Why Polo Ralph Lauren Expand in Singapore free essay sample

Polo Ralph Lauren is known as a strong brand with a strictly American image. Consumers from around the world know the Polo brand and with the world becoming more and more Americanized there is much opportunity for the company to enter the growing Asian market. Summary The Polo Ralph Lauren brand was started by American entrepreneur Ralph Lauren in 1967. At the time he was working for a company called Beau Brummell Neckwear. Lauren designed an innovative tie that was wider than other ties on the market at the time. He then convinced Beau Brummell Neckwear to sell his ties inside the Empire State Building. The ties sold like crazy which led to the establishment of Polo Ralph Lauren. Lauren named the brand Polo after the popular horse racing sport because the sport represents prestige and elegance in the United States; a sport that only America’s noble and elite can play and afford. We will write a custom essay sample on Why Polo Ralph Lauren Expand in Singapore or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Therefore, Ralph Lauren’s target customers were those who had an above average income. This is a desire and goal that Ralph Lauren was determined to meet with his Polo brand. In 1969 the company opened its first boutique store inside Bloomingdale’s, an Upper East Side New York department store. In 1971, the first stores of Polo Ralph Lauren fashion appeared in Beverly Hills, California. Ten years later Lauren became the first American designer open a shop in London. Cureently, Polo Ralph Lauren has grown to be a well-known brand, not only for tie but also for all fashion items particularly fashion for men. However the brand is not limited to only menswear. Polo also provides childrenswear, womenswear, swimwear, sportswear and even home decor items. Following this paragraph is a brief description of Polo Ralph Lauren’s top selling brands. Polo by Ralph Lauren: provides a complete menswear wardrobe with distribution through Ralph Lauren stores and Department stores. Polo Sport: A line of men’s active sportswear RLX Polo Sport: Complete in the sports apparel market by offering clothing for running, skilling, cycling etc. Polo Golf: This collection of men and women’s golf wear Blue Label: classic women’s weekend wear. Environmental Assessment The environmental analysis of a company allows the company to get a clearer picture of the threats and opportunities in the external environment of the company. From the results, the company can provide suitable strategies to exploit opportunities and eliminate threats. I have broken the business environment of Polo Ralph Lauren into 4 parts. Political and legal, economic, social and cultural, and technological. Political and Legal environment Public policy must always be considered when looking at the business environment. One of the reasons why Singapore was chosen over other Asian countries was because of its government stability. Singapore currently has many policies in place to support foreign business. They provide a stable economy with low interest and banking rates as well as a competitive tax system. Singapore also has no restrictions on foreign exchange management making it more convenient and for foreign investors to transfer capital and profits in and out of Singapore than in some of the other countries in Asia. The Singapore commercial law now contains other pro-business components. Foreign investors are not required to participate in the activities of joint venture or franchising. Singapore government also does not restrict foreign investors to protect their domestic industry for any reason. All of these factors help make company executives and investors alike to grow and develop their company in Singapore. Economic Environment Singapore is seen by most as a well developed country with a dynamic business environment. Business ideas can easily turn into the reality because of the countries flexible business environment, low history of corruption, high financial transparency and price stability. Also, the economy does not receive much interference from the government and it only the legal matters of setting up a business is usually taken care of in as little as 3 days to set up. Since 2002, the tariff has been stable and less than 1% which helps to increase business financing. There are also very few products are taxed in Singapore. According to the 2010 World Bank assessment of business environment, Singapore is considered easiest country in the world to start a business. Singapore also has been labeled the Worlds second most free country by The Heritage Foundation’s Index of Economic Freedom in 2010. Singapore’s stable economy is not highly affected by inflation rates and market fluctuations. This is a key factor Polo Ralph Lauren to succeed in Singapore’s market. Because the country is so developed, consumers are more likely to comfortably purchase a luxury brand item such as Polo Ralph Lauren. Social and Cultural Environment Singapore is located in the middle of South East Asia. Between countries such as Malaysia, Indonesia and Brunei. Singapore is known as a trade center for Southeast Asia, which brings much diversity to the nations culture and social life. Based on the demographics alone, Singapore is filled with the multi- ethnic people and a wide variety of different cultures. Total population in Singapore was over 5 million this year. 7% of the population is Chinese, 14% Malaysian and just over 7% of the population is Indian. The diverse nationalities and cultures of Singapore have a drastic effect on the style and behavior of the people in Singapore. The traditional family values seem to still be in tact but the Western World is definitely having an impact on the country’s youth as it is in most of Asia. The strong western influ ence is what allows for the Polo Ralph Lauren company enter the Asian market and be succesful in the Asian market. American brands are seen as prestigious in Asia and Polo is one of America’s more prestigious brands. It is a must have for American’s so it will become a must have in Asian countries as well. Technological Environment