Report: Johnson & Martin Ltd's Expansion into Middle Eastern Markets

This report assesses the potential for Johnson & Martin Ltd, a UK-based clothing manufacturer, to expand its business into the Middle East, specifically targeting Turkey, Egypt, and Saudi Arabia. The report begins with an introduction to the company and its objectives, followed by an analysis of market opportunities, including value propositions, target market identification, and market segmentation based on demographics, lifestyle, and geography. It provides detailed market and competitor analyses for each country, identifying opportunities and threats. The report then outlines core marketing strategies and launch/growth strategies, alongside financial projections and an assessment of the investment environment in each country. It also addresses resource requirements, financing, and potential risks, culminating in recommendations and a conclusion. The report aims to guide Johnson & Martin Ltd's decision-making process regarding its Middle Eastern expansion, offering insights into market dynamics and strategic approaches.

Running Head: Thriving in Competitive Global Context
Thriving in Competitive Global Context

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Contents
Introduction......................................................................................................................................3
Analysis of the market opportunities...............................................................................................4
Value proposition.........................................................................................................................4
Identification of target market segment.......................................................................................4
Market Segmentation...............................................................................................................4
Target market...........................................................................................................................5
Market & competitor analysis.........................................................................................................6
Turkey..........................................................................................................................................6
Identification of opportunity and threats.................................................................................7
Egypt............................................................................................................................................7
Identification of opportunity and threats.................................................................................8
Saudi Arabia................................................................................................................................8
Identification of opportunity and threats.................................................................................8
Marketing strategies.........................................................................................................................9
Core marketing strategy...............................................................................................................9
Launch/growth strategy.............................................................................................................10
Financial projections......................................................................................................................10
Investment Environment............................................................................................................10
Turkey....................................................................................................................................10

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Egypt......................................................................................................................................13
Saudi Arabia..........................................................................................................................16
Identification of resources required and financing....................................................................19
Turkey....................................................................................................................................19
Egypt......................................................................................................................................20
Saudi Arabia..........................................................................................................................20
Identification of material risk and mitigation............................................................................21
Recommendation...........................................................................................................................22
Conclusion.....................................................................................................................................23
References......................................................................................................................................24

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Introduction
The report talks about Johnson & Martin Ltd, a manufacturing Company who deals in the
manufacturing of the clothes for the young people. The products provided by the company are
fashionable and have quality. The company is established in the UK which is saturated and
having the little prospects for the future sales growth. The top management of the company has
decided to expand the business in the Middle Eastern Regions and decided three countries as
their potential market which includes Turkey, Egypt, and Saudi Arabia.
The aim of the report is to assess the opportunities in the Middle Eastern Region. The Johnson
and Martin is the medium sized firm who is now looking to expand a business in other regions.
The long-term objective of the J&M is to set the operation in the Middle Eastern regions. The
report includes the research and the analysis on the basis of which the company will decide in
which firm they should enter first. At the end, mode of entry is suggested to the company with
the help of which the company will be able to enter the market.

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Analysis of the market opportunities
Value proposition
The company is trying to provide the unique value to the customers that enhance customer
satisfaction. The Johnson & Martin is providing the quality product which can be felt by the
customer after touching the stuff and once the customer wears it. The stuff provided by the
manufacturer is made up of that fabric which provides the comfort to the customers (Toytari,
et.al, 2017). The manufacturer provides the fashionable products for youth that attracts the youth
towards the manufacturer.
Identification of target market segment
The market analysis is the study which helps the company to understand the market in which
they are going to settle their business.
Market segmentation
The market segmentation helps the company in identifying the target market. The market
segmentation is the process with the help of which the company is able to divide the potential
customers into different groups and segments (Wilkinson, 2013). The segmentation of the market
will be same for all the markets where a company is looking to expand the business.
Demographics- The demographic factors include the gender, age group, income and other
factors.
 Gender- Company deals in the manufacturing of the clothing for the young people. The
company is medium sized firm; the firm produces products for both boys and girls. The
attire at a store is available for both boys and girls.

