Research Topics: Strategic Implications

Impact of Current International Business Strategies to TLC Corporation’s Development

Introduction             Business management is the functional application of marketing techniques. It refers to the analysis, planning, implementation, and control of programs designed to create, build, and maintain mutually beneficial exchanges with target markets. Basically, this paper aims to describe and study the progress of TCL Corporation with respect to its strategies particularly in its international business strategies.  In addition, this paper attempts to analyse the issues related to strategic planning, merging and acquisition issues. Thus, the importance of appropriate business techniques for international ventures such as analysis, planning, implementation, and control of programs should also be considered.             Perhaps, every organisation wants to initiate a management system and strategy that could maintain the organisation’s capability, strength and competitiveness. It is important that the management team and the organisation per se should always open their mind for changes that they might encounter in order to cope and adapt to the latest development that are happening within and outside their environment.          This paper discusses in detail the research proposal that examines the perception of the consumers regarding the appropriateness of the current business strategies employed in TCL Corporation. Basically, the researcher attempts to identify the different factors that significantly contribute to the progress of the said organisation in international market. This includes discussion of its history, the current status of marketing strategies, and its relationship to consumer satisfaction. Specifically, this proposed research explores the perceptions of the respondents and their view regarding TCL Corporation’s performance.                 This research proposal discusses in detail the background, general purpose of the study. Moreover, the objectives of the study and the research statements are presented. Here, vital concepts, questions and assumptions are stated. Finally, the scope and limitation of the study, overview of the methodology used and the significance of the research are discussed.   Statement of the Problem Generally, the purpose of this study is to conduct a study on the quality of service related to TCL Corporation’s international business strategies. This study tries to answer the following queries: 1.                  Does merger and acquisition strategies is useful for TCL Corporation’s development in International Business? 2.                  Does appropriateness of business strategies significantly affects the progress of certain organisation? 3.                  Is there any significant relationship between international business strategy and organisation’s progress?   Hypothesis of the Study Based on the research questions the research project works out on the following null hypotheses: 1.                  Appropriateness of international business strategy has no significant effect to the progress of TCL Corporation. 2.                  Respondent’s perception regarding merger and acquisition strategies has no significant relationship to the progress of TCL Corporation.   Significance of the Study             This study will be a significant endeavour in understanding the importance of appropriate business strategies in a certain organisation.  This study will be helpful to international business administrators and management practitioners for this will be a guide for them when they employ effective business approach to their organisation particularly to those who plan to explore international business ventures. By examining the risks and other factors involved in marketing strategies, business administrators and management practitioners will be able to design measures to minimise the risks. Further, through the understanding of the needs of their consumers in terms of satisfaction, this study will help different manufacturers to satisfy their consumers/costumers. Moreover, this study will be a significant endeavour in promoting effective international strategies that suffice the needs of both local and international consumers/customers.                         This study is deemed useful for future researchers on international business strategies and its application to different business organisations.  This study could also serve as an academic tool in informing its reader about the business development and organisational change.  Moreover, this research will provide recommendations on how to value business development as they are taking a large part in the organisations success.  In addition, this study will provide information to business leaders regarding business progress and development. Knowing how consumers perceive development of an organisation will assist business leaders in establishing programs, policies, and staff development.   Objectives             The primary objective of this study is to examine and determine the perception of the respondents regarding TCL Corporation’s development.  To address this objective, the researcher explores the nature of TCL Corporation and marketing and management programs: its benefits and advantages to different consumers both local and international. Moreover, this study will focus on respondents’ perceptions to TCL Corporation international business strategies.   The objectives of this study will be to: <li class="MsoNormal" style="text-align: justify; line-height: 200%"> determine the impact of current strategies of TCL Corporation’s development in International Business;</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> determine if respondents’ perceptions to strategies has significant relationship to their satisfaction towards service/product provided by TCL Corporation; and</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> determine if merger and acquisition strategies is useful for TCL Corporation’s development in International Business.</li>               Apparently, a survey is conducted to determine what attributes affects their criteria in identifying the progress of TCL Corporation’s development in International Business. An interview takes place to know what are their problems and concerns regarding the business programs. Finally, this research comes up with pertinent findings, and provides insightful recommendations on business programs.   Background of the Study Today’s organisations are experiencing change like never before as a result of competition which had created uncertainty for the organisations. Moreover, the pace of change is so rapid particularly in international market, only organisations that can adapt to this changing environment can survive, getting a profile of the current problems can enable organisations to thoughtfully bring the elements of the change into alignment and move forward towards an ideal. Because of this fast pace of development, appropriate business strategies tends to become an important tool in survival. Different business institutions in China particularly the TCL Corporation needs to consider the present business traits particularly its management style and marketing strategies.               Basically, the TCL Corporation is a Chinese electronics manufacturer headquartered in Huizhou of Guangdong Province, southern China. TCL Corporation products include mobile phones, personal computers, home appliances, electric lighting, and digital media sold to domestic and oversees markets. TCL is listed on the Shenzhen Stock Exchange and Hong Kong Exchange as TCL Corporation and TCL International Holdings Limited (www.tcl.com).               In addition, TCL Corporation aims to meet the customers’ needs effectively and thereby provide shareholders with good, sustainable financial returns. The organisation also attempts to ensure that all colleagues have opportunities to develop their abilities and are well rewarded for their contribution to the success of the business. The organisation policy is to work with all of their suppliers fairly, recognising the mutual benefit of satisfying customers’ needs. It also aims to fulfil their responsibilities to the communities and environments in which we operate.   Actually, finance and growth strategies for TCL Corporation are very essential to its progress.  In accordance to this progress, the issues about mergers and acquisition should be considered. Basically, www.encyclopedia.com defined merger as a combination of two companies into one larger company. Such actions are commonly voluntary and often involve stock swap. A merger can resemble a takeover but result in a new company name (often combining the names of the original companies) and in new branding; in some cases, terming the combination a “merger” rather than an turnovers is done purely for political or marketing reasons.  