Degree of Master in Fashion Management The Swedish School of Textiles 2012-05-21 Report no. 2012.13.24 Expanding into new markets Dana Daoud and Veronica Högfeldt Is Lebanon a potential market for Swedish fashion companies? Visiting adress: Bryggaregatan 17 Postal adress: 501 90 Borås Website: www.textilhogskolan.se Abstract Title: Expanding into new markets – is Lebanon a potential market for Swedish fashion companies? Publication year: 2012 Authors: Dana Daoud, Veronica Högfeldt Supervisor: Lisbeth Svengren Holm Length: 41 pages (excluding attachments) Aim: The aim of the thesis is to describe and analyze the potential in a new and foreign market and the market we chose to define is Lebanon. We want to see if there is any potential for Swedish fashion companies to establish there and what kind of problems and barriers the companies could bump into if they decide to expand their operations to Lebanon. Theory: The theories that the study is based on are Push & Pull, The Uppsala-model, the Internationalization model, international market environments and the entry modes. Method: The research is conducted through personal interviews and observations. Main results: Lebanon is a potential market for Swedish fashion companies. It is a market with a big consumer group that likes to spend money on fashion. Since Sweden is famous for fashion that comes with both good quality and price, it would profit them if they entered the Lebanese market. Companies should travel to Lebanon and experience the market and the potential there by themselves, before they enter it. It is important that companies which are in the starting hole to expand to a new market collect as much information as possible about it before establishing there to be able to succeed. Keywords: Internationalization, Lebanon, expansion, foreign markets, Swedish fashion Acknowledgments We would like to express our thanks and gratitude to the companies who took their time for an interview; Gina Tricot, Lindex, Azadea, Byblorama and IDAL. We would also like to thank our supervisor Lisbeth Svengren Holm, who supported the idea and gave us feedback. It would not have been possible to realize this field study without our parents that helped us during our trip, Taxi Nervous, and our siblings, friends and fellow students who pushed us and gave us valuable comments throughout the process. This has been an amazing experience for us. We hope you appreciate our thesis and find it interesting, Table of Contents 1. Introduction ................................................................................................................. 1 1.1 Background ......................................................................................................................... 1 1.2 Problem ................................................................................................................................ 3 1.3 Research Question ............................................................................................................ 4 1.4 Purpose ................................................................................................................................. 4 1.5 Perspective .......................................................................................................................... 4 1.6 Delimitations ...................................................................................................................... 4 1.7 Terms..................................................................................................................................... 5 1.7.1 Small and Medium Enterprises .......................................................................................... 5 1.7.2 Swedish Fashion and Export ............................................................................................... 5 1.7.3 Internationalization ................................................................................................................ 5 2. Theory ............................................................................................................................ 6 2.1 Push and Pull ...................................................................................................................... 6 2.2 The Uppsala model ........................................................................................................... 8 2.2.1 Critical views of the model ................................................................................................... 9 2.3 The IP model – A network approach .......................................................................... 9 2.4 International Market Environments ............................................................................11 2.4.1 Economic environment .......................................................................................................... 11 2.4.2 Political-Legal Environment ............................................................................................. 12 2.4.3 Cultural/Social Environment ........................................................................................... 12 2.5 Foreign Market entry modes ..........................................................................................13 2.5.1 Exporting ...................................................................................................................................... 13 2.5.2 Joint Venturing ....................................................................................................................... 14 2.5.3 Joint ownership ..................................................................................................................... 14 2.5.4 Direct Investment ..................................................................................................................... 15 2.6 Summary of the Theories .............................................................................................15 3. Methodology .............................................................................................................. 17 3.1 Pre-study ................................................................................................................................17 3.1.1 Summary of the interviews............................................................................................... 18 3.2 Choice of method .................................................................................................................19 3.2 Case studies .......................................................................................................................20 3.4 Personal Interviews ........................................................................................................21 3.4.1 Practical implementation: Personal Interviews ........................................................... 22 3.5 Research Method: Observations ................................................................................23 3.5.1 Practical implementation: Observations...................................................................... 23 4. Empirical research .................................................................................................. 25 4.1 Interview objects ................................................................................................................25 4.2 Themes ................................................................................................................................26 4.2.1 Fashion in Lebanon .............................................................................................................. 26 4.2.2 Culture and Lifestyle ............................................................................................................ 27 4.2.3 Market Entry ........................................................................................................................... 28 4.2.4 Laws and Regulations ......................................................................................................... 28 4.2.5 Political, social and economical factors ....................................................................... 29 4.2.6 Tourism ..................................................................................................................................... 30 5 Analysis ........................................................................................................................ 32 6 Discussion and Further Research ....................................................................... 36 6.1 Discussion ..............................................................................................................................36 6.2 Suggestions for further research ...............................................................................38 7 References ...................................................................................................................... 39 1. Introduction In this chapter we present the background and the purpose of our study. We also discuss the problem for the research, which follows by the research questions and the delimitations. Terms that will be used throughout the thesis are also described and explained herein. Finally, there is a pre-study about Swedish fashion companies’ internationalization process, which was fulfilled through interviews. Today, we are moving towards globalization with an integrated world where the country’s economy and the companies are dependent