Question1: Is this the right moment to invest in launching the Roca Brand in Egyptian market?
Solution No.1
To make investment in any region, company should be able identify the strengths and weaknesses as well as opportunities and threats of a targeted area. It is the responsibility of the marketing and research team to inspect whether the macroeconomic factors are favorable for the company or it will create hurdles for it as far as investment decision is concerned. As, Egyptian market faces political as well as economic unrest, that’s why the company’s Corporation Marketing Director, Velazquez and Brand & Communication Director, Xavier Torras became so anxious whether to invest in the Egyptian market or not. It is also true that the higher the risk, higher the return but in this scenario, it look more ominous to take such kind of decision because there are number of outside factors that will become threat for Roca brand as far as investment point of view is concerned. Following are some of the factors that will become threat for the Roca brand in order to launch its product in the Egyptian market.
Economic and Political Uncertainty
One of major threats for Roca brand is to look on economic as well as political unrest in the Egyptian region. Both of these macroeconomic threats are mandatory to examine for any organization to expand its business operations. Roca’s brand shouldn’t be able to commence its operations because it will definitely become ineffective for the company to do so. If both of these aspects could be in a positive shape then Roca may launch its new operations in the Egyptian market.
Government Policies
The other factor that is crucial to decide the launch of Roca is the unfavorable government policies. This is also considered as vital determinant to launch a product or service. If government policies are not supportive for the company then it would not be feasible to enlarge product development process. So this is also a major threat for Roca that prevents it from launching a new product because same situation is found in the Egyptian economy.
The Arab Spring
The Arab Spring was a major factor that led to social unrest in number of Arabian countries including Algeria, Jordan, Yemen, Libya, Morocco, Syria, Egypt and other number of countries in the territory. It is also a major threat for Roca because all the Arab countries are still suffering from it including Egypt.
Currency turmoil
If any organization wants to invest in a particular region, then it must look on the currency whether it is stable or not. This factor also not favors Roca’s corporation because as a consequence of Arab Spring, it caused currency turmoil in number of Arab countries including Egypt. When country’s currency is not in a good shape, then it will create a disastrous situation for investors, same is the case found in Egypt in the form of unstable currency.
Furthermore, the idea of Roca to launch new product via commencing local campaign seems to be difficult in the highlights of the above mentioned facts. It is clear that if a company wants to increase its product line, then it must evaluate all the pros and cons by conducting various analyses such as EFE (External Factor Evaluation) Matrix. EFE provide all the information that is beneficial for the investors for the sake of investing in a desired market. It tells what the opportunities for the organization to catch and what the potential threats are (Shinno, 2006). To conclude the discussion, it would be quite true to say that Roca shouldn’t consider to increase its product line via domestic campaign. On the contrary, Roca should look for other alternatives to consider in the form of market development or joint ventures with other organization outside the country. To summarize the discussion; let’s look SWOT and PEST analysis:
SWOT Analysis
Strengths
- Worldwide leader in the bathroom industry
- Global presence in 135 countries.
- Offering extensive range of products as compared to its rivals.
- Strong brand image
- Products based on utmost designs and innovations
Weaknesses
- Roca became under inspection for its domestic and global operations.
- Limited market share
- Business models is heavily reliant on local manufacturing
Opportunities
- Roca should expand its operations at global level.
- Real estate sector is booming at an express pace.
- To capture the Egyptian market
Threats
- Immense competition level from domestics as well as global brands
- Economic, Political and social unrest found in Egypt caused threat for designing marketing strategy.
- Cost of shipping sanitary ware is extremely expensive
PEST Analysis
Political Factors
- Government may influence the economy in Egypt in the form of unfavorable policy for the investors.
- Majority of the Arabian countries suffered from Arab Spring due to political instability.
- Political uncertainly may be a threat for Roca in order to launch its campaign in Egypt.
Economic Factors
- The economic outlook is troubleshooting in Egyptian markets.
- OECD declared the huge amount of economic risk in Egyptian economy.
Social Factors
- Low customers purchasing power.
- Human rights violations caused as a result of Arab Spring.
- Social unrest hits investors
Technological Factors
- Products are entirely based on latest technological designs and innovations.
