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INTERNATIONAL EXPANSION
OF MANGO/MNG
“El Centro Virtual de Experiencias de Internacionalización” (The On-line Centre for
International Business Cases) is the result of the collaboration of the Spanish Institute
for Foreign Trade ICEX and AEEDE, the Spanish Association of Business Schools ,
which includes eleven leading Business Schools. The aim of this project is to promote the internationalisation of Spanish SMEs, drawing on the academic rigour of the
business schools that have participated in this project.
This centre presents case studies of Spanish companies that are successful internationally. These case studies can be found on the ICEX webpage and appear in a multimedia format that includes discussion forums and articles that create awareness of
the key issues involved in internationalisation.
The success stories chosen represent a broad sample of sectors and geographic
areas and show the globalisation process that some of our companies have gone
through. The company profile shown here is that of an SME multinational which has
become a reference point in its sector, basing its international penetration strategies
on factors as diverse as marketing, management, financial liquidity and business
alliances.
This pioneering project, in Europe and throughout the world, serves to promote and
diffuse a comprehensive entrepreneurial culture among SMEs. It promotes the integration and association between universities and businesses, facilitates dialogue and the
exchange of knowledge between experienced businesses and those that are beginning to take their first steps in international markets. It also emphasises the importance of human capital in medium and long term business competitiveness.
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Starting point
INTERNATIONAL EXPANSION OF MANGO/MNG
MANGO is a multinational company dedicated to the design, manufacturing and commercialisation of women’s clothes and accessories. MANGO is currently the second most important
exporter in the Spanish textile sector and market leader in the female fashion sector.
“The secret of MANGO lies in it being a fashion chain with the spirit of a boutique. To be
leader you must have the desire to improve yourself and always know what you are capable of. “
Enric Casi
General Manager of MANGO
Present in 89 countries and with a thousand shops, MANGO is also the Spanish fashion
chain with the greatest international scope, after an important international expansion process through franchising.
“The challenge now is to consolidate the position in each country”.
Isak Halfon
Director of International Expansion of MANGO
“‘We are just beginning. We are not even at a third of our possibilities”.
Enric Casi
How has the group come to be in this situation? What factors have been relevant in taking
the decisions that have allowed MANGO to be the second largest textile firm in Spain?
The key is in its business model. MANGO sells a medium-high quality product aimed at
women between 18 and 40 years old, young in spirit, sophisticated, professional and independent, who has a passion for fashion and design. The concept of the chain is based on
the alliance between a quality product in accordance with the latest trends and at a reasonable price.
“The concept of MANGO is that of an exclusive fashion product, with a lot of design and quality. We try to give our shops the dignity of a great brand. MANGO sells exclusivity, few items
of each model”.
Enric Casi
Throughout the internationalisation process, MANGO has had to make important strategic
decisions in relation to how to enter foreign markets and the geographical expansion, which
have not always been satisfactory.
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In the case in question, we will explain the international expansion process of the company,
covering the following topics:
*
*
*
*
How the decision to approach other markets was taken.
What the keys to its success have been in order to reach the position it holds.
What strategies and tactics have been followed in order to adapt to each case.
The strategic configuration of its markets: what markets present more dynamism and
what countries have posed more difficulty in the expansion process.
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2
Everything you need to know
THE COMPANY
1,2
MANGO, with one hundred percent Spanish capital, is a multinational company dedicated to
the design, manufacturing and commercialisation of women’s clothing and accessories.
Currently MANGO has become the leading company in the female fashion segment and the
second largest export company of the Spanish textile sector.
3
In 2006 the company occupied second place in the sector in Spain . The sale of 80 million
garments worldwide generated a turnover of 1,257 million euros.
Located in Palau-Solità i Plegamans, Barcelona, its head office covers a surface area of
150,000 m2. It houses the departments of design, production control and distribution to
outlets, architecture and interior design of the shops, image and publicity, and administration
and logistics.
“Currently MANGO has become the leading company in the female fashion segment and the second largest export company in the Spanish textile sector.”
4
1,650 of the 6,500 employees which MANGO has worldwide work here . MANGO has a
5
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mainly young staff of an average of 29.5 years old . 62.7% of the office personnel are
women, and this figure is as high as 91.2% in shop personnel.
HISTORY OF THE COMPANY
The company was founded at the beginning of the 80’s by Isak Andic, a Jew of Turkish origin who arrived in Spain in the previous decade. At first the company sold hippy T-shirts at
900 pesetas (5.4€) straight from the warehouse. It soon changed its business model. In 1984
it opened its first shop in Barcelona’s Paseo de Gracia. One year later it had five establishments in the same city.
The expansion of the chain in national territory progressed rapidly. It began with the opening
of a shop in Valencia and in almost eight years it reached the emblematic figure of 99 establishments in Spanish territory. In 2005, 21 years later, MANGO had a network of 240 esta7
blishments in Spain, 127 of which belonging to the company and the rest being franchises .
1 At the close of this case study the annual report corresponding to 2006 was still unavailable. As a consequence most of the
information that appears in this case corresponds to the year 2005. All the information referring to the years 2006 and 2007
has been taken either from press releases published by the company itself, information published in press articles and interviews, or estimates and/or forecasts carried out by the firm in previous years.
2 The author wishes to thank Isak Halfón, director of the international expansion of MANGO, and Enric Casi, general manager
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of the company, for the interviews they granted. He also wishes to give special thanks to Rosario Font, coordinator of the
international expansion, for the collaboration and interest shown at the outset of this case.
3 Source: Press release from MANGO.com.
MANGO/MNG BUSINESS MODEL: KEYS TO SUCCESS
Towards the end of the 80’s, and after realising the need to improve the distribution of the clothing, the chain reviewed its business model. It is at this time when the concepts of product,
shop interior design, quality, price and image of the brand which characterise the firm are
defined.
Following the variables which make up retailing mix, according to Laroche and McDougall
(2000), in the table below we can see the decisions that make up the central nucleus of the
mix which integrates the business model of MANGO.
4 Info from 2006. Source: Press release from MANGO.com.
5 Info from 2005. Source: MANGO (2006).
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Table 1
Description of the variables of retailing mix in the business model of MANGO
Variable
Description
Medium-high quality fashion, aimed at a very defined target, in which the age
more than the mentality influences. ‘This is a woman who likes style and design’
Product
Affordable price. The concept of the firm is based on medium-high quality at a
good price. The profitability strategy of the company is centred on the income by
rotation more than by margin.
Price
Presentation
Exclusive shops, located in privileged areas of the city. They are designed to the
latest trends in interior design in order to create a dynamic atmosphere, in accordance with the personality of the client, which reflects the personality of the brand.
Promotion
Campaigns that link the brand to models of recognised prestige in the world of
international fashion.
Sales
Personnel
The company has a motivated, creative, enterprising team of people, and it
encourages permanent training and the creation of a climate which allows staff to
contribute ideas.
The MNG Card has been developed as a means of payment and a way to pay for
purchases in instalments.
Consumer
Service
Source: Adapted from Laroche and McDougall (2000) from information from MANGO (2006).
Enric Casi, managing director of the company assures that the business model of the firm
rests upon three pillars (See Appendix III):
· Concept
The MANGO concept comes from the interrelation between its own product and quality, with
a coherent and unified brand image. The aim is to dress the modern and urban woman
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according to her daily needs .
· Team
MANGO’s patrimony is its people. It has a young, motivated and flexible staff, who combine
enthusiasm and creativity with the company values – Humility, Harmony and Affection – and
all this within a multicultural environment in which employees of 36 nationalities are to be
found, only in its head office.
In the following table we can see the principle characteristics which the company requires in
its personnel, as well as the environment and business culture it aims to generate.
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8 E The concept, design and product of the company will be dealt with in more detail in part (Concept, Design and Product).
Table 2
Qualities of Human Resources, Environment and Culture of the Company
Qualities Required by
HR at MANGO
· Young people.
· Dynamic.
· Creative.
· Entrepreneurial.
