Expanding Next plc's Retailer Business in E-commerce Sectors

Next Plc company can expand its retailer business in e-commerce sectors in countries like India and China by using market entry strategies such as PESTLE and Porter's five forces analysis, and marketing mix elements like the 4S web-marketing model. The company should consider the mixed and socialist market economic systems of these countries, as well as the large variety of people present, to increase sales in the particular market.

International
marketing

Table of Contents
INTRODUCTION ..........................................................................................................................1
Analysis of micro and macro factors impacting the retail market..............................................1
2)An evaluation of market potential...........................................................................................3
3) Two market which Next plc can choose in order to expand its business ..............................4
4) Market entry strategy which Next plc should follow to enter in India and China..................5
5) marketing mix of both the countries.......................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................7
Online..........................................................................................................................................8

INTRODUCTION
International marketing is the export or full direct entry of the market organization into
another country. International marketing involve the recognition of the different needs of the
customers available all over the world. Next plc is a British multinational clothing, footwear and
home products retailer company headquartered in Enderby, Leicestershire. It operates about 700
stores in different countries. The following report depict about the various micro and macro
economic factors that can affect the retail market. In this report evaluation of market potential
has also been made. Various market entry strategies are made in order to successful move the
Next plc into international market. In this report various elements of marketing mix are used in
order to understand the culture and behavior of the consumer.
Analysis of micro and macro factors impacting the retail market.
In order to expand its business international for boosting high profitability online sale Next
plc can move on to Different countries. Therefore, before moving internationally PESTLE
analysis of four different countries has been conducted which is listed below:-
PESTLE analysis of China
PESTLE affects
Political factors Political factors of the China are good for Next plc because government of
China is focusing more on the development of e-commerce
(Constantinides, 2002).
Economic factor Economic factor of China is fairly good because its rate of GDP has been
constantly increasing. At the same time purchasing power of the
customer's is also increasing.
Social factor About 90% of the China population is literate who prefer to purchase
goods from e-commerce website developed by the nation.
Technological
factor
China is continuously making an effort to improve its technology but one
of the major problem faced by the country is that country is not able
properly develop the B2C industry.
Legal factor Legal factors of the China are relatively good. Country is just trying to
develop the legal framework for e-commerce (Leelapanyalert and Ghauri,
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2006).
Environmental
factor
Environment factors of the country are constantly changing. Taste,
preference and behavior of the customers are constantly changes.
PESTLE analyses of India
PESTLE affects
Political factors India is one of democratic country who works on a federal form of
government. Various policies imposed by the government mainly affect
the sales of company.
Economic factor Economic condition of the country is highly stable after the introduction
of industrial reform in 1991. Due to which GDP of the country is
constantly increasing. It increases from 4.35% in 2013 to 5% in 2014.
Social factor Change in trends affects the business environment. India is a country
which is resulting in high pension costs and increase in the employment
of the old age people (Craig and Douglas, 2005).
Technological factor India has started using both 3G and 4G technology. India also possesses
one of the powerful IT sectors in the world. It has also aimed to launch
their satellites into space.
Legal factor Increase rate of minimum wages and dies-stable discrimination affects
the working of the business.
Environmental
factor
Environment factors of the country are good. The bad quality of air leads
to various types of health problems.
PESTLE analysis of Iran
PESTLE affects
Political factors Political factors of the Iran are not highly favorable. Those business
organization who want to enter into these market need to follow Islamic
rules and constitution imposed by the government.
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Economic factor Economic condition of the country is not good. Its rate of GDP and
inflation is declining. Unemployment rate of the company is also very high.
Women are not free to work (Czinkota and Ronkainen, 2012).
Social factor Analysis of the country show that growth rate of the country is perpetually
declining. It could only be stabilize when it reaches to 105 million by 2050.
Technological
factor
Technological factor of the country is high but it is not proving to be
beneficial for the country. Because backwardness of the country has been
seen as one of the cause for bullying the developed countries.
Legal factor Legal factors of the country are not good. Impose of various Islamic rules
has reduce the growth rate of the country.
Environmental
factor
Environment factors of the country are not good. Continuous terror attack
from different countries has put a question mark on the development of
various business organizations.
2) An evaluation of market potential.
Market potential of the different countries taken above can be understand by knowing the
benefits and risks associated in the country for the entry of new retail firm.
China- China is a country with high growth rate where chance of new entrants is high but at the
same time it is seen that the government policies are not much in favor of new entrants (Doherty,
2007). But if company is able to enter into the country than it can easily expand its business due
to the availability of large of population. Manufacturing cost of the retail can also be reduced to
the availability of low cost of labor. At the same time it is also seen that China is continuously
focusing on improve its e-commerce service which can prove to be one of the beneficial factor
for the Next plc to expand its business.
India- Entry of next plc company is very easily in country like India where entry of new
companies is very easily. At the same time it is also seen that development of technology in India
will aid the Next plc to expand its business in the e-commerce sector (Kamau, 2014). In variety
of culture people are living which in turn will also help the company to increase its sales. But at
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the same time highly imposed taxes by the government will reduce the profitability margin of the
company.
Iran- Expanding of company in Iran is not a better option. Because of the entry of the barriers.
In this country entry of new firms is not easily. On the other hand if company is able to entry that
also it will not be able to flourish properly because Iran is an Islamic country where different
rules and regulation are made according to the Muslim norms (Papadopoulos and Heslop, 2014).
Population of this country is less and only one culture people are present. Therefore, sales of
those products which are against Muslim law will create a problem for the company to increase
its sales.
3) Two market which Next plc can choose in order to expand its business
After conducting the PESTLE analysis of different countries it can be concