Fashion Competition In Qatar

Market-specific factors belong in the final cluster and shows competition, expansion predictions and likely return on investment. Two crucial factors are market potential and market competition. According to transaction cost theory the market potential refer the amount of resources company ready to commit to market (Brouthers et al., 2000). Profit growth is one of the most leading motivators that drive fashion retailers’ international expansions (Evans et al., 2008). Qatar is one of the fastest growing markets for fashion retailers. Most of the retail activities in Qatar are concentrated in Doha. The country’s modern retail space per 1,000 people is more than 200 sq m, which is expected to increase as the country plays host to the FIFA World

Thus the alternatives available to a retailer decrease, which in turn deteriorates the bargaining power of the retailer and boosts the firm to choose a low control entry mode. Transaction cost theory also provides an explanation of fashion retailers’ preference for a lower control entry mode in a high competition environment. Fashion retailers tend not to engage in operations that need substantial resource commitments due to high competition in a foreign market, because the competition level may increase costs, which may make the business less profitable (Chen and Mujtaba, 2007). With the growing presence of international fashion brands, the competition in the Qatar fashion market has become increasingly intense. Zara is currently facing rigid competition from local as well as international retailers in Qatar. Qataris are the biggest buyers of luxury goods in the Middle East region, closely followed by consumers in Bahrain, according to the American Express Middle East Luxury Spending Tracker. Consumers in Qatar spend up to QR18,200 ($5,000) a month on various luxury items but fashion topped the list of preferred purchases in 2012, with 37% of respondents saying they enjoy shopping for fashion-related items. Due to this attraction market of Qatar is becoming more competitive with passage of

Following table presents the characteristics of three entry modes in terms of involvement/control, investment cost, knowledge dissemination risk, and returns on investment. The wholly owned entry mode permits greater involvement and returns than doe’s franchise, while franchise is useful because it reduces the investment requirements of the franchisor. Control can be view as the authority to affect or direct the actions or processes of a foreign subsidiary; however involvement can be seen as the level of market-specific managerial and financial resources committed to a foreign subsidiary by a firm (Erramilli and Rao,