Harvard Case - GLAMI Global Expansion Dilemma: Where, When, and How?
"GLAMI Global Expansion Dilemma: Where, When, and How?" Harvard business case study is written by Mohit Srivastava, Ladislav Tyll. It deals with the challenges in the field of Strategy. The case study is 9 page(s) long and it was first published on : Nov 25, 2019
At Fern Fort University, we recommend that GLAMI pursue a phased global expansion strategy, prioritizing Eastern European markets like Poland and Romania for their initial foray. This approach leverages GLAMI's existing strengths in e-commerce, fashion, and technology while minimizing risk by focusing on regions with strong potential and cultural similarities.
2. Background
GLAMI, a Czech Republic-based fashion e-commerce platform, is experiencing rapid growth in its domestic market. Recognizing the limitations of a single-country strategy, GLAMI is exploring international expansion to capitalize on global fashion trends and achieve sustainable growth. The case study presents GLAMI with the dilemma of choosing the right markets, timing, and expansion strategy to ensure success.
The main protagonists are:
- Martin Myslive'ek: CEO of GLAMI, responsible for guiding the company's strategic direction.
- The GLAMI Management Team: Responsible for evaluating potential markets, developing expansion strategies, and overseeing implementation.
3. Analysis of the Case Study
SWOT Analysis:
Strengths:
- Strong brand recognition and customer loyalty in the Czech Republic.
- Innovative technology platform with advanced search and recommendation capabilities.
- Strong team with expertise in e-commerce, fashion, and technology.
- Data-driven approach to marketing and operations.
Weaknesses:
- Limited international brand awareness.
- Lack of experience in navigating foreign markets.
- Potential cultural differences in fashion preferences and shopping habits.
Opportunities:
- Growing global demand for online fashion.
- Emerging markets with high growth potential.
- Technological advancements enabling seamless cross-border transactions.
Threats:
- Intense competition from established global players.
- Fluctuations in currency exchange rates.
- Potential regulatory hurdles in new markets.
Porter's Five Forces:
- Threat of New Entrants: High, due to the relatively low barriers to entry in the online fashion market.
- Bargaining Power of Buyers: Moderate, as customers have a wide range of choices online.
- Bargaining Power of Suppliers: Low, as GLAMI sources products from numerous suppliers.
- Threat of Substitutes: High, as customers can choose from various online and offline retailers.
- Competitive Rivalry: High, with numerous established and emerging players vying for market share.
Value Chain Analysis:
- Inbound Logistics: GLAMI's value chain focuses on efficient sourcing and inventory management.
- Operations: The core of GLAMI's value chain lies in its technology platform, which powers search, recommendations, and personalized experiences.
- Outbound Logistics: GLAMI leverages efficient logistics networks to ensure timely delivery to customers.
- Marketing and Sales: GLAMI employs data-driven marketing strategies to reach targeted audiences.
- Customer Service: GLAMI provides excellent customer service to foster loyalty and positive brand perception.
Business Model Innovation:
- Subscription Model: GLAMI could explore a subscription model offering exclusive access to curated fashion selections or discounts.
- Personalized Shopping Experience: Further leveraging AI and machine learning to personalize product recommendations and shopping experiences.
- Partnerships with Local Influencers: Collaborating with local fashion influencers to build brand awareness and drive sales.
4. Recommendations
Phased Global Expansion Strategy:
Phase 1: Eastern European Expansion (12-18 months)
- Target Markets: Poland and Romania offer high growth potential, strong online penetration, and cultural similarities with the Czech Republic.
- Entry Strategy: Start with localized versions of the GLAMI platform, translated content, and localized marketing campaigns.
- Key Initiatives:
- Market Research: Conduct thorough market research to understand local fashion trends, consumer preferences, and competitive landscape.
- Partnerships: Collaborate with local logistics providers, payment gateways, and marketing agencies to ensure smooth operations.
- Local Influencer Marketing: Leverage social media and local influencers to build brand awareness and drive engagement.
- Pricing Strategy: Implement a competitive pricing strategy based on local market conditions.
Phase 2: Expansion to Other Emerging Markets (24-36 months)
- Target Markets: Explore expansion into other emerging markets with high growth potential, such as Spain, Italy, or Germany.
- Entry Strategy: Leverage learnings from the Eastern European expansion to refine the strategy and tailor it to the new markets.
- Key Initiatives:
- Local Adaptation: Adapt the platform, content, and marketing campaigns to cater to local preferences.
- Strategic Acquisitions: Consider acquiring existing players in target markets to accelerate growth and gain market share.
- Regional Hubs: Establish regional hubs to manage operations and support local teams.
Phase 3: Global Expansion (36+ months)
- Target Markets: Explore expansion into mature markets like the United States or China.
