During 2000 & 2001, Giordano had been facing a serious of challenges, like intensifying competition, rising unemployment rate, which had increased to 4.5% in March 2001. Moreover, economic growth in Asian countries was predicted to drop during that period of time. The management believed that the Group profit was at risk if the growth of its two major markets, Hong Kong & Taiwan, slowed down in consequence.
Giordano management decided to continue its multi-region development strategy and, as a result, the Group made its debut in Germany through a joint venture in March 2001. Germany is an important gateway for the Group to enter into the European Union (EU) consumer market. Through this venture, the Group also wishes to tap into the increasingly important East European apparel-manufacturing base. By the end of the fiscal year, there were 23 Bluestar Exchange outlets operating within a hypermarket (supermarket) chain in a shop-in-shop format, where the company will be selling its goods in Bluestar Exchange label owned by Giordano in 50 “Real shops”. Real is owned by Germany’s SB Warenhaus, a unit of Metro, Europe’s second-largest retailer.
Selection Criteria for entering an overseas market
Every decision making should be aligned with Giordano’s core value (customer service, 2) cost control and 3) speed & simplicity). After deciding Germany as the first overseas market of EU, SLEPT factors may be useful in providing guidelines which the most appropriate market entry mode is (Appendix 1). Based on both SLEPT factors and the Group’s core value, the method of market entry could be easily defined, that is, Contract Joint Venture with REAL in Germany. More elaboration can be found in the following section.
International Market Entry Modes – Contract Joint Venture
The decision of how to enter a foreign market can have a significant impact on the results. There are many different ways to expand into foreign markets, in this essay, we...