H Entering Australia

Executive Summary Table of table of contents Introduction Hennes and Mauritz (H&M) was first established in 1947 and conf theatrical role since expand inter tribeally and currently operate in 34 countries (H&M, 2009). As H&M continues to expand either year, the pastime report has chosen Australia as the new groceryplace, where analysis has been conducted to digest H&M with recommendations of which market place entry method they should adopt and the threats and issues they must(prenominal) everywherecome to be able to postdate. 1. 0 untaught Analysis AustraliaFor the purpose of this report H&M (Hennes & Mauritz) has chosen Australia as the foreign earth in which they wish to code and introduce their adjoins. Australia is the largest island, however, is besides the minuteest unstained in the world which is situated below south East Asia (Department of Immigration and Citizenship, 2009). Being the sixth largest nation on earth it excessively consists of six stat es and dickens territories with the lowest population density per squ be mebibyte (REFERENCE).As it is practically im doable for H&M to enter the undivided Australian market simultaneously, H&M has, on that pointfore, chosen Melbourne as the first Australian state they wish to enter. There be many an other(a)(prenominal) groundss for choosing Australia and Melbourne in particular including Melbourne is the second largest capital metropolis in Australia with a population of 3,634,200 (REFERENCE). Melbourne is ren ingested as the sort capital of Australia, where the Melbourne Spring Fashion week (MSFW) is one of the largest and most popular consumer formulate howeverts in Australia (City of Melbourne, 2009).This may consequently make it easier for H&M to launch their products and also obtain brand aw arness, as Melbournians atomic number 18 comparatively fashion conscious. current line opportunity, since 2006 on that point has been a 15% harvest-festival in the constituent where unsalted female consumers ar demanding for low priced nonetheless gamy quality and modernistic appargonl (Euromonitor, 2009). Australia has a kindred country compose as previous countries H&M has successfully entered and launched its product. Hence, H&M appears to shake up prior acquaintance and experience in expanding internationally into a horse opera country. 1. 0Product Analysis Hennes and Mauritz (H&M) was founded by Erling Persson in Vasteras, Sweden, in 1947. It was ab initio known as Hennes, which is the Swedish word for hers, as the caller-out only sold women wearing. Persson purchased Mauritz Widforss a small sporting apparel company and since then organize Hennes and Mauritz (REFERENCE). The company now operates in 34 countries including Germany, France, Hong Kong, ground forces and the UK. H&M continues to expand internationally where they expanded into the Japanese market in 2008 and pull up stakes set ahead expand into Russia and Leba non by the end of 2009 and Israel and South Korea in 2010 (H&M, 2009).The plaza concept of H&M is to provide burn-setting products at the lowest price possible, to fence with expensive department stores. H&M has 6 main product declines which admit Women diverse sick of apparel spanning from basic sportswear to corporate and troupe garments. Men includes tailored garments such as jackets to raffish apparel that job the latest trends. Children is divided into three categories babies, children and H&M Young which is aimed at children up to the progress of 14. Divided patsyed at teenagers and young adult, which offers fashion with a young look with creative designs that reflect those of the latest trends. &denim Jeans provides both traditional five-pocket jeans to the trendiest cuts. Accessories H&M also produces its own footgear, handbags, jewellery and even cosmetics. It should also be noted that H&M does not own manufacture any products, kind of they swan on over 700 independent providers chiefly in Asia and Europe which enables them to select the best supplier (H&M, 2008). 3. 0 Market SegmentsWith the diverse range of product lines, it appears that H&M has the ability to target opposite market segments simultaneously, this is somewhat difficult to achieve. Therefore, for the purpose of this report, deuce precise market segments progress to been selected and profiled to provide an overview of which segments H&M should specially target when launching in Melbourne. 3. 1 visibility One Womens outwear segment The foremost market segment that H should target would be the womens outerwear segment which includes all garments from stand out to blo usances to jackets (REFERENCE).Main reason being, this market segment is reasonably profitable with a Retail Value of over $3000 million (Refer to figure XX), where women have traditionally been the shadow consumer in the tog and footwear industry (REFERENCE). However, on that point appears to be a new social trend where men are becoming much fashion-minded and are also looking for cheaper options (REFERENCE). In recent times, there has been a change in preference for young women, where they do not only demand for high quality yet fashionable products, it must also be low priced (REFERENCE).H&M should then be able to target this segment, as the companys core concept coincides with this new trend. Where Hs womens array are intentional for women of all ages who are fashion minded, where its product line includes everything from modern basics to tailored classics, sportswear, maternity raiment and cutting-edge fashion. (H, 2008, pg. 17). However, for the purpose of this report and to make it easier to target, the patriarchal feather segment provide be young women senior(a) 18 to 24, while the secondary segment go forth be women venerable 25 to 40. . 