Introduction
Mario Prada, Miuccia’s great-grandfather, started the Prada Group of Companies in Milan, Italy. Prada was the first luxury goods company upon its launch in 1913. Prada was a fancy boutique situated at the Galleria Vittorio Emmanuelle II, producing excellent equipment, accessories, and luxury products made from high-quality materials and expertly crafted. According to Han (2019), Milan’s firm swiftly became a preference of the aristocracy and a favorite of the most potent members of Europe’s high society.
The Milan firm then swiftly became a preference of the aristocracy and a favorite of the most potent members of Europe’s high society, the elite. The Prada Company eventually permitted the figure-of-eight ribbons and the coat of arms of the Royal House of Savoy. Since then, the company has been authorized to utilize these emblems. The company also became the official supplier of the royal household in Italy.
In the late 1970s, Miuccia and Patrizio Beertelli began working together, setting the groundwork for the company’s future global development. When Patrizio Bertelli introduced a new business model in the luxury goods market, he maintained direct, internal control over all operations and applied high-quality rules throughout the production process. The fashion industry all across the globe caught a glimpse of Miuccia Prada’s avant-garde perspective and creative mind.
Portfolio Analysis
Men’s and women’s leather products like shoes, bags, clothing, and eyewear are now available from this high-quality company, which caters to all genders. Additionally, Prada is involved in the eyeglass, fragrance, and mobile phone industries. Luxury goods giant Prada Group owns the Prada brand, making it a worldwide force and a corporate legend (Han, 2019)). There has never been a business model like the one used by the organization that can integrate both industrial and artisan production techniques.
Church group is the high-end men’s footwear manufacturer, and the Car Shoe is the developer of the first driven moccasin. In 2014, Prada purchased Angelo Marchesi Srl, the renowned Milanese pastry store established in 1824, for 80% of its original value (Polfuß, 2021). Prada Spa was valued at 9.2 billion euros in 2011 after listing 20% of its shares on the Chinese stock exchange (Polfuß, 2021). The Prada-branded goods too ensured the essential degree of artistry, quality, and consistency to maintain their client’s trust.
According to Han (2019), Prada’s goods are created by a system of external consultants in the 13 company-owned locations, eleven of which are situated in Italy; one is in Britain, and another in France. Each step of the manufacturing process is carefully and directly monitored, from raw material acquisition and sourcing (including different vendors) through the creation of models and the planning and management of in-house and external production. There are over 594 direct-operated shops in the group’s distribution network in 70 countries and a selection of retail stores and multi-brand commercial spaces in the world’s major cities and fashionable places (Han, 2019). Prada’s success is built on innovation and creativity. The group’s avant-garde attitude permeates all aspects of the business, including distribution. For the first time, Prada opened “Prada Epicenters,” stores designed by Pritzker Award winners Rem Koolhaas and de Meuron & Herzog, two of the world’s most renowned architects.
Apart from fashion, Prada draws inspiration from the visual arts, architecture, film, and other forms of popular culture. For over two decades, Fondazione Prada’s operations have been focused on analyzing the goals and significance of its initiatives. An extensive research show has been held in Fondazione Prada’s unique event space in Venice, Ca ‘Corner Della Regina, since 2011. The new permanent Milan location, designed by Rem Koolhaas-led architectural company OMA, opened for business in 2015.
BCG Matrix for Prada
The Boston Consulting Group developed the BCG matrix, a strategic long – term scheme that assists in analyzing the position of a significant business unit and the possibilities it has to provide. The matrix is divided into four classes based on two variables. The first of these factors is the expansion of the industry or market. The other of these characteristics is the corporate strategy unit’s economy of scale. Strategic business units are classified into one of four categories. Prada’s BCG matrix will aid in determining the initiatives applied for its corporate strategic divisions. Therefore, apart from expanding a specific industrial unit, Prada would look to expand its operational unit’s economy of scale as would be identified by BCG matrix below.
Stars. Prada’s strategic business unit for financial services is a star in the BCG matrix. It conducts business that has the capacity to grow in the future. This SBU contributes significantly to Prada’s revenue. Prada should continue expanding by purchasing other supply chain companies. As this SBU has potential, this will assist it in producing greater income. Financial services is also the key factor boosting the most sales out of its product array. The potential in this sector is equally strong since people want this and comparable items. For this SBU, Prada should implement a strategic plan in which it produces novel features on this product through R&D. Prada will benefit from this by drawing more customers and increasing revenue.
Cash Cows. In Prada’s BCG matrix, the SBU of supply chain and logistics services is a cash cow. The department in this warehouse operates 21 workstations, inspecting 3500–4000 items a day (Masse and Silchenko, 2017, p. 140). Approved goods are certified with a digital signature, while those that fail to meet the required quality standards are sent back to the manufacturing area for replacement. The warehouse produces an average of 700 pairs of shoes per day (Masse and Silchenko, 2017, p. 148). The unit has been in existence for decades and has generated enormous money for Prada. Prada has a large market share, but the entire market is shrinking as corporations manage their suppliers in-house rather than offshore it. Prada’s proposed approach is to suspend future investment in this sector and continue to operate this key business unit as long as it is sustainable.
In Prada’s BCG matrix, the global food SBU is a cash-cow. This product line has a 30 percent market share in its category, but people are becoming less interested in foreign food. The market’s growth rate has slowed because of this shift in tendencies. According to Polfuß (2021), Prada even created established teams to work globally in the food SBU, which is required to be applied in all their branches. Prada’s advised strategy is to invest enough to maintain this crucial business segment operational. If it ceases to be lucrative and becomes a liability, Prada should sell this important business unit.