· Easygoing
.· Flexible.
· Positive attitude.
· Potential to develop.
Business Environment
and Culture
·
·
·
·
·
·
·
·
Values, humility, harmony and affection .
Climate of contribution of ideas.
Climate of trust and dialogue
Teamwork.
Multicultural environment.
Pleasant and friendly atmosphere.
Absence of hierarchical barriers.
Direct and respectful treatment.
Source: MANGO.
· Distribution and Logistics
MANGO carries out the physical distribution of the merchandise through a logistical system
developed with its own technology. Based on speed, information and technology, its objective is that each of the one thousand sales outlets, spread out around the world, always have
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the article they need based on the speed of rotation and the sales forecast .
MANGO’s pillars of success are supported by another three secondary pillars of a complementary but no less important, nature which have served as a basis for the notorious development of the chain in the international environment. These are: Enterprising Spirit,
International Vocation and Technology (See Appendix III).
9 The strategy of physical distribution of the merchandise will be dealt with in more detail in part
(Physical Distribution of the Product).
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CONCEPT, DESIGN AND PRODUCT
MANGO sells design and style at a good price. According to the managing director of the
company, ‘The secret of MANGO lies in being a fashion chain with the spirit of a boutique’.
In this sense, while most chains try to be ‘universal’ and try to supply the largest number of
market segments possible, according to Casi, MANGO emulates the concept and business
model of the large brands. That is to say, making collections and matching ensembles (they
do not design garments, but rather ensembles) but with economies of scale.
The concept of the chain is based on the alliance between a quality product, in accordance
with the latest trends, at an affordable price. According to Enric Casi, ‘the concept of MANGO
is that of a fashion product, exclusive, with a lot of design and quality, but without the massification that would make it trivial. Our aim is for our shops to have the dignity of a large
brand. MANGO sells exclusivity, few items of each model’.
PRODUCT
The design of the collections is carried out in a building called the Hangar. According to the
company, it is the largest design centre in Europe, with a surface area of 10,000m2. 550 people work here on the design and development of around 8,000 items of clothing per year,
spread out over 12 collections.
The result is a medium-high quality product, aimed at a woman of between 18 and 40, young
in spirit, sophisticated, professional and independent, and who is passionate about fashion
and design.
Inspired by art, design and pop culture, the brand transforms trends into a concept of personal and unique urban fashion. MANGO creates complete collections that are presented in two
seasons: spring-summer and autumn-winter.
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At the beginning of each season a minimum group of models are launched. From then on,
depending on the demand in the market, the launch of new collections is decided. Therefore,
with a view to adapting to the needs of the different markets, the firm introduces new models,
called flashes, throughout the season.
The designers get inspiration from the markets in which they are present, from their travels or
by reading specialised magazines among other things. An important part of the design process involves observing market trends.
On the other hand, accessories have become one of the greatest challenges for the firm.
Thus, the strategy of MANGO involves increasing its collections and offering a larger selection of models of clothes, bags, swimsuits, lingerie, jewellery, perfume and all kinds of accessories that match the clothes from the collection, such as beach wraps or sunglasses.
“The key is in its business model. MANGO
sells a medium-high quality product aimed
at women between 18 and 40 years old,
young in spirit, sophisticated, professional
and independent, who has a passion for
fashion and design.”
In this sense, we can highlight co-branding agreements with firms such as Swatch for the
manufacturing of watches that match the firm’s collections, or the launch of the MANGO perfume Adorably, for ‘feminine, flirty and charming women who follow fashion, but who maintain classical elements of yesteryear femininity.’
PRODUCT LINES: COLLECTIONS
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EIn the MANGO collection we can find the following product lines:
· Casual/Sport
The Casual line, aimed at a wide range of public who chooses clothes with a style between
the suit and casual collections. It is the most funky, sexy and fun line. The casual designs are
created with a practical and modern woman in mind, who seeks comfort. The Sport clothes
give an informal, young and laidback touch.
· Suit/Evening
This line has the most elegant, up-to-date and sophisticated silhouettes of the collection. The
Suit line is aimed at dressing a woman for her professional activity, while the Evening wear is
reserved for special and essentially evening occasions.
10 Source: MANGO.com.
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· MngJeans
A collection of denim clothes that mark the unmistakeable trends of the season. It includes a
complete denim and tops collection to combine.
· MNG Why not
A line of underwear designed for the urban and cosmopolitan woman, seeking to find comfort in her lingerie.
· MNG Exclusive Edition
This is a line which is nearer to couture than to the pure identifiable concept of the brand.
· Limited Edition
Every season MANGO creates a special limited edition collection in collaboration with famous
designers.
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BRAND STRATEGIES
In 2005, for the first time in its history, MANGO became part of the select ranking of the most
valued brands in the country. The ranking, which the prestigious firm Interbrand creates each
year, situates the fashion brand in 4th place, with an estimated value of 521 million euros (six
times less than its rival Zara) (Interbrand, 2006).
The brand strategy followed by Punto Fa, s.l. is based on a single-brand concept, which aims
to concentrate all the efforts and energy of the company on the development of the
MANGO/MNG brand. This, as well as contrasting with the strategy followed by the Spanish
market leader the Inditex Group, considerably increased the risk of the company.
Damián Sánchez, creative director of the company, affirms that ‘MANGO seeks to position
itself in the international market as a brand’. In order to do so, as part of its positioning strategy, in 2006 MANGO held its first fashion show. This was a pioneering initiative in the sector of textile chains in Spain. Therefore the chain also tried to associate its brand with personalities linked to fashion and design. Thus, each season, MANGO campaigns star models
such as Naomi Campbell or Claudia Schiffer, among others.
In recent years, the chain has joined the trend of capsule collections, which consist of the
launch of small collections designed by well-known couturiers and personalities. Up until
now MANGO has developed two collections, the first of them by the model Milla Jovovich
and her partner Carmen Hawk, and the second by the Cruz sisters Penélope and Mónica.
The brand image is strengthened by its own sales outlets. Each shop is designed to be unique and different, sharing the same ‘look’ and reflecting the style of the brand. The designs
are based on elegance and spaciousness.
PRODUCTION
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The production of MANGO is organised internally and following two different systems
:
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• Factory Production
The product design is carried out by MANGO, while the manufacturing is by a supplier who
acquires the raw materials necessary for the production. MANGO acquires the finished product.
• Production in Workshops
In this case, the product design is carried out once again by MANGO, who acquires all the
raw materials necessary for production and delivers them to the supplier who in turn manufactures the product.
The use of one system or the other depends on geographical factors, related to the closeness and technical factors linked to the specialisation of the production. In both cases the
suppliers present similar characteristics. The production system in factories covers 75% of
the total manufacturing.
The manufacturing of the garments takes on average three to four months from the when the
order is made to when the merchandise is received.
The relationship with the suppliers is managed strategically. A long-term relationship is formed with them, and is based on constant dialogue which permits joint analysing and planning of all the aspects of production, as well as quality control.
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The production is carried out by a total of 130 suppliers spread over at least 11 countries .
Per market, China stands out with a concentration of 58% of the suppliers, followed by
Morocco with 22%.
INTERNATIONAL EXPANSION OF THE MANGO CHAIN
MANGO is the Spanish textile company with the largest international exposure. These days
the chain has more than 1000 shops spread over 89 countries in the five continents, and is
present in 25 countries more than its main rival.
What made MANGO set off on its international expansion? Enric Casi has no doubt about it
‘The market asked us to’.
The strong competitive rivalry existing in Spain in the years before constituted an important
competitive advantage in going out to foreign markets. Enric Casi states that ‘The experience acquired in the Spanish market provided the company with very valuable knowledge in
relation to aspects such as retailing, production and price setting, among other things’. ‘This,
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11 Source: MANGO (2006).
12 The names of both systems of production are given internally by MANGO and in no case do they constitute the generic
names applicable to market trends.
13 Information from 2005.
states Isak Halfon, director of the international expansion of MANGO, made breaking into
other markets easier’.
