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Padini is a Malaysia-based investment company that started as a garment manufacturer and wholesaler in 1982. It has since expanded to become a leader in the textile and clothing industry in Malaysia, operating various brands like Padini, Seed, and Vincci through over 800 standalone stores and franchised outlets globally.
Padini utilizes franchising and retailing strategies to expand its business internationally. Through franchising, Padini allows franchisees to operate its brands in foreign markets using the company's business model in exchange for fees. Retailing allows Padini to directly operate and sell its wide range of fashion products through over 800 stores worldwide, gaining brand recognition and increased sales volumes in foreign markets. While these strategies help Padini
Padini is a Malaysia-based investment company that started as a garment manufacturer and wholesaler in 1982. It has since expanded to become a leader in the textile and clothing industry in Malaysia, operating various brands like Padini, Seed, and Vincci through over 800 standalone stores and franchised outlets globally.
Padini utilizes franchising and retailing strategies to expand its business internationally. Through franchising, Padini allows franchisees to operate its brands in foreign markets using the company's business model in exchange for fees. Retailing allows Padini to directly operate and sell its wide range of fashion products through over 800 stores worldwide, gaining brand recognition and increased sales volumes in foreign markets. While these strategies help Padini
Padini is a Malaysia-based investment company that started as a garment manufacturer and wholesaler in 1982. It has since expanded to become a leader in the textile and clothing industry in Malaysia, operating various brands like Padini, Seed, and Vincci through over 800 standalone stores and franchised outlets globally.
Padini utilizes franchising and retailing strategies to expand its business internationally. Through franchising, Padini allows franchisees to operate its brands in foreign markets using the company's business model in exchange for fees. Retailing allows Padini to directly operate and sell its wide range of fashion products through over 800 stores worldwide, gaining brand recognition and increased sales volumes in foreign markets. While these strategies help Padini
Padini is a Malaysia-based investment company which headquarters located in
HicomGlenmarie Industrial Park, Shah Alam In !"#!, Padini $ounded as proprietorship under the trade name Hwayo Garments Manu$actures %ompany Initially, Padini was a manu$acturer and wholesaler o$ ladies wears A$ter that, Padini added men&s and children&s lines to its o$$erin's It entered the retail industry with $la'ship brand Padini in !"#( Padini&s $irst sin'le-brand store distributin' Seed was opened in Sun'ai )an' Pla*a, +uala ,umpur in !""- .ow, Padini has become a leader o$ multibillion te/tile and raiment industry in Malaysia 0he ma1or subsidiaries o$ Padini includes 2incci ,adies& Specialities %entre Sdn 3hd , Padini %orporation Sdn 3hd, Seed %orporation Sdn 3hd, Padini 4ot %om Sdn 3hd, 0he .ew )orld Garment Manu$actures Sdn3H4,Padini International ,imited,and others 5PA4I.I 6AMI,7, -8!-9 It has ::8 stand-alone stores, consi'nment counters and $ranchised outlets in Malaysia and around the world 0he vision o$ the Padini is to be the best $ashion company ever 0hey are committed to achievin' this 'oal throu'h hard work, discipline and creative endeavor 5PA4I.I, -88#9 In today business, one success$ul or'ani*ation not only rely on luck, they also need to 'rasp all the chances that 'iven Globali*ation has created many opportunities $or those or'ani*ations to e/pand their businesses internationally Globali*ation also has stren'thened the world economy in the aspect o$ markets and production 0here$ore, this is the ri'ht timin' $or the Padini to develop their business internationally Padini e/pands and enters $orei'n marketplace by usin' mode o$ entry Mode o$ entry is the channels used by the or'ani*ation to entry international market 0he mode o$ entry use by Padini is throu'h $ranchisin' o$ one or all o$ their strate'ic business units such as Seed, 2incci and so on 5Padini Hodin's 3erhad, -8!