Question2: If finally the decision is to go ahead with the launch, what would be more appropriate, the global or the local one?
Solution No.2
During the year 2012, Roca’s corporation operated in more than 132 regions all around the globe successfully as a consequence of adopting global expansion and acquisitions strategies. Out of all, three Roca’s brands recognized as global products such as Laufen, Armani-Roca and Roca. It is recommended for Roca’s corporation to increase its business operations at a global level. Global expansion favors a lot to the Roca’s corporation because of its strong brand image in sanitary and bathing items.
Global campaign benefits to Roca in Egyptian Market
Increase Market Share
By increasing operations at a global level, Roca will be able to increase its market share at a significant level. When Roca will offer its products to a diversified group of people in Egyptian market, it will increase its sales and revenue. As Roca already captured market in more than 132 destinations, it will assist them a lot if it further expands it operations in Egyptian economy.
Strengthen Customer’s base
Roca has already established as a trademark for other brands in sanitary and bathing products. To enter in Egyptian market means added enormous group of customers for the Roca. There are several benefits for the Roca brand as a result to capture in the Egyptian market. Roca should realize that Egyptian customers are a best resource of a marketing tool for them; the more they satisfied the more they share their experiences with other people. Similarly, if Roca unable to retain Egyptian customers by offering improved products and services, then it cannot get success in the Egyptian market. Displeased customers always share their bad experiences more than do by pleasing customers, so it is the responsibility of the Roca to launched its global program in the Egyptian market as per the needs and wants of the customers (Jalkala and Salminen, 2010).
Promote Multiculturalism
To capture to Egyptian not only favors the organization in numbers but it also entirely change the organization’s culture due to the induction of numerous people belong from Egyptian cultural background. Roca’s employees not only work with Egyptian people but will also learn its cultures as well. It will be a great learning curve for the Roca to increase its operations in Egyptian market. Consequently, Roca’s employees become much more aware with the Egyptian economy. (Delle Fave and Bassi, 2009).
Cash Foreign Investment
Foreign investment favors the country in a significant manner as it eliminates poverty and unemployment from that country. Roca will be able to facilitate Egyptian economy in a number of ways; accordingly it will conduct numerous operations within the Egypt in the form of joint ventures and acquisitions. By launching global campaign in Egypt, Roca could get an opportunity to become market leader by offering improved products in the Egyptian market. When Roca’s management hires the staff of a Egyptian territory, it will favor that country in the form of stabilizing employment and economic stability. As a result, the Egypt administration always facilitates Roca’s corporation to conduct business in their territory.
Fortifies Brand Image
By initiating global campaign in Egypt, Roca’s brand image will strengthen in a noteworthy manner. Once the Roca becomes able to successfully launch global operations in Egypt, its brand image will be promoted in the Egyptian economy and ultimately it will turned out to greatest strategic initiative for them. Not only this, it will also increase Roca’s sales and revenue in the form of adding Egyptian customers.
Market Development
Market development is also another positive outcome for Roca’s corporation after implementing global market strategy in Egypt. By commencing operations in Egypt, Roca will be able to identify new geographical location. If Roca will be successful in carry out global operations in Egypt, it could become an industry giant in that territory as well. Successful global campaign in Egypt will consequently strengths Roca’s sales and revenue on long-term basis. For making global campaign successful in Egypt, Roca must look all the macroeconomic factors that may prove to be threat for them in order to capture Egyptian market. In addition, Roca should also examine the potential opportunities and threats in Egyptian economy to become top industry rival.
How Local Campaign is Favorable for Roca
Roca must examine with studying national indices like GDP (Gross Domestic Product) and Per Capita Income of the Egyptian customers. If would be more appropriate for Roca to delve thoroughly to the facts and figures in order to find the data regarding number or people who can afford the company’s product. This provides the strong basis for carry-out domestic campaigns in Egyptian market. Roca should also let its economist and researchers stay in the Egyptian market for a sufficient time span to continuously evaluate the Egyptian customers buying behavior. Ultimately by carry out local campaign in Egypt in this kind of manner, Roca’s management will easily find the number of customer’s buying behavior that could be able to get the Roca’s product in Egypt.
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