Understanding of the Micro and Macro Environmental Free Sample

Questions: 1. Identify the Macro and Micro Environmental Forces affecting your chosen Organisation and Explain their Impacts in one Country of your Choice. 2.Formulate a Strategy that will Enable the Organisation to respond and Prosper in that Country. Consider its Internal Strengths and Weaknesses as an Organisation, the External Opportunities it should Seize and the External threats it should Counter. Answers: Introduction: The current report aims to demonstrate a critical understanding of the micro and macro environmental influencing a chosen organisation from the provided list of organisations. Therefore, Hennes Mauritz AB (H M) has been selected as the organisation to fit the purpose of this report. H M is a Swedish multinational clothing-retail corporation. It is popular for its fast-fashion clothing for all types of consumers. The company has expanded its global operations in North America, Europe, Middle East and Asia (HM 2017). After the accomplishment of successful revenue goals and brand image, the organisation has made its entry in Japan, which is a challenging market. In the initial stage, H M has received effective response from the Japanese customers; however, the sales of the organisation have started to fall considerably in the later years. Therefore, H M has been planning to initiate a new store in Tsushima, a popular Japanese city, for increasing its business presence in the nation. This is due to the economic recession of the nation, which has minimised the purchasing power of the consumers. The business situation is vital for the success or failure of an organisation (Arrigo 2016). Japan is considered as a fashion capital both in Asia and in the global arena. This is because the Japanese people are more prone to purchase clothing and other fashion items. However, there has been decline in sales volume in the clothing and footwear industry in Japan due to economic downturn and the competition level is higher in the market. The current report aims to evaluate the impact of the micro and macro-environmental forces affecting H M in Japan. F inally, the report sheds light on formulating a strategy for the organisation to prosper in the Japanese market by considering strengths, weaknesses, opportunities and threats. 1.Macro and micro-environmental forces affecting Hennes Mauritz AB (H M) in Japan: The micro-environmental forces that affect H M in Japan in carrying out its business operations are under noted: Business: H M has opened its first store in Japan on 13th September 2008 followed by two other stores in the same month and year. Despite the fact that H M produces fast-fashion retail products, the products have gained popularity amongst the Japanese individuals. These products are combined in an imaginative procedure with greater avant-grade styles (Magrath and McCormick 2013). In addition, H M has collaborated with Comme des Garcons, which is a Japanese label. This has helped in increasing the business presence of the organisation in the Japanese market. In addition, some of the departments of H M are represented in the nation along with few production offices. In this context, Baines, Fill and Page (2013) stated that such development of departments and production offices helps an organisation to deliver the products at a faster rate to the customers. Suppliers: H M has developed 800 global suppliers, which comprise of sub-suppliers as well. Each collection of H M has is drafted as well as designed in its Swedish head office, which is carried out on the part of the external manufacturers. With the help of vast supply chain, the organisation would able to keep adequate inventory to meet the rising demand in the Japanese market. However, there is limited availability of suppliers for H M in the Japanese market and hence, this might increase the cost of production for the organisation (Br?tucu and Paladen 2015). This chain requires adequate amount of planning, as availability of diverse range of products needs to be ensured on the shops at the right time. Marketing intermediaries: One of the significant parts of microenvironment includes marketing intermediaries, which enable an organisation in the flow of products and services from the manufacturers to the final users. In the absence of effective cooperation from the marketing intermediaries, an organisation would not be able to provide its products as per the expectations and wants of the customers (Chakravarty 2014). It has been identified that H M does not have any marketing intermediary in Japan. As a result, H M might find it difficult to deliver the products to its customers and hence, it might experience a fall in demand in the market in future. This is because the competitors like Zara, Uniqlo and GAP in Japan have marketing intermediaries, which might result in loss of competitive advantage for H M. Buyers: The target group of H M is vast, which mainly comprises of students and younger people. The main reasons identified behind the success of the organisation constitute of low product price with higher quality, while ensuring fashion-conscious experience. The H M customers are always on the lookout for discovering new and interesting products (Charlesworth 2014). In that case, H M is required to ensure the smooth operations of its supply chain. In addition, the organisation needs to form a mutual trust with their manufacturers. Thus, it is crucial for a marketer like H M to understand, estimate and satisfy the changing needs of the customers. Public: H M has strong global brand image, as it is one of the leading clothing-retail companies in the world. The customers often link H M with superior quality at cheaper prices, which has helped in increasing its popularity in the Japanese market. The firm has considerable number of store locations in Europe; however, the number of stores in Japan is limited. As a result, it might restrict the organisation in increasing its profitability in the market, as the Japanese customers do not intend to travel greater distance for shopping purpose (Dach and Allmendinger 2014). However, the organisation has launched a campaign against AIDS (Fashion against AIDS) by seeking support from the popular global personalities. Thus, H