Wednesday, December 4, 2013

PC World Internationalization Plan for Dixon Retail Germany

Table of Contents

Executive Summary

The assignment includes the Dixson Retail Group analysis and approaches leading to extend business. With the passage of time, thins have been changing drastically and an organization need be in the market for its survival and progress. There are certain facts and threats need to be focused to have positive impacts in the organization. Strategy development is needed in this regard as a result to have successful results. The vision of the organization includes “people to make better informed choice before spending their money”. We also will take action to narrow the gap between customer and producers/services providers. Our mission is just to help people and companies to share information. To be the leading provider of opinion based platform.    
Therefore, the sector of Dixons Retail Group is analyzed to identify how it is going on the current periods in different economies around the world. Since the market has growth in diverse terms, the financial statistics prove that organization has been performing in the international market. The customer relation building truly depends on the marketing department and the higher management; they have to play an immense significant role in making the name of the company. Critical points as population and economic statistics were described and discussed to give to the reader an impression about the current situation of the German economy. Also, the potential growth over time was evaluated based on actual data and outlooks.
Likewise, the region, which in this case is the European Union, was evaluated through its main population and economic statistics. The objective here is to identify if the potential growth of the foreign economy where the company will be established. This is important to understand since in last couple of years, Germany, England and France saw their growth perspective as compared to countries like Portugal, Spain and Greece. It is important note that making healthy relations with the foreign countries displays well on the organization’s performance. 
Finally, the mode of entry to the German market was deeply described, evaluated and recommended, based on theoretical concepts which help to identify the critical points when determining the best-suited association type -if any-, in order to satisfy and make easier the task of the company on reaching its objectives and goals.


Today’s economy requires companies to adapt as fast as it goes as time is being running out and policies are being altered, companies have been changing throughout the years, even big companies as Kodak, Polaroid and Daewoo, have seen most of their operations fail in past years (Cohen, 2005), then the today’s companies must look not only for expansion, also for knowledge and the best practices to allow them to generate constantly competitive advantage. Therefore, how the company is organized will determine its effectiveness to identify and work on critical areas to generate advantages over the competitors.
The entry mode on a foreign market is basically this, identify and develop the company on the best way which allows it to adapt and act efficiently and effectively to maintain a top of the competitiveness. If the company is not established in the right way, the company can’t take decisions, implement procedures, sign contracts and satisfy its clients successfully. Some steps were recommended at the final of this project to ensure a correct application of the entry mode. Organizations that are in the business by developing healthy relations with their associates, they always tend to maintain those dealings to progress more in the future time. The established associations would benefit the employees as well as the management in order to accomplish the tasks and motives.

MNE Analysis

The main task here is to identify the strengths and weaknesses of Dixons Retail Group, this is important to understand because it would directly impact on the company’s performance and reputation. Strengths that are working or not working together in different areas shall be addressed to get an effective synergy on the activities. Weakness of the organization have to be identified so that it could be further improved and performance of the organization could be triumph and immense (Lloyd, 1998).
A market is defined as group that has buyers and sellers. They do trade and earn revenue. When a business is running and in progress then for good outcomes there has to be distribution of the strategies. For example the information regarding the specific consumers must be considered and noted, effective branding technique will help to expand the business, and it will provide easiness for targeting the consumers as per their requirements. Occasion segmentation is dividing the market into groups on the basis of the different occasions when the buyers plan to buy the product. Benefit segmentation is essentially dividing the market on basis of the characteristics or features of the product or the service as perceived by the customers. In a scenario when there is Christmas day, would will do shop a lot, now it is the duty of the marketing department to collect information that what the consumers are going to be purchasing. Wide range of products, it gives the company the opportunity to reach all the niche-markets by age, social status, sex, education, etc (McDaniel, 1998).
The weakness includes as:
         lack of managerial back up
         lack of diversification of the product
         low number of stuff many impedes growth
         brand  - we are new entity that provides absolutely new service to advertising agencies and marketing departments
         lack of strong advertising campaign

Sector Analysis

Dixons Retail plc is a specialist electrical retailer and services company, which sells consumer electronics, personal computers, domestic appliances, photographic equipment and communication products. The Company sells its products stores, over the Internet and by phone, also it undertakes business to business (B2B) sales and services. As of April 28, 2012, the Company operated over 1,200 stores in the UK, Ireland and 10 other European countries using a number of established brands, including Currys and PC World in the United Kingdom, and Elkjop in Norway, as well as multi-channel Internet operations under these brands (Reuters, 2013).
This Company belongs to the sector Consumer Discretionary, industry Retail Discretionary and, sub-industry consumer electrical and Apple. Stores. Is important to mention here that this sector encompasses those industries that tend to be the most sensitive to economic cycles (Fidelity, 2013) then, if the task is to evaluate the entrance of the Company into a market, the first issue should be to evaluate in which stage of the business cycle is that country’s economy. Now, this sector has a good performance pulled by the rally of the S&P (Standard and Poor) 500 which has reached its highest level ever month of November 2013. The following graph shows that this industry is growing faster than the index cited which is expected since as mentioned before; it is too sensitive to business cycle.
Source: (Fidelity, 2013)
The comparison explains the difference between performance and BMI consumer discretion. At the end of month, Industry performance has shown a higher rate as compared to BMI consumer which proves the industry demands and supply.