2 Profile Two Childrenswear The second market that H should hand targeting once the womens outerwear market has been successfully targeted would be Childrenswear in Australia, as figure XX illustrates the steady ontogenesis in the market percent of childrenswear in Australia (REFERENCE). There are many reasons to the return of the childrenwears market share this may be because Australians are choosing to have fewer children (REFERENCE). In addition, habitation isposable incomes have increased providing, the key buyer generally mothers, will be more willing to purchase frank quality childrenwears at a low price. Therefore, H intensive range of children apparel which caters from infants to children aged up to 14, should be able to target the childrenwears market in Australia. Where the concepts for the childrens clothing are made to be fashionable, practical and hard-wearing (H, 2009). 4. 0 elaboration Home Country, immaterial Country and Company Culture Each and every country, metropolis and company will have its own distinct subtlety.There are many definitions of tillage where Fl etcher and Brown, 2009 has defined socialisation as prescriptive of deportment that are acceptable to slew in a specific communitylearnedpeople are born into a coatingdynamic becauseour behaviour influences the floriculture and culture is subjective (Fletcher and Brown, 2009, pg. 76). It is crucial for H to have understandings of the culture of the home country, foreign country and also the companys culture. Main reason being, cultural differences play an valuable role in launching and establishing H as postulatent rivalry in the Australian market. . 1 Swedish Culture The Swedish culture is typically perceived as egalitarian, simple and open to international influences (REFERENCE). This may be ca employ due to the predominance of the Social Democratic company where it promotes the culture of equality, pluralism and individual freedom (REFERENCE). As the Swedish culture is relatively similar to the Scandinavian, it can be assumed as a low stage setting cultural country in contrast to Australia. petty(a) context culture can be class as messages are mostly explicit and the rowing covey most of the meaning in the dialogue (Fletcher and Brown, 2009, pg. 88). Meaning in Sweden people mainly communicates finished words and do not place stress on non-verbal cues. Therefore, this culture may affect business negotiations between Sweden and Australians, due to the differences in cultural context, where Australians rely more on body language and facial nerve expressions (REFERENCE). In regards to the fashion culture, Sweden is greatly influenced by European fashion, where there is a strong raimented up working mans culture (REFERENCE). 4. 2 Australian CultureIt is relatively difficult to bring out and analyse Australian culture, in equivalences to other countries, as Australia is newly formed country and is a preponderantly multicultural society where it consists of different races and ethnic groups (Live in Victoria, 2009). However, there are gradu al changes to social trends which may become part of the Australian culture (REFERENCE). sympathetic to Sweden, Australia also has a low cultural context, yet in contrast, Australians appear to place more ferocity on non-verbal cues. Relating this to the Australian clothing culture, Australians generally outfit in business attire during business hours.though outside of working hours, Australians tend to choose clothing that is comfortable such as track reconcile pants and a loose fitted t-shirt, in comparison to a pair of jeans and jacket (Department of Immigration and Citizenship). This is an important factor H must take into consideration, as this will acquirely affect the products and selling strategies used to target the market segments. For instance, as Australia appears to have a laidback culture, it would probably suit the market more if H was able to launch products that suited the Australian culture and preferences. . 3 H Culture Company culture can be defined as a s ystem of values and beliefs shared by people in an organisation the companys corporate identity and meaning (Fletcher and Brown, 2009, pg. 334). As stated on the official H website, the company believes its employees, teamwork, working at a face past and constantly astir(p) (H, 2009). This suggests that H appears to have a relatively open, happy-go-lucky and energetic company culture, where it strongly promotes open communicating between managers and their employees (H, 2009).In addition, H is a upstanding believer of non-discrimination where all qualified applicants are devoted equal opportunities regardless of any characteristics including, race, religion, sexual orientation, sex, age marital status or disability. The company culture of H should not cause any implications when entering the Australian market. However, it may cause implications when international marketing strategies does not coincide with the companys culture, as strategies are designed to accommodate the co mpanys culture and not vice versa (REFERENCE). 5. Economic broker The Australian economy has recently experienced a market downturn where economic factors such as consumer government agency and expendable income will have a direct and indirect impact on the market entry and success of H in the Australian market. ?Gross Domestic Production (GDP) The GDP for Australia has been relatively flat in 2009, where there is no important growth, however, there is an anticipated growth of 0. 5% in 2010 and with the recession ceasing there should be gradual growth of 3. 25% in 2011 (ANZ, 2009). ?Interest RatesIn recent times, the delight rate has continued to drop, where in 2009, the nominal interest rate had dropped by 3% (Refer to Figure 2. 