Globally, the Jewellery industry has witnessed exponential growth concerning sales volume, the variety of jewels traded, market share for industry players and most importantly, profits in the past half-decade (Euromonitor International, 2018). The recession of 2008 to about 2013 significantly impacted on service industry sections such as jewelry in Britain and China. However, with the gradual turn of events, there is growth which has increased competition at all levels. The consequence is that entrepreneurs now have the urge to earn more revenue, which they can achieve through adaptability and innovation. The dynamism associated with the Jewellery industry poses various challenges to entrepreneurs who seek to integrate two different markets and acquire a share in them. Such problems include: authenticity of inventory, perceptions, and ethics, inventory costs, and sourcing challenges, overcoming already established brands as well as the risk of loss of acquired inventory and property investments. Therefore, the goal of the dissertation is to determine and analyze the critical challenges faced by the jewelry entrepreneur while integrating the Chinese and British markets to occupy the market share and strengthen their market competition. In its entirety, the paper details the researcher's use of descriptive research design in methodology to arrive at the findings of the challenges associated with the integral jewelry business. Conclusively, the dissertation details the trials and methods used to establish them and further recommends that through elegant and efficient data collection and market analysis, entrepreneurs can successfully overcome the problems in the jewelry market and acquire substantial market shares vide proper integration of trends across Britain and China.
Acknowledgement
I would like to thank my supervisor Professor Suma Athreye for her guidance and support, which encouraged me to write this dissertation. I would also like to thank the people that I interviewed for giving me their time and valuable information, which contributed to this dissertation. I would also like to thank my family who emotionally and financially supported me throughout my time at the University of Essex. I confirm that this work is my own and no one helped me to produce it. All quotes referenced. Thank you.
Table of Contents
Declaration…. ………………………………………………………………………1
Abstract………………………………………………………………………….......2
Acknowledgement…………………………………………………………………...3
Table of Contents……………………………………………………………………4
CHAPTER ONE…………………………………………………………………….7
INTRODUCTION…………………………………………………………………..7
1.1.Background of the Study……………………………………………………7
1.1.1 Research Overview……………………………………………11
1.1.2 Global Jewellery Industry……………………………..........12
1.1.3 European and Asian Jewellery Industry……………….........14
1.1.4 British and Chinese Jewellery Industry…………..................17
1.2.Problem Statement…………………………………………………………..19
1.3.Objectives of the Study……………………………………………………...20
1.4.Research Questions………………………………………………………….21
1.5.Significance of the Study……………………………………………………21
1.5.1 Significance to Entrepreneurs………………………………...22
1.5.2 Significance to Entrepreneurs………………………………...22
1.5.3 Significance to Researchers…………………………………..24
CHAPTER TWO……………………………………………………………………25
LITERATURE REVIEW……………………………………………………………25
2.1 Introduction……………………………………………………………………...25
2.2 Theoretical Review………………………………………………………………25
2.2.1 Resource-Based View Theory…………………………………26
2.2.2 Stakeholder Theory…………………………………………….27
2.2.3 Discrete Choice Theory…………………………………...……28
2.3 Conceptual Framework………………………………………………………......30
2.4 Entrepreneurship Challenges…………………………………………………….32
CHAPTER THREE………………………………………………………………….35
RESEARCH METHODOLOGY……………………………………………………35
3.1 Introduction……………………………………………………………………...35
3.2 Research Definitions……………………………………………………………..35
3.2.1 Population………………………………………………………………….37
3.2.2 Sample Size………………………………………………………………..38
3.2.3 Sample Technique…………………………………………………………38
3.2.4 Sources of Data……………………………………………………………40
3.2.4.1 Primary Data……………………………………………………….40
3.2.4.2 Secondary Data……………………………………………………..42
3.3 Research Methods……………………………………………………………….43
3.3.1 Qualitative Methods……………………………………………………….43
3.3.2 Quantitative Methods………………………………………………………45
3.3.3 Mixed Methods…………………………………………………………….46
3.4 Research Design…………………………………………………………………47
3.4.1 Interviews …………………………………………………………………48
3.5 Data Collection…………………………………………………………………..49
3.5.1 Data Validity and Reliability………………………………………………50
3.6 Data Analysis and Presentation………………………………………………… 50
3.7 Limitations of the Methodology…………………………………………………52
3.8 Ethical Issues…………………………………………………………………… 52
CHAPTER FOUR……………………………………………………………….…..53
RESEARCH FINDINGS, CONCLUSIONS AND RECMMENDATIONS…..……53
4.1 Introduction………………………………………………………………..…….53
4.1.1 Methods of Data Analysis and Presentation of Data…………………….……55
4.2 Findings…………………………………………………………………………55
4.3 Discussion of Findings………………………………………………………….60
4.4 CONCLUSIONS AND RECOMMENDATIONS……………………………....64
Bibliography………………………………………………………………… 67
Appendices………………………………………………………….………. 71