-9 0heir entry into Saudi Arabia, ;'ypt, 3ahrain, Pakistan and others are usin' $ranchisin' 2.0 Current Expansion Strategy Padini has become a leader o$ local te/tile and 'arment sector, which they carry the Made-in-Malaysia stamp $or the abroad e/port market Padini has a wide variety o$ products ran'in' $rom men < women 'arments, shoes, accessories, and so much more Padini has currently e/pand their business into variety o$ brand such as 2incci, 2incci Accessories, Padini Authentics, P4I, Padini, Seed, Miki, and P<%o 2incci is one o$ the brands that has success$ul venture into the abroad market such as 0hailand, =atar, Pakistan, 3ahrain, ;'ypt, Morocco, 3runei, Philippines, Saudi Arabia, >man, Syria, Indonesia, ?nited Arab ;mirates and %ambodia Accordin' to Padini annual report -8!-, 0i*io is a new brand has been launched in .ovember 0he store sells a variety o$ shoes, which are created by in-house desi'ner, while ba's and accessories are imported in $rom +orea Padini has been reco'ni*ed as Malaysia 0op :8 Most 2aluable 3rands in -8!- and valued by Interbrand at @M-A8 million 0his awards has indicate Padini is a best and most pre$erred brand by the customers because it have di$$erent o$ brand can be choose by customer .ot only that, middle and low income o$ customers also can buy the product $rom Padini because the price is reasonable 2.1 Franchising 6ranchisin' is a channel o$ distribution which will be the entrepreneur&s choice and also as a way to promote and e/pand their business by usin' the scarce resources, minimi*in' a'ency related e/penses, and promotin' e$$iciency in their business operation 5Michael, !""A9 Accordin' to Padini annual report o$ -8!:, Padini currently has nine labels in its $amily o$ brands which are 2incci, 2incciB, 2incci Accessories, Padini Authentics, P4I, Padini, Seed, Miki, and P<%o %onsumers can $ind easily all o$ the brand in ma1or urban o$ a shoppin' mall Padini has "! $ree standin' stores in Malaysia $or each o$ the brand Similarity, Padini has !(8 consi'nment counters are operated and run at a shoppin' mall in Malaysia In the domestic sector, Padini have !C 2incci storess and ! P4I store that is use $ranchisin' distribution channel to e/pandtheir business 3esides, Padini has D8 2incci stores that are usin' $ranchisin' model to operate in international market 5Padini Annual @eport, -8!:9 6ranchisin' model is the $ranchisor allows the $ranchisee to use their $irm&s success$ul business strate'y and model to sell the products or services I$ the $irm lacks o$ the ability to develop enou'h local in$ormation such as 'eo'raphic location and their own mana'erial labour, $ranchisin' may be a way to acquire the intellectual capital that are necessary to e/pand their $ranchise business 54ant and +au$man, -88:9 Padini as the $ranchisor has a si'ni$icant de'ree o$ control over business operations used by its $ranchisee 0he $ranchisor will help the new $ranchisee to 'et o$$ the 'round, providin' advice $or selected location, equipment, sta$$in', trainin' and development and other aspect to start their new $ranchise business As the return, $ranchisor will receive initial $ees paid that will come $rom a percenta'e o$ 'ross revenue, royalties and others $ees 5Sashi < +aruppur, -88-9 6urthermore, a 'ood selection o$ the $ranchisee is also important to the Padini $or its success$ul e/pansion to market 6or instance, to be a $ranchisees must has e/pert work e/perience in te/tile and 'arment industry, hi'h achievement e/perience, stron' workin' ability, knowled'e o$ the speci$ic market and stron' $inancial status 3y $ul$ill these conditions, $ranchisee able to compete with other competitors that $rom the same industry 0here$ore, a 'ood ideas and power$ul strate'ies can be launched by them $rom time to time $or Padini in operatin' their clothin' business 0his will ensure that Padini can stand stable in the domestic and abroad markets ;ven thou'h the $ranchisin' model has helped Padini success$ully to e/pand its $ashion business, but like other business model, it also has bene$its and drawbacks 6ranchisin' channel can help Padini to obtain e/pansion capital $rom the $ranchisee Padini can invest less capital into the its $ranchisee business since $ranchisee have a stron' $inancial status to run their clothin' business Some part o$ the capital will come $rom the initial $ranchise $ees paid such as a percenta'e $rom the $ranchisee 'ross revenue and loyalty $ee 6urthermore, company can 'ain brand ima'e throu'h $ranchisin' channel 3y $ranchise the business around the world, customer will know well that Padini is the success clothin' companies which have variety brands 0his can build out the brand ima'e with the customer and help in company 'rowth rate Innovation challen'es will $ace with the company i$ the $ranchisor has come out the new idea It is di$$icult to innovate throu'h $ranchisin' channel than the company place the idea on its store )hen $ranchisors come out a new idea, they have to ne'otiate with the $ranchisee to 'et their approval on developin' the new idea 4ue