1. Watson’s Personal Care Stores

2. Identified Driver
Market Expansion

3. 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

4. Distribution Map

5. Where Are We Going?

6. 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

7. 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

8. 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

9. 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

10. 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

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

12. 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

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

14. 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

15. Comparative Advantage

16. 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

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

18. 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

19. 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

20. 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 )

21. Porter’s 5 Forces

22. 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

23. 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.

24. 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

25. 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

26. 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

27. Transnational Strategy

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

29. 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

30. 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

31. Thank You
Any Questions?