TO: Charagh Din, Mr.

Raju Daswani

Cc: Doctor Constancio Paranal

FROM: Kara Tanaka

DATE: August 3, 2018

SUBJECT: Expansion Strategy: Digital, Physical, and Product

EXECUTIVE SUMMARY:

The objective of this report is to present a creative solution from deep analysis to the

rising problems that Charagh Din (CD) is facing. CD is searching for a growth strategy to enrich

the experience of CD’s customer base. They have five options to consider: expand product

portfolio, target other customers such as women, expand geographically, focus on e-commerce

sales, and manufacture their own products. Through analyzing each option, I found that targeting

other customers such as women would misalign with CD’s mission and manufacturing inwards

would be unproductive and costly (appendix 1). While CD is differentiated based on the value

curve analysis (appendix 2), they have a low overall score compared to their competitors.

Therefore, I suggest CD increase value without losing too much differentiation. Despite going

against tradition, it is important for CD to take opportunity through my expansion strategy:

Digitally, Physically, ​and through​ Products. ​First, CD can digitally expand in the respective

markets they will enter, US, UAE, and the UK, by catering towards their target market of men.

Through a simple, straightforward layout (appendix 5) with reviews and information about each

product, CD can create an online marketplace. Second, CD can physically expand to the UAE

(Dubai), UK (South Hall), and US (Santa Clara). All of these countries have an attractive GDP

and PPP (appendix 7) and high population of indian immigrants to be familiar with the brand.
Based on Hofstede’s cultural analysis (appendix 6), I have provided examples and suggestions

of what the stores should look like (appendix 8). Finally, CD can take advantage of the other

types of products in the men’s market: trousers, activewear, and denim (appendix 9). All of these

have an attractive growth and popularity rate. Activewear has a growth of 14%, and denim has a

growth of 12%. Overall this strategy will take six years to implement. By forecasting CD’s

projected revenues and costs conservatively, I predict CD to increase profits by 58.67% in 6

years.
PROBLEM:

Mr. Raju Daswani is looking for a way to enrich the experience for CD’s customers to

solidify the growth and success of his company. CD is a very traditional, family owned company

that has been known to survive major hardships, such as government regulation and employee

strikes, without relying on national or international expansion, promotional discounts, and

borrowing money. However, as globalization, e-commerce, and other types of retail become

more prevalent in a connected world, CD must find ways to maintain and grow their eroding

market share through the following modernized alternatives:

● Expand CD’s product portfolio (trouser and accessories)

● Expand target market to women

● Expand their geographical spread to other metropolitan cities or across India

● Partner with e-commerce firms to take CD’s products online

● Integrate backwards into manufacturing

Both Raju and Yahu know of the potential markets that they can tap into in order to stay

afloat in a competitive market. Other products in menswear were becoming more popular -

activewear and denim wear were growing at a CAGR of 14% and 16% respectively. The overall

accessory market was growing at a CAGR of 5.4%. Moreover, in 2018, the expected online retail

market is expected to grow to $44 Billion by 2018, which is 31% of total retail. The problem is

that CD must step out of their comfort zone and create a solution that will help them remain

competitive in the market. Rojan and Yahu are looking for ways to align their company with the

changed environment of 2017 by utilizing contemporary approaches in technology and

performance.
ANALYSIS:

To solve CD’s problem listed in the previous section, CD can utilize the an expansion

strategy in three aspects: ​Digital, Physical, and Product​. ​ ​CD can expand ​digitally​ by creating

an e-commerce website, they can expand their ​physical​ stores internationally, and expand their

product​ portfolio to reach a larger market. I predict that this strategy increase revenue by ​58%

in six years (Appendix 4).

Although CD is considering manufacturing inwards and expanding their target market to

women, I would advise against these two suggestions. First of all, I believe CD’s expansion to

women would go against their long standing, simple value proposition of catering towards men.

Although the women retail market is becoming is rising in growth, I suggest CD remain true to

their target market of men. Targeting women may take a lot more market research and marketing

campaigns. In addition, CD has already made great relationships with their manufacturers.