Question Mark. Prada’s SBU for local foods is a question mark on the BCG matrix. Consumers are more interested in local cuisine, according to market trends. As a result, this market is seeing rapid expansion. Prada, on the other hand, has a little market share in this area. Prada’s suggested strategy is to spend in R&D in order to generate unique features. This product design plan will ensure that this key business unit becomes a cash cow for the corporation and generates returns in the future.
Prada’s SBU for leather business unit is a question mark in the BCG matrix. Leather business unit is a lucrative commercial entity that has been expanding throughout the years. Prada, on the other hand, has a little market share in this profitable sector as compared to its competitors such as Gucci and Bottega Venetta. The low sales are due to Prada’s low penetration and marketing in this area. Prada’s preferred approach is global expansion, in which it seeks to make its goods available in more stores. This will raise Prada’s sales and turn this crucial business area into a cash cow.
Dogs. Prada’s SBU for plastic bags is a dog in the BCG matrix. For the past five years, this SBU has been operating at a loss. It also competes in a market that is contracting because of increased ecological issues and environmental concerns. Gucci, a direct competitor, produced a three-piece silk satin and a two-tone cotton shirt, in what became to be regarded as a Valentin louzalen model. The model was created to divert the use of plastic bags in the fashion industry. Prada’s proposed plan is to exit this crucial business segment and reduce its losses. Prada’s SBU for artificially flavored items is a dog in the BCG matrix. These items were recently introduced, with the expectation that this market will expand. However, as individuals become more health-conscious, they are avoiding the intake of artificial flavors. Prada has no major market share in a world’s decreasing economy. Prada’s recommended method is to call back this merchandise.
Global Presence/Ambition Analysis
For the Prada Group, expanding its sales stores in both established and new regions, emphasizing countries with solid growth potential, is a critical component of its distribution strategy. Over 600 directly operated shops in over 70 countries and chain stores and multi-brand showrooms located in some of the world’s most fashionable locales are pillars of the group’s worldwide development strategy (Garrido et al., 2019, p. 272). They also serve as the primary profit basis for the company. However, Prada’s premises are frequently leased rather than acquired.
Because the DOS is considered a display zone for new collections and a place to meet consumers and get real-time feedback about how each category is doing, this method has several advantages. They are also a vital marketing tool. As the true capitals of every brand, each DOS portrays its reputation in a clear and consistently defined way. The wholesaling channel (multi-brand shopping locations and department stores) generates roughly 15% of total revenue, while direct sales provide about 85% (Garrido et al., 2019, p. 283). This reflects a wide margin of profits and a broad scope of marketing across different marketing platforms.
Eyewear. Prada, the high-end brand, was the first to recognize eyewear’s fashion potential and included glasses in its collections as a fashionable accessory. By signing an arrangement with Luxottica in 2003, the firm gained access to the world’s leading manufacturer of high-end elegance and athletic eyewear, showcased as Miu Miu and Prada sunglasses in 2000 (Jelinek, 2018). Under this partnership, Prada and Luxottica have been granted exclusive rights to the Miu Miu and Prada eyewear lines worldwide, with Prada coordinating the development, styling, and distribution of all eyewear fashions.
Fragrances. For Miu Miu perfumes’ manufacturing, distribution, and growth, Prada Group formed an arrangement alongside Coty Inc. in 2013. The debut of a Miu Miu fragrance was scheduled for 2015 at the latest. In 2003, Prada entered into a relationship with Puig Beauty and Fashion Group to create, sell, and develop perfumes under the Prada brand (Mitchell and Balabanis, 2021). Perfumes created under Miuccia Prada’s artistic leadership have been hailed as masterpieces worldwide and are still popular today. However, Prada’s automated manufacturing approach enables the quick development of a wide range leather items. This might be a drawback since it requires time for all of the items to sell out before new ones are made. As a result, it may be essential to refresh a variety of non-essential aspects in order to increase associate undesirable value creation.
Mobile Phones. Pioneering and iconic mobile phone brand strategies were laid forth by LG Electronics and Prada in 2006 when they inked a partnership. Prada and LG collaborated to examine the mobile phone’s elements (system, user interface, entertainment) and display from every perspective. The “Prada Phone by LG” was the world’s first touchscreen phone, released in March 2007. More than one million units were sold worldwide, making it the most successful mobile phone co-branding in history. The table below shows the global ambition of Prada in Japan, China and the rest of the world.
Global ambition can be represented using the global Revenue index (GRI), which is the ratio in percentage of a company’s distributions of sales in the major world’s markets to the industry’s distribution demands in the same location.
The formula for GRI= n1Σ [1Xn (cumRXn+cum RX(n-1)]
Table 1: GRI Calculations and GRI Index
In October 2008, a second cellphone was released, striking new ground in quality and innovative design. In 2011, the Prada cellphone by LG 3.0 was one of the broadest and most explicit touchscreen devices at 4.3″ with an 800nit dazzling screen readily visible even under sunshine (Polfuß, 2021). This was one of the most significant expansions made by the Prada Group of Companies in the history of technology. However, because of poor integration, the industry attempt to expand to other regions might face a drawback. When there is a lack of variety in the workforce, employees of diverse ethnic backgrounds find it difficult to acclimatize to a certain geographical place, and it becomes hard to recognize their potential.
Therefore, global presence analysis reduces the risks in the business since they get to understand major trends and players in the industry by conducting a SWOT analysis (Table 2), which identifies the strengths and weakness facing the business.
