Global And Transitional Business Report

This report examines Marks & Spencer's global expansion and withdrawal from China, France, and Canada. It analyzes the PESTLE and Porter's Five Forces frameworks for each country, evaluates the BCG matrix, and provides recommendations for potential re-entry into the Chinese market.

Global And
Transitional
Business

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
CHINA.............................................................................................................................................1
FRANCE..........................................................................................................................................7
CANADA......................................................................................................................................11
RE-ENTER INTO EXISTING MARKET....................................................................................15
RECOMMENDATION.................................................................................................................16
CONCLUSION .............................................................................................................................16
REFERENCES..............................................................................................................................17
APPENDIX....................................................................................................................................18
.......................................................................................................................................................19

INTRODUCTION
Global business is considered as an international trade in which an organisation conducts
its business across the globe. A transnational corporation is refers as a huge firm that operates its
business activities within several countries (Ferraro and Briody, 2013). In the modern business
environment competition is so high at market place and the basic purpose of each small as well
as large business enterprises is to attaining higher growth and success within the commercial
centre. The present report is based on the case study of Marks and Spencer. The company was
established in the year of 1884 by the significant efforts of Michael Marks and Thomas Spencer.
The company has expand their business in different countries in respect to boost their
profitability or revenue in international market. This report contains the study about the reasons
why Marks and Spencer have withdrawn their business from countries, thus China, France and
Scotland are the major country's from where Marks and Spencer has withdrawn their business.
Along with this entry modes used by company will also explain and different strategy Marks and
Spencer can be adapting to apply for re entry in to the markets.
MAIN BODY
Background of Marks and Spencer
Marks and Spencer Group Plc is a major British Multinational retailer company with its
headquartered is in Westminster, London. The company was established by the potential efforts
of Michael Marks and Thomas Spencer in the year of 1884 (Luo and Zhao, 2013). Marks and
Spencer is grew to be an iconic British retailing brand with many retailing rand with many firsts
to its credit. The company expended its business to overseas through the late of 1990's it create
aggressive investment around the globe and planned to push international business to a quarter of
its overall profitability or revenue in less than a decade. (Refer to appendix 1 point 3)
CHINA
Pestle Analysis for China
This approach is used by company to identify the factors which would be affecting
company's performance in specific country. China is one of the attracting point for many
countries due to high number of potential customers, high profit margin, low labour cost etc. But
still Marks and Spencer have been withdrawing their stores and production unit from China.
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Factors which are affecting their performance in a negative way is given below with credible
examples,
Political factor: It includes all the factors which is made by the ruling party like
taxations policy, anti dumping duties, rules and regulations etc (Hines, 2013). Though China
government is stable but their policies always prefers local companies to grow. Besides this UK
government regularly increased anti dumping duties on Chinese product due to which their
relationship is not good in the context of ease of doing business.
Economical factor: It is made up of various factors due to which economic conditions of
country is directly affected like disposable income, growth rate, currency fluctuations etc. China
is one of the largest consumptions of clothing due to high numbers of potential customers which
creates a favourable environment for business. But still they have failed due to currency
exchange between both the countries.
Sociological factor: It consist of different factors like distribution age group of people,
population growth in every year, lifestyle, attitude of handling things, superstitious activities etc.
Most of the Chinese believes in superstitions due to which company has incurred high loss.
When M&S stores opens their stores for the first time, one accidents happens which cause one
death of a customer. This enhance the fear of Feng Shui and people decrease their frequency of
visiting their stores. Besides this, according to the survey done by the BCG company, Chinese
people prefers to buy products from the local brand instead of going to foreign brands. Both the
factors directly affect the sales and profitability of company in a negative way.
Technological factor: Technology advancement plays an important in the success of
organisation but in china market it makes an adverse impact on the profitability and sales of
M&S. China have more than 600 million of mobile users and most of them prefers to buy online
rather than physically visiting the store. It creates a negative impact as footfall of M&S store is
low as their expectations and it is hard for them to recover cost which they have already invested
in the country. Moreover, Chinese people prefers to use online transaction on stores instead of
swapping cards on POS on the other side stores have facilities of cash and card payment only.