On the other hand, takeover has significant effect to a business and www.encyclopedia.com explained that:   “There are a variety of reasons that an acquiring company may wish to purchase another company. Some takeovers are opportunistic: the target company may simply be very reasonably priced, for one reason or another, and the acquiring company may decide that in the time period that’s important to it, it will end up making money by purchasing the target company, because of its normal profitability.”                         On the other hand, companies are not stopping in finding ways to achieve the desired growth in their business venture particularly TCL Corporation. There are various reasons why companies aim for these growths including the desire to earn and create big profits through presenting their product lines and services. Growth also can be equated in achieving the business stability and the aspiration to establish or mark the company’s name in the business arena.   With this regard, TCL Corporation should carefully evaluate its international business strategies. The said corporation should determine the effectiveness of their current management practices in order to attain international business success. Actually, effective business management involves: understanding the economic structure of the industry; identification of segments within the market; identification of the Marketing strategy which best fits the company; identification of the target market; do marketing research to develop profiles (demographic, psychographic, and behavioural) of the core customers; Understand the competitors and their products; develop new products; establish environmental scanning mechanisms to detect opportunities and threats; understand the company’s strengths and weaknesses; audit the customers’ experience of your brand in full; develop marketing strategies for each of the products using the marketing mix variables of price, product, distribution, and promotion; create a sustainable competitive advantage; understand where you want your brands to be in the future, and write marketing plans on a regular basis to help you get there; and setup feedback systems (management information system) to help the business administrator monitor and adjust the process (Levitt, 1983).   Moreover, proper management of a certain business becomes more effective if the ethical issues in bidding process was completely analysed that includes risk analysis and suppression. www.encyclopedia.com defined risk management as the process of measuring, or assessing risk and then developing strategies to manage the risk. Actually, an ideal risk management refers to prioritisation process that is trailed whereby the hazards with the maximum loss and the maximum probability of stirring are handled first, and risks with minimum likelihood of incidence and minimum loss are handled later.   In addition, risk management also countenance a difficulty in allocating resources appropriately which is the idea of opportunity cost. The resources exhausted on risk management could be as an alternative spent on more beneficial activities. Once more, ideal risk management spends the smallest amount of resources in the process while plummeting the effects of risks as much as possible.   In accordance to this, TCL Corporation should also consider the following variables to maintain the status of the organisation: i.e. social responsibility, consumer/customers, employees, and competitors.   Social Responsibility In a globalised economy where tough competitions occur among businesses, companies are exploiting the benefits of social responsibility. These social activities: include charitable contributions, discounts to senior citizens, expenditures on employee alcoholism and substance abuse treatment, responses to customer complaints, product warranties, processes for exchanging purchases, community service in volunteer or governance capacities, employee education, child care or flexible hours for employees with children, advertising or promoting community events, sponsoring sports teams, recycling, special services to the handicapped, and so forth (Smith, Thompson & Kenner, 1991).   Companies view social responsibility as a corporate investment that will result in a long-run corporate profit and not a corporate expense. Businesses supporting social responsibility activities claim that it is in the best long-run interest of the business to become intimately involved in and to promote and improve the communities in which it does its business.  Moreover, it can and should improve the corporate and local image of the company, and it is in the stockholders best interest. Further, companies believe that by making communities a better place to live in, it can entice superior and happier workers to the company who in turn will put out better products and increase profits.   However, it is important to point out that the primary reason why businesses turn into socially responsible activities is to maximise their profits; public interest comes in second.   Employees Johnston (1999, 52) states that the workers are viewed as the greatest source of improvements. Therefore, it means that workers who are managed correctly will take responsibility for their work, be committed to the organisation, and have ownership of the service or product. Companies and organisations feel that employee compensation is the dominant factor in employee satisfaction.  Consequently, employers attempt to “buy” employee satisfaction with increased pay and benefits.   Again, in maximising their profits, companies are increasing their employee satisfaction by providing rewards and incentives and implementing employee-friendly training. Companies consider the need to address workers’ increasingly demand for change, choice, flexibility, and variety in their work. According to Seidler (1996), in a business organisation, the value of the individual is developed as human capital (Seidler, 1996).                         Creating an environment in the workplace that results in employees feeling better about themselves when they are in it, than when they are not, results in similar “love” of their work. A work environment that constantly raises an employee’s self-esteem, above that she/he experiences anywhere else in their life, will be where she/he most desires to spend their time and yields very high employee satisfaction with their job and costs next to nothing. People do more of what they enjoy and less of what they don’t enjoy. The results also show that people who enjoy working are more productive.                               Companies build an environment where there is increased employee satisfaction. As a result, job satisfaction is high, thus there is an increase in employees’ productivity. Further this leads to rewards for an impressive performance. Consequently, the employees’ trust and loyalty with the company also increases. Companies who value their employees gain maximum profit.    Customers In today’s business world, the value and importance of customers is not something that should be set aside by companies. Marketing plans and strategies would be incomplete without paying much consideration to the customers. Customers will always be a part of the agenda in any marketing plan of any company. Because of the implications for profitability and growth, customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today’s ever increasing competitive environment (Lindenmann, 1999).   Competitors Another ethical issue on business ethics to be considered in TCL Corporation is the behaviour towards a competitor. In order to collect secret information from their competitors, companies are practicing industrial espionage. Industrial espionage of all varieties is an elusive and secretive field that must be given careful attention by industrial managers and corporate executives worldwide (Madsen, 2003). Meyer (1987) contends that throughout the world of commerce and industry, intelligence is on its way to becoming a key management tool for the corporate executive. Meyer (1987) suggests that the emergence of business intelligence systems is the most striking and potentially significant business trend of our time. Here, intelligence becomes the means by which companies chart their future course (Joyal, 1996). Because of the intensifying economic the importance of acquiring information concerning economic plans and intentions becomes more acute (Joyal, 1996).   According to Michalos (1995), the best argument for business ethics include: 1. In order for business or a market economy to exist, there must be some sort of community of potential buyers and sellers. 2. In order for a community of potential buyers and sellers to exist, there must be morality. 3. Anyone with an interest in preserving business or a market economy should help maintain those conditions, like morality, that are necessary for its preservation. 4. Business people have such an interest.   The worst argument is said to be that it is profitable to conduct business in accordance with principles of morality. This is bad according to Michalo’ (1995) because it dangerously combines “one’s interest in sustaining a market economy” and “one’s interest in increasing one’s own profits,” so that if profits in fact fall while one is trying to be moral, one may be tempted to abandon morality.   Theoretical Framework The theoretical framework that will be used in the study is the Input-Process-Output Model. In the IPO model, a process is viewed as a series of boxes (processing elements) connected by inputs and outputs. Information or material objects flow through a series of tasks or activities based on a set of rules or decision points. (Harris & Taylor, 1997) Flow charts and process diagrams are often used to represent the process. (Harris & Taylor, 1997) What goes in is the input; what causes the change is the process; what comes out is the output. (Armstrong, 2001) Figure 1.1 illustrates the basic IPO model:     The IPO model will provide the general structure and guide for the direction of the study. Substituting the variables of this study on the IPO model, the researcher came up with the following:   References:   Armstrong, P. (2001). Input-Process-Output Model. Colorado: Colorado State         University.   Barnett, V. (1991) Sample Survey principles and methods. Hodder publisher.            ISBN: 0 340545534   Creswell, J.W. (1994) Research design. Qualitative and quantitative approaches.     Thousand Oaks, California: Sage.   Guilford, J.P. and B. Fruchter (1973). Fundamental Statistics in Psychology and        Education, 5th Edition. New York: Mc Graw-Hill   Harris, G. and Taylor, S. (1997). Escaping from the Box: A New Process        Model             to Support Participation and Improve Coordination. In Center for Quality of           Management Journal, Volume 6, Number 3. Cambridge, MA: The Center    for Quality of Management, Inc.   Johnston, L. (1989). The TQM Coordinator as Change Agent in Implementing            Total Quality Management. Published Master’s thesis. Monterey: Naval        Postgraduate School. p. 52.   Joyal, P. M. (1996) Industrial espionage today and information wars of tomorrow. Paper Presented at the19th National Information Systems Security Conference Baltimore Convention Center Baltimore, MD October 22-25.   Levitt, Theodore, (1983) “After the Sale is Over…” Harvard Business Review, vol. 61 (September/October), pp. 87-93.   Lindenmann, Walter. (1998). Measuring relationships is key to successful public relations. Public Relations Quarterly, 43, (4) 18+.   Madsen, A. (2003) Industrial espionage strategic implications in an age of crime and competition. Transnational Research Associates. Available at [members.lycos.fr/transnational]. Accessed 10/10/03].   Meyer, H. E. (1987) Real world intelligence. New York: Reed Business Info, Inc., p.8.   Michalos, A. C. (1995) A pragmatic approach to business ethics. Thousand Oaks, California: Sage Publications, Inc.   Saunders, M., Lewis, P. and Thornhill, A. (2003). Research Methods for         Business Students, 3rd Ed. London: Prentice Hall Financial Times. Seidler, E. (1996). Discipline and deselection in the TQM environment. Public Personal Management, Vol. 25, pp. 529+.   Smith, H. L.; Thompson, J. K.  (1991). Social responsibility and small business: Suggestions for research.  Journal of Small Business Management. Vol. 29. No. 1.   Credit:ivythesis.typepad.com

Impact of Current International Business Strategies to TLC Corporation’s Development

Introduction Business management is the functional application of marketing techniques. It refers to the analysis, planni...

Sample Risk Management Business Proposal: Exploring the Strategic Implications of Rules and Regulations in Selected Indian Small Chemical Companies

Hi Natrajan,   “Good day. The information about the different rules and regulations should be researched by you since you are the one from India. I don’t know what you mean by fabricated, but you can also interview the companies if you want and then send us the data for analysis. About the introduction, I already revised the paper as you can see below. I emphasized that the rules and regulations we are talking about focus on their safety approach towards their employees and the community. About the SPSS, I also provided now a brief explanation in that section that it refers to Statistical Packages for the Social Sciences. It is a computer software for all types of statistical analyses. Sorry for the trouble. Keep in touch if you still have some questions.   Sincerely The Writer                                               HARISH NATRAJAN PROPOSAL: EXPLORING THE STRATEGIC IMPLICATIONS OF RULES AND REGULATIONS IN SELECTED INDIAN SMALL CHEMICAL COMPANIES     INTRODUCTION                 This paper proposes the study to investigate the strategic implications of rules and regulations within organizations. Specifically, it will be on the rules and regulations of chemical companies in safety and risk management. The specific focus will be on small chemical companies in India. Specifically, the study will include the following companies: Joshi Electricals and Transformers; Lihar Chemicals; Aarti Industry; and Agrawal Group. Those companies are still considered SME, but are already performing well and are seen as potential competitors in India’s chemical industry.   The research will be limited only to the output that the respondents from the selected companies will provide, as well as information from literatures that will be cited and reviewed. The reason why this study was chosen is because of the continuous rapid expansion of India’s chemical industry (Young, 2003). This is related with the concern of safety practices that should be reflected on the company’s rules and regulations on how they handle safety among employees and among the communities. The rapid expansion may mean the need to keep up the track on companies that follow and do not follow the rules and regulations for the chemical industry set up by India’s governing bodies. History has taught the country of the danger of not having an effective regulating policy for the chemical industry. One example is the gas leak at the Union Carbide plant in Bhopal, India in 1984 (Young, 1992). Approximately 3,800 people die in the wake of the incident and several thousand other individuals experience permanent and partial disabilities (Union Carbide Corporation, 2005). The tragedy led to increased regulation of the chemical industry and the adoption of the Responsible Care initiative (Young, 1992). Responsible Care is a voluntary initiative within the global chemical industry to promote the safe handling of India’s chemical products from inception in the research laboratory, through production, distribution, use and disposal (DOW Agro Sciences, 2005). This and other initiatives may have caused a burden or advantage on chemical companies in India depending of course on their view or how advantageous or important they see the regulation. Of course, companies also have their own policies on safety. Because of the many regulations to follow, SMEs may find it difficult to adjust because of their limited capacity. Through this study, it will be determined what strategic implications do several SME chemical companies India use in implementing different rules and regulations.               This study will be cross-sectional and will utilize both quantitative and qualitative research. The summary of the proposed methodology and other important points will be discussed further in the paper.   BACKGROUND     The Indian Chemical Industry     The chemical industry of India is experiencing a strong economic performance and growth recently. The Ministry of Chemicals and Fertilizers in New Delhi reported a few years ago that India’s Chemical industry output has been growing at double-digit rates in recent years, and has reached Rs1.3 trillion ( billion)/year (Young, 2003). This has been the result of India’s previous effort to strengthen its chemical industry in the late nineties basically through strategies such as corporate tax reductions designed to encourage business generally, cuts on import taxes and internal duties, and a halving of capital gains taxes applied to non-resident Indians (Robert, 1997). Now, the current overview of the industry is: it totals US Billion + US Billion Fertilisers; contributes to 13% of GDP; and is one of the fastest growing sectors of Indian economy (Indian Chemical Portal, 2005). Its distinguishing characteristics are its being fragmented and dispersed – multi product and multi faceted (Indian Chemical Portal, 2005).Chemicals sold directly to large customers and through distribution channels. Distribution channels mostly consist of stockists and dealers spread all over India addressing small segments and retail market (Indian Chemical Portal, 2005).             Despite the success and progress, India’s image as a large and successful chemical manufacturer and exporter is not all positive. As mentioned earlier, the gas leak at the Union Carbide plant in Bhopal, India in 1984 (Young, 1992) did not only shake India but the whole global community, resulting in the development of firmer and tighter rules and regulations for the chemical industry globally. Although Union Carbide is a foreign company, India was the place where the incident took place meaning the company was under the regulation of India during that time. Canadian chemical manufacturers drafted a detailed program, called “Responsible Care,” that involved codes of practice for transportation, distribution, manufacturing, research and development, and hazardous waste operations (Entine, 1996). One of the aims of Responsible Care is to participate with government and others in creating laws, regulations, and standards to safeguard the community, workplace, and environment (Entine, 1996). India is one of the countries that currently implements responsible care, adopting the policy in 1991 (Young, 1992). After that, many new regulations for the chemical industries were implemented such as the Prevention and Control of Air Pollution Act and the Environment Protection Act (1986), plus Rules on the Handling of Hazardous Chemicals (1989) (Young, 1992). With this many regulation, compliance with it proved difficult to enforce in an industry comprising mainly small, independent companies (Young, 1992). Basically, implementation was less than enthusiastic (Young, 1992).   Another issue that delivers a negative image to the bustling Indian chemical company is the issue of illegal chemicals exporting. According to Raj (1998); “India is among three remaining manufacturers of DDT (10,000 metric tonnes capacity) along with China and Mexico. Italy stopped manufacture of the widely banned persistent organic pollutant (POP) pesticide earlier this year”   Because of such problems, it is difficult for chemical companies, especially Small to Medium-sized Enterprises to implement all regulations at once. Companies now need to provide details about process safety, environmental impact, provision for pollution control, site justification, plus safety and health provisions for employees and precautionary measures for controlling emergencies both on-and off-site. This has caused delays and cost overruns (Young, 1992).   SMEs in India’s Chemical Industry                 Small to Medium-Sized Enterprises or SMEs play an important role in India’s economy. The SME sector accounts for 40 percent of the industrial production, 35 percent of the total export and provide about 80 percent of employment in the industrial sector in the country (Dangayach and Deshmukh, 2005). The chemical industry is also strengthened mostly by SMEs. Specifically, the Maharashtra state is home to many small chemical industries. It is one of the zones that the government allocated in the early 1990s where chemical industries could set and manufacture chemicals for sale. The zones are spread across the entire state of Maharashtra and the government laid down innumerable rules and regulations as part of the start up procedures. These included registering with the various departments like the explosives, electricity, water, labour, weights and measure, the customs department, the income tax registration etc. Also of the start up procedures for the firms also involve registering with the pollution control department as this has been deemed important by the government due to its entry into the WTO and also as part of its focus to attract FDI. The chemical firms also have to identify the construction and the various infrastructures needed e.g. the offices, laboratory, which has to be laid down in drawing and approved of by the inspector of factories. Aside from those, heavy paper work, long waits for file processing and permissions are also problems. These issues sometimes take the toll during start up by burdening the companies for the extra time in terms of finance. Also due to the erratic power supply in the state the companies during start up have also to identify the usage of generators as a substitute for the frequent power cuts. All these difficulties are in accordance with the regulations mentioned above.   STATEMENT OF THE PROBLEM                 The Indian Chemical Industry can now be considered well-regulated but the effects of such regulations are taking its toll on small companies. For small companies, implementation of such rules and regulations can be a daunting and expensive task because of their limited human and financial capabilities. Based on the study of Miller and McKinney (1995), even corporations are affected by the increase of local and international regulations in manufacturing. Miller and McKinney (1995) concluded: “Industries presently face a challenge to maintain competitiveness and productivity while creating a minimal environmental impact” (p.112). They further stated that: “The conventional concerns of product functionality, dependability, quality, and cost are further complicated by environmental regulatory compliance” (Miller and McKinney, 1995, p.12). However, such regulations are acceptable because today’s firms do not only have responsibility to their company but to the economy, ethics and legal aspect as well to the public at large (Lantos, 2001). Thus, strategies are needed in order to effectively mix the responsibilities of the firm. Through this study, we may explore the different strategies used by several small chemical companies in India, specifically: Lihar Chemicals; Aarti Industry; and Agrawal Group. These companies have to abide with the rules and regulations like all other companies. The way they handle the implementation of many regulations may reveal useful strategies that other companies might use. This will further help the growth of India’s chemical industry.   Aim and Objectives of the Study     The aim of the study is to identify the process and different difficulties of implementing rules and regulations experienced by Lihar Chemicals, Aarti Industry, and Agrawal Group, and to determine the strategies they use to implement those effectively, at least in their view.   The following are the objectives of the study: Ø      Survey and interview senior managers of Joshi Electricals and Transformers, Lihar Chemicals, Aarti Industry, and Agrawal Group. Ø      Conduct literature review. Ø      Analyze the results of the survey and interview. Ø      Develop a strategy framework for implementing rules and regulations.   RESEARCH QUESTIONS           Specifically, the study will concentrate on the different strategies or strategic implications used by small companies in India in implementing rules and regulations. The following research questions will be answered:   1.         What are the rules and regulations currently implemented by Joshi Electricals and Transformers, Lihar Chemicals, Aarti Industry, and Agrawal Group? 2.         What are the process and different difficulties they encounter in the implementation of those rules and regulations? 3.         What strategies do they use to implement the rules and regulations them effectively? 4.         What strategic implications would be effective for small chemical companies in India in implementing rules and regulations?             All the research questions will be approached through the utilization of surveys and interviews to the companies mentioned. The first question will be approached through a checklist survey that representatives of the company will be required to fill up. They will then be asked to identify the difficulties they experienced in each of those rules and regulations in terms of implementation by answering an open-ended question. The last two questions (3 and 4) will be approached through personal interviews with senior managers of the companies. Hopefully, their experiences will help provide insights to the study and help design a useful conclusion.   SIGNIFICANCE OF THE STUDY               As a director for 5 years in a chemical firm, the researcher sees that this study will benefit greatly the small chemical firms in India – especially those that are still in the process of start-up – mainly because it may reveal important strategic implications for implementing rules and regulations that they may try to use to their advantage. Not only will the study be able to identify the difficulties of implementing regulations, but it will also or may also develop a useful framework of handling rules and regulations implementation effectively.                         The study is also significant to the study of management because it may reveal new management techniques or develop new management frameworks for small companies.   