HI6008 Business Research: Alley Fashion Expansion Strategy Report

This report examines the business expansion strategy of Alley Fashion, a fashion retail company operating in Australia, focusing on a potential expansion into Townsville, Queensland. The report begins with an introduction to Alley Fashion and its current market position, followed by a literature review exploring the merits of regional expansion, including intra-regional and inter-regional strategies, and factors influencing firm performance. The research design outlines a descriptive study employing survey and interview methods to gather primary data from Townsville residents. The analysis will involve trend analysis and data visualization techniques, with the goal of determining the profitability of expanding the business in the home region. The report considers factors such as market size, customer base, and the competitive landscape. It concludes with a discussion of the findings and recommendations for Alley Fashion's expansion strategy. The report references several scholarly articles to support its analysis and conclusions. This assignment was created by a student and is available on Desklib to help students with their studies.

Running head: BUSINESS EXPANSION STRATEGY
BUSINESS EXPANSION STRATEGY
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Introduction
Alley Fashion, a privately owned enterprise in the fashion industry is facing
the business expansion dilemma. This company operates in the fashion retail sector
where the sophisticated fashionable customers being the women are targeted
mainly. Alley Fashion has its home business in the Sydney city of Australia. It
operates in 145 locations across the Australia region. The paper talks about the
business expansion decision of the CEO of Alley Fashion in Townsville, Queensland
city of Australia. The firm is taking a strategic decision to expand its business
operations in the home region for the growth of the brand. The market growth of
Alley Fashion is the main determining factor here in the home region in order to gain
the power in the competitive marketplace of fashion.
Alley Fashion also operates through e-commerce applications with a broad
consumer base. The digital platform of the business is accessed globally while the
physical store locations are mainly on the Australia region. It has its operations
spread on the most widely profitable markets of Brisbane, Melbourne and Sydney
however extending the business line with new markets will help the company in
gaining better ownership. Alley Fashion has its product segment divided into
dresses, skirts, tops, shirts, bottom-wear pants, jackets and the product line also
contains the accessories like bags, watches, jewelry along with the apparel
business. The product line is completely exclusive with the top branded apparel
companies. The brand positioning of Alley Fashion is majorly performed through
online advertising in the form of social media and the online website application from
where the global selling is done. The brand position itself for the women falling in the
age of 18 to 50 years with diversified regional segment. All the cultures are
combined and the products are suited for each segment as per their needs. The
brand focuses on the comfort and the style values of the consumers. It is positioned
mainly through sales promotion techniques in the form of customer discounts and
offers in the website for higher sales.
The paper focuses on whether the business expansion in Townsville region
will be profitable in terms of regional expansion strategy. It takes into account the
merits of inter-regional expansion and the environmental contexts under which it will
be operating. Townsville being a highly tourist attraction spot in Queensland attracts
lots of diversified customer base from the United Kingdom and United States

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majorly. The strategic decision to open a retail store in Townsville will attract foreign
customers and expand the business.
Discussion
Literature Review
According to the article “Liability of country foreignness and liability of
regional foreignness: Their effects on geographic diversification and firm
performance”, there exists a U-shaped relationship between the performance of a
firm and the inter-regions on which it is operating. The performance is seen to be
increasing with the diversification of business more in the home regional side than in
the inter-regional side. The intra-regional diversification will however, have much
better market exposure benefits. The marketing approach along with the market
research the market size determines this relationship. The business managers play a
big role here in estimation of the budget and financial risks in operating at the various
regions are expansion of business (Qian, Li and Rugman 2013). It considers the
measure of two types of sales – the inter-regional as well as the intra-regional sales
by the company.
The another scholarly report “Performance effects of intra- and inter-
regional expansion: the moderating role of firm-specific advantages” too share
the same views on the regional expansion of the business stating that home region
being a closed form of geographic area for business operations within the proximity
is favorable for the foreign liability. This strategy is adopted by most of the
multinational companies. The advantage of expanding business in the home region
provides the similar political, legal, social, economic and technological environment
which will be completely different for the inter-regional business expansion (Ral-
Trbeacz and Eckert 2016). The home region serves a benefit-integrated market for
the operations to continue. To minimize the transaction costs in the same region is
also another motive behind the set-up of business. The new product differentiation,
market opportunities and the brand recognition in the new market require huge
marketing efforts in the form of budget and research. The environmental similarity in
the home region business expansion will require less modification and adaptation
costs to the local conditions.

