Businesses today that take up the bold move of internationalisation get to enjoy many successes, such as experiencing more considerable market growth and diversification (van Rossum, 2017). Internationalisation has always been a significant technical term, especially for companies categorised under Small and Medium Enterprises (SMEs). However, internationalisation proves to be a significant reason for many companies’ success in Singapore (Lee, 2017). A survey by International Enterprise (IE) Singapore found out around 700 local companies running foreign operations experienced a 4.2% growth in overseas revenue annually, which was higher than previous years (Lee, 2017). As companies become much more involved in the economy and activities of the global business arena, they have a higher chance of generating more profits and success (Azuayi, 2016).
This report purpose is to explain how internationalisation is efficient for companies to further succeed in their field. In this report, the consultant team will use a successful local company as an example. With supporting research, the team will explain why internationalisation is necessary for companies that aim to achieve more desirable results. Lastly, this report seeks to show that internationalisation is essential for company success and also, in the long run, motivate smaller companies to try internationalising and further expand their business while overcoming challenges.Scope
What will be discussed is the importance of internationalisation for a company’s success. Concerning internationalisation, the three factors focusing on is leadership, digital marketing and network. We will discuss the following points: why internationalisation is recommended for a company to be successful, and also how internationalisation has been aptly used by a distinguished company, leading to breakthroughs for that company.
In this report, some aspects will not be discussed, because the consultant team has decided that the three factors which are leadership, digital marketing and network are incredibly crucial when talking about internationalisation. These three factors will be the primary focus of the report, and the consultant team will only describe these aspects in detail. There may be other important aspects such as infrastructure or government support, but the team has decided to work on just three others for now.
To show that internationalisation is a suitable way for companies to succeed further, the team will present the extensive research done on a chosen company. There will be supporting information from Enterprise Singapore, a board that encourages enterprise development as well as provide reports regarding Singaporean companies’ activities and growth, both local and abroad. The team will give relevant websites and library sources to support our claim for internationalisation.
Chosen Company’s Background of Charles & Keith
The Charles & Keith group was established in 1996 by Singaporean fashion entrepreneurs Charles Wong and Keith Wong, with the objective of providing fashionable and comfortable footwear for the general Asian women population. From one small local store, Charles & Keith today now owns more than 500 stores locally and abroad. Charles and Keith have expanded into many fashion cities including Dubai, Seoul, Shanghai and Taipei. They have expanded their product offerings to cater to a broader consumer base by offering bags, accessories and jewellery, which were not available in their stores previously. In 2006, Charles & Keith introduced PEDRO, a footwear brand specially catered to the modern working man. Additionally, PEDRO operates 102 stores in the Asia Pacific region and the Middle East. Now, Charles & Keith continues to be a successful Singapore-born company, and also one that has successfully internationalised.
Findings & Analysis
In the recent years, internationalisation has worked out surprisingly well for many Singaporean companies, which were mostly SMEs in the past. It is regarded as one of the main aspects that have made it possible for Singaporean companies to experience further growth and progress. Many of them have also expressed their interest in further expanding their operations extensively in the Southeast Asian region. (refer to Figure 1)
Charles uses a democratic leadership style where he gets his staff motivated to work harder by having them to go through motivational courses and organising trips to fashion capitals for research. Charles encourages employees to grow on the job and get promoted. He values individuals who practice self-initiative, forward-thinking, stepping out of their comfort zone and aiming for higher goals. He also encourages employees to voice out their honest opinions by having a meeting with them frequently. Charles, as a strategic thinker, did not see much of an expectation in this industry model. Charles always occupies himself in a well thought out plan process to produce a mental picture of realistic goals to a steady and engaging path for the prospect of the company as a whole, including every employee.
