BUS 323 International Management Essay Is Due Tomorrow, Don't Forget!

The retail industry in Taiwan is maintained through primary retail channels comprising of departmental stores, hypermarkets, supermarkets, convenient stores and e-commerce.  Taiwan is construed as the best retail market in the Asia Pacific region for companies, both domestic and multinational ones, to execute a large-scale retail expansion program (Taiwan the 'best retail market' - Inside Retail Asia. 2013). The retail sector in Taiwan is growing at a rate of over 4.4% annually with the growth primarily driven by the rise in the in the levels of disposable income, enhancement in the degree of consumer confidence upon retail market products and rise in the number of high net worth individuals (Retail Industry in Taiwan - Major Trends, Growth and Opportunities, 2016 - 2021). In terms of the footwear and fashion accessories market in Taiwan, the growth is slow with improvements in the sales figure to the tune of only 8% in 2016.  

The major footwear brands in Taiwan holding considerable degree of market share comprises of Nike, Cole Haan, Converse and Umbro (Footwear in Taiwan - New Market Study Published. 2013).  Most of these brands follow a robust supply chain management with distribution of footwear through authorized dealers thereby keeping a check upon counterfeiting of the footwear brands. Sales channel’s pertaining to Taiwan’s footwear industry primarily comprises of standalone stores, department stores, tie ups and collaborations with supermarket chains along with online channels. Moreover, the manufacturing of the footwear of leading brands in Taiwan such as Nike and Umbro are outsourced to Taiwanese owned manufacturing groups such as Pou Chen Group and the Feng Tay Group (Taiwan’s Booming Shoe Industry. 2017). Moreover, the production of footwear in Taiwan is regulated and managed by the Taiwan Footwear Manufacturers Association (TFMA). The footwear market in Taiwan is less price sensitive and more of the quality and brand conscious resulting towards big international brands such as Nike and Converse holding considerable market share in the footwear industry.

Pazzion was founded in the year 2002 with an objective towards catering to the needs and requirements of women with regards to footwear and accessories (Story & Milestone | Pazzion. 2017). The company initially started out as a manufacturer and supplier of trendy footwear’s to clothing and fashion accessories retailers in Singapore. However, with three years of market presence in the footwear industry in Singapore as a distributer of footwear in Singapore the company decides towards venturing out towards retailing of the footwear manufactured by the company resulting towards initiation of first outlet at Marina Square shopping mall, Singapore  in the year 2005.  Moreover, in 2005 the company had undertaken overseas expansion with first franchise in Thailand, Bangkok along with opening its first flagship stores at Wisma Atria (Story & Milestone | Pazzion. 2017). Over a period of twelve years the company expanded its business operations in over 10 countries with market presence in Cambodia, India, Thailand, South Africa, Mauritius, Japan, Brunei and Vietnam amongst others.

The primary business of Pazzion comprised of selling trendy and fashionable leather and non-leather footwear since the business of Pazzion evolved from being a distributor of footwear in the Singaporean footwear market to a retailer of footwear with market presence in 10 countries globally. The company increased its product line from trendy footwear to introducing of own line of fashion accessories comprising of bags, wallets as well as other leather goods in the year 2010 (Story & Milestone | Pazzion. 2017). Moreover, the company increased its product portfolio further through including a product line of children and baby shoes. In order to provide trendy fashion accessories constantly, Pazzion conducts extensive degree of market research in order to evolve in its production activities and include trendy products in its product line that can compete with the products offered by international brands.

Anderson et al. (2010) mentioned that business structure of an organisation tends to be dependent upon the industry dynamics and market entry conditions. Pazzion operates as a private company and has business structure typical of that of private companies with the ownership structure of the company being undisclosed. Moreover, the business structure pertaining to the company varies dependent upon the nature of the market that the company caters to. For instance, in terms of facilitating market penetration in the overseas markets such as Thailand, India and Brunei amongst others, the company follows franchising mode of operations. However, in the home country Singapore the stores of Pazzion are owned and managed by the company itself. The management of the company focus towards devising market entry and market penetration strategy based upon the nature of the market and the degree of presence of market consolidation opportunities.

