Cotton On Market Entry Analysis in China and United Kingdom

The report analyses the market entry of Cotton On in China and United Kingdom. It includes macro environmental and geopolitical forces impacting the countries, business and trade policies, potential threats and opportunities.

Running head: GLOBAL BUSINESS MANAGEMENT
Global Business Management
Name of the Student
Name of the University
Author note

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Executive Summary
The report has helped in analysis of the various countries in which there will be
expansion of the company Cotton On will be done in Japan and United Kingdom.
Furthermore, there are various macro environmental factors along with geo political
factors which have been considered in the analysis of the analysis of the global
business opportunity of Cotton On . Lastly, the potential threats and risks have been
identified and analyzed which has helped in managing the different kinds of business
in an ineffective manner.

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Table of Contents
Introduction 3
Overview of Cotton On 3
Analysis of Countries in which Cotton On will Develop their Business 3
Macro Environmental Analysis of China 3
Macro Environmental Analysis of United Kingdom 5
Geopolitical Forces Impacting China 6
Geopolitical Forces Impacting United Kingdom 6
Business and Trade Policy of China 7
Business and Trade Policy of United Kingdom 7
Assessment of Potential Dangers, Threats and Opportunities in China 7
Assessment of Potential Dangers, Threats and Opportunities in United Kingdom 8
Conclusion 8
References 9

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Introduction
The report throws a light on analysis of the two countries such as China and
United Kingdom for the market entry of Cotton On in these countries. Furthermore,
the macro environmental along with geo-political forces which will impact the country
in which Cotton On will be expanding their operations. The business policy and trade
will be required to be discussed effectively which will help in assessing the different
risks, opportunities along with dangers in short term policies of each country.
Overview of Cotton On
Cotton On is one of the Australian retail chains which is known for the fast
retail clothing for men, teenagers, women and children. The company was founded
in the year 1991 which was founded in Geelong, Australia (Cottonon.com, 2018).
There are different kinds of divisions available in the company which is inclusive of
cotton on body, kids along with different other clothing accessories. The company
has almost 1600 stores in more than 12 countries in the entire world. In the entire
international market along with in the Australian division, there are 17000 staffs are
employed and they are performing well in the organization as well.
Analysis of Countries in which Cotton On will Develop their Business
Cotton On has their operations in all over Australia along with their business
in China and United Kingdom. The company has their presence in more than 1000
locations along with in Australia and in the entire international market as well.
However, the company is not being able to operate in China and United Kingdom as
there were no such cope present in these two countries in the past. However, there
are different kinds of scope in these two countries in the present scenario and the
company can expand their business in an effective manner as well. In China, the
company can gain huge expansion and there will be huge opportunities for growth of
the business as well.
Macro Environmental Analysis of China
Political Factors is one of the main aspects which is required to be analysed
in an effective manner. The entire clothing retail industry in China is considered to be

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prestigious in nature as there is no such political pressure from the government of
China and this is a significant example of the strict regulation free environment for
development of clothing retail industry (Cavusgil and Knight 2015). The local
government of China is helping in changing the traditional concept of the market and
trying to convert the same into supermarkets. There is huge scope of the retail
markets in China in Western provinces of China.
Economic Factors is the other aspect the taxation rate and policies are more
than 25% and there are various special kind of provinces such as Western
provinces. Furthermore, Cotton On will be successful in managing their business in
an effective manner in Chinese market in which there are different suppliers who
originate from China and they have the entire knowledge on the local food products
with international standards of quality as well (Doh, Luthans and Slocum 2016).
Social Factors is the other aspect which is required to be analysed in an
effective manner as it has been noticed that the individuals in China are health
conscious in nature. However, on the other hand this has been noticed that there are
different kinds of cultural norms in which there is implementation of different foreign
formats which can be an issue for Cotton On to expand in the Chinese market
(Cumming and Zahra 2015).
Technological Factors is the aspect in which this has been the technological
advancements and implementation is a challenge as there is less of extensive
knowledge of the distribution network. Furthermore, the living standards of the
individuals in China is high and this will be advantageous for Cotton On to extend
their business in Chinese market (Gaspar et al. 2016).
Legal Factors is the aspect in which this has been noticed that the different
government legislations have created direct impact on performance of the
companies which are operating in China. The policies relating to the government of
monopoly control will limit entry of the different companies (Sassen 2016).
Environmental Factors is the last aspect in which the government of China
has abolished the plastic bags usage and the Chinese government is trying to focus
more on introducing the recycling programmes through social progress plan and
there is strict control of the firms in recent times (Donate and de Pablo 2015).

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Macro Environmental Analysis of United Kingdom
Political Forces is the first aspect in which this has been noticed that political
factors play a major role in the retail sector of United Kingdom. The European
economy is growing at a fast pace; however, the different political pressure is huge
in the United Kingdom market which can cause huge trouble for the entire economy
in UK clothing retailing sector. Cotton On can suffer from different strict regulations
which can affect the overall productivity of the firm as there will be no such profit
gained buy the company (Bezzinay et al. 2017).
Economic Factors is the other aspect which is required to be analysed
effectively wherein the UK population has increased over the years and the ageing
population can restructure the target audience and this can affect the overall
productivity of the firm in a negative manner as well. Furthermore, the rate of inflation
has been increased and this can create negative impact on the different supply chain
and transportation costs as well for Cotton On (Peng 2016).
Social Factors is the aspect in which the social trends of the individuals are
changing in the UK market and this has created major impact on the profitability of
the retail companies. In the UK market, the demographic changes in the market is
affecting the growth of Cotton On can be affected in a huge manner in the market
and this can create a huge impact on the firm expansion as well.
Technological Factors is the other aspect which is required to be analysed
in an effective manner in which there is huge innovative techniques which are being
used by the firms in UK to become more popular in the market. Furthermore, this has
been seen that this will allow the firms to grow in an efficient manner to gain profit.
However, the Cotton On is required to be analysing the different aspects related to
technological advancements which can be disadvantageous for the company in the
future (Peng 2016).
Legal Factors is the aspect in which this has been noticed that there are
different kinds of legal legislations which are required to be followed strictly or there
can be huge issues relating to the opening or expansion of the company in the
respective market. In case of Cotton On, this has been seen that the company will