The study is also significant for the researcher personally and for the whole SME chemical companies in India because studying the procedures for the various government bodies and also identifying them will help set up business successfully – identifying the procedures and knowing the different strategies that the selected companies use will give an advantage of being ready with the required paperwork to be submitted to the agencies.   METHODOLOGY                 As mentioned, quantitative and qualitative research method will be both used in the study. Quantitative method will be used to quantify the frequency and percentage of difficulties that will be identified. On the other hand, quantitative method will be useful in knowing deeply the strategies that the companies use.   Primary and Secondary Data                 Primary data will be the survey and interview results, while secondary data will be literature reviews. Literatures will provide as a guide when interpreting both qualitative and quantitative data. The focus of literature will be on the rules and regulations in the chemical industry, the capabilities of SMEs to abide to the regulations, and the strategies used in implementing regulations.   Sampling               All managers of the SMEs included in the study will be surveyed. Thus, the sample rate will be 100%. For this, convenience sampling will be used because the companies only have few managers. A semi-structured questionnaire will be sent to them. The questionnaires can be finished from 10 to 20 minutes but the respondents can take their time if they want.               Directors will be interviewed regarding the strategies they use in implementing the rules and regulations. Interviews will be recorded so that it can be tabulated later for better analysis.   Analysis               Quantitative data will be analyzed with the use of the latest SPSS software. The frequency and percentage of the items will be determined. On the other hand, interviews will be tabulated. Useful strategies will be considered based on their effectiveness.   Procedure               Literature review will be conducted to know and familiarize more about the topic. The semi-structured questionnaire will be constructed with the guide of the literatures that will be reviewed. The questionnaire will focus on asking respondents about the different rules and regulations they follow, the steps which they implement it, and the barriers and difficulties they experience throughout implementation. A letter of consent will be sent to the companies. Upon approval, the questionnaires will be sent to the companies through email. The questionnaires are expected to return after 1 week. The results will be analyzed using the latest SPSS. SPSS means Statistical Package for the Social Science, and is a “statistics computer software” used for computing statistical data easily.   The top 5 rules and regulations, and top 5 barriers will be the focus on the interview. Questions for the personal interviews will be formulated. The directors of the company will be personally asked about the strategies they have implemented or adopted along the way just to make sure that they implement the rules and regulations effectively. The interview sessions will be recorded and will be conducted through video conferencing. The conversations will be transcribed and important points will be written and included in the study.   A conclusion will be made based on the results of the interviews, surveys, and literature search as well. Hopefully, a useful framework will be developed. Credit:ivythesis.typepad.com

Sample Risk Management Business Proposal: Exploring the Strategic Implications of Rules and Regulations in Selected Indian Small Chemical Companies

Hi Natrajan, “Good day. The information about the different rules and regulations should be researched by you since you are the one f...

PESTLE Analysis of the Luxury Goods Industry

GENERAL OBJECTIVES As a person with knowledge of the luxury goods industry, the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this industry and at times fail to understand the reasons or logic behind certain strategic implementations imposed on it. By delving into this project paper, the author intends to have better insights into how the strategic analysis of the luxury goods industry is thought up, formulated and then imparted down. The author hopes to have an in-depth understanding as to how the strategic analysis of the luxury goods industry enables companies and organizations in this business to compete effectively and profitably in this era of internationalization where competition is extremely intense. In order to reinforce the learning objectives, two key focal issues were focused upon i.e. innovation and diversity. Innovation was discussed with regard to the strategic analysis of the luxury goods industry where it was renowned for its developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better understand the issues being discussed.   EXECUTIVE BRIEF This paper utilized the luxury goods industry as the model industry to review its present impacts and opportunities and how it dealt with critical situations. From the analysis, key trends in the luxury goods industry were then identified, how it worked and its effectiveness in dealing with critical situations was ascertained. The paper then moved on to assess the luxury goods industry with regard to its suitability to critical situations, during which the internal capabilities of the industry in relation to the strategy being followed was determined also. An overall analysis of the performance and effectiveness of the luxury goods industry was also conducted to assess and compare the strengths and capabilities of the industry with those of others. Gaps in the luxury goods industry and environment were then identified. Finally, several choices of strategies to improve the status of the luxury goods industry as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well.  PART A: LUXURY GOODS INDUSTRY Detailed Analysis of the Macro-Environment (PESTLE Analysis)   Political Trends               The luxury goods industry has experienced electoral and political transitions and crises in the last 12 months.  There have been at least four political trends that have emanated from these political events. These are: (a) the cry for democracy and reforms; (b) increased popular and local-level assertiveness; (c) greater public accountability; (d) re-definition of the concepts of power and politics. Also, the forms of political economies have slowly shifted from a bipolar (big government-big business) to a tri-polar structure (authorities – private sector – civil society).               The implementation of the Free Trade Area, which laid out a comprehensive program of regional tariff reduction, will be continuously implemented in phases through the year 2008. Over the course of the next several years, the programs in tariff reductions were made broader. Efforts to eliminate non-tariff barriers and develop common product certification standards were initiated. In addition, ASEAN also was able to formulate framework agreements for the intra-regional liberalization of trade in services. Industrial complementation schemes meant to encourage intra-regional investment were also approved (Amsden, 2001).    Economic Trends Despite the adverse economic trends in the first half of the year, the luxury goods industry as a whole experienced relatively robust economic growth. It is estimated that the ASEAN countries, taken together, posted a better-than-expected GDP growth of 4.5% last year, slightly higher than the 4.1% growth that they achieved in 2002. Last year, Vietnam was the fastest growing ASEAN country, with an estimated GDP growth of 7.3%, followed closely by Thailand with a GDP growth of 6.7%. In other countries, GDP growth ranged from about 1% to 5%. Many countries have also seen the risk-weighted capital adequacy ratios of their banking systems improve due to government-sponsored bank recapitalization programs, continued progress in financial restructuring, and improvements in financial risk management. The capital adequacy ratio of commercial banks in these countries is now far higher than the 8% Basle norm. It ranges from about 14% in Malaysia and Thailand to about 20% in Indonesia, with the Philippine commercial banks reporting an average capital adequacy ratio of about 18% (Arora et al. 2001). Social / Cultural Trends There have also been social and cultural trends that have been evident over the last 12 months in the luxury goods industry. These include: (a) the irreversible rise of civil society among ASEAN countries; (b) the rise of civil society blends perfectly with a tri-polar structure of political economy; (c) the increase in the roles of intellectuals; and (d) the beginning of a period of introspection. Technological Trends It is a common knowledge that the luxury goods industry is still a relatively new industry and is still in its early stages of development. However, it has shown signs of rapid growth and it is being estimated that there will be more than a million mobile devices that will be shipped within the year. And it is further being expected that within the next years the tremendous growth and technological advancements will continue in the mobile world. Mobile commerce and multimedia terminals are just some of the technological advancements already being expected. Therefore, the continued growth and development will also make it imperative for localization to occur in the luxury goods industry in the years to come (Dunning, 1993). Legal Trends Intellectual property (IP) and IP Rights (IPR) creation, commercialization, and protection have been a significant source of comparative advantage of enterprises and economies and a major driver of their competitive strategies. Indeed, countries all over the world are fully aware of the pressing need for a long-term policy commitment to collectively transform the luxury goods industry into one which is largely based on knowledge, driven by innovation and sustained by life-long learning (Cyhn, 2002). Countries all over the world have pledged to work together to help accelerate the pace and scope of IP asset creation, commercialization and protection; to improve the regional framework of policies and institutions relating to IP and IPRs, including the development and harmonization of enabling IPR registration systems; to promote IP cooperation and dialogues within the region as well with the region’s Dialogue Partners and organizations; to strengthen IP-related human and institutional capabilities, including fostering greater public awareness of issues and implications, relating to IP and IPRs. Detailed Analysis of the Industry Environment The assessment of the industry attractiveness is performed using the Porter’s Five Forces Model.   A. Threat of New Entrants New entrants in the luxury goods industry will have to deal with high costs of entry for their latest technologies. Most major competitors in this industry have yet to establish strong distribution channels. This will severely hamper their plans to retaliate with their technological developments as without distribution channels, their products would never be seriously considered in the market by customers. These companies must worry though about certain government laws in some countries that might weaken their competitive position (Baumol, 2002). B. Bargaining Power of Suppliers Suppliers of luxury goods have relatively lower bargaining power because their products have yet to establish consistency in the market. This is in contrary to ordinary brands where these products have been able to secure the confidence of its customers worldwide. C. Bargaining Power of Buyers A majority of consumers in the luxury goods industry are professionals who rely on mobile and expensive gadgets and expect seamless services every time they use them. For instance, a customer phones in a service request from the New York airport while boarding a plane bound to Paris the same day. The technical people in New York will immediately work on the service ticket of the client. And when that client arrives in Paris, he / she would be able to call the New York service center and pick up exactly where he / she left off (Bartlett et al. 1999).The bargaining power of buyers in the luxury goods industry is relatively high because there are only few, large players in the industry. D. Threat of Substitutes There are very little threats that could emerge from possible substitutes.  This is because product-for-product substitution could not possibly happen especially with luxury goods. Other products cannot simply replace the ingenuity of the established luxury products in the market. Also, the millions of users of these luxury products surely would find it too uncomfortable using other products other than their luxury products (Christensen, 1997). What are strategic implications for the forces analysis? The luxury goods industry requires raw materials to produce their goods which lead to buyer-supplier relationships within the industry. The luxury goods industry requires to the productive manufacturers which can supply them with the raw materials that they need. Because the supply is not that abundant, then suppliers in the luxury goods industry are powerful. Another factor which has contributed to this is that the limited sources of raw materials are already controlled by the major players in the market, which makes the power of suppliers high in the luxury goods industry. There are two major reasons why the power of buyers in the luxury goods industry is low. The first reason is that luxury goods are one of the most expensive things in the world. On the other hand, the second reason is that there are only a few major players in the global market who controls the major supplies of luxury goods in the whole world. Thus, buyers are forced to follow the prices dictated by the companies along with other rules in the market such as availability of the luxury goods to be offered to them.  The possibility of new companies entering the industry influences the pace of the competition. Thus, the key is to evaluate the methods of entry and exit for a new player to the industry. Although any company should be able to enter and exit the sector, each industry presents different levels of difficulty influenced by economics. These unique characteristics of the each industry are referred to as barriers to entry which may come from different aspects of the business ranging from supplies to technology. They seek to reduce the rate of entry of new entrants which leads to maintenance of a level of profits for the existing players. These are the luxury products which are available from other industries which can meet an identical or similar need for the consumers. They are unique because they are perceived as the best possible gifts for very special occasions such as engagements, weddings and anniversaries. OPTIMISTIC AND PESSIMISTIC SCENARIOS Deriving from the analysis between the luxury goods industry, operations management and capabilities of the industry involved, many positive and negative scenarios would become imperative. It is therefore essential to evaluate these scenarios as to whether they are appropriate to the issues addressed, whether they are feasible enough to be implemented and their acceptability to key stakeholders. A. Optimistic Scenarios Since there are potentials of merging and acquisitions that could happen among the companies within this industry, there is definitely a need to reconcile both the inside-out and outside-in capabilities. While most luxury goods companies’ operations management involves focusing on their core competencies with market position following their resource base, they will be put into a disadvantageous position should they choose to neglect both the macro as well as the luxury goods industry environment. Therefore, in ten years, it is expected that operations management changes, as well as changes in political, economic, legal and even demographic trends within the industry will occur in order to develop the outside-in capabilities of the luxury goods companies, such as market sensing, customer linking, channel bonding and technology monitoring. The advantages enjoyed by the luxury goods companies may come in the form of increased revenues. Knowing what the market demands and the latest trends could help these companies fully exploit their research and development capabilities to come out with luxury products which are not only cost-effective but also high in quality within the next ten years. The strategic option can even be used as marketing tool where the focus is on staying close to their customers and listening to their feedbacks. On the flip side of the coin, there will be huge mobilization of resources involved, and the associated risks bestowed on the companies. Nevertheless, the mentioned optimistic scenario seems the most evident to happen in the wake of globalization, since there is a sudden shift towards a more integrated and independent world economy. The key stakeholders too should not have any objections so long as the industry’s core business is not threatened. By virtue of the industry’s centralized control of its business, it is being expected that major barriers should not exist in carrying out such an option except additional time may be required given the scope and span of operations. Understanding the strategic importance of operations management is something the luxury goods companies has to be familiar with. These companies normally practice a centralized and globally scaled configuration of operations and capabilities. This allows information dissemination to be retained. B. Pessimistic Scenarios A tie-up or merger with various luxury goods companies offers tremendous benefits in terms of access to their operations management policies, infrastructure and even its resources. However, this scenario might become difficult to achieve within the next ten years, since every company might be in danger of losing sight of its core competencies while pursuing these tie-ups. This will result in jeopardizing the image of these companies. Meanwhile, the collaboration of luxury goods companies with its major competitors can be seen as a brilliant move at first.  