Conklin (2010) mentioned that mission statement acts as a guidance for the organisation in terms of facilitating operations and management strategies. The mission of the company is towards becoming a major footwear and fashion accessories brand. The evolution of the company from being a distributor of footwear in Singapore to become a retailing brand with business operations in over 10 countries has resulted in changing business strategy over the years through gaining experience from the home market in Singapore as well as from exposure towards other markets abroad. Thereby, the mission has changed considerably over the years for Pazzion owing to capitalizing upon market dynamics and market opportunities in the footwear and fashion accessories industry.

Grefen (2013) mentioned that the level of effective value creation by an organisation through its products and services along with the managerial decision making are highly reliant upon the ownership structure of the organisation. The ownership structure pertaining to the parent company is similar to any other private companies with unknown number of shareholders holding Pazzion’s share in addition to presence of franchisee owned by the franchisee owners in all 10 markets that the company operates in except Singapore where the eight retail outlets of Pazzion are fully owned by the parent company. Being a private company, the details regarding the ownership structure of the parent company is publicly unavailable.

The Taiwanese foot wear and fashion accessories market is a highly segmented market based upon demographical factors, the income levels and the propensity of the market towards being brand conscious, quality conscious or market segments where consumers are price sensitive in nature. Taiwan is one of the largest producers of footwear with high degree of contracting in terms of footwear manufacturing by companies such as Pou Chen Corporation, Feng Tay Enterprises and Fulgent Sun Group together which accounts for over 60% of all footwear manufactured in Taiwan (Taiwan's Top-3 Footwear Makers Record New Revenue Highs for 2014 | Taiwan Industry Updates | CENS.com. 2014). However, despite the presence of brands such as Nike and Umbro the leather footwear and leather-based fashion accessories market has a lesser degree of competition. Since a large number of market segments in Taiwan prefers trendy and fashionable products thereby, Pazzion has a favorable prospect in Taiwan.  

Pazzion primarily focuses towards offering leather and non-leather footwear in addition to providing other fashion accessories and the primarily targeted segment of the company entails young and trendy adults with an affinity towards buying fashionable footwear and accessories (Story & Milestone | Pazzion. 2017). The Taiwanese consumers are highly trendy in nature and prefer buying products from international brands owing to improvements in the average income levels, economic growth along with an increase in the proportion of high net worth individuals in the Taiwanese economy. Since the company provides high-end trendy leather shoes in addition to fashion accessories made out of genuine leather with a considerable degree of quality thereby the products of Pazzion are suitable for the Taiwan footwear and fashion accessories market. In addition to that, Pazzion also offers high-quality footwear cleaner and footwear conditioner at premium prices for offering maintenance of high-end leather and nonleather shoes. Since the market for footwear cleaners and conditioners are limited in Taiwan with a few local companies offering shoe cleaning products, thereby the prospects of Pazzion's high-end shoe cleaner is considerable in the Taiwanese market.

The population of Taiwan is segregated into three major ethnicities with 84% population being Taiwanese, 14% with Mainland China backgrounds and 2% belonging to indigenous origins (Reaching the Taiwanese consumer - Santandertrade.com. 2017). The consumers in Taiwan have a high degree of loyalty and affinity towards brands and the leading international and local brands have a considerable degree of domination in the consumer markets. However, the majority of the consumers are highly priced sensitive in nature and even marginal increases in terms of brand product's price can lead to a substantial drop in sales. The median age at Taiwan is 39.3 years old and Taiwan has a highly sophisticated consumer market where consumers are well versed with international trends and demand the same in the products that they consume (Reaching the Taiwanese consumer - Santandertrade.com. 2017). In the case of both footwear and fashion accessories market, there is the presence of a large number of international brands.  Yet since the Pazzion has a unique selling proposition since it primarily sells genuine leather shoes and accessories whose demand in the Taiwanese market is considerable but there are fewer footwear and fashion accessories brands competing in that market segment.

