Staples Global Growth Strategy, Essay Example

Introduction

Staples has successfully introduced “Blue Ocean”, a portable, foldable printer that appeals to business owners who are constantly on the go. The printer is compact, easy to use, and is suitable for printing out invoices for customers in locations where printing facilities are not available. Staples is not looking to market the same product on a global scale, and is looking to assess future demands of international markets.

Growth Rate and Market Analysis

King (2013) stated that “The office supplies market has been forecast to increase at a compound annual growth rate (CAGR) of 3.63% through to 2016”. This growth rate, however, is not equally distributed in across the globe. Office supplies are in high demand of markets with large outsourcing industries, such as India and the Philippines (Growth Markets, 2014). This indicates that office supplies, in particular those that are able to work with minimum infrastructure will be in high demand within these countries. As the article (Growth Markets, 2014) concludes, in India, “. Poor infrastructure was a major contributor to these worrying results“,  namely the slow growth of GDP. Small business owners’ main challenge in India, therefore, might be to overcome the limitations of low infrastructure. The “Blue Ocean, therefore, would provide a solution to a large segment of the market, and become popular in a short period of time.

A recent study by Deloitte (2013, p. 2) states that “by 2030, India is projected to house the world’s largest middle class consumer market, surpassing both China and the US”. Further, the report states that the Indian Government is planning to invest 1 trillion dollars into improving the infrastructure of the country. This indicates that business activity in rural and underserved areas will surge, and demand for office supplies (in particular portable and compact devices) will grow.

The Statista website (n.d.) estimates India’s digital population to consist of 350 million internet users. This indicates that access to internet and computers is growing in the country, therefore, the demand for office supplies will grow consequently.

Market Entry Strategy

While Staples is already present in India, and Staples.in is the largest office product company in the country (Staples India website, n.d.), if the firm was to enter the market at the present, it is recommended that the “wholly owned subsidiaries” model will be selected. This would provide the company with full control over operations, including recruitment, strategic planning, and financial agreements.

The main benefit of entering a new market using the “wholly owned subsidiaries” (WOS) model  is the ability to generate profits without sharing it. This model is suitable for entering high growth potential markets. While foreign investment in India is limited by the government, the high level of growth demand would favor this method. The authors of the study recommend that companies take into consideration various market characteristics before deciding between JV  and WOS market entry. These characteristics include GDP, the current and predicted growth of GDP, socio-cultural distance, risk, students in tertiary education, and the number of scientists/professionals. The above list is relevant to the market of Staples, as college/university students are likely to need office supplies, as well as academic researchers. Given the fact that India promotes higher education and enrollment rates are growing each year (Government of India, 2014), it is recommended that Staples enters this market.

References

Álvarez, M. (2003). Wholly-owned subsidiaries versus joint ventures: The determinant factors in the Catalan multinational manufacturing case. Institut d’Economia de Barcelona.

Deloitte. (2013) India matters. Winning in growth markets. Retrieved from http://www2.deloitte.com/content/dam/Deloitte/uk/Documents/about-deloitte/deloitte-uk

High Growth Markets. (2014) Backing strong words with deeds. Retrieved from https://www.kpmg.com/Global/en

King, M. (2013) Office supplies market led by Staples and Office Depot. Yahoo Finance. Retrieved from https://uk.finance.yahoo.com/news/office-supplies-market-led-staples

Staples India. (n.d.) Website. Retrieved from http://www.staples.in/AboutUs

Statista. (n.d.) Digital population in India as of August 2015 (in millions). Retrieved from http://www.statista.com/statistics/309866/india-digital-population/