Dick’s Sporting Goods Expansion to Hong Kong Essay Example

wars in the sector is severe. As such, Dick’s Sporting Goods maintains competitive pricing and strong supplier relations. It also bundle the cost leadership and supplier relations strategies with other strategies such as good customer service to remain competitive.

Organizational Structure

Dick’s Sporting Goods organization has a hierarchical structure headed by the Chief executive officer Edward Stack who is also the chairman of the board (DICK'S Sporting Goods, 2016). There are various departments in the company such as legal, human resources, marketing, finance and administration.

It is evident that the organization structure at Dick’s Sporting Good relies on division of workload to various departments, accountability of each section, work based on capabilities and a systematic organization process. Venturing into a new market like Hong Kong will demand that the management consider the changes that are likely to emerge. For example, Hong Kong will present a new market with different legal implications, supply dynamics and customer dynamics.

The process of venturing into Hong Kong will see the legal department assess the regulations and laws of operating in Hong Kong. The laws govern issues such as supply, competition laws, corporate governance and tax laws (Guy, 2009). The legal department will have to present the executive management with the legal particulars of operation so that the decision on the viability of operation can be made. The finance department will be affected as due diligence in the Hong Kong market will present financial information on the set up costs and other supply associated costs. Additionally, the human resources will be involved in the assessment of labor for operation. The supply department will need to examine the distribution channels to access the viability of

operation.

The foreign culture will also influence how the organization behaves. The company will be forced to operate in manners that is consistent with the culture of the people in Hong Kong (Fenn, Leung, Chan, Chong, & Tse, 2014). Many of the people in the country have a Chinese background. As such, it will necessary for the organization to operate with courtesy, respect, and accountability.

Legal Structure of the Business Expansion Effort

Dick’s Sporting goods is a publicly traded corporation listed in the New York Stock Exchange. The management of the company sets out to establish increase the value of the company by exploring avenues that will benefit the company. A decision to venture into THE Hong Kong market would focus on tapping into benefits in the country while also avoiding the limitations in that might emerge in the new market. The option to expand overseas not only presents the management with a tough task of assessment but also several uncertainties. One of the consideration that the company must consider is its legal structure as well as the legal implication of moving. The legal implication requires a thorough analysis of the legal environment in Hong Kong to ensure assess whether they would allow the business to expand.

There are rules and regulations governing business incorporation and operation in in different countries that need to be observed. A viable decision to move into Hong Kong would consider the ease of business registration or incorporation in the country. The ease of incorporation would encourage Dick’s Sporting Goods to move to venture into Hong Kong. This would ensure that the company not only operates legally but also operates in a good business

environment. It would also be necessary to assess whether Hong Kong offers a regulatory environment that is relaxed to allow risk taking, business growth, and innovation.

Laws governing financial transaction, distribution and labor must be consistent with the goals and objectives of the company. For example, tax laws are necessary to estimate the profitability of the company in Hong Kong. Tax laws influence the finances of the company. As such, an appropriate decision would consider a country that has better and easy tax laws that ease the process of financial transactions (Fernie, 2005).

In addition to a legal environment that facilitates easier financial transactions, it is important to consider the legal requirements governing the acquisition and management of the human resources. Matters of minimum wages and a company’s responsibilities to its employees are necessary to ensure that the Dick’s Sporting Goods is consistent with Hong Kong regulations. Compliance with all the rules and regulations is the key to smooth operation in Hong Kong. Dick’s Sporting Good’s legal department would be responsible for the evaluation of the legal environment in Hong Kong and deliver the information to the executive team to use it along with the analysis of other components such as the political and cultural environment to make a decision.

Political and Cultural Analysis

A business that intends to set up operation in a foreign country must consider the political stability and the nature of policies in the country. A political system that is democratic in nature offers a stable business environment, respect to rights and freedom. On the contrary, a totalitarian system of government is risky for businesses because it does not offer guarantee for respect of constitutional

freedoms or rights. The imposed authority implies that the government is very controlling of business process, prompting the rise of corruption to operate in the country (Hill & Requejo, 2011).

Additionally, the political ideology employed by a county is a source of opportunities and challenges. The political ideology affects the foreign governments’ attitudes towards foreign direct investments and profit repatriation. The government of a country can also influence policies of taxation, property, product liability, and safety. Hong Kong is a special administrative region, employing a political system that differs from that of China. The country enjoys relatively high political stability and security (Fenn, Leung, Chan, Chong, & Tse, 2014). The country political system and undertaking favor foreign investment and establishment of foreign businesses.

Hong Kong social-cultural landscape is a mixture of traditional chines values and western influences. Hong Kong was colonized by Britain. It still bases its major systems such as legal systems on British foundations. The people’s culture is partly influenced by western ways as imposed by the British. Majority of the Hong Kong people are also well educated. It makes the people more open-minded and receptive to foreign components that others in the region. However, it Chinese cultural influence is still existent (Fenn, Leung, Chan, Chong, & Tse, 2014).

The working environment is characterized by business procedures that expect full commitment. It is important for business officials and workers to familiarize themselves with the components of the local culture, probably learn Cantonese. In general, the presence of a western influence on the culture of Hong Kong would present an opportunity for Dick’s Sporting Goods. It can be easy to integrate into the culture and perform business

with ease as many people also understand English.