Technology is so important to Polo Ralph Lauren’s success in Singapore. The development of information technology has played a significant role in creating innovative distribution strategies, media strategies, advertising strategies and so on. According to Infocomm Development Authority of Singapore (IDA), Total Internet Users in Singapore is well over three million which means that over three-fourths of the population has internet access. With the internet being so popular in Singapore it is easy for citizens to find product information as well as information about the current fashion trends. Currently about 10% of all Singaporean’s that use the internet use it for purchasing goods. As this number continues to grow more opportunities for companies to develop online catalogs and ordering systems will grow as well. Polo already has a website full of useful product information and also an online ordering system. The website currently operates in over thirty countries including Singapore. Opportunities and Threats Opportunities The Polo Ralph Lauren company has much opportunity to develop in Singapore and other parts of Asia. Economic theory says that the company will see their sales increase as the World’s economy continues to recover and the country of Singapore continues to develop. The rapid growth of the economy spend on shopping has greatly increased the standard of living of many Singaporean citizens and as a result people will spend more money while shopping. Singapore is becoming more and more of a tourist attraction. Many foreigners come from all over the world and while they are there they will shop. The key tourism drivers for Singapore are travel and Mice (meetings, incentives, conventions and exhibitions). In 2011, Singapore’s tourism industry welcomed over 3 million tourist, business, and MICE visitors. This generated revenue of over 6 million dollars. With Polo being such an attractive brand globally, the company can definitely benefit from Singapore’s tourists both business and leisure. Threats Polo Ralph Lauren’s products are marketed customers of middle and high-class. The key players in this market tend to be Tommy Hilfiger, Guess, and Calvin Klein, etc. Competitors have used some tools such as pricing, quality, and design. Because of this, Polo Ralph Lauren has expanded the range of its market. So it faces competition in each price point from discount to luxury. The price of Polo Ralph Lauren products tend to be more expensive than their competitors. For example: The new Lauren line will feature jackets from $230 to $250 and pants from $119 to $139, whereas Calvin Klein will offer pants and skirts at the price of $125. Competitive Analysis of the Industry Harvard Business School professor and author of many well known business strategy books Michael Porter designed what he calls the â€Å"Five forces† to analyze the competitive environment of a business. The five forces he lists are rivalry among existing firms, threat of new entrants, substitute products or services, bargaining power of suppliers and bargaining power of buyers. The stronger each of these forces the more competitive a company is in its industry. Rivalry among existing firms In most industries, corporations are mutually dependent. For a competitive movement of one firm, it can be expected to have a noticeable effect on its competitors and thus may cause retaliation† (Wheelen, 2010, pp159). Growth in the apparel industry will boost competition and help eliminate the weaker competitors. To be able to survive in the market, companies need to continuously improve product quality, keep up with the current trends and adapt to new customer care services. Polo is threatened by competition from Guess and Tommy Hilfiger. For the luxury range designers, Prada, Gucci and Versace are the direct competitors of Ralph Lauren. However, with the power of Ralph Lauren brands, loyal customers and designed in classic American style that allows it to mitigate the threat. Ralph Lauren targets the upper price point range where consumers are light price sensitive, so competition is less fierce. For the Polo Ralph Lauren, the threat of rivalry from competitors is moderate. Polo Ralph Lauren’s Top Competitors Giorgio Armani Calvin Klein Hermes DKNY Lacoste Armani Exchange DKNY Van Heusen DKNY RLX Prada Sport Nike, Reebok, Adidas, etc. Threat of new entrants â€Å"Normally, new entrants to an industry bring to it new capacity, a desire to gain market share and substantial resources. They are, therefore, threats to an established corporation. The threat of entry depends on the presence of entry barrier and the reaction that can be expected from existing competitors† (Wheelen, 2010, pp159). An entry barrier is created to prevent a company to enter an industry. It requires considerable resources to launch market and distribute products in this industry, not to mention a recognizable brand. There are many difficult factors for new entrants such as suppliers, distributor’s channels, product diversification, product differentiation and the ability to negotiate with retailers. Thus, they must spend large amounts of time and money on building brand loyalty and raising customer knowledge. With a strong reputation, the risk for new entrants of Ralph Lauren is considered to be low. Threat of substitute products and services â€Å"A substitute product is a product with some differences but can satisfy the same need as another product† (Wheelen, 2010, pp160). With the numerous brands at different price points ranging from the low end to the high-end black and purple label, the companys products can meet all the needs of customers. It is considered that the threat of substitutes for Polo Ralph Lauren would be low since there are no considerable apparel substitutes that would cause customers to switch to another industry. Bargaining power of suppliers â€Å"Influences of suppliers come from their ability to raise prices or reduce the quality of purchased goods and services† (Wheelen, 2010, pp159). In a diverse market, if the numbers of suppliers is smaller to supply a variety of customers, suppliers will have relative power that can be used to