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The jewelry industry is one turbulent industry whose competitive nature has prompted the need for application of consistent and tactful decision making for entrepreneurs the world over to cope with the dynamism therein. The essential approach to dealing with an ever-changing industry environment involves the assessment of one's business environment to establish the challenges they face and determine a way forward. Sarstedt and Mooi (2014) posit that market analysis is the process of uniquely identifying the various conditions in the marketplace that affect it, gathering the relevant information and deriving many conclusions that are key in founding the optimal operational standards for a given entity. Entrepreneurs use market analysis to establish what key factors, challenges, and advantages can and cannot work for their business if they choose to adopt the same (Patino et al., 2012). Market analysis and research firmly found on the need to determine challenges and hurdles associated with a given product, service or industry in general. It is from the challenges and potential encounters that one forecasts that enable them to elaborately make prudent decisions regarding what measures to undertake to land strategic market shares, increase sales volumes and build an integrated system of running the business. Laudon and Traver (2013) argue that challenges faced by an entrepreneur in their quest to integrate into given markets categorize into internal and external issues. External issues are those that are beyond the control of the entrepreneur while the internal factors are the factors that pose challenges to the entrepreneur but are within their control (Armstrong et al., 2015). Integrating into already cut out markets can be unusually very complicated and requires business persons to have the best comprehension and synchronization of prevailing market factors, the essentials that run the given industry as well as the sourcing capabilities available as options. The factors above if well considered construct the success of facing the jewelry industry challenges as well as any other industry (Mullins et al., 2012).
Entrepreneurs who run large jewelry companies stand a better chance of analyzing the challenges pre-existing and foreseeable in the market. Corporate service providers in the industry take a top to bottom approach in institution desired visions and mission that act as guidelines for meeting the demand. The benefit is that through economies of scale and access to high-level market analysis experts, the scrutiny of issues at hand in target markets is top notch and with credible, actionable results. Retail entrepreneurs and sole proprietors, on the other hand, have limited scope and access to expert analysis of the challenges in their target market (Bonnemaizon et al., 2015). The lack of standardized access to the technical scrutiny of the market means the entrepreneur's exposure to various challenges that are unforeseen and undetermined. It is with such instances that the service providers thus incur losses, slow growth or failure once they attempt to integrate into the markets such as Chinese entrepreneurs trying to venture into British markets and vice versa (Uner et al., 2013). Precisely, there is the disconnect in what challenges are available in the market and those the business persons can identify.
In a concerted effort to accurately analyze the challenges at hand, an entrepreneur and firm have the task to identify potential problems, evaluate the same and score them by how unique the challenge is, to what extent it is viable and can the challenge be substituted once solved. It is relative to say that the identification of the difficulties regarding the viciousness they possess can be linked to the resource-based view theory only that this time, the issue at hand is challenge and risk management. The Resource-Based View Theory by Wernerfelt as argued by Zheng et al. (2013) stipulates that by resources an entrepreneur has, the challenges in their market efficiently faced if both resources and risks at hand are analyzed based on Viability, Uniqueness, and Non-substitutability. If the solutions available for an entrepreneur are viable, rare, inimitable and non-substitutable, then the same applies to face the market. Common solutions can be borrowed through observation and benchmarking. However, the more unique and differentiated challenges identified usually require customized problem-solving. Thus, any factors affecting the market conditions of any jewelry entrepreneurship that fits the Resource-Based View Theory can be analyzed and solved entirely. It is critical to note that in the global jewelry industry, the cost incurred while investing in analysis and solution of business challenges must always be significantly less than the future discounted cash flows that arise from engaging the very solution (Peteraf, 2013). The mentioned hypothesis strengthens the business assumption that solutions to market entry challenges have to earn a profit if financial or significantly contribute to positive growth if non-financial. It makes the foundation of viability in whole.