Source:(Bloomberg BusinessWeek, 2013)

Source: (Bloomberg BusinessWeek, 2013)
In the case of Africa & Middle-East, this sector is not performing as is expected, it is below the perform of the S&P for Africa & Middle-East, it could be product of the oil-dependence of the economy which is characteristic of those countries. In the initial of Sep 2013, industry performance was less but after the passage of time in Nov 2013, it was raised to more than 10% as expected.

Country Analysis

As Europe's largest economy and second most populous nation (after Russia), Germany is a key member of the continent's economic, political, and defense organizations, it is which determine the trend of any aspect in European Union. Irrespective of the geographic location, customer is attracted towards the brand if there is proper segmentation. Segmentation refers to distribution of products as per the demands of the customers and market. Since the population is the number 17 in the world ranking with 81,147,265 people (Patton, 1995). The advantage in this scenario refers to the fact that the customers have the tendency to purchase the products offered by the market that engulfs the business shared in the market by stake holders.    
Another important factor is the German economy - the fifth largest economy in the world in PPP (Public Private Partnership) terms and Europe's largest - which is a leading exporter of machinery, vehicles, chemicals, and household equipment and benefits from a highly skilled labor force (Gentle, 2000). Likewise, the GDP is one of the biggest in the world number six in a world ranking at US$ 3.25tn and, as a result of its sustainability; the growth rate is at 0.7% annual, typically number for stable economies. The GDP per capita is also one of the greatest at US$ 39,700 and number 29 in a world ranking which gives us a good input when evaluating the purchasing power of its population (Gentle, 2000).
A final important issue is the fact that the higher contribution to GDP comes from services, which represents 73.8% of the total, the inflation rate is stable and not one of the highest. It is at 2.1% which is good for the company since it means stability over prices. Moreover, the lending rate is one of the lowest and number 169 in a world ranking at 3.07%, another important factor for the company and its borrowing needs (Chandler, 1998).

Analysis of Regional Organization

European Union (EU) established a new currency, the euro, it was launched in world money markets on 1 January 1999; it became the unit of exchange for all EU member states except Denmark, Sweden, and the United Kingdom. In 2002, citizens of those 12 countries began using euro banknotes and coins. Ten new countries joined the EU in 2004.
Regarding to the population, as with Germany, most of them are in the range is according to the company public objective that includes the consistent enhancement of revenue and performance. Also, another good advantage here is that EU has a unique supranational law system, it means that the company does not have to adapt to different legal systems in any county of this group, then it represents save on time and money (Gentle, 2000).
As a group the EU has the highest GDP in the world at US$ 15.97tn, with a GDP per capita at US$ 35,100 which gives the company a good starting point when evaluating the purchasing power of the population. Likewise, the household consumption is the highest contributor to the total GDP, which represents the 58.2% of the total, higher the consumption, higher the potential income for the company. Regarding to the labor force it is concentrated on services sector with 71.8% which means will be easy to find labor supply. As a group the lending rate maintains as one of the lowest at 5.9% and number 121 in the world. Finally, regarding to communication, there are more than 226mn and 629mn fixed and mobile lines operating which represent easiness to manage the company in any aspect.

