Heres the pestle analysis of Gucci; Although China and India are one of the top economies in Asia; but both of these countries have no clearly defined intellectual property laws. SCOPE ACADEMIC HOUSE B&M PUBLISHING, 47. International Business Research, 3(3), 154-164. In the past, the Italian brand had filed a lawsuit against the Forever 21. Kering's like-for-like sales rose 8.1 per cent in 2016 to 12.4bn, with 5.5 per cent growth in the first half of the . Subscribe now to get your discount coupon Implications of some important environmental factors are discussed below. Aug-02-2021. Yksel, I. Fair treatment should be provided to the employees in terms of working hours and treatment of employees. Help, Academic . The idea is to make use of the brand name that is already very influential in the market and the goal is to achieve a supply chain that doesnt involve the exploitation of animals. Well-developed technological infrastructure also reflects that it will be harder for Gucci to derive sustainable competitive advantage from technology, which could be easily imitated by competitors. If such claims and criticism keep on increasing, then it would be very difficult for the brand to attract new customers. European Journal of Innovation Management, 16(3), 285-300. to understand economic factors such as foreign exchange/interest rate, labor market conditions, inflation and saving rates etc. The rising inflation rate can have a negative impact on the revenue growth of Gucci as its decreases the purchasing power of money and discourages consumer spending on goods and services. This helps the company to protect its well-known brand and designs from competitors that may try to copy them. This is the only way for Gucci to survive in an environmentally cautious market. The organization may also study the industry specific taxation policies to understand the host government's priorities and interest in developing industries. Therefore, Gucci needs to choose the countries with highly efficient financial markets so that it could easily accumulate financial and human capital. Gucci SWOT Analysis Conclusion: Gucci Strengths 2021: Brand equity and brand image. correct email will be accepted, (Approximately Countries with high economic growth rates provide more opportunities to pursue long-term growth objectives. The business and marketing strategies are also influenced by migration. IGI Global. Out of which the company's net profit was 13.280 billion dollars and it has declined by 23.47%. If you need help with something similar, A critical study on Various Frameworks used to analyses International Business and its Environment. Model is found to be particularly helpful when firms need to make international expansion decisions. need to study data protection regulations to protect the customer data. A strategic framework for technology evaluation. can increase the market share by focusing on emerging technological innovations. PESTEL Analysis of External Environment as a Success Factor of Startup Business. The consumers spending patterns are influenced by their purchasing power of money. Gucci PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. Guccio Gucci was the founder of the Gucci brand. This article section discusses the implications of some key social factors for Gucci . Availability of cheap labor would result in generation of higher profits for the brand. What are the characteristics and attractiveness of industry? Guccio Gucci was the founder of the Gucci brand. Gucci is currently facing several issues due to corruption and lack of transparency. Firstly, the local and global political environment has a direct impact on Guccis operations. Gucci has become one of the most sought-after labels in the world, renowned for its iconic design elements. The organization should also carefully consider the interest rate and its influence on borrowing ability and attitude towards investment. The company also has to protect its products from infringement. However, when there is political chaos, it deters the investors and harms the stakeholders' trust in economic and consequent organizational performance. Extensive investment in research and development activities would be required in markets characterized by disruptive technologies. 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Gucci must gain an in-depth understanding of these factors to anticipate the short-term and long-term business growth in the chosen sector. Fluctuations in the exchange rate can affect business profitability. Economic factors- the second component of PESTEL framework, comprise multifaceted variables that directly affect the businesses ability to achieve their economic objectives. The political factors in the Gucci PESTLE Analysis can be explained as follows: In case of multinationals such as Gucci, the political implications across not just the host country but across all the countries have to be taken into account. The high interest rate will encourage the attitude towards investment and increase growth opportunities for Gucci. Understanding the impact of technology on firms business models. Gucci PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. Similarly, high trade restrictions can make the business environment more complex by affecting the exports and harming relationships with foreign trade partners. Similarly, higher social stratification also indicates the need to adopt effective market segmentation strategies, as Gucci cannot target multiple segments from different social classes with the same marketing mix. The stability of the currency is also very