Human Resources and Personnel Plan

The company would need to access the availability of human resources to support its operations. Additionally, there would be need to develop personnel strategies to retain the employees and keep them motivated. It would demand using a recruitment strategy that focuses on the desired qualities that support the company’s objectives and goals (Fernie, 2005). For example, hiring responsive employees who are familiar with the culture of Hong Kong would be essential. Additionally, it would be essential to train employees to impart the organizational values (Guy, 2009). A proper remuneration plan would help the employees to retain motivated. A good remuneration plan offers suitable benefits and rewards for the employees that perform well.

Market Analysis/ Marketing and Sales Strategy

The Hong Kong is competitive, with several high-end companies producing goods for the local market and export. Hong Kong is one of the world’s principal suppliers of sporting goods. Sports footwear, sports apparel and sports accessories and equipment account for 7.4%, 26.8%, and 65.8% respectively.

The company’s target market in Hong Kong would be individuals, sports teams and other professional establishments. It would take intense marketing promotion strategies to carve out a place in the Hong Kong market. It would be wise for Dick’s Sporting Goods to utilize sales channels such as selling in specialty stores, traders, and discount stores to create awareness. As a promotion strategy, the company should participate or stage trade fairs (Montgomery, Made for Success (Firm), & Blackstone Audio, Inc, 2011).

It should also employ aggressive advertising in social media, video media, and print media. An online marketing strategy using specialized media outlets or advertising companies

would help the company to establish an online presence. It should also employ discounting pricing strategies to establish a market presence by luring customers. Introducing a variety of its quality products in the market would combine well with the other strategies in Hong Kong.

Strategy and Implementation

The company can gain competitive advantage in the new market by employing strategies such as expanding its online presence, building strategic partnerships with other sports goods retailers in Hong Kong, and implementing incremental changes (Mun, 2010). The appropriate entry strategy would be to align with distributers in the new market. Since the company has a strong financial power, strong supply chain management and brand recognition. It can tackle its shortcomings of a weak online presence. The funds and recognition can help the company build strong supply chains and improve e-commerce (Guy, 2009). It can also improve communication with the customers by setting up online customer service portals. It can also tackle the threats emerging from other competitors who see the Hong Kong market as a lucrative market.

Financial Plan

The company would need to consider several assumption in devising a financial plan to venture in Hong Kong. Some important assumption would be that there won’t be a major recession and that Dick’s Sporting Goods has enough finances to maintain the financial plan. For the break-even analysis, the running cost, payroll and rent expenses are also assumed. The figure below shows the break even analysis for the first month of operation for the footwear sales of one store. According to the graph, it would require the store to sell an estimated 1200 units to reach the break-even point.

Corporate Social Responsibility Strategy

Dick’s Sporting Goods

has a corporate social responsibility strategy of helping the community. It has a Community Youth Sports Program that aims to provide sports equipment to sports organization for the youth (DICK'S Sporting Goods, 2015).

The focus is to reach more than a million youths. This program is relevant and timely. It would apply to the business operations in Hong Kong. Helping the youth around its areas of operation would signify the company’s good intentions for the community. The company can also expand its corporate social responsibility by shunning ignorance on matters of sustainability by going green. It can improve its image by selling green products. This would show that the company is environmental friendly.

Executive Summary

Dick’s Sporting Goods is a renowned sports goods retailer dealing with sports apparels, sports footwear, and equipment. It has established itself as a force in the American market by opening many stores and establishing a brand reputation. It is known for competitive pricing and good customer service.

The company has a strong organization structure that is based on a hierarchical structure where there are divisions to deal with different functions of the business. For the company to expand to Hong Kong, it would demand a proper analysis of the rules and regulations that govern business operations. It would also require a financial plan that funds the set up and operational costs. It would also require a marketing strategy that focus on differentiated products, intense promotion using social media and other media outlets. It would also require well-trained and motivated workers.

Hong Kong is ideal because the political climate is stable and the cultural environment is accommodative. In addition to a strategy that entails working with

already established distributers and retailers in Hong Kong, the company can establish itself by showing concern to the environmental issues of concern as a social responsibility. It can show concern by “going green”. Most importantly, the company would need to evaluate the Hong Kong business environment constantly to keep up with the emerging changes.

References

1. DICK'S Sporting Good. (2015). Culture & Values. Retrieved July 19, 2016, from http://www.dickssportinggoods.jobs/about-us/culture-and-values/
2. Fenn, L. K., Leung, E. W., Chan, T. P., Chong, K. Y., & Tse, T. T. (2014). Doing business in Hong Kong and investing in Mainland China. Wiley.
3. Fernie, J. (2005). International retailing. Bradford, England: Emerald Group Pub.
4. Guy, F. (2009). The global environment of business. Oxford: Oxford University Press.
5. Hill, C. W., & Requejo, W. H. (2011). Global business today. New York: McGraw-Hill Irwin.
6. Montgomery, L., Made for Success (Firm), & Blackstone Audio, Inc. (2011). Online business promotion. Ashland, Or.: Blackstone Audio, Inc.
7. Mun, H. (2010). Global business strategy: Asian perspective. Singapore: World Scientific.