Taiwan's economy is largely dependent upon international trade and ranks 19^th largest trading economy in the world along with being a full-time member of Asia Pacific Economic Cooperation (APEC) and World Trade Organisation (WTO) (Gateway to Asia: Doing business in Taiwan. 2017). Export-import accounts for 130% of GDP (exports 70% and imports 60%) with Taiwan's top trading partners being China, ASEAN Bloc, United States, Japan followed by the European Union. The main traded and export category comprises of electronic products and the Taiwanese government have relaxed the regulations regarding foreign exchange transactions making the business climate of Taiwan highly favorable for multinational companies. Ministry of Economic Affairs Investment Commission (MOEAIC) looks after domestic and foreign direct investment (FDI) in Taiwan and deregulation of relevant economic sectors such as manufacturing and services sectors resulted towards increasing degree of business investment from domestic and international companies (Gateway to Asia: Doing business in Taiwan. 2017). In terms of the Doing Business Index, Taiwan ranks 19^th out of 189 economies in terms of ease of doing business and the Taiwanese government's initiative towards simplifying investment procedures resulted towards creating a business climate that is conducive to high economic growth. In addition, foreign-invested enterprises are provided legal protection under the Statute for Investment by Foreign Nationals resulting towards the foreign-backed enterprises getting similar treatment as domestic Taiwanese enterprises.

With a score of 17 Taiwanese culture is highly collectivist resulting towards the fact that the Taiwanese citizens are more prone towards working in order to support an entire group as opposed to working solely for themselves. The group includes family, extended family and work for family.

Taiwan scores lowly in terms of masculinity index with a score of 45 and thereby are construed to be primarily a feminine culture. Thereby, the Taiwanese people focus more upon working towards supporting their families as opposed to working for competition and highest rank.

Scoring 69 Taiwanese people do not prefer an uncertain and unknown future prospect. Taiwanese people are more prone towards working hard, maintaining certain rules and sustaining certain behaviors in order to make sure that uncertainty is mitigated. 

Figure 1: Hofstede Scores for Taiwan

(Source: Cultural Distance Between The United States and Taiwan | Global Affairs. 2017)

Scoring 58 Taiwan has a relatively high power distance and the country has a hierarchical society resulting in the fact that the probability of an entry level employee questioning regarding the work style and work execution of managers in Taiwanese company is slim  (Cultural Distance Between The United States and Taiwan | Global Affairs. 2017).

Scoring 93 Taiwan is not a time oriented nation since it is a nation of multiple tasks and the Taiwanese people prefer to take on a number of goals all at once and their approach towards things are never unfocused. They are committed towards other people and towards relationships.

Scoring 49 Taiwanese culture is both indulgent and restrained since the country comes in the middle of cultural scale resulting in the fact the country does not have clear indulgent or restrained Society (Cultural Distance Between The United States and Taiwan | Global Affairs. 2017). This results towards the fact that a section of Taiwanese society are prone towards celebrating and enjoying their lifestyle which another section of the society are more prone to stick to the social norm.

Taiwan’s population comprises of persons belonging to Taiwanese origin with Hakka Background, Mainland Chinese background and indigenous origins (Reaching the Taiwanese consumer - Santandertrade.com. 2017). The local culture and livelihood have considerable influence from western culture. The western influences upon lifestyles of local Taiwanese population have resulted in the majority of the Taiwanese being well versed in global trends and are familiar with international brands. For  Pazzion, the exposure of the Taiwanese population towards global trends presents an opportunity for a product launch.

Internet penetration rate is high in Taiwan with over 71% households having access to the internet with over 79% households having computers (Advantages of Doing Business in Taiwan. 2017). This, in turn, facilitates towards enhancing the promotional activities of the international brand since such brands effectively use social media and website for promotional activities. Pazzion can capitalize upon technology savvy Taiwanese consumers in order to facilitate market penetration.

The signing of Economic Cooperation Framework Agreement (ECFA) between Mainland China and Taiwan has had a significant positive impact upon the increase in quantum of exports as well as positively affecting the economic infrastructure of Taiwan (2016 Business Climate Survey Summary of Results. 2016). Moreover, the robust manufacturing infrastructure in Taiwan coupled with the increasing standards of living of the population along with increasing GDP and import growth to by 3.8% and $30 billion expanded the consumer market considerably  (2016 Business Climate Survey Summary of Results. 2016). Companies such as Pazzion can capitalize upon Taiwan's booming consumer market for the launching of its products in the Taiwanese economy.