influence price. Supplier’s power in some aspects of this industry is high since a large portion of Ralph Lauren revenue comes from licenses. Therefore, the financial viability and operational ability of licensees are depended on by Polo Ralph Lauren. The same applies to many of Ralph Lauren’s manufacturers in Asia which are affected by the potential of political instability or workers rights violations. Generally, the threat of suppliers is high since major brands compete for manufacturers and switch manufacturers is costly. Bargaining power of buyers The customer is the key factor in the buying process. They decide where to buy the product and the price they want to pay for it. They can choose what to buy and from what company. Therefore, the companies should create value and set a price that the customer is willing to pay Buyers affect an industry through their capacity to reduce the prices, deal for higher quality or more services, and even play competitors against each other. Polo Ralph Lauren’s revenue mainly stems from wholesale that supplies its products through several department stores in the wholesale channel. When the buyers order products, depending on the quantity they could integrate backwards and control this channel of distribution, hence the threat of buyers can be considered moderate. The revenue of retail segment is about 45. 5% of Ralph Laurens total revenue in Fiscal Year 2010 as retail sales grew to $2. 2 billion. Ralph Laurens retail segment runs through the chain of 326 retail and factory outlet stores as well as online stores. The individual buyer has no influence on the price of the products offered. Core Competencies of Polo Ralph Lauren (How) Jay Barney is considered to be the father of the modern Resource- Based View. According to his theory companies can sustain a competitive advantage through heterogeneity of firm- level differences. So in order to maximize returns, companies must change the mode of management selection strategies with the important task of indentifying and developing and deploying key sources. Value: when they enable a firm to conceive or implement strategies that improves its efficiency of effectiveness. It allows the firm to differentiate products or services and create unique value. Polo Ralph Lauren is a strong brand that has been known for many years by many consumers. Companies earned higher profits from their products than other appeal companies because of the loyalty associated with the brand. Customers not only bought products designed good brands but also have products with high quality that are designed based on the classic American style but still very elegant and durable. Polo Ralph Lauren has a variety of products at different price points from popular products to the high- level design. Rare: valuable firm resources possessed by large number of competing firms cannot be sources of either a competitive advantage or a sustainable competitive advantage. Competitors do not have access to the resource. Good quality has created long-term reputation for Ralph Lauren. Polo Ralph Lauren has a very wide range of products but each one has lasted for years, their craftsmanship is very hard to find. The company also has special product lines such as products designed specifically for the Olympic Games or Ralph Lauren Polo handmade woven design silk tie which cannot be found in other companies. Imperfectly inimitable: because of a combination of the following: unique historical conditions, causally ambiguous, social complex. Competitors cannot easily copy or reproduce the resource. Popular branding consultant Scott Davis stated in his book Building the Brand that â€Å"Lauren apparel becomes part of who the customer is by striking a deep emotional chord with that customer. Ralph Lauren’s customers feel good about themselves†. The emotional value aims the brand transcend other brands. Other companies can be able to copy the design of Polo Ralph Lauren products but not the feeling. Currently, the products of Polo Ralph Lauren still remain as one of the industry’s most powerful design and it is favored by the general public. Non- substitutable: There must not be strategically equivalent valuable resources in terms of rareness or imitatibility. Equivalent resources that may allow for a similar strategy are not readily available. Fashion is a part of lifestyle, Polo Ralph Laurens products have created the excitement for consumers through the design and its brand thus these products must reflect the consistency and long-term use. The feelings and experiences are not easily forgotten. The objective of the company is constantly creating a change in style but not losing their uniqueness. The theories listed will definitely aid Polo Ralph Lauren as they continue to expand on the Singapore market. Playing off their image as a uniquely American luxury brand is in their best interest while the world is becoming more Americanized. Works Cited Barney, Jay B. , and Delwyn N. Clark. Resource-based Theory: Creating and Sustaining Competitive Advantage. Oxford: Oxford UP, 2007. Print. Events. Welcome to WorldBank Group. World Bank Group, n. d. Web. 24 Apr. 2013. lt;http://web. worldbank. org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/0,,pagePK:158889~piPK:146815~theSitePK:223547,00. htmlgt;. IDA Infocomm Development Authority of Singapore. IDA Infocomm Development Authority of Singapore. Infocomm Development Authority of Singapore, n. d. Web. 24 Apr. 2013. lt;http://www. ida. gov. sg/gt;. Please Select Your Location. Cal vin Klein. Calvin Klein, n. d. Web. 24 Apr. 2013. lt;http://explore. calvinklein. com/en_US/gt;. Polo Ralph Lauren Corporation (RL) Financial and Strategic SWOT Analysis Review. Researchandmarkets. com. Research and Markets, Mar. 2012. Web. 25 Apr. 2013. lt;http://www. researchandmarkets. com/reports/1291183/polo_ralph_lauren_corporation_rl_financial. pdfgt;. Ralph Lauren. Ralph Lauren. Polo Ralph Lauren, n. d. Web. 24 Apr. 2013. lt;http://www. ralphlauren. com/gt;. Wheelen, Thomas L. , and J. David Hunger. Concepts in Strategic Management and Business Policy: Achieving Sustainability. Upper Saddle River, NJ: Prentice Hall, 2010