In this report, an analysis of the Skagen Designs company and their recent international expansion. We will speak about possible new market extension, we will argument our choices, and we will explain how Skagen Designs will enter those new markets.
We will also examine others product lines, we will explain how we choose future sponsor partners, and finally we will take a look at the opportunities and threats of the Internet and the e-commerce.
Question 1: What screening criteria should Skagen Designs use in connection with its choice of new markets for its watch collection?
There are a lot of different criteria that can be used in order to segment the “international market”. However, all those criteria don’t have the same advantages and weaknesses. After a brief description, we will choose some of them and explain why they are interesting for Skagen Designs strategy.
1.1 Internal/Firm’s criteria
There are different internal raisons to go international and those raisons can also have an influence on the choice of the market. Here are those most important for Skagen Designs:
Degree of internationalization and overseas experience: Skagen Designs has already entered a lot of different countries such as Belgium, Germany, Australia, and so on. This diversity means that the company has diversified experiences about countries. Thanks to this experience, the company can enter other countries with more ease because it has already acquired some knowledge that could be re-used. This means that what really matter for Skagen Designs is not the geographic distance between its actual markets and the new ones, but the similarity between them. This similarity will be explain in more detail later in the section ‘specific characteristics’.
Size/amount of resources: Compare to its competitors, Skagen Designs has fewer financial resources and materials. This means that the company should not try to compete head on with its competitors and thus, avoid saturated market in which the market shares are already in their hands. Moreover, this limited amount of resources must also be taken into account when choosing how many market to enter at one time. If Skagen Designs tries to enter too many markets at once, it could face a liquidity problem because of the investment needed (marketing campaign, distribution outlet, …).
Existing networks of relationships: Skagen Designs has a large network of relationship that goes through different continents (from Hong Kong to Europe, or USA for example). This network could be use to facilitate the entry of the product in related market.
1.2 Environmental criteria
Going from general characteristics of a country to the specific characteristics of the inhabitants, we can use a lot of different criteria to segment markets. However, those criteria differ in their degree of measurability, accessibility, profitability and actionability.
Criteria for international market segmentation
Measurability: the degree to which the size and purchasing power of resulting segments can be measured.
Accessibility: the degree to which the resulting segments can be effectively reached and served.
Profitability: the degree to which segments are sufficiently large and/or profitable.
Actionability: the degree to which the organization has sufficient resources to formulate effective marketing plans and ‘make things happen’.
For the general characteristics, Skagen Designs should focus its attention mainly on the political factors, barriers of entry, and economic factors. We will explain immediately why.
Political risk: First of all, the political risk is always crucial for companies that want to enter new market. Companies look at the different risks that could appear and threatened their activities in a country before deciding to enter a market. The political risks can be divided in 3 parts:
* Ownership risk,...