The international expansion process of the firm began in Portugal in 1992, when a businessman from that country asked MANGO for a franchise for the city of Coimbra. Following this
first one, a second request came from France to open two new franchises, one of them in
Toulouse and the other in Lyon.
In this first stage, the international expansion was pushed from outside due to the demand
from businessmen in other markets and during this period a total of 37 franchises in countries such as Andorra, Aruba, Belgium, Korea, France, Greece, Israel, Malta, Mexico,
Portugal, Switzerland and Taiwan were opened.
‘From 1996 we felt we had learned a series
of things and we felt more capable of going
outside Spain.’
The successful running of these establishments, as well as subsequent ones, encouraged the
company to initiate its international expansion with its wholly-owned shops. In this regard,
adds Casi, ‘From 1996 we felt we had learned a series of things and we felt more capable of
going outside Spain.’ From this moment the true international expansion process of the brand
began.
The initial objectives set by the management of the firm were: to be present in all cities worldwide, to open at least one hundred new shops per year, and to accept a challenge as long
as interesting premises were offered or found.
This second stage began in 1996, carrying on till 2002, and culminated in the opening of 121
shops abroad. From this moment the expansion was opened to markets geographically distant yet close in culture. This is the case of openings in Mexico, Cuba, Chile, Peru, Brazil,
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Venezuela and Argentina .
Table 3
Stages in the International Expansion Strategy by Way of Entry
Stage
Period
First Stage
1992-1995
Introduction (Learning)
Franchises.
Second Stage
1996-2002
Expansion (Growth)
Franchises. Wholly-owned shops.
Consolidation
Wholly-owned shops only in markets in the euro, dollar and yen
zones. Franchises in markets in the euro, dollar and yen zones.
Diversification .
Only Franchises in all those markets outside the euro, dollar and
yen zones.
Third Stage
Nature
2002-2005
Way of Entry
Source: Based on information from MANGO (2006).
14 In Chile and Brazil, MANGO entered with its wholly-owned shops and with franchises, while in
Argentina it entered exclusively with its wholly-owned shops.
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The year 1999 would be a milestone for the company and a turning point in its process of
international expansion. The opening process of its wholly-owned shops abroad reached its
maximum with the inauguration of 42 establishments. In this same year the large shop of the
chain in the Opera area of Paris was opened.
From 1999, the frequency of opening wholly-owned shops abroad lessened progressively
until 2002, when the rate of growth became negative. In this exercise establishments were
closed in Germany (1), Andorra (1), Argentina (2), Brazil (1) and the UK (1), until there was a
total of 6 closures and only two openings.
This stage lasted hardly six years. In 2003 it left the Argentinean market completely, closing
4 establishments which were still in its possession. One year later it sold a franchise of its
shops in Chile; and in 2005, it did the same with 8 shops in Israel. Leaving behind a multimillion investment.
In the rest of Latin America, the rate of new openings slowed right down and was limited to
a few franchises in markets such as the Dominican Republic, Ecuador, El Salvador or
Panama, all markets in which the company registered a merely symbolic presence.
TABLE 4
INTERNATIONAL EXPANSION PROCESS OF MANGO 1992-2005
Expansion Strategy
Area
Countries
Portugal (1992), France, Andorra (1994), Switzerland (1994), Belgium
(1995), Greece (1995), The Netherlands (1996),
Europe
Sweden (1997), Austria (1998),
Germany (1996),
(1998), Luxemburg (1997), Norway
Geographically
(1998), Italy (2001), Denmark (2002), United Kingdom (2002), Finland
close countries
(2005).
Malta (1994), Cyprus (1996), Hungary (1998), Slovenia (1999), Rumania
(1999), Ukraine (2000), Slovakia (2001), Lithuania (2001), Poland
Eastern Europe
(2001), Bulgaria (2002), Croatia (2002), Czech Republic (2002), Serbia
and Montenegro (2003), Estonia (2004), Albania (2005), BosniaHerzegovina (2005).
Mexico (1994), Cuba (1996), Chile (1997), Peru (1997), Brazil (1998),
Culturally
close countries
Latin America
Venezuela (1998) y Argentina (1999).
Costa Rica (2001), Dominican Republic (2001), Ecuador (2002),
Honduras (2003),El Salvador (2004),Colombia (2005), Panama (2005).
Korea (1995), Taiwan (1995), Japan (1996), Malaysia (1996), Singapore
Asia
(1996), Thailand (1996), Filipinas (1999), Hong Kong (2000), Indonesia
(2000), India (2001), China (2002), Macao (2004), Vietnam(2004).
Geographically
and culturally
Asia Central
distant countries
Rusia (1999), Kazajstán (2003), Azerbaiján (2004).
Israel (1995), Turkey (1996), Bahrain (1997), United Arab Emirates
Middle East
(1997), Kuwait (1997), Libya (1997), Saudi Arabia (1998), Jordan
(2001), Oman (2001), Qatar (1997).
Source: Based on information from MANGO.
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In this respect, Isak Halfon affirms that the bad experience in Argentina and Brazil has made
the chain invest with its wholly-owned shops only in countries that have stable currencies.
That is, according to the company, the euro zone, the Japanese yen zone and the American
dollar zone (See Appendix VII). To this must be added the difficulties that the chain has had
in order to exploit the Israeli market, due to the wide cultural and religious gap of this market
compared to the Spanish market.
The company re-thought the expansion formula using its own resources, and abandoned it
almost completely. From this moment on it is dedicated almost exclusively to the consolidation of its presence in those areas where the company directors of the chain feel safe. (See
Appendix VI).
In 2002 the third stage began. The international expansion strategy of the chain became
more conservative and went on to have two speeds: on the one hand, a slow speed through
its wholly-owned shops and consolidation of stable markets (without abandoning the opening of franchises in these markets), and on the other, a faster speed through franchises
which was characterised by the diversification of the markets. In this second line, the objective seems to have been more centred on being present in as many countries as possible,
than on the volume of shops per country.
WHOLLY-OWNED SHOPS AS A FORM OF ENTRY
According to Enric Casi, ‘wholly-owned shops help you to acquire the know-how that allows
you to be a good franchiser. Wholly-owned shops help you to have contact with the market.
Having your wholly-owned shops means you know what sells and what to do and you set
the pace of the franchises from your wholly-owned shops. The know-how that is created in
your wholly-owned shops is sold to the franchisee.’
Wholly-owned shops are larger in surface area than franchises, with an average surface
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space of 407.94 m2, as opposed to the 233.28 m2 of the franchises. Wholly-owned shops
are usually used for the opening of establishments in the most important cities. On the other
hand, in secondary cities a franchise is usually opened.
Entry with wholly-owned shops demands a huge investment effort and, as we have seen, can
involve a high risk. The investment forecast by the chain in 2007 was 100 million euros, of
which 70 million will be destined for new openings. This figure almost duplicates the budget
for 2008.
In relation to wholly-owned shops in other countries, it is worthwhile mentioning that MANGO
does not use the expatriate figure. The managers of wholly-owned shops abroad, exceptions
aside, are natives of the country of destination. Circumstantially, an expatriate is sent either
when the country presents a high level of complexity, or when the right person has not been
found.
15 Estimate made with the number of shops in 2005 and the commercial surface area foreseen for this same year and carried out by MANGO.
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THE FLAGSHIP
The “flagship” store is a wholly-owned shop that is larger than usual, and is used as a flag or
ambassador of the brand in the corresponding country.
“The flagship – according to Isak Halfon –
lets people get to know you. It is like the
showcase of your brand and it helps you a
lot with the franchisees. It helps them to
get to know you.”
Flagship stores are usually used to enter countries such as France, Italy or the UK, where the
chain wishes to have greater growth. “The flagship – according to Isak Halfon – lets people
get to know you. It is like the showcase of your brand and it helps you a lot with the franchisees. It helps them to get to know you.”
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TABLE 5
COUNTRIES IN WHICH MANGO USES THE FORMULA OF WHOLLY-OWNED SHOPS
Penetration Formula
Area
Euro Zone.