Legal factor: It consist of different laws like employment laws, labour laws, working
conditions etc. which foreign companies should follow while entering in other countries so to
avoid legal issues (Qihao, 2018). Another factors which hampered the conditions of M&S in
china is one child policy. Parents can not give birth to more than one children which decrease the
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potential growth of customers in China though it have been remove in the recent past but still it
will take time to get back to normal situations.
Environmental factor: Global warming has created a buzz in the market due to which
government and people are concerned about the environment they are living into. Opening an
store required large space which will persuade to less agriculture land. Besides this pollutions
generated from manufacturing company is also lethal for those who are consuming it. All these
factors are against the success of M&S due to which they are planning to withdrawing their
amount and stores from Chinese market.
PORTERS FIVE FORCES MODEL
It is one of the model which is used by M&S to identify various issues which they were
facing in the Chinese market more specifically retail industry of china. Industry in which
company is working plays an important role as is directly affects the working operations of M&S
and their sales and profitability. Different type of factors are given as follows,
Factors High/medium/low Reason
Bargaining power of supplier Medium Apparel industry is vast in
nature as it also includes
textile and clothing industry.
They have medium bargaining
power as raw materials
required to make cloths should
be high in quality due to which
company holds bidding for
getting highest quality
material so that they can attain
product differentiation on the
basis of quality.
Bargaining power of buyer High Full power is based in the
hands of customer as in retail
industry, switching cost is very
low. In other words, if
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customer is getting product is
low price as compare to their
favourable brand then they will
switch it to low cost brand.
Competitive rivalry High Competitive rivalry is high as
there are many big players
who are offering better
services and products in the
Chinese market like Zara,
Alibaba, H&M, Levis etc.
Threat of new entry Low There are less chances of entry
of new brand as it requires
high scale of economies to
enter in to Chinese market.
Moreover, it is really hard for
new company to understand
customer needs and demands
because it is too complex in
nature.
Threat of substitute Medium Though there are substitute in
the clothing industry but still
factors through which clothes
are sell in market can be
considered in this. M&S were
selling there outfits through
their physical store in store
which is opposite to the needs
of Chinese people because
they prefer to buy product
from online platform rather
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than offline.
BCG matrix
This approach is used by company to identify their internal strengths and how it could be
improved so that company can achieve new heights of success in the industry. It is an framework
which is made by the Boston consulting group and its helps in identifying various strategic
approach which a company can opt to gain competitive advantage over others for a longer period
of time. (Refer to appendix 1)
Factors Explanation
Stars Those products which have highest market
share in the market and generate higher amount
of revenue as compare to other products are
comes under stars. Those product who has the
monopoly in the market is considered as stars
product. But company also have to invest
larger amount of funds in the product for their
marketing activities. One of the famous
product which M&S has in the market is Men's
shirt. Shirts has the big amount of chunk in
overall revenue of M&S in china. But due to
bad strategies they could not maintain their
success and resulting in losing share of market
to other competitors.
Question mark These are the kind of products in which
company has small share in the market but still
product has the opportunity to come under
stars product if company are investing
regularly in to the product. However chances
of getting failed in the business is also high
that's why company has to analyse and monitor
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activities which is related to the success of
product. For instance, M&S have two products
in the Chinese market i.e., kids-wear and
women wear which is favourable in the market
but company could not utilise their funds to its
fullest due to which their market has been
captured by other brands like Levis and H&M.
Cash cows All the products which has high rate of return
is considered in the cash cow brands. It assist
company to increase their profitability in the
coming future as company gets more money as
compare to their investment in the product. For
instance, M&S lingerie is one of the product
which satisfies customer needs and interest
because it is cheap as compare to other
company's product with high quality of
material used to make this product. But
company like M&S can not depend on a single
product to earn profits.
Dogs Dogs product are the one who has low market
share and growth rate. These are the kind of
products in which company can not even attain
the break even point and constantly getting loss
from the product. Company can not quit or
break their streak of investing in business
because organisation have already invested in
the business. For instance, premium clothing
for men has disappointed Marks and Spencer
as it was not according to the needs of
customer because of that it is hard for them to
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sell their product.
