Hwayo Garments Manufacturers Company Marketing Essay

The company is now exporting the garments to countries such as Bahrain, Brunei, Cambodia, Egypt, Indonesia, Myanmar, Oman, Pakistan, Philippines, Saudi Arabia, Syria, and United Arab Emirates and now to establish its empire to Thailand.

The company set up its base firmly in various geographical areas which consists of high rate of population such as Pakistan, Indonesia, and United Arab Emirates. The structure of such a populated country enhances the sales rate of the company. The company’s target base (population) enables the company to be confident in expanding the business. A huge population definitely is a major factor in contributing to a huge amount of profit.

Besides Padini’s outlets are located at strategic location whereby, the customers can get it easily. Padini’s outlets are usually set up in big shopping complexes which are a prominent place to attract the customers. These even enables the Padini to cut cost, because setting up the stores in a mall is far much more cheaper than building a whole new building to market their product. This is cheaper yet an effective way to cut cost.

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Not only is that, Padini’s clothes more to formal attires. These is a very big advantage to the company because most buyer’s or customers are those professional worker’s who seek for new designs of formal wear according to the latest trend which Padini clearly provides. So this simple technique does not let Padini down instead uplifts the status and recognition of the company for producing more formal wears.

Therefore, Padini is a versatile company which can even succeed in country like Thailand if the company expands its empire to Thailand. A best leading company (Padini) will succeed everywhere regardless of where it sets up its business. In fact to set up the business in a low cost country is a good way to create awareness in the eyes of public.

2.0 Analysis

2.1 Gainings

Thailand is a real emerging market place recently, and it is also acknowledged as “Asian Tiger” (Martcher, 2010). Thailand has developed very fast after 1997 Asian Crises, but the Bangkok has shown the most significant development among the cities in Thailand (Hutchinson, 2012). Thailand has well-developed infrastructure and pro-investment policies (Martcher, 2010). Thailand has shown improvement and development in transport facilities, upgrading communications tools as well as IT networks (Siameastern, 2006). Padini able deliver its product to retail store by using good transport facilities, for example railway, river transportation and road, to increase efficiency and lower the cost of business. Besides that, Padini can easily get information such as investment news, economic information and politic situation from internet, so can change plan quickly to fit the external environment changes.

Thailand is considered a gateway to Southeast Asia and the Greater Mekong sub-region, and it trade conveniently with China, India, and the countries of ASEAN (Siameastern, 2006). Thailand provides more convenient transportation which connects to South Asian countries, and China, for example river transport and coastal shippping. (Rungfapaisarn , 2012). Padini can export product to China, India, and those South Asian countries conveniently and no need to spend a lot of unnecessary transport fees, for example Padini can choose a cheaper river transport or railway instead of using flight to deliver its product. Padini product can be sold in a cheaper price to increase its competiveness.

Thailand is one of the members of ASEAN and has played an important role for establishing the ASEAN Free Trade Area (AFTA) (Siameastern, 2006). Thaksin Shinawatra, former Thailand Prime Minister, has established free market economic development (Hutchinson, 2012). Padini can trade with ASEAN member countries without any barriers, and improve efficiency. Padini also expand its reputation from exporting its product to ASEAN countries, such as Indonesia, Cambodia, and Philippines, where the market Padini has not entered before. Padini can enjoy free market system in Thailand which is low restriction from rules and regulations, hence Padini has more freedom to manufacture its product, and Padini has lower down cost of business.

Thailand has lower labor costs compare to other Southeast Asian countries and China. It is a great advantages from participation in China-centered supply chain (Martcher , 2010). Padini can employ cheap labor from local, in order to lower manufacturing cost. Besides that, Padini also provide a great employment opportunity for local people, hence, Padini can increase its reputation in local community.

In the long-term aspect, Thailand’s economic growth is extremely good. In a result, their exporting business has consisted 60% of GDP after suffered from Asian crisis. Thailand is playing a hidden role on two of the best emerging market of worlds, which are China and India. Thailand is a major trader with China and India, and will benefit a lot from their growth (Cole, n.d). Since Thailand export a lot to China and India, Padini can export its product from Thailand to China and India, therefore, Padini can gain more from China and India market.