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 Age- The manufacturer targets the teenagers and youth having the age group of 13-18
and 18- 25 years. The reason being the company believes in providing the quality and the
fashionable product so this age group can easily understand the clothing stuff and quality
(Brito, et.al, 2015).
Lifestyle- The segment on which the company can focus is a lifestyle of the people. The Middle
Eastern regions people lifestyle is different from the lifestyle of UK. The manufacturing firm can
produce the product considering the lifestyle of the people in the Middle Eastern regions (Zhang,
and Rong-rong, 2016).
Geographic segmentation- The different regions have different clothing preference, the
company is looking to expand the business in the middle east regions, over here also company
need to provide the products considering the demand of the customers and their preference
(HORNER, and NADVI, 2017).
Target market
The Primary focus target market of the company is geographical segmentation; the company is
looking to expand the business in Turkey, Egypt, and Saudi Arabia. The demographic
segmentation is also considered by the company when the company expands the business in the
Middle East regions. The secondary target market for the manufacturer will be a lifestyle of the
people living in the Middle East regions as the company needs to consider their lifestyle because
each and every people have a different lifestyle (Rosenau, and Wilson, 2014). The culture of the
Turkey, Egypt and Saudi Arabia varies a lot similarly their lifestyle varies which makes the
difference in their dressing style.

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Market & competitor analysis
The market and the competitors in the market varies from country to country, to expand the
business company needs to analyze the market and its competitors so that they can select the best
potential market for the expansion of the business.
Turkey
The clothing and textile industry is one of the crucial sectors of turkey, as it is the highest
contributors to turkey economy and the foreign trade. The contribution of these two sectors in the
economy of turkey is approximately 7%. The country includes more than 56,000 textile and
clothing companies and these companies give employment to at least two million people (Bureau
of Economic and Business Affairs, 2016). In the year 2013, the company got the 8th and 4th
position in the global cotton production and consumption respectively and got the 3rd position in
organic cotton production after India and Syria (Fibre2Fashion, 2017). The country is included in
top ten exporters of textiles in the year 2015.
(Source: Lu, 2017)

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FKN is the turkey leading clothing brand and the apparel wholesalers, who offers its services
across the world. This is leading turkey clothing manufacture and company will find the tough
competition (Jony Moin, 2013).
Identification of opportunity and threats
The company has the opportunity to expand the business in Turkey as the most of the industry of
the country is engaged in the cotton manufacturing. The company will get the opportunity to
form the new links with the retailers of the Middle East regions. These connections can give the
opportunity to the company for the overseas growth. Though, along with the opportunity, the
company will also face the threats from the local competitors (Aiama, et.al, 2016). The
companies who are already established in the market have a strong reputation and brand value.
Hence these companies can be a threat to the J&M Ltd.
Egypt
Egypt market includes the production process which consists of the cultivation of cotton, to
making yarns and fabrics along with the ready-made apparels. Textile and the apparel industry is
the 2nd largest sector, following to agro and play an important role in shaping the Egyptian
economy. Apparel sector accounts for the 3% of GDP and approximately 27% of the industrial
output (Fibre2Fashion, 2017). Approximately 25% of the total industry is attentive on the textile
production; out of this 12% are involved in the home textile, 8% in cotton yarn and
approximately 5% in other textiles. According to the research conducted in the year 2010, the
textile sector of the Egypt consists of 3,243 companies with the total investment of 3.2 billion
USD. The industry is soon going to get more of the support from the government (Zawya, 2016).

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PULL&BEAR and Bershka are the company who manufacture clothing for the young people.
These companies can become the big competitor of Johnson & Martin Ltd.
Identification of opportunity and threats
The company has the opportunity in the Egypt as the clothing manufacturing industry contributes
a high proportion of the GDP. Though, the market of the Egypt is already developed so if any
new company will enter the market will take time to establish the brand name and value. The
company has an opportunity to hire the workers at the average wages which leads to the profit
(Vadicherla, and Saravanan, 2015). The threat that can be faced by the company in Egypt, this
threat includes the successful establishment of the company because the market contains tough
competition among the company and these companies make strategies for the new entrance in
the market.
Saudi Arabia
The Saudi Arabia market for the clothing manufacturing is the growing market. The manufacture
of Johnson & Martin Ltd has an opportunity to grow in the market. The textile industries
producing the apparel for the youth are increasing and over the last five year, 28 factories
increase in Saudi Arabia. Considering the industrial activities 1429 to 1433H, the textile and
apparel industry shows a growth of 23, 45% and 35, 9% respectively (Al-Hassan, 2013).
PULL & BEAR is having operations in Saudi Arabia and the company manufactures the clothing
for the young people.
Identification of opportunity and threats
The opportunity for the company in the Saudi Arabia is more as compared to Egypt and turkey
because the Saudi Arabia market is the developing market but talking about the market of the