Manufacturers know the specifics of what CD wants and do a great job at maintaining the quality

that matches CD’s brand. I suggest maintaining these great relationships instead of

manufacturing inwards. Manufacturing inward would take a lot of time, infrastructure, and

money to implement (appendix 1). Therefore, CD can focus on expansion through digital,

physical, and product ways.

Based on the value curve analysis (appendix 2), CD is very differentiated in the market;

however, they have a low overall score compared to their competitors of 23.7% compared to

Raymond, the competitor with the highest overall score of 70.5%. I suggest CD increase value

without losing too much differentiation. CD can do this by increasing their convenience to buy

(digital and physical expansion), increasing their variety of products, increasing their number of
stores, etc. This can be better described in the expansion strategy which is better described

below.

Physical:

To keep up with the global market, I suggest that CD expand to three other cities in the

world: the United Arab Emirates, United States, and United Kingdom. As seen in the value curve

analysis, CD is very inconvenient to buy because it only has one store available and there is no

online site. CD differentiates itself from the market with having its products available at one

exclusive store; however, opening up three stores in different parts of the world will still

maintain CD’s exclusivity, while creating the ability to capture different parts of the world's

market.

To reach other markets, I suggest CD enter markets where people will recognize their

brands. The United Arab Emirates, United States, and United Kingdom all have very high

populations of Indian people. Moreover, all three countries have an increasing purchasing power

Based on these assumptions, these countries are very attractive markets to enter. An analysis per

country is seen below:

United Arab Emirates:

According to Hofstede cultural dimensions, the United Arab Emirates scores high on

power distance (they believe in a hierarchical system), low on individualism (they are a

collectivistic society), and avoid uncertainty and “maintain rigid codes of belief and behaviour

(appendix 6).” It is interesting that 72% of the United Arab Emirates are male, with 4.83 million

being from age 25-54, which is exactly within CD’s target market. The United Arab Emirates

has one of the largest number of Indian migrants, totalling 3.31 million. Dubai, one of the most
populated cities of the UAE contains an estimated population of 2.5 million, with 85% of this

city being expatriate; moreover, of the 85% of expatriates Indians account for 51%. Overall, the

UAE has a very attractive economy, with an increasing GDP and Purchasing Power, they are a

growing country (appendix 7). The UAE proves to be a very viable market to enter.

United States​:

Hofstede’s insights suggest that the United States notably favors uniqueness and

individualism, low on favoring hierarchical systems, values masculinity (wants to be the best),

and there is a fair degree of acceptance and willingness for something new and different

(appendix 6). The United States also has one of the largest number of Indian migrants, totalling

2.3 million. To be exact, from 2011-2015 20% of Indian immigrants in the United States resided

in California. More specifically, the top destinations in California were Clara county and

Alameda County. Overall, the United States has a very attractive and growing economy

according to the GDP and PPP (appendix 7).

United Kingdom​:

Similarly to the US, according to Hofstede’s cultural analysis, the UK does not favor

inequalities, favors individualism, driven by success, are more content with avoiding uncertainty,

and are enjoy indulgences and impulse buying (appendix 6). In Europe, there are 1.3 migrants

from India, with the UK containing 836,524, which is an incream from 452,144 in 2000. In

London, South Hall is known to be “Little India.” Many renowned Indian shops, restaurants, and

cinemas reside there. Overall, the United Kingdom also has a stable economy and an attractive

and growing economy according to the GDP and PPP (appendix 7).

Digital:
 From 2014 to 2018 the online retail market is expected to grow by $21 Billion dollars.

E-commerce retail will be a $44 Billion dollar market in 2018 and the apparel industry will

comprise of 31% of this. Although the value curve analysis shows that CD is able to

differentiate themselves from competitors through soley being a brick and mortar store, it has a

negative impact on CD: it is inconvenient for people to purchase their products and they miss out

on the growing e-commerce market. From 2016-2021 India’s retail e-commerce CAGR is

projected to reach 23%, meaning 329.1 million people can buy goods and services online in

India by 2020. Therefore, it’s important that CD take hold of this opportunity by opening up their

own ecommerce website.

