Watson’s Personal Care Stores

Identified Driver Market Expansion

About Watson’s Owned by A.S. Watson Group (ASW) Work with more than 5,000 suppliers in the world Provide 180,000 distinct items for sale Operating in 25 markets worldwide The largest international health & beauty retailer in Asia and Europe

Distribution Map

Where Are We Going?

Why Are We Going? Target Market: Women from 18 to 45 Asian Australians now make up some 12% of the nation's population 20% of China-born international students 19% of residents in Sydney are of Asian descent 18.2% of residents in Melbourne are of Asian descent

Keys To Success The largest health care and beauty care store in Asia Consultants for personal care in each retail store Providing products from various brands around the world Company brand products Strong band name Also sell commodities, food and drinks

Political PESTLE Analysis -Efficient and transparent legal system -Stable political environment -Corporate tax rate of 30% -Less corruption than countries such as Canada, UK, and US

Economic PESTLE Analysis -GDP of $52,000CD -AUD currency is extremely stable -Is the world’s 13th largest economy -Entering 24th consecutive year of uninterrupted economic growth

Social PESTLE Analysis -Diversified ethnicities -13th ranked education system in the world -Minimum age is $16.87 an hour -Publicly funded health care and education

Technological PESTLE Analysis -Government funded research and development -Proper maintenance of infrastructure -Cell and internet service available throughout the country

Legal PESTLE Analysis -3 branches of government -Contracts do not have to be on a formal document and signed to be legally binding -If upto code, it is easy to import products into Australia

Environmental PESTLE Analysis -Volatile weather conditions -Diverse wildlife -Strict laws enforcing the removal of natural resources

What Does It Mean? -We do not see issues in the future dealing with the Australian government -The country has the proper infrastructure and resources needed -With consecutively growing economy with diverse ethnicities we see Australia as a logical destination to move our company

Comparative Advantage

Comparative Advantage Almost 40% of the workforce holding a tertiary qualification or advanced diploma The first choice education destination within the Asian region Rich in natural resources Female population is increasing to 50.2% of the total High level of disposal income An opening trade market 10th in the country of ease of doing business

Market Structure Monopolistic Competition Limited barriers to entry Large competition from Australian drug store’s

Social Trends We increasingly rely on use of skin product Awareness of healthy skin and body care Women’s inherent love for beauty Environment: air pollution, low water quality Daily life: bad habits, fast pace of life, stressful

Corporate Social Responsibility 4 pillars Workplace: safe, healthy,supportive, discrimination-free environment Marketplace: setting out the same ethical expectation with business partners, offering the products of best quality

Corporate Social Responsibility Environment: energy-efficiency, reduce waste and greenhouse gas emission Community: develop programs with organization’s that are relevant to local community needs ( beach cleanup, gardening for the community )

Porter’s 5 Forces

Australian Beauty & Health Industry Modest growth of 2% in 2013 Consumers seek products with multiple benefits Mass resurgence in drugstores Price promotions and discounting Australian households spent 8 billion on beauty and 10.5 billion on personal health care in 2012

Competitor Priceline pharmacy A health and beauty retailer of cosmetics, skincare, haircare and healthcare products - Over 330 Priceline brand stores throughout Australia. - Has over 4 million memberships, making it one of the largest health and beauty retail loyalty programs in Australia.

Opportunities & Threats Potential customer base among Asian females (own their brand loyalty) Professional sellers speaking different languages Unique products Lower prices Lack of popularity among locals

Bargaining power - Suppliers have little bargaining power : a large batch of demand for stores all over the world (economies of scale) - Customers have high bargaining power: large competition in Australian industry

Self-developed Products Products owned by Watsons and manufactured in Mainland China (low cost) Issue: transportation cost Solution: already have warehouses in Southern Asia: Malaysia, Singapore and Indonesia, much closer and cost much cheaper transportation fee

Transnational Strategy

Entry Method Greenfield Late mover in Australia health and beauty industry Scale of entry Strategic commitment

Action Plan One store in each city Find out customer preference Build warehouses Adding more stores over time Using similar marketing strategy we did in other countries Market position: localization

Risks Involved -Variability of Australian currency -Competition from large multinationals in industry -Low brand awareness from residents not of Asian heritage -Do not yet know consumer preferences

Thank You Any Questions?