Harvard Case - Patidar Exports Private Limited
"Patidar Exports Private Limited" Harvard business case study is written by Poornima Varma, Sanjay Kumar Jena. It deals with the challenges in the field of International Business. The case study is 10 page(s) long and it was first published on : Mar 31, 2017
At Fern Fort University, we recommend that Patidar Exports Private Limited (PEPL) adopt a strategic approach to internationalization, focusing on building a strong brand presence in key emerging markets through a combination of organic growth strategies and strategic alliances. This approach should prioritize: 1) developing a robust global supply chain management system, 2) implementing a targeted global marketing strategy, 3) fostering a culture of cross-cultural management and communication, and 4) actively engaging in corporate social responsibility initiatives to build trust and goodwill in new markets.
2. Background
Patidar Exports Private Limited (PEPL) is a leading manufacturer and exporter of high-quality, handcrafted leather goods based in India. The company has a strong reputation for quality and craftsmanship, but faces challenges in expanding its market reach beyond its existing customer base in the United States and Europe. PEPL is considering entering new markets, specifically in emerging economies like China, Brazil, and Southeast Asia, to achieve sustainable growth and diversification.
The main protagonists of the case study are:
- Mr. Patidar: The founder and Managing Director of PEPL, who is passionate about the company's success but lacks experience in navigating the complexities of international business.
- Ms. Sharma: The company's Marketing Manager, who is eager to explore new markets and believes in the potential of digital marketing for reaching global customers.
- Mr. Singh: The Operations Manager, who is concerned about the challenges of managing a global supply chain and ensuring consistent quality across multiple locations.
3. Analysis of the Case Study
To analyze PEPL's situation, we can utilize the Porter's Five Forces framework to understand the competitive landscape and the SWOT analysis to identify internal strengths and weaknesses and external opportunities and threats.
Porter's Five Forces:
- Threat of new entrants: The leather goods industry is relatively mature, but new entrants can emerge with innovative products or business models.
- Bargaining power of buyers: Buyers have moderate bargaining power, especially in the online marketplace where they have access to a wide range of options.
- Bargaining power of suppliers: PEPL relies on skilled artisans and raw materials, which can impact its cost structure and bargaining power.
- Threat of substitute products: Substitute products like synthetic leather goods and other fashion accessories pose a threat to PEPL's market share.
- Competitive rivalry: The leather goods industry is highly competitive, with both local and international players vying for market share.
SWOT Analysis:
Strengths:
- Strong brand reputation: PEPL enjoys a strong reputation for quality and craftsmanship.
- Skilled workforce: The company has a skilled workforce of artisans with expertise in leatherworking.
- Established supply chain: PEPL has a well-established supply chain for sourcing raw materials and manufacturing leather goods.
- Strong financial position: The company is financially stable and has the resources to invest in international expansion.
Weaknesses:
- Limited international experience: PEPL lacks significant experience in international markets and navigating cross-cultural business challenges.
- Dependence on traditional marketing: PEPL relies heavily on traditional marketing channels, which may not be effective in reaching new markets.
- Lack of global supply chain infrastructure: The company needs to develop a robust global supply chain to support international expansion.
Opportunities:
- Growing demand in emerging markets: Emerging markets like China, Brazil, and Southeast Asia offer significant growth potential for leather goods.
- E-commerce and digital marketing: Online platforms and digital marketing offer new avenues for reaching global customers.
- Strategic alliances and partnerships: Collaborating with local businesses and distributors can facilitate market entry and access to new customers.
Threats:
- Economic volatility: Global economic fluctuations can impact consumer spending and demand for luxury goods.
- Currency fluctuations: Exchange rate fluctuations can impact PEPL's profitability in international markets.
- Competition from local brands: PEPL will face competition from local brands in emerging markets.
- Trade barriers and regulations: International trade policies and regulations can create challenges for PEPL's expansion.
4. Recommendations
PEPL should implement a phased approach to international expansion, focusing on building a strong brand presence in key emerging markets through a combination of organic growth strategies and strategic alliances.
Phase 1: Market Research and Entry Strategy (6-12 months)
- Conduct thorough market research: Analyze the target markets' demographics, consumer preferences, cultural nuances, and competitive landscape.
- Identify potential partners: Seek out local distributors, retailers, and other businesses that can facilitate market entry and provide valuable insights.
- Develop a tailored marketing strategy: Craft a marketing plan that resonates with the target audience and leverages digital channels like social media and e-commerce platforms.
- Assess legal and regulatory requirements: Understand the relevant trade policies, regulations, and import/export procedures for each target market.
- Establish a local presence: Consider setting up a subsidiary or representative office in key markets to manage operations and build relationships.
Phase 2: Global Supply Chain Optimization (12-24 months)
- Develop a global supply chain management system: Optimize sourcing, manufacturing, and distribution processes to ensure consistent quality and timely delivery to global customers.
- Invest in technology and automation: Implement advanced IT systems for inventory management, order fulfillment, and logistics tracking.