As the target market for CD is primarily men, the digital expansion and design of the

website should cater towards the shopping habits of men. According to an article in forbes, men

prefer simple and straightforward experiences (not comprehensive and social ones), purchase

when they have an immediate need, are logical shoppers, aren’t nearly as interested in deals and

discounts as women are, they make more online research prior to buying, and like comparisons.

Based on these, CD should create their website based off of the online buying habits of men by

creating a simple, easy to use website.

Products:

I suggest that CD dive into the market of offering a lifestyle brand of menswear clothes.

To do this, I suggest that they start to sell trousers and casual attire. The menswear segment is

currently transforming in popularity with casual clothes - specifically denim, activewear, and

t-shirts. Overall this market is growing well at 16%, 14%, and 12%. In addition, according to an

article on Forbe’s, men like to go to one place to shop for many things. It would be great if
Charagh Din can expand their portfolio into trousers, denim, and activewear. Therefore, it’s a

wonderful opportunity for CD to increase popularity among their target market of men.

Financial Analysis:

To conduct a financial analysis for CD, I found the market share of CD using 7 weighted

characteristics and rating CD and their competitors as seen in appendix 3. I found the overall

score per competitor, combined them, and then calculated the market share. From this, I found

the CD had 11% of the 347 trillion market (given by the case). I used this 11%, or 39.5 trillion,

as the revenue in projecting the revenue for CD with my recommendation.

I set conservative goals for CD’s revenue growth product line, e-commerce, and physical

expansion. I would like the revenue per year to grow at a steady rate of 2% of each minimally. In

addition, I used the revenue growth of 8% stated in the case for the growth of CD’s current

model and goods sold. However, I set this number at a 3% decrease (5%) to show a conservative

growth model. To find the revenue of the new physical expansion, I set a conservative revenue

goal of 5% of the 39.5 trillion revenue for each physical expansion store revenue, which grows at

the 2% rate described above. To find the revenue for product expansion and e-commerce, I took

2% of CD’s overall revenue as a goal for each strategy to make per year (appendix 4). From this

I hope to gain a 58.67% increase in 6 years for CD with my recommendation below.

RECOMMENDATION:

I recommend entering the three markets of the UAE, UK, and US, expand digitally, and

move into product expansion. In order to do this, I have created a overview of the timeline seen

in the table below.

Year Progress
 2018 ​ aunch the e-commerce website in India. (1 Million to implement)
Digital: L

Product Expansion:​ Create/release trouser product line. (1 Million to implement)

2019 Digital:​ Launch the e-commerce website in UAE only. (1 Million to implement)

Physical Expansion:​ Expand to the UAE. (1 Million to implement)

2020 Product Expansion:​ Release activewear. (1 Million to implement)

2021 Digital:​ Launch the e-commerce website, available in India only. (500,000 to
implement)
Product Expansion:​ Continue to market trousers and activewear. (1 Million to
implement)
Physical Expansion: E ​ xpand to the UK. (1 Million to implement)

2022 Product Expansion:​ Release denim product line. (1 Million to implement)

2023 ​ aunch the e-commerce website in US. (500,000 to implement)

Digital: L
Physical Expansion:​ Expand to the US. (1 Million to implement)

Digital Expansion:

As seen in the analysis above, CD should cater their market towards the online shopping

habits of men by creating a simple and easy to use website that has information about each

product. When you first enter the page, the site should ask where the shopper is from (Appendix

5A). Based on location, availability and the most popular items will adjust. The landing page

should have simple easy call to actions per category that align with the categorized products that

CD has (Appendix 5B). Per category of shirt picked, they will be able to adjust their needs based

on a filters available to them. All information about the certain product will be on the website, in

addition to customer reviews (Appendix 5C).