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turkey and Egypt both markets are developed. J&M can easily make the brand value and
goodwill in the developing market. Though, the company needs to form the links so that they can
provide the products to the retailer who can buy the product in bulk with the J&M. The company
can face the threat of the success of business in the market of the Saudi Arabia. Apart from the
success, there can be a threat to profitability or sales or revenue of the company (Hodges, et.al.
2015).
Marketing strategies
Each and every company make use of different market strategies for the company. The clothing
manufacturing companies also make use of the different strategies for different countries.
Though, the core marketing strategy for the company is same for all the countries (Solomon,
2014).
Core marketing strategy
The objective of the company is to expand the business in the Middle East regions. The company
is clothing manufacturing that produces a product for the youth and at the same time, the
company believes in providing the quality of the products. The company core strategy is to target
the youth who are looking to buy the fashionable products. The company is looking to expand
the business in the other regions because they want to enhance the sales of the clothing they are
providing (Armstrong, et.al, 2014). The company decided to expand the business because they
want to earn more of the profit and wants to generate the awareness in the market.

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Launch/growth strategy
The company marketing strategy is the launch of the product and the growth of the business. The
company is planning to grow in the markets of Turkey, Egypt, and Saudi Arabia, and to grow in
the market the company need to launch the different and unique clothes for the young people
because the culture of the Middle East regions is totally different. The company startup in
Turkey and Egypt will help the company in making a profit because the market is well known
for the clothing manufacturing and in these potential markets company will face the tough
competition from the existing companies.
J&M Company can also expand the business in Saudi Arabia as the market of this region is
developing. The competitors available in this market are less as compared to the other market
because the market of the Saudi Arabia is the growing market (Barquet, et.al, 2013). The
company can expand the business in the Saudi Arabia but the company at the same time might
face the difficulty in the sales and the revenue of the company.
Financial projections
The market of the Middle East region is selected because the company knows it very well that
this region consists of many countries where the company can expand the business and can
easily make the profit out of it.
Investment Environment
Turkey
The market of turkey in the clothing manufacturing is reaching on a hike, if the company is
looking to expand the business in turkey then the company need to invest the huge amount

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(Balasubramanyam, and Togan, 2016). Considering the financial requirement in the business the
projected profit and loss statement, balance sheet and cash flow is given below:-
Johnson & Martin Ltd.
Profit & Loss Statement
Amount ($)
2016 2017 2018
Sales $580,000 $649,600 $812,000
Miscellaneous income $0 $64,960 $81,200
A. Total $580,000 $714,560 $893,200
B. Cost of Sales $377,000 $357,280 $446,600
C. Gross Profit (A-B) $203,000 $357,280 $446,600
D. Operating Expenses
Salary $100,000 $105,000 $110,250
Rent $12,000 $12,600 $13,230
Utilities $1,000 $1,050 $1,103
Insurance $500 $525 $551
Depreciation $35,000 $36,750 $38,588
Marketing $10,000 $10,500 $11,025
Maintenance & Repairs $5,000 $5,250 $5,513
Other $2,500 $2,625 $2,756
Total $166,000 $174,300 $183,015
Operating profit $37,000 $182,980 $263,585
Less: Interest $20,000 $17,500 $15,000
Profit before tax $17,000 $165,480 $248,585
Less: Tax @ 30% $5,100 $49,644 $74,576
Net Profit AT $11,900 $115,836 $174,010
Johnson & Martin Ltd.
Balance Sheet
Amount ($)
Assets 2016 2017 2018
Current $50,000 $60,000 $72,000
Fixed $350,000 $350,000 $350,000
Other assets $140,000 $100,000 $100,000