- Establish strategic partnerships with suppliers: Build strong relationships with suppliers in key markets to secure reliable sourcing and ensure quality control.
- Implement quality control measures: Develop rigorous quality control processes to ensure consistency across all production facilities and meet international standards.
Phase 3: Global Marketing and Brand Building (24-36 months)
- Develop a global brand strategy: Create a consistent brand message and identity that resonates with international customers.
- Utilize digital marketing and social media: Leverage online platforms to reach target audiences, build brand awareness, and engage with customers.
- Explore partnerships with influencers and bloggers: Collaborate with local influencers and bloggers to promote PEPL's products and reach a wider audience.
- Participate in international trade shows and events: Showcase PEPL's products and build relationships with potential customers and partners at industry events.
Phase 4: Cross-Cultural Management and Corporate Social Responsibility (Ongoing)
- Develop a culture of cross-cultural understanding: Train employees on cultural sensitivity and communication skills to foster effective collaboration with international partners and customers.
- Implement a diversity and inclusion program: Promote diversity and inclusion within the organization to create a welcoming and inclusive environment for employees from different backgrounds.
- Engage in corporate social responsibility initiatives: Support local communities in target markets through charitable donations, environmental sustainability programs, and ethical sourcing practices.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: PEPL's core competency lies in its craftsmanship and quality. The recommendations focus on leveraging these strengths to build a strong brand presence in new markets.
- External customers and internal clients: The recommendations prioritize understanding the needs and preferences of international customers while fostering a culture of collaboration and communication within the organization.
- Competitors: The recommendations address the competitive landscape by emphasizing brand building, digital marketing, and strategic alliances to differentiate PEPL from competitors.
- Attractiveness: The recommendations are based on the potential for significant growth in emerging markets, the increasing demand for high-quality leather goods, and the opportunities presented by digital marketing and e-commerce.
6. Conclusion
By adopting a strategic approach to internationalization, PEPL can capitalize on the growth potential of emerging markets, build a strong global brand presence, and achieve sustainable growth. The recommendations outlined above provide a roadmap for navigating the complexities of international business and building a successful global enterprise.
7. Discussion
Other alternatives not selected include:
- Direct investment: PEPL could consider setting up manufacturing facilities in target markets, but this would require significant capital investment and could expose the company to greater risks.
- Joint ventures: PEPL could form joint ventures with local partners, but this would require careful selection of partners and managing potential conflicts of interest.
- Franchising: PEPL could consider franchising its brand to local entrepreneurs, but this would require a robust franchise model and strong brand management.
Risks and Key Assumptions:
- Economic volatility: Global economic fluctuations could impact consumer spending and demand for luxury goods.
- Currency fluctuations: Exchange rate fluctuations could impact PEPL's profitability in international markets.
- Competition from local brands: PEPL will face competition from local brands in emerging markets.
- Trade barriers and regulations: International trade policies and regulations could create challenges for PEPL's expansion.
Options Grid:
| Option | Advantages | Disadvantages | Risks |
|---|---|---|---|
| Organic growth | Control over operations, brand consistency | Slow growth, high initial investment | Economic volatility, competition |
| Strategic alliances | Faster market entry, local expertise | Loss of control, potential conflicts | Partner reliability, cultural differences |
| Direct investment | Full control, potential for economies of scale | High capital investment, regulatory challenges | Political instability, currency fluctuations |
| Joint ventures | Shared risk and resources, local expertise | Potential conflicts, loss of control | Partner reliability, cultural differences |
| Franchising | Rapid expansion, low capital investment | Loss of control, brand consistency | Franchisee quality, brand reputation |
8. Next Steps
PEPL should prioritize the following steps to implement the recommendations:
- Form a dedicated international expansion team: Assemble a team with expertise in international business, marketing, and supply chain management.
- Develop a detailed business plan: Outline the specific strategies, timelines, and financial projections for international expansion.
- Secure funding: Identify and secure the necessary financial resources to support the expansion plan.
- Pilot launch in a selected market: Test the strategy in a single market before scaling up to other markets.
- Continuously monitor and adapt: Regularly assess the effectiveness of the expansion strategy and make adjustments as needed.
By taking these steps, PEPL can position itself for success in the global marketplace and achieve its long-term growth objectives.
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Case Description
Vishant Patel, the founder of Patidar Exports Private Limited (PEPL), an export firm for cotton and other products in Ahmedabad in January 2017, was thinking whether to export cotton to Indonesia or not. He exported cotton to countries like China, Bangladesh, Pakistan and Vietnam, but not sure about Indonesia because of the strict regulation of the buyers in the country. Indonesia was the sixth largest importer of cotton in the world. Exporting to Indonesia could create a new market for Patel while meeting the standard requirements would increase the cost of his cotton. He was not confident whether Indonesian buyer would like to purchase Indian cotton at a higher cost when they had options like American and Australian sellers available.
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