FRANCE
Porter's five forces model on apparel industry of France
Company business operations are based on two factors i.e., external and internal. External
factors are those which can not be controlled by company. Porters five forces model is used by
company to asses external factors which will help in the coming future at the time of making
business strategies. Though Marks and Spencer have failed in Frances due to factors which are
mentioned below,
Threat of new entry: If the market is profitable and has high margin of profits then it
will automatically attracts more competitors in the market. Apparel industry goes on one line i.e.,
high risk and high reward. Chances of new entry is less as it requires huge amount of cost of
capital in the starting and probability of succeedingly in the industry is less.
Bargaining power of suppliers: If there are more number of suppliers in the market then
power owned by them would be low and vice versa. There are high number of supplier in France
like kiddystores, French select. Pas par pas etc. due to which power relies in the hand of
companies rather than suppliers. So it can be said that bargaining power of suppliers is low in
France.
Bargaining power of buyers: Buyer refers to those individual who are using different
types of products to satisfy their needs and demands. France has more than 60 millions
population which depicts that market for M&S is high. But still they have not take the advantage
of opportunities (Zhao and Wang, 2018). According to the report. Company has lost more than
28 million dollar due to bad marketing and pricing strategies.
Threat of substitute: It states that how a customer can satisfy their needs without using
that product. There are no substitutes for food and clothes which makes the threat of substitute to
lower. If other competitor is considered as substitute then there are ample of local and global
companies who are running their business in France like H&M, Zara, Levis etc.
Competitive rivalry: It means how many competitors does M&S has in France market.
There are many big players like H&M, Zara and core brands like Chanel, Louis Vuitton, Pierre
Cardin etc. It is really hard to compete with them as every product they made are unique and
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satisfy every demands of customers. Besides this, other company are using different types of
marketing techniques like price skimming and promotions techniques due to which their brand
awareness are more than Marks and Spencer (Hamber, 2012).
PESTLE ANALYSIS
Companies performance are dependent on two different dimensions that is
external and internal environment. Company can handle internal factors as it consist of strengths
and weakness of the company. Apart from that, main role is played by external factors which
includes political, economical, sociological, technological, legal and environmental factor. This
strategy is used by company to analyse these factors and how it affects performance of company
in the competitive market.
Factors Explanations
Political France and the united kingdom are the only
countries in the European countries who have
nuclear weapons. This leads to cold war
between both the countries as both have bitter
relationship in the past due to many war which
fought by both the countries. France
government does not support working of
Marks and Spencer that's why they made
policies and regulations according to their
domestic firm which create a negative impact
on the working of company. Moreover Brexit
has also hampered the profitability of M&S.
Economical Company can only attain growth and high
profitability in foreign countries if their
economic conditions are good and favourable
for growth for company. France is suffering
from three different issues which they can not
resolve it like low unemployment rate and low
growth rate. Due to low disposable income,
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people of France can not buy expensive
products of Marks and Spencer due to which
their growth and customer acquisition rate goes
down in consecutive years.
Sociological M&S does not have a great history in starting
their operations in France as in 2005, they have
closed more than 18 stores in their country
which leads to loss of 1700 workers in a one
go. Lot of criticism has been faced by company
in that period of time and even former CEO
was fined for that also. Citizens of France are
still not happy with the company due to which
they are boycotting their product to its
fullest(Marks & Spencer opens in Paris again
ending a ten year drought for ex-pats, 2019).
Technological France has low internet connectivity due to
which there is no sense to invest on online
platform. On the other hand it is not possible
for store to cover large number of market
share.
Legal Legal issues are strict in France due to which
many companies faced problem to operate their
business operations. Marks and Spencer also
comes under this category as they have faced
many obstacles because of that they have
planned to withdraw their business or stores
from their. For instance, it takes around 100
days just to take electricity in the shops or
factory. Moreover internet is an essential part
while conducting business on the other hand it
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takes months to get internet connection due to
slow legal process (Top 10 challenges of doing
business in France, 2019).
Environment Most of the countries in the world are suffering
from environment issues like global warming
due to which local authorities have made strict
rules for saving the remaining environment. It
is hard for them to work within rules and
regulations set by them.