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The next journal article “Global, local, or regional? The locus of MNE
strategies” states that how the common currency helps in directly reducing the intra-
regional business effects through creation of the market distance for insiders. The
benefit of operation in the inter-region will provide the free-flow of labor in the
company along with the funds as per the financial and operational risks. The
intellectual property rights will be less with more common cultural and social values
reducing the economic distance. The distribution practices among the similar supply
chain increase the business network of suppliers and distributors. The requirements
especially in terms of adapting to a new geographic area although in the same
region were previously difficult, however presently with government aids and the
regional integration, the option to expand in inter-region seems feasible (Verbeke
and Asmussen 2016). The size of the firm increases with the footprint in the new
area exercising the full market power in the region restricting the market entry for
other firms.
In another research paper “Multinational firms pace of expansion within
Host countries: How high rates of pro-market reform hamper the local
exploitation of foreign knowledge”, it is discussed that how firms want to increase
their ownership in the market through localizing the business within the home region.
The new market activities by expanding the established business make the firm gain
a huge proportion of the existing product market. It also serves another benefit in
terms of business contracts and funding arrangement from the local investors and
the shareholders. The market conflict is much low in comparison to the intra-regional
expansion of business where different government regulations with excise duties pay
a high price for operating business (Putzhammer et.al, 2019). However, for better
market success, the firms can expand their business to intra-regional markets and
use that market knowledge in the host- region to create value by combining the
learnt practices with the host market knowledge preparing better market competitive
strategy with foreign ideas. The higher a firm operates in intra-regional expansion,
the better the institutional knowledge gets.
Another research article “Cluster policy and regional development: Scale,
scope and renewal” states that the regional path extension contributes to the
increase in business profitability in the form of cluster of business networks. This
implies in the sense that the industries as well as within the clusters within a region

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develop along well-established technological trajectories. It is mainly directed
towards the focus of firms where the industries has to operate on the reduced cost
and improved efficiency in existing value chains. Some incremental product with
process innovations are seen to take place, in this ‘race to the bottom’ situation
where the regional industries may eventually experience stagnation and a gradual
decline because of a lack of renewal (Njos and Jakobsen 2016). An important driver
of regional renewal is local firms’ diversifying or branching into related activities and
sectors. The possibilities for regional path renewal are strengthened when a region’s
industry structure includes related variety, i.e., the region has a wide range of
industries that are technologically related.
This research article “Firm resources, cultural distance and simultaneous
international expansion in the retail sector” discusses the fact that most of the
firms do not adopt the foreign market expansion due to the different foreign policies
and the different consumer market with different preferences in terms of tastes,
attitudes and values. The market penetrations strategy may fail into such high
sensitive markets with huge financial and operational risks. The international
expansion across the borders requires more financial resources along with market
knowledge to operate in the foreign countries. The home market provides the local
network and resources which proves to be more beneficial in terms of business
internalization (Mohr and Batsakis 2018).
Research Design
The research study should be descriptive in the sense that that the research
problem of business expansion is explored in broad terms taking into consideration
the regional expansion merits and demerits.
The research objective is to reach the decisional outcome of whether it is
profitable to expand the business in the home-region and in a new market or not.
The research questions are:
Question 1 – Are the regional expansion strategies profitable?
Question 2 – Which one of the regional expansion strategy will be fruitful: Inter-
regional or intra-regional?

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The data collection will be in the form of primary source through two ways:
a. Survey Method
b. Interview Method
The respondents of the survey will the women who are both residents and
migrants of the Townsville region. The sampling boundary is restricted to the
Queensland region to assess the environmental scanning. The probability sampling
method is to be performed, where the random stratified sampling will be done. The
stratification will be classified under the bases on demographic segmentation and the
behavioral segmentation. The demographic segmentation will include the age,
location, income class and the behavioral segmentation will include the lifestyle and
values of respondents.
The Likert-type scale with enumerative rating from 1 to 5 will be used in order
to analyze the data from survey. The trends analysis is to be performed with moving
average of 5 years in the market responsiveness of Townsville especially in the
fashion retail sector.
The data to be presented in the form of bar charts like histogram and graphs
like ogive.
The data will be interpreted taking into consideration the findings from the
data analysis. It will be chronologically arranged with the major highlights at the first
and the recommendations to be provided at the end in how to expand the business.

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Reference List
Mohr, A. and Batsakis, G., 2018. Firm resources, cultural distance and simultaneous
international expansion in the retail sector. International Business Review, 27(1),
pp.113-124.
Njøs, R. and Jakobsen, S.E., 2016. Cluster policy and regional development: Scale,
scope and renewal. Regional Studies, Regional Science, 3(1), pp.146-169.
Putzhammer, M., Slangen, A., Puck, J. and Lindner, T., 2019. Multinational firms'
pace of expansion within host countries: How high rates of pro-market reform
hamper the local exploitation of foreign expansion knowledge. Journal of
International Management, p.100703.
Qian, G., Li, L. and Rugman, A.M., 2013. Liability of country foreignness and liability
of regional foreignness: Their effects on geographic diversification and firm
performance. Journal of International Business Studies, 44(6), pp.635-647.
Ral-Trebacz, A. and Eckert, S., 2016. Performance effects of intra-and inter-regional
expansion: the moderating role of firm-specific advantages. Problems and
Perspectives in Management, 14(3), pp.8-20.
Verbeke, A. and Asmussen, C.G., 2016. Global, local, or regional? The locus of
MNE strategies. Journal of Management Studies, 53(6), pp.1051-1075.

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