Explain how privalia entered the international market

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Assignment

One example of an internationalization process of a digital company is Privalia. In early 2011, José Manuel Villanueva and Lucas Carné, founders of Privalia, an online fashion discount store, were about to submit to the Board of Directors a strategic plan that could mark the beginning of a new phase in the company's growth. Since its inception in 2006, Privalia had grown at a fast pace: three years later, it was already profitable in Spain and expanded into Italy, Brazil and Mexico. By 2010, it had secured market leadership in every country where it operated. However, the competition grew just as fast, and the experience acquired over recent years indicated that speed and market size proved key in online fashion sales. Privalia already operated in Spain and Italy, but, if it really wanted to become a relevant player in Europe, the company needed to move into the topmost markets like Germany, France or the United Kingdom. Villanueva and Carné decided to strengthen Privalia's international expansion by venturing into the German market. Thus far, Privalia's international growth had unfolded organically, via the creation of affiliates in the countries where it had moved into (Italy, Brazil and Mexico). Now, in order to enter the German market, should Privalia set up a subsidiary or should it acquire Dress-for-Less that was up and running in a leading local market position? Villanueva and Carné did not have much time. A board meeting had been scheduled to make a final decision. They needed to design a clear growth strategy, evaluate their options and prepare an entry proposal for Germany.

Question 1. Analyze why Privalia should enter international markets, in particular Germany.

Question 2. Explain how Privalia entered the international market. What entry mode/s did they use?

Question 3. Analyze advantages and disadvantages of the following three entry modes: export mode, contractual agreement mode and foreign direct investment, in the context of the case.

Question 4. What strategy should Villanueva and Carné choose for the entry to the german market?

Reference no: EM133595265

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