Strategic factors affecting entrepreneur's ability to integrate into various markets are born of an analysis of the market environment which elaborately divides into external and internal market environment. The foreign business environment comprises of economic factors, political factors, competitors as well as industry regulations while the internal environment consists of the input resources which include human resources, strategic risks, innovation, financial considerations and managerial factors. Based on how the entrepreneur interacts with these sets of the environment, the market analysis made into stages that gears toward a lasting solution where possible. The same commence at the formulation of solutions, selection of viability, execution and lastly evaluation to ascertain the successes based on predetermined parameters (Storbacka and Nenonen, 2011). Brenes et al. (2009) perceive that efficient market analysis must be in tandem with the entrepreneur's vision and mission. By the current company situation, strategic solutions for challenges faced formulated and the most appropriate set executed. The elected answers are a culmination of the input from all departments and functions of a company to allow choices that have desired influence on operational and administrative goings of the firm (Shelth, 2011). The mentioned notion is supported by
This notion is supported by Colla and Lapoule (2012) who posit that the result of analyzing a market and the factors affecting it is to satiate the expectations of the entrepreneur and associated stakeholders through efficiently establishing means to maneuver the market challenges. Classical Strategic theory as argued by Popescu (2009) applies in marketing integration, and entry through the emphasis that solutions attained are intended, deliberate planning procedures that base on thorough analysis of the any industry-jewelry inclusive- with the aim of determining a single but comprehensive initiative to drive perpetuity. The structure of facing challenges is itself a stepwise approach. It marks with a target market mission. The lack thereof of a mission statement alludes to forecast failure due to a lack of synchronized organizational direction (Leeflang et al., 2014). The definition of a marketing mission report this is the most straightforward initial strategy defined as the election and creation of a wholesome solution strategy upon which forecast decisions and operations have to be based when facing integration into a given market.
The final product of investigating a market and the variables influencing it is to satisfy the desires of the business person and related partners through adequately building up intends to move the market challenges. The traditional Strategic hypothesis as contended by Kechris (2012) connects in showcasing mix and passage through the accentuation that arrangements achieved, consider arranging systems that based on careful investigation of any business adornments comprehensive with the point of deciding a solitary yet exhaustive activity to drive ceaselessness. The structure of confronting challenges is itself a stepwise approach. It is set apart with a real market mission. The deficiency in that department of a statement of purpose implies gauge disappointment because of an absence of synchronized authoritative heading. The meaning of a showcasing statement of intent along these lines is the least sophisticated beginning methodology characterized as the race and production of a healthy arrangement technique after that conjecture choices and tasks must be based when confronting incorporation into a given market.
1.1.1 Research Overview
The account of the thesis is discussed in this section. Chapter One entails the first aspect f the dissertation. It introduces the research in question through historical background and review of the same topic on a global scale, regional and finally localizes the investigation to the study countries depicted. The chapter further states the problem statement, objectives of the study, research questions as well as the significance of the study.
Chapter two of the dissertation reviews the literature associated with the research topic. The researcher covers the various undertakings to investigate related issues in the research while establishing the course for the study and why it should be undertaken. The researcher further reviews the theories associated with the research details and what is available through a theoretical review. The chapter goes ahead to include the conceptual framework as well as the challenges that are related to the research topic. Chapter three elaborates the research methodology at hand. It entails the research design, definition of associated terms used in the research and the means by which the study was undertaken. Lastly, Chapter four involves the research findings, analysis, conclusions and recommendations.
