Introduction of Montblanc International GmbH
Montblanc International GmbH was founded in 1906, by a stationery trader Claus-Johannes Voss, a Hamburg banker Alfred Nehemias and the Berlin engineer August Eberstein and is a subsidiary of Compagnie Financiere Richemont- Cartier, Dunhill, Chloe and seven others companies; It is German Manufacturer of writing instruments, jewellery and leather goods. Montblanc International GmbH is a MNC with Singapore based operations This purpose of this report is to analyze on the external forces, environmental and major factors that might affect the business of Montblanc International GmbH locally, functions of management and recommendations in achieving success in the next 5 years.
The company is in the industry of luxury goods and engages in the development and production of writing instruments. It also offers watches, leather, jewellery, eyewear, and fragrance for men and women. Their products are sold through selected retailers and jewellers and about 360 boutiques in more than 70 countries. “A century of tradition, efficiency, craftsmanship, heritage, culture, and creativity are the key defining factors of Montblanc, one of the world’s most consistent and successful luxury brands.” (Petcu, 2012) These are key factors which led to the success of Montblanc of today. Mont Blanc makes their pens a symbol of high standards, reputation and class and stands to be one of the topmost companies that produce an extensive range of luxurious accessories such as pens and watches.
Some of their pens are collector’s items, guaranteeing a lifetime of high-value purchases and usually is an ideal gift for someone with high authority or studying. Their selling points are quality and nostalgia, men and women who desired a life expensive luxury and creativity and talent. They target professional and people who wanted to be seen as a professional by selling their products at a higher price and serial number on every pen they produced to act as an identification of an authentic Montblanc product. Their key products are their fountain pens, with special and limited editions and they have their own customer service and repairs for their products. They do not sell replacement parts and provide 2 year warranty for all products.
4 Environment factors that affects Montblanc
3.1 Changing demographic
“SINGAPORE: The Singapore government is taking a comprehensive look at its population policies in view of the country’s changing demographics.” (Saad, 2012) Changing demographic refers to changes of the population, e.g. age, gender, race employment status and etc. In Singapore, there is an increase in ageing population. With higher employment rate, people are more financially stable as compared to the olden days and are more willing to spend on luxury goods. And as compared to generation X, generation Y are more willing to spend on luxury products and wants to be seen as chic and trendy. Social status plays a important factor to them.
Moving from generation X to Y, a new generation Z has emerged, this being the Net Generation. “Generation Z is highly connected, as many members of this generation have had lifelong use of communications and media technologies such as the World Wide Web, instant messaging, text messaging, MP3 players, mobile phones and YouTube, earning them the nickname “digital natives”. (Mira, 2012) Thus, Mont Blanc should tap onto the ever-changing world wide net to market their products.
3.2 Lower trade barriers
Trade barriers are restrictions induced by government on international trade which will affect the country’s economy. Purchasing power is one of the key factors that affect the company. If the country economy is good, the purchasing power of Singaporean to purchase their products will increase. Instead of just purchasing the cheapest product in the company, buyers can purchase a higher quality product if the economy is doing well. Also if the economy hits inflation, people will think twice about spending money. Lower trade barriers also increase the competition in the market as more competitors of the same industry start swarming into Singapore which will affect the company. Montblanc’s competitve advantage is its well established brand in the world and in Singapore. Competitors will be able to able to copy its products and design, but branding is something that will help Mont Blanc to maintain its competitive edge and increase the barrier of entry to competitors.
3.3 Globalization of production
Globalization of production helps to save cost of production as products are split into many parts and produced in countries where labour and production cost are cheaper. Many production has moved their productions to China, however, Montblanc’s products are only produced in Germany. “The international business environment is forcing many firms to see the entire world as the stage for manufacturing, production, and marketing.” (Gomez-Mejia & Balkin, 2012) With increased accessibility and improved telecommunications, moving their production factory to China will help to lower costs. Parts and raw materials can be sourced at other places for cost efficiency. However, quality control must be maintained at all times, regardless of where productions are.
3.4 Technological innovations
Today, internet access is almost worldwide and we can’t deny its advantages. According to a research made on internet statistics, there are around 3.7 out of 5.2 millions of the population in Singapore who use Internet and the internet penetration rate in Singapore is 77.2%. (Consultant, 2012)
Figure 1- users of internet in Singapore
Due to long working hours and increased job demands, more and more working people are finding it difficult to visit our traditional brock and mortar shops. Retail experience still do matter for some, however, online shopping is becoming more popular in Singapore. Mont Blanc, being a trusted brand, will benefit even more from online shopping as people already has a standard expectation of the quality of their products. Currently, in Singapore, people can only shop for Mont Blanc products in their retail outlet or their US online store. However, cost of shipping and longer waiting time might play and important factor too.
