Macro and Microenvironment analysis of Indian market by David Jones
David Jones a leading retail company in Australia has decided to enter a new international market. The company has planned to enter the Indian retail market after analyzing the extensiveness and diversification of a large number of populations in the country. In this assignment, a discussion on the market choice of the company, issues that could be faced by the company as an emerging organisation, competitive analysis in the international market and subsequent organizational analysis is been provided.
Figure 1: Logo of David Jones
(Source: Shop.davidjones.com.au, 2017)
In order to analyse the market value of business of David Jones in India, PESTLE analysis is been conducted.
Figure 2: PESTLE analysis
(Source: Floh et al. 2014)
India prolongs a good relationship with other countries in respect of political grounds. Grant (2016) has shed light on the strategic dialogue been formed between Australia and India in 2015 that provided an opportunity for enhancement of business among the two countries. However, the company can face a hindrance in their business activities due to the campaigns recently promoted by Indian Government. PM has launched a ‘Make in India’ concept in retail sectors, where, textile and garment manufacturer from rural areas of India are being exposed to the local as well as international market by the Government initiatives (ETRetail.com, 2017). David and Jones, being an international company may counter such political scenario and not get sufficient exposure on entering Indian market as Government is focusing of retailers within the country.
Australia being a developed country has a much less inflation and unemployment rate. On the other hand, India is facing huge economic issues in the past few years an inflation and unemployment are much prevalent in this country (Dess, 2013). A significant impact on the export and import of goods is made by RBI affecting tax rates. This could have affected the growth of a new business in the Indian retail market.
Market Analysis of David Jones in India
Social aspect in India and Australia are completely different. India is a country inhabiting people of different cultures, religions, lifestyle and family structure. David Jones will have a great scope in attracting customers in India regarding social aspect (Grant, 2016). However, they might face competition from domestic market, being more associated with Indian culture. This would prove to be a negative factor since this organisation would be launching Western dresses which other international organizations’ like Burberry, Zara have already captured.
Technology is facing an exponential growth in India in the last few years, enhancing import export activities, foreign direct investment and also in licensing agreement. In addition to this, online medium is greatly influencing urban society of India. Thus David Jones will be entering a country that is being technological rising and the organizing will also be able to conduct their promotional activities via online medium on entering this new market (Zhang, Guo & Goes, 2013).
Tax system in India can have a significant impact on entry of David Jones in this market. Frequent increase in decrease of tax, emergence of new tax system like GST, can affect the business activities of a newly emerged organisation in Indian market (De Knop & Meunier, 2015). Prevalent legislations are also needed to be followed by the company in a methodical way, which may be time consuming. This may cause a disruption in convenient operations of their business.
Tropical summer climate is prevalent in India and people mostly prefer cotton clothes. David Jones, coming from a temperate climate country, needs to modify their clothes to make their target customers feel comfortable on availing their service.
David Jones on entering their new market in India needs to segment their market, target their customers and position their product offering.
Figure 3: STP model
(Source: Zhang, Guo & Goes, 2013)
On the basis of four factors, David Jones has segmented their market in India that is being discussed below:
- Geographical situation of India covers an extensive boundary, being the 7th largest country in world in terms of population (Zalengera et al.2014). Company has scope of segmenting their customers based on 28 states of the country having various cultures.
- Demographic situation of India portrays that women are adhered to ethnic clothing; however, David Jones primarily sells western outfits. In this context, there is a huge chance of facing competition. Thus company is focusing on teenagers and women below 25 in availing their western outfits.
- Psychographic factors of Indian customers lean towards a traditional lifestyle, where their culture and ethical values play an important part (Zhang, Guo & Goes, 2013). Company needs to focus on personality and style statement of people and accordingly segment their market, since; India is a country full of mixed culture.
- Behavioral factors include desires, personal beliefs as well as creativity of customers. The company, being new to market, will face difficulty in analyzing behavioral aspect of customers and their choices.
On successful analysis of the market segmentation, David Jones needs to set a particular segment and target customers of that segment, which will provide them maximum profit. David Jones has primarily set their customers as per the demographic factors. They would target teenagers and women their age ranging from 15-25 years, and thereby promote their western outfits. Pawliczek & Rossler, (2016) have opined that women of this age range would be keen to shift their choice of clothes from tradition to western outfit.
Competitive Analysis of Davis Jones in India
Company needs to identify a unique selling proposition, considering the factors as to why Indian customers would be availing their service. They need to portray a positioning map and note the perception of their target customers about their products. As stated by Fernie, Fernie, & Moore (2015), a value proposition is to be created to explain the fulfillment of target customers’ needs and adopt appropriate promotional strategies.