BCG MATRIX
BCG matrix has two dimensions on which product is set accordingly. Market share refers
to how much customer does the company has. If company has more market share then it will
generate more sales for them which leads to higher profitability. On the other hand, second
dimensions is growth rate of the industry. If there are high number of customer who could be
attracted by the company in future then it means that industry has high growth rate.
Factors Explanation
Stars Product which requires high amount of
investment from the side of M&S but still
gives return of investment is baby products and
its accessories. But as M&S is not a toy
company, it can not make their product
differentiate from other companies. M&S has
make their market in the starting but they can
not take the advantage of it due to which they
have lost the competition with other
companies.
Question mark Marks and Spencer perfume categories have
the bright future in France and their products
are unique as compare to existing players. But
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it requires huge amount in the starting as
marketing activities will consume high amount
of fund which they can not invest because
company was facing backlash from people of
France.
Cash cows These are the one who maintains cash flow of
company in every situations. M&S men wear
is one of the department in which they does not
have to invest sum of funds to get high return.
However, company can not maintain their
streak due to price competitiveness.
Dogs Lingerie sections is of the section which does
not work as expected by the executives of
M&S. As they can not differentiate their
product or lower their prices compare to other
companies because of which potential
customer does not prefer to buy lingerie from
M&S.
After they have started withdrawing from different markets, there goodwill in the market
has hampered in a negative way due to which their profitability and sales has become low.
CANADA
PORTERS FIVE FORCES MODEL
Factors High/medium/low Reason
Bargaining power of supplier Medium Most of the components which
are used to make cloths are
easily available in France as it
is enriched with many natural
resources. M&S is a retail
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store means there supplier are
the one who made final
product which could be used
by customers. There are
average number of supplier in
France who provide this type
of service.
Bargaining power of buyer Medium There are large number of
potential customer in the
market but still due to low
disposable income of people
they does not prefer to spend
more on clothing. Moreover,
switching cost in retail
industry is less due to which
power remains at the hand of
buyer. That's why bargaining
power of customer are
medium.
Competitive rivalry High When there are high number of
competitors then market
becomes competitive in nature
as every company wants to
become market leader. There
are many big players like Dior,
Givenchy, Yves Saint Laurent
etc who are competing against
M&S.
Threat of new entry Low Retail industry requires high
amount of funds in the starting
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to launch their business.
Besides this, risk of not getting
success is also high due to
which new entrants does not
prefer to enter into market.
Threat of substitute Medium There are no substitute for
cloths and foods but still
France has lots of company in
the retail sector.
PESTLE ANALYSIS
This is an analytical tool which is generally used by companies to analyse the factors that
are present in external environment which may affect its operations at large. By using this M&S
will be able to determine about the major factors that may affect its operations as well as growth.
Following are the factors that are evaluated by PESTLE analysis:
Political:- It includes analysis of various factors like governmental rule and regulations
in term of trading and other related factors. Canada have political stability where the laws or
legislation of government doesn't change much frequently which is a positive factor for M&S.
But apart from this these regulations restrict M&S to modify their organisational structure or
policies which affect their operations at a large scale. As in order to deal with competitive
environment M&S is required to bring innovative approaches to serve its customers and these
fixed regulations doesn't allow for the same. So in order to bring changes or new services it has
to take permission with government which is very time consuming.
Economical:- The economical condition of Canada is good and consider as a 10th largest
economy around the world. But after the economical crises of 2000 affected country up-to a
large extend as a result of which people started setting up their own venture with an aim earn
their livelihood. This has created a greater competition in front of M&S as they are getting tough
competition from local retailers which offer products at relatively low price.
Social:- Canada is a country with greatest population and is also contain people who
belongs to different culture and society. As majority of people are migrants that have come up in
country with an objective to study or job. So, it is a country with diversified people as well as
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culture which leads M&S to offer product by analysing all the possible need or requirement
which its target market contains. This become very complex as well as costly for the company to
cater the need of diversified population as each one is different in term of their choices.
Technological:- Canada is experiencing a highest growth in technological sector but
apart from this development some major issues also get arises. Cyber crime is one of them which
have a great influence over the customer's choices. It is one of the major issues that is faced by
most of the retailers which offer their product or services online to its customers and Mark &
Spencer is one them. Customer usually afraid of purchasing the product or services online due to
increasing rate of cyber crime such as hacking of data, misuse of financial information, fraud
product details and many more. This leads to decrease in the market share of company as people
doesn't believe over online offering of M&S.