- Entry Strategy: Focus on building brand awareness and establishing a strong online presence.
- Key Initiatives:
- Global Partnerships: Collaborate with global fashion brands and retailers to expand product offerings.
- Cross-Border Logistics: Optimize logistics networks to ensure efficient delivery to global customers.
- International Marketing Campaigns: Develop targeted marketing campaigns to reach global audiences.
5. Basis of Recommendations
- Core Competencies and Consistency with Mission: The phased expansion strategy aligns with GLAMI's core competencies in e-commerce, fashion, and technology. It also supports the company's mission to provide a seamless and personalized shopping experience.
- External Customers and Internal Clients: The strategy prioritizes understanding and catering to the needs of local customers while empowering internal teams to thrive in new markets.
- Competitors: The strategy acknowledges the competitive landscape and emphasizes differentiation through innovation, localized experiences, and strategic partnerships.
- Attractiveness: The chosen markets offer strong growth potential and attractive market dynamics. The phased approach minimizes risk by allowing GLAMI to learn and adapt as it expands.
Assumptions:
- GLAMI can successfully adapt its platform and marketing strategies to different cultural contexts.
- GLAMI can secure necessary resources and partnerships to support its expansion.
- The global fashion market will continue to grow and offer opportunities for expansion.
6. Conclusion
By adopting a phased global expansion strategy, GLAMI can leverage its strengths, minimize risks, and capitalize on the global fashion market's growth potential. The strategy prioritizes Eastern European markets for its initial foray, leveraging cultural similarities and strong online penetration. This approach allows GLAMI to build a solid foundation for future expansion into other emerging and mature markets, ultimately achieving sustainable global growth.
7. Discussion
Alternative Options:
- Immediate Global Expansion: This approach could lead to significant costs and complexities, potentially overwhelming GLAMI's resources.
- Mergers and Acquisitions: While attractive, acquiring existing players in target markets could be costly and require significant integration efforts.
- Joint Ventures: This option could provide access to local expertise and resources, but it also involves sharing control and profits.
Risks and Key Assumptions:
- Cultural Differences: Adapting to different cultural preferences and shopping habits could be challenging.
- Competition: Intense competition from established global players could hinder GLAMI's market share.
- Regulatory Hurdles: Navigating different regulatory environments could present significant challenges.
Options Grid:
| Option | Advantages | Disadvantages |
|---|---|---|
| Phased Global Expansion | Minimizes risk, leverages existing strengths, allows for learning and adaptation | Slower growth compared to immediate expansion |
| Immediate Global Expansion | Faster growth potential, captures market share quickly | High costs, complex logistics, increased risk |
| Mergers and Acquisitions | Rapid market entry, access to existing infrastructure | High costs, potential integration challenges |
| Joint Ventures | Access to local expertise and resources, shared risk | Sharing control and profits, potential conflicts |
8. Next Steps
Timeline:
- Year 1: Conduct thorough market research, develop localized platform versions, and secure partnerships in Poland and Romania.
- Year 2: Launch operations in Poland and Romania, monitor performance, and adapt strategies based on learnings.
- Year 3: Explore expansion into other emerging markets, refine the expansion strategy, and consider strategic acquisitions.
- Year 4+: Focus on global expansion, build brand awareness, and establish a strong online presence in mature markets.
Key Milestones:
- Q1 2024: Finalize market research and develop localized platform versions for Poland and Romania.
- Q2 2024: Secure partnerships with local logistics providers, payment gateways, and marketing agencies.
- Q3 2024: Launch operations in Poland and Romania with localized marketing campaigns.
- Q4 2024: Monitor performance, gather customer feedback, and adapt strategies based on learnings.
By executing this strategic plan, GLAMI can successfully navigate the global fashion market and achieve sustainable growth while maintaining its commitment to innovation, customer satisfaction, and responsible business practices.
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Case Description
GLAMI was launched in October 2013 in the Czech Republic as a fashion search engine with a focus on providing consumers with an accessible platform. It operated a neatly organized online fashion catalogue that consisted of combined products from fashion e-shops that functioned throughout various countries. Through its five years of existence, GLAMI had expanded throughout Europe and Asia. Fashion retailers and e-shops partnered with GLAMI as free or priority members, and had their items placed throughout GLAMI's website. The company's business model functioned through a cost-per-click (CPC) model, where GLAMI would charge priority members according to how much they were willing to pay per click. In August 2018, due to its success and the increasing size of the fashion industry and the online retail space, GLAMI was looking to expand beyond its current boundaries to a high-growth area-Latin America. However, considering the vast differences among Latin American countries, GLAMI was finding it difficult to narrow down the list of countries in which to explore international expansion.
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