House of Fraser's Business Environment Analysis

This assessment provides a comprehensive analysis of House of Fraser's business environment, focusing on their struggles to make profit in the UK due to uncertain business conditions. The report suggests investing in Indian markets with innovative retail ideas, while considering internal and external business structures for better understanding and expansion. A thorough examination of customer segmentation is also included, taking into account purchasing power, traditional practices, and ethics.

GLOBAL MARKETING

EXECUTIVE SUMMARY
Expansion policy is an important aspect of a business activity for growth and determining
growth in business market. Choosing the geographical region is important and making effective
strategy and growth policy will help the business to increase their grass roots in new business
market. For achieving success in the business market, an organisation must understand internal
and external business environment for better utilisation of resources. Expanding business in
developing country is necessary as it will need less costing and increase in revenue. Emerging
country is always an opportunity for increasing revenue and getting stability. They have planned
to increase their business in India where they will have ample opportunities of greater
investment. They will be able to explore more areas in Indian market. By efficient business
strategy in internal and external business organisation they can able to increase their business
strategy in target market.

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
RECOMMENDATIONS.................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Expansion is an integral path of strategy and planning for growth and development of an
organisation in different market. It will lead to increase in brand image and popularity of that in
different market that will allow them to increase revenue and core competitiveness in different
global market. House of Fraser is a popular British departmental store operating in United
Kingdom and Ireland founded in 1849 in Glasgow, Scotland, UK. It is dealing in clothing,
cosmetic and housewares. The company is earning very effectively in UK market and planning
to invest on global platform. They wish to expand their business in different developed and
developing market. In current scenario, they have planned to expand in Indian market. . This
assessment will focus on strategies that are to be made in internal and external business market
and how company can flourish their business in those market place.
TASK
House of Fraser is working very efficiently in UK market. Their policy is to provide the
best range clothing, housing and housewares to people of UK. But with with globalisation and
opportunities provided by government of UK, they have sensed that they can expand their new
product in new geographical market in developing country. The company has planned to invest
in India as it is a fast growing country that is providing opportunities for foreign investment
(Berner and Berner, 2012).
Internal analysis of House of Fraser
Overview of company – The company is dealing in retail business in clothing,
household and cosmetic products. They have chain of stores dealing for providing the best retail
products at a reasonable rate. Their wholesale business is another source of income for the
company. They also have a several chain of products especially related to defence personal.
The headquarters of company are located in London, UK. Frank Slevin is Executive
Chairman and Alex Williamson is the CEO of company. The company is having a strength of
more than £1,152 million (2013) with more than 5000 employees working for the company.
Further, it was acquired by Burger Group in 2006 with Lloyds Banking Group is the biggest
shareholder. Company is having own ethics and policies over the years to compete effectively in
competitive market over the years. In recent time, they have planned to expand their business in
Information Technology, Jewellery and food sector.
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Domestic market mix of House of Fraser- Company is working efficiently in UK market
with better planning of their business activities. They have made strategy following marketing
mix for gaining better revenue by increasing productivity. These are as follows:
Product – Company with clothing, cosmetics and household appliances. They are
working efficiently in providing the best devices through range of customers. Moreover, they are
able to compare with bigger and smaller company by providing range of product at a reasonable
price. They are able to make goodwill and loyalty among customers with better product strategy.
Apart from their departmental stores, they also have wholesale business through which they take
contracts and consignment of bigger organisation.
Price – They tend to focus on UK market so their planning and strategy must concentrate
on providing the best products and services at a reasonable price. Through wholesale business
activity, they have increased their productivity by selling products at minimal prices (Benton,
and Redclift, 2013).
Place- Over the years after starting their business in Scotland, they have concentrated on
expanding their business in Britain and Ireland only. Till now, they have only expanded their
business in developed countries only. For example, they they have established jewellery business
in Australia for better growth and strategy.
Promotion- The company has an efficient promotion strategy. They have used used both
digital and printed media for promotion of their business in different market. As they are dealing
in retail sector, they have marketing strategy accordingly like discounts and coupon,
merchandising, sponsorship etc. this has allowed organisation to make people aware about their
brand and increase productivity.
All these factors must be considered while making strategies for doing business in
domestic and global business market (Abbasi and Abbasi, 2011).
Goal of company – In current business scenario, company’s financial health is not so
good. For stabilising sales and activities in future run, Chinese firm Sunpower is about to invest
in business activities of organisation by providing funding of 15 million pound in business
activity of organisation. Company feared that they may become next victim of torrid trading
condition in UK. So, they have planned to slash sizes to floors of their retail store up to 30% to
minimise rent. They want to plan their business with the help of Alteri (a firm help to plan better
for struggling retailers.)
