VYSOKÉ U ČENÍ TECHNICKÉ V BRN Ě BRNO UNIVERSITY OF TECHNOLOGY FAKULTA PODNIKATELSKÁ ÚSTAV EKONOMIKY FACULTY OF BUSINESS AND MANAGEMENT INSTITUTE OF ECONOMICS ENTRY OF THE NOBILIS TILIA CO., LTD TO THE GERMAN BEAUTY INDUSTRY VSTUP FIRMY NOBILIS TILIA, S.R.O. NA NĚMECKÝ TRH S KOSMETIKOU DIPLOMOVÁ PRÁCE MASTER’S THESIS AUTOR PRÁCE Bc. LENKA DUDROVÁ AUTHOR VEDOUCÍ PRÁCE Ing. ROBERT ZICH, Ph.D. SUPERVISOR BRNO 2010 ABSTRACT The main topic of my diploma thesis assignment is to evaluate whether the Nobilis Tilia Co., Ltd should extend its action of enterprise by expanding to another country, to be exact, to German beauty market. The whole work is subsequently divided into three essential parts – theoretical, analytical and project one. In the theoretical part literary sources focused on strategic enterprise management are evaluated. The analytical part of the thesis is bent on the Company Nobilis Tilia, Ltd, its history and range of products. In the next part the entrepreneurial environment analysis, Porter analysis and SWOT analysis of the German market will be mentioned. The project part will be concentrated at the recommendations given, based on the analysis results. Key words : strategy, strategic management, internal analysis, external analysis, SWOT analysis, competitive advantage, competitiveness, export, Germany ABSTRAKT Hlavnou témou mojej diplomovej práce je zhodnotenie, či má firma Nobilis Tilia, s.r.o. rozšíri ť svoje podnikate ľské aktivity na zahrani čné trhy, konkrétne na nemecký trh s kozmetikou. Celá práca je postupne rozdelená do troch hlavných častí – na teoretickú, analytickú a návrhovú. V teoretickej časti sú zhodnotené poznatky získané z literárnych zdrojov zameraných na strategický management firiem. Analytická čas ť sa zaoberá firmou Nobilis Tilia, s.r.o., jej históriou a portfóliom produktov. Následne je spracovaná analýza vonkajšieho obecného prostredia, Porterova Analýza Piatich Síl, SWOT analýza nemeckého trhu s kozmetikou. Návrhová čas ť práce ponúka preh ľad odporú čaní, založených na výsledkoch spomínaných analýz. Kľúčové slová : stratégia, strategický management, analýza vnútorného prostredia, analýza vonkajšieho prostredia, SWOT analýza, konkuren čná výhoda, konkurencieschopnos ť, Nemecko, vývoz TARGETS SETTING As a topic of my diploma thesis assignment I chose an estimation of the possible entry of the Nobilis Tilia Co., Ltd to the German cosmetics market. To fulfill the task I am obliged to respond to these issues: - Why is it necessary to elaborate analyses as an entrepreneurial environment analysis, SWOT analysis, Porter's Five Forces and eventually others? - What are the most important findings from these analyses for the Company? - What kind of strategy is held in this Company nowadays? What are the eminencies and weaknesses of it? - What strategy should the Company follow to compete on international level successfully? - What are my proposals for the Company (based on the analytical part of the work)? WORK METHODOLOGY For elaboration of my master thesis I drew the information from scientific publications borrowed mainly from Moravian Library and Libraries and Learning Resources of Nottingham Trent University. Another information channel I have used frequently was the internet. I was trying to avoid the untrustworthy sources and concentrated at first-rate servers. I have focused my attention on German cosmetics market, global competitiveness reports, and economic circumstances of Germany etc. Very important and helpful sources of advice were internal materials from the Company Nobilis Tilia. The contents of my independent work consisted of study of the borrowed publications, internet articles and internal materials associated with my topic. Examination and selection of suitable information followed. Further step of my task was to make analyses based on the materials collected. The last part of the thesis belongs to my interpretation of the results and recommendations given to the Company. Bibliographic citation DUDROVÁ, L. Vstup firmy Nobilis Tilia s.r.o. na n ěmecký trh s kosmetikou . Brno: Vysoké učení technické v Brn ě, Fakulta podnikatelská, 2010. 143 s. Vedoucí diplomové práce Ing. Robert Zich, Ph.D. Statutory declaration Herewith I declare that submitted diploma thesis 'Entry of the Nobilis Tilia Co., Ltd to the German Beauty Industry' is authentic and written independently. I also pronounce that citation of resources used in this thesis is complete, in compliance with norm ISO 690 and copyrights are not infringed (in the sense of Act. No. 121/2000 Coll., on Copyright Act. and on laws related to copyright Act.). In Brno, 31 st August 2010 ______ _____________________________ Personal signature of the Author Acknowledgments I would like to express my thanks to Ing. Robert Zich, Ph.D. for his admirable willingness and patience during the tutorials, his guidance was exemplary. My acknowledgments are also pointed to Magda Pýchová, the Managing Director of Nobilis Tilia, Ltd., for the useful internal information about the Company. TABLE OF CONTENTS INTRODUCTION............................................................................................................12 I. THEORETICAL PART ...................................................................... 13 1. ANALYSIS OF THE COMPANY ...................................................... 14 1.1 Analysis of internal environment .......................................................... 14 1.1.1 Framework of McKinsey..................................................................................14 1.2 Analysis of external environment.......................................................... 15 1.2.1 General environment analysis ..........................................................................15 1.2.2 MAP analysis....................................................................................................15 1.2.3 Analysis of industrial environment...................................................................16 1.2.4 Industrial attractiveness....................................................................................16 1.3 Key success factors................................................................................ 17 1.4 SWOT analysis...................................................................................... 18 2. STRATEGY .................................................................................. 19 2.1 Strategy hierarchy.................................................................................. 20 2.2 Strategies on Stage of Operations ......................................................... 22 2.3 Generic competitive strategies .............................................................. 23 2.3.1 Strategies of differentiation..............................................................................23 2.3.2 Scope Strategies................................................................................................25 2.4 Strategies of entry.................................................................................. 26 2.4.1 Global strategy..................................................................................................26 2.4.2 Internationalization...........................................................................................27 2.4.3 Foreign market entry modes.............................................................................28 2.4.4 How to choose the right entry strategy?...........................................................36 2.4.5 Competitive advantages from a global strategy ...............................................39 2.4.6 Drawbacks and risks of the global strategy......................................................40 II. ANALYTICAL PART ..................................................................... 43 3. INTRODUCTION OF THE COMPANY ............................................. 44 3.1 Essential data about the Company......................................................... 44 3.2 Development of the Company in time .................................................. 44 3.3 Product portfolio.................................................................................... 45 4. ANALYSIS OF INTERNAL ENVIRONMENT .................................... 46 4.1 Framework of McKinsey....................................................................... 46 4.2 Financial position of the Company ....................................................... 49 5. ANALYSIS OF EXTERNAL ENVIRONMENT ................................... 50 5.1 Chemical industry overview.................................................................. 51 5.1.1 Development of chemical industry in Germany ...............................................51 5.2 Industrial attractiveness......................................................................... 52 5.2.1 Bargaining power of buyers .............................................................................60 5.2.2 Bargaining power of suppliers..........................................................................63 5.2.3 Threat of new entrants......................................................................................65 5.2.4 Rivalry among existing competitors.................................................................65 5.2.5 Competition from substitutes ...........................................................................70 5.2.6 Conclusion of Porter's Five Forces Analysis....................................................72 5.3 PEST and MAP analysis