Global Business Assignment - Marks and Spencer
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Added on 2020-12-18
Global Business Assignment - Marks and Spencer
Added on 2020-12-18
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Table of ContentsINTRODUCTION ..........................................................................................................................1MAIN BODY...................................................................................................................................1CHINA.............................................................................................................................................1FRANCE..........................................................................................................................................7CANADA......................................................................................................................................11RE-ENTER INTO EXISTING MARKET....................................................................................15RECOMMENDATION.................................................................................................................16CONCLUSION .............................................................................................................................16REFERENCES..............................................................................................................................17APPENDIX....................................................................................................................................18.......................................................................................................................................................19
INTRODUCTION Global business is considered as an international trade in which an organisation conductsits business across the globe. A transnational corporation is refers as a huge firm that operates itsbusiness activities within several countries (Ferraro and Briody, 2013). In the modern businessenvironment competition is so high at market place and the basic purpose of each small as wellas large business enterprises is to attaining higher growth and success within the commercialcentre. The present report is based on the case study of Marks and Spencer. The company wasestablished 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 theirprofitability or revenue in international market. This report contains the study about the reasonswhy Marks and Spencer have withdrawn their business from countries, thus China, France andScotland 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 andSpencer can be adapting to apply for re entry in to the markets. MAIN BODYBackground of Marks and SpencerMarks and Spencer Group Plc is a major British Multinational retailer company with itsheadquartered is in Westminster, London. The company was established by the potential effortsof Michael Marks and Thomas Spencer in the year of 1884 (Luo and Zhao, 2013). Marks andSpencer is grew to be an iconic British retailing brand with many retailing rand with many firststo its credit. The company expended its business to overseas through the late of 1990's it createaggressive investment around the globe and planned to push international business to a quarter ofits overall profitability or revenue in less than a decade. (Refer to appendix 1 point 3) CHINAPestle Analysis for ChinaThis approach is used by company to identify the factors which would be affectingcompany's performance in specific country. China is one of the attracting point for manycountries due to high number of potential customers, high profit margin, low labour cost etc. Butstill Marks and Spencer have been withdrawing their stores and production unit from China.1
Factors which are affecting their performance in a negative way is given below with credibleexamples,Political factor: It includes all the factors which is made by the ruling party liketaxations policy, anti dumping duties, rules and regulations etc (Hines, 2013). Though Chinagovernment is stable but their policies always prefers local companies to grow. Besides this UKgovernment regularly increased anti dumping duties on Chinese product due to which theirrelationship 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 ofcountry is directly affected like disposable income, growth rate, currency fluctuations etc.Chinais one of the largest consumptions of clothing due to high numbers of potential customers whichcreates a favourable environment for business. But still they have failed due to currencyexchange 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 onedeath of a customer. This enhance the fear of Feng Shui and people decrease their frequency ofvisiting their stores. Besides this, according to the survey done by the BCG company, Chinesepeople prefers to buy products from the local brand instead of going to foreign brands. Both thefactors directly affect the sales and profitability of company in a negative way. Technological factor: Technology advancement plays an important in the success oforganisation but in china market it makes an adverse impact on the profitability and sales ofM&S. China have more than 600 million of mobile users and most of them prefers to buy onlinerather than physically visiting the store. It creates a negative impact as footfall of M&S store islow as their expectations and it is hard for them to recover cost which they have already investedin the country. Moreover, Chinese people prefers to use online transaction on stores instead ofswapping 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, workingconditions etc. which foreign companies should follow while entering in other countries so toavoid legal issues (Qihao, 2018). Another factors which hampered the conditions of M&S inchina is one child policy. Parents can not give birth to more than one children which decrease the2
potential growth of customers in China though it have been remove in the recent past but still itwill take time to get back to normal situations. Environmental factor: Global warming has created a buzz in the market due to whichgovernment and people are concerned about the environment they are living into. Opening anstore required large space which will persuade to less agriculture land. Besides this pollutionsgenerated from manufacturing company is also lethal for those who are consuming it. All thesefactors are against the success of M&S due to which they are planning to withdrawing theiramount and stores from Chinese market. PORTERS FIVE FORCES MODELIt is one of the model which is used by M&S to identify various issues which they werefacing in the Chinese market more specifically retail industry of china. Industry in whichcompany is working plays an important role as is directly affects the working operations of M&Sand their sales and profitability. Different type of factors are given as follows, FactorsHigh/medium/lowReasonBargaining power of supplierMediumApparel industry is vast innature as it also includestextile and clothing industry.They have medium bargainingpower as raw materialsrequired to make cloths shouldbe high in quality due to whichcompany holds bidding forgetting highest qualitymaterial so that they can attainproduct differentiation on thebasis of quality.Bargaining power of buyerHighFull power is based in thehands of customer as in retailindustry, switching cost is verylow. In other words, ifcustomer is getting product is3
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