2 Majors factors affecting Montblanc
4.1 General business environment
General business environments are the factors and conditions such as economic, legal, political, and social circumstances that affect everyone in an industry. Singapore of today is pro-business environment, capable of attracting foreign investments and business entrepreneurs into Singapore. The business environments here are quite stable in terms of political, economic and legal. Singapore government are firm and not corrupted and is strict regarding piracy and copyrights and are providing assistance for people who wanted to start a business. Cases of selling of unauthentic branded products are low in Singapore.
4.2 Economic conditions
Fluctuation in interest rates can have an impact on consumer purchasing. When interest rates are high, consumers may be less willing to purchase luxury goods. Higher inflation is normally accompanied by higher prices, so consumers may be less willing to buy luxury goods, If wages don’t rise at the same rate of inflation, their spending power will decrease. Figure 2- Inflation rate in Singapore 2011 and 2012
The rate of unemployment can have a major effect on sales too. The more the number of people who are um-employed, the less money that is circulated into the economy through the purchase of goods and services.
4 Management Functions
5.1 Planning and Strategizing
Planning is a basic managerial function and is the process of setting goals and objectives for the company and how it will be accomplished. It is important to plan as it set the organization’s objective clear and specific, .e.g. the targeted market of consumer, the image for Montblanc, price of their products, and also the setting of financial and operational budgets various products. The importance of planning is that it reduces risk of uncertainty, facilitates coordination and decision-making. Other than that, it also promotes creativity and allows a basic of control of the organization.
To plan for an online store in Singapore, research has to be made in detail on the spending power people on luxury products, segregating into the different market segments and determining which segment has the highest spending expenditures on such luxury products. Forecasting sales by observing sales of other luxury products such as miu miu and prada which has moved into local online stores can help to minimize unnecessary cost in warehousing and manpower.
Organizing is arranging the internal structure of the organization, arranging and coordinating to achieve desired success. Organizing helps to organize resources and manpower according to the plan, increasing the effectiveness and efficiency and the success rate of achieving the organization’s goal.
Figure 3- Organizing Structure of MontBlanc
Montblanc adopted a organization structure which decentralized the organization into 3 divisions and the productions of dfifferent products are from 3 different factories. This structure benefits the organization as the deciding power are decentralized to each of the divisions where the management are more familiar with the culture and economy of the specific countries. Marketing and logistics play an important factor in online stores. Thus, internally, Mont Blanc has to hire a team of experts to push out their online store to the net savvy market.
Leading helps the management to control and supervise the actions of the staff. This helps them to assist the staff in achieving the company’s goals. A leader’s influence over employees also affects and is affected by the effectiveness of the organization. The leader may partially determine which rewards are rewarded to achieving task goal accomplishment and choosing the rewards that have the highest value for the employee. “The key to our success is our people – they ensure the company´s success regardless of their role in the organization. We consider Montblanc´s development to be the responsibility of everyone in the company.” (Montblanc)
Giving bonuses and commissions as rewards are related to sales goals and effective in motivating the employees to achieve the goals. Communication and Interaction between the leader and subordinates are important, knowing their specialties and sending them for further development, matching their skills with the task requiring will increase the employee’s expectation and performance. Being considerate and humble, assigning right tasks, meaning goals and allowing subordinates to involve in the setting of goals and decision making will increase their satisfaction in their work and hence increase the efficiency of the organization.
Controlling is the process of examining performance, comparing actual against planned actions, and taking corrective action if necessary. It is important to to examine the performance so as to keep track of the financial status of the organization, whether if they are in the right directions and also allow them to attentive to any changes in the economic that might affect the plan.
Firstly, as the decrease in the trade barriers, as a General Manager, I suggest that Montblanc should decentralized their source of production and sought for lower cost production in less developed countries such as Thailand, China, Indonesia as their cost of labour and materials are much lower than developed countries. This will help them in saving money on shipment cost and increase the profits of the organization and providing an alternative for them if any problem occurs in their current factories. Constructing a service centre in Singapore will increase the efficiency and reputation. People will only to wait for weeks instead of months.
Secondly, due to the rapid evolution of the technology in the Singapore and the increase of demand of online shopping in Singapore, Montblanc should start selling products online to go with trend, creating their personal shopping website that allows consumers in Singapore so that consumers could purchase with just a click instead of going down to the respective boutiques.
Thirdly, in terms of demographics, generation Y and Z are more willing to purchase luxury goods; hence Montblanc should introduce a new design/series which is attuned to the needs and wants of the younger generation. This will not only bring in a different feeling and image of Montblanc, it will provide a new market target group for the organization, bringing it to a new level. Other than that, they can try to venture into different industries and provide a larger range of products with its well-known reputation. Lastly, Montblanc is an established brand and thus, the more they should improve the branding of their products as it is a competitative advantage for them.
In conclusion, Montblanc is affected by environmental and major factors of different countries. Changes of which will determine the success of the organization. Nevertheless, functions of management are a key factors to success as their success depends on their people and with well applied of the functions; When staff are motivated and appreciated, they are more willing to work harder for the company and even contribute ideas to the development of Montblanc. This will definitely bring Montblanc to greater success in its industry
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