1.1.2 Global Jewelry Industry
Globally, the jewelry industry runs in hierarchies based on the pocket power of buyers as well as the sophistication that sellers can avail. There are very low retail buyers whose financial ability is not as such and robust buy from the more moderate cadre entrepreneurs while the high-end clients who are not moved by price changes buy from some of the most elite sellers. The higher the price associated with jewelry, the higher the perception linked to its importance. Silver is thus an industry that is perceptional to a more considerable extent since the same jewel sold at one point at a given price, can be sold exorbitantly at a different provider based on presentation and market perceptions of the seller. The essential products fall into personal accessories, bags and luggage, watches, writing instruments and beautiful jewelry. The market is primarily competitive as it is produced with a high revenue return of approximately 148 Billion Euros traded annually. The growth rate for the industry since after the global recession has played from the range of 5-6% positive growth annually meaning the industry is lucrative and promising to venture into. An essential fuel of the increase in demand is the recovery after recession coupled with inelastic market due to the nature of products that the jeweler's industry avails.
The industry's competitive nature is uniquely different. Unlike many other sectors where top five providers trade almost a third or more of the trade volumes and revenue, the jewelry industry has the top tier providers selling a mere 12% to 18% of business (Carrigan et al., 2017). The relatively less trade capacity of the most significant market shareholders is indicative of intensely competitive nature of the industry. It means that no sole or group entrepreneurs can entirely run the industry. It is not a monopolistic market but a perfect competition market with very many sellers and buyers with a slightly inelastic demand curve. Thus, any new entrant entrepreneur, as well as the already existing ones, therefore face a stiff kind of completion that is accrued by various challenges as established in the dissertation. Due to the competitive nature, emerging branding trends have in the past decade overtaken the industry at all levels. Initially, there were few branded jewelers across the world before the new millennium. After that, the personalization of jewelry products took trend due to demand by clients and the universal changes in media that spread the lucrativeness and luxury associated with brands (D'arpizio et al., 2015). Currently, the market share that ascribes to brands jewelry accounts for over 60% of the volumes traded annually making the branding aspect a challenge to consider in the market analysis by any entrepreneur.
There are developing trends in the market that are a crucial challenge to the usual mode of operation of entrepreneurs in this sector. The constant dynamism of social media application and integration into business functionalities is one such trend that if not researched upon and used prudently can see entrepreneurs fall short of their desired market share. The emergence of an insatiable millennial market segment is also an emerging issue that keeps the industry in an ever-changing state. Millenials are deemed to desire high-end products but are also critical players as entrepreneurs giving the entrenched entities a competitive edge that is well networked and applies social media usage almost entirely (Alon et al., 2016). Internationalization, fast fashion, hybrid consumption that entails new trends and avenues of access to jewelry as well as the regular cycles of recession and booms significantly impact the global jewelry sector.
There are rising patterns in the market that are a crucial test of the typical method of the task of business people in this part. The steady dynamism of online networking application and joining into business functionalities is one such pattern that if not looked into upon and utilized wisely can see business people miss the mark regarding their coveted piece of the overall industry. The development of a voracious millennial market section is additionally an upcoming issue that keeps the business in a regularly evolving state. Millenials are esteemed to want the top of the line items but on the other hand are critical players as business visionaries giving the settled in elements a focused edge that around organizes and applies online networking use entirely. Internationalization, quick design, crossbreed utilization that involves new patterns and roads of access to gems and also the overall cycles of subsidence and blasts incredibly affect the global adornments division.
1.1.3 European and Asian Jewelry Industry
The world geographical allocation of jewelry trading can easily be interlinked geographically. In fact, the business follows an almost finite path that is continental. There are five regional distributions that jewelry tends to follow which include, the South American and North American region, the European region, the Asian region, and the African region. The business, however, does not follow the production factor, that is, it is not in line with where the jewel resources are aligned, but leans more toward the purchasing power regionalization. The Asian market deemed the highest purchasing zone followed by Europe and North America. The population size of the Asian region gives the reason as to why more trades within this region. Also, the policy and regulations associated with jewelry trading in Asia allow for the trade of even illegal types of products. The part is vast thus allowing for easily untracked black market operations and illegally acquired but authentic jewelry. The European region trades quite less in silver as compared to Asia. Europe comes in after the China and America respectively (Bernard and Fort, 2015). The European market is known for decency and the need for genuinely coupled with strict rules of the validity of jewelry. However, another contributory factor as to why Europe trades much less as compared to Asia would be the population size. Asia has a total population of 4.4Billion people while Europe has 741 Million people. Out rightly, the demand in the zones is not the same, and however much the application over the population for Asia may be less, it will always be more if compared to Europe.