to the di$$erent culture and rule in di$$erent countries, the new idea may have di$$iculty to implement in $ranchisee stores Moreover, company will less control over the mana'er that hire by the $ranchisee 6ranchisee is an individual businessE they have a di$$erent 'oal $rom the $ranchisor towards their business operation 0his will easily cause con$lict amon' $ranchisor and $ranchisee 5Hoy, !""C9, and even lead to le'al trouble that can break down the company reputation 0his is because some o$ the promotin' strate'ies such as coupon can be used by $ranchisor but may be not suitable to $ranchisee 2.2 Retailing Moreover, Padini %ompany has used the retailin' strate'y to e/pand their business market 0his is the strate'y how Padini e/pand their business and more toward to 'lobali*e their company @etailin' is known as the $inal step needs to provide their product and service to customer Padini has retail around ::8 $reestandin' stores, $ranchised outlets and consi'nment counter in Malaysia and all around the world 5Padini, -8!C9 3esides that, retailin' must able to attract, retain and recruit a talented work$orce in order to stand up $rom competitor durin' -! century %ompany must provide various type o$ product as their critical strate'yE it has well successes $or Padini 0his is because Padini involve di$$erent brand and product line such as 2incci, Seed, 2incci Accessories, Miki +ids and so on 3esides that, they tar'et customer with various product line such as $ormal wear, kids, accessories, shoes and etc Padini not only retailin' their product in domestic market but also at oversea 0he advanta'e o$ retailin' is retailer is $ound in the valued added delivered to customer, throu'h the per$ormance and activities o$ the company 0his value added must be $irmly based upon customer needs and values 5%arralero-;ncinas, nd9 >bviously, clothes is one o$ the basic need o$ human, Padini provide the valuable deliver to $orei'n country such as 3runei, 0hailand, Iran, Saudi Arabia and so on It is one o$ the competitive advanta'e $or Padini i$ compare with other industry such as hotel industry Another advanta'e o$ retailin' can increase the sales volume and publicity 5+oistinen, -88"9, this is more clearly when the company retailed their market at $orei'n country such as Padini 0his is because company tar'et customer are increased, it will e/ist di$$erent behaviour and culture o$ their customer, company can sells their product and service internali*ation Publicity o$ company will increased, this situation not only happen in local country but it may spread to other country, this is the basic way that the company entre to the international market >n the other hand, the disadvanta'e o$ retailin' is the need clearer understandin' o$ the processes 5%arralero-;ncinas, nd9 It is very important $or a company to understand the source be$ore movin' their business $rom domestic country to $orei'n country Accordin' to certain researcher, they su''est that retailer need to $ully understand the role o$ product, li$ecycle, ima'es and etc which is di$$erent with domestic product in creatin' the advanta'e $or company 6or e/ample, some o$ the country very concern about the protection o$ wild animal, the company which produces the leather product is very challen'in' to enter to this country 0he limitation o$ retailin' also included the 'ap between the host and home environment in $our areas which is outlets o$ store $ormat, consumer behavior, network and environment 5%arralero-;ncinas, nd9 %onsumer behavior is di$$erent in every countries, the most common o$ this problem that happened in clothin' industry is the si*e and colour 6or e/ample, the ran'e o$ si*e in 0hailand is smaller than Malaysia, so Padini %ompany should do some research be$ore retailed their product to $orei'n country 3esides that, environment considered as e/ternal in$luence $or every company 7ou try to ima'ine that your company placed at very remote places and maybe there e/ist some pollution at that area 0his situation will a$$ect the per$ormance o$ company directly 3.0 Future Expansion Tstrategy Increase the competitie adantage 0he competitive advanta'es able to achieve throu'h the acts o$ innovation that occur as a company diversi$ied which brin' new skills and resources to other industry 5Porter, !""89 3y havin' the competitive advanta'es, the company able to protect itsel$ $rom the competitors and the potential competitors It helps the company able to survive in the markets It also can help the company able to compete with other competitor and have more competitive advanta'es to success in the market Expand mar!et opportunity and increase pro"it International e/pansion provides $irms to have potential market opportunities $or 'rowth 53uhner, !"D#9 0he competitive advanta'es that 'enerate pro$itability in home markets stimulate the international company that apply the same competences to $urther enhance its pro$itability 5Porter, !""89 3oth home country and the international country are able to attract more customers and e/pand their current markets It will be increase the sale o$ the business in both countries and create many market opportunities $or the business and countries to 'row Increase the productiity and control cost 3eside, the 'lobal company will be e/ploitin' $rom economies o$ scale 53artlett, !"D"9 ;conomies o$ scale allow $irms to increase their e$$iciency and productivity It makes the countries able to increase their productivity with lower vtariable cost 0he countries may 'et the raw material $rom the international country in a cheaper price #ecrease unemployment rate >ne o$ the importance o$ veri$yin' into a new country $or host country is it will decrease the unemployment rate because when a business is e/panded into a new country, the or'ani*ation will need to hire a number o$ local employees to work $or it Globali*ation creates more 1ob opportunity, when more the $irm e/pand internationally, more work$orces is needed 5@uby 7an1ie %hen9 It will increase the 1ob opportunities and decrease the unemployment rate o$ that new country because there are many 1ob opportunities that can be $ound on the market so many o$ the unemployed work$orces can 'et their 1ob easier Recommendation 3.1 $icensing %ethod )e recommend Padini use licensin' method to e/pand to %hina Padini should have a licensin' a'reement with %hina $or 'rantin' o$ permission to use its intellectual property ri'hts, such as trademarks, patents o$ Padini or technolo'y It can able to allow Padini to take its product to the market without the e/pense o$ settin' up the business locally 52irtuoso ,e'al9 6urthermore, it also provides an instant market access and makes competitors di$$icult to enter into the market and prevents imitators to copy its products 52irtuoso ,e'al9 Since licensin' does not 'ive a $irm the ti'ht control over manu$acturin', marketin', and strate'y in a $orei'n country 5%H9 so it can help Padini to enter into %hina easily because It can help %hina able to accept easily the enterin' o$ Padini since the %hina 'overnment still can control over the business %hina 'overnment intervention in business will a$$ect the e/pansion o$ business into %hina, a bi' portion o$ publicly traded %hinese $irms were controlled by the 'overnment 50he ;conomist, -8!!9 3y usin' licensin' method, it helps or'ani*ation to save more money on research and development e/penses 0he or'ani*ation does not need to conduct a research in the new country and they also do not need pay the e/penses o$ research and development 52irtuoso ,e'al9It helps or'ani*ation to save a lot o$ time and resources since they do not need to conduct the research so they can enter into the market throu'h licensin' in a very $ast speed 0he home country is able to learn the ways that the international country operate the business and 'enerate new product that suitable $or new country&s customers 0he potential cost o$ licensin' is licensin' is less pro$itable compare to others because the incomes must share between two countries 52irtuoso ,e'al9 3.2 &oint 'enture )e also recommend Padini to use 1oint venture strate'y 3asically, accordin' to investopediacom, 1oint venture is de$ined as a business arran'ement in which two or more parties are comin' with an a'reement to pool their resources to'ether in order to achieve the 'oal o$ completin' a speci$ic task 5investopedia, nd9 0he task mentioned can either be a new pro1ect or it can be other business activities In conductin' a 1oint venture between two companies, both parties are responsible $or the pro$its, losses and costs associated with it 6irstly, 1oint venture allows a company to per$orm works pro$essionally which helps to increase the implementation o$ plan to be conducted smoothly 0he 'roupin' o$ two or more companies allows each company&s pro$essions to work to'ether )ith more e/pertise 'athered and worked to'ether, brainstormin' will be very e$$ective and mistakes done inside a plan can be determined quickly and allows the plan to be completed with hi'h quality Since Padini has not e/pand its business in %hina, so we recommend Padini to use the 1oint venture strate'y as this strate'y helps $irms to access into new markets, knowled'e, capabilities and other resources 5Fiatao ,i, !"""9 0hen, the $actors that in$luence the success$ulness and $ailure o$ 1oint ventures depend on the e$$ectiveness o$ the leadership team 5Fiatao ,i, !"""9 0he structurin' o$ the mana'ement team has a bi' e$$ect towards the 1oint venture&s per$ormance as these mana'ers brin' their own e/periences and their parent&s perspectives to international 1oint ventures 0rustin' is very important because it increases the satis$action and commitment to 1oint venture 5%ullen, Fohnson, < Sakano,!""