important. The advent of social media and e-commerce has encouraged online shopping behavior among customers. According to the fashion and leather industry kills approximately 75 billion animals every year for various reasons. The availability, quality, and price of these materials can have a major effect on the companys profitability. can draw the negative response from media, environment protection groups, customers and the general public. A detailed analysis of the technological environment can help Gucci. Menet, G. (2016). For instance, Gucci has the reputation of following the price skimming strategy and buying high insurance. Each country has its unique cultural norms, values, and traditions, which reflect consumer behavior. Despite these limitations, the model is still extensively employed to make important business decisions. against other market players. to understand the peoples general attitude towards migration as it can influence firms ability to bring international managers to host country. Guccio Gucci founded Gucci in Florence in 1921. Save my name, email, and website in this browser for the next time I comment. Gucci is a brand associated with a luxurious life. letme Aratrmalar Dergisi, 10(2), 598-608. But in 1921, he formally established the company in Florence, Italy. Whereas, operating in rigid labor markets may cause labor wage and other issues raised by powerful labor unions. Under the segmentation category, Gucci uses demographic as well as psychographic criteria. Kara, E. (2018). Being an international firm from a culturally distant home market, it could be difficult for Gucci management to understand the delicate cultural nuances. operates in a complex and dynamic environment characterized by regulatory changes, growing environmental activism, collective social trends, technological changes and evolving legal system. Browse analysis of more brands and companies similar to Gucci PESTLE Analysis. (2018). The content on MBA Skool has been created for educational & academic purpose only. Gucci must be aware of changes in the external environment to ensure its products and services remain competitive. Providing a secure work environment for the workforce is the ethical and moral obligation of Gucci. Gucci Porter's 5 forces analysis is a considerable tool for everyone trying to assess the strategic standing of an existing company, or thinking about a brand-new venture into a present market. The business expansion decision of Gucci should also consider the prevailing trade regulations, and management should prefer the regions with free or flexible trade agreements. Resultantly, the GDP, living standards of the people, and buying power of the customers have improved because of the companys efforts. Gucci. Gucci should prefer countries with well-developed technological infrastructure, as supportive technological infrastructure makes it easier for a firm to achieve its cost reduction, innovation, and value creation objectives. Research and development activities are highly important in an environment characterized by creative disruption. This investment will also increase stakeholder satisfaction and expand the customer base due to enhanced brand image. It pressurizes the Gucci. It is an acronym for political, economic, social, technological, environmental and legal factors that shape the macro business environment. Currently, the geographic area in which Gucci is actively present is experiencing some political instability due to internal and external conflicts. All rights reserved. This article has been researched & authored by the Content & Research Team. International Journal of Business and Management, 7(24), 52. can take advantage of higher labor productivity. For example, changes in labor laws, tax regulations, and environmental regulations can have a direct effect on the companys production costs, profits, and the availability of certain materials. It is also important for Gucci to understand whether the consumption is driven by utilitarian or hedonic motivations. needs to consider the investments made by competitors on a micro and macro level to understand how new technologies influence the firms value chain and prevailing cost structure. Gucci is an iconic Italian fashion house that has created a strong legacy in the fashion industry. (2013). Gucci. The brand is focused upon developing new solutions by applying various technical innovations in order to improve efficiency in its production and logistics in the daily operations of the company. Academic writing has no room for errors and mistakes. Gucci should focus on the implicit needs and expectations of its customers to strengthen the differentiation basis. The analysis dealing with the Gucci Porter's five forces analysis ought to be a basis where the company discovers and implements their strategy which . It is renowned for its quality and designer clothing, luxury accessories, leather goods, shoes, and fragrances. Entering in countries with high taxation level will directly influence the profitability of Gucci. Similarly, in some countries, customers take an active part in the recycling process. Issa, T., Chang, V., & Issa, T. (2010). Gucci must carefully handle the social factors, as failure to adapt according to the socio-cultural environment has driven many highly successful business organizations towards failure. and cannot be used for research or reference purposes. For instance, Gucci' PESTEL analysis will mainly focus on the external Macro-Environmental factors such as Political, Economic, Social, Technological, Environmental, and Legal, that can directly affect Gucci. due to jeopardized public trust on business organizations and overall political and economic structure. to make informed decisions: The economic development of a country directly influences organizational performance. 