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Macy’s Oversea Expansion to UAE

Macy’s company in the United States is a successful local fashion company that seeks to expand its market to Abu Dhabi in the United Arab Emirates shortly. The company has been successful in the local markets, and the management feels that it is the time it seeks a new overseas market that will see it as the first fashion company in the United States to expand to the United Arab Emirates.

Mode of entry: Joint Venture

The company will use joint venture as the entry mode as it seeks to introduce new and advanced fashion that corresponds to the culture of Middle East. The joint venture involves company joining hands with another with the aim of expanding its markets. This entry strategy has five objectives that drive it. The objectives include; market entry, reward, and risk sharing, sharing of technology, and a combined development of the product as well as making it easier to conform to the local government’s requirements (Foley, 2004). These objectives are aimed at sharing the market risks and distributing development in the desired country which is what Macy’s is seeking in Abu Dhabi. Having appreciated the challenges posed by oversea expansion, Macy’s company knows that it will not be easy to venture, and it will select one of the established companies Abu Dhabi to form a joint relationship with. According to the requirements of joint partnership, it is healthy to form the alliances when; the goals of the two partnering companies converge, and their competitive goals do not converge, the size f the partner is smaller in comparison to the leaders in the industry, and when partners can comfortably learn from one another.

For that reason, Macy’s will be seeking to partner with a company that possesses such qualities to make it easier for the business to thrive in the Middle East. The major key issues that the company has considered before choosing joint venture as the main entry method are; ownership, the length of the joint agreement, control, pricing, the local firms, transfer of technology, capabilities of local firms, government intentions, and the local resources. This entry strategy will be beneficial to Macy’s given its replicated success in the local market, and it has already identified companies such as Al Tayer Group LLC which is one of the successful and promising companies in Abu Dhabi (Calia, 2016). The company is aware of the challenges associated with this mode of entry such as lack of trust over proprietary information, clashes in cultural diversifications, ambiguity in splitting the pie with the partnering company as well as arising conflict over new investments. With that in mind, it will table a well-drafted proposal to the partnering company and will set aside a committee to negotiate on its behalf and solve such arising challenges. There are however some challenges such as strategic imperative where each partner will be seeking to maximize their gained advantage which may be hard to eliminate, but the company will do its best to curb the effects of the challenge.

Overview of Macy’s Company

Macy’s company is one of the most successful omnichannel retailers in the United States with selected outlets in the country. It is a mid-range company composed of departmental stores, and it is owned by an American corporation called Macy’s Inc. Macy’s is part of two divisions that are owned by the company with the other company being Bloomingdale’s. With over 800 departmental stores, the company boasts of being one of the best manufacturers and suppliers of clothing, accessories, footwear, furniture, jewelry, housewares and beauty products. This company is best known for its niche which has made it popular in cultures and its merchandise diversity. Some its famous departmental stores include; Hawaii, United States, Guam, Puerto Rico, Midtown Manhattan, and New York City. The company has been able to withstand competition from its closest rivals such as Bon-Ton, Belk, Dillard’s, Boscov’s, JCPenney, and Sears. It has been involved in community activities and sponsorships that have made it a success in its respective stores. For instance, it has been sponsoring the Fourth of July annual fireworks display from the year 1976. In addition, it is known for the annual thanksgiving event which it has been holding in New York since 1924. It has the biggest flagship stores in the world which cover almost an entire New York building covering approximately 1.1 million square feet.

The company has been involved in the stock exchange market where it sells its share under the symbol “M” in the stock exchange markets of New York. It undertakes its operations mainly through the internet where it leads a wide range of merchandise in consumer goods and clothing. Their services are provided through some its subsidiaries such as Technology, Inc and Macy’s Systems; Inc. the Technology, Inc subsidiary supports the company with the operational electronic processing of data and information regarding management. On the other hand, the Macy’s Systems, Inc support the company through designing and marketing its label and all its licensed products and brands.

Growth Opportunity Analysis

Having achieved remarkable success in its already existing departmental stores, the company has decided that going overseas is the next big step. It has several prospective in sight but has chosen Abu Dhabi as the first destination due to the already existing license agreement between its sister branch Bloomingdale’s. This will give it an opportunity to extend their relationship with the company into the Arab market where the license agreement has seen some success (Sayegh, 2014). Their products have been appreciated greatly by the local people, and this has given them a motivation into opening a bigger store where they can expand the existing market share. This will see it anchor an approximated 3.2 million-square-foot development that is expected to house other shops to create local job opportunities.

In addition, the company is looking forward to going down as the first clothing company in the United States to have expanded successfully into the Arab Emirates’ market. Another motivating factor to its oversea market expansion to Abu Dhabi is the availability of expansion space in the outcast of the central business district in Abu Dhabi (Calia, 2016). This will give it a strategic location where people can conveniently come for shopping. The management has also identified investment opportunities in the Arab’s economy and feels that it is the gap that the country has been missing. This growth opportunity is seen as one of the best ventures the company will make shortly and will give it a lot of exposure. Given the kind of reception it receives it all its new ventures, the company is positive that fashion designers and the local government will give it a warm welcome as it will help grow its economy and even attract more American based tourists.

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