Assignment 3: Foreign Market Entry and Diversification
Strayer University
BUS599

Create An Argument For Diversification Of Your Business That Will Be Presented To The Board Of Directors Or Business Investors. Diversification is going to be the key to the longevity of our label. Our smallest competitors, Simply Fashion and Cato, offer shoes and accessories; while our largest competitors, Lane Bryant and Avenue have begun to offer minimal exercise wear. “…diversifying entrants pose a bigger threat in increasing rivalry and challenging incumbents’ market share…” (Klein & Lien, 2009, p. 299). Right now, Lane Bryant is the leader in diversified product lines, although our competitors offer a variety of products in plus size fashion. Our company will improve on quality in order to become a threat to the competitors. If we do not diversify, we will quickly become irrelevant in the market, like our smaller competitors. If we plan to succeed and increase longevity we must diversify and improve upon what our competitors offer.
Develop A Strategy For Diversification Indicating The Products And Industries For The Diversification And How Synergies May Be Gained From The Diversified Activity. As a way to increase popularity and customer base loyalty, marketing, research and development will work with designers and distributors on a costume accessories line for plus size women. Currently plus size women are hard pressed to find bracelets for the larger wrist, rings for the larger finger and necklaces that fall where they are supposed to. Lane Bryant is the leader in accessories but they are extremely expensive at twenty to thirty dollars for a ring or bracelet. Costume jewelry is not an item that is meant to last forever. Metals tarnish, plastic’s color fades after repeated use. Our company can come in and offer the correct size accessories at the correct price. Claire’s is a leading accessories line for average women. They are successful because they offer an extremely wide variety of accessories at varying price levels but they do not have many pieces for larger fit. They do offer extenders for necklaces and some bracelets but the extenders are generic and most times do not match the jewelry purchased. We see a synergy with them as a way of increasing sales and market for both companies. Another area for diversification is the exercise clothing line. Collaboration with Weight Watchers or Jenny Craig will put us ahead of our biggest competitor. The need for properly fitted, comfortable exercise clothing is great enough for our company to corner this market. The collaboration will give the weight losing industry a chance to enter another market.
Identify And Discuss The Foreign Market That The Company Should Enter And Discuss The Strategy It Should Use To Enter The Market. According to the demographic population statistics of 2011, published by MINTEL (Mintel Group Ltd., 2011), England has the next highest population of plus size women. Almost 25% of the women wear size 18 and over. Nearly 40% of the female population in the UK wears size 16 and over. With these demographics, our company plans to enter the global market in those countries. They have seen an increase in the sale of plus size clothing but the numbers are still small, leaving the industry open for infiltration. Plus size attire only accounted for 17% of total women’s clothing sales in the European market in 2011. The strategy for entering the market will start with opening the online boutiques. As popularity increases we can look into established a brick and mortar location. The store will be a representation of our American locations but also blend with the local atmosphere. “Purchasing locally [is] a key strategy as it pleases the local authorities and meets the needs of the local consumers. European retailers are more likely to export retail formats that add value by catering to the needs and tastes of the local market, they are likely to enter foreign markets that are developing and are likely to scale up profitably, keeping pace with the economic development of the market place” (Bell, Lal, & Salmon, 2004, p. 312). We will establish relationships with local designers and fabric retailers. The building of this relationship will help us gain trust and loyalty within the local economy.
Discuss The Challenges That Company May Face In The Foreign Market, And How It Might Respond Strategically To Minimize The Impact Of These Challenges. Even though all the research shows the industry being ripe for new entries, the target market is a challenge. Plus size women don’t necessarily want to be plus size women. The ones who wear sizes under 18 will shop in regular stores if possible because once they start shopping in a specialty store they have to admit facts to themselves that they may not want to address. Plus size figures are not always bigger replicas of the average sized female. With being larger there sometimes are different shapes that have to be accounted for when buying clothing. The best way to combat that would be to align ourselves with the different coalitions that are forming in the European to help understand and beat obesity. We could donate time, supplies and some proceeds from special campaigns to their cause. Our company will avoid being seen as an enabler to obesity. “Obesity and overweight among children in Europe is also associated with the socio-economic status of their parents, especially their mothers. Furthermore, cross-country comparisons show the prevalence of childhood overweight is linked to a Member State’s degree of income inequality or relative poverty” (Robertson, Lobstein, & Knai, 2007, p. 9). Since studies have shown that obesity is mostly a socioeconomic problem, we can take on a “Be Beautiful Being You” motto. We can work with local groups and organizations to bring awareness to the community. Helping to create positive self-image and awareness of affordable healthy choices will be a goal of our company.
Create A Scenario When It Would Not Make Sense For The Company To Diversify Or Expand Into A Foreign Market. Provide Support For Your Rationale. The clothing industry as a whole has been branching into China because of their expanding economy and large population. According to Business of Fashion, China has seen a 33% increase in the purchasing of luxury fashion goods (Harilela, 2012). Normally, this would make it a prime target for global expansion for our company. However, China is country where our company would not likely prosper. China has only seen an increase in waistlines in the past few decades. Even with the increase in size, the numbers are enough to validate entry into their economy. “The obese are roughly one out of 70 people in China, as opposed to one out of three in America” (Suarez, 2010) Even though those statistics are from 2010, they still warn against expansion into their market.
Assess How The Company Will Create A Business Environment Conducive To Ethical Behavior. Ethical business practices will start in upper management and pass down to lower level employees. The company handbook will have a section on the importance of ethical policies and how to conduct business as such. Employee interactions will involve speaking truthfully, taking responsibility for one’s actions and learning to be upfront about opinions. Customer service ethical standards will include providing quality products at fair pricing, being honest about features of the clothing and the floor sales clerk will not be allowed to give judgment on customer apparel choices. Employees will be encouraged and required to report safety issues, theft, harassment issues or any other work related problem. Our company will be committed to conducting business in a way that meets the needs of our present market goals without compromising the company brand image.

Works Cited
Bell, D. E., Lal, R., & Salmon, W. J. (2004). Globalization of Retailing. In J. A. Quelch, The Global Market: Developing a Strategy to Manage Across Borders (pp. 290-312). San Francisco, CA: Jossey-Bass.
Harilela, D. (2012, April 8). The Top 20 Movers, Shakers and Decision-Makers in China Fashion. Retrieved from The Business of Fashion: http://www.businessoffashion.com/2012/04/the-top-20-movers-shakers-and-decision-makers-in-china-fashion-2.html
Klein, P. G., & Lien, L. B. (2009). Diversification, Industry, Structure, and Firm Strategy: An Organizational Economics Perspective. Economic Institutions of Strategy Advance in Strategic Management, 299.
Mintel Group Ltd. (2011). Fifth of Brits are Plus Size - but clothing selection is thin on the ground. Mintel Group Ltd.
Robertson, A., Lobstein, T., & Knai, C. (2007). Obesity and socio-economic groups in Europe: Evidence. European Commission.
Suarez, R. (2010, June 1). Reporter's Notebook: Obesity on the Rise in China. Retrieved from PBS News Hour: http://www.pbs.org/newshour/rundown/2010/06/reporters-notebook-obesity-rising-in-china.html