Taiwan has strong environmental that regulates the degrees of pollution permissible for business in terms of manufacturing and production operations with over 17 legislations aimed towards regulating the pollution. For businesses such as Pazzion, the company requires adhering to the legislations and legal acts aimed towards regulation of emissions and pollution.

Taiwan has a stable executive-led political system with a four-year ruling period for the President with Executive Yuan (cabinet) and Legislative Yuan (parliament) looking after policy making and legislation respectively (Gateway to Asia: Doing business in Taiwan. 2017). Over 23 diplomatic and trading pacts between China and Taiwan including EFCA along with strong diplomatic relation between Taiwan and 140 countries enhances the economic prospects. International brands capitalize upon such favorable political climate to enhance business operations in Taiwan.

Legislations such as Statute for Investment by Foreign Nationals and Statute for Investment by Overseas Chinese facilitates foreign enterprises towards gaining similar treatment as domestic Taiwanese businesses (Gateway to Asia: Doing business in Taiwan. 2017). The signing of EFCA with China, Free Trade Agreements (FTA) and Economic Cooperation Agreements (ECAs) facilitates towards encouraging foreign businesses to invest in Taiwan.

Taiwan has a culture of transparency in terms of work culture and the Taiwanese government has initiated legislations that are aimed towards anti-corruption conventions both in terms of public sectors as well as private sector through storing anti-corruption and bribery laws (Business ethics and anti-corruption laws: Taiwan. 2017). This favors companies such as Pazzions towards initiating businesses in an ethical manner. 

Taiwan has a workforce of 10 million (48.07% of total population) with 37.4% of the population having a college or higher education degree with 320,000 students graduating from college or university with the median age being 39.2 years (Advantages of Doing Business in Taiwan. 2017). Having nearly half of the population being part of workforce result towards the presence of a robust consumer market. Pazzion has opportunity towards capitalizing upon favorable demographic factor to further its business.

The Taiwanese Government has introduced free trade zones (FTZs) and free economic pilot zones (FEPZs) where the foreign business operating in such are accorded national treatment (Gateway to Asia: Doing business in Taiwan. 2017). Moreover, the government provides tax relief for a foreign business that operates in the high growth economic sectors such as logistics, international medical healthcare, high-end technology driven manufacturing and financial services all done in order to promote Taiwan as a key trading and manufacturing hub in Asia Pacific region. The main tax incentives by the Taiwanese government are provided under Statute for Industrial Innovation and it is worth noting that Taiwan has special tax regimes and incentives for multinationals who establish regional operations and R&D centers in Taiwan. 

In order for multinational organization setting up regional business in Taiwan, such organizations require recognition and approval from Department of Commerce of the Ministry of Economic Affairs (MOEA).  There is no minimum capital requirement for limited companies setting up business in Taiwan but the paid-up capital has to be verified by Certified Public Accountant (Gateway to Asia: Doing business in Taiwan. 2017). Also, Limited Partnership Act of 2015 facilitates options towards entrepreneurs towards modifying the business structure. In addition, the Business Merger and Acquisitions provides options for both foreign and domestic companies towards facilitating business mergers. The unfair trade practices, unfair competitive practices, monopolies, concerted actions and restrictive practices are regulated by the government through the   Fair Trade Act (FTA). Moreover, the Taiwan’s Intellectual Property Office (TIPO) governs copyrights, trademarks, patents and business secrets.  

Pazzion has considerable presence in the Singapore market with eight stores in posh locations all of the owned by the parent company. However, in order to penetrate overseas markets such as Thailand, Brunei and India the company primarily follows a franchise business model. In terms of the prospective Taiwan consumer market, the brand should follow a franchising strategy. Hinterhuber & Bertini (2011) mentioned that in order to facilitate franchising successfully, the parent company requires supporting franchises thoroughly. Pazzion regulates the product and service quality offered by its franchisees through system integration, personnel training, service training, consistency in terms of maintaining the same product quality by the franchise as has been offered by the parent company.

Kumar & Steenkamp (2007) mentioned that positioning strategy entails communication towards the prospective consumers after taking into account the customers preferences, needs, dynamics of the communication channels in order to produce communicative messages for the consumers.

