International Marketing Report: Michael Kors Expansion Strategies

This comprehensive report evaluates Michael Kors' potential for international expansion, focusing on China, India, Russia, and Iran. The analysis employs various business models, including PESTEL, Porter's Five Forces, Porter's Value Chain, Brand Audit, McKinsey 7S, GE Matrix, and SWOT analyses. The report delves into both macro and micro environments, examining political, economic, social, technological, environmental, and legal factors (PESTEL). It also analyzes the fashion industry's competitive landscape using Porter's Five Forces and Michael Kors' internal value chain. Furthermore, it includes a brand audit, a McKinsey 7S framework assessment, and SWOT analyses tailored for each target market, providing strategic recommendations for market entry and growth. The report also includes a discussion of core competencies and competitive advantages, along with an Ansoff matrix and Bowman's Strategy Clock for each market, concluding with a 12Cs framework assessment, and competitor analysis.

International Marketing
PM305
BSc Business Management
1

Table of Contents
Introduction..........................................................................................................................................4
TASK 1.................................................................................................................................................4
Global Macro analysis.................................................................................................................4
PESTEL analysis...............................................................................................................4
Global Micro - The fashion industry..........................................................................................7
Porter five forces model.....................................................................................................7
TASK 2.................................................................................................................................................7
Micro analysis – Within Michael Kors........................................................................................7
Porters value chain.......................................................................................................................7
Support activities:........................................................................................................................8
Brand audit...................................................................................................................................8
McKinsey 7S framework...........................................................................................................10
SWOT analysis for Chinese market...........................................................................................12
SWOT analysis for Indian market.............................................................................................12
SWOT analysis for Russian market...........................................................................................12
SWOT analysis for Iranian market............................................................................................13
TASK 3...............................................................................................................................................14
TASK 4...............................................................................................................................................15
TASK 5...............................................................................................................................................16
CONCLUSION..................................................................................................................................17
REFERENCES...................................................................................................................................18
Appendix............................................................................................................................................20
1. PESTEL Analysis for China, India, Russia and Iran.............................................................20
2. Porter five forces model on China, India, Russia and Iran....................................................22
COMPETITOR TABLE...............................................................................................23
Competitor Resource Analysis.....................................................................................24
3. PORTER VALUE CHAIN....................................................................................................24
4. Brand audit...........................................................................................................................25
Mintel - Luxury Goods Retailing - International - August 2014.....................................26
5. Core competencies and competitive advantages...............................................................36
Financial Position.....................................................................................................................37
Key advantages of Online marketing and physical marketing...........................................................39
Ansoff's matrix.........................................................................................................................40
Bowman's Strategy Clock on China, India Russia and Iran......................................................41
6. 12Cs Framework....................................................................................................................44
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Mintel - Environment of Russia – Infrastructure investment....................................................51
3

INTRODUCTION
International marketing is a marketing principle of satisfying various needs and wants of
different people who are residing outside national boundaries (Brush, 2015). Michael Kors is a
Limited Company which sells women and men accessories like watches and bags, jewelry,
footwear and fragrances. Michael Kors is evaluating the potential markets of China, India,
Russia and Iran with the view of investing there. They need to study different types of business
models and analyze the data provided by these models according to the business environment in
those countries presently, weighing up the pro’s and con’s before making the decision to go
ahead and invest in that country.
The business models chosen to evaluate the situation there are PESTEL, Porters 5
FORCES Model, Porters Value Chain, 12 C’s framework, Brand audit, McKinsey’s 7S Model,
GE Matrix and SWOT analysis. These models will help the company determine how best to
position their products and services.
TASK 1
Global Macro - PESTEL analysis
China India Russia Iran
Political Main impact of
political factors
upon China is that
Chinese
government does
not allow any other
country's business
to enter into China
and carry out their
business. They need
to form a merger
and alliance with a
parent company of
China and then
carry out the
business jointly
(Caroli, Cucculelli
and Pongelli, 2015).
