Internationalization - Case Study of Polarn O. Pyret

Abstract: Aim: As a result of growing globalization and competition the issue of internationalization is becoming more and more important and relevant for companies all over the world. With fading barriers to trade, investment opportunities and technological innovation, more and more companies see new openings for increased profit and growth by going international. During the last number of years new Swedish fashion brands and clothing companies have entered the international market, and Swedish clothing in general is gaining wider interests outside Swedish borders. Due to this I found it interesting to look at how Swedish small and medium-sized clothing companies start their international expansion, particularly in terms of market selection and choice of entry mode. Polarn O. Pyret (PO.P) is a Swedish clothing company and one of the leading concepts for children wear in Sweden. PO.P has successively expanded internationally and is becoming bigger and bigger. The company was therefore a good source to gain a deeper understanding of the internationalization for Swedish clothing companies. Method: This thesis has a descriptive and exploratory purpose and a qualitative approach. Furthermore, a single case study strategy has been used. The data is collected both from primary resources such as interviews by mail, face to face and phone, while secondary data is collected from homepages and annual reports. For the analysis a within-case data analysis has been made. Result & Conclusions: The main finding for this thesis is that PO.P does not follow the traditional Uppsala model for internationalization. PO.P seems to penetrate new and more distant market stepwise while gaining more knowledge and experience about internationalization, but only by the use of franchising. The motivators to go international for PO.P can be described as proactive as growth and profit are the main motivators, instead of reactive such as demand from someone else. The result also implies that market condition in terms of competition and growth potential, in addition to socio-cultural factors play an important role in the internationalization process for PO.P. It seems that it is important for PO.P when selecting the right market for internationalization, that the market is close in geographical distance, in addition to low psychical distance, as the customers in these markets can more easily understands the brand and the concept, due to similarities in culture, climate and development. PO.P is using a combination of wholly owned concept stores and franchise stores in Sweden and master franchise agreements internationally. By using franchise agreements PO.P does not have to be responsible of all the risk and they can easily gain experience by the franchisee. Using master franchising can on the other hand also give them less control over the activities in the markets abroad.