Second assignment topshop lt Essay Example | Topics and Well Written Essays - 2000 words

Second assignment topshop lt - Essay Example In the context of the present study, it needs to be mentioned that while analyzing the overall international business structure, the key business issues required to operate a business in the international market have been considered, which include marketing, logistics, organisational structure and communication. However, even before describing the proposed international business structure, it is important to provide a brief insight about market trend of the behaviour exhibited by the African consumers (Burgemeister, 2003, p. 192). African Retail Industry The launch of Topshop stores in Johannesburg and Durban shows the degree of attractiveness of the South African retail market. In the year 2011, The African Development Bank and AFDB provided a report that described the middle class of the country as those people having daily consumption of US$2-20 per day. Industrialists, however, wish to think differently. Mr. Mncane Mthunzi, the executive director of Massmart, believes that compan ies should not focus too much on the so-called definition of the African middle class. According to Mthunzi, as per the retailers, the disposable income should be decided by the fact whether the people coming to retail store have the money to buy the designated product or not. According to experts, the fact that the sub-Saharan Africa does not have modern retail outlets or major shopping malls does not imply the fact that the south-African consumers do not have the purchasing power. Experts believe that South African customers can be categorised as wealthy or upper class, rising or higher middle class and also rural customers. Analysts actually believe that the major retailers including global as well as local firms should actually focus on the rising middle class segment (Churchill, 2009, p.211). This is a group that is becoming more judicious in the consumer behaviour. Such groups are looking for quality branded products. Analysts also added that this is the trend that can be seen throughout the continent. However, as compared to other African neighbours, South Africa has shown rapid growth in the retail segment. The country has been able to get over the aftershocks of 2008 economic slump. In 2012, the country saw an economic growth of 2.6%. The retail sales have increased by 3.9%. The consumer spending has increased by $4,291 per capita. Managing the international distribution network One of the major decisions that a company has to make while aiming at internationalisation is managing the overall channel and distribution. One of the key elements of the distribution strategy is to decide upon the market entry strategy. There are various modes of entry that a company can choose, including joint ventures, strategic alliances, acquisitions, green-field strategy and franchising. While making the market entry decision into a foreign country, one of the key factors to be considered is the risk factor. In the context of this, it is to be mentioned that despite of growth potential, the African retail industry can be tagged as a virgin market. Also the disposable income of the people of Africa may not be as high as other European and North American nations since the African