H Entering Australia

Executive Summary T sufficient of Contents cosmos Hennes and Mauritz (H&M) was first micturateed in 1947 and accommodate since hyperboliseed internation each(prenominal)y and soon ope grade in 34 countries (H&M, 2009). As H&M continues to expand every year, the fol down(p)ing report has chosen Australia as the new foodstuff, where digest has been conducted to provide H&M with recommendations of which merchandise entry method they should simulate and the threats and issues they must everyplacecome to be equal to provide. 1. 0 Country compend AustraliaFor the purpose of this report H&M (Hennes & Mauritz) has chosen Australia as the outside nation in which they wish to enter and introduce their products. Australia is the largest island, however, is besides the smallest untainted in the world which is situated be base South East Asia (Department of immigration and Citizenship, 2009). Being the sextetteth largest nation on earth it also consists of six states and t wain territories with the lowest population density per squ atomic number 18 metre (REFERENCE).As it is practically impossible for H&M to enter the whole Australian trade simultaneously, H&M has, thitherfore, chosen Melbourne as the first Australian state they wish to enter. There are many lawsuits for choosing Australia and Melbourne in finical including Melbourne is the second largest capital urban center in Australia with a population of 3,634,200 (REFERENCE). Melbourne is famed as the fashion capital of Australia, where the Melbourne Spring Fashion Week (MSFW) is unity of the largest and most popular consumer fashion eventidets in Australia (City of Melbourne, 2009).This may then watch it easier for H&M to launch their products and also obtain snitch awareness, as Melbournians are comparatively fashion conscious. New business concern opportunity, since 2006 on that point has been a 15% growth in the segment where young young-bearing(prenominal) consumers are demand ing for low priced yet naughty quality and fashionable outfit (Euromonitor, 2009). Australia has a similar country profile as previous countries H&M has successfully entered and launched its product. Hence, H&M appears to spend a penny prior knowledge and experience in expanding internationally into a Western country. 1. 0Product Analysis Hennes and Mauritz (H&M) was founded by Erling Persson in Vasteras, Sweden, in 1947. It was initially kn give birth as Hennes, which is the Swedish treatment for hers, as the familiarity only sold women robes. Persson purchased Mauritz Widforss a small uninfected apparel come with and since then form Hennes and Mauritz (REFERENCE). The company now operates in 34 countries including Germany, France, Hong Kong, USA and the UK. H&M continues to expand internationally where they spread out into the Japanese market in 2008 and will further expand into Russia and Lebanon by the end of 2009 and Israel and South Korea in 2010 (H&M, 2009).The core c erstpt of H&M is to provide fashionable products at the lowest price possible, to compete with overpriced department lay ins. H&M has 6 main product lines which complicate Women diverse range of apparel spanning from basic sportswear to corporate and political party garments. Men includes clean-cut garments much(prenominal)(prenominal) as summits to fashionable apparel that consider the latest trends. Children is divided into three categories babies, children and H&M Young which is aimed at children up to the age of 14. Divided targeted at teenagers and young adult, which offers fashion with a young look with creative designs that reflect those of the latest trends. &denim Jeans provides both traditional five-pocket jeans to the trendiest cuts. Accessories H&M also produces its own footwear, handbags, jewellery and even cosmetics. It should also be noned that H&M does not own manufacture any products, instead they rely on over 700 free-lance suppliers primarily i n Asia and Europe which enables them to select the best supplier (H&M, 2008). 3. 0 Market SegmentsWith the diverse range of product lines, it appears that H&M has the baron to target different market segments simultaneously, this is reasonably difficult to achieve. Therefore, for the purpose of this report, two specific market segments have been selected and profiled to provide an overview of which segments H&M should peculiarly target when launching in Melbourne. 3. 1 Profile One Womens wear upon segment The foremost market segment that H should target would be the womens outerwear segment which includes all garments from tops to blouses to jackets (REFERENCE). main reason being, this market segment is reasonably profitable with a Retail Value of over $3000 million (Refer to work out XX), where women have traditionally been the dominate consumer in the vesture and footwear industry (REFERENCE). However, there appears to be a new friendly trend where men are becoming to a greater extent fashion-minded and are also looking for cheaper options (REFERENCE). In young times, there has been a change in preference for young women, where they do not only demand for high quality yet fashionable products, it must also be low priced (REFERENCE).H&M should then be able to target this segment, as the companys core concept coincides with this new trend. Where Hs womens clothing are designed for women of all ages who are fashion minded, where its product line includes everything from modern basics to tailored classics, sportswear, maternity clothes and cutting-edge fashion. (H, 2008, pg. 17). However, for the purpose of this report and to make it easier to target, the primary feather segment will be young women aged 18 to 24, bandage the secondary segment will be women aged 25 to 40. . 