Wholly-owned shops.
Dollar Zone.
Countries
Germany, Andorra, Austria,
Belgium, Denmark, France,
the Netherlands, Hungary,
Norway, Poland, Portugal,
United Kingdom, Czech
Republic,
Sweden,
Switzerland.
Canada and United Status.
Yen Zone.
Japan.
Asia.
Turkey
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.
Fuente: Elaboración propia a partir de datos de MANGO (2006).
The largest MANGO shop is in London and has a surface area of 3,000 m2, of which more
than 2,000 m2 are dedicated to shop surface and the rest to storeroom. Behind it is a shop
in Paris with more than 2,000 m2.
In the case of the USA, the company has disembarked in the Big Apple with the opening in
September of a flagship of almost 2,500 m2 in the emblematic Singer Building, right in the
middle of SOHO.
THE FRANCHISE AS A FORM OF ENTRY
The franchise is a particular form of licence to ownership rights (Adams y Mendelssohn,
1986). The brands, the brand names, copyrights, designs, patents and know-how can be
included in the package of different weights and forms to be licensed.
The franchise is a form of marketing and distribution in which the franchiser grants the franchisee the right to develop the business activity in a prescribed manner for a certain period
of time, and in a specific place (Ayling, 1987).
In any case, the franchise is form of alliance between companies. Alliances set up between
companies with the aim of competing in international markets are usually based on the
exchange of a series of assets.
Possessing knowledge about a product-market is in itself an asset. Access to markets and
distribution channels are assets possessed by some companies and bought by others. Both
companies within the alliance possess complementary skills which, in the case of the franchise, this complement is given in the access to markets and distribution, as well as management and administration resources.
In the case of MANGO, it is the form of entry in foreign markets that represents most elasticity and dynamism for the reasons stated above. Thus the number of franchised establis16 Turkey is currently the exception to the rule of investment in the chain. This is due to the historical links which join the Andic family with this country.
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hments has multiplied by twenty nine in the period 1994-2005, to reach the figure of 492 in
the year 2005, exceeding three and a half times the number of wholly-owned shops.
The company affirms that: ‘The franchise system is carried out in countries where the cultural and administrative characteristics are different to ours and for this reason, it is more appropriate for the management to be carried out by people of that country. Furthermore, this
system of management is also applied in cases in which a good location is provided and
when the characteristics of the market make it more appropriate’. (MANGO, 2006) (See
Appendix VI).
In this regard, the general manager of the firm states that it is very complicated to manage in
countries like Russia, where an informal economy abounds. Given the specific peculiarities of
this country, he affirms that, in this case, ‘it is better for a local businessman to do it as he
knows what is going on. Also, in Saudi Arabia, it better for a local businessman to take charge because he knows the idiosyncrasies of the country better than us. In this sense, the franchise is a plus, it adds value, it helps, because they are culturally very different to us and we
would no doubt do it badly.’
‘A local businessman –continues Casi - is used to working in an unstable environment, while
the company is not used to working in this type of environment. It is easier for the local businessman to work in this way’.
However, he also indicates that, apart from the rational criteria, there is always a circumstantial criteria in each case. So, he states, at this moment in time, they are thinking of entering
Russia with their own shop, despite it being a country where they have entered only with franchise.
This decision is based on the existence of a shopping mall with very interesting outlets and
the company is pondering the possibility of opening its own outlet, in such a way that everything the Russian franchises return can be sold in this establishment, consequently avoiding
the inverse logistics of these garments and the complexity this involves in such a complicated country as is the Russian market. The same will happen in China.
MIX INTERNATIONAL MARKETING STRATEGIES
PRODUCT STRATEGIES
The company makes common collections in 89 countries that have completely different cultural, climatological and morphological environments. In some cases these differences are
even present within the same country. This is the case of Ecuador, where the firm has two
shops: one in the city of Guayaquil, which has a tropical climate and is situated 5 metres
above sea level and has an average annual temperature of around 26.5º; and another establishment in the capital, Quito, situated 2,820 metres high and with an average annual temperature of about 14º.
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“80% of the universal collections is universal,
and then there is 20% that serves to adapt
the collection to the profile of the country”.
On the opposite side, there are areas, as is the case of the region of Indonesia and Malaysia,
where the temperature is stable all year. These determining factors make it necessary to
adapt the collections the campaign sells in each market. According to Halfón, ‘Rising to this
challenge is easy because it is only a question of spending more money: more people, more
designers,...’.
According to the director of the international expansion of the firm, ‘MANGO makes global
collections with brushstrokes for each country’. To this Enric Casi adds that ‘80% of the universal collections is universal, and then there is 20% that serves to adapt the collection to the
profile of the country’.
For this reason, they have created the department of design for special collections which is
responsible for transmitting in each of its designs the peculiarities and needs of the different
markets in which the brand is present.
17
This department divides the collections into different sections
:
• Collection for ‘cold countries’: is adapted to those areas in which the climatological conditions and physical appearance of its inhabitants requires warmer garments of a specific
pattern. This collection is aimed in general at, among others, Russia, and at regions of
Siberia in particular.
• Collection for ‘Asian countries’. The principal mission of this collection consists of adapting the designs to the average height of the inhabitants and to the aesthetic needs of
these markets.
17 Source: MANGO.
25
• Collection for ‘warm countries’. The material and make up of the designs is characterised
by its lightness and freshness. The products of this line are designed for warm countries
such as Ecuador, Columbia, Venezuela, Santo Domingo, Panama, Puerto Rico, or El
Salvador.
• Collection for ‘Arab countries’. Due to the climatological, cultural and religious needs of
the region, this collection seeks to find alternatives to substitute the traditional abayas and
chadors with creative designs, and at the same time close necklines and lengthen skirts;
they also design loose shirts and a special collection of accessories.
For this last line, MANGO has entrusted a special collection to the prestigious Lebanese
designer Zuhair Murad, expert in adapting and merging the latest fashion trends to the tastes of the Middle East. In the words of Judith Ventura, director of design at MANGO, ‘The
designs of Zuhair Murad are a representation of the modern woman in the Middle East of the
21st century’.
This is a limited edition collection made up of 18 complete looks with accessories such as
bags, shoes, stoles and jewellery. The clothing from the collection, elaborated with sheer
materials and in colours and tones characteristic of the region, do not have excessive ornamentation and are easy to wear for their comfort and how they adapt to the body. In Arab
countries the complete MANGO collection is available as well as the Murad collection.
Apart from the special collections, the firm decides, in function of the countries’ characteristics and the conditions of each shop (size, location, etc.), what designs of the four thousand
models that make up the collection will be sent to each country and to each shop.
In this respect, the general manager of the company points out, ‘There may be a part of the
collection which is not sent. This way, it is possible that markets such as Japan do not receive 10% of the collection. On the other hand, the flagship in Paris has the whole collection,
while for shops of, for example, 200 metres on the outskirts of Paris we have to see what personality is best adapted to the area in which it is situated and the part of the collection that
best adapts is sent. For example, if the shop is near a university it will be more causal clothes, jeans, while if the shop is near offices, the clothes will be more like suits. In the end,
each shop has its own personality. The personality of each shop is decided by the head office, and in any case the statistics tell us if it’s a shop that buys more casual wear, more dressy
clothes, more knitwear, more jeans...’.
In relation to the establishments, in general, Casi indicates that, ‘The shops do not adapt to
the local culture, although the legal environment in Saudi Arabia does dictate that there cannot be a shop window, as clothes may not be exhibited. Nor can there be dressing rooms as
people cannot try on clothes but rather can take them home and bring them back if they do
not want them. Also, women may not sell, so the assistants cannot be girls. There is only
adaptation in very extreme cases.’