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not be successful in UK market as the legislations are mandatory to be followed
(Moore 2016).
Environmental Factors is the last aspect wherein there are different
sustainability concerns which can affect the growth of the firm in a negative manner.
There are various issues in sustainability in Cotton On clothing retailing wherein
there is lot of carbon emission along with the packaging is other major concern in it
as well which can create trouble for their expansion (Kasemsap 2016).
Geopolitical Forces Impacting China
There are different kinds of geopolitical forces which will impact China in
which this is inclusive of the huge growth rate of population in the entire market. This
has been seen that the geopolitical future of China is favourable in nature which will
help the company Cotton On in expanding their clothing retailing business and gain
huge competitive advantage in the entire economy of China as well. Furthermore,
the main geopolitical imperatives of China include maintaining internal unity in Hans
Chinese region, maintaining the control of the different buffer regions along with
protecting the coast from foreign encroachment as well (Hornstein 2015).
However, there are few issues in the geopolitical regions of China which is
inclusive of the political pressure which can create huge impact on the market. This
can create huge problems in the growth of the country as there are various
operations in which the government regulations are not up to the standard and this
will impact the Chinese market which can be a single issue for the company as well.
Lastly, this was seen that there are various threats in which the company Cotton On
has to focus more on the economic downturn of the country as this will provide
different kinds of approaches to deal with such situation in an efficient manner
(Schimmer, Geschuhn and Vogler 2015).
Geopolitical Forces Impacting United Kingdom
There are different kinds of changes in the geo political environment of United
Kingdom when there was exit from the union of Europe. Moreover, this has been
seen and analysed that there was huge impact on the topography along with natural
resources which are required to be evaluated. The United Kingdom is one of the

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essential parts of the alliance which was being created by the various European
countries and this provided with different negative impacts on the United Kingdom
Country as well (Rugman and Verbeke 2015). Moreover, this has been identified and
analysed that the political pressures and the geographic political approach of the
company is negative in nature and this creates huge pressure on the Cotton On
company to expand their operations in United Kingdom as well.
Business and Trade Policy of China
In case of Chinese market, this has been noticed that China has tried to carry
out discriminatory along with unfair practices related to trade to detriment of the US
economy along with consumers. China has constantly failed in their approach of
promising fair and free trade (Moore 2016). The trading practices which are being
adopted by Chinese market is not up to the standard and this affects the business
practices or the different kinds of business activities which can be difficult for the
Cotton On retailing clothing Company to survive in such environment as the free
trade is essential in becoming successful in the market effectively.
Business and Trade Policy of United Kingdom
The different kinds of policies which are being adopted by United Kingdom
has aimed in providing the different kinds of business opportunities to the
organization such as Cotton On. The plan for expansion in the UK market is strong
and this helps in providing huge trade barriers in the market of UK which can create
huge negative impact and create barriers for Cotton On market (Lasserre 2017).
Assessment of Potential Dangers, Threats and Opportunities in China
There are different kinds of potential threats and dangers in China for Cotton
On in which this includes the negative perception on China which the different
individuals possess on the government of China. This has been noticed that China is
one of the strictest governments regulations-oriented country which creates huge
pressure on different retailers.
On the other hand, this can be analysed that there are various opportunities
which is inclusive of the main focus can be provided on service sector as this will

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create lucrative opportunity for the service businesses and this will help China in
becoming popular in the entire market as well (Hamilton and Webster 2016).
Assessment of Potential Dangers, Threats and Opportunities in United
Kingdom
There are various kinds of potential threats for Cotton On while expanding
their operations in United Kingdom which includes the risk of the uncertainty in the
economy of UK which can affect the growth of the firm in a negative manner. The tax
rate is huge in the United Kingdom economy which can cause huge pressure on the
firm in establishing their business in UK market (Gaspar et al. 2016).
On the other hand, there are various opportunities for Cotton On to expand
their operations in UK in which this has been seen that there is huge geographic
expansion and this will help Cotton On in establishing themselves in the high-quality
retail market in an effective manner as well (Cavusgil and Knight 2015).
Conclusion
Therefore, this can be concluded that there are different kinds of issues along
with opportunities of both United Kingdom and China market. From the above
analysis, this can be identified that Cotton On can expand their business in Chinese
market as there is huge growth of the population and this helps in improving the
overall productivity of the firm as well.
Moreover, this has been seen that the political pressure is less in the Chinese
market and this can help in the growth of the company in China rather than in United
Kingdom. There are different kinds of technological advancements in the Chinese
market which helps Cotton On in trying to focus on increasing the revenues and the
growth of the firm will be increasing in terms of the revenue as well.

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