Table 2: Global Summary of Prada’s Strengths and Weakness
The International Expansion of the Prada Company
Business Unit for Expansion
Miu Miu is the business unit for expansion in Prada Company as it containes many Question marks and Dogs from the BCG Matrix. Miuccia Prada created Miu Miu in 1992. Miuccia Prada’s household nickname was the inspiration for the name. It began with a cowgirl-themed line of fringed leather jackets and patched prairie skirts in 1993. For three seasons, commencing from 1994, the company showcased their collections in the United States. During Paris Fashion Week in 2006, it debuted a womenswear collection. By 2005, Prada had established a separate gallery for Miu Miu in an Art Nouveau house that had formerly functioned as Prada’s original Milan offices, and the men’s fall-winter presentation was held there in 2006. Miu Miu introduced its first perfume in 2015, backed by a 2013 deal with both Coty Inc. and Prada, marking the brand’s first venture outside of the fashion and accessory industries.
The expansion of business is a growth strategy to establish new markets to expand the business and help the Prada Company survive through the tough times as it gives the business a considerable edge on the competition. In order to determine the most suitable unit for expansion, the company has considered several factors which could adversely affect the business in a foreign environment. The best business unit expansion for the Prada Company would be Miu Miu. This is because the unit is a daily oriented brand which is more casual and affordable. Moreover, its target market is the youth and thus it is renowned for attractive designs for the youths. Apart from shoes and handbags, Miu Miu handbags maintains the super-hot selling point among the other products. The new collection of the handbags evokes the brain of every client and lures them into buying the product.
The buying habits of the target group determine the purchasing power; therefore, regular purchases mean that the target group has the purchasing power to purchase these products. In this case, the target group for Miu Miu is the youths. The young adults love fashion and thus frequently shop new designs to keep up with the fashion. Therefore, the company has to ensure steady supply of their products to the target group where the buying habit is frequent to avoid the consumer shifting to another business company. It is believed that Miu Miu gained its inspiration from the mother company, Prada. It thus reflects the Miuccia Prada’s style of fashion which is simple, expensive and stylish at the same time. Miu Miu creates customer profiles to ensure that their products keep selling in the market.
Once customer profiles are created, Miu Miu unit carries out a market analysis to establish the marketability of their products in the given market. The market analysis identifies emerging trends in the targeted market to stay ahead in products. To stay on top of the business trends, Miu Miu has spotted new trends early because it is a great way to use such information to the advantage of the brand.
Rationale for International Expansion of the Business Unit
There are several reasons that contributing to the international expansion of Miu Miu business unit. One of the most significant advantages of globalization is an increase in income. Marketing the products internationally reaches a larger number of prospective customers, resulting in a higher revenue rise. Global expansion means business growth, which is not limited by the average income available in the local market. Therefore, Miu Miu chose to expand internationally in order to increase its revenue. Miu Miu was able to rapidly expand its brand’s reach into complementary product sectors. The company’s image and credibility will benefit from increased competition globally. For example, Canada and New Zealand will be essential to the brand’s success in the high-fashion industry. The wider the spread, the more clients they will receive.
Through its network of 25 totally owned boutiques, Miu Miu’s income will climb to almost 65 million euros, or $78 million after international expansion (Massi and Turrini, 2020, p. 8). Miu Miu’s ready-to-wear sales accounted for 42% of total retail sales. It is projected that footwear will account for 26% of the total sales, while leather items will account for 32% (Massi and Turrini, 2020, p. 9). The other reason for international expansion is an increase in savings. While growing worldwide gives for more profit prospects, it also allows for lower expenses. Doing business overseas will be less expensive since you may cut manufacturing expenses in more economical nations. Similarly, due to differences in minimum wages across the globe, the wage one must pay the overseas workers may be lower than the compensation paid to the local staff. For example, one of the reasons Miu Miu seeks to expand internationally is to save money.
Another motive for worldwide expansion is to lessen the amount of competition in the market. A competitive advantage is one of the most valid reasons for a company to expand its operations internationally. Businesses and organizations who expand their operations internationally frequently do so in order to acquire a competitive advantage. They will be able to get out of a saturated marketplace and seek new clientele in new places in this manner. In addition, expanding into new markets enhances visibility. This results in the organization gaining tremendous brand recognition and establishing a partnership with existing customers. It will have a competitive edge over domestic competitors because of its brand name. Suppliers, as well as customers and consumers, stand to gain from less competition in the marketplace. In addition to gaining access to superior suppliers, Miu Miu’s global expansion will provide the company with the opportunity to acquire new technology and increase productivity. One of the most prevalent motivations for going global is to expand your market reach.
Youthful labels like Moschino, Chloè, and Valentino are Miu Miu’s key competitors. This is owing to their reputation as youthful, rebellious businesses that sometimes emphasize on rebellious fashion for individuals who are not scared to try new things. Therefore, international expansion will help Miu Miu to thrive in the market despite the presence of these major competitors.
Profit margin increase is another another reason for expanding into new overseas markets. Globalization makes it possible to access new sources of talent and technology. The reduction of manufacturing or running costs may allow for better earnings as a result of this. The idea of transferring divisions to other nations is not new to the industry. Several countries are well-known for producing goods at a cheap price point. As a result, the Prada Company wishes to expand the Miu Miu brand throughout the world. While retaining quality and corporate success, Miu Miu was able to keep talent, raw materials, and labor expenses as low as possible. Starting a business might also help to extend the life of a product that is already on the market. It is possible that some goods that are making losses in their home nation will be favorably appreciated in other countries. Finding new clients for an existing model may prove to be more beneficial than building a completely new product from the ground up in some instances.