Product Expansion:
 To expand CD’s product portfolio, I recommend implementing trousers in year 1,

activewear in year 3, and denim in year 5. The product portfolio for each can be seen in appendix

9. First, the target market for trousers are those loyal to the brand of CD. For example, Aarav is

a 48 year old male who has been purchasing attire from CD for 20 years. As he knows CD only

wears shirts, he always has to buy his trousers from other stores and malls. Luckily for Aarav, he

can now purchase an entire outfit at CD.

Second, the target market for activewear are 18-50 year old men who are classy, yet

sporty. Arjun is a 35 year old men that enjoys tennis, cricket, and soccer, some of the most

popular sports in India. Arjun likes to have a variety of activewear that is unique, comfortable,

and classy. Charagh Din’s new activewear called “CDactive” is just for him as it provides a

classy look and a comfortable look.

Finally, the target customer for the denim product series are young, stylish, outgoing boys

and men. Sai is a 24 year old man who loves the nightlife. He’s looking for something to spice

up his life. As he’s already a loyal customer of Ditto, the new denim series is just for him.

Physical Expansion:

United Arab Emirates:

Based on the analysis of Indians in Dubai as described previously, I suggest the UAE

store to be in Dubai.The shopping habits in the UAE and the culture of the UAE described in the

analysis should match the store layout. I suggest that the store cater towards their collectivistic

and avoidance of uncertainty. Therefore, store layouts should be very familiar and similar to

other layouts of luxury retail stores, which are growing in popularity. In the Middle East alone,

the luxury market grew by 30% in 2011, and is expected to grow at a 4.6% compounded annual
growth rate between 2013-2018. Therefore, I suggest that CD use other luxury competitor

layouts of spacious, light colored stores to go into the market (​Appendix 8A)​.

United Kingdom:

As described in the analysis above, CD should enter the market of UK, but specifically in

South Hall, “Little India.” By doing this, there will be a market that is familiar with CD. Because

the United Kingdom is okay with unfamiliarity, are driven by impulse buying, and South Hall is

meant to look like a piece of India, I suggest that CD model it’s store similarly to the store it

currently has mixed with street front selling/wide open doors. The street front selling/wide open

doors (Appendix 8B)​ ​is meant to cater towards the impulse buying of the UK in general and also

matches with the area.

United States of America:

As the highest number of Indian immigrants are in Santa Clara, I suggest Charagh Din

enter this city. The United States favors uniqueness and wanting to be the best; therefore,

Charagh Din is a great company for the US, as there are 25,000 types of shirts available and the

quality is high. As many men like to do their shopping in one place, I believe it would be

strategic to be located in a mall and follow traditional mall layouts for America. As malls are

open to many types of customers other than the Indian market, I think it’s important that it’s

obvious that the store is for men; therefore, manikins in the storefront with only men clothes

would be preferable (Appendix 8C).

Reflection

Personally, I enjoyed that this case provided us options of what CD could do. It was

easier for me to put more detail in my strategy because I felt like I could better understand where

the company want to head towards and what they were willing to do. It was a lot of work to do

the financials, but I loved the challenge. I think it’s hard to understand, in general, who the

company is; however, I liked that this case provided a lot of information about the history of CD

and how they overcame their struggles.

I think this case can directly relate to the article we read in class. The “Putting the Right

Price on Customer Interaction” article really related to the article. While all of the channels that

CD wanted to enter were really great, I feel like too much at one point would have too many

resources or options. Productivity would start to go down and more interactions would start to go

down! In addition, I feel like the value curve analysis we conducted in class really helped me

understand where CD stood in the market. I utilized this analysis to calculate the market share

and how CD was differentiated from the market!

This assignment tested my abilities through interpreting qualitative data and quantitative

data. I find myself enjoying how to create quantitative data more and more! It’s interesting that

there are so many ways to pull data from several resources to fit what you want to find out

(market share, size, and revenue). Although my financials might be accurate, I think I’d like to

learn more about interpreting data like this in the future!