26
Portfolio of brands
The products of the company are not commercialised in all the countries under the same
brand. On an international level, the chain uses four names derived from the acronym or combination of the original MANGO brand. These are as follows:
• MANGO
This is the original brand under which the company Punto Fa, s.l., began the commercialisation of its products. Its origin goes back to 1983, when the founder, Isak Andic, was on a
trip to the Philippines where he tried this fruit for the first time. The colour and taste remained
in the founder’s mind as a refreshing, different and sweet memory (Cerviño and Cubillo,
2003). Coincidence made the name of this fruit the same in all languages, which turned it into
a global brand name. In 1984 this name was chosen for the first shop in the Paseo de Gracia,
Barcelona.
• MNG
This is the acronym of MANGO once the vowels are eliminated. This brand is used in all those
markets where the original brand has been previously registered by another company, or else
where its use has not been allowed because it is a generic. This is used, among others, in
the following countries: Argentina, Chile, Columbia, Costa Rica, Ecuador, El Salvador,
Honduras, Panama, Venezuela and some Arab countries.
• MANGO Barcelona
This brand is currently used in China. In this market, the chain entered with the brand
MANGO/MNG. The similarity of the brand with the Chinese word ‘Ming’ meant the population of this country did not associate the MANGO brand with a Spanish brand, and so the
effect of Made in or a country of origin was lost. To avoid this, the firm decided to associate
the original brand with the name of the city of Barcelona, thus making it possible for the brand
to be associated with its European origin.
• MNG by MANGO
This is the name chosen by the company for the commercialisation of its products in the USA.
The managing director of the firm comments that, ‘the Anglo-Saxon world uses initials a lot,
and this name allows it to be adapted to this mentality of initials’.
Product Labelling
In the labelling of the product, given the conditioning factors mentioned above and for reasons of economies of scale, only the MNG brand appears both in the outside labelling as well
as the inside, in such a way that the same labels can be used in all the markets.
All the clothes of the company are labelled indicating the country in which they have been
manufactured. This information appears in the inside labels translated into 27 languages. Also
the information relevant to the product (content, washing instructions, etc) appears translated into 15 languages.
27
PRICE STRATEGY
In light of the general progressive reduction in prices the textile sector has suffered in recent
years, MANGO has gone for a concept of product and development of the brand image,
which progressively distances itself from the image of warehouse or generalist chain and
brings it closer and closer to the image of a traditional boutique, aiming to find a relatively
medium-high positioning with regard to their most direct competitors.
In general, MANGO applies a medium-high pricing policy, which accompanies its product
policy of medium-high quality, which, although the prices of the firm are reasonable for the
general public, they place MANGO on a higher level than their direct rival Zara.
In this regard, Enric Casi, affirms that ‘The chain’s profitability strategy is based on income
through rotation more than by margin’. That is to say, it is not so important that the price is
very high, as the price allows them to sell many items and earn little with each one, as opposed to earning a lot with each item.
“MANGO presents on a scale, a tighter
strategy of international prices than its
main rival.”
As regards fixing international prices, Isak Halfón points out that ‘The ideal thing would be to
have equal prices worldwide’. However, this is not possible for several reasons:
In the first place, as we will see in the next section on physical distribution of the merchandise, most of the logistics is still concentrated in the head office in Barcelona so items have to
travel to Spain from their country of origin, where they are classified and sent to the shops in
the destination country, which involves double transport. Therefore, we are talking about 89
28
different countries, with different customs and import regulations which have a different
impact on the prices of the clothes.
Furthermore, ‘there are countries, as Halfón points out, in which the salaries and rentals are
much higher than those levels registered in Spain. For example, in France the salaries are
double, so with Spanish prices the franchisee cannot pay the costs. This means that in
France the prices will be between 15 and 20% more expensive than in Spain’. In the same
way, the chain’s director of international expansion international adds, ‘the cheapest is Spain
and from there it increases’.
MANGO presents on a scale, a tighter strategy of international prices than its main rival. The
international prices of MANGO fluctuate in premiums not higher than 60 percentage points
(See Appendixes IX & X).
Price and positioning
In spite of trying to create a unique and global image, the price set for each market directly
influences the image of the chain and, definitively its positioning in each country.
In the words of the firm’s general manager, ‘Depending on the type of country, the MANGO
product becomes more elitist. Therefore, in Europe, Japan, the USA and Canada, the positioning of MANGO is on the same level. In short, as Halfón points out, ‘A middle class positioning’.
On the other hand, in Latin America, the MANGO shops are more elitist, as it is an area with
rather low purchasing power. As Casi indicates, ‘It is not our thing, because ours is a product
with a high rotation and there they don’t do that’. In line with this, the General Manager of the
firm adds, ‘when the chain opened its first shop in Peru in 1997, Fujimori, who was the president of the country, arrived with his wife to shop...’.
COMMUNICATION
MANGO assigns 4% of the total sales in each country to advertising in each market.
Therefore, in community markets, the chain spends around 11,000 euros in advertising the
opening of each franchise.
The target of MANGO is focused on a very specific type of woman. This means the company
does not use generalist media such as television, as the type of woman who wears MANGO
represents only between 15% and 20% of the people who watch television, states Casi.
MANGO concentrates its publicity on adverts in fashion magazines, a media specifically
aimed at those women who are interested in what MANGO does, and in exterior publicity.
As regards the latter, in recent years the company has developed innovative campaigns. In
2005, it launched a campaign in which it showed real designs of the company: Skirts, jackets, necklaces, blouses and trousers. In order to do so, they transformed free-standing
information boards into urban showcases with real clothing inside. In May 2007, it carried out
29
a campaign for which it turned exterior publicity columns into transparent showcases, with
interior lighting and inside which they placed dressed mannequins.
In international markets, the chain’s advertising strategy is adapted to the specificity of each
market. In this sense, Isak Halfón, emphasises the importance of counting on local people,
who know the country and who tell them what type of campaign is best for their market. Thus
the company edits a special catalogue for Arab countries in which, for religious reasons, mannequins appear instead of models.
PHYSICAL DISTRIBUTION OF THE PRODUCT
The system of physical distribution of the merchandise of MANGO is centralised in the head
office of the company in the province of Barcelona. Currently MANGO has seven distribution
centres, four of which are located in Spain, near the head office, and the other three are situated in the USA (New Jersey), China (Hong Kong) and Singapore. The latter is the only distribution centre in the southern hemisphere.
“Throughout recent years, the logistics
system of the company has evolved greatly.”
The facilities, with a total surface area of 250,000 m2, distribute more than 80,000 million
items of clothing per year, with a potential distribution capacity of around 30,000 items per
hour. This means that shops situated in Europe can be re-stocked in less than 72 hours.
The characteristics of the fashion sector mean that the company’s logistical system has to be
flexible and capable of catering to the demands of the market. The basic aspects of the logistics in this sector are the rotation speed of the clothing, the speed of re-stocking the shops
(supplier-head office-shop), the management of the distribution at sales outlets (shop-shop),
and the inverse logistics of clothing not sold during the season (shop-head office-outlet).
30
However, this is not easy to manage when you sell to 89 countries, as there are different
dates for holidays, different dates and customs for the sales period, and where we find countries that mix seasons with the sales period in the shops, countries that have one week of
sales and countries that have one month of sales, as well as countries with changed seasons
such as the case of the southern hemisphere.
Throughout recent years, the logistics system of the company has evolved greatly. Now the
trend consists of making deliveries directly from the supplier to the shops of the chain, for
which a secondary logistics system has been developed. This measure allows them to reduce the delivery dates and to speed up the distribution system, reducing costs both in transport as well as in the infrastructure necessary.
The new system, which, according to the company, channels between 40% and 50% of the
total distribution, is used to make initial deliveries of the new collection to the shops at the
beginning of each season, but not, on the other hand, to re-stock the merchandise sold, or
the inverse logistics of unsold garments.
The pilot experience has been developed in the Southeast Asia market, due to the fact that
in this region around 74% of the garments the chain commercialises are manufactured. After
opening the distribution centre in Hong Kong in 2004 and the integration of the logistics operators with the firm’s computer systems, garments were sent to 43 shops situated in
Singapore, Thailand, Philippines, Hong Kong, Malaysia, China and Indonesia, thus avoiding
double the transport. They also plan to introduce this system in the Middle East.