Legal:- This factors support in analysing various forces which are present in external
environment such as laws related to labour, health & safety, taxation law and many more that
may affect business operations. The law or regulations related to labour safety is very strict
which affect the operations performed by Mark & Spencer and also cost higher.
Environmental:- Canada is one of the most attractive tourist place because of which
large number of people come up to experience its scenic beauty. But apart from this there are
several major issues faced by country like acid rain, air pollution, climate change and smog etc.
This lead government to formulate hard and strict rule which forces M&S to use particular raw
material that are eco friendly and recyclable. These strict rules affected the operations as well as
quality of product, packaging and other material used by M&S which doesn't allow company to
innovate their product which may further leads to limit the market.
BCG MATRIX
Factors Explanation
Stars It includes those product that have highest
customer base and revenue within market as
compare to others products of company. These
product are highly in demand and required
larger amount of fund to be invested in order to
maintain it position. The star product of M&S
in Canadian market is women's wear which are
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highly appreciated by customers in market. But
due to humour regarding its design of apparels
that it offer product for old age or adults affect
the choice of customer up to large extent.
Question mark Main focus of company is to invest regular in
the products so that proper marketing activities
would be attain by M&S. Children wear has
future in Canada as their product is unique as
compare to other products. But at that time
company has to cut down the price of products
so that potential customer would buy more but
they could not because M&S were already
suffering from losses.
Cash cows Marks and Spencer men's wear is one of the
favourable product in all over world which
does not requires funds for marketing
activities. But as cost price of products are high
due to which they can not cut down their
prices. Other companies took that advantage of
it and acquire M&S customer by cutting the
prices.
Dogs Market of lingerie is not good for M&S
because they can not lower down their prices
and can not differentiate their product due to
low scope of innovation.
RE-ENTER INTO EXISTING MARKET
Out of all the countries which have been discussed in the above report, it can be said that
China is favourable and ideal market for Marks and Spencer to re enter into because all the
factors which assist company to enhance profitability and sales is present in China like high
disposable income of consumers, huge customer and market share, attitude towards western
15

cloths are high, advanced and latest technology etc. China has highest population in the world
which depicts that country has high number of customers for Marks and Spencer which is good
for their future profitability and sales. China's gross domestic product is in top ten in the world
which shows that they also have high disposable incomes which M&S can take advantage of.
But this time, company should conduct proper market research before re entering into the
market. Strategy which could be use by company to re launch in to china is market penetration.
It refers to when company enter into marketing by opting low prices as compare to other
competitors or differentiate their product by other substitute product by innovating it.
RECOMMENDATION
 Before entering/re-entering into Chinese market, Marks and Spencer should thorough
market research which will cover various aspects like consumer preferences, beliefs,
values, religion, taste, needs, budget, attitude towards life, competitors strategy and their
pricing etc (Kochan and Pascarelli, 2012). All the points would help them to know the
accurate scenario of that company. (Refer to appendix 1 point 2)
CONCLUSION
As from the above report it can be concluded that company should make a blue print of
strategies which they are going to use while entering into new countries. Various factors which
company should focus on like market structure, demand conditions, customer needs and
preferences, religion and culture country follows etc. There are different kinds of frameworks
which could be use by company like Pestle, ansoff matrix etc. These framework assist company
to gain competitive advantage over other competitors by predicting various obstacles which they
might faced in the future and how they can tackle it without affecting their productivity and
efficiency.
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REFERENCES
Books and Journals
Breslin, S., 2013. China and the global order: signalling threat or friendship?. International
Affairs.89(3). pp.615-634.
Daly, S. and Murusidze, G., 2012. Transitional Exporting: A Case Of Two Emerging Markets.
Journal of Business Case Studies (Online).8(2). p.147.
Davis, K.E., Kingsbury, B. and Merry, S.E., 2012. Indicators as a technology of global
governance. Law & Society Review.46(1). pp.71-104.