Charles & Keith has launched e-commerce stores internationally (Wong & Wong, 1996), and mobile applications. The online stores have allowed them to ship their products internationally to more than 70 countries (Lee, 2016). Thus, Charles & Keith can cater to a broader consumer base which is not only in the Asian region, but also tap into the Western markets. (refer to Figure 3)
Furthermore, they have their own Facebook page, Twitter account, and YouTube channel which makes it more interactive for their consumers as they can get the latest updates regarding their new products or other information about Charles & Keith (Mama, 2015). In modern society where people are highly reliant on social media, it is useful for Charles & Keith to market their products on various social media platforms. (refer to Figure 2) They also have a mobile application where customers can shop on their phone which is more convenient for them as they can buy anytime, anywhere.
This line graph displays the traffic overview of Charles & Keith’s online website. From this graph, the company’s website enjoys a fairly positive and consistent visitorship rate while increasing slowly. In the engagement column, total website visits show an increase of 13.28% (“charleskeith.com Traffic Statistics”, 2018).
The map highlights the areas that contribute the most to Charles & Keith’s online store website visitorship. It is clear that Charles & Keith is able to appeal to markets such as the American and Australian ones, showing that their operations are able to reach out to such further regions. (“charleskeith.com Traffic Statistics”, 2018).
Networking refers to the process of establishing a mutually beneficial relationship with business partners, potential clients, and customers. To extend their business overseas, Charles and Keith collaborated with Onward Holdings, one of Japan’s largest apparel groups. With their help, Charles & Keith successfully opened their first store in Lalaport Yokohama during March 2011 followed by a flagship store in Harajuku and the third store in an Osaka mall during April (“A New Growth Brand for Japan’s Onward Holdings: Charles & Keith”, 2013).
When entering the Saudi Arabian and Jordanian markets, Charles & Keith partnered with Alhokair Fashion Retail, which is the largest franchise retailer in Saudi Arabia, Central Asia and the Caucasus region (Ramlan, 2010).
In 2010, Charles & Keith started a partnership with L Capital Asia (now known as L Catterton Asia), a private-equity arm of LVMH Moët Hennessy Louis Vuitton SE (LVMH) which is a French multinational luxury goods conglomerate headquartered in Paris. They acquired a 20% stake in Charles & Keith for more than S$30million after being wooed by a few other private equities and high net-worth investors. LVMH has helped the company expand into the Chinese market where it is now running approximately 70 outlets with the plan of adding 30 to 50 stores in the upcoming years (Ong, 2014).
The brothers enrol their staff in motivational courses and also organise study trips to fashion cities, helping staff gain interest at work with refreshed motivation. By encouraging workers to sound out their judgments, employees will be able to share their troubles during work, improving working conditions and boosting productivity levels. By valuing employee and customer views, and believing that every idea could lead to a positive change for the organisation. Such a leadership style helps break down organisational silos. Charles and Keith are always on a relentless quest for knowledge and experience. From participating in trade exhibitions to visiting their factory in Malaysia to superintend their employees, both brothers embody adaptability and continuous learning, setting an example for their employees. Charles learns to implement personal development strategies and utilise tools for achieving goals and overcoming obstacles. He sees personal development as the fundamental catalyst to professional success.
From the findings, this shows that Charles & Keith has put in a lot of effort to cater to their consumers’ needs through social media platforms as they are most commonly used and are the most convenient and efficient. Through their online store, consumers will know about their online exclusives and also their items that are on sales. This allows them to have a smooth and efficient shopping experience.
These findings show that to set foot overseas, and it is essential for the local company to have a strong and good business relationship with an overseas company or organisation. This will provide information by venturing overseas, as well as to help them understand the local market needs better. Collaborating with the international organisation also help the company to enter into the larger overseas market such as China, which is a country with great opportunity and sizeable economic exchange that is difficult to come unless with the help of the network.
SWOT Analysis of Charles & Keith
The company ensures that its employees and leaders have a global perspective on how to run the business, so the staff of the company generally are well-informed and well-equipped with the necessary skills to run the business operations.
Additionally, Charles & Keith has established a secure and stable online store and website by investing more into the system, and also shifting their focus from brick-and-mortar stores to their e-commerce store.
The company is also able to collaborate with other corporate giants to establish and foster stronger cooperation, thus benefiting through information exchange, generating shares, and many other aspects.