Here, also
fashion industry
is affected by
different
political factors
that introduces
different rules
and regulation
which needs to
be followed by
firm in order to
carry out the
business
(Cavusgil and
et. al., 2014).
Russia is a
democratic
country and
thus different
laws are
formulated that
affects the
running of the
operations
within country
(Chetty, Ojala
and Leppäaho,
2015.
Political factors that
affect Iran because of
its Islamic republic and
thus aims to provide
all citizens with equal
and appropriate
opportunities (Gubik
and Karajz, 2014).
Economic Economic condition
of China has been
Economy of
India has been
Economic
condition of
Inflation rate in Iran is
13.5% in 2010 that
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reformed and thus it
helps businesses to
grow and flourish
(Isa, C.M.M. and et.
al., 2012).
significantly
stable and thus
introducing
industrial
reform policies
results in
improving the
economic
environment of
country (Isa and
et. al., 2012).
Russia mainly
depends upon
natural
resources.
Thus, through
having strong
economy
situation,
business needs
to pay more
attention upon
the education of
new generation
(Johanson and
Mattsson,
2015).
affects the population
to spend much on
fashion products
(Sleuwaegen and
Onkelinx, 2014).
Social China is very
concerned
regarding
population growth
and attempts to
stabilize the
population in order
to attain results
(Sikimic, Frattini
and Chiesa, 2013).
Such factors
refer to any
change in the
trends that
would impact
the business
environment
(Sandberg,
2013).
Conversion
from society
into autocratic
structure brings
gap between
poor and rich
(Brush, 2015).
Government and
residents are not
working together and
thus it affects the
social conditions of
Iran (Schuster and
Holtbrügge, 2012).
Technological Technology growth
in China is high and
thus it provides
opportunities to
fashion businesses
to use effective
technology to carry
out operations
Johanson and
Mattsson, 2015).
Technology
significantly
influences
product
development
and thus
introduces cost
cutting
processes to
bring latest
fashion in the
country
(Sikimic,
Frattini and
Chiesa, 2013).
Russia is
having high
technological
advancements
and thus
continues to
develop its
innovation that
helps fashion
industry to
grow and attain
success
(Schuster and
Holtbrügge,
2012).
Technology is at boom
in Iran that helps in
making best quality
products at lower cost
(Caroli, Cucculelli and
Pongelli, 2015).
Environment
al
Rapid industrial
development in
China negatively
impacts upon the
As a result of
growing
urbanization it
results in health
Rapid
infrastructure
development in
across Russia
Iran is suffering from
overgrazing and
deforestation that
affects the businesses
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environment and
thus increasing
pollution and
decreasing natural
resources affects the
fashion houses
(Cavusgil and et.
al., 2014).
problems and
creates pressure
upon
environment
which affects
the businesses
(Klebanoff,
2012).
due to the
upcoming
World Cup
2018
investment of
US$20billion
ensures
dilapidated
soviet era
infrastructure
which lacked
investment up
until now has
been updated
and is safe to
make business
possible.
Including
logistics of raw
materials and
finished goods
reaching
customers at
the earliest
(Mintel, 2016)
running in the country
(Johanson and
Mattsson, 2015).
Legal Government has
introduced different
laws in order to
support foreign
investors and
enhance the
economy of the
country (Kim, Min
and Chaiy, 2015).
There are
different legal
changes
implemented in
India such as
disability
discrimination
that directly
affects
businesses
(Sleuwaegen
and Onkelinx,
2014).
Russia also
changed its law
and order, in
order to help
people to invest
in this country
(Sandberg,
2013).
Legal regulations are
very weak in Iran as
Taliban are operating
and affecting the
businesses to carry out
the operations (Tang,
Atkinson and Zou,
2012).
Further explanation is available in the Appendix.1
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Global Micro – Within the fashion industry
Porter five forces model
China India Russia Iran
Buyer power High High Low Low
Supplier
power
Low Low High High
Competitive
rivalry
High High High Low
Threat of new
entrants
Low Low Low Low
Threat of
substitution
High High High High
Further explanation is in the Appendix no.2
TASK 2
Micro analysis – Within Michael Kors
Porters value chain
Primary activities China India Russia Iran
Inbound
logistics
Value of firm
will increase.