Ferraro, G.P. and Briody, E.K., 2013. The cultural dimension of global business. Upper Saddle
River: Pearson.
Hamber, B., 2012. Transitional justice and intergroup conflict. In The Oxford Handbook of
Intergroup Conflict.
Harrison, A., 2013. Business environment in a global context. Oxford University Press.
Hines, C., 2013. Localization: A global manifesto. Routledge.
Kochan, F. and Pascarelli, J.T., 2012. Perspectives on culture and mentoring in the global age.
The SAGE Handbook of Mentoring and Coaching in Education, Sage, Los Angeles, CA,
pp.184-198.
Lovrić, L., Kandžija, V. and Babić, J., 2013. Attractiveness of Central European Transitional
Countries for Foreign Investment.
Luo, Y. and Zhao, H., 2013. Doing business in a transitional society: Economic environment and
relational political strategy for multinationals. Business & Society.52(3). pp.515-549.
Milhaupt, C.J. ed., 2012. Global markets, domestic institutions: Corporate law and governance
in a new era of cross-border deals. Columbia University Press.
Parhizgar, K.D., 2013. Multicultural behavior and global business environments. Routledge.
Qihao, he, 2018. Global Climate Governance and Disaster Risk Financing: China's Potential
Roadmap in Transitional Reform. China Legal Sci..6. p.28.
Shuman, M., 2013. Going local: Creating self-reliant communities in a global age. Routledge.
Zhao, Q. and Wang, D., 2018, July. Corporate Political Strategy and Performance Fluctuation In
Transitional Economies. In Academy of Management Proceedings (Vol. 2018, No. 1, p.
12793). Briarcliff Manor, NY 10510: Academy of Management.
Online
M&S to close 100 stores by 2022. 2019. [Online]. Available Through.
<https://www.bbc.com/news/business-44197128>.
Marks & Spencer opens in Paris again ending a ten year drought for ex-pats. 2019. [Online].
Available Through: <https://www.telegraph.co.uk/news/worldnews/europe/france/8910768/
Marks-and-Spencer-opens-in-Paris-again-ending-a-ten-year-drought-for-ex-pats.html>.
Top 10 challenges of doing business in France. 2019. [Online]. Available Through.
<https://www.tmf-group.com/en/news-insights/articles/2018/july/france-top-10-challenges/>.
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APPENDIX
 It is measure by taking two characteristics i.e., growth rate of the industry and market
share in the industry. If these two dimensions are strictly followed by the M&S then they
have the opportunities of becoming market leader but due to bad strategy implemented by
them, they could grab the opportunities. It is made up of four factors i.e., stars, question
marks, cash cows and dogs which is explained below with functional example of China
market.
 When entering for the first time into china, M&S have chosen wholly subsidiary mode.
But this time they should opt out of different modes which is given below,
◦ Licensing refers to when owner of product sell their selling rights to other party and
in exchange gets royalty amounts and some part of profit also. It would help M&S to
decrease their chances of getting low by their own and besides this other party should
have knowledge about the market which will persuade to better understanding of
customers.
◦ Partnership states that when M&S would sign a deal with local market player to sell
their product. It will help M&S to reduce their financial burden on them. Moreover,
most of the legal work would be done by the local partner.
◦ M&S could use exporting in which they will sell their product in china market with
the help of agent. Most of the work would be done by the agent which is beneficial
for M&S and cost of investment will also decrease incredibly
 This at he early of 2000's Marks and Spencer has started closing its stores in international
market in respect to maintaining its loss or market situation. Withdrawing is considered
as a crucial aspect and it is tough for an organisation to withdraw their business
operations from a country as the organisations invest a huge amount in setting up their
operations in a new geographical area, thus it is required for each small as well as large
business enterprises to specify their strategy as per the market situation or needs in order
to making appropriate survival within the market place. Marks and Spencer is majorly
deals in selling clothing, home products and luxury food items and as a large retail
company, Marks and Spencer is operating at global level and for some reason the
company is withdrawing their business from foreign markets such as Chins, France,
Belgium etc. These three are the potential foreign market where Marks and Spencer was
18

not performing at good level, so organisation or its higher authority take the decision to
withdraw their operations from these particular countries.
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