Figure 2; Positioning map

In the footwear and fashion accessories market, there is the prevalence of both international as well as local brands. Domestic brand WXY offers highly trendy and fashionable shoes which durable only for a short period. Zoody is primarily focused upon providing leather shoes but the product quality is less than satisfactory. Pazzion is position in the Taiwan market that it shall have Nike and Umbro as its primary competitors in the high-quality footwear segment. However, the company positioned itself as more focused towards being trendy and fashionable rather than offering durable products. Pazzion has been positioning itself in a manner that facilitates the company towards facing a lesser degree of competition from local Taiwanese brand and the primary competition arises from international brands of the likes of Nike. The company shall be capitalizing upon the demand of Taiwanese consumers towards getting highly fashionable and trendy footwear and accessories with decent product quality.

Markey et al. (2007) mentioned in the context of pricing strategy that the prices are a key factor in determining whether the value that the company places upon its products or services are similar to how the consumers of the target market values such products. Branding tends to be a relevant factor towards the development of pricing strategy in Taiwan and the price margin at the distributor level is lower for international brands as opposed to local brands (Taiwan - Pricing | export.gov. 2017). The distributor price margin in Taiwan averages between 16% and 40% and fluctuates depending upon whether the distributor manages the marketing of the brand. In addition, organizations also have to take into account value added tax rate of 5% in Taiwan on all manufactured products. In addition, the commodity taxes prevalent in Taiwan that has tax rates from 15% to 50% results towards affecting production costs and thereby affecting the price margins of products (Guide to Taiwan Commodity Tax. 2017). Moreover, there is a presence of Taiwan is highly price sensitive market despite the fact that the Taiwanese consumers showcase considerably loyalty towards different sets of brands.  The prices of premium products of Nike hovers between NT$850 and NT$ 2300 while the products pertaining to local brands such as WXY and Zoody revolves between the price range of NT$400 and NT$ 1100. Pazzion requires following a combination of penetration pricing strategy for its low-end products and economy pricing strategy for is high-end products in order to ensure that the company shall be able to attract consumer base of both domestic and international brands. Based upon the positioning strategy of Pazzion the pricing of the footwear and leather bags as well as accessories requires being priced between NT$ 600 and NT$ 1600. This is to be done in order to cater towards the Taiwanese population that is price sensitive but demand highly fashionable consumer products with decent product quality.

Hinterhuber & Bertini (2011) mentioned that the distribution strategy is dependent upon the nature and dynamics of the market, the nature and characteristics of the intermediaries as well as the characteristics of the product that is being distributed. Since Pazzion deals primarily in leather footwear and leather-based fashion accessories and after observation of business model of Pazzion it can be ascertained that the company requires focusing upon the selective distribution of its products in the Taiwanese market in the initial stages of launching its products. However, once the product has a substantial market prospect and considerable growth the company, in addition to a selective distribution strategy that is aimed towards its franchisees, should delve towards direct distribution for the products offered by Pazzion in the online e-commerce platforms. Initiation of two different sets of distribution strategies for two different selling platforms shall enable the company towards gaining considerable consumer base in Taiwan. In terms of Logistical Performance Index (LPI) Taiwan is ranked 25 amongst 145 countries in the world in addition to that in terms of logistics competence and tracking & tracing of logistics Taiwan ranks amongst the best in the world (Global Rankings 2016 | Logistics Performance Index. 2016). Through utilizing both railway and roadway transportation along with usage of GPS and Inventory Trackers the company can facilitate its logistical operations along with the hiring of 3^rd party logistics (3PL) for facilitating the logistical functions. 