However, upon close examination, this move could pave the way for luxury goods companies to experience a decline in its operations management. The bottom line is both sides wouldn’t be able significantly gain in such an alliance because of copying of ideas and information leakage. For instance, a company’s strengths in luxury product development combined with the operations management capabilities of their competitors can transform them suddenly into an unbeatable force to reckon with. One possible setback, however, is the differences in the cultures of the companies involved. Another possible setback could be whether any of the company’s competitors has the need to form alliances. CONCLUSION The results of the analysis carried out on the luxury goods industry indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the luxury goods industry could still be expected to improve faster than an average of ten years. The review of the industry’s capabilities and resources revealed very little inconsistencies regarding its strategies. This is coherent with its traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for the luxury goods industry. The analysis among the environment as well as the operations management and capabilities of the luxury goods companies revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the competitiveness of the industry. Also, luxury goods companies have to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.  PART B INTRODUCTION The luxury goods industry over the years has developed an efficient and effective process of implementing the policies and tasks necessary to satisfy its consumers and management of companies and organizations. There has been a recent focus on the careful management of the processes involved in the production and distribution of luxury products and services within the industry. More often than not, small luxury goods companies don’t really have the capabilities to implement operations management. Instead, these companies engage in activities that various schools of management typically associate with operations management. These activities include the manufacturing of products, product development, production and distribution. However, operations management deals with all operations done within companies and organizations. Activities such as the management of purchases, the control of inventories, logistics and evaluations are often related with operations management. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, operations management includes the analysis and management of internal processes. Gucci will be the model business entity that will be used in this research based on their history in the luxury goods industry Measuring Gucci’s Performance a. Financial Analysis In the fiscal year of 2003, Gucci was able to experience a significant progress in several key metrics. The inventory was reduced from million to million and inventory turns rose from 12 to 26. The cost of revenues, excluding the benefit from previous special charges and the applicable portion of the amortization of intangible assets, decreased from 72.3% of revenues to 67.8% of revenues. The combination of sales and marketing, research and development, and general and administrative expenses was reduced from $ 435 million to 9 million, while at the same time improving on the pace of innovation. Gucci’s total revenue has approximately grown from million in fiscal year 1995 to $ 871. 9 million in fiscal year 2003. b. Marketing The retailers in Europe represent Gucci’s largest sales and marketing channel which encompass national and regional office supply stores and mass merchants. Distributors represent Gucci’s second largest European channel and generally sell to both traditional and Internet resellers and retailers. In Europe and the US, Gucci’s market share is still relatively high. Gucci has more than 100 international distributors located worldwide.             The company also uses online stores as a venue to sell its products. This is accomplished through the use of e-marketing campaigns and product bundles. The company is able to build awareness of its products and brands through mass media advertising, public relations efforts and branded Internet properties. The company also makes it a point to receive feedback from its customers through market research. The company then uses these feedbacks to refine its product development efforts and marketing strategies (Kotler et al. 1999). c. Operations Gucci out-sources all of the fashion designs of its products to third party manufacturers. This outsourcing extends from prototyping to volume manufacturing and includes activities such as material procurement, quality control and delivery to distribution centres. The company is assured that there is an adequate supply of components to manufacture its products. The majority of the company’s products are assembled in Italy and the US. Distribution centres are operated on an outsourced basis in Europe and the US. d. Human Resources Gucci knows that its future depends on the company’s ability to attract new personnel and retain existing personnel in key areas including engineering and sales. None of the company’s employees is subject to a collective bargaining agreement. The company considers its relationship to its employees to be good. Gucci Company SWOT Analysis Strengths: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Gucci has products that boast of a very powerful retail. This includes a reputation for value of money, convenience and a wide variety of products </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Gucci has grown significantly over the years, and has experienced global expansion.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Gucci’s main competence lies on the use of information technology (IT) to fully support its international logistics system. Therefore, Gucci can see how their individual products perform within the United States, or even at stores at a glance. IT also supports Gucci’s efficient procurement. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Gucci is able to deliver good customer care, as the limited amount of work would mean plenty of time to devote to customers.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Gucci’s lead consultants have established a strong reputation within the market.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Gucci can afford to change direction quickly if its management finds that the company’s marketing strategy is not effective.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Gucci has little deficits and overheads. Therefore the company can offer good value to customers on a consistent basis.</li> </ul> Weaknesses: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Gucci is one of the world’s largest companies in luxury goods but has a weak control of its empire, despite its IT advantages. This could lead to a decrease in productivity in some areas where they have the least control of.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Since Gucci sell products across many sectors, the company may lack the flexibility that some of its more focused competitors possess.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Gucci operates globally, but its presence is located in only relatively few countries worldwide.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Some of the company’s weaker branches lack market presence or reputation </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Some of the company’s personnel still lack the essential skills base in many areas.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The company is still vulnerable to the temporary losses of its vital staff (e.g. being sick, leaving).</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The company’s cash flow is unreliable especially in the early stages of a new product development.</li> </ul> Opportunities: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Taking over, merging, or forming strategic alliances with other luxury goods companies while focusing on strong markets like Europe or the Greater China Region. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The branches of Gucci operate only on trade in a relatively small number of countries all over the world. Thus, this would open the opportunities for future businesses in expanding various consumer markets, such as those in China and India. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The opening of new locations and branches offer Gucci the opportunities to exploit market development. This could lead to the diversification of the company’s branches from large super centers to local-based sites. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Opportunities exist for Gucci to continue with its current strategy of establishing large branches worldwide.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Gucci is continuously expanding, with plenty of future opportunities to exploit for success.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The local councils of Gucci are in the process of encouraging local businesses with work whenever possible.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The competitors of Gucci may be slow to adapt to new luxury goods especially the ones that Gucci releases.</li> </ul> Threats: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Being number one means that Gucci is the target of competition, the company to beat, both locally and globally. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Being a global retailer means that Gucci might be exposed to political problems in the countries where the company has operations.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The production costs of most consumer products have the tendency to fall because of lower manufacturing costs. Manufacturing costs fall because of outsourcing to low-cost regions around the globe. This phenomenon could lead to competition in prices, which in turn would result in the deflation of prices in various ranges. Intense price competition must definitely be considered a threat. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The latest developments in information technology which could possibly change the markets might challenge the company’s ability to adapt to these changes </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> A slight shift in focus of a large competitor might wipe out any market position that Gucci has achieved over the years. This could force the company to specialize in rapid response but good value services to local businesses. This would put so much pressure on the company’s consultancy staff to keep informed with the latest changes in technology where possible.</li> </ul> MARKETING MIX ANALYSIS A. Product Gucci’s dedication to quality for almost three generations now has led to the satisfaction of millions and millions of its customers worldwide. Gucci was created by a group of people who pursued the best quality and craftsmanship in terms of luxury goods designing and production. The various Gucci products that its customers patronize today are still being manufactured using nothing but the original and unparalleled raw materials discovered three generations ago by the Gucci family. Gucci’s durability and bright colors are obtained by using only the purest raw materials. . The raw materials used in the production of Gucci luxury products are able to meet the high quality standards and specifications. The packaging materials where Gucci products are sold are also being subjected to strict quality standards. In line to Gucci’s policies in product safety, appropriate measures are taken in the production process of Gucci and all of its brands to prevent the possible contamination of the products. Gucci manufacturing plants implement the principles of the HACCP (Hazard Analysis and Critical Control Points) system as a testament to their dedication to quality. B. Promotion Gucci has been able to maintain its reputation as one of the world’s leading luxury goods companies for more than 130 years now. It is able to face the challenges in many of its markets directly. This is made possible by the effective promotional and positional strategies aimed to deliver not only profit growth, but also on building down the foundation of Gucci’s brands and business. The promotional campaigns and strategies of Gucci are focused mainly on driving the growth of its brands and improving the company’s financial performance. These campaigns have also helped secure significant acquisitions and partnerships. And more importantly, these campaigns have led to the release of the potentials of the company’s employees, thus building a quality performance- based culture. The promotional strategies of Gucci’s local products are practically reinforced by the local employees themselves. These moves certainly allow the company to improve even more without the costs of introducing new technologies. These efforts have resulted in increased financial gains for the company and have allowed the establishment of distribution networks for both the local and international Gucci products. C. Place Gucci has grown and expanded virtually around the entire globe. This was made possible by their strong efforts to acquire smaller luxury goods companies and firms from other countries. Over the years and decades, Gucci has slowly but surely established an empire, with strong segment markets established in Asia and the Middle East, the Western Hemisphere, the Europe and most recently the Asia Pacific. In Europe for instance, Heineken was able to achieve a broad market leadership through various acquisition deals over the years. The company also exerts efforts to communicate with their customers in every local culture about Gucci products and their impressions. And this is no easy thing because Europeans have different tastes in fashion and technologies. Therefore, Gucci products might not really have an appeal to them. This critical information gathered by Gucci paves the way for them to make the right decision regarding the appropriate strategies to pursue. What are value chain implications for the corporation? Gucci’s functions are based on a simple concept: that they could best understand consumer needs and efficiently provide the most effective luxury goods and products to meet those needs by selling directly to customers. This direct business model eliminates retailers, who adds unnecessary time and cost, and also allows the companies to build every system to order, offering customers powerful, richly designed luxury products at competitive prices. Gucci introduced the latest relevant technology much more quickly than companies with slow-moving, indirect distribution channels, turning over inventory an average of every four days. The traditional value chain in the luxury goods industry is characterized as “build-to-stock.” Gucci design and build their products with preconfigured options based on market forecasts. Products are first stored in company warehouses and later dispatched to resellers, retailers, and other intermediaries who typically added a 20–30 percent markup before selling to their customers. Gucci commands the upstream part of the value chain, while giving the downstream part to middlemen (resellers, retailers and other intermediaries). Retailers justify their profit margins by reasons that they also give free several benefits to customers: easily accessed locations selection across multiple brands, opportunity to see and test products before purchasing, and knowledgeable salespeople who could educate customers about their choices. CONCLUSIONS AND RECOMMENDATIONS Gucci has been able to remain one of the world’s leading luxury goods companies for more than a century now primarily because of the execution of the company’s branding and positioning strategies to perfection. Add to the mix the company’s dedication to high quality of service and the formula for success is at hand. However, I am not totally convinced that the branding and positioning strategies Gucci implements currently would be as effective as before. For one, consolidation and globalization are taking place across most industries, and the luxury goods industry is not excluded. Gucci, as a leader in their industry, has implemented various strategies to fully adapt to the need to go global.  I suggest that Gucci should implement a more sober approach to maintain consumer loyalty with their local brands. There is nothing wrong with building new loyalties with the other global consumers. But there are instances where the local market is often neglected. As a result, local consumers will tend to develop a bad impression about the company and its products. While it is good to acquire new firms, it is even better to keep and maintain the older and more established markets. This way, the empire of Gucci will remain unscathed amidst the advent of consolidation and globalization. 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PESTLE Analysis of the Luxury Goods Industry

GENERAL OBJECTIVES As a person with knowledge of the luxury goods industry, the author has always brought up to his superiors the viabil...