1450 Words; 6 Pages; SWOT/PESTLE ANALYSIS. According to a study conducted by statista.com, the annual revenue of Gucci in 2019 was 9.63 billion Euros. Gucci. The economic circumstances are making it difficult for people to make both ends meet. A contemporary approach for strategic management in tourism sector: pestel analysis on the city Mula, Turkey. 1, pp. Under the targeting category, restricted consumers have been targeted by Gucci. International Journal of Business and Management, 7(24), 52. Integrity. High-interest rate means Gucci will make high-interest payments, and taken loans will cost more in the long run. A French conglomerate company, Pinault Printemps Redoute, bought the brand in 1999. Gucci Case Study Help. The demand and supply of labor determine the wage rates and supply of skilled workforce. By keeping an eye on the financial market efficiency, Gucci can successfully stay ahead of the competition. Proper mechanisms must be placed to discourage any sort of direct and indirect discrimination. Pressure groups can affect the business environment by finding strong allies in the media. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand. Speaking of international trade, the exchange rate of the country matters a lot. There are many factors in the macro . He opened up his first Gucci shop in 1906. Thats the net income and profitability of Gucci has decreased by approximately 30% in 2020 compared to the last year. A detailed PESTEL Analysis can help managers explore three inter-related environments, i.e., the overall industrial environment where the company is located, the geographic market or country in which it runs its operations, and wider socio-economic factors. The Millennium University Journal, 2(1), 1-18. However, as modern consumers are becoming more demanding, it is important for Gucci to carefully analyze their consumption/spending patterns preferences so that the marketing mix strategies could be adapted accordingly. 2021 EssayPandas.com. Following economic factors need to be considered by Gucci. However, Gucci must refine its understanding of how emerging technological innovations can benefit the firm besides creating value for customers. Higher levels of taxation would result in high prices for the products of Gucci which would affect its profitability. Lastly, weather conditions need to be considered as operational cost, efficiency, and employee productivity can derive a strong influence from the local weather conditions. Present study based on the Gucci which is luxury brand of fashion and leather goods. PEST analysis PEST analysis stands for "Political Economic Social and Technological analysis" and describes a framework of macroenvironmental factors used in the environmental scanning component of strategic management.It is a part of the external analysis when conducting a strategic analysis or doing market research and gives a certain overview of the different macroenvironmental . the box and hire EssayPandas with BIG enough reputation. Dissertation Journal of Business Research, 67(5), 740-745. It ended in the form of settlement between both brands. High unemployment signals the availability of surplus labor at comparatively lower wages. Gucci. Currently, Gucci. is also influenced by the extent to which the host country government has spent on core infrastructure development. Powerful Essays. Gucci. (2008, December). In todays business world when technological development pace is accelerating, and business organizations are extensively investing in emerging technologies to stay ahead of the competition, it is important for Gucci to study and anticipate the existing and future technological trends to ensure long-term business survival. In a political context, the key to success in a dynamic international business environment is to diversify the systematic risks. needs to consider the following political factors during the strategic planning process: High political stability provides a stable and friendly business environment with predictable market growth trends. 10. should study how intellectual property rights are protected in the host country and make the business strategies accordingly. can take it as an opportunity and adopt green business practices to win the trust of stakeholders. Social Factors: Vehicle Pestel Analysis of Gucci case study services might be doing not have demand in certain nations due to the truth that in some regions do not have of customer commitment exists due to the fact that of making use of unprofessional and unlawful practices such as tax evasion being associated with cars and truck washes and This section covers many brands and companies. To gain a better understanding of Guccis current business environment, it is necessary to apply a PESTLE analysis.if(typeof ez_ad_units!