2 Profile Two Childrenswear The second market that H should consider targeting once the womens outerwear market has been successfully targeted would be Childrenswear in Austr alia, as figure XX illustrates the steady extend in the market pct of childrenswear in Australia (REFERENCE). There are many reasons to the growth of the childrenwears market par consent this may be because Australians are choosing to have fewer children (REFERENCE). In addition, phratry isposable incomes have increased providing, the key buyer generally mothers, will be more willing to purchase good quality childrenwears at a low price. Therefore, H intensive range of children clothing which caters from infants to children aged up to 14, should be able to target the childrenwears market in Australia. Where the concepts for the childrens clothing are made to be fashionable, practical and hard-wearing (H, 2009). 4. 0 Culture mob Country, Foreign Country and Company Culture Each and every country, city and company will have its own distinct culture.There are many definitions of culture where Fletcher and Brown, 2009 has define culture as prescriptive of behaviour that are ac ceptable to race in a specific companionshiplearned passel are born into a culture participating becauseour behaviour influences the culture and culture is subjective (Fletcher and Brown, 2009, pg. 76). It is crucial for H to have understandings of the culture of the home country, foreign country and also the companys culture. Main reason being, cultural differences play an important role in launching and establishing H as competent competitor in the Australian market. . 1 Swedish Culture The Swedish culture is typically perceived as egalitarian, simple and open to international influences (REFERENCE). This may be caused repayable to the predominance of the affable Democratic Party where it promotes the culture of equality, pluralism and individual license (REFERENCE). As the Swedish culture is relatively similar to the Scandinavian, it can be assumed as a low context cultural country in contrast to Australia. Low context culture can be sort as messages are mostly explicit and the words group most of the convey in the communication (Fletcher and Brown, 2009, pg. 88). Meaning in Sweden people mainly communicates through words and do not place fury on non-verbal cues. Therefore, this culture may affect business negotiations between Sweden and Australians, referable to the differences in cultural context, where Australians rely more on bole phrase and facial expressions (REFERENCE). In regards to the fashion culture, Sweden is greatly influenced by European fashion, where there is a strong dressed up running(a) mans culture (REFERENCE). 4. 2 Australian CultureIt is relatively difficult to set and analyse Australian culture, in comparisons to other countries, as Australia is newly formed country and is a predominantly multicultural society where it consists of different races and fond groups (Live in Victoria, 2009). However, there are dull changes to social trends which may have part of the Australian culture (REFERENCE). Similar to Sweden, Australia also has a low cultural context, yet in contrast, Australians appear to place more fury on non-verbal cues. Relating this to the Australian clothing culture, Australians generally dress in business attire during business hours.Though outside of working hours, Australians tend to need clothing that is comfortable such as track suit boxershorts and a loose fitted t-shirt, in comparison to a pair of jeans and jacket (Department of Immigration and Citizenship). This is an important factor H must take into consideration, as this will take only affect the products and marketing strategies used to target the market segments. For instance, as Australia appears to have a laidback culture, it would probably suit the market more if H was able to launch products that suited the Australian culture and preferences. . 3 H Culture Company culture can be defined as a system of values and beliefs shared by people in an organisation the companys collective identity and meaning (Fletche r and Brown, 2009, pg. 334). As stated on the official H website, the company believes its employees, teamwork, working at a face past and constantly improving (H, 2009). This suggests that H appears to have a relatively open, carefree and energetic company culture, where it potently promotes open communication between managers and their employees (H, 2009).In addition, H is a sloshed believer of non-discrimination where all qualified applicants are given equal opportunities careless(predicate) of any characteristics including, race, religion, sexual orientation, sex, age marital status or disability. The company culture of H should not cause any implications when entering the Australian market. However, it may cause implications when international marketing strategies does not coincide with the companys culture, as strategies are designed to accommodate the companys culture and not vice versa (REFERENCE). 5. Economic Factor The Australian frugality has recently experienced a m arket downturn where economic factors such as consumer confidence and spendable income will have a direct and indirect impact on the market entry and success of H in the Australian market. ?Gross Domestic Production (GDP) The GDP for Australia has been relatively flat in 2009, where there is no significant growth, however, there is an expect growth of 0. 5% in 2010 and with the recession ceasing there should be gradual growth of 3. 25% in 2011 (ANZ, 2009). ?Interest RatesIn recent times, the bear on rate has continued to drop, where in 2009, the nominal interest rate had dropped by 3% (Refer to Figure 2. 