Expanding elsewhere also helps to balance out variations in the domestic market. Global expansion and a diversified market presence may assist an organization in mitigating long-term market risks. Successful expansion into new markets outside one’s own country enables enterprises to diversify. Rather than enduring the brunt of a single market’s ups and down, businesses can use the gains from one market to offset the losses from another. Another motivation to expand internationally is to introduce distinctive products and services that are adapted to local tastes. To compensate for a product’s poor performance in its native market, it may be launched in a country where consumer preferences are more favorable. Miu Miu, for example, can launch a scent following worldwide expansion. The product is different and will flourish due to the large customer base in the global market.
Global expansion is also fueled by product demand. Quantitative need is one of the most prevalent and illuminating reasons for businesses to expand globally. Businesses who do not expand into international markets are passing up rich chances. The internet is very useful to monitor how overseas markets react to new products and services. When you see an increase in interest in your items from international buyers, you should widen your market testing. Businesses can enter international markets cautiously while maintaining the potential of expansion if the response is favorable. Miu Miu desires global expansion in order to meet demand for its shoes, handbags, and fragrance.
Expansion into new markets is a normal part of the growth process for businesses. Previously believed to be the only path to the overall growth goal, small firms now have access to the worldwide market. It is now a practical and accessible strategy, and many businesses, small and large, are looking forward to worldwide expansion. Miu Miu, while being a young brand on the market, will flourish as it expands internationally. While many businesses are capable of achieving this objective, the procedure remains challenging. Numerous people fail as a result of being unprepared for the obstacles they may encounter. In both the short and long term, the advantages of integration outweigh the costs.
Numerous factors motivate businesses to compete on a worldwide scale, including their outstanding image, long-term growth, increased earnings, economies of scale, and compliance with government rules. A strong and innovative entry strategy establishes a long-term presence in the market and adds to the success of global competitiveness.
Companies that want to join international markets must decide on their entrance strategy and how it will affect their global operations. Furthermore, businesses work in increasingly changing and unstable settings marked by fierce rivalry, unpredictable market circumstances, rapid technical development, and shorter product cycles. As a result of these circumstances, a company’s capacity to effectively introduce new products to the market becomes critical to its survival and long-term development. Consequently, profitable product invention and industrialization is a challenging effort, and numerous studies have demonstrated that the entry or launching strategy is a significant component in determining whether a product innovation is successful or unsuccessful. Apart from the motivation for corporations to join overseas markets, several experts feel that improving export competitiveness is their primary priority. One of the most important and essential variables in determining global expansion success is entry strategy.
As more stores get opened in Canada and New Zealand, Miu Miu will gain the confidence and ambition to go into a new growth phase to become a worldwide luxury conglomerate. The establishment of an exclusive distribution network allowed the business unit to generate significant profits and maintain complete control over the look, feel, and offerings of each of its retail locations nationwide (Santarelli, 2019). Miu Miu talents will grow, and will be able to merge fashion and fine art uniquely. It will have a strategy of mergers and acquisitions throughout this period. Santarelli (2019), stated that the most dynamic and complex strategic actions that organizations may engage in are mergers and acquisitions. They are the most critical aspect of growth and development in today’s corporate environment.
Global Positioning Analysis
Miu Miu’s global positioning establishes the world’s perceptions of the company’s products. The marketing strategy of a business refers to how it wishes to be perceived by consumers in comparison to its competitors. The positioning strategy of an organization is designed to imprint a single brand feature on the consumer’s mind in order to foster long-term client relationships. Miu Miu must actively shape the brand’s identity in order to shape their consumers’ perceptions through the development of a unique market position. This included establishing a quality standard for all products, utilizing unique channels for product delivery, and catering to customer needs by resolving specific problems caused by the products’ use. To maintain Miu Miu’s global positioning, efforts needed to be stepped up to ensure they translated the product and style to create the desired image in the minds of their audience.
The visuals and design used in manufacturing the different goods divisions thus needs to reflect the type of brand Miu Miu intends to become. The company’s sales are the best indicator of whether the market position is right for the company (Volberda et al., 2011). High sales indicate a positive response from the intended target group. However, the best way is to conduct surveys, focus groups, and interviews with the customer group to find out what the audience really wants. Armed with the valuable insights from customer research, the company can work on either repositioning or maintaining the position of the business globally (Hollensen, 2016). This action might involve changing the company’s marketing goals to accurately reflect the new position it is seeking to achieve. Rarely does a company achieve its desired global position in their first trial. It is therefore important to learn from the client’s feedback and keep adjusting the products and markets accordingly to easily evolve and adapt to market positions. While the Miu Miu brand gets introduced into the market, a number of departments will be expanded to Canada and New Zealand in order to stabilize its position globally. The transfer of departments will have an impact because it will lead to an increase in sales in the Miu Miu business unit.
Country Evaluation
Canada Attractiveness. One of the countries that Miu Miu will be expanded into will be Canada. Canada’s consumer market has significant capacity for growth across all sectors. The country’s economic strength attracts businesses seeking to expand into new markets and diversify their business units as the country’s appeal for outsourced manufacturing grows. Nevertheless, many of these enterprises thrive in Canada. Miu Miu will be able to join the Canadian market, which will result in a significant increase in sales. There are three major elements that impacts Canadian’s business environment, all of which either help enterprises reach their full potential or deter them from expanding outside. Canada’s size seems to be attractive to enterprises seeking global expansion. However, the majority of people are unaware that Canada’s broad geography results in a population with a diverse economic position, consumer tastes, and retail outlets.