2.2 Shortcomings

Foreign Business Act 1999 has replaced Alien Business Law 1971; however it creates more restriction to enter Thailand market compare with previous act. Foreign company can obtain the license from the other existing foreign company and enter Thailand market; however, it might have restriction on transferring the ownership of license (Chaninat & Leeds Co., Ltd., n.d). Padini has some difficulty to obtain the Foreign Business License which is under Foreign Business Act, but Padini might pay a lot of money to get the license from existing foreign company, or Padini might pay a lot of grievance money to government in order to get the license. Generally, Thailand is a country that accept bribe from related parties, and it is difficult for any politician to point who accepted bribe (TravelinAisa, 2012).

In Thailand, migrant workers have only enjoyed little protection by labor law, those migrant workers are coming from Burma, Cambodia, and Laos, and they have been abused by local police, civil servants, and employers. For some reported cases, female migrants always been facing sexual violence and labor trafficking, and male migrants were facing extreme labor exploitation (World report 2012, 2012). Padini has to overcome these issues seriously if Padini decided to recruit migrant workers in manufacturing department, otherwise Padini will lost its reputation in terms of controlling its workers.

In 1992, Thailand has shown efficiency to strengthen intellectual property law. However, it shows some problems on enforcement on Intellectual Property Law. For example, right owners may exercise their right on Section 66 of the Copyright Act, so that they able to sue infringer to court. In this stage, right owner can threaten infringer, so that right owner can demand a lot of money from infringer in order to prevent prosecution. However, this sum of money more than amount of fine from the court, and people consider this exercise as abuse of power. Other thing is for those using trademark and copyright for personal use, are not considered as infringer and will not bring in to court (Vannasaeng, Tankarnjananurak, n.d). Padini may easily trigger the risk if the design is similar with other brand, Padini has to pay a sum of money in order to avoid prosecution, in order to ensure the product continue exist in the market. Other than that, Padini cannot sue a person who use pattern and design of Padini for personal use, Padini should beware of this issues seriously, Padini may face other competitors imitate its pattern and design. Padini will lose its uniqueness of clothes in the market.

3.0 Recommendations

In order to overcome the difficulty to obtain the Foreign Business License under Foreign Business Act in Thailand, we recommend Padini to form partnership with local partner. Partnership may help Padini to reach Thailand market and buyers in most effective and efficient way. For example, partnership with local fashion agent or distributors, Padini can facilitate and expedite market entry with partners’ extensive market knowledge and established social network. The interpersonal relationships are vital factor to success the business transactions according to the business culture of Thailand. (STATE, 2010) Partner with existing local distributors and agency could also assist Padini to have better understanding towards local market. Besides, Padini could reduce the manufacturing cost by sharing manufacture cost with other fashion manufacturers. Strategic alliance allows Padini to stand independently and separate from its partners yet still can get advantage from the relationship through sharing bases. (Suwannarat & Pornlapas, 2012) In other hands, according to Lothar Katz (2008), Thailand business culture has expecting those investment and trade activities to do in “their way” and they might accept bribe from related parties to make the business process going smoothly. (Katz, 2008) Thailand is a country that accept bribe from related parties, and it is difficult for any politician to point out who accepted the bribe (TravelinAisa, 2012). The Thai people value lasting and trusting personal relationship, they expect establishing strong bonds prior to closing business deals. When facing the transaction or dealing with Thailand government, partner with established relationship may help Padini to “resolve” some of the license problems. Thus, corruption might be another way for Padini to obtain the Foreign Business License. If Thailand accept bribe from Padini, both of them form positive relationship connection. Padini would provide business opportunity such as employment in Thailand. In addition, when Padini earn more income, tax payment in Thailand will increase as well. This called mutual benefit. The benefits gain by this strategic alliance could contribute to Padini competitive advantage.