PLANS FOR THE FUTURE
The chain’s international expansion for the next ten years includes the aim of tripling the
current number of shops to reach 3,000. Also, they plan to duplicate the frequency of openings they had as objective at the beginning of the international expansion process, setting a
new objective of 200 new shops per year.
The expansion will be focused essentially on Europe, Japan, China and the USA, with strong
expansion plans for the latter two, strengthening their presence notably in markets such as
Eastern Europe and the rest of Asia. ‘The challenge now, explains Isak Halfón, is to consolidate the position in each country’. Furthermore, ‘If up until now Europe has been the firm’s
battle horse, explains Damián Sánchez, creative director of the company, now the second
attack will be the USA.’
Lastly, states Enric Casi, ‘We are beginning, we are not even at a third of our possibilities’.
32
33
3
In more depth
IN MORE DEPTH
18
1. Calculate the average income per type of establishment, as well as the average
income per m2 and the type of establishment. Use Appendixes I and II to do so. Do
significant differences exist between the two forms of entry used by MANGO in this
process? Do you think it is more profitable to have a shop owned by the company
or a franchise?
2. Identify which are the 10 top countries by turnover, and in your opinion explain
what factors have contributed to the success of the chain in these markets, as
opposed to failure in others.
3. Do you think the international expansion model used by MANGO will help to reach
the same success in the USA than in other countries? List the factors in favour and
against.
4. What is your opinion of the international expansion model through franchising?
Identify the advantages and disadvantages of the franchise as a form of entry.
5. Explain what the factors have been that, in your opinion, led MANGO to fail in
Argentina.
6. Do you think the situation of MANGO in Japan is due to a problem of management, cultural adaptation or any other problem (in this case, identify it)? In your opinion, what should MANGO do to improve their situation in the Japanese market?
7. Why do you think the company directors do not feel safe outside the euro, dollar
and yen zones?
8. Do you think MANGO will solve the organisational and management problem it
has in the southern hemisphere in the future? What would you recommend they do
to solve the problem of logistics and collections in different seasons in this area of
the planet? (Remember that when it is winter in Spain, in the southern hemisphere
it is summer).
9. Analyse the relationship that exists between the length of time the chain has been
in each market and the volume of shops it has in each country. In your opinion, is
there a relationship between length of time and volume? Do you think there are significant differences between forms of entry?
10. Make a matrix which reflects the relationship that exists between the weight
each geographical area occupies (continent or subcontinents) over the total exports
of the chain and the rate of growth (in terms of number of shops) seen in the last
period. To do so, use the table in Appendix XI. What is your opinion of the strategic
situation of the chain by countries? In light of the results, and if you were the chain’s director of international expansion, what strategic action would you develop?
36
18 For questions that include standard answers, feedback has been included to direct students to the right answer.
Questions that do not have a closed answer are also indicated.
11. Do the same as before, but this time for each of the countries. To do so, use the
table in Appendix XI.
12. Why is entering the USA strategic? Give a reason for your answer.
13. Why do you think the MANGO brand, in spite of having a similar number of establishments as its rival ZARA, has a brand value six times inferior?
14. What is your opinion of the hypothetical substitution, on an international level,
of the MANGO brand for the MANGO Barcelona brand? What implications could this
decision have for the chain?
15. Identify, for each MANGO chain, the group of countries (clusters) existing in
Europe as regards fixing prices. How many clusters are there? What countries make
them up? What do you think this is due to? Use Appendix X to do this.
16. Identify the groups of countries (clusters) existing worldwide as regards fixing
prices. Do you think a relationship exists between the distance at origin and the
fixing of prices? Do you think other factors exist which have an influence on fixing
prices, beyond distance or customs barriers?
17. From an organisational and administrative point of view, explain what impact
the re-organisation of the logistical activity the company is carrying out could have.
Explain the benefits.
18. In your opinion, what aspects will mark the international future of MANGO?
37
4
Analyse
Once the international expansion of MANGO has been developed, what do you think
the most important conclusions will be for the company?
BIBLIOGRAPHY
Adams,J. y Mendelsohn, M., 1986, ‘Recent developments in franchising’, Journal of
Business Law, 206-19.
Ayling, D., 1987, ‘Franchising has its dark side’, Accountancy, Nº 99, 112-17.
Arco, S. del, 2007, ‘MANGO para rato’, El País, 18 of March. Madrid.
Barciela, F., 2006, ‘En la estela de Zara’, El País, 15 of October. Madrid.
Bradley, F.,1995, International Marketing Strategy.Prentice hall.2nd Edition.
Cerviño, J. y Cubillo, J.M., 2003, Leading Brands from Spain. ICEX y Foro de Marcas
Renombradas de España. Madrid.
Hernández, S., 2007, ‘Inditex supera a Gap en red mundial de tiendas al llegar a los 3.135
establecimientos’, El País, 17 of March.
Laroche,M. y McDougall, G.H.G., 2000, Canadian Retailing. Ed.McGraw-Hill Ryerson. 4th
edition.
Interbrand, 2006, ‘Ranking de las Marcas Españolas más Valoradas’, Actualidad Económica,
Nº 2.481/82. Madrid.
MANGO, 2004, Memoria de Sostenibilidad 2004. Barcelona.
MANGO, 2006, Memoria de Sostenibilidad 2005. Barcelona.
Riaño, P., 2007, ‘MANGO marca la diferencia con Inditex’, Expansión, 27 of February.
Madrid.
Sánchez, M. et al., 2006, ‘Con “m” de MANGO: moda, mujer, moderna’. En Sánchez, M.
(coord.), Casos de Marketing y Estrategia. Ed. UOC.
LINKS
www.mango.com
www.company.mango.com
41
5
Appendices
APPENDIX I
COMMERCIAL INFORMATION OF THE MANGO CHAIN
2001
2002
2003
2004
2005
Wholly-owned shops
421.590
449.620
432.836
459.298
459.167
Franchises
249.982
295.377
346.978
372.381
429.093
Total Net Revenue
671.572
744.997
779.814
831.679
888.260
Number of Wholly-owned shops
245
238
242
246
261
Number of Franchises
330
391
462
522
605
Total number of Shops
575
629
704
768
866
329,80
331,49
313,58
Surface Area of Wholly-owned shops over Total (%)(2)
-
-
-
48,0%
43,0%
Surface Area of Franchises over Total (%)(2)
-
-
-
52,0%
57,0%
189.638
208.508
Gross Margin (%)
49,1%
46,%
47,6%
53,2%
54,2%
Net Profit per m2(3)
297,4
290,8
293,5
312,4(2)
416,8(2)
67,85%
69,43%
71,58%
71,44%
72,6%
Sales per Type of Establishment(1)
Establishments per Type
Commercial Surface Area
Average Surface Area of Shops (m2)
Total Commercial Surface
Percentage of Sales in International Shops
304,83(2) 285,92(2)
220.758 234.108(2) 247.608(2)
(1) In thousands of euros.
(2) Elaborated from the forecast of commercial surface of the company for 2004 & 2005.
(3) In euros.
Source: MANGO (2005, 2006) and own elaboration.
44
APPENDIX II
FINANCIAL INFORMATION OF THE MANGO CHAIN
2001
2002
2003
2004
2005
Revenue for Spain
266,8
270,6
273,1
284,5
290,0
Foreign revenue
574,6
679,7
728,9
770,9
854,0
Total revenue
841,4
950,3
1.002,0
1.055,4
1.144,0
Net Revenues
671.572
744.997
779.814
831.679
888.260
EBITDA
112.316
124.292
147.489
158.967
140.468
EBIT
81.594
93.280
115.897
124.228
114.202
Net Profit
56.408
60.629
64.791
73.129
103.217
Own Funds
279.426
336.705
373.729
432.877
560.824
Total Balance
669.048
684.821
873.152
906.152 1.125.547
4.868
4.924
5.608
5.566
5.847
101.559
102.688
109.484
127.723
133.525
-
-
-
28,65
29,43
MANGO(1)Chain Revenues
Results(2)
Balance
Other information
Total number of employees
Personnel costs
Average age of employees
(1) In Millions of Euros.