The Canadian people are used to a variety of marketing and sales channels. Because the nation’s wealth is scattered and economic activity is generally similar, domestic enterprises may market to the same demographic audience on both the East and West coasts. In Canada, the business unit is stressed at all stages, and rewards are given for group advancement rather than competition victory. The Miu Miu business unit’s success will be enhanced by the Prada Company’s focus on it. The Canadian people place a premium on candor over what is commonly referred to as courtesy. In Canada, relationships are founded on mutual trust rather than exchange symbols. Business owners often concentrate their worldwide growth strategy on avoiding another country’s regulations and bureaucracy.
Canada Risk Assessment. The legislation and methods in Canada, on the other hand, are simply too intricate to be executed in a western fashion. It is necessary for businesses to protect themselves against Canadian “first to file” legislation, which allows trademark and intellectual property rights to be ignored with relative ease. As reported in a recent poll of more than 330 enterprises with a presence in Canada, bureaucracy is the number one cause of difficulty for 31 percent of those polled when it comes to entering the market (Santarelli, 2019). Conducting a SWOT analysis that is specifically geared to the foreign marketing plan and growth model will aid the business unit in its efforts to thrive and develop in foreign markets. The Prada Company conducted a SWOT analysis in Canada, which assisted Miu Miu in garnering the attention of young Chinese fashionistas.
New Zealand Attractiveness. New Zealand will be the second country into which Miu Miu will expand its operations. It is difficult to overlook New Zealand’s economic impact on the world and its influence on cutting-edge corporate practices, especially in the current global economic climate. With its reputation for coming up with creative ideas and taking a fresh approach to business, the country has gained international recognition. In today’s world, New Zealand is recognized as a trendsetting market, which means that companies that succeed there will have a competitive advantage. Given its focus on contemporary items such as handbags, shoes, and perfume, Miu Miu will be able to integrate itself into the market. Moreover, for New Zealand’s high-income norms and quality-conscious clientele, the country has developed a market that is ripe for expansion, making it an ideal site for existing brands and emerging designers to begin and grow their respective businesses. Because New Zealand clients have a high level of purchasing power, this will result in an increase in Miu Miu sales in the country. Consumers in New Zealand are well-known for their willingness to adopt new trends and technologies.
New Zealand Risk Assessment. The top ranked risk in New Zealand is the presence of natural catastrophe exposures and disasters. Though the risk is insurable, the economic and political aspect of the disasters are not making the county not to be risk free. According to Wallace (2020), New Zealand’s business world is faced with such risks as cyber-attacks, spread of infectious diseases, fiscal crises and failure of climate change adaptations. According to the WEF’s survey, though unemployment was among the top risks in the previous years, the presence of COVID-19 caused increased employment disruption. As such, many companies in the country raised automation and the transition to greener economies, hence changing labor markets (Wallace, 2020). Therefore, for Prada to enter New Zealand, it must optimize recovery conditions in the country through business models to ensure resilience in the future.
Timing of Entry
The timing of entry is just as important as the form of admission in terms of success. A large number of businesses justify their global expansion by highlighting the necessity to enter the market quickly, while completely ignoring the time and effort required to build a significant presence in the market. They argued that because there was a limited amount of time for players to fix their mistakes, only those who were bold enough to strike first would be rewarded. As a result, the first-mover advantage has become one of the most widely recognized business theories in recent history. In business, the term “first-mover advantage” refers to a company’s competitive edge over its competitors. This should translate into more success for the brand in Canada and New Zealand. As the Miu Miu label is now well-known among clients in New Zealand and Canada, this will help the company maintain its competitiveness against competitors.
Entry Mode Decision
The aims of the firm, its international experience, internal expertise and strategies, investment risk, regulatory requirements, the environment, access to local expertise and partnerships, and ease of access to clients all impact the manner of entrance into foreign markets. Digitalization via e-commerce platforms is one of the entrance techniques that will be utilized by Prada Company to extend the Miu Miu business unit abroad. Miu Miu’s remarkable success in Canada will be aided by technological advancements. Miu Miu will also form an online limited-edition shop. On the first Thursday of each month, a one-of-a-kind item will be introduced and be available for 24 hours at Miu Miu online stores. In 2023, the Chinese bag and accessory industry is expected to increase by 10% annually, reaching $128 million US dollars after international expansion (Karaosman et al., 2020). The Miu Miu brand will appeal to a younger demographic. It will mostly be concerned with leather accessories and purses in various colors and designs.
Scale and Speed of Entry
The Miu Miu brand will make a gradual transition into the international fashion market. Making a firm successful in the global market is challenging. One of the obstacles it will have to overcome is meeting local regulatory standards. The same is true for businesses that are growing into new markets. It becomes increasingly difficult for a firm to comply with local laws, taxes, and regulations as the organization’s presence and staff grow larger. As a result, due to regulatory issues, it will take some time for Miu Miu to establish itself in New Zealand. With only a few products, which include leather goods and shoes, the company will have a restricted market presence and will have a limited ability to build up.
Overall Mapping of the International Expansion Plan
The Miu Miu business section of the Prada Company will be successful in its efforts to grow into the international market. The international expansion of the business unit will have a favorable impact on the unit. It resulted in an increase in client base. Because of their passion for fashion, young people in Canada will help to promote leather products. Increased sales will result, which will in turn enhance the company’s revenues even more. Prada Company Furthermore, the brand’s arrival into New Zealand will be advantageous because shoppers in New Zealand are enthusiastic about new and trending products. In Japan, the products designed by Miu Miu will be a hit, and the company’s brand will flourish as a result.
Strategic Foresight
Scenario Planning Analysis
Scenario planning involves predicting the future and how your firm’s environment will change. It is the process of identifying unknowns or alternative possibilities for your business (Jelinek, 2018). The Prada Group analyzes the scenarios to predict the success of new ventures. While scenario planning has no direct impact on the firm, it increases risks, expenses, and missed opportunities when entering new markets.
