Strategies to Overcome Challenges Faced by UK and Sri Lanka: A Comparative Study

The provided content discusses River Island, a clothing retail company that has faced various challenges in the market. To overcome these issues, it is essential to focus on developing appropriate strategies. Firstly, it is crucial to leverage the strengths of having staff with product knowledge and being visible at key service areas. This can be achieved by optimizing store layout and ensuring adequate staffing during peak trading hours. Additionally, River Island should capitalize on its opportunity to increase sales by expanding its product range to include Christmas gifts and focusing on casual clothing. Furthermore, it is essential to address the threat of competitors with lower price points like Primark by emphasizing the quality and uniqueness of their products. The Porter's five forces analysis highlights the intense competition in the retail market, which necessitates a strategic approach to stay ahead of rivals. By understanding the competitive landscape, River Island can develop effective strategies to overcome its weaknesses and capitalize on opportunities.

Globalization

TABLE OF CONTENTS
introduction......................................................................................................................................1
1. Reasons for parent company’s international expansion..........................................................1
a. Outline of the company’s historical performance...........................................................1
b. Products/service range and market share........................................................................2
c. Competitors and competitive advantage.........................................................................2
2. Impact of the global business environment on the corporation taking into account...............2
3. Justification for the reasons and methods of entry..................................................................4
4. Constraints and recommendations...........................................................................................4
conclusion........................................................................................................................................4
references.........................................................................................................................................5

INTRODUCTION
Globalization can be defined as process by which any organization can expand its
business and various operations at international level (Hirst, Thompson and Bromley, 2015). The
current research report is based on globalization which includes different reasons behind the
international expansion of an organization at global level. Study focuses on River Island cloth
shop which is making a plan to establish itself in Sri Lanka. It has a presence of around 60
years’ experience in fashion. It is also one of the well-known and loved brands that is present in
High Street (About Us, 2015).
Research will focus on analyzing the current situation being faced by River Island cloth
shop by evaluating historical performance of the firm. Further, it includes analyses of product
range, market share, competitive advantages and existing competitors of the company (Hitt,
Ireland and Hoskisson, 2012). The current report focuses on the impact of global business
environment on local and international business operations. Along with this, appropriate methods
of market entry in global market and related different problem and their solutions are also
describing in the following paragraphs of the report.
1. Reasons for parent company’s international expansion
River Island cloth shop wants to globalize its business operation for increasing its
performance and developing presence at international level. For this it wishes to expand its
operations in Sri Lanka. There is a presence of varied reason by which the company has thought
over the process of expansion (Berthon, Pitt, Plangger and Shapiro, 2012). These include
increasing its overall financial performance, enhancing the portfolio of its product/service range
and market share. It further wishes to diversify its presence in different nations so as to minimize
the risk factor. Attaining competitive advantages in international market will also be considered
as a major reason behind the globalization.
a. Outline of the company’s historical performance
River Island has started by Bernard Lewis and his brothers in London in 1948.
Afterwards, in1965 Lewis expanded its business and started 70 new store of River Island in on.
In 1993 the brand opened its first shop in Republic of Ireland which shows the international
success of the business (Coff and Kryscynski, 2011). Now, at present, River Island is best known
UK brand and it has more than 300 clothing, accessory, and jewelry and footwear stores in
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Different countries like, UK, Ireland, Turkey, Poland, Singapore, and the Middle East.
Therefore, not its revenue has increased up to 12.5 % in year 2013. Afterwards it has strong
financial performance from last two years. So, it has decided to expand its business in global
Asian market so, it has decided to start its unit in Shri Lanka also (Lovett, 2012).
b. Products/service range and market share
River Island offers different products for Women, Men and Kinds. So, it range of product
include clothes, shoes and accessories. These products and services are featured by the company
on the basis of the new collection, seasonal offers, trends, limited edition, brands and sale, etc.
As per the market context River Island has strong market share in Women’s wear outwear and
footwear market and growth rate of market share in these products is 3% year on year. But in
men’s wear company has obtained limited growth and static market share in different countries.