(2) In Thousands of Euros.
(3) In Euros.
Source: MANGO (2006).
45
APPENDIX III
BUSINESS MODEL OF MANGO
KEYS TO SUCCESS OF MANGO
Source: Own elaboration
46
APPENDIX IV
MAP OF INTERNATIONAL EXPANSION OF MANGO BY YEAR OF ENTRY
Source: Own elaboration from Mango (2006.)
47
APPENDIX V
MAP OF TURNOVER FOR MANGO BY GEOGRAPHICAL AREA
Source: Own elaboration from Mango.
48
APPENDIX VI
MAP OF INTERNATIONAL PRESENCE OF MANGO BY FORM OF ENTRY
Source: Own elaboration from information from MANGO (2006).
49
APPENDIX VII
EVOLUTION OF WHOLLY-OWNED SHOPS ABROAD, 1994 - 2005
Source: Own elaboration from Mango (2006).
50
APPENDIX VIII
EXTERIOR LABELLING OF MANGO GARMENTS
51
APPENDIX IX
INTERNATIONAL PRICE LEVELS IN RELATION TO THE MANGO CHAIN,
2007
Dress
100.00
91.33
81.73
77.44
77.33
76.66
75.28
75.03
71.88
71.54
70.35
70.19
69.89
68.10
67.84
67.46
66.96
66.02
65.99
65.17
64.85
64.85
61.94
61.94
61.63
61.61
61.29
61.04
61.03
60.45
59.87
59.69
59.28
58.99
57.61
57.60
57.14
56.79
49.14
49.07
48.03
47.97
47.97
47.97
Country
Australia
Korea
India
Japan
Columbia
South Africa
Thailand
United Kingdom
Russia
Ireland
Taiwan
Slovakia
Sweden
Philippines
China
Croatia
Serbia
Tunisia
Canada
Poland
United States
Ecuador
The Netherlands
Germany
Ukraine
Hong Kong
Costa Rica
Lithuania
Bulgaria
Cyprus
Israel
Denmark
Syria
Russia (Kaliningrad)
Singapore
Turkey
Italy
Panama
United Arab Emirates
Saudi Arabia
Qatar
Spain
Portugal
Greece
T-shirt
100,00
87.02
83.65
81.92
81.34
77.70
77.60
77.09
72.61
72.43
71.38
69.96
68.75
68.57
67.90
67.59
67.36
65.65
65.35
65.23
65.07
65.07
64.07
61.40
61.40
61.40
61.40
61.40
61.23
60.78
60.03
59.71
59.64
59.32
58.15
58.15
57.30
56.08
53.58
49.96
48.85
48.43
48.40
48.40
Country
Korea
United Kingdom
South Africa
Australia
India
Thailand
Columbia
Egypt
Slovakia
Norway
Rumania
Sweden
Croatia
Switzerland
Ireland
Serbia
China
Israel
Honduras
Ecuador
Latvia
Canada
Macedonia
Austria
Germany
Italy
The Netherlands
Slovenia
Estonia
Japan
Malta
Syria
Turkey
Russia (Kaliningrad)
France
Luxemburg
Hong Kong
Denmark
Libya
Arabia Saudi
Qatar
United Arab Emirates
Spain
Andorra
Jeans
Country
100.00
Australia
99.64
India
98.83
Korea
97.96
South Africa
94.08
Columbia
92.51
Egypt
91.52
Thailand
87.83
Russia
87.27
United Kingdom
87.02
Guadalupe (France)
85.09
Slovakia
82.39
China
82.02
Croatia
81.70
Serbia
79.50
Tunisia
79.09 Reunion Island (France)
79.09
Ireland
78.98
Ukraine
78.97
Honduras
78.69
Ecuador
78.39
Morocco
78.34
Poland
75.92
Germany
75.92
The Netherlands
75.73
Switzerland
75.22
United States
74.84
Latvia
74.77
Israel
74.66
Azerbaijan
74.37
Costa Rica
72.99
Lithuania
72.91
El Salvador
72.76
Bosnia-Herzegovina
72.56
Syria
71.17
France
71.17
Luxemburg
70.26
Moldavia
68.28
Panama
64.88
Israel - Eilat
60.17
Arabia Saudi
58.78
Qatar
58.49 Andorra (Pas de la Casa)
52.15
Spain
Source: Based on information from MANGO.com..
52
APPENDIX X
INTERNATIONAL PRICE LEVELS IN RELATION TO MANGO IN THE
EURO ZONE, 2007
Dress
Country
T-shirt
Country
Jeans
Country
100.00
Ireland
100.00
France Guadeloupe
100.00
100.00
France Guadeloupe
91.27
Ireland
90.89
93.29
Finland
86.90
France Reunion
90.89
Ireland
86.58
Netherlands
86.90
Montenegro
90.89
Montenegro
86.58
Montenegro
82.53
Austria
87.25
Austria
86.58
Germany
82.53
Finland
87.25
Finland
86.58
France Reunion
82.53
Germany
87.25
Germany
83.96
Bosnia And
Herzegovina
82.53
Italy
87.25
Italy
79.87
Luxembourg
82.53
Netherlands
87.25
Netherlands
79.87
Italy
82.53
Slovenia
87.25
Slovenia
79.87
France
78.17
Belgium
81.79
Belgium
79.87
Belgium
78.17
France
81.79
France
79.87
Austria
78.17
Luxembourg
81.79
Luxembourg
67.05
Spain
73.80
Greece
78.14
Greece
67.05
Portugal
65.07
Andorra (Pas
de la Casa)
67.21
Andorra (Pas
de la Casa)
67.05
Greece
65.07
Portugal
67.21
Portugal
67.05
Andorra (Pas
de la Casa)
65.07
Spain
67.21
Spain
60.34
Andorra
56.33
Andorra
59.93
Andorra
France Guadeloupe
France Reunion
Source: Based on information from MANGO.com.
53
APPENDIX XI
PRESENCE OF MANGO BY COUNTRY, 2005
Country
Australia
Austria
Belgium
Brazil
Bulgaria
Canada
Chile
China
Colombia
Costa Rica
Croatia
Cuba
Cyprus
France
Germany
Greece
Honduras
Hong Kong
Hungary
India
Indonesia
Ireland
Israel
Italy
Japan
Republic of Korea
Kuwait
Lebanon
Malaysia
Malta
Mexico
Netherlands
Peru
Philippines
Poland
Portugal
Russian Federation
Saudi Arabia
Turkey
Ukraine
United Kingdom
Taiwan
Volume of Exports
0.42
2.16
2.01
0.5
0.27
0.58
0.31
1.1
0.06
0.1
0.59
0.02
0.28
8.92
6.25
0.88
0.05
0.79
1.11
0.17
0.63
0.58
0.55
1.25
0.45
0.42
0.54
0.56
0.98
0.17
0.94
1.77
0.15
0.53
0.38
4.48
3.12
2.29
6.47
0.68
5.61
0.78
Year of Entry
2002
1998
1995
1998
2002
2005
1997
2002
2005
2001
2002
1996
1996
1994
1996
1995
2003
2000
1998
2001
2000
1998
1995
2001
1996
1995
1997
1997
1996
1994
1994
1996
1997
1999
2000
1994
1999
1998
1996
2000
1998
1995
Number of Shops
2004
9
12
12
3
2
0
5
17
0
2
4
2
4
62
45
8
1
7
5
2
5
5
10
11
22
10
4
4
7
3
11
12
2
4
4
50
20
18
15
5
20
12
2005
9
12
13
3
2
6
6
19
1
2
5
2
4
70
49
9
1
8
6
3
7
7
10
12
19
12
4
5
12
3
17
14
3
5
6
56
28
24
17
5
23
14
Source: Mango (2006).