Corporate Level Analysis for Key Division. Brand value is higher for Armani, Gucci, and Louis Vuitton than Prada according to Prada’s business strategy. Prada is now ranked 3rd in Italy, behind Ferrari and Gucci (Garrido-Prada, 2019). The company’s goal should be to become the most powerful Italian brand and to rank among Interbrand’s top 100 most powerful brands (87th in 2009, 91st in 2008). Prada’s brand equity would be boosted, as fashion brands’ appeal and awareness must go hand in hand. Prada must rebuild the brand while keeping and improving its core values.
Prada has tried to control and grow various non-profitable sub-brands. Keeping a brand costs money. Car Shoe and Church’s also sell shoes. Therefore, in some cases, Prada competes with its sub-brands. Given that these two minor corporate branches, Car Shoe and Church’s, only account for 4% of Prada’s revenues, it is best to shut them down and sell them off to reduce the company’s debt (Karaosman et al., 2020). In contrast to 2009, Prada’s annual report (2010) reveals a 2.8% fall in car shoe sales, in accordance with previous years (Garrido-Prada, 2019). Prada should prioritize Prada and Miu Miu and commodities like garments, leather goods, and footwear to attract the target audience. It should keep producing accessories, eyewear and perfumes.
Prada’s global brand image will be reinforced by selling certain trademarks, and its most loyal customers will benefit from increased investment in them. Prada’s target demographic is rich upper-class people aged 35 to 60 who appreciate exclusivity, enjoy cultural events, and travel in luxury (Jelinek, 2018). As one of Italy’s first luxury fashion businesses, Prada relies on human assistance. Prada has a particular style, a long history, and strong ties to Italian culture and the arts. Prada’s customers are often globetrotters who buy from all over the world.
In general, two settings have an impact on a company’s future. The first is the microenvironment, which is influenced by the internal corporate change agents. Cash flows, staffing, institutional arrangements, procedures, and systems are all part of the environment. The second factor is the macro-environment, which has an impact on the whole industry. Recessions, political crises, and global financial markets, to mention a few examples, all have an impact on a firm ’s survival, as can social and technical discontinuities. The macro-environment is the subject of this Work Project since it is more broad and may be applied to Prada retail business as a whole.
Prada Scenario Development
Formulate the strategic focal question
As stated in the prologue, the strategic focus question for the forthcoming scenario creation is the next part of the fashion retail business, which will take place in the next 10-15 years. It is purposefully open and wide in order to produce strategic solutions applicable to the fashion retail business as a whole. Later, the broad-fit scenarios and conceptual options will be refined down to company archetypes and their appropriate strategic choices based on specific corporate assets.
Classify and select macro patterns
The worldwide environment has an impact on the fashion retail business. As a result, while identifying the driving forces, an outside-in approach is required. In this case, two scenario matrices have been developed. In order to accomplish this, a STEEP+I analysis was used to show the situational and procedural macrotrends (see Table 1). These patterns have been assessed in terms of their impact and uncertainty (see Table 2), for Critical uncertainty matrix and (see Table 3) for driving forces matrix.
Table 3: List of Factors of Uncertainty using STEEP+1 analysis
Critical Uncertainty Matrix 1
In the first critical uncertainty matrix (see Table 4), most crucial uncertainties have been identified as: (1) the value of shop experience, (3) the existence of smart cities, with the first two having either minimal or high relevance or the last two with either sluggish or rapid development rate. Their effect on the future of Prada’s business is significant, as shop experience, online marketing, virtual reality, and the technological pace of the surroundings (the evolvement of smart cities) heavily influence customer-purchasing decisions in this industry. In terms of the cost of the retail experience, it might be seen as virtual or live in the store.
Table 4: Critical uncertainty matrix
Value of store experience extremes. Because client tastes are variable, this trend is fraught with uncertainty. According to recent trends, e-commerce sales have partially overtaken retail sales (Hodson, Perrigo, and Hardman, 2017). Therefore, the trend is not a scenario that could have been predicted some years ago. Looking at one aspect of this tendency, the value of the shop experience may become insignificant in the future; implying that store concepts and the associated experience will play a limited influence in the consumer experience and purchasing choice.
Consumer behavior and lifestyle. The value of store experiences correlates with consumer behavior in most products. For example, learning and experience both play a key role in impelling consumer’s behavior as it affects purchase decisions. As such, by comprehending consumer’s decision on a product, the customers can seal in the gap in the market and recognize the products that are desirable and the products that are obsolete.
Occurrence of Smart Cities. Concerning the emergence of smart cities, the rate at which this trend grows influences and shifts the market positions of firms. These smart cities bring together organizations such as government agencies, public and private entities, and technical firms to develop smart solutions for a variety of societal issues. On one hand, a delayed growth of smart cities may lead to Prada Inc. competing in product design and quality. Both characteristics would be more important than technological advancements in products and services. On the other hand, if smart cities expand quickly, the fashion retail business will be defined by rapid and disruptive developments and cooperation with other sectors, to which all enterprises must adjust with their existing retail models. These initiatives would necessitate Prada’s attention as well as significant spending in R&D.
Location, occupation and density of population. With the advent of smart cities, technological transformations would occur, with automation breaking down traditional industrial groupings. Consequently, Prada Inc. would compete in a world without borders between industries (Atluri, Dietz and Henke, 2017). This tendency may have ramifications for the Prada Inc. in a variety of ways. For example, store location for such automated devices might affect consumer’s loyalty. This means that Prada must position its retail in a location that is easy to access by customers with low internet know-how, and ensure the location is densely populated for profit purposes. With integration, this can either be slow progress or high progress.