Kumar & Steenkamp (2007) stated that the promotional channels determine the degree of efficiency of the part of the marketer towards conveying the introduction of a brand, product or services towards its targeted customers.  The digital literacy of Taiwan’s population is considerable with over 80% of the country’s households having internet primarily through broadband connections. In addition to that, over 65% of the internet users in Taiwan fall within the age group between 12 and 29 years. Moreover, the mobile telecommunication market is also robust with high growth in the number of mobile internet subscribers. In terms of social networking sites, Facebook is the market leader in Taiwan followed by community website Wretch. Moreover, Youtube, Todou and Skype also host a large number of internet traffic into their websites. In terms of the print marketing channels, the daily newspapers such as Liberty Times, Apple Daily, United Daily News, China Post and Taipei Times together holds the majority of the market shares. The cable television channel is highly scattered in nature with over 66 regional cable operators in the country, however, the satellite television platform comprising of DishHD and CHT MOD holds considerable market share in Taiwan’s cable industry (Pay-TV (Cable Network Operators) - Taiwan. 2017). Pazzion requires primarily utilizing online social networking sites Facebook and Wretch for initiating promotional activities owing to the fact that the company deals with high-end footwears and trendy products and the tech savvy and trendy Taiwanese consumers are the primary target market. This is to be followed with advertisements in Youtube and Skype along with limited advertisements in print media comprising of Liberty Times and China Post. Moreover, the advertisement requires being bilingual by using Mandarin and Taiwanese language in promotional activities. 

The product line of Pazzion comprises of Flats, Low Heels, Wedges, Sandals, Bridal Footwears, High Heels, Baby Shoes, Leather Hand Bags and Crouches (Story & Milestone | Pazzion. 2017). Over 76% of the Taiwanese population belongs to the age group of 15-64 years while the 0-14 year age group has a population proportion of 13.6% while the median age of the Population stands at 39.4 years with female comprising of 48% of the population (Taiwan Population 2017. 2017). The flats and sandals are the most popular and common products of Pazzion while the demand for baby footwear having considerable sales with the handbags and bridal footwear being the least sold items by Pazzion. Since Taiwan has an affinity towards trendiness thereby high heels as well as sandals shall be the most demanded items from Pazzion’s product line followed by Baby Shoes. Moreover, wedges are hugely popular amongst the Taiwanese people's. Thereby, in terms of sales mix by Pazzions, the majority of the sales volume shall arise from the sales of sandals, high heels and wedges followed by baby shoes while the bridal footwear shall account for the least proportion of sales for the company.

The Taiwanese people primarily look for a combination of trendy and comfortable consumer aware that compliments their personalities. Taiwan's local culture is heavily influenced by fashion trends in mainland China resulting from the fact that large majority of the Taiwanese population belongs to Han ethnicity. Since Taiwan has one of the most sophisticated footwear manufacturing industry, thereby the company requires following a local sourcing strategy by setting up production facilities in Taiwan that caters to the market demand. Moreover, through domestic sourcing strategy, the franchises shall be able to sell shoes at discounts as because the franchises do not have to pay additional import charges such as customs duty and additional taxes since the products are domestically manufactured.  The primary attributes regarding the products largely demanded by Taiwanese consumers have inherent characteristics of good branding and considerably low priced. In terms of population demography, the considerable population of the country belongs to age group between 15-35 (Taiwan Population 2017. 2017). Thereby, the production strategy shall be towards primarily catering towards the market segment with popular products such as high heels, sandals and wedges. Moreover, since over 14% of the population belongs to 0-14 years age group thereby product aimed towards very young consumers such as baby footwear shall be fruitful towards making the production strategy successful.   

Since the company shall be focusing upon franchising business model for the Taiwanese footwear and fashion accessories market, thereby the burden of financial capital requirement shall be less upon the company as capital costs are majorly borne by the franchisees. The company shall be focusing towards reducing the cost of production considerably and increasing the profit margin of distributors and franchisees through initiating production facilitates at Taiwan. 

 Table 1: Cost Breakdown for establishing business

(Source: As created by the author)

The initial launching of the products in Taiwan market shall be facilitated through franchising of Pazzion’s product line. The initial financial period shall start with high marketing costs in both online social media channels as well as print marketing channels. For the initial months, the sales shall be relatively low with a lesser profit margin for the distributors and the franchisee owners due to high marketing costs. However, with intensive marketing and promotional campaigns, the brand awareness pertaining to Pazzion's target market shall be facilitated. The sales of the product are expected to fluctuate widely within the initial months owing to both external industry factors as well as due to lack of brand awareness amongst prospective consumers with sales picking up steadily. The sales target for the initial year shall be to the tune of NT$ 500,000 for the franchises in Taiwan. 