Value of firm will
increase.
Value of firm will
moderate.
Value of firm will
decrease.
Operations Value in
international
market
increases
(Brush, 2015).
Value in international
market will moderate
(Doole, 2008).
Value in
international market
decrease
(Sleuwaegen and
Onkelinx, 2014).
Value in
international
market will
moderate
(Sandberg, 2013).
Outbound Collection and
storage of firm
Collection and storage
of firm will increase
Collection and
storage of firm will
Collection and
storage of firm will
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logistics will increase
(Sikimic,
Frattini and
Chiesa, 2013).
(Cavusgil and et. al.,
2014).
moderate (Chetty,
Ojala and
Leppäaho, 2015.
decrease (Caroli,
Cucculelli and
Pongelli, 2015).
Marketing and
sales
Growth Growth Decline Equilibrium
Service Satisfied
customers
Satisfied customers Neutral Unsatisfied
Support
activities:
Procurement High Input of resources is
high
Low Moderate
Human resource
management
Skilled Skilled Skilled Unskilled
Technological
department
High
technology
Upgrading technology High technology Poor technology
Infrastructure Developed Growing Developed Underdeveloped
Further explanation is in the Appendix no.3
Brand audit
China India Russia Iran
Brand
proposition
Gain Gain Decline Neutral
Brand
strategy
Easy Difficult Easy Difficult
Brand
association
High Low High Low
Brand
strength
High quality
product
Minimum quality
products
High quality products Low quality
products
Brand identity Specific
design and
Attractive design and
logo
Recognizable Ineffective
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logo
Brand
development
strategy
High Moderate High Low
Brand
personality
High Moderate Low Low
Brand
positioning
Premium class
people
Middle class people Premium class people Middle and
low class
people based
on income
level
Further explanation is in the Appendix no.4
Resource Based View
Valuable
 Within the Russian market, Michael Kors is required to develop value creating strategy.
 In Chinese market, focus should be made on feasible strategy so that competition can be
reduced (Johanson and Mattsson, 2015).
 In India, the value factor requires cost factor so that to secure future investment
(Papadopoulos and Heslop, 2014). For success and competitive advantage, Michael Kors should develop competitive
strategy in Iranian market (Klebanoff, 2012).
Rare
 Prices should be affordable in Indian market so that people can buy the products.
 Michael Kors needs to focus on strategic facets in Russian market so that the level of
average profit can be enhanced (Cavusgil and et. al., 2014).
 In Iranian market, Michael Kors has to utilize all the resources optimally (Czinkota and
Ronkainen, 2013). Business could be expanded in other areas of China.
Inimitable
 This can be a source of competitive advantage for Michael Kors in Indian market.
9

 Business will grow more in China if competitors would not follow the same product
process (Johanson and Mattsson, 2015).
 Knowledge based resources should be applied in Russian market. Focus should be there on quality products so that Iranian customers could not resist
buying it (Kim, Min and Chaiy, 2015).
Non – substitutable
 Competition would increase in Chinese market due to duplication of products.
 Michael Kors will have to focus on marketing strategies in Indian market due to huge
availability of substitutes (Sandberg, 2013).
 However, in Russia, Michael Kors should add discounted features in the business
practices
 Profits are dependent on the economic stability of Iranian market.
As illustrated in the Appendix no.5
McKinsey 7S framework
Dimensions China India Russia Iran
Strategy Michael Kors
should emphasize
on competitive
strategies (Sikimic,
Frattini and Chiesa,
2013).
Michael Kors
needs to focus
on marketing
strategies for
business
expansion
(Sikimic,
Frattini and
Chiesa, 2013).
To enhance
sales, product
differentiation
strategy can be
applied
(Johanson and
Mattsson,
2015).
Innovative
strategies should be
developed (Sikimic,
Frattini and Chiesa,
2013).