Critical Uncertainty Matrix 2
Table 5: Critical Uncertainty Matrix 2
In the second critical uncertainty matrix scenario (see Table 5), second most crucial uncertainties have been identified as: (3) use of AI in designing, and (4) sustainable fabrics, with the first having either low presence or high presence and latter with either low adoption or rapid adoption rate. Therefore, from the diagram below (see Figure 1), the impact on the future of Prada’s business is significant; use of robotics and virtual reality, may affect customer-purchasing decisions in fashion and design industry.
Robotics. Robotics and use of AI are necessary in the current world of cyber bulling. An AI – based takeover of the authority historically held by magazine major newspapers and the design week first row to crown the “best-dressed” might spark a socialist transition in an aristocratic industry. The fact that designer’s white women occupy so-called “streetstyle” exhibitions on design websites and the top brass of the “influencer” world demonstrates that the business is still overlord with snobbery and implicit bias – or worse – over skin color and body type. Algorithms might be used to circumvent the prejudice and snobbery that stifle fashion. Therefore, customers will be looking at the aspect of robotics and adoption of AI in design, hence affecting the shopping experience and purchase choice of customers.
Industry Investments. Prada can moderately counterbalance diminished foot traffic in physical stores by enhancing investments in online purchase, in this case, Robotics. This effort will need Prada to reestablish funds from offline channels to robotic online marketing channels. Therefore, with more investments in robotics, the sector can be a boom, or otherwise, recession might ensue. In this case, Prada would need to extend its digital-channel presence and engagements across borders.
Virtual reality. Long before this season’s Matrix trend, the widespread use of Photoshop had begun to shift our image of cover-girl perfection from that of a beautiful, real human being to that of a digitised version of human beauty, with impossibly even skin tone and unnaturally symmetrical features. In the last two years, the prettifying face filters that began on Snapchat have spread to Instagram Stories. These enlarges eyes and lips, plump one’s cheekbones into a heart shape, and replace black pupils with a flash of silver. The effect is deliberately unreal: more cartoon character than supermodel. Imitation, in this case, is the sincerest form of flattery. Some things never change, and Generation Z all want to look like the cool “kids”. It is just that this time around, the new “kids” on the block are virtual reality.
Growth of merging markets. With virtual reality, there is need for growth of merging markets. The merger of two or more companies may send out a signal to other forms not to attempt a take-over bid. In this case, enterprises that merge may be able to relocate more funds to R&D and generate new products. For instance, in the event that Prada lucks the capacity to migrate to virtual reality store management, it may look to merge with such firms that provide the products. This may increase Prada’s comprehensiveness and profitability in the end.
Create conceivable futures
Bearing in mind the four independently discovered major uncertainties using the critical uncertainty matrix, Figure 1 depicts four distinct scenarios that Prada may face in scenario 1 and Figure 1 for scenario 2.
To begin, the “Smart Store” scenario appears to be the most severe. It represents the Prada’s business, as it exists in a world of smart cities with diverse location and population densities, pleasing customers who place a high value on the shop experience. Customers want experience shopping venues that are tailored to them based on their personal information (location, occupation, and population), and analytics. The following diagram depicts the customer narrative in the “Smart Store”:
Figure 2: Narrative Smart Store
This example exemplifies ideal omni-channeling. Digital drives the customer experience from start to finish, with customers able to acquire their items in a variety of methods. Full-tech stores are similar to theaters in that they provide an exceptional shopping experience, whether virtual or real.
Figure 3: Narrative Pretty Prada Store
External and Internal Impacts. In the “Pretty Prada Retail” scenario above, is where neither smart cities nor the shopping experience are highly prized by customers, is the polar opposite. This combination leads in the consolidation of retail stores and associated inventory halls. The store functions similarly to a warehouse, with customers able to purchase apparel through many channels, including online shopping and retail. Companies’ storefronts would be similar in that they would have a basic and efficient design that provides for a large amount of storage space as well as quick order pick-up and delivery.
Figure 4: Narrative Service Store
External and Internal Impact of “Service Store”. In this scenario, the environment seek efficient and customized methods of purchasing clothes. Ineffective phases in the purchasing process, as well as poor coordination and late delivery, have a substantial negative influence on Prada’s sales and image. Customers prefer internet purchasing to in-store shopping because it allows them to focus on the product and service rather than the ambience. Furthermore, the value of a brand is no longer recognized through retail shop encounters. It is increasingly offered through technical solutions such as inventory tracking, one-hour shipping, and online purchasing guides.
This scenario would upend the current Prada’s business by foreseeing the collapse of traditional physical retail. Shoppers would no longer visit the physical stores; hence, retail stores would become obsolete. Prada would only survive by getting on the web bandwagon. Furthermore, Prada may differentiate itself from the competition by modifying procedures to meet the above-mentioned needs: providing a transparent, rapid, and perfect service while maintaining an exceptional technical growth pace. As a result, new enterprise concepts would arise, and corporations would begin to interact in certain areas in order to increase Prada’s organizational resources.
Figure 5: Offline adventure store narrative
Impact of “Offline Adventure Store”. For external effect, Prada would compete in this situation by developing novel and excellent retail ideas that would provide their customers with a one-of-a-kind buying experience that lucks in other corporate fashion industry. In external influence, Prada would concentrate on the aspects that an actual store can effectively provide: expert help from motivated store staff, engagement, and narrative. Customers are taken on a trip around the stores, delivering an exciting response in-store to life. These clients place a premium on touching the quality, experimenting on several styles, and walking away with their new acquisition. This situation would enable the Prada to concentrate on providing brand value and connecting with customers. Technology would only play a minimal part in this scenario. Rather, it may be viewed as a means of facilitating human interaction. Below is a four-matrix developed from the robotics presence or not and virtual reality adoption.