The second year at Taiwan shall entail a reduction in terms of marketing costs as targeted market does not require intensive marketing since the awareness regarding Pazzion's product have been substantially facilitated in the initial year of launch. The number of franchisees shall rise substantially as the business operation expands and more prospective franchisees are attracted towards opening their own Pazzion stores. The targeted sales revenue shall increase substantially to NT$ 1,100,000.

Owing to the reason that extensive promotional activities have been facilitated over the previous two financial periods coupled with the high probability of an increase in the number of franchisees in Taiwan the profit margin for the distributors shall be enhanced in the third year of operations by Pazzion. Moreover, the company shall be able to establish itself as a trendy footwear brand in the Taiwan market. The targeted sales revenue for 2019 shall increase to NT$1,800,000. 

Corporate tax rate in Taiwan

The company is expected to break even in its initial year of operations in the Taiwan market. The initial year will showcase consistently high costs owing to intensive marketing campaigns and initial costs of operations. The company is expected to break even before its 8^th month in Taiwan as can be construed from the above figure. The constantly increasing degree of sales of Pazzion over the months shall be facilitated by brand promotion and increasing degree of awareness amongst Pazzion’s target market regarding its products. With tax rate expected to remain at 17% for the next three financial periods, the net profit margin shall rise steadily.

The business prospects of Pazzion shall be highly dependent upon the managerial decision-making processes, organizational structure along with the dynamics regarding the business operations. This management consideration shall be relevant for Pazzion.

In the retail industry, the skill sets pertaining to organizational is a key determinant regarding the business prospects of the organizations (Saikia, 2012). Personality traits such as efficient communication skills, good present-ability, demonstration qualities, negotiation skills pertaining to the sales force of the organizations are a key determinant of the sales generating capability of the organization. In order to enhance the degree of sales activities pertaining to Taiwan market Pazzion requires recruiting and training highly proficient sales personnel. The first choice shall be towards predatory recruitment policy through recruiting experienced sales staff from rival and competing businesses in Taiwan. 

In order to facilitate market penetration in Taiwan’s footwear and fashion accessories market, Pazzion requires focusing upon recruiting corporate advisors that are well versed with the industry dynamics in Taiwan. Moreover, in order to acclimatize itself with the market condition as well as for market development activities the company requires an experienced local based business consultant. The hiring of business advisors shall result towards gaining expertise on the part of the company with regards to constructively developing its business operations and market presence in Taiwan.

Since Pazzion shall be entering the Taiwanese footwear market for the first time thereby there is a high possibility regarding market entry barriers and aggressive business strategy on the part of the closest competitors of the company. Moreover, the presence of the large number of international brands of the likes of Nike, Umbro along with domestic companies such as WYX constraints the scope of market penetration by Pazzion. Thereby, there require being contingency plans in the form of lowering product prices further through offering discounts in case the competing brands focus upon price based competition. Moreover, the shall prepare itself for increasing the marketing costs by including print marketing and cable television marketing in situations when the rival companies increase their online marketing campaigns aggressively. 

The business model of business ownership by the parent company in home market Singapore followed by a franchising business model with regards to overseas business expansion is highly effective towards business development by Pazzion. The exposure towards footwear and fashion accessories market in 10 economies in the Asia Pacific region results towards enhances the probability of success in the Taiwan market. The demographic features and the nature of the footwear market in Taiwan facilitate high degree of business opportunity on the part of Pazzion despite the presence of international and domestic brands in the market. Moreover, the infrastructure regarding manufacturing activities in Taiwan is considerably favorable along with a highly favorable legal framework conducive to businesses. Thereby the company can benefit largely through setting up a manufacturing plant in Taiwan for facilitating footwear for its Taiwanese franchisees. The company requires focusing upon the online marketing channels for reaching out to its target market. Moreover, since the company is an international one with attractive and trendy product line thereby the probability of successful market penetration is considerable. The company can benefit from hiring experienced sales personnel from rival companies along with taking the advice of local industry experts regarding business operations through acclimatizing itself with the market conditions in Taiwan’s footwear and fashion accessories market. 

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