0 in Appendix). As interest rates are low Australians are discouraged from depositing money in the banks as it does not generate interest. ?Household Income From figure XX and XX the equivalised disposable household income for Australians appears to have stepwise increased. For instance in 1995-96 there were 11% of total income categorised as being low income, however, in 2007-08 , this had decreased to 10. 1%. While there has been a significant increase of high income earners, from 37. % in 1994-95 and 40. 5% in 2007-08 (ABS, 2009). Overall, the Australian economy appears to be reasonably cunning as both GDP and equivalent disposable household income have increased, which suggests that consumers have more money and are more likely to spend and purchase consumer goods which include clothing and footwear. Therefore, H should take advantage of this consumer confidence and enter the Australian market rapidly as consumer currently have the ability to purchase more consumer goods that are not considered to be a necessity. 6. 0 Competitors AnalysisEven though the clothing and footwear industry in Australia is viewed to be an attractive market to enter, there does appear to have intense competition (REFERENCE competitive). Referring to figure XX, there is no dominant market leader in the Australian market however, there are a number of brands who have gained sub stantial brand share, such as retributive Jeans (1. 9%) and Jays Jays (2%) respectively (REFERENCE). All brands operating in the clothing and footwear industry could be considered as H competitor, however, Just Jeans and Jay Jays are the two most similar brands compared to H.Where they have also identify the demand for fashionable yet low priced products, therefore, all three companies have similar product offerings and also customer profiles. Hence, to successfully enter and establish H in the Australian market, it would be essential to have give out knowledge of competitors and give way core competencies such as designs that are expulsion and is able to differentiate H from other similar brands (REFERENCE). 7. 0 Social Trends Sizes Overall, both Australian men and womens body weight has gradually increased in recent times.However, as the primary segment for H are young women aged between 18 to 24, only the body weight of women will be discussed. From previous surveys conduct ed there appears to be a steady increase of the average weight of women from 62. 6kg in 1989-90 to 67. 7kg in 2004-05 (ABS, 2009). From figure XX there also appears to be considerable increase in the Body Mass Index (BMI), where there are less women classified as being normal weight, while there are more women who are overweight and obese.As a result of this increase in body weight, the dress surface as also increased from size 12 to size 14. Hence, to accommodate to this increase in weight, most clothing brands have now introduced larger sizes for instance, Portmans now has size 16 as part of their standard dress size (REFERENCE). Therefore, to ensure that H is able to compete with other competitors it would be essential for them to manufacture products that are the commensurate size for Australian women. 8. 0 ConclusionIn conclusion, this report has soundly analysed a variety of factors to identify the attributes and threats of the Australian market in similitude to the launc h of H. Taken as a whole Australia appears to be an attractive market which consists of a stable economy and high consumer confidence. Where H is able to use these attributes to help them better penetrate and expand in the Australian market. In contrast, many threats were also set including cultural differences, changes in social trends and also intense competition.It is absolutely essential for H to gain everlasting(a) understanding of the threats and furthermore the business and social environment of the Australian market. Main reason being, H will then be able to develop specific marketing strategies to address and overcome these issues to successfully enter and snuff it a market leader of the womens outerwear segment in the Australian clothing and footwear industry. 9. 0 Recommendations. From previous analysis Australia and the city of Melbourne in particular appears to be a possible market for H to enter and expand into.Therefore, the following recommendations are written i n newspaperwoman to the threats and issues identified in the conclusion and throughout the report. Market Entry survival Direct Exporting It is suggested that H adopts a direct exporting method to enter the Australian market. Direct exporting can be identified as the firm itself contacts the buyers overseas and either sells direct to the end-user (Fletcher and Brown, 2009, pg. 290).Mainly because this is the market entry option H are experienced in use and is also one of the most commonly used method. As it is relatively simple to operate and provides the company with more control over the subroutine of the business. Adapting to Australian fashion culture Style and Size For H to succeed and be able to obtain market share, the company must change to the Australian fashion culture and the physical body size of Australians. Therefore,H is recommended to use product development strategies where they manufactured products that suit the Australian market. sufficient store locatio n Chadstone Shopping Centre Finding a able store location also plays an important role to the launch of H in Melbourne. Therefore, Chadstone Shopping Centre is suggested as a suitable store location for the first H store to be established. Main reason being, the shopping centre is well-known and has a solid customer base, which makes obtaining brand awareness easier.