Figure 7. Smart Database
External and Internal Impact. Increased sustainability for Prada both internally and externally as most of its customers would never access duplicates from the market. The Prada’s designers would also have a reduced workload on spotting issues related to cyber hacking.
Figure 8: Pretty database website
The external and internal impacts. The scenario above would have increased sustainability, as most products would be sold, especially those who would have given up purchasing because of cyber bullying. In this case, Prada would use fewer resources to make products, with less energy for productions as most designs would not go unsold due to cyber bullying, thus giving it a competitive advantage in the market.
Figure 9. Service database website
External and Internal Impacts. One of the external impacts of the scenario is on social media. Luxury brands are employing the use of social media platforms, though with cyber bullying to create experience-related purchases. The effects include VR and AR. This will give Prada new opportunities by increasing their reached widen their customer base though at the cost of those who are cyber-bullied, unless the robotics are applied well.
Figure 10: Offline adventure website narrative
External and Internal Impact: Radiation is an ever-changing natural disaster and can occur at any time. Externally, the currency rate will fluctuate, which will impact the infrastructure and economy of the country. With the robotics and AI-enabled garments, the situation of currency fluctuations will reduce as it would not affect brand’s sales, though it will impact negatively employment rates as most work with would be automated.
Table 6: Recommended Strategies for First Scenario
Threats and Opportunities of Implementing the Strategies in Scenario 1
Items are manufactured with breakneck speed as those in scenario 1 have various corporate-related threats. For instance, the stores would be connected with a lack of social responsibility in terms of trash disposal and labor rules. As such, there is an increased threat of tight regulations and tough tariff laws that might hinder Prada’s operations. The main distinction amongst the Stores concept is its emphasis on time. High pricing, dubious trendiness of items, and a scarcity of eco-friendly clothing are other major threats.
Table 7: Recommended Strategies for Scenario 1
Threats in Implementing the Strategies in Scenario 2
One of the major threats in implementing the first strategy is changes in tariff laws. In this case, Prada should use its market diversity opportunity to start exploring new market dynamics. Another threat is the possibility of a shift in manufacturing, especially the futuristic garments. In this situation, Prada should use its market share to find new places where manufacturing costs are low. Lastly, another threat is related to changes in the meaning of luxury. As such, Prada should ensure it maintains its balance between luxury brands and brand values and beliefs as it has always done. The table below (see Table 8) is a summary for threats and possible opportunities for implementing both scenarios.
Table 8: Summary of threats and emerging opportunities in both scenarios
A Forecast into the Future (Short Team)
Based on the firm’s record of accomplishment on financial success, the corporation has been on the increase in financial achievement, collecting higher revenues year after year. This may be credited in part to the reputability of the company’s goods, as well as the well-structured overall strategy to technology and market trends in fulfilling evolving client wants.
Table 9: Prada’s Two-Year Financial Forecast
The estimates can only be achieved if the firm can effectively distribute the technology. The model’s inclusive operation should influence the distribution process, with staff at all levels adopting the technology (Gaspars-Wieloch, 2021). To persuade employees and users of the new technological sales model, they must be fully informed of the benefits. For example, the customer acquisition team can learn how technology can help them find customers and display items in stores.
The implementation of the above recommendations will improve management, sales control, application, mentoring, hiring, assessing, and the Prada Group’s incentive models. The firm will be closer to achieving its goals, such as increased marketing efficiency, because the technology program will touch so many sectors. Expenses for staff training should be subtracted from the income generated by improved production performance when analyzing revenue growth.
Overall Scenario Mapping
Table 10: Overall Scenario Mapping
Recommendations
From the aforementioned; the section integrated the investigated research, which focused on the evolution of Prada’s company by deconstructing its progress in the action plan and current business approach. For their future firm, the designers eventually proposed a different strategy. Since Prada’s rise from a single boutique to a global fashion icon, the “system” of retail in the fashion industry has gotten more complicated due to a widening competition base and advancements in encouraging innovation.
Without a doubt, the future is unclear, and there is no way to predict it. Prada, on the other hand, may foresee and combat it to some extent through various planning approaches. This Work Project sought to answer the question of the future chapter in the fashion retail sector in the next 10-15 years. The scenario planning approach, which is based on both data analysis, was utilized to investigate this subject for the industry as a whole. Companies that fit the Fast Fashion archetype should be more inclined to market themselves as a “Smart Store.” This can be done by cooperating with others and trading in R&D, and the Slow Fashion archetype should take a form in the “Offline Adventure Store” scenario. Finding a specialty in the business, in particular, is a good alternative for organizations in this situation. However, both ideas should plan for all circumstances as much as possible and so must strike a balance between online and offline experiences to the greatest extent possible. Because firms are so diverse that no one-size-fits-all advice would be appropriate, two company archetypes have been employed to generate appropriate recommendation: Fast Fashion and Slow Fashion.
Nonetheless, owing to space limits, this Work Project has certain restrictions. To begin, stereotypes may be defined more precisely than just being extremes. This strategy only indirectly includes merchants in the luxury sector since they lay between the two extremes. In so doing, these merchants simply know that their strategic alternatives fall somewhere in the middle of the two extremes. Second, the positioning requisite level on the corporate archetype may be refined in terms of the specific corporate assets required to act on the unfolding future.
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