Skills Ability to meet
competition
(Cavusgil and et. al.,
2014).
People need to
be more
innovative
(Klebanoff,
2012).
Focus on
promotion
aspects
(Cavusgil and
et. al., 2014).
Ability to create
competitive
advantage
(Klebanoff, 2012).
Structure According to
competition,
business policies
and systems could
be transformed
(Doole, 2008).
As per the
country,
organisational
structure
should be
changed
(Brush, 2015).
Changes needs
to be done
according to
economic
structure
(Sleuwaegen
and Onkelinx,
2014).
Michael Kors
should emphasize
on proper
management of
work (Sandberg,
2013).
Style Authoritarian style
can be adopted
Business
should be
Democratic
leadership can
Participation should
be there from every
10

(Tang, Atkinson and
Zou, 2012).
conducted
through
leadership
facets
(Johanson and
Mattsson,
2015).
be adopted employee (Johanson
and Mattsson,
2015).
Staff More innovation is
required (Klebanoff,
2012).
Employees
need to be
more capable
(Sikimic,
Frattini and
Chiesa, 2013).
Consideration
should be there
on legal
dimensions
(Doole, 2008).
Employees must be
capable to develop
success aspects of
business (Johanson
and Mattsson,
2015).
Systems Decentralized
system
Centralized
system
Sharing of
communicatio
n should be
appropriate
according to
organisational
systems (Kim,
Min and
Chaiy, 2015).
Hierarchies should
be developed.
Shared
values
Focus on client
preference
Core values of
customers
should be
considered
Corporate
culture can be
developed so
that people can
follow work
ethics (Kim,
Min and
Chaiy, 2015).
Emphasis on
customer beliefs.
Further explanation is in the Appendix
GE matrix
 According to high, medium and Low scores, Michael Kors can determine in which
market it should invest. New opportunities are available in Indian market; hence medium
term investment can be employed here (Sandberg, 2013).
 According to the external market forces, Michael Kors can enhance the level of business
investment in Iranian market (Keillor, Hult and Babakus, 2015).
 Competition is more in Chinese market; therefore it is essential for Michael Kors to
invest less (Schuster and Holtbrügge, 2012).
 The opportunities of success are high in Russia; therefore Michael Kors should expand
the business units. On the basis of market attractiveness, investment can be decided.
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SWOT analysis for Chinese market
Strengths
 Cheaper and lower wages
 Plenty of natural resources
 Developed infrastructure
Weaknesses
 Inadequate financial sector
 Inequality in rural and urban areas
 Education level is poor
Opportunities
 Availability to develop technical reach
of business
 Financial infrastructure could
underpin business practices
(Sleuwaegen and Onkelinx, 2014).
Threats
 Technical glitches
 Competition
SWOT analysis for Indian market
Strengths
 Liberalization policy could assist
Michael Kors to grow more.
 Skilled human resources could be
employed for business functions.
 Huge demand for goods and services
(Caroli, Cucculelli and Pongelli,
2015).
Weaknesses
 Due to vast industrial sickness,
Michael Kors is unable to achieve the
determined objectives.
 Inadequate and poor quality
infrastructure cost (Brush, 2015).
 Time delays
Opportunities
 Since, India is a developing nation;
therefore Michael Kors has the
possibilities to develop in the same
country.
 Growing competition
Threats
 Heavy competition from Chinese
market
 Power crisis of Indian market could
affect the virtuous growth level
(Chetty, Ojala and Leppäaho, 2015).
SWOT analysis for Russian market
Strengths
 Well planned economy
 Large availability of natural reserves
Weaknesses
 Authoritarian government
 High spending on public services
 Limited access to foreign finance
Opportunities
 Trade links with India and other BRIC
countries could assist Michael Kors to
expand more
Threats
 High public debt
 Legal issues could generate at the time
of trading with different countries
(Tang, Atkinson and Zou, 2012).
SWOT analysis for Iranian market
Strengths Weaknesses
12