The competitive nature of Jewelry in Europe is unique with fewer sellers and more buyers- Oligopoly market structure (D' Carpio et al., 2015). The Asian market, on the other hand, is a perfect competition market that also deals with brokerage from the original producers of the jewel products. The challenges thus of integrating into the European market can attribute to the barriers to entry as the already existing providers are well established as brands. The European market is characteristically unique with a higher affinity for branded products associated with status and stronger buying power as compared to the Asian markets. The financial capacity determined through the Gross Domestic Product of the Asian region and European region is evident of a vintage European side which allows for the buyers in Europe to be high end, selective and specific in product quality. The challenges thus faced in these two diverse market regions are distinct and mutually exclusive. Jewelry entrepreneurs in Europe, for instance, were not adversely affected by the global recession which saw a decline in buyers. Due to the lower number of entrepreneurs in the market, the drop in demand did not necessarily alter the sales volumes to a large extent. The inverse is true for Asian markets where the number of jewelry entrepreneurs is so high such that a slight drop in buyers leads to little or no revenues since the small number of buyers available are fiercely competed.
As at 2016, the Asian market traded sales volumes of over 170Billion US Dollars. The region acts as a transitory zone for production, brokerage as well as final sales for any jewelry ranging from the unrefined to the most refined pieces of art. The European region, on the other hand, sold slightly less than 20 Billion US Dollars' worth of jewelry in the same year. The Asian region tends to profit more regardless of the quality of products sold (The Statistical Portal, 2015). The most significant edge of marketing for Asian markets lies in numbers as earlier mentioned, and more so, the ability to export to other markets that are categorized based on purchasing power. The challenges thus faced by entrepreneurs on a regional scope vary but are almost similar geographically. Asia poses a stiffer competition to integrate into and acquire substantial market share. As a result, the sellers are the force to seek buyers externally to boost the sales that are quite dismal internally.
The aggressive approach to the jewelry business in Europe is somewhat unusual with not so much merchants but rather more purchasers. The Asian market then again is an impeccable rivalry advertise that additionally manages the business from the first makers of the gem items. The difficulties hence of incorporating into the European market credits to the hindrances of section as the efficiently existing suppliers are entrenched as brands. The European market is typically one of a kind with a higher fondness for marked items related with status and more grounded purchasing power when contrasted with the Asian markets. The budgetary limit decided through the Gross Domestic Product of Asian district, and European area is evident of a vintage European side which considers the purchasers in Europe to be top of the line, particular and particular in item quality. The difficulties in this manner looked at these two fluctuated advertise areas are various and fundamentally unrelated. Gems business visionaries in Europe, for example, were not unfavorably influenced by the worldwide retreat which saw a decrease in purchases. Because of the lower number of business people in the market, the drop sought after did not adjust the business volumes to a substantial degree.
1.1.4 British and Chinese Jewelry Industry
In the United Kingdom, the revenue earned through the Jeweler industry as at 2016 stood at 5.41 US Dollars while the Chinese end had 110 Billion US Dollars in revenue the same year. The depiction of this comparison is that the British Market trading is relatively low. However, by income earned relative to the population of the countries as case studies, the ratio of earnings to potential population is reasonably equal. China trades more in the variety of jewelry that is not branded necessary while the British market dominated by branded products. The clientele in Britain is high end, mostly the consumers while China is a mixed market filled with both producing and consuming entities coupled with brokering importers and exporters. The market competition in both countries is very stiff, but China's competitiveness is exceptionally high.
