(MGMT8055) International business assignment on expansion of Louis Vuitton in Dubai

Question

Task: You are required to develop an international business assignmentbased on real world business issues/challenges. Pick a company (any industry), one of its products, and a foreign market to enter. What product to choose and which market to enter? Why What will be the entry mode (Exporting, acquisition, Joint venture, or Greenfield)? Why What will be the entry mode (Exporting, acquisition, Joint venture, or Greenfield) Why?

Answer

Introduction
The prime motive of the international business assignmentis to demonstrate the international business problems which might be experienced by Louis Vuitton while launching a new café business into the Dubai market. International business expansion is determined to be the process of mounting a business from the local market into global markets throughout the world. There comprises of various reasons due to which an organization seek international expansion. One such reason is to get out the saturated market, gain access to new consumers and generate more revenue. As a result, this helps organizations in gaining huge competitive advantages and expands its reach to the international marketplace (Sadeghet al., 2020). In the coming section the international business assignmentwill highlight the market entry strategy which will be implemented by Louis Vuitton expanding its business into the international market by launching a new café business within Dubai. It will also determine the market entry strategies which the company has implemented previously in order to enter into other markets.

A market entry strategy highlights the organizational objectives along with an overview of the target market especially the products or services which will be sold by an organization along with the expected sales which will be achieved. It has been observed in the international business assignmentthat in most of the cases organizations deals with challenging situations while entering into a foreign market which in turn affects their business expansion (Reuberet al., 2018). In order to overcome from such challenges it becomes crucial for organizations to implement effective strategies and work in collaboration with their partners. The focus must be towards considering the market factors which might affect the business as well as analysing the needs along with the preferences of the target market. Hence, the international business assignmenthelped in determining the application of internationalization theories which will help the company in expanding its new café business within the Dubai market. Therefore, in the upcoming section the international business assignmentwill determine the solutions which will be implemented by the company to overcome the difficulties it is facing during internationalization and while applying the market entry strategy.

Background of the international business assignment
Company background
Louis Vuitton Malletier primarily known as Louis Vuitton is a French Luxury Fashion house. The company was founded in 1854 by Louis Vuitton. The company produces several products luxury bags, leather goods, ready-to wear shoes, sunglasses and more. The company operates in about 50 countries and has 460 stores globally (Louis Vuitton, 2022). It is named as the most treasured luxury brand. Most of the products mentioned in the international business assignmentare adorned with the LV monogram and is regarded as the most profitable brand globally whose profit margins are about 30%. Instead giving good products and services, the company after sales services provides free cleaning and product care to its customers and this sets the brand separately from others in fashion industry.

Industry Backgroundin the international business assignment
Louis Vuitton is a manufacturer and marketer of luxury goods and it consists of clothing, fashion goods, perfumes and cosmetics. As per the international business assignmentfindings, it operates under fashion industry and fashion industry is generally shaped to design, market, and production and sells the clothes, footwear and accessories. The primary purpose of fashion industry is to fulfil the needs of the customers with modern apparel and finds its interest in the outset, production, advancement and promotion of style depending on the needs of the customers (Research Guides, 2022).

Literature Review
In the words of Sturgeon, (2021), international business is regarded as the manufacturing and sale of productsalong with services among nations. Scholars of international business assignmentstated the fact that usually business manufacture products overseas because of lower taxes or labor costs, and they sell goodsalong with services within the international market due to the high prospective for acquiring a larger audience, new consumers, as well as an increased income(He et al., 2020). However, while expanding business internationally as discussed in the international business assignment, organizations deal with number of challenges which affects the way of operating business globally. As per Nippa and Reuer, (2019), one of the challenges faced by organizations is language barrier along with cultural differences. Most of the organizations deal with the challenge of managing global teams. At the time of trying to function as a team, it could be critical to account for language barriers, reliance, differing levels of technology, time zones and cultural differences (Imada, 2021). Furthermore, change in inflation rates along with currency exchange also creates a difficulty in operating globally. Thus, it is also significant to examine in the international business assignmentthe inflation rates as it affects the labor along with material costs (Sestu and Majocchi, 2020). Along with this, nuances of foreign relations, policy as well as politics also create challenging situations for the organizations at the time of market entry(Nambisan et al., 2019).

Analysis of the issue identifiedin the international business assignment
Louis Vuitton is planning to introduce a new Café in Dubai (Imada, 2021). This market has been chosen as Dubai has developed by 2.1% in 2019 and 3.8% in 2020 providing various opportunities for international expansion. In order to launch its new café within the market as per the international business assignmentthe company will implement joint venture as a market entry strategy. A joint venture is regarded as a combination of two or more parties which seek the growth of a single firm or project for gaining profit, sharing the risks related with its development (Minbaevaet al., 2018).This particular market entry strategy will be implemented as it helps in providing access to new distribution networks along with new markets and also give access to new expertise along with knowledge which involves specialized employees. With this the firm will be able to maximize its capacity within the Dubai market. However, while implementing this market entry strategy mentioned in the international business assignmentthe company might a challenge due to conflict of interest with its partner firm. This might occur due to lack of compatibility among both the firms (Bressanelliet al., 2019). There might also occur a failure of alignment with the organizational goals which might affect the Louis while entering into the Dubai market.