In order to combat issues like workers being abused by employers, Padini should establish a code of conduct or code of ethics which is a formal statement of an organization’s values on certain ethical and social issues. After that, Padini should implement Ethics Training Program to its employees once a month. The program would provide guidance to managers and employees to behave ethically. For example, Ethics Training class that train employees know their own rights in workplace while management teams being train to know the consequences of abuse employees. US Sarbanes-Oxley Act 2002 made compulsory codes for U. S. publically-traded companies’ directors and senior officers as well as their listed companies.  This was a huge influence for global companies to adopt codes of conduct (Lunday, 2010). Codes of conduct is one of the most widely adopted instruments within the diverse set of management instruments for monitoring and stimulating human’s responsible behavior. 38% of the top 100 organizations in the Netherlands using a code of conduct while 65% of the top 500 organizations in Spain (Melé, et al., 2000). The U. S. has had 78% while Canada has had 85% within the top 1000 organizations are drawn up a code of ethics (Kaptein et al., 2000). An effective code enhances social responsibility. It also clarifies the norms and values the organization wants to embrace. It is visionary and transformational, providing guidance in difficult circumstances (Stevens, 2008).

Shortcomings also stated that Padini may easily trigger the risk of pattern rights. Thus, we recommend Padini to produce apparels with unique and difficult to imitate designs to avoid copy from others design as well as being copy design from others. Padini could have customization service for customers to design their own personal apparel based on their own preferences such as colors and pattern. Customization product is unique and hard to imitate. It might be a weapon for Padini’s competitive advantage. Nowadays, technology advancement allows manufacturing to customize product with low cost as well. The information technology improvement in Thailand enables Padini to carry the trade and business in more competitive way. Besides that, due to the emergence of Internet, we recommend Padini to improve their business by set up non-physical stores. For example, set up an official trading website and receive order nationwide. The trend for nowadays is people prefer online shopping. Internet is a low cost medium. E-commerce enables Padini to reach wide target market and allow product customization online. Customer can access to their website 24/7 (24 hours per week). This strategy could even reduce their operation cost because no fixed cost (rental) needed. Internet contributes for easier distribution process as well. For example, order received from official website, products will be delivering by the nearest distribution centers in each area; while the orders from other countries will be deliver by Bangkok distribution center. (Wattanasupachoke, 2012)

Lastly, a recommendation for Padini is to improve their business operating. International Manufacturing strategy suggested implementing for Padini operation need to be infrastructure in proper structure, regroup and summarized to prevent some overlapping issues. Padini should have sufficient international supply/demand management which displays the complete order process with inventory replenishment and production decisions in the international environment. All the factors regarding need to be considered and distribute balanced internationally, such as: capacity utilization, inventory objective and planning and customer services. Padini entering Thailand market not just to expand the market development, it also considers the international manufacturing which move the production and manufacturing facilities to Thailand. Manufacturing strategy has referred to exploiting some of the manufacturing function in targeted country to get the competitive advantages. Manufacturing strategies is operation management which mainly focusing on the strategic consequences of investment at operational level. (Meijboom & Vos, 1997)

4.0 Conclusion

Being one of the fashion leading companies in Asia, Padini has the positive energy given by Thailand to market its product in Thailand. This is because of the high technologies which are readily available in Thailand yet with low labour cost as well as low raw material cost compare to Malaysia. Padini setting up its company in Thailand will interrelated facilitate a good and harmonious relationship with Thailand. In future, Padini might able to enter China and India market due to the good trading relationship between Thailand, China and India.

In order to maintain competitive in the industry or market, Padini should either come out with new strategies or improve on existing ones to adapt to the environment from time to time. The macro environment is not something that Padini can change; however, business marketing strategy can be changed to suit the environment. Therefore, it is very important to have a good marketing strategy so that everything can be integrated and Padini can achieve its organizational mission and vision. The strategies and recommendations should take into account and implemented in the right way. Continuous improvement necessary to uphold and up thrust the concept of Padini in Thailand.

Last but not least, Padini’s patent rights and trademarks must be well versed with the legal system in Thailand in order to protect its intellectual properties.