COSMA ZONE EXPANSION TO CHINA
MBA 1.5 (2ND Semester)
INSTITUTE OF BUSINESS ADMINISTRATION
UNIVERSITY OF THE PUNJAB
WHY GO GLOBAL?
Business has to scale up to meet the demands of this global market. The scaling-up process is unavoidable. - Richard Parsons, former CEO and Chairman of Time Warner
The answer to “Why go global?” is a simple one. If you want your business to remain competitive you have to expand internationally. If you don’t, your competitors will – and in the process they will increase their cash-on-hand, acquire better employees, improve their production efficiency, and iterate faster. We live in a global village. Teenagers around the world – from Thailand to Canada to Turkey – are texting 24/7 and have an opinion about whether the iPhone or Android is a better phone. KFCs and Diesel jeans are in every major city and you’d be hard-pressed – even in remote, 2nd-world countries – to find someone who has never used the Internet. Every day more and more products make a trip half-way around the world, either by air or sea, into the hands of consumers who have never visited the country of origin. Growing your business must include a plan for international expansion. Now, I know you’re not going to be convinced by a bunch of anecdotes, so here are the facts about why you should go global (or at least start thinking about it seriously!).
The Benefits of International Expansion
1. You will have more customers.
2. You will have access to a larger talent pool.
3. You will have more profits.
Not only will you increase the number of potential consumers of your product or service, but you may also be able to extract higher margins. When exporting products your costs will undoubtedly change, but it’s been shown that consumers in developing countries will pay-up for access to high-quality and well-branded products.
4. You will become more efficient.
It’s no secret that economies of scale are what made the largest companies of this era – think Walmart and Apple. When you increase your output via international expansion, you can often do so with lower variable costs.
The importance of this is three-fold:
1. You can increase your margins
2. You can offset exporting costs with your decreased production costs 3. You can keep your prices more competitive in your home country
5. You will iterate faster and create better products.
Exporting your products will instantly expose them to consumers with different tastes, opinions, and ways of interacting with the world around them. The knowledge gained will serve your company well – either by providing new insights about your current domestic offerings or sparking ideas for new products that can serve both markets.
6. It’s the future
International expansion will soon be standard operating procedure for all but the smallest of ventures. 15 years ago it was the rare, forward-thinking company that had an online presence. It was unheard of for all but the largest companies to sell products online. Now almost every company has some kind of online store.
The Cosma Zone, has 80 stores in Pakistan. The company, which has its headquarters in Lahore, Pakistan was founded in 2000 by us.
The Cosma Zone carries a wide range of products for the body, face, hair and home. It claims its products are "inspired by nature" and they feature ingredients such as marula oil and sesame seed oil sourced through the Community Fair Trade program. In 2010, The Cosma Zone produced its first ECOCERT certified organic skincare line, Nutriganics. Following the launch of Nutriganics, The Cosma Zone reformulated their hair line to contain no parabens or colourants (Rainforest Hair Care), and produced a new line...
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