Due to this difficulty in market entry strategy the company also might face the challenge of setting global pricing along with cost calculation strategy while operating business within Dubai. In addition it is analysed in this international business assignment, the fluctuation in currency rates might be a challenging factor for the firm to navigate. Thus, monitoring exchange rates should therefore be a major part of the approach for all international businesses (He et al., 2020).Cultural differences might create an impact on the market demand of the product of Louis Vuitton. Another risk which the business might face as per the international business assignmentis political instability and ambiguity within Dubai market.

Theoretical frameworks
Internationalization theory addressed in the international business assignmentdetermines the presence of the organization since it is the most appropriate way of collaborating a set of activities instead of market exchange. The organizations could expand when it will be able to absorb the markets and it will do so till the costs to the organization of further development extends the advantages (Paul and Mas, 2020). As per this theory, in order to launch and expand its café within the Dubai market with the help of joint venture the firm is required to overcome all the challenges by absorbing the market and the business strategies of its partner firm. The focus of the international business assignmentmust be towards analysing the different situations and factors present within the market and make adequate decisions by considering such factors. However, the firm might face the problem of absorbing the market factors which in turn might create an impact on the business operations. Dynamic theory of entrepreneurship states that an efficient function of an entrepreneur is to begin innovation into venture (Stallkamp and Schotter, 2021). As per this theory, entrepreneurs arise since people having certain psychological components that are tolerance capacity, self-intuitions and power. According to this theory in the international business assignmentthe company is required to embark upon the new combinations of the production factors with its partner firm and bring new innovations into its new venture within the Dubai market. The products which will be introduced within the café must be high quality as compared to the competitors and according to the taste of the people living in Dubai. However, fulfilling the needs of the consumers and complying with the regulations while stepping into the country might be a challenging for the firm to expand its café business within Dubai.

Discussion
Comparison and evaluation of the solutions
It can be said in the international business assignmentthat in order to enter into the Dubai market by introducing a café, Louis Vuitton must bring improvements in its joint venture strategy. In order to enhance its joint venture market entry strategy with the partner firm, it becomes crucial for the company to consider all the major factors while determining loan serviceability. At the time of funding the focus must be towards paying attention towards certain major aspects like cash flows and expenses along with changing revenue streams (Sturgeon, 2021). Apart from this, it is also recommended in the international business assignmentto develop a clear and concise joint venture agreement at the beginning of the arrangement of launching café within Dubai. This must clearly set out the roles as well as the responsibilities of every party involved and define major areas likeexit provisions, liability, profit share and control. In addition, both the parties while entering into the joint venture must clearly align with the expectation of the anticipated profits along with the outcome (Sharma et al., 2020). As a result, this will assist in clearly illustrating the point that while income is significant there also possess other consequences to determine likegeneral public goodwill, customer reception and staff satisfaction.

Evaluation of the solution to enter into the foreign markets
Joint venture as a market strategy is found in this international business assignmentto be effective for the firm since this strategy has been used by Louis Vuitton previously while entering into the UK market. With the help of this strategy the company gained the ability to access greater resources which involved specialized technology and staff(Nambisan et al., 2019). It also allowed flexibility by aligning business exposure with organization’s commitment. Thus, the company become successful in expanding its business within UK by attracting huge customer base and generating more revenue.

By considering this it has been analysed in the international business assignmentthat the implementation of all these recommendations will prove to be beneficial for the firm in gaining technical and specialized knowledge along with expertise regarding the factors associated with the joint venture (Nambisan et al., 2019). With this the company will also gain the ability to enter into the Dubai market easily and gain easy access to capital for growth. By entering into a joint venture with a larger firm with proper strategy and with more financial resources, Louis Vuitton will be able to expand its business more rapidly. Furthermore, by considering all the major factors mentioned in the international business assignment, it will become efficient for the firm in gaining access to adequate resources and also sharing the costs along with the risk with the partner. In this manner the firm will be able to attract more customers toward its café business by making them aware regarding the new business which will be launched within Dubai (Chang et al., 2020). The emphasis of the company will be towards utilizing the joint venture database which will help in promoting and marketing its café within the Dubai market.

Conclusion
The international business assignmentdemonstrated that while launching a new café business within the Dubai market the company will apply joint venture market entry strategy. However, while implementing this strategy the company might face certain challenges like conflict of interest with its partner firm due to lack of compatibility among both the firms. As a result, this might create an impact on the business expansion to a greater extent. However, to address these challenges mentioned in the international business assignmentit becomes important for the firm to pay attention towards certain major aspects like cash flows and expenses along with changing revenue streams. This will help the firm in gaining the ability to enter into the Dubai market easily and acquire huge capital.

References
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Imada, K., 2021. Louis Vuitton has opened its second café in the world in Ginza, Time Out Tokyo. Available at: https://www.timeout.com/tokyo/news/louis-vuitton-has-opened-a-swanky-new-cafe-in-ginza-031621 (Accessed: 16 October 2022).
Louis Vuitton. 2022. Retrieved from, https://eu.louisvuitton.com/eng-e1/homepage Minbaeva, D., Park, C., Vertinsky, I. and Cho, Y.S., 2018. Disseminative capacity and knowledge acquisition from foreign partners in international joint ventures. Journal of World Business, 53(5), pp.712-724.
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Sharma, P., Leung, T.Y., Kingshott, R.P., Davcik, N.S. and Cardinali, S., 2020. Managing uncertainty during a global pandemic: An international business perspective. Journal of business research, 116, pp.188-192.
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