The British jewelry industry led by entrepreneurs such as Pandora who maintained the lead from 2016 over to 2017. The sector fills with lead providers who tend to work against online service delivery which is supposedly the intended desire for many clients. It is a go-slow approach toward forcing clients into buying through usual shopping. However, as time goes by, the market will be forced to adapt to online platforms due to convenience and effectiveness of reducing storage and property letting expense. The current growth rate is at 6% per annum, which is higher than previous recent years but lower than earlier in the millennium where the growth rate was in double digits. The growth rate in 2017 attributes to many economic factors that are emergent and ripple effects of the post-Brexit Britain. The pound weakened, and as such, there was the need to harmonize the local pricing with overseas prices to keep in the competition. The harmonization of costs enabled an increase in purchasing power that boosted the sales available in the year. The market's few entrepreneurs it should be noted, allow for a more or less controlled pricing power that kept the buyers at desired price ranges and overall growth rates until the pound weakened. Currently, the market is not as competitive except for established brands and the initial cost of starting up. Thus, integrating into this kind of market is quite achievable as it also promises to grow with a forecast constant aggregate growth rate of 2% per annum. The means above that by 2020, the jewelry industry in Britain will have increased by 8% with the base year of 2016 in consideration.
The Chinese jewelry market is entirely different from that of the British. China operates the industry section on a perfect competition set up which means there are as many buyers and sellers as possible in the market at any one given point in time. The products sold are more or less similar with slightly noticeable differences. The growth rate for the industry is thus stable and stagnated somewhat. For instance, the purchase of gold jewelry has declined in the recent years due to client preferences. Many customers prefer gold bars currently as it also acts as a store of value. The slow growth rate of the country's economy also impacts on the market segment making it stagnate at a steady level. Thus, entrepreneurs face challenges that are external and out of reach of their control. The changes in tastes and preferences pose a hurdle in the sourcing and inventory a business person would opt to consider. The product and design that associates with quality jewelry in China are still wanting despite the country having enough craftsmanship regarding numbers. The highly qualified personnel to come up with exceptional jewelry are few, and as such, the state has less potential regarding authenticity. Gradually, due to the inability to avail high quality, there is a market segment that the Chinese entrepreneurs have now to compete for with international giants who have better quality and finesse of products. The competition thus gets stiffer for entrepreneurs, and many can be faced out in as much as they can still re-enter the trade due to the room for export to markets that won't mind quality such as Africa, South America, and Asia. The sales channels available for this market include wholesale and retail with few giant market shareholders. The most common entrepreneurs are not well formulated and face challenges such as loss of inventory, property difficulties related, and authenticity and perception issues among others.
1.2 Problem Statement
It is evident that the jewelry industry is very dynamic, characterized by emerging trends, government policies as well as other factors that pose challenges to any entrepreneur seeking to integrate into the market. Businesses are also vulnerable to market liberalization that has over the years increased market players, altering demand and competition for the same. The success, therefore, of any venture in the jewelry industry is very dependent on how the proprietors choose to face the challenges that come with trading in it as this aspect is what makes the difference in a perfectly competitive market structure. The British jewelry market was significantly affected by the adverse effects of the global recession causing operationalization of related entities quite challenging during the economic low. On the other hand, the Chinese ornamental industry is slow in growth, filled with many entrepreneurs and buyers that pose a very competitive market that is difficult to thrive in solely. It is from the challenges mentioned above that the problem arises on the need to efficiently analyze and comprehend the existing and forecast challenges that an entrepreneur faces or may face in their quest to integrate the Chinese and British jewelry markets to construct a formidable market share and place themselves in a strategically competitive position. The failure to undertake the above analysis of challenges risks the entrepreneurial ventures plunging into losses and potential failure.
There is the disconnect between the potential challenges faced by entrepreneurs and the success or failure of their ventures. There have been numerous studies conducted in the jewelry industry since the emergence of the trends arising from market liberalization, global recession, government policies amongst other factors affecting the entry and success into the given market.
Lee and Choi (2015) carried out general research on the vastness of the jewelry industry in Asia with a critical focus on the Korean peninsula. They recommended that further study need be undertaken in various markets to establish best practices in operating in the i