M is required to increase its store availability in the Japanese market for increasing the overall sales and profitability. Competition: The major competitors of H M in the Japanese market include Zara and Gap, as these two organisations have greater number of stores compared to H M. In addition, Zara and Gap have identical target customers in Japan. Furthermore, these organisations have some intermediaries having thorough overview and knowledge of clothing textiles, which poses a serious challenge for H M. The price range of these two competitors in Japan is similar to that of H M. However, as the popular designers and global personalities work in collaboration with the organisation, which has helped in increasing its brand image in the market of Japan. The major macro-environmental forces affecting H M in the market of Japan are briefly discussed as follows: Political forces: H M is a PLC firm having 27,000 global production facilities for assuring the fabrication process of its products. In Asia, child labour has been a common crime, which violates the human rights. However, this is a major threat to the business operations of H M, as child labour is highly unaccepted in the business practices of the organisation. Thus, a nation found guilty of adopting child labour and it is unwilling to abstain the same, H M would not cooperate with the same. Economic forces: H M has assured effective practices in Japan through effective procurement by bulk purchase from the markets, which offer the best rates, effective system of inventory management and in-house designing. Despite maintaining the competitive pricing structure, the organisation is exposed to economic shocks due to fluctuation in global currencies (Ghauri et al. 2016). In addition, import duties, taxes and changes in import laws of Japan might cause problems for the organisation in sourcing products at the catalogue price. Socio-cultural and demographic forces: The organisation has focused on manufacturing and selling accessories and apparels, which follow the latest trends in Western culture. However, it also designs clothing products based on the tastes and preferences of the Japanese customers. Along with this, the organisation has catered to women involvement in the issue of economic activities through employment of additional women compared to men in its offices of Japan (Zawadzka 2015). Thus, it provides the women with an opportunity to show their talent in an industry concerning them the most. Secondly, it has initiated working with the International Labour Organisation for providing higher wages and assuring hygienic work conditions for the staffs of the organisation in Japan. The organisation has recognised that access to clean and safe drinking water has been a severe issue in Japan. In order to address this issue, H M has developed coalition with the UN agencies for accessing the same. Finally, H M has been involved in recycling washed and unwanted clothes and using organic cotton for ensuring the safety of the workers (Kumar and Kim 2014). Technological forces: In case of H M, it is necessary to remain updated due to the fast changing trends in the global market. In addition, since it is in the catalogue business, it remains ahead one season about the store offerings. For instance, in summer, the winter collection sourcing would be in process because of the product lead times (Hathaway 2014). By taking into account the issues associated with the clothing business, the new technologies need to be embraced for paving its path to keep up with the current market demand. Thus, H M needs to change its designs rapidly to stay in line with the Japanese clothing-retail industry. Environmental forces: It has been observed that H M is a retail giant, which denotes that the firm is always on spotlight. Thus, utmost care needs to be exercised before undertaking any action (Jo and Lee 2015). In this respect, H M is required to assure that there are no environmental hazards associated in the production process irrespective of the nation from which it is merchandising. The production facilities of the organisation in Japan are complying with the prevailing environmental laws along with no prohibited dumping in water. Legal forces: In accordance with the Japanese laws and regulations, H M has assured the safety and security of the factory by incorporating emergency exits, fire extinguishers, fire alarms and other necessary equipments. On the other hand, the organisation has implemented basic Japanese laws about recruiting staffs on their own will and there would not be any contract. In addition, H M has assured identical employment opportunities for all groups of individuals. The staffs are provided with salaries, leaves and benefits according to their positions (Kennedy 2013). Finally, the organisations conduct yearly financial audits for ensuring transparency in its business operations. 2.Formulation of a strategy for enabling H M to respond and prosper in Japan: The current marketing strategies of H M include mobile marketing campaign for promoting the trendy collections. In this particular strategy of mobile marketing, the customers receive mobile banner advertisements and SMS coupons. The intention of this technique is to promote the seasonal trends for that specific season along with driving membership of the H M Club. However, the organisation has not provided the shoppers with the online facility to shop the products. Therefore, three primary objectives have been formulated for designing the marketing strategy of H M. These three primary objectives include increasing its brand name through higher advertising, focusing on the lower selling prices compared to rivals and using the economic downturn as a chance to diversify through low-cost locations. The objectives are briefly discussed as follows: Increasing brand name visibility: In Japan, many people are not aware of the product offerings of H M. It has been observed the lead-time of Zara is slightly faster; however, H M uses a different strategy. Nearly, a quarter of its stock is composed of fast-fashion products; however, the daily items are sourced at cheaper rates from overseas markets (Nordflt et al. 2014). Due to this reason, H M needs to be more appealing in the Japanese