David Jones can analyse the market competence on their entry to the retail market of India with the assistance of Porter’s Five Forces of Competitive theory. This has been discussed below:
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Competitive rivalry |
? Tough competition will be faced by company from the existing local retail market (Westside, Max, Provogue) as well as international organizations (Amazon, Gap, Burberry) that are operating in India prior to entry of David Jones ? Existing companies have greater knowledge of customers as well as prevalent market situations. Thus during adverse market conditions, David Jones will face a tough time in sustaining in market. |
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Supplier bargaining power |
? David Jones, being a new entrant in Indian retail market, will come across a number of suppliers. A new organisation is also subjected to switching to an alternative supplier, on being rejected from one (Pawliczek & Rossler, 2016). ? High bargaining power of suppliers will be faced by David Jones on entering Indian retail market. |
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Buyer bargaining power |
? Company will be getting a number of buyers since, customers are generally curious of availing the services of a newly entered company in market. ? David Jones will be attracting a large number of women customers, as they are launching western clothing and apparels for women. |
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Threat of Substitution |
? Products of David Jones have high chances of substitution on entering Indian retail market, since they will be facing huge competition from its both local and international rivals (Westside, Burberry). If customers are dissatisfied with their services, they would substitute it with products of the competitors. |
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Threat of new entry |
? Company will counter high threats from other international companies that are planning to launch their products in Indian market by adopting technological advancements and innovative marketing strategies. ? In addition to this, there is a constant entry of local retail companies in the market who are well acquainted with customer choices and market factors. They may also impose a threat to David Jones. |
In order to evaluate the situation of the organisation on operating its business activities in India, SWOT analysis is performed:
Figure 3: SWOT analysis
(Source: Brito et al. 2015)
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Strengths ? Firm supply chain management system is prolonged by David Jones. They follow convenient stages of supply chain management, which are selection of raw materials, process of manufacturing and distribution process. ? Bull et al. (2016) said that, effectual management of production adds value to its sustainability in market. A specific design is maintained by the company to stock management system that varies from 4-5 weeks. After that, a new set of designs are being formed. As a result, company fulfils customer needs more, compared to other companies. |
Weaknesses ? Self contained or centralized distribution system is the main weakness of David Jones. Owing to this system, fault in any one factors of the production can cause the whole system to get collapsed. Decentralized distribution system is followed by rival companies of David Jones that has allowed them to gain competitive advantage. ? Advertisement process and communication with customers are not being appropriately implemented by this company. Lack of promotion can cause a huge impact on business. |
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Opportunities ? Scope of global expansion in other continents has imposed a great opportunity on enhancing the business activities. ? Focusing on online market can also be a great opportunity |
Threats ? Extreme competence in market has caused a great threat in operating business activities. ? David Jones has not collaborated with any of the eminent international designers, thus there is no such brand label. |
Conclusion
David Jones has extreme potential to become one of the leading international retail companies. On their entry to Indian retail market, they would face a large number of adverse factors that would risk their sustainability in the market. In this assignment, probable market analyses have been performed that would help the company in managing revenue growth, following unique business strategy and understanding the needs of customers in the new market. Evaluation of the market analysis and successful implementation of the strategies would help the organisation gain profit in the international market.
Reference List
Brito, P. Q., Soares, C., Almeida, S., Monte, A., & Byvoet, M. (2015). Customer segmentation in a large database of an online customized fashion business. Robotics and Computer-Integrated Manufacturing, 36(9), 93-100.
Bull, J. W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C. & Carter-Silk, E. (2016). Strengths, weaknesses, opportunities and threats: A SWOT analysis of the ecosystem services framework. Ecosystem services, 17(8), 99-111.
De Knop, S., & Meunier, F. (2015). The ‘Learner Corpus Research, Cognitive Linguistics and Second Language Acquisition’nexus: a SWOT analysis. Corpus Linguistics and Linguistic Theory, 11(1), 1-18.
Dess, G. G. (2013). Consensus on strategy formulation and organizational performance: Competitors in a fragmented industry. Strategic management journal, 8(3), 259-277.
Fernie, J., Fernie, S., & Moore, C. (2015). Principles of retailing. Abingdon: Routledge.
Floh, A., Zauner, A., Koller, M., & Rusch, T. (2014). Customer segmentation using unobserved heterogeneity in the perceived-value–loyalty–intentions link. Journal of Business Research, 67(5), 974-982.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. Hoboken: John Wiley & Sons.
Gustafsson, A., Herrmann, A., & Huber, F. (Eds.). (2013). Conjoint measurement: Methods and applications. Berlin: Springer
Make in India’ rolled out for textile & garment industry – ET Retail. (2017). ETRetail.com. Retrieved 2 August 2017, from https://retail.economictimes.indiatimes.com/news/apparel-fashion/apparel/make-in-india-rolled-out-for-textile-garment-industry/43430184
Pawliczek, A., & Rössler, M. (2016). Knowledge of Management Tools and Systems in SMEs: Knowledge Transfer in Management. Knowledge Management Initiatives and Strategies in Small and Medium Enterprises, 180(9), 55-120
Shop.davidjones.com.au. (2017). Shop.davidjones Retrieved 3 August 2017, from https://shop.davidjones.com.au/djs/en/davidjones
Zalengera, C., Blanchard, R. E., Eames, P. C., Juma, A. M., Chitawo, M. L., & Gondwe, K. T. (2014). Overview of the Malawi energy situation and A PESTLE analysis for sustainable development of renewable energy. Renewable and Sustainable Energy Reviews, 38(8), 335-347.
Zhang, Z., Guo, C., & Goes, P. (2013). Product comparison networks for competitive analysis of online word-of-mouth. ACM Transactions on Management Information Systems (TMIS), 3(4), 200-521.
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