Posts Tagged ‘electronics’

So much for the global consumer

December 5, 2008

One of tenets of the more extreme globalisation mantra is that we have all developed similar buying patterns and firms can thus treat us as global consumers. This little grab from the New York Times, and the accompanying nifty world maps, show otherwise. The article claims that:

“Greeks spend almost 13 times more money on clothing as they do on electronics…[while] Australians spend only 1.4 times more cash on clothes than they do on consumer electronics.”

boot2This has very big implications for the internationalisation decisions of large multinationals. Certain countries become more attractive than others – although the choices are not as clear cut as one might think.

If you are LG or Nintendo do you chase the potentially already sated Aussie consumer, or the yet-to-be-convinced Athenian?

What is unfortunately difficult to visually gauge from the graphs, but is presumably more accessible from the Euromonitor data, is how different the country-level buying behaviours are product-to-product within the Triad regions. This would help get at some of the still contested issues within the regionalisation debate (see this paper by Tom Osegowitsch and I for an insight into this discourse). If, for example, Spaniards are more like Brazillians than Germans in their consumption patterns, and Aussies more like Canadians than Malaysians, where does that put the notion of regional strategies? Will firms really stay close to home geographically, if proximity of tastes is not correlated?

Finally, as an Aussie, I must take umbrage with this quote in the New York Times piece:

“In Australia, what else do you need besides a bathing suit and a pair of Uggs?”

That’s not a mental image any of us would like to think too hard about!

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Oh Harvey, Oh Harvey

December 4, 2008

It was somewhat disheartening to see the always candid Gerry Harvey (Australia’s richest retail tycoon) lamenting the poor performance of his firm, Harvey Norman, in Ireland.  A big box retailer of home electronics, furniture and white goods, Harvey Norman is one of the few Australian retailers to venture off shore in recent years (see my discussion of the few in a chapter I wrote last year for a book called The Internationalisation Strategies of Small-Country Firms: The Australian Experience of Globalisation).

The firm has chosen an odd mix of locations – Singapore, Malaysia, Ireland and Slovenia (along with the obligatory NZ). The international adventure now makes up 24 percent of the business on a simple store count basis.  As these stores are all company owned, whereas 98 percent of the Australian stores are franchised, they represent (potentially) a more significant source of revenue. The simple reason for the dramas is that the Irish economy is faring a lot worse than Australia.  However, there are still question marks over Harvey Norman’s ability to build sufficient competitive advantage in its international operations.

In Australia the firm benefits from enormous economies of scale in both purchasing and marketing (the firm is one of the biggest media spenders in the country).  Also, it utilises a distinct within store franchising system. A given store might include a furniture franchisee, a white goods franchisee, an electrical goods franchisee and a computer products franchisee. This allows appropriate specialisation from sales (and purchasing) staff and offers the usual motivation benefits of entrepreneurial franchisees.  The Australia operations also has a nice side-business in property management and leasing.

It looks like very few of these competencies have been transferred offshore, with all stores company owned, and limited scale in a given country (beyond NZ).  With troubles in the retail market at home, and Harvey Norman much more exposed to consumer timidity than their upstart competitor JB Hi-Fi (who sell a lot more software such as DVDs, video games and CDs rather than big-ticket hardware like TVs), it is hard to see Gerry and co diving into more international expansion any time soon. Looks like the paucity of Aussie internationalisers may continue, at least in the retail domain.