References

Duncan, E. (n.d.). Topic: E-commerce in India. Retrieved August 3, 2018, from

https://www.statista.com/topics/2454/e-commerce-in-india/

IANS. (n.d.). UAE has largest number of Indian migrants in world. Retrieved August 3, 2018,
from
https://www.khaleejtimes.com/international/UAE-has-largest-number-of-Indian-migrants-i
n-world

Rampton, J. (2016, March 20). A Marketer's Guide to Understanding Ecommerce Shoppers in

2016. Retrieved August 3, 2018, from
https://www.forbes.com/sites/johnrampton/2016/03/19/a-marketers-guide-to-understandin
g-ecommerce-shoppers-in-2016/#e65583542434

Statistics of Indian Population abroad, Non-resident Indian and Person of Indian Origin.
(n.d.). Retrieved August 3, 2018, from
https://www.nriol.com/indiandiaspora/statistics-indians-abroad.asp

UAE Population Statistics in 2018 (Infographics) | GMI. (n.d.). Retrieved August 3, 2018,
from https://www.globalmediainsight.com/blog/uae-population-statistics/

UAE Population Statistics in 2018 (Infographics) | GMI. (n.d.). Retrieved from

https://www.globalmediainsight.com/blog/uae-population-statistics/

Zong, J., Zong, J. B., & Batalova, J. (2017, November 28). Indian Immigrants in the United
States. Retrieved August 3, 2018, from
https://www.migrationpolicy.org/article/indian-immigrants-united-states
Appendix 1:

Digital Physical Expansion Product Expansion Manufacturing Target Market to

Inwards Women

Infrastructure Needed Medium Medium/High Medium Low Low

Cost Medium Medium Low High Medium

Mission Alignment Low Low Low High Low

Feasibility High High High Medium Medium

Time Low Medium Low High High

Overall Score of Attractive Attractive Attractive Unattractive Unattractive

Attractiveness
Appendix 2: Value Curve Analysis

For better viewing click ​here​.

Weight Max Possible

Attributes Distribution Score Aditya Raymond CD Differential Arvind Zodiac

Convenience to
buy 16.00% 1.6 5 9 1 1.60 8 5

Variety of
Products 12.00% 1.2 9 9 2 1.27 9 4

Number of
Stores 15.00% 1.5 10 8 1 1.56 5 3

Variety
Category of
Wear 13.00% 1.3 8 5 2 0.86 8 3

Customer
Targets 12.00% 1.2 5 5 1 1.33 8 1

Online 16.00% 1.6 1 10 1 1.64 1 10

Atmosphere 16.00% 1.6 2 3 8 0.91 3 5

100.00%

Overall Score 10 55.00% 70.50% 23.70​% 57.50% 46.40%

Appendix 3: Market Share Analysis
For better viewing click ​here​.

Weight Max Possible

Attributes Distribution Score Aditya Raymond CD Arvind Zodiac

Longevity 20.00% 2 1 10 5 7 3

Variety of Products 10.00% 1 9 9 3 9 4

Number of Stores 20.00% 2 10 8 1 5 3

Variety Category of
Wear 11.00% 1.1 8 5 2 8 3

Customer Target 12.00% 1.2 5 5 1 8 1

Online 16.00% 1.6 1 10 1 1 10

Atmosphere 11.00% 1.1 2 3 8 3 5

100.00%

Overall Score 10 49.60% 75.80% 28.80% 56.30% 42.00% 252.50%

Market Share 20% 30% 11% 22% 17% 100%

Revenue From $68,163,168,3 $104,168,71 $39,578,613, $77,370,69 $57,718,81 $347,000,0

Market Share 16.83 2,871.29 861.39 3,069.31 1,881.19 00,000.00

$347,000,000
Overall Market Size ,000.00
Appendix 4: P/L
For better viewing click ​here​.
Appendix 5:
Appendix 5A:

Appendix 5B:

Appendix 5C:
Appendix 6:
Appendix 7:
Appendix 8:

Appendix 8A:

Appendix 8B:

Appendix 8C:
Appendix 9:

Trousers:

Chinos Series:

Comfortable, professional, and stylish!

Casual Series

Comfortable and fun!

Active Wear:

Classy, activewear:
Comfortable Activewear:

Denim:

Trousers:

Tops: