Competitive Strategies for China's Domestic Luxury Department Stores.
[Dissertation (University of Nottingham only)]
China’s domestic luxury department stores have faced increasing competition from foreign competitors. The competition is mainly due to the liberalization of the retail industry by China’s government fulfilling their commitment to the WTO since 2004. Such liberalization attracts many foreign luxury department stores into China. By today, with the saturation of first tier cities’ market, they have begun expanding into the market of Chinese second tier cities. Except for the increased competition, it seems that China’s domestic luxury department stores also have faced many opportunities, because many new polices are launched by the Chinese government to motivate them to develop. The luxury goods market of the second tier city has its own unique characteristics. Zhengzhou as a classical example of second tier cities will be selected to study the competition and competitive strategies for China’s domestic luxury department stores.
The purpose of this dissertation is to evaluate and identify the strategies of China’s domestic luxury department stores in the strong competition. In order to achieve this aim, several objectives are set. In the literature review, the author critically reviews the relevant literature about the topic, ranging from the industry positioning approach (Porter, 1980, 1985), the resource-based view (RBV) (Barney, 1991; Peteraf, 1993; Wernerfelt, 1984) to the dynamic capability approach (Teece et al., 1997) which are treated as the nature and causes of competitive advantages. However, these views above have been called into question as well in sometime. Moreover, Porter’s Five Forces Model and Generic Strategies are examined in this specific context. Furthermore, dynamic capabilities for the luxury department stores will be finally presented and discussed by the author.
A qualitative methodology based on both primary and secondary data was justified as the research approach in this research, and the case study method is selected to collect consistent information about the research topic. Three different attributes of luxury department stores will be chose to support the research. Moreover, semi-structured interviews as the part of the case study will be used so as to allow the participants to provide detailed explanations regarding the research questions.
The findings show that there is always no clear positioning for almost China’s luxury department stores, and they only focus on using the resources what they captured. For the industry environment, the bargaining power of different involvement has strikingly changed. With regard to competitive advantages and generic strategies, cost leadership strategy can be used by China’s luxury department stores as a hidden way. Moreover, domestic operators prefer to change the expansion model in the future development was not treated as a suitable approach of reconfiguration. Lastly, poor learning ability is a distinct weakness in their structure of strategy formulation.
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