(9 0he 'oals that each partner achieved in a team will be directly a$$ected by the quality o$ workin' relationship between partners So, Padini should construct its mana'ement team in %hina properly i$ it needs to e/pand its business in %hina So, by havin' trust a'ainst the mana'ement team in %hina, it helps to enhance satis$action and commitment to 1oint venture (.0 Conclusion 0hrou'hout this assi'nment, we analy*ed Padini had success$ully enter into the international market by various e/pansion strate'ies 0he current e/pansion strate'ies used by Padini are $ranchisin', e/portin' and retailin' Padini uses $ranchisin' distribution channel to e/pand their business in the domestic sector and even international market In domestic sector, Padini have !C 2incci stores and ! P4I store that is use $ranchisin' distribution channel and D8 2incci stores that are usin' $ranchisin' model to operate in international market Padini also use the e/portin' strate'y to sell their 'ood and service at 0hailand, 3runei, Saudi Arabia and so on Padini try to use this strate'y to internali*e their business 0he last e/pansion strate'y use by Padini is retailin' Padini has retail around ::8 $reestandin' stores, $ranchised outlets and consi'nment counter in Malaysia and all around the world Insi'ht o$ Padini @ecently, we $ind out that Padini&s Holdin's has increased as in -8!C the net earnin's o$ Padini has beyond its e/pectation 3ased on Padini, it said that the revenue shown is due to the e/pansion o$ Padini&s retail distribution network with the open o$ three Padini concept store and a total o$ $our 3rand >utlet Store 6uture 4irection o$ %ompany Padini who treats the retail environment as a whole will not stop to be more and more challen'in' %ompetition that occurs between consumers and markets 0his causes the competition $or consumers& spendin' @ecently, customers tend to sit at home instead o$ spendin' outside due to economic conditions However, some consumers who are with hi'h level o$ standard livin' will still continue to take up $or premium 'oods to enhance their own li$estyle In $uture, Padini plans to have the chance to e/pand business 0he success$ul o$ the company in the international market depend on the strate'y that the company implements 0here$ore, it is important $or the company to implement the most suitable strate'ies in that country 0he success$ul role model that we can see is Padini In order to be success likes the Padini, we think that other clothin' companies can practice the 1oint venture strate'y 0he 1oint venture strate'y is de$ined as 1oint between two or more parties in order to achieve the common 'oals Sometimes, they also can cooperate with their competitors, customers or partners 6or e/ample, Pepsi%o has invested to the di'ital media in 3ra*il 0his is because they could build the stron' ima'e throu'h media industry )e hope Padini can e/pand its business into the %hina market in $uture As we know, %hina is the country that have hi'h rate o$ population in the world 0here$ore, this can provide many business opportunities to Padini In addition, the hu'e rate o$ population also can help Padini to enhance the sales rate and earn hi'h amount o$ pro$it 0he livin' standards o$ %hina people now are become hi'her than be$ore Ma1ority middle classes o$ the %hina people had up'rade to the upper classes 0here$ore, they have the capable to buy more and spend more 0his is the 'reat business opportunity provides to Padini so that we hope Padini can take advanta'e o$ this rare business opportunity @e$erence 6a Gain 5nd9 Assi'nment PA4I.I H>,4I.GS 3;@HA4 :-latest H 6a Gain Academiaedu @etrieved $rom httpIJJwwwacademiaeduJ((!D"DAJAssi'nmentKPA4I.IKH>,4I.GSK3;@HA4K:- latest Padini Holdings Berhad 5nd9 @etrieved $rom httpIJJannouncementsbursamalaysiacomJ;4MSJsubwebns$J#$8C(!A$D8"DAD8:CD-(AcA $88!#aAb$J"d$!C-aAdadAea8DCD-(#ac-88-:(:A8JL6I,;JPA4I.I- Annual@eport-8!-M-85(D#+39pd$ PADINI FAMILY | VINCCI 5-8!-, .ovember -C9 @etrieved $rom httpIJJmilemmuedumyJorionJnurilyaJ-8!-J!!J-CJpadini-$amilyJ PADINI 5-88#9 @etrieved $rom httpIJJwwwaaaaor'myJmmvbJrecipientKpadinihtml Michael, S % 5!""A9 0o $ranchise or not to $ranchiseI An analysis o$ decision ri'hts and or'ani*ational $orm shares Fournal o$ 3usiness 2enturin', !!5!9, (#-#! 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