Tuesday, July 9, 2013

Developing Strong International Retail Management Practices

Developing strong international retail strategy is important for organizations that desire sell products overseas. In today’s world, emerging markets are often a main staple for corporate processes. In the retail industry it is often the internal processes that are as important as the right products in creating structure. The present strength of the company, standardization of core processes, and  focus on customer value that makes the difference between those that will be successful in moving into international markets and those that won’t.

Successful international retail management relies on a number of internal factors that ensure the organization is prepared to take on a wider distribution network with its current structure. According to Vida, Fairhurst & Reardon (2000) these internal characteristics include strategic management characteristics, retail conception, logistics, and the size of the organization. The ability of managers to determine and implement the retail strategy, the retail approaches, logistical abilities, and the capital strength have an influence on whether or not the organization will be successful.

Products that are sold externally are not the main determinants of a successful international retail business. Certainly, the right product helps but isn’t as influential as the companies structure. The profitability of the organization often relies on those internal structural functions that ensure that products are being purchased/developed at a price conscious level and then moved through efficient processes to display them to customers. It is these internal structures that seem to make a large influence that separates the viability of companies within the industry.

Standardization creates higher levels of efficiency when moving and selling large quantities of similar products. Successful organizations often use standardized core elements (store design, locations, etc…) with adjustable peripheral elements (i.e. assortments, promotions, offerings, etc…) (Swoboda & Elsner, 2013).  Such a system allows for sequential and logical adjustments of core structures in response to global market needs without enduring higher expenses in variability and redundancy.

A solid core system can also help to promote stronger distribution management. The logistical market varies among nations and having a proper system can reduce intensity of price competition, collaboration of suppliers, the purchasing of bulk commodities, and the rate of adoption of improvements (i.e. technology) (Fernie, 1995). The realizing of profits through an international supply chain requires the ability to control costs and utilizing an efficient system that can work in multiple economic environments.

Most companies seek to cost cut and expand their markets as much as possible. How a company does this is important for the attainment of goals. According to Abrahamsson & Rehme (2013) those companies that focus more on customer value versus secondary goals in cost cutting or market expansion are more likely to be successful. Even though the goal is the same, the process may vary.  It is the benefit of focus on those things that further the fulfillment of customers’ needs.

Through the development of strong strategy approaches with core processes that adjust to the international market conditions organizations can develop additional retail profits. Instead of simply cost cutting and bulk buying one’s way into profitability it is also possible to focus on the more developed concept of customer value. Each of the decisions and processes should end in a satisfied customer that is willing to develop brand loyalty and long term relationships.

Abrahamsson, M. & Rehme, J. (2010). The role of logistics retailers’ corporation strategy-a driver for growth and customer value. Supply Chain Forum: International Journal, 11 (4). 

Fernie, J. (1995). International comparisons of supply chain management in grocery retailing. Service Industries Journal, 15 (4). 

Swoboda & Elsner (2013). Transferring the retail formal successfully into foreign countries. Journal of International Marketing, 21 (1).

Vida, I., Fairhurst, A. & Reardon, J. (2000). Determinants of international retail involvement: the case of large U.S. retail chains. Journal of International Marketing, 8 (4).

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