Baleno: Expanding Retail Operations in China
ASIAN CASE RESEARCH JOURNAL, VOL. 13, ISSUE 1, 1–27 (2009)
ACRJ
This case was prepared by
Sherriff T. K. Luk and Ivy
S. N. Chen of the Hong Kong
Polytechnic University as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative or business situation.
Please address all correspondence to Ivy S. N. Chen,
Department of Management and Marketing, Hong Kong
Polytechnic University, Hung
Hom, Kowloon, Hong Kong.
E-mail: msichen@inet.polyu. edu.hk. The authors would like to thank the senior management of Baleno for their inputs/ comments in the preparation of this case and the staff of the
Asian Center for Brand Management, Hong Kong Polytechnic University for their clerical support.
Baleno: Expanding Retail
Operations in China
INTRODUCTION
It was a hot and humid Friday afternoon. Samuel Chan,
Marketing Director of Baleno, was preparing for a meeting with the staff of the Franchising Department. They were to discuss whether the company should continue to expand its operations in China through franchising. China had lifted restrictions on the operations of foreign retailers as part of its WTO agreement. Retailers could now choose where to locate their stores. They could also open their own stores without the need for a joint venture partner. Some of Baleno’s competitors had already opened directly managed stores in key locations. Baleno’s Franchising Department had also experienced severe staff shortage, with some staff leaving to help competitors in their franchising operations. Baleno had also encountered problems with some of their franchised outlets. Some franchisees had started competing stores in their territory. The fashion retail market was growing fast and in order to keep pace with demand as well as the actions of competitors, Baleno needed to find a way to expand its retail network quickly or it would be left behind.
THE COMPANY
Baleno was established in 1981 by young fashion experts. This group had left
ACRJ
This case was prepared by
Sherriff T. K. Luk and Ivy
S. N. Chen of the Hong Kong
Polytechnic University as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative or business situation.
Please address all correspondence to Ivy S. N. Chen,
Department of Management and Marketing, Hong Kong
Polytechnic University, Hung
Hom, Kowloon, Hong Kong.
E-mail: msichen@inet.polyu. edu.hk. The authors would like to thank the senior management of Baleno for their inputs/ comments in the preparation of this case and the staff of the
Asian Center for Brand Management, Hong Kong Polytechnic University for their clerical support.
Baleno: Expanding Retail
Operations in China
INTRODUCTION
It was a hot and humid Friday afternoon. Samuel Chan,
Marketing Director of Baleno, was preparing for a meeting with the staff of the Franchising Department. They were to discuss whether the company should continue to expand its operations in China through franchising. China had lifted restrictions on the operations of foreign retailers as part of its WTO agreement. Retailers could now choose where to locate their stores. They could also open their own stores without the need for a joint venture partner. Some of Baleno’s competitors had already opened directly managed stores in key locations. Baleno’s Franchising Department had also experienced severe staff shortage, with some staff leaving to help competitors in their franchising operations. Baleno had also encountered problems with some of their franchised outlets. Some franchisees had started competing stores in their territory. The fashion retail market was growing fast and in order to keep pace with demand as well as the actions of competitors, Baleno needed to find a way to expand its retail network quickly or it would be left behind.
THE COMPANY
Baleno was established in 1981 by young fashion experts. This group had left
References: 2. China’s GDP grows 11.4 percent in 2007. January 24, 2008. 9. Li & Fung Research Centre 2006. China’s apparel market, 2006, Issue 6 10. Li & Fung Research Centre 2006. Performance of China’s apparel product sectors, 2006, Issue 7