Fashion Marketing: Contemporary Issues, Second edition - Pr School

100 Fashion Marketing
cost entry strategy and that a low cost entry approach necessitates a considerable
loss of control, Treadgold identified three strategic options for the development
of foreign operations. The first is a high cost/high control strategy,
adopted mainly by firms with limited foreign market experience, which can
be achieved through organic growth or the outright acquisition or dominant
shareholding of a company currently operating within the foreign market.
The alternative approaches include a medium cost/medium control strategy,
achieved normally by joint venture arrangements, or a low cost/low control
strategy, achieved through a franchise arrangement.
The themes of resource availability, the degree of control required by the
internationalizing retailer and the extent of their experience in foreign market
trading, identified by Treadgold (1991), are also apparent in the review of
retailer internalization strategies provided by Salmon and Tordjman (1989).
Without doubt, their work has proved to be highly influential to the understanding
of the strategic approaches adopted by retailers in respect of internationalization
(Dawson, 1993; Sparks, 1996).
Salmon and Tordjman (1989) identified three strategic approaches to retailer
internationalization, international investment, global and multinational, and suggest
that a retailer’s choice of strategy is ultimately dependent upon the trading
characteristics and internal competencies of the company. The international
investment strategy involves the transfer of capital from one country to another,
with the aim of acquiring part-share or total shares in another operating company.
Retailers typically adopt this approach in the early stages of their
international involvement in order to diversify their business for reasons of
financial and political risk, to gain rapid market share within countries where
the organic development of a chain of outlets would involve high risk and
high cost, as well as to obtain the trading advantages inherent to that market.
Accordingly, Salmon and Tordjman (1989) assert that the type of retailer
likely to use this type of international growth strategy would typically be
large, highly diversified within their own domestic market (although this
was clearly less evident among internationalizing British grocery retailers:
Burt, 1993; Wrigley, 1997; 1998), and are committed to exploiting the growth
opportunities available within foreign countries, mainly through the part or
full acquisition of existing retail chains and other businesses. Within a fashion
retailing context, the acquisition by the Paris-based LVMH Group of companies
including Christian Dior, Givenchy, Loewe, Christian Lacroix, Fendi,
Kenzo, Guerlain and Gant underlines their adoption of an international investment
strategy which seeks to spread their corporate risk across a number of
different brands serving disparate customer segments. Consequently, should
the LVMH conglomerate find that any one brand falls out of fashion favour,
then the company has an alternative brand to promote and therefore an alternative
source of income.
The internationalizing fashion retailer typically must respond to two conflicting
pressures. The first is to adapt to local market conditions in order to
fully respond to the needs of consumers, while the second is the desire to benefit
from operational scale economies (Salmon and Tordjman, 1989). Following