teen and young adult segments. Some of the Japanese customers might hesitate to be highly fashion-forward due to their reserved style and hence, they might find new products at H M. In order to increase the brand name in Tsushima, it is suggested to H M to develop more advertising opportunities. For developing national brand awareness, it is suggested that H M puts advertisements in the popular fashion magazines of the city. In addition, the organisation could place advertisements through television commercials in between the popular TV shows in Japan. Finally, placing advertisements in Facebook, Twitter and teen chat sites would help H M in attracting the potential customers in the Japanese market (Ohlsson and Riihimki 2015). Lower average selling prices compared to rivals: Another strategy that H M could adopt is to concentrate on advertising regarding the lower average selling prices in contrast to its rivals. The management of H M in Japan focuses on minimising costs by keeping low overheads (Pelton 2013). The advertising needs to focus on advertising by projecting on the cheaper products available in the stores with higher quality. Use of current economic downturn for business expansion: H M needs to make use of current economic downturn as a chance to diversify by ensuring low-cost locations in Japan. With the worsening of the economic conditions, particularly in Japan, H M leasing its store cities has been finding it convenient for securing effective locations at better terms. This would be a great benefit for H M, as with the revival of the economy, it could seize the opportunity for diversifying in cheaper locations to ensure future growth (Pousttchi and Hufenbach 2014). In order to design the marketing strategy more effectively for H M, the SWOT analysis of H M in the Japanese market has been depicted as follows: Strengths: Offering superior clothing-retail products at effective price through designing strategy and strong procurement Collaboration with the designers Weaknesses: Product recall Limited geographical presence in Japan Opportunities: Expansion of business operations in other cities of Japan Home initiative of H M Developing a Japanese footprint Threats: Falling confidence of the customers Strong competition from Zara and Uniqlo Table 1: SWOT analysis of H M in Japan (Source: HM 2017) Based on the above SWOT analysis conducted, the following marketing mix strategy has been developed to strive in the fashion market of Japan: Product: In case of product aspect, publishing the outfit of family-set is a potential product to enhance the sales value. This is because most Japanese living in Tsushima prefer wearing this specific outfit (Sandybayev and Nicosia 2015). In addition, it is a complementary merchandise product, which denotes that if the parents decide to purchase an outfit, they would purchase another one for their children. As a result, the sales of H M might increase more beyond the expected ones. Moreover, H M is required to enhance its product quality for succeeding in Japan. As the organisation is involved continually with cost minimisation, it fails to provide superior quality products to its customers. The Japanese individuals living in Tsushima are popular in rejecting clothing products due to loose button, poor stitching and poor quality fabrics (Sun et al. 2014). Thus, it is crucial for H M to enhance the product quality for ensuring its success in the Japanese market. Price: H M needs to introduce some programs for promoting its merchandise along with using mobile marketing strategy in Tsushima, Japan. It could use price deal for temporary minimisation of price in a shorter timeframe (Shen 2014). This would help the organisation in attracting additional number of customers to increase its sales volume. In addition, loyal reward program could be thought of as another alternative, in which the customers would gather credits or points for each purchase and redeem the same to obtain rewards. For rewards, the organisation could expect greater visits in the stores to release its inventory at a faster rate (Virkkunen 2015). Place: In case of place aspect, H M needs to collaborate with the marketing intermediaries for revenue enhancement along with ensuring competitive advantage. Online selling is a feasible alternative to the organisation for increasing its revenue margin in Japan. The internet subscription number in Japan is 47.08 million in 2016, out of which 62% people use e-commerce (Venter 2016). Despite the limited store availability of H M in Japan, the customers from different regions could order products online, which would help in boosting sales. Moreover, providing Automatic Vending Machine (AVM) in Tsushima could enable the organisation to ensure successful due to the demand of automation in the nation. This is because the Japanese customers spend nearly $58 billion for shopping through AVM in a single year. Promotion: It has been evaluated that H M already uses mobile phone marketing in Japan for promoting its merchandises. Thus, it could use matrix code in Tsushima, which is a two-dimensional technique for depicting information (Youell 2013). For instance, QR code has gained widespread popularity in Japan and they are used often in magazines and internet. This code has the ability of enabling Kana characters, URLs, music, Japanese Kanji, images and e-mails. With the help of this barcode, H M could be able to store information conveniently and accordingly, it would be able to attract more customers. Conclusion: To conclude, it has been found that H M has the capability of growing rapidly in the Japanese clothing-retail industry. This is because it has developed a strong and positive brand image in the market over the recent years. However, the sales volume of the organisation has started to fall due to change in consumer preferences and increasing competition level from Zara and Uniqlo. The two-above mentioned organisations have similar target markets like H M, which has resulted in loss of competitive advantage slightly for the latter. In addition, the limited geographical presence of the organisation and absence of online store have been the contributing factor towards declining sales as well. 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