BBUS 4430-01, Winter 2013
Take Home Final Exam
Q 1.We have discussed the desire of many retailers to expand their operations globally. Is expanding globally the best answer to retailers facing pressure to grow in order to achieve higher sales and profits?
Looking through several research papers besides the articles we have covered in class, it becomes clear that retail has taken to global expansion almost like a one-size-fits-all solution to most of their problems, hoping the increased sales would drive away any potential crises to the organization. It has almost regenerated into a rat race like an adaptation of the ancient rulers attempting to invade the world before anyone else in a quest to dominate the ‘market’.
Granted that a large scale of resources from supply chain to franchise management and a variety of other components need to be planned, built and sustained along with keeping in check the Brand Equity and Communications so as to remain consistent within the all touch points between the organization and the consumer. However, companies seem to consider this a more feasible alternative to staying within a country or continent and being run over by the multiple sources of threats from doing so.
The advent of the new millennium has seen changes in several spheres within all major countries. Political strategies aside, several countries across the globe have made stringent their policies from importing international products to letting global brands expand their businesses onto their soil. The formidable economic situation administered the final blow to these organizations; the management couldn’t sit content and merely ‘maintain’ the brand’s current status and profits anymore. The recession especially trapped up the established companies (mostly American and a good few European based companies) where they either had to climb out and survive or be sucked into the whirlpool of decaying and forgotten brands.
This is also an era where globalization has heightened to a larger scale. International travelling and tourism has risen to an all-time high and outsourcing of inexpensive labour is encouraged.
People everywhere are hooked onto the novel experiences of other cultures, their intriguing cuisines taking up primary interest. Any foreign possessions are prized and philosophies exchanged, westernization becoming a popular fad in the east; it is an open invitation for any and all to come play.
Retailers could only see this as an answer to the stagnation. Despite stringent business-related policies adopted by several of the lesser globalized countries like China and India, the market potential is far too attractive for them to stay behind, the populations are relatively green, thirsty for novelty and some of the largest one would find across the globe contained within a country. If the retailer can successfully convince these masses to buy their products, there is no telling how far up they could go. Such expansion solves several other deterrents the retailers would have faced by occupying a single state. The social, political, economic scenarios can drastically change the purchasing behaviour of the masses within a country but don’t just as quickly spread to other continents hence providing them a far more consistent set of sales figures. Q 4. “It’s not department stores’ size or location of physical capabilities that are their problem, says Ron Johnson, CEO of JC Penny. Based on what you’ve seen in the course, do you agree or disagree with Ron Johnson’s perspective and why?
It is true that today’s consumers are a lot more learned and not so naïve in terms of their journey towards purchasing decisions. While advertising and similar marketing activities from the retailers have largely remained with the same channels, messaging and strategies, the everacute consumer has grown wildly insensitive to most of them.