Azza Fahmy Case Study

Evaluate the overall country attractiveness using the macro indicators from Exhibit 4 & explain the relative importance of each factor for AFJ’s decision.  

1. Motivations

• Market seeking: may not be possible as they currently have limited production capacity. They are struggling to produce growth?  
• Asset seeking for an internationalized brand, Azza Fahmy wants to be an internationalized brand (France and Spain). Market seeking for Turkey- huge market size, Turkey cannot help them to internationalize their brand.

1. CAGE

• E: Economics 
• C: consumer taste, upper class
• A: political structure, governance
• G: infrastructure

Discuss other factors which may be relevant for AFJ to consider

• Affinity (Consumer tastes and behaviour): Look at C, the size of the market is affiliated with the cultural aspect, consumer behavior (e.g. Turkey- dd of gold increased, gold is a common wedding gift. In Spain, gold is most popular along with silver as 2nd . There were more working women in Spain who formed majority of the jewelry market in Spain  )
• Competition (e.g. in Turkey comp of 3000 in the manufacturing industry but only 50 leading companies )
• Operating Environment (taxes, unemployment rate)
• Govt Intervention (e.g. Turkey’s Grand Bazaar cluster is supported by the govt)

Eventually they went to France in the end, it’s a reflection of their motivations- turns out they are asset seeking.

PROF SAID ALL YOU NEED TO KNOW ABOUT THIS CASE IS THAT- 

1. Jewelry is a discretionary, luxury good (ECONOMICS)
2. High value to weight (jewelry) makes the geographical distance less important (GEOG)
3. Culture plays a part (France: DD for jewelry increase cos more women worked and more Frenchmen were willing to wear jewelry. There was also more tourists looking for jewelry with international designs ) (CULTURE)

Suggest an appropriate initial Internationalization Strategy and the mode of entry for your respective country. Discuss how these may develop over time

IR grid: growing in the ME, going into countries similar to itself (INITIALLY VIA HOME REPLICATION COS IT WAS THE FIRST TIME THEY WERE INTERNATIONALIZING, THEY WERE DOING HOW THEY WERE DOING AT HOME)

AAA: MOVED TO Adaptation! Azza Fahmy moved from home replication towards multidomestic IR grid [pressures for them to succeed come from their ability to adapt and grow their brand]. They cannot standardize, but needs to adapt.

• Ir grid describes, it doesn’t prescribe
• AAA gives guidance on where AF should go. Note that small scale companies can usually only choose and focus on 1 A.

EQUITY VS NON EQUITY: PROF WOULD CHOOSE NON EQUITY – START BY DIRECT EXPORTING, THEN FRANCHISING IF THEY FEEL LIKE TAKING MORE RISK

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