately related to the topic and company discussed here.
The research cannot be relied on the secondary data, to conduct full research the primary
data is to be collected with reference to secondary data (Trzesniewski et al., 2011).
Advantages of primary data in this report is that, The secondary data is old enough as the
technology is changing and every day there are so many companies launched in the UK that
entering into such a big competitive market so for that secondary data is not enough to
study the penetrating strategy and to study the market situation and market condition
especially in the cosmetic sector (Enders, 2010). Primary data provides the current market
situation and current trends, the current economic condition of the UK, since there is
BREXIT that will be making a huge impact on the policies and laws of the UK, the whole
economy will be disturbed through this political move, so to study the situation and
whether or not to enter the UK market through this joint venture strategy, the market
survey and market needs, current market trends changes in skin type and changes in skin

tone may affect the consumer perception and customer behaviour so how to enter in the
new market a local company that have knowledge and experience of UK's consumer market
will be very beneficial for the company (Stokinger and Ozuem, 2018). Data collection is done
through Quantitative research method by conducting primary research by doing a survey of
the questionnaire where questions are asked from the respondents (Hewson and Stewart,
2014).
Survey- a survey is a tool or method for collecting data and is collected from a set of
respondents in a group where the group is predefined on the various topics of research and
to collect the information for deriving a result. The type of survey is chosen on the basis of
the objective of the research and the methodology chosen by the researcher. There is
majority a standard process for conducting a survey based on the aims but also to ensure
that all respondents fit in the criteria for the research (Suen and Ary, 2014). For conducting
a survey first the sample is to be selected that involves the audience who will be the
prospect respondents of the research, this sample is chosen according to the demographics
and other characteristics. The demographic characteristics include gender, age, and country
wise segmenting etc. thus the better audience the better will be the quality of the survey.
The next step is to decide the sample size because how much people will be surveyed for
this research is to be decided in advance, to choose the sample size the objective and its end
is to be decided and then accordingly the number of candidates to be surveyed is to be
decided (Palinkas at al., 2015).
The questionnaire is a combination of questions that are based on the research topic and
research aims and objectives (Shek et al., 2010). The questions are of two types closed-
ended questions and open-ended questions, the open-ended questions come with the
detailed answers with a specific choice but the closed-ended questions include only multiple
choice answers and don't involve the reason for choosing the specific answers amongst
other answers. The open-ended questions are generally asked in the interview as the face to
face interaction gives you the option to provide detailed answers and in questionnaires
mostly closed-ended question is asked as here the answers are already known the only
selection is to be done by the respondents (Brace, 2018).In this research, the primary data
collection method of random sampling and questionnaire will be used here. Through
questionnaires, the data will be collected from 50 respondents and this questionnaire will

have 10 questions that will be asked from the respondents. Surveying through Random
sampling method in form of questionnaire is chosen for the primary research is because for
this research through survey only the information can be gathered. The qualitative research
method is the tool to collect the data for research through open-ended questions and
answers through face to face communications. The research method tends to collect the
data from the already done researches through journals, research papers, articles etc.
Links through literature review- The literature review described above is linked with the
primary research as the concept of the joint venture is not new and this strategy has been
used by various companies for penetrating in the market. The joint venture strategy and its
advantages are important for preparing the questions in the questionnaire. The joint
venture strategy is same for the companies but with some alterations in the partnership
ratios so the information collected from the literature review can be used for the primary
data research and primary data collection (Hart, 2018).
Ethical issues – there are various factors in research that can be taken as offensive in the
culture, personal beliefs of the society etc. during research the privacy and security of the
respondents may be affected but during this research, the privacy and security of each
respondent will be kept safe. The information collected will be only used for the purpose of
the research and its finding no further transmission of private information will be made. The
main ethical issue in this research that can be generated is that the respondents may not
respond to the given questionnaire (Miller at al., 2012).
Questionnaire-
1. Do you know the brand Farmec?
 Yes
 No
2. Is there any customer that demands Farmec cosmetics?
 Yes
 No
 Sometimes
3. What is the current preferability of the consumers in cosmetic?
 Facial products

 Lipsticks
 Daily care body products
 Other cosmetic products
4. Which brand of UK is most famous and most preferred by the customers?
 Charlotte Tilbury
 Ciaté London
 Rimmel London
5. Among Which international brand is famous for cosmetic in the UK?
 Maybelline
 MAC
 Benefit
6. Is the BREXIT law policy favourable for the joint ventures?
 Yes
 No
7. Will the exit of European Union impact negatively on the cosmetic industry of UK?
 Yes
 No
 Maybe
8. What are the risks associated with a joint venture in the UK?
 Low customer acceptance
 High cost
 Low brand recognition
9. What is the most important factor for entering into UK economy?
 Large scope for audience
 High level of profits
 Good Market situation for cosmetic brands
 Large female ratio in the population
 Low-cost outflow through a joint venture
10. Which one is better?
 Joint venture
 Acquisition
 Own brand launching

CHAPTER 4 RESULTS
1. Do you know the brand Farmec?
Brand recognition Respondents
Yes 30
No 20
From the above chart it can be determined that the Farmec brand is not known to the shop
vendors or the store outlet owners this is because the Farmec is a Russian brand and most
of the audience use either American or European brands for their skin so the brand is less
known still 40% of the vendors have recognised the brand so this is a good sign for Farmec.
For this 40% of the positively responding population is the opportunity for the company.
These stores and these shops can be targeted for selling Farmec brand.

2. Is there any customer that demands Farmec cosmetics?
Brand recognition in consumers of UK Respondents
Yes 20
No 25
Sometimes 5
The above table shows the brand recognition of Farmec Company in the UK market
and there is not a very positive response from the respondents, but still 20 out of 50
respondents ask for the Farmec brand in the stores thus these people will be termed
as the motive for Farmec to launch its product in the UK market and the people who
are not aware of the brand will be targeted as prospect audience and can be termed
an opportunity for the company to launch its best range of cosmetics in the UK
market. The people who sometimes ask for the brand are the ones who only have
seen the advertisement or may have somewhere herd of the brand; these can be the
prospective customers of the Farmec brand.

3. What is the current preferability of the consumers in cosmetic?
Cosmetic favourability Respondents
Facial products 20
Lipsticks 15
Daily care body products 10
Other cosmetic products 5
From the above chart it can be easily determined that the all the range of cosmetic products
have the best selling product range is facial product range including all face crèmes, eye
makeup range, other makeup range for face etc. this means that the target audience is
highly attracted to the facial product range and hence Farmec company should concentrate
on launching facial products, the next most demanding range is lipstick as lipstick alone can
capture a huge customer base and can involve high range of market share. The next target
should be the daily care products like body crème, facial masks, scrub crèmes etc. the range
of products launched by Farmec should be a combination of all these products in the above-
mentioned preference ratio.