0 in Appendix). As interest rates are low Australians are discouraged from depositing money in the banks as it does not cave in interest. ?Household Income From figure XX and XX the equivalised disposable household income for Australians appears to have little by little increased. For instance in 1995-96 there were 11% of total income categorised as being low income, however, in 2007-08, this had decreased to 10. 1%. While there has been a significant increase of high income earners, from 37. % in 1994-95 and 40. 5% in 2007-08 (ABS, 2009). Overall, the Australian economy appears to be reasonably attractive as both GDP and equivalent disposable household income have increased, which suggests that consumers have more money and are more likely to spend and purchase consumer goods which include clothing and footwear. Therefore, H should take advantage of this consumer confidence and enter the Australian market rapidly as consumer currently have the ability to purchase more consumer goods that are not considered to be a necessity. 6. 0 Competitors AnalysisEven though the clothing and footwear industry in Australia is viewed to be an attractive market to enter, there does appear to have blood-and-guts contestation (REFERENCE co mpetitive). Referring to figure XX, there is no dominant market leader in the Australian market however, there are a number of brands who have gained developed brand share, such as Just Jeans (1. 9%) and Jays Jays (2%) respectively (REFERENCE). All brands operating in the clothing and footwear industry could be considered as H competitor, however, Just Jeans and Jay Jays are the two most similar brands compared to H.Where they have also identify the demand for fashionable yet low priced products, therefore, all three companies have similar product offerings and also client profiles. Hence, to successfully enter and establish H in the Australian market, it would be essential to have sound companionship of competitors and develop core competencies such as designs that are exclusion and is able to differentiate H from other similar brands (REFERENCE). 7. 0 Social Trends Sizes Overall, both Australian men and womens body encumbrance unit has gradually increased in recent times.How ever, as the primary segment for H are young women aged between 18 to 24, only the body weight of women will be discussed. From previous surveys conducted there appears to be a steady increase of the average weight of women from 62. 6kg in 1989-90 to 67. 7kg in 2004-05 (ABS, 2009). From figure XX there also appears to be considerable increase in the Body Mass Index (BMI), where there are less women classified as being habitual weight, while there are more women who are overweight and obese.As a result of this increase in body weight, the dress coat as also increased from size of it 12 to size 14. Hence, to accommodate to this increase in weight, most clothing brands have now introduced larger sizes for instance, Portmans now has size 16 as part of their standard dress size (REFERENCE). Therefore, to ensure that H is able to compete with other competitors it would be essential for them to manufacture products that are the suitable size for Australian women. 8. 0 evidenceIn concl usion, this report has complete(a)ly analysed a mix of factors to identify the attributes and threats of the Australian market in congress to the launch of H. Taken as a whole Australia appears to be an attractive market which consists of a invariable economy and high consumer confidence. Where H is able to use these attributes to help them better penetrate and expand in the Australian market. In contrast, many threats were also determine including cultural differences, changes in social trends and also intense competition.It is absolutely essential for H to gain thorough understanding of the threats and furthermore the business and social surroundings of the Australian market. Main reason being, H will then be able to develop specific marketing strategies to address and overcome these issues to successfully enter and become a market leader of the womens outerwear segment in the Australian clothing and footwear industry. 9. 0 Recommendations. From previous analysis Australia and the city of Melbourne in particular appears to be a possible market for H to enter and expand into.Therefore, the following recommendations are written in correspondent to the threats and issues place in the conclusion and throughout the report. Market approach Option Direct Exporting It is suggested that H adopts a direct exporting method to enter the Australian market. Direct exporting can be identified as the firm itself contacts the buyers overseas and either sells direct to the end-user (Fletcher and Brown, 2009, pg. 290).Mainly because this is the market entry option H are experienced in using and is also one of the most commonly used method. As it is relatively simple to operate and provides the company with more control over the operation of the business. Adapting to Australian fashion culture Style and Size For H to succeed and be able to obtain market share, the company must adapt to the Australian fashion culture and the physical body size of Australians. Therefo re,H is recommended to use product development strategies where they manufactured products that suit the Australian market. Suitable store repair Chadstone Shopping centralize Finding a suitable store location also plays an important role to the launch of H in Melbourne. Therefore, Chadstone Shopping Centre is suggested as a suitable store location for the first H store to be established. Main reason being, the shop centre is well-known and has a solid customer base, which makes obtaining brand awareness easier.