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Domestic target customers – In current market scenario, 89% of stakes of company is
with Sunpower and they have authority to make strategies and take control of company for
longer run. They have planned to transform organisation by transforming business activities of
organisation. Firstly, they have planned to increase their business in domestic market by
increasing their products. They have also predicted that Brexit will also come into effect in
coming years that will affect transformation, food and housing cost. People are more concerned
about job security and personal finances so they are not investing on non-essential items. As they
are not expecting that much fruitful result from business in UK, they planned to increase their
base in new business market like developing countries.
Industry – This company deals in products that are generally needed on daily basis. The
management must make policies and and planning according to needs and wants of people in
business environment (Xu and Wania, 2013).
External analysis of business activity -
For proper analysis of macro business structure, PESTLE analysis will help in better
evaluation of different factors for organisation.
Political factor – In current political scenerio Brexit will be a major role in UK market
that so uncertainty may arise in business in UK. Company wish to target Indian market for their
better growth and proceedings. In current business market, there is a political stability in the
country. Government is giving opportunities to foreign traders to come and invest in country. As
it is also near to China, so Sunpower will also find it easy to plan better as China is having a
better trade relationship with India.
Economic – The country is having a mixed stability where private, public and
government sector go hand to hand together and earn profit in bsiness market. It is regarded as
the world’s sixth economy in the world. As per report at the end of 2017, the country is having
$2.85 as nominal GDP and $10.336 per capita GDP. By recent report and for year 2015- 2018, it
has been regarded as the fastest growing economy suppressing growth rate of China. Most of the
GDP are earned from Agriculture 17.32%, Industry 29.02% and Service 53.66% by the end of
2016. Hence it is observed that the country is having stable economy they have one of the better
integration policy among ASEAN countries. For example integration of India and China, country
has a good relationship with China. The bilateral trading between China and India was $3 billion
in that is expected to to be $409.2 billion in 2020. So, it is the best economic market that will
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generate profit for the organisation. The current Government has planned to invest in digital
market and modernising health care services to propel of country. 'MODICARE' is a new scheme
that is being implemented by Indian Government that will help 100 million family across the
country. So, overall it is the best place for investment in terms of requirement for success of
business activity (Thrift and Amin, 2017).
Social – For doing successful business, it is important for organisation to understand
business social culture of the country. India is having diverse social culture, country is divided
by different religion belief where secularity is respected altogether. Not even diverse religions
are followed but languages are also different. There are 21 official languages recognised by
constitution of India. Apart from languages, they have different cultural beliefs. Every culture
follows own tradition and beliefs so, it is important for organisation to understand behavior,
clothing and culture of country before investing in that place (Clapp and Dauvergne, 2011).
Company just cannot infuse western culture in India or there are lots of home appliances
that are not used in India so there is lots of planning to be done before investing in Indian market.
It might be easy for company to invest because Chinese companies have information about the
culture and belief on Indian culture and strategies of Chinese origin that helps organisation to
grow in business market. For better understanding the cultural dimension of country they can
take help of Hofstede cultural dimension theory that helps in understanding cross culture
dimensions of geographical region that help in better analysing trading practices of
organisational structure. The theory is divided into 5 dimensions of culture for analysing and
determining different factors
(a) Power Distance Index (PDI) - It determines the dominant and less dominant culture
in a region. This helps in determining the equality and non-equality distribution of power
among different groups in a company.
(b) Individualism and collectivity – It is the measurement of degree at which members
of society are engaged to each other. This will help House of Fraser for planning and
performing better business activity in the country.
(c) Uncertainty avoidance Index – It is defined as tolerance of society against ambiguity.
This factor is important because it will allow organisation to know up to what extent a
society is able to accept change or accept innovative ideas.
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(d) Masculine vs Femininity – It is the important for organisation to understand the
standing and values of men and women in society. India, few years back was considered
as a male dominant society but in current scenario, women are respected and are
protected by law (Wynne, 2013).
(e) Indulgence or Restrains – To have better trading practices, company must know
attitudes and behaviour of society and how they are approaching their life; this will help
them in planning and infusing innovative ideas in their business policies. In UK, people
are concerned about preserving their money and spending on only necessary items. So,
trading and earning profit in that environment is very risky affair as certainty of business
activity may be uncertain.
Talking about similarity and dissimilarity, it is observed that the culture of both the
countries is dissimilar to each other. Most part of India basically believes in tradition practices
and use of western wear is limited to city area only. Consequently, the clothe they manufacture
must have some Indian attire in it so that they can increase their revenue base, in terms food and
home appliances they will face competition from local and international players in business
market. The IT Sector for the company willn also face bigger challenges as there are many
company who have already made their base in business activities in the country (Lee and Ren,
2011).