54
APPENDIX XII
PRESENCE BY GEOGRAPHICAL AREA: SITUATION AND PERSPECTIVES
Europe
Europe is the continent where the chain is best positioned, according to Damián Sánchez,
Creative Director of the company. In this market Mango generates 70% of its total turnover
(30% corresponds to Spain and the remaining 40% comes from the rest of Europe) (See
Appendix XI).
MANGO is present in practically the whole European territory. Most of the expansion of the
chain is centred on markets such as Italy, France, United Kingdom, Germany and Eastern
Europe. ‘The heart of the company, according to Isak Halfón, is the European Community,
as it has a very high growth potential and can grow much more than it has’.
As Enric Casi states, ‘Spain is a very mature market, whereas Germany is only at 15% of its
potential, the UK is at 10%, and Italy has only just begun’. The objective for these markets
will be to reach around 300 establishments in each one. (See Appendix XII). According to the
company, the experience in Spain has shown what is possible.
The company’s forecast for 2006 was to open 30 new shops in this market, which would
mean 30% of the total openings forecast.
Speed of expansion:
Rapid
Objectives:
Short Term
Eastern Europe
The countries of Eastern Europe are immersed in a process of intense growth, especially as
many of them have been incorporated into the European Union. They are countries with great
growth potential which allows them to make plans for expansion and consolidation in the
medium term.
This region has become more dynamic within the chain’s activity, actually registering increases in turnover up to 62% in 2002. Currently MANGO is present in all the Eastern European
countries.
Speed of expansion:
Medium and Medium-high
Objectives:
Medium Term
55
America
Latin America
Mango has been present in Latin America for 13 years. In spite of being one of the first markets tackled by the firm, this area has little weight on the global turnover of the chain (See
Appendixes X and XI).
According to the international expansion director, this market has great potential, but presently it has very few sales outlets. Its location in the southern hemisphere means the collections arrive six months late, as the temperatures are different to those of the northern hemisphere. This problem is added to by the fact that there is not enough critical mass to manufacture specific collections for the countries in this area: Ecuador, Chile, Bolivia, Brazil and
Peru. As a consequence, declares Halfón, ‘it is not clear if the company is going to expand
as it has done in other areas’.
Speed of expansion:
Slow
Objectives:
Long Term
North America
Mango has designed an ambitious expansion plan for North America, where it aims to reach
250 establishments in the space of ten years. The expansion plan designed by the company
includes starting the expansion in Canada and then moving down to the USA.
In 2005, MANGO opened 6 shops in Canada and hopes to reach 25 establishments around
the whole country over a period of 5 years. They have begun in Canada because, according
to the company’s general manager, ‘Canada is more similar to Europe for the Americans and
for ‘us’ Canada is more similar to America. Canada is a very similar market to Europe. On the
other hand, it is a market like the American one but with a smaller population, therefore it is
a good testing ground before embarking completely on the USA market’.
To enter this market, the firm has designed an expansion plan centred on the most important
cities of the East and West Coast. In May 2006 it opened its first shop in California. During
this year the first ones were opened along the west coast. At present it has 14 shops in the
USA.
The reason for the delay in tackling this market, according to the company, lies in the customs restrictions. Import quotas on textiles from China complicated the production process
of the chain, as they had to look for suitable suppliers who also had a quota for bringing garments into the USA. With the entry of China in the WTO (World Trade Organisation) in 2005,
the firm took the decision to tackle the American market.
56
The USA is the great challenge for the company. It is a very mature market, with large textile groups where the competition is very fierce. In this sense, emphasises Enric Casi, we do
not expect to have such spectacular growth as in Europe.
Speed of expansion:
Rapid
Objectives:
Medium Term
Asia
MANGO was the first Spanish textile company to establish itself in the Asian market, with the
opening of the first sales outlet in Taiwan in 1995. Asia generates 10% of the chain’s total tur19
nover . (See Appendix X). The objective for this market is to reach 25% on the total turnover.
The chain’s expansion in the Asian market has been very fast, registering a total of 78 establishments opened in eight years. Currently MANGO is present in almost all the countries in
the Asian continent.
During 2006, the forecast for opening shops contemplated the increase of the shop surface
area by 23%, rising to 37,000 m2. Most of the new openings have been concentrated in
China, Taiwan, Korea and Japan, countries considered by the company to be the ones with
the highest strategic value or potential for growth in the continent (See Appendix XI).
Russia
Russia is one of the countries where the brand works best. In this country the company has
registered a spectacular growth, with the opening of 28 establishments during 1999-2005, a
trend which is currently continuing (See Appendixes X, XI and XII).
According to the company itself, the keys to its success in this country are ‘to create fashion
and offer alternatives that adapt to the characteristics and the demands of the Russian
woman, without losing the style that identifies MANGO’.
In 2005, Mango opened its first shop in Siberia. This opening was a great challenge for the
firm, as it was a new market with new customs and trends, where very few foreign brands
are present.
Speed of expansion:
Rapid
Objectives:
Short Term
19 This figure corresponds to the company’s turnover in the Far East.
57
China
Mango entered China in 2002 and has registered very favourable growth in the area and has
22 establishments.
China generates 1.1% of the total sales of the company, making it the 10th country in terms
of turnover. This figure rises to 1.96% if the turnover for Hong Kong (0.79%) and Macao
(0.07%) is included. It is one of the markets where they hope to develop an ambitious expansion plan with high levels of growth.
Speed of expansion:
Rapid
Objectives:
Short Term
Japan
The chain drew up an ambitious expansion process for the Japanese market. In 2003 Mango
signed an alliance with Mitsui, one of the most renowned business groups in Japan, for its
expansion in this market. This alliance contemplated the opening of between 6 and 8 establishments per year. This progression has not been fulfilled.
Among the reasons, declares Isak Halfon, is the fact that the company has not known how
to understand this market. It is a very difficult market, with the very latest fashions.
20
Speed of expansion:
Average
Objectives:
Medium Term
Middle East
By including Middle Eastern countries, the turnover in the Asian continent has reached almost
24% of the group’s global turnover. In the area we find countries of high growth such as Saudi
Arabia, where the chain has 24 shops,or the United Arab Emirates, with 6 shops, and countries where entry contemplates medium and long term objectives, as is the case of Jordan
(2), Qatar (2) or Bahrain (1).
The forecast for the Middle Eastern market is focused on the opening of around twenty shops
over the next two years, hoping to reach the figure of 66 shops in the area.
In 2006, Mango opened its first shop in the city of Damascus, after a change in Syrian law,
which has begun to allow the importation of clothing. The forecast is to follow this with the
opening of a new shop in the city of Aleppo.
58
20 Initially everything seems to indicate that the company had foreseen a rapid speed of entry into this market, as well as reaching its objectives in the short term. However, the results obtained indicate a change in strategy until they find the key to success for this country.
Central Asia
According to the chain’s international expansion director, Central Asia is a region with great
potential for growth. It is a virgin market, where there is hardly any competition, so it will be
easier to enter. However, given the conditions of these markets, the expansion strategy is
medium-term.
Africa
Africa is the continent in which the chain has had least presence, generating little more than
0.58% of the firm’s global turnover. Currently the company is present in Algeria, Egypt, Libya,
Morocco, South Africa and Tunisia.
In spite of representing a relatively very low quota of the foreign turnover of the firm, and
registering a very low level of growth (See Appendix X), as what happened in Latin America,
Africa is considered by the chain to be a market with a medium to long term potential.
Among the factors that make the chain’s expansion difficult in this continent are the problems
related to the collection, as they are found in the southern hemisphere, the patterns and the
economic situation, especially in the Sub-Saharan Africa, where the chain is not present.
Speed of expansion:
Slow
Objectives:
Medium/Long Term
59
ESIC BUSINESS & MARKETING SCHOOL
AUTHOR: José María Cubillo Pinilla

18_Mango_ing_v2:Maquetaciâ€”n 1.qxd

Transcription

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