FMSS, Mode of Entry: Analysis and Recommendation

For making an entry in the market, it is really necessary to get to know the basic demands and requirements. A market is defined as group that has buyers and sellers. They do trade and earn revenue. When a business is running and in progress then for good outcomes there has to be distribution of the strategies. For example the information regarding the specific consumers must be considered and noted, effective branding technique will help to expand the business, and it will provide easiness for targeting the consumers as per their requirements. The competitiveness in the market proves that how an organization is capable enough to vie with others. The resources of the company proves that how much is it capable of facing the business hardships. The recommendations could be proposed regarding the market capture as Germany is one of the biggest opportunities regarding the business marketplace. More is the probability of making business in the specific region by fulfilling the demands of the customers.       
The exporting mode, which is a low resource since it represents low investment and consequently low risk-return alternative. This mode, while providing a firm with operational control, lacks in providing marketing control that could be essential if the company wants to earn market-share. In this case, this could not represent the best alternative available for Dixons Retail Group because, as mentioned before, Germany is a big market where the most of the population are in the public objective range age that makes more probability of sales in the market industry. If the company decided just to export to Germany the products, it might not help to earn on market-share, since only few people could reach the brand and its products.
The sole venture mode, on the other hand, is a high investment and consequently high risk-return alternative that also provides a high degree of control to the investing firm. It could be a good choice for Dixons Retail Group, as long as they have presence in 10 countries in EU. To introduce the brand to this market requires that the firms counts with its own central office, support and client service branches, stores for the products to be sold and delivered and, other requirements that the company could establish under this kind of contract.
The joint venture mode involves relatively lower investment and then provides risk, return, and control according to the extent of equity participation of the investing firm. Regarding to this kind of society, the organization should extend its business by making joint ventures with various organizations and associations, different kinds of Joint Venture. As Joint Venture requires different investment capital, number of directors, number of German citizens directors and managers, which determine the control over the company. It is recommended to hire the services of a local company specialized in the German Civil Code in order to determine the most convenience for the company’s Interests. Moreover, it could be a good choice since it allows the company to get financing either from selling shares or debt, which represent cheaper financing sources. When the company is dealing well in the credits and debits, means in auditing and financing. All the company’s proceedings would be carried out well and faultless.
Finally, the licensing mode is a low investment, low risk-return alternative which provides least control to the licensing firm. It could be a good choice if the companies wants to take advantage of the already established local firm and its operations, public and distribution channel but, the problem with this kind of contract is the fact that the company will have less control over operations, the know-how of the company will be difficult to transmit to the local firm. However, it will be easier to access the local market knowledge and respond to its needs (Aguilera, 2006).
From the above described, is deducible that to establish a specific kind of company in a foreign market, if the threats and risks are eradicated well from the business plan then there are more chances of getting the most convincing results. Then is important to have cleared the differences between advantages or disadvantages for the ownership, location and internalization.

Implementation of the plan
Our implementation plan will have two main activities:
           Organizing – includes organizational structures that manage implementation.
Because of the number and diversity of marketing activities, firms must develop make clear who will carry out the marketing plans and what the reporting relationships among managers and other employee will be. 
           Executing- each employee/team must execute its assigned tasks in an effective and efficient manner to make the marketing plan to work.  Executing activities will have the following characteristics:
a.         Must be goal and objective directed
b.         assigning resources to facilitate performance 
c.         Effective and efficient coordination of activities--who's doing what and by when
d.         Attention to detail.
e.         Accountability for the assigned and done tasks.
Marketing resource management provides a set of applications that automate and integrate such activities as project management, campaign management, budget management, asset management, brand management, customer relationship management and knowledge management. The knowledge management component consists of process templates, how-to wizards and best practices.

Marketing Plans Failures
There are certain points that must be considered in mind to make sure that our companies make success in business. There must a valid point that the plan was too quickly prepared. It can be attractive to move quickly through the steps in the marketing planning process and to simply identify a number of actions that need to take place, often based on activities that have taken place in the past. Another reason could be the misuse of data, as it was not effectively in the marketing planning process. While there is certainly some ability involved in the marketing planning process, original accepted wisdom does not mean ignoring context that can impact decisions. There could be another reason of failure that could be the time consumption and less significance. The aptitude to put into practice is not present. Preparation is one thing. Execution is fairly one more. A well written plan is worthless if the organization does not have ability or wish to put into practice that plan. There is no promise to the plan. Broad involvement in the marketing planning process can ensure that organizational members necessary to help achieve the plan are committed to its implementation.
Apart from that there could be many reasons that for facing the failure.
·         Lack of Commitment
·         Lack of accountability
·         Irresponsible behavior
·         Time Negligence
·         Proper and timely execution
·         Lack of confidence
Evaluation and Control
            In order to execute set goals in the marketing plan, the following approaches will be adopted:
           Monitoring procedures and techniques
           Progress reports
           Time line outcome measurement procedures
Management would track efficiency of the strategy by determining the following criterion:
           number of unique visitors of the website and their daily behavior in order to plan addition changes in functionality
           number of  possible long term partnerships,
           results of advertising campaigns, promotional and public relations related activities


Since the market analyzed has been Germany, there are many points of critical evaluation the company could except from its study of this, for example, the risks related with changes in the government does not apply here because Germany is a point of reference when talking about democracy, infrastructure, knowledge advances, economy and between other important points regarding to this topic. Then, the steps mentioned at the end of the FMSS analysis, described well how the company should do to enter into this market, the critical points here are related with the civil contract when establishing the company.
Furthermore, this shall be well-defined because it will limit the company’s scope in the market when start to operate, a bad election in the contract, could mean restrictions for getting capital to financing its activities, restrictions over the policies on sales, purchases and changes on the board of directors, even restrictions about the process of taking decisions inside. That is why, a well-established plan with future scenarios must be developed to identify possible gaps not taken according to the company objectives, expectations, goals and requirements too, for example, the company is trading in London Stock Exchange, if they wanted to do the same in Germany, they might choose carefully the new society which allows them to do that.


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