Technological factor – The country has planning to grow in technological through digital
marketing practices it has allowed many organisation to come and invest in the country. So
company have to infuse technology to their business activity effectively so that they can
efficiently able to reach end customers of different regions of the country
Environmental factor – As the country is having diverse culture it will have diverse
business activities and trading practices. Company must understand diverse environmental factor
and business activities so that it can help organisation to to plan differently for different regions
of country (Ishizawa, 2011).
Legal factor – Country has welcomed Foreign Direct Investment under which they call
different country for manufacturing practices in their country. But there are certain rules and
regulations that are to be followed. For Example labour law, minimal wages, organisational
culture etc.
External micro analysis of International target market.
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For analysing international target market it is important to understand different factors of
target market that will help organisation to plan better in that particular market place.
Market size – Indian market size is a fast growing business; it is estimated to be US $600
billion.
Market growth rate – At the end of 2017, the growth rate of retail sector is 12% that is
expected to grow in future business market.
Market potential- The potential of Indian business market has increased. It is one of the
facets emerging country in the world surpassing growth rate of Russia and China in current
business scenario. Due to this, the purchasing power of country is ever increasing that makes
India a potential market.
Customer segmentation- Customer segmentation in India is dependent upon urban and
rural sector. It has divided sector into 3 broad views includes middle class, large affluent class
and small economy disadvantageous class. With FDI, it is expected that more opportunity will be
provided to company for investing in market accordingly (Towers Watson, 2012).
RECOMMENDATIONS
By analysing different factors of House of Fraser, it is observed that the company was
doing good business in retail stores but due to lack of large retail outlet, they are not sable to
expand their business as expected but with the help of investment from Sunpower, they can deal
successfully in Indian business market.
They must plan efficiently before entering business market.
 They must plan where to invest so that they can get better output from minimal
investment. As a result, they must start with investing in posh cities of India that includes
Mumbai, New Delhi and Bangalore that have bigger scopes of earnings.
 For entering the market, they must make sure that they have covered all the aspects like
legal factor that includes trading rights, must have strategies for different market
according to tradition and ethics of that market, they must also test their capability
whether they are able to invest alone or they can be successful with joint venture to
sustain and grow in business market.
 Segmentation of the customers must not only be on purchasing power but with also their
traditional practices and ethics.
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CONCLUSION
Through this assessment, we have concluded that House of Fraser is a very old retail
sector doing well in UK but due uncertain business environment, they are not able to make
profit. They can invest in business activities in India with innovative ideas in their retail
business. But before investing, they have to understand internal and external business structure
of company for better understanding and expansion. Expanding business is a vast theory and
there is more to be explored in future run.
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REFERENCES
Books and Journals:
Berner, E. K. and Berner, R. A., 2012. Global environment: wter, air, and geochemical cycles.
Princeton University Press.
Benton, T. and Redclift, M., 2013. Social theory and the global environment. Routledge.
Clapp, J. and Dauvergne, P., 2011. Paths to a green world: The political economy of the global
environment. MIT press.
Wynne, B., 2013. Scientific knowledge and the global environment. In Social theory and the
global environment (pp. 177-197). Routledge.
Ishizawa, Y., 2011. General anesthetic gases and the global environment. Anesthesia &
Analgesia. 112(1). pp.213-217.
Towers Watson (firm), 2012. 2012 Global Workforce Study: engagement at risk: driving strong
performance in a volatile global environment.
Lee, J.Y. and Ren, L., 2011. Vendor-managed inventory in a global environment with exchange
rate uncertainty. International Journal of Production Economics. 130(2). pp.169-174.
Xu, S. and Wania, F., 2013. Chemical fate, latitudinal distribution and long-range transport of
cyclic volatile methylsiloxanes in the global environment: A modeling assessment.
Chemosphere. 93(5). pp.835-843.
Abbasi, T. and Abbasi, S. A., 2011. Ocean acidification: The newest threat to the global
environment. Critical Reviews in Environmental Science and Technology. 41(18). pp.1601-1663.
Thrift, N. and Amin, A., 2017. Neo-Marshallian nodes in global networks. In Economy (pp. 159-
175). Routledge.
Online
House of Fraser's Chinese owner pledges support despite festive sales tumble. 2018. [ Online].
Available through <https://www.telegraph.co.uk/business/2018/01/11/house-frasers-chinese-
owner-pledges-support-despite-festive/>
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