River Island is operating its business in highly competitive and fragment environment so, is has
faced some strategic and financial barriers in terms of increasing market share (Snieška, 2015).
c. Competitors and competitive advantage
River Island is operating its business in fashion industry so, it is facing tough competition
by retail and other fashion organization. So, major competitors of this organization include,
house of Fashion, Avirate, Ramafour, Odel, Hameedia, Nolimit, Glitz and Kamsins, etc
(Recommended clothing shops in Colombo, 2015). Competition and home and foreign country is
very high but River Island focuses on the quality of the products and services which help in
retaining customers as compare to other competitors. Along with this, current trends
consideration and seasonal offers of the company also help in attaining competitive advantages
and grabbing strong competitive position in the market (Jennejohn, Hines, Gawell and Blodgett,
2012).
2. Impact of the global business environment on the corporation taking into account
At the time of international expansion of the business River Island needs to take
consideration of global business environment because it can influence the business operations in
positive and negative manner. Pestle analysis help in determining different global factors of
business environment of Sri Lanka which can affect the business operations of River Island at
the time of expansion. Political analysis has reflected that Sri Lanka is a democratic, socialist and
a unitary state which is governed by semi presidential system. End of the civil war in 2009, this
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country has got a stable political environment which increases opportunities for growth. But,
there are different factors which can influence of business of River Island in positive as well as
negative manner (Taylor, 2012). So, River Island needs to focus on level of corruption.
Bureaucracy, tariffs, trade controls, education and employment laws, government stability and
involvement of government in different business decisions, etc. All these factors cam affect the
decisions of River Island so, company needs to take consider all these factors at the time of
global business expansion.
Economic analysis has reflected that, Sri Lanka is a developing country and at present
economic position and growth is very high which increases the purchasing power of different
customers. It will have positive impact on demand of goods and products of River Island as well
as will help in increasing sales revenue of the company. But, on the other hand, there are
different economic policies such as Fiscal and monetary policies which can affect taxation and
interest rates and money supply of the organization (Mocanu, Vasiliu and Stancu, 2012). So,
River Island should focus on economic factors also. Technologies are increasing day by day but,
in Sri Lanka existing retailers are not using latest technologies. But, country is investing huge
amount in improving research and development. In future, this country will get all technologies
which are used by developed nation. So, River Island needs to consider technological factors also
at the time of business expansion. Social factors such as needs and requirements of customers,
literacy and growth rates also affect the production and human resource department of the
company in foreign countries. Literacy rate of Sri Lanka is 92.5% which shows that customers of
River Island will be educated as well as company can get skilled and experienced employees for
different operations and functions of the organization (Sri Lanka, 2015). Generally, Climate of
Sri Lanka is generally tropical and temperatures fluctuates as per the locations. So, River Island
needs to focus on products and services which must be favorable for hot climate. Along with
this, different environmental issues that have taken into consideration by River Island at the time
of starting business in this country; these are deforestation, population, filling and marshy land,
etc. along with this, legal system of this nation is very complex and mixture of different laws (Sri
Lanka, 2015). So, Organization needs to focus on labour laws, company laws, environmental
laws and corruption because all these legal rules and regulations can directly affect business of
River Island.
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3. Justification for the reasons and methods of entry
There are different number of modes for entering into international markets. But for River
Island Joint venture will be the best option for this. Organization needs to make arrangements
between two companies to join forces for the purpose of investment and running business
operations in international market. It will be significant for River Island because it reduces
different types of risks. Along with this, joint venture will be effective for reducing the
government intervention because of the indigenous business. Company can develop close control
over production, marketing and other business activities of the organization. Further investment
and requirement of capital will be shared with other company of Sri Lanka. Overall, joint venture
will be very effective for expanding business in Sri Lanka (Lovett, 2012).
4. Constraints and recommendations
Major constraints for the international expansion of the business of River Island will be
differences of language, currency, culture and legal. Language of UK and Sri Lanka is quite
different so, it will be communication barrier for organization. So, for resolving this issue River
Island should use the Professional English language which is common language and use by every
country. Along with this, differences between currencies can increase and decrease the value of
products and services at the time of international import and export transactions. So, River Island
should focus on foreign direct investment, future and forwards contract in diversify portfolio. It
helps in reducing the problems associated with currency (Coff and Kryscynski, 2011). Along
with this, differences of culture affect the production of goods and services so, River Island
should conduct a market survey on customer’s expectations which will help in developing goods
and services as per the needs and requirements of every customer.
