The present report is based on analysing and evaluating the alternative market entry strategy and evaluating the situational analysis of a brand seeking to enter a foreign market. For the purpose, H&M has been identified such a brand that has rising interest in the South Asian market. The report found that H&M has used various different entry modes ranging from acquisitions, franchise, greenfield investment to enter in markets like Malaysia, China and Japan. However, it still has to enter in some of the leading markets like Pakistan.
Pakistan, one of the leading nations in South Asia has emerged as the potential foreign markets for international brands due to its rising per capita income, GDP growth and highest middle level income groups. On other hand, Pakistan allowed 100% FDI in retail and wholesale trade since the beginning of 2000s. The current report would therefore analyse Pakistan as the potential market for internationalisation and further assessed the right entry mode for H&M for entering Pakistan.
INTRODUCTION
H&M Hennes and Mauritz is the Swedish fashion retailer present in over 53 countries worldwide having 3132 stores with the workforce of over 115,000 people. In the Europe alone, it has the market capitalization of over £230 million with the market share of 30%. The company majorly deals in menswear, womenwear, cosmetics and kidswear. The company was founded in 1946 in Sweden and until now expanded its market presence in different continents including Asia, Europe, North and South America.
H&M gained huge success and recognition in international markets largely by its impulse marketing, integrated outsourced production philosophy, strong brand image and established supply and distribution channels. Whilst H&M established its presence in European and American countries by mid 90s, it just entered in Asian markets like Japan, Philippines, Malaysia and Thailand in late 2000s.
Evans et al. (2008) stated that H&M has gained immense success in adopting international strategy back in early 90s when it grew in Europe and America. H&M ultimately focus on adopting networking structure approach, brick and mortar retail outlets, customers loyalty, sales promotion and advertising. At the same time, it tried vertical and horizontal production strategies and strengthen its supplier base in South Asian markets.
TARGET COUNTRY AND MARKET CHARACTERISTICS
Pakistan: Overview and Key Findings
Pakistan has grown rapidly after adopting liberalized reforms in early 90s when it embraced initiatives like attracting FDI, encouraging private sector, abolishing licensing and tariff policies and so on. These reforms resulted not only in increased per capita income or spending power but also influenced the lifestyle, opinions and outlook of public towards international brands, goods and services (Hokison, 2010)).
It was found that Pakistan export rose to $ 23 billion whereas import level also reached to $40 billion by the end of year 2013. Pakistan offered several locational advantages to foreign companies in terms of cheap labour, high productivity, lower taxes, moderate local culture and lower taxes. This severely increased the presence of multinational companies in Pakistan where their market capitalization reached to $88 billion (http://www.tdap.gov.pk/tdap-statistics.php).
After recognizing huge success in other sector and industries, Pakistan authorities opened the FDI routes for the retail sector in year 2006 where foreign companies with single brand could enter Pakistan with 100% of their stake as wholly owned entities whereas multi-brand had the FDI limit of 50%. Where such moves were