Products from Charles & Keith tend to be priced higher than average which may diminish the consumers’ interest. With prices already comparatively expensive in a country like Singapore, expensive items from a highly distinguished Singaporean store is not likely to attract many consumers in its home country.
Compared to bigger international fashion retail companies, Charles & Keith’s product offerings are much lesser although it has made efforts in introducing new products of theirs. With lesser product offerings as compared to many other more prominent companies, they may lose out to them regarding sales and consumer interest.
Since Charles & Keith is equipped with a robust e-commerce store, they may continue to improve and expand the e-commerce store system and possibly attract and appeal to many more consumers. A sturdy online base means that it would be easily accessible and extremely informative for online consumers to use and thus, it would attract many more consumers and widen Charles & Keith’s consumer base.
The significant shift in focus to the e-commerce store away from brick-and-mortar stores may mean that consumers that prefer traditional shopping (e.g. physically travelling to the store) may not have much easy accessibility to a Charles & Keith store anymore, thus inconveniencing them.
There is intense competition in the fashion industry due to many fashion retail giants, so Charles & Keith may have difficulty competing against them. Zara, Pull & Bear, and H&M are some companies that have expanded so widely that they practically cover the globe. Charles & Keith is an internationalised business but not as much as the examples stated previously. Consequently, such fierce competition may render Charles & Keith obsolete and may end up with the company not enjoying as much success as before.
Conclusion & Recommendations
To conclude, internationalisation is a complicated yet effective method for companies to expand their sphere of influence and operations globally. Massive competition in the business world goes to show how useful internationalisation is for companies wanting to ensure business sustainability and success. Exemplary business strategies and practices must come together. Having excellent leadership, a stable digital marketing stance and a well-established network help significantly in company expansion. However, companies can always improve on their current aspects as well as explore new ones through operations analyses. Companies that internationalise would find that their successes are much more than before.
After assessing Charles & Keith’s company and business situation, there are a few recommendations and improvements that the team would like to suggest for Charles & Keith. In a broader perspective,the team hopes that companies planning on internationalising their businesses take note of the points stated below to ensure that such loopholes would not be created, and also plan out the necessary steps to globalise successfully.
Company: Charles & Keith
Should have a more balanced focus on both the e-commerce store as well as the retail outlets (brick-and-mortar stores), not doing so may mean losing the domestic customer base and only appealing to the foreign customer base. For example, in 2016, Charles & Keith closed all of its stores in Japan to concentrate more on closer Asian markets and also its e-commerce offers. (refer to Figure 4)
Take note of the product pricing as Charles & Keith have higher than average prices, prices may affect customer interest in the products, so price-sensitive measures should be put into place. The target market of Charles & Keith has shifted towards the higher social class, which may cause it to change from an affordable luxury brand to an unaffordable luxury brand to a large group of people. Charles & Keith might lose their loyal consumers that may not be able to afford their products if their prices continue to rise. Hence, they should take note of their product pricing to cater to a larger group of consumers.
Push out many more product offerings as the current product line may not be enough to compete with other fashion retail companies soon and it may be wise to carry out R&D to find out and create products that would cater to a much broader customer base. The current catalogue of Charles & Keith may not be able to support more needs of different customers due to its limited offerings. The catalogue may still be relevant to certain consumers but investing funds into making more innovative and attractive products to cater to more consumers may be a smarter choice. This also ensures that they can sustain and increase the customer base that they have right now.
Improve on product originality, comfort and speciality. This would help Charles & Keith to stand out from other competitors. Products from fashion retail companies today are mostly indistinguishable so creating products that are different and special this would help in attracting more consumers who prefer new and unique products (product differentiation). This may require a higher cost, but it is a risk worth taking.
The company’s operations and staff should have necessary information and understanding about foreign countries that they are operating at. Consumer culture is crucial in building profitable company-customer relationships. This can include interaction between staff and customers, as well as how shops are set up in foreign countries. Having proper knowledge of foreign countries’ cultures would be extremely helpful for Charles & Keith should they decide to expand further internationally. Their relationships with the locals would be fruitful and beneficial, possibly increasing the company’s survivability in a non-local area.