Billabong Analysis

Billabong multinational Limited is an Australian based wearing company that imbeded its business in 1980s and leaded planetaryly by means of its franchises and acquisitions. The business is engaged in the selling, distri exactlyion, wholesaling and retailing of app bel, eyewear, accessories, wetsuits and hard goods in the boardsports sector under the Billabong, Element, Von Zipper, Honolua Surf, Kustom, Palmers Surf, Xcel, Tigerlily, Sector 9 and RVCA flaws (Billabongbiz, 2013). The company is headquartered in Queensland, Australia with 6,000 employees and they track down across numerous countries such as Australia, North America, Europe, Japan and the ride out ofthe world.Billabong has emerged a number of sports and youth labels such as RVCA, and Surjection (Billabongbiz, 2013). They continue to expand their brand image by sponsoring promotional events and some of the athletes. The rival brands of Billabong are atomic number 80 and Rip Curl as these companies are iconi c breakers brands. In rear to perform Billabong International Limited effectively, the board of directors are structured into six non-executive directors, two executive directors and the chairman who are responsible for(p) for the shareholders of Billabong. However, due to recent recession, the virgin CEO, Launa Inman, has been appointed.2 Financial AnalysisThe meshability performance of Billabong International Limited is non effective as it is -45.71% in Q2, 2013 (Google Finance, 2013). Similarly, net meshing margin of the company is -50.72% which represents the salary later on subtracting the indirect expenses. Overall profit performance is showing a negative sign and the firm live experienced shrinking sales and rising debts. However, with respect to gross profit margin, it shows a positive figure as it amounts to 50.21% in Q2, 2013.This shows that the profitability after score for the cost of goods sold is good and toweringly effective for the company, but the negat ive net profit implies that the indirect expenses of the company are significantly higher. The plans of the company are to focus on its core brands in the neighboring four historic period, cut manners by 15% and achieve improvement in its supply chain for both the wholesale and retail operations2.1 Identification and rating of Billabongs planetary strategyThe securities industry mix helps a business to experience its sales and finally determine the success or failure of a business. For this reason, it is the most essential element of business when determining a marketing plan. Billabong International Limited makes broad use of the marketing mix in their marketing plan.Billabong International Limited has diversified their increase range not onlyrelated to surfboarding. Their positioning strategy is a high quality, high priced, fashionable product. Billabong exculpates customer satisfaction by awayer quality products that is not vulnerable or ruined easily despite the har sh conditions of many of their products intended uses, such as swimmers, skis and snowboards. Billabong has been successful in making brand images by appealing as an internationally known for professional surfing, and by means of its wave logo and sponsorship of international events.By doing this, it has not only gained international markets, so far it has too become a prestige and status symbol for its fundament market. The product and positioning of Billabongs products is the most important element in its marketing mix as it ensures the long term survival of the company and go on high sales. By meeting customer guide, positioning itself as a well-known and trusted brand with a vast amount of prestige it has ensured that sales remain high.2.1.2 PromotionBillabong uses a strong promotion mix to set off and reinforce its image and product. A combination of an interactive website, promotional magazines and flyers, individualized in store selling and strong public relations thr ough both sponsorship of sporting events and famous athlete using Billabong products pretend generated a strong brand images amongst its industry. Billabongs sponsorship of international sporting events and sporting stars also helps to encourage their brand not only in Australia but also on the international market as well.2.1.3 PriceBillabong uses a competition-based pricing method in which it sets its prices at a similar level to those of its competitors to ensure that their customers leave behind not wish to buy the cheaper products. However, Billabong is awkwardly positioned between Rip Curl and Quicksilver. curiously wetsuits and womens jeans are higher than Quicksilvers. They rarely use to a lower place market value pricing to avoid creating a image of less(prenominal) prestigious products.Surf brands Average price comparison(Source EDITD, 2013)2.1.4 PlaceBillabong uses variant methods to ensure that their product reaches the market place. With stores in more than deo xycytidine monophosphate countries Billabong uses wholesalers to ensure that their products reach the retailers. Billabongs positioning also comes into effect with place as it must ensure that its product cadaver out of discount and department stores and remains only in military capability stores. Because of this Billabong has adopted an exclusive distribution network where the product is only addressable in specialty surf shops.2.2 SWOT AnalysisA business can use a SWOT analysis to decide which marketing strategy to apply.2.3 ongoing Target MarketBillabong is a brand which offers various types of products designed to accommodate various lifestyles. Their extensive product ranges are for surfers, boarders, beach lovers, and the sensible fashion people. correct though it is difficult to identify comprehensive characteristics of this industry, the majority of consumers are males and females who are aged between 14 and 29. (Goldcoast, 2013)According to Australian Business Solut ion (2011), there are an increasing number of casual dress codes at Australian workplaces and social gatherings which has led to a high demand for low-cost and advance(a) suppose at workplaces. Billabongs new casual-line is aiming to meet such demand and targeting office workers.Due to Billabongs sports image, it has been entrenched in consumers mind especially among teenagers and youths. When these consumers modernise older, they will be pleased to see Billabong to provide expanded casual-line offering to meet their new needs. The new