The organization is in the private sector and therefore, the application of partnerships is essential especially to the limited partnerships and the corporations and they also form the primary sources of investments and funds for the company. There are two methods of entry which Lush Company can use to enter into the business and this includes, the use of licensing and corporation. Lush is also a UK based company and hence the American Foreign Corruption Acct will not be applicable to it and hence it will only comply with the UK Bribery Act. Such an act will help in ensuring that all the rules and regulations are adhered to continuously during the strategizing and corporate decision making issues.
Based on the company’s PEST and SWOT analysis, certain key areas in regards to the opportunities and strengths of the company have been identified and this, therefore, displays some of the essential sections which the firm can grow and expand in the future. A fundamental growth area of the company is related to product marketing typically for certain specific regions and target customers who the cosmetic items are being offered to by Lush Limited Company. There are certain things which the company should do in order to become successful in the Chinese market and this entails meeting the needs and requirements of their target audience including the key consumers of their products.
Further, the company’s exit strategy and level of finances advocate for an expansion into the Chinese market. The success of the corporations is affected by the foreign exchange market which has a key role in the currency exchange rates and money supply in the economy. Lush Limited Company’s exit strategy entails the sale of the corporation to a particular public organization. The other exit strategy could be to shut down the operations of the business and liquidate its assets and pay off for all the liabilities.
The mission statement of Lush Handmade Limited Company is to make their products using hand by use of vegetarian preservatives and ingredients. Using the open commitment and transparency, the company offers information on their commitment to vegetarian, cruelty free and natural products to a variety of individuals.
The company is located in Poole, Dorset, United Kingdom. The key founders of the firm are Liz Weird, who was a beauty therapist and Mark Constantine, a trichologist. The cosmetic products of the company are provided for various nations precisely over 40 countries. Such countries may include, Japan, South Korea, and Russia who form the primary players in the Eastern part of Asia (Wakefield-Rann, 2017). Lush Limited is seeking to expand into China for a variety of reasons, however, such an expansion is likely to be faced with certain challenges in regards to culture, legal issues and ethics among others. In the past, China has been faced with certain political upheavals, however, that has changed since the government has become stable with more focus on the economic development and maintenance of stable economic conditions. The above mentioned issues will typically create a stable environment which will allow for expansion of Lush Handmade Limited in China. Additionally, the country China has a communist government and hence its ruling is based on certain strict regulations. However, recently there have been attempts to unite the nation and thus stop more fighting with the aim to adopt capitalism into the country
A key legal challenge which the company is likely to face is that relating to the registration of the company and also the approval of their products and this is because a lengthy procedure is involved. Also, the rule of law is weak and this includes the inconsistency in the application of the regulations making the whole process inconvenient. Besides, the legal challenges, there are also ethical and cultural challenges (Di & Arbajian, 2014). For example, there is a value given to a community by the country. It would be prudent for the company therefore to comprehend the differences in culture of the citizens of China. One of the key cultural difference among Chinese is that the elderly in the society is to be treated with a lot of respect and dignity. Additionally, the Chinese community tends to save a lot and this is unlike in the western communities. The Chinese do not typically spend on certain useless items such as the cosmetics using their hard earned cash. The company would only be able to sell if they respect the culture and beliefs of the Chinese society.
The firm is a private company and hence it has just a small amount of shares which is availed for subscriptions. Further, its growth mainly depends on partnership and therefore its structure is based on a limited partnership which allows only the business partners to be investors (Di & Arbajian, 2014). The top chain of command is headed by the two founders and thus they make most of the decisions of the making pertaining to operations and various strategies of the firm. The company also aims at using a mixture of the decentralized and centralized organizational structure to meet their various needs.
The primary aim of the Foreign Corrupt Practices Act was to prevent acts of bribery to the outside authorities which were done by the organizations based in America. The key purpose of the Foreign Corrupt Practices Act was to reduce the provision of corporate gifts to the outside authorities. The act required various companies to do a number of things and such include, the keeping of accurate and clear, books and records by such firms (Koehler, 2015). Also, the guarantor who had enrolled with the Securities and Exchange Commission to carry out an accurate bookkeeping process. Further, the cases of bribery by the American partnership of the foreign authorities were not allowed by the act. However, the act was altered in 1988. The UK Bribery Act is considered as a guide to Lush Handmade Company and hence it has to abide by all the rules and regulations indicated in the Act.
The company’s niche in the market entails offering of cosmetics and also the socially responsible behavior (Komatsu Cipriani, 2017). The target market for the firm will be mainly high income and middle income earning classes. The other target audience for the firm will be women who are aged 18-45 and this will be the major target for its products.
One of the fastest growing markets today is the cosmetic industry. The key trends in the industry entail sustainable selections which are considered to be environmentally friendly. However, the choices happen to be efficient and effective. In the recent past, there has been a trend in technology and innovations and this, therefore, implies that beauty and natural are equivalent to skincare (Moraes, 2018). The industry is also big in size and this has therefore attracted a large number of competitors, however, there are chances that Lush Handmade is likely to succeed.
The European Commission has passed certain laws which have made it illegal for various companies to offer items which have been tested on animals (Bush, 2017). Additionally, there has been a decline in the trade barrier and this is because it has been found out that the taxes and customs duties imposed make penetration into the foreign market difficult.
Generally, there is an increase in the purchasing power by the customers and this, therefore, means that much products of the company is likely to be purchased (Danzig, 2018). Also, there has been an increase in the inflation causing a rise in the cost of raw materials.
In the social aspect, most of the customers demand environmentally friendly products. Also, the number of families without children has risen and thus there will be an increase in expenditure on luxury products. Further, the middle class has risen and hence they can afford certain luxury cosmetic items.
According to Bush (2017), in the technology aspect, there is an increased investment in the online buyer’s market. Also, there is an investment in technology especially on the natural beauty products whose aim is to change the skin.
The key strengths of the company entail, the development of a distinctive retail format which enables the consumers to identify its brand (Bull et al., 2016). Also, the company provides back to the community and this involves campaigns on the corporate social responsibility.
The prices of the cosmetic products are expensive making them non-affordable by the lower class (Blockeel, Drakopoulos, Santos-Ribeiro, Polyzos & Tournaye, 2016). Also, many individuals are not familiar with the brand and hence it is not identified globally.
The key opportunities for the company entail the Going Green aspect which has provided the company with the opportunity to develop a new industry (Bull et al., 2016). Also, most individuals have developed a passion for organic, healthy and fresh body care and skin items and hence the company will make more sales.
There are also various threats such as the existence of the other cosmetic items. Also, there are much cheaper cosmetic products compared to those of Lush Handmade Limited (Blockeel et al.,2016).
According to Epstein (2018), there is likely to be an impact on the company’s products by the social culture and this is because it operates in over 40 countries. The Asian culture is considered to be quite different from those of the western cultures and this is epically in regards to cosmetic products and hence the company needs to consider that when expanding to China. Additionally, the company will certain products which are Chinese consumer based and such products should be able to preserve their natural and skin color (Marshall, McCarthy, McGrath, & Claudy, 2015).
The foreign exchange market is that market one country currency can be converted into another. The primary functions of the foreign market exchange are providing insurance on foreign exchange risk and conversion of currency (Kálmán, Makay & Tóth, 2016). The organizations use the market in relation to the conversion of currency for various purposes such as conversion of money received from a foreign country into home-based currency. The other purpose entails using the market when there is extra money earned by the particular organizations. Additionally, the forex market can be used to provide insurance protection for various risks (Guofeng, 2015).
There are various sources of international funding available for the company as it seeks to expand into China. A key source of finance is from the business investors and this is because it is a limited partnership (Polak & Boughton, 2016). The other source of international financing is through the issue of bonds. The World Bank has a started partnering with the private sectors and hence it is also one of the international sources of finance available for Lush Limited Company (Odell, 2014).
According to Keenan, Maldonado & O’Grady (2016), the exit strategy is used as a mechanism by the organization in ensuring that they can easily get out of a market prior to a particular disaster. When an exit strategy is planned well, it can enable an organization to set its objectives and thereafter attain them optimally. There are typically two types of an exit strategy which can be used by the Company since it is a private company. The first exit strategy could be to convert the company into a public company by selling it. In the above mentioned strategy, the company will typically remain with a huge amount of money (Brown, 2016). The other exit strategy could stop the various operations of the company and later dispose of all the assets.
The feasibility of global venture of the company into China is possible and this is because of the key strategies which have been put in place by the company. The firm is considered to be technologically savvy and innovative and therefore it will offer certain products which are culturally and socially acceptable by the community (Burns, 2016). The company should, therefore, continue to pursue the project and during which it should obtain a variety of investments which will be used to grow the mortar and brick stores to be used in the Chinese market.
References
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Brown, C. M. (2016). Between Rivers: Reflections on home, obligation, and otherness from a confluence of conservation and connectivity.
Bull, J. W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C., … & Carter-Silk, E. (2016). Strengths, Weaknesses, Opportunities and Threats: A SWOT analysis of the ecosystem services framework. Ecosystem Services, 17, 99-111.
Burns, P. (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.
Bush, T. (2017). PESTLE analysis: everything you need to know (2016). Available in: https://pestleanalysis. com.
Danzig, R. (2018). ALTERNATIVE FUTURE SCENARIOS OF AGRICULTURE IN FLORIDA: PESTLE analysis to asses the possible alternative future scenarios fro Florida agriculture within the coming 30 years.
Di, Y., & Arbajian, P. (2014). Understanding alternative choices of handmade cosmetics in the postmodern consumer society.
Epstein, M. J. (2018). Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. Routledge.
Guofeng, S. (2015). Foreign Exchange Market. In Financial Reforms in Modern China (pp. 133-175). Palgrave Macmillan, New York.
Kálmán, P., Makay, E., & Tóth, D. (2016). Foreign Exchange Market. MNB Handbook, 1(7), 1-56.
Keenan, C., Maldonado, V., & O’Grady, B. (2016). Working the streets: An international comparative analysis of income generation among street youth. Canadian Review of Social Policy, (58), 25.
Koehler, M. (2015). Measuring the Impact of Non-Prosecution and Deferred Prosecution Agreements on Foreign Corrupt Practices Act Enforcement. UCDL Rev., 49, 497.
Komatsu Cipriani, T. (2017). The emerging challenge of brand design and brand management in social innovations. The Design Journal, 20(sup1), S3536-S3545.
Marshall, D., McCarthy, L., McGrath, P., & Claudy, M. (2015). Going above and beyond: how sustainability culture and entrepreneurial orientation drive social sustainability supply chain practice adoption. Supply Chain Management: An International Journal, 20(4), 434-454.
Moraes, C. S. D. S. (2018). Are consumers wiling to adhere to Companies’ Environmentally Friendly Packaging?: case study on Rituals and Lush Refill Vs Naked Package (Doctoral dissertation).
Odell, J. S. (2014). US international monetary policy: Markets, power, and ideas as sources of change (Vol. 765). Princeton University Press.
Polak, J. J., & Boughton, J. M. (2016). The World Bank and the International Monetary Fund: A Changing Relationship. In Economic Theory and Financial Policy (pp. 92-146). Routledge.
Wakefield-Rann, R. (2017). More Than Skin Deep: A Service Design Approach to Making the Luxury Personal Care Industry More Sustainable. In Sustainable Management of Luxury (pp. 211-231). Springer, Singapore.
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