CONCLUSION
The current research and report has described that River Island has strong financial
position in its local market so, now company wants to expand its business in Sri Lanka because
growth rate of this nation is also very high which can increase the demand of cloth products and
services. But, company needs to focus on different political, economic, social, technological,
environmental and legal factors at the time of making international expansion otherwise these
factors can influence business operations. Including this, joint venture will be most effective
market entry mode which will be beneficial for reducing risk in global market. Report has also
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concluded that major barriers of River Island will be differences between language, currency,
culture and legal system of UK and Sri Lanka. So, organization should focus on appropriate
strategies to overcome these problems.
REFERENCES
Books and journals
Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley & Sons.
Hitt, M., Ireland, R.D. and Hoskisson, R., 2012. Strategic management cases: competitiveness
and globalization. Cengage Learning.
Mocanu, M., Vasiliu, E. and Stancu, R., 2012. Some Considerations on Globalization and its
Effects on Education. Globalization. 4(1).
Coff, R. and Kryscynski, D., 2011. Drilling for micro-foundations of human capital–based
competitive advantages. Journal of Management. p.0149206310397772.
Taylor, D., 2012. Global software: developing applications for the international market.
Springer Science & Business Media.
Jennejohn, D., Hines, B., Gawell, K. and Blodgett, L., 2012. Geothermal: International Market
Overview Report. Geothermal Energy Association.
Snieška, V., 2015. Research into international competitiveness in 2000–2008. Engineering
Economics. 59(4).
Berthon, P.R., Pitt, L.F., Plangger, K. and Shapiro, D., 2012. Marketing meets Web 2.0, social
media, and creative consumers: Implications for international marketing
strategy. Business horizons. 55(3). pp.261-271.
Online
About Us. 2015. [Online]. Available through:
<http://www.riverisland.com/inside-river-island/about-us>. [Accessed on 18th December
2015].
Geieersbach, N., 2010. The impact of international business on the global economy. [pdf].
Available through: <
http://www.saycocorporativo.com/saycouk/bij/journal/vol3no2/article_8.pdf>. [Accessed
on 17th December 2015].
Lovett, G., 2012. River Island's UK production contributes to bestsellers. [Online]. Available
through: < http://www.drapersonline.com/river-islands-uk-production-contributes-to-
bestsellers/5033577.fullarticle >. [Accessed on 21st December 2015].
Recommended clothing shops in Colombo. 2015. [Online]. Available through: <
http://www.timeout.com/sri-lanka/shopping/clothing-shops-in-colombo >. [Accessed on
21st December 2015].
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Sri Lanka. 2015. [Online]. Available through:
<http://www.marketresearchreports.com/countries/sri-lanka>. [Accessed on 21st
December 2015].
River Island cloth shop SWOT
STRENGTH
Staff product knowledge
Staff visible at key service areas
Cinema and restaurants at close proximity of
the store
Average of 4 million visitors per week
WEAKNESS
Peak trading hours creates issues
Standards and minimal staffing in key service
areas can cause missed sale opportunities
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OPPORTUNITY
To increase sales
Add Christmas gifts in the store
Focus on casual clothing
THREAT
Competitor with lower price points like
Primark
Immediate competitors at close proximity like
ZARA
Porter’s five forces
Porter’s five forces Porter’s five forces
rivalry among existing firms
(High)
Intense competition as retail market is in the
mature stage of Product life cycle.
.
threat of new entrants into the market
(High)
Decreasing level of customer loyalty has led to
high level of competition and making it easier
for new entrant to make an entry.
supplier power
(High)
High-street clothing retailers the relationship
tends to be controlled by Suppliers. Same
concept applies here as well
power of the buyers
(High)
Presence of many competitors.
Substitute power
(Low)
Clothing cannot be substituted for other
products.
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