product line is a modern, up-scale look but also inexpensive casual dress codes at workplaces. Therefore, it will better resonate with age group 25 to 39 years old who have built careers and gained stronger buying power.2.4 Reasons for Billabongs international expanding uponAustralia has littler population compare to some other regions that place significant restrictions on its radical sales revenue and Billabongs future objectives. Billabong s expansion helped to rising their total sales revenue by over 70% in 2003-04. Increase in sales has also allowed the firm to lower its merchandise cost by achieving economies of scale and lower risks. In 2003, Billabong adapted video conference technology in order to make the communication and permute of ideas across the world for its overseas offices easier.Furthermore, by working in more than 100 countries obtained cushion impacts of the entry of a new competitor and economical cycle into any of their industries. Global expansion supported the extension product life cycle for numerous products and easier access to re bloods and technology.3. Identification and evaluation of the outside(a) milieuTo better understand Billabongs global expansion strategy, both Porters atomic number 23 Forces and a PESTEL analysis will be undertaken.3.1 Porters Five Forces3.1.1 The CompetitionSince 1970s, there was a significant rising popularity of the beach and surfing, and then three majo r companies (Billabong, Quicksilver and Rip Curl) have become a symbolic of surfing. These brands manage to establish strong credibility within surfing subculture and it was also equally expendable by non-surfers who identified with the lifestyle. In the 1990s and 2000s, Billabong started to aggressively pursue international expansion by emerging sports and youth labels such as RVCA and Nixon watches to gain market share. However, in 2012, there was a significant loss of $287m. (Billabongbiz, 2013)3.1.2 unexampled EntrantsThere is still room for a new entrant as the global demand for surfing apparel is expected to remain strong. For instance, Hollister Abercrombie & Fitch started off with a local manufacture that successfully moved into surfing garment and retailing. Moreover, smaller brands like Byron Bay label, Afends has dramatically grown in the go decades by selling itsproducts through independent and online stores. Afrends gained reputations among young surfers and skater s from Australia and California.3.1.3 Suppliers PowerAs Billabong has become an internationally well-known brand, they outsource its manufacturing by using small to mid-sized companies in order to keep economies of scale. Billabong uses Hong Kong as the central sourcing division to provide most of its products to Australia and hot Zealand. These suppliers have no bargaining powers.3.1.4 Consumers PowerDue to the size of Australia population, consumers actually have not enough bargaining power. However, to the global extent, consumers are likely to find other tailors which would provide products that would be cheaper than existing ones.3.1.5 Product SubstitutesAccording to the Urban Market query (UMR) survey, findings indicate that Nike (13%) has overtaken the lead from Billabong (10%) as the best choice for Australias youth. opposite rival brands such as Quicksilver and Rip Curl have also expanded their popularity. Young females prefer disposable fashion with affordable price suc h retailers like Cotton on and Supre. Country way and Colorado would be other substitutes for Billabong, but it has different quality and style compare to Billabong.3.2 Industry Analysis3.3 PESTEL Analysis3.3.1 Political factorsBenefit from the worldwide trade barriers which allowed exportation procedures more than easier for Billabong International Limited to other regions. The rate of import duty lessen from 17.5% in 2005 to 10% in 2010 as the Australian governments maintained responsibility barriers for defending the domestic clothing and manufacturing industry. (Wellers, S., 2007) The announcement of bilateral trade agreements by World Trade Orgainisation(WTO) has affected Billabong International Limited. Since 2005, all Australian businesses indispensable to produce their financial reports to International Financial Reporting Standards. Hence, it makes easier for Australian accounting standards into global practices and cost of implementation was significant.3.3.2 Eco nomic factorsThe growing popularity of surfing and skateboard has been impacted by improvement in standard of living and the consumer outlay power. As Billabong Internationals products are distributed in more than 100 countries and the majority of the revenue is generated by other regions, the firm is continually influenced by fluctuations in currency. Every each year, value of earnings has shown loss when it was inform in Australian dollars. From the global point of view, Billabongs global expansion was encouraged by its high incomes from Asia and South America that enabled to create new markets.3.3.3 Social factorsBillabongs brand awareness has been influenced by the growing popularity of surfing and skateboarding among the broader community. Identifying customer tastes were depends on various types of traditions and cultures. For instance, U.S preferred bright colors products while Australia preferred faded and weather beaten colours. Complications in written material contrac ts with different languages have encouraged the firms ability to consort in global markets. errors on contracts could lead to future conflicts. Difference in oragnisational culture and practices on different regions are their major concerns. For instance, Australia has relaxed working environment while U.S and Japan are more intense. Further, European countries are compel on limiting working hours by governments.3.3.4 Technological factorsCable television and net has attracted millions of new customers in surfing and skateboarding which helped Billabongs products market towards a wider customer base. E-commerce has simplified the logistical and oragnisational difficulties when operating a global business.3.3.5 environmental factorsConsumers pay more attention on environmentally friendly products source of materials, where materials are sourced, and whether production processes have negative impacts on the environment.3.3.6 Legal factorBillabong ensures to protect intellectua l property rights issues such as brand logo, names and trademarks from unauthorized piracy.