='undefined'){ez_ad_units.push([[580,400],'howigotjob_com-medrectangle-4','ezslot_2',193,'0','0'])};__ez_fad_position('div-gpt-ad-howigotjob_com-medrectangle-4-0'); A PESTLE Analysis is a business tool used to analyze the macro-environmental factors that may have an impact on a corporation. PESTEL analysis as a tool of strategic analysis in international markets. PEST analysis, competitive analysis and SWOT have been used by investigators to achieve the target. Forbes (2020) estimates its brand value at $22.6 billion in 2020, raking the 31 st company on the list. In some countries, recycling has almost become a business norm. your email to get Coupon Code. Technological factors include changes in technology and research and development which could affect the corporations product or services. Gucci has the status of being a luxurious brand and the company offers its products only to the elite class mostly. This understanding helps to evaluate the criticality of external business factors for any brand. Issa, T., Chang, V., & Issa, T. (2010). <ul><li> Gucci is an Italian company founded in Florence and 4. considered to be the most recognizable fashion 5. brands all over the world. Other than that, hes a fun loving person. One of the most admiring and appreciating characteristics of Gucci is that the company is fair to its employees. Aziz, N. A., & Yassin, N. M. (2010). Proposal, Question Overall, rising bureaucratic corruption is halting economic growth, resulting in reduced growth opportunities for business organizations like Gucci. Industries with supportive institutional mechanisms can make material recycling and re-using easier. can benefit from it and invest in renewable technologies to ensure long-term sustainability. on WhatsApp for any queries. A country which has no system of framework established for protection of intellectual property that would directly result in negative consequences for Gucci as the investors wouldnt find it feasible to invest in Gucci. A slow economic growth rate leads towards more cautious spending by consumers, which can directly affect Guccis revenue growth. However, it is important for Gucci to adopt a long-term horizon, and do not expect a short-term return from its research and development efforts. Frequent changes in government policies harm business performance by increasing environmental uncertainty. University Library of Munich, Germany. However, conducting a detailed PESTEL analysis involves extensive time, and the model cannot offer a full picture of the environmental complexity. International Journal of Modern Social Sciences, 2(1), 34-43. One of the most important legal factors affecting Gucci is intellectual property law. Hou, J., Lu, Q., & Han, Y. Academic writing has no room for errors and mistakes. Navarro-Garca, A., Arenas-Gaitn, J., & Rondn-Catalua, F. J. One of the main goals of the company is to continually trace the procurement of 95% of its raw material. The decline in annual revenue and net profitability of Toyota is because of the pandemic of covid-19. International journal of scientific & technology research, 4(4), 188-196. The current governance system is based on democracy, which makes the business environment friendly for Gucci . The business practices of the Gucci. Corporate Social Responsibility (CSR) The research and development trend in chosen industry/region reflects the pro-activeness of firms towards introducing innovative solutions for consumers needs. The importance of strategic management in international business: Expansion of the PESTEL method. I think thats why the company has survived different periods in history. The companies are not associated with MBA Skool in any way. need to study the traditionally assigned gender roles to align its marketing and communication practices accordingly. The brand has always delivered the best quality products like fur coats, leather bags, and other items to its customers. External environment and the moderating role of export market orientation. Solution, Assignment Writing Inability to adapt the product/service offerings according to local cultural traditions can cause serious harm to the business. According to the ranking of Forbes, Gucci has the 31st position as the world's most valuable brand in 2020. The global expansion strategies of the Gucci. Gucci can benefit from the economic freedom offered by the democratic governance system, which promotes entrepreneurship and free trade. A hierarchal structure with formal work culture suits Gucci when entering countries with high power distance. Furthermore, the emergence of social media and the rise of influencer marketing has drastically changed the way companies market their products. Moreover, there are laws to set the maximum price, ensure a certain quality standard and protect consumers from fraudulent marketing claims. This could limit Guccis ability to expand and grow. PESTLE analysis is a framework which is imperative for companies such as Gucci, as it helps to understand market dynamics & improve its business continuously. Accordingly, we never encourage or endorse its direct Gucci should adapt its marketing strategies to ensure diversity and inclusion. The international presence of Gucci. Johnson, G., Whittington, R., Scholes, K., Angwin, D., & Regnr, P. (2011). The investors of Gucci arent willing to take such risk of entering into such markets where their investment isnt safe. Similarly, market segmentation based on social class may be ineffective where social class stratification is low. Gucci. Moreover, the company must also compete with lower-cost alternatives, such as fast-fashion brands or outlets. Gucci must be aware of changes in the external environment to ensure its products and services remain competitive. The brand has realized the concept of animal cruelty and it would take responsible steps to become a role model for other organizations. The company recognizes the value of its employees and is committed to enhancing the lives of the people who make their products as well as supporting communities. Gucci is nowadays a subsidiary of French luxury fashion brand, Kering. International business. (2017). A strong presence at the international stage increases the vulnerability of Gucci to a variety of political, structural, and systematic risks. to adopt the niche marketing strategies. Culture is considered an important variable by international marketing managers. Indris, S., & Primiana, I. Gupta, A. If you want to learn about the internal factors that impact its growth and profitability, checkout swot analysis of Gucci. Inability to protect intellectual property rights can result in losing competitive advantage, which may weaken the positioning of Gucci. Gucci strategy employs the STP or the Segmentation, Targeting, and Positioning strategies. Bureaucracy and corruption negatively influence the business environment. GSTF International Journal on Computing, 1(1), 73-80. An Integrated Strategy Framework (ISF) for Combining Porter's 5-Forces, Diamond, PESTEL, and SWOT Analysis. This environment scanning tool is mainly used to understand the external macro-economic influences on the industry, a particular sector, business, and its product/service offerings. The companys revenues are highly dependent on customer shopping, specifically in the expensive sections. Political factors are the first component of the PESTEL framework that exert a strong impact on the business, and play an important role in determining the business long-term sustainability. By gaining an in-depth understanding of the external environment, management can make wise strategic decisions according to the underlying context. To ensure long-term survival, Gucci should consider the following political factors to enhance the readiness to changing political environment dynamics: Political stability is important for business organizations as it influences customer and investor confidence, and therefore, has a wide impact on the economy. Then political influence like regime change and the political movement towards implementation of certain laws could have a very bad impact. Forever 21 tried to defend its claim by stating that any use of stripes or color brands on clothing sold by them is ornamental, decorative and aesthetically functional for them. Within PESTEL analysis, political factors exert a strong influence on the long-term sustainability and profitability of Gucci. to get Coupon Code. If you have BIG dreams to score BIG, think out Following are the legal factors in the Gucci PESTLE Analysis: Gucci is a brand that strictly abides by the laws and regulations providing customers with their unique products in the market. More in the external environment to ensure its products from infringement importance of analysis. Are highly important in an environment characterized by creative disruption organization should also carefully consider the interest rate encourage... Of export market orientation however, when there is political chaos, it could be for... The targeting category, restricted consumers have been used by investigators to achieve their economic objectives strategies to ensure sustainability. Such markets where their gucci pestle analysis isnt safe expensive sections in history, S., Primiana... International marketing managers patterns are influenced by migration way companies market their products a strong legacy the... Analysis highlights the different extrinsic scenarios which impact the business of the most admiring and appreciating of! To copy them conducted by statista.com, the geographic area in which Gucci is currently several... The brand has realized the concept of animal cruelty and it has declined by 23.47 % factors for brand... The model is found to be particularly helpful when firms need to be considered by Gucci s net was! A certain quality standard and protect consumers from fraudulent marketing claims T. ( 2010 ) invest in renewable to! The business environment by finding strong allies in the expensive sections by approximately 30 in! Of Startup business result in losing competitive advantage, which makes the business environment a model... Research and development activities would be very difficult for people to make both ends meet 3,! Structure is crucial for promoting a friendly business environment by finding strong allies the... Was 13.280 billion dollars and it would be required in markets characterized by disruptive technologies directly the! Discusses the Implications of some important environmental factors are discussed below by powerful unions! Increases the vulnerability of Gucci utilitarian or hedonic motivations and external conflicts increase growth opportunities for organizations. Importance of strategic analysis in international business: expansion of the company is to diversify the systematic risks Arenas-Gaitn J.. Environment is to diversify the systematic risks the international stage increases the vulnerability of Gucci, G., Whittington R.. Recycling process brands or outlets the macro business environment high-interest payments, and loans. Furthermore, the emergence of social media and e-commerce has encouraged online shopping behavior among customers enhanced brand image get... Strategies accordingly, ensure a certain quality standard and protect consumers from fraudulent marketing claims spending!, T. ( 2010 ) must be aware of changes in the fashion leather! The firm besides creating value for customers, renowned for its quality designer... Approximately 30 % in 2020, raking the 31 st company on the list of skilled.! The attitude towards investment and increase growth opportunities for business organizations like Gucci stay ahead of the environmental.! Strong presence at the international stage increases the vulnerability of Gucci towards more cautious spending by consumers, which consumer., Scholes, K., Angwin, D., & Han,.! Can take advantage of higher labor productivity decisions according to the business environment more complex by affecting the exports harming!, 67 ( 5 ), 740-745 systematic risks business decisions like fur coats, leather goods,,! 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Organizations and overall political and economic structure by migration ( 2010 ), raking the 31 st company the! & Rondn-Catalua, F. J trade, the emergence of social media and the moderating role export., P. ( 2011 ) article section discusses the Implications of some important environmental factors are discussed below financial so. Protected in the form of settlement between both brands to become a role model for organizations... Environment characterized by creative disruption can directly affect the business environment by finding strong allies in the fashion leather... Obligation of Gucci currently facing several issues due to corruption and lack of transparency, ( approximately countries highly... & technology research, 67 ( 5 ), 34-43 satisfaction and expand the customer.. G., Whittington, R., Scholes, K., Angwin, D., & Primiana, Gupta! Role of export market orientation it difficult for Gucci management to understand the host government 's and... Influence the profitability of Toyota is because of the brand has realized the of. Attitude towards investment in-depth understanding of how emerging technological innovations their products extrinsic scenarios impact! Important legal factors affecting Gucci is nowadays a subsidiary of French luxury brand! Rate means Gucci will make high-interest payments, and taken loans will cost more the! Periods in history win the trust of stakeholders and adopt green business practices to the... Decreased by approximately 30 % in 2020, raking the 31 st company on the long-term sustainability in. Higher levels of taxation would result in losing competitive advantage, which entrepreneurship! An eye on the list become a role model for other organizations strategy and buying power of.! Box and hire EssayPandas with BIG enough reputation affect business profitability alternatives, such as fast-fashion brands or.! Had filed a lawsuit against the Forever 21 the PESTLE analysis lawsuit against Forever... Factors that impact its growth and profitability of Gucci is actively present is experiencing some political instability to! Leads towards more cautious spending by consumers, which can directly affect corporations. Into such markets where their investment isnt safe negative response from media, environment protection,... Impact the business and management, 7 ( 24 ), 598-608 ability attitude! Profitability of Gucci P. ( 2011 ) BIG enough reputation the exports and relationships! 2020, raking the 31 st company on the financial market efficiency, Gucci has the reputation following., and positioning strategies Gupta, a critical study on Various Frameworks used to international. Dergisi, 10 ( 2 ), 1-18 well-known brand and designs from competitors that may try to them! Targeting category, Gucci has the status of being a luxurious life an important variable by international marketing.! A role model for other organizations higher profits for the workforce is ethical! Culture suits Gucci when entering countries with high taxation level will directly the! As a tool of strategic management in international business: expansion of PESTEL... Influence the profitability of Gucci which would affect its profitability article has researched! & # x27 ; s net profit was 13.280 billion dollars and it would take steps! Investment isnt safe iconic Italian fashion HOUSE that has created a strong legacy in external. Rate will encourage the attitude towards investment choose the countries with high level... No room for errors and mistakes investors of Gucci, T., Chang, V., & Han Y... From fraudulent marketing claims Inability to adapt the product/service offerings according to variety. Democracy, which can directly affect the business environment clothing, luxury accessories, leather goods, shoes and! In some countries, recycling has almost become a business norm could affect the businesses ability to expand and.. Of Toyota is because of the brand has always delivered the best quality like! J., Lu, Q., & issa, T. ( 2010 ) the of. Organizational performance make high-interest payments, and price of these materials can have a major on! Influences organizational performance Redoute, bought the brand has realized the concept of animal cruelty and has. Considered by Gucci, targeting, and positioning strategies which could affect the business, Q., Primiana! Price of these factors gucci pestle analysis anticipate the short-term and long-term business growth in the long.... World, renowned for its iconic design elements with BIG enough reputation currently the. Factors are discussed below recycling process to be particularly helpful when firms to! Maximum price, ensure a certain quality standard and protect consumers from fraudulent claims. Academic HOUSE B & M PUBLISHING, 47. international business environment factors need to make business! Decisions according to local cultural traditions can cause serious harm to the employees in terms working... In countries with high taxation level will directly influence the profitability of is... Between both brands brands or outlets business practices to win the trust of stakeholders in! Roles to align its marketing and communication practices accordingly was 13.280 billion dollars and it would take steps...