Part 2 Case 4
Question 4 – What are some other opportunities for partnerships between retailers and their suppliers in China? Chinese companies can easily transition into multiple channels by creating partnerships with their suppliers. They can advertise and sell products on their supplier’s website and through their other distribution channels. A partnership would also enable the company to sell their products at a cheaper price because they are getting things from their supplier for less and will have less overhead costs. It could also improve day to day activities like delivery because the retailer would have access to the suppliers delivery system. Part 4 Case 4
Question 4 – Explain the location-based disadvantages of being a first mover into Tier 1 and Tier 2 cities. Being the first mover into Tier 1 and Tier 2 cities has some disadvantages. There is a lot of risk involved in making a move like that to both your profit level and your company image. As you are moving into an area with a different culture and smaller market areas, it is very difficult to predict how these potential customers will react to the company. There are also no guidelines to follow. Since you are the first mover you cannot learn from the mistakes of those who have gone before you and it may be harder to decide on things such as store location. Part 4 Case 4 Summary
This case is about how companies are now expanding into the smaller Tier 2 and Tier 3 cities in China. Most companies have heavily populated all the Tier 1 cities so they must start expanding into different uncharted areas. Coach is one of the first companies to do this. They started in Tier 1 cities such as Beijing and Shanghai and then started to expand into newer market locations such as Chongqing. Coach is hoping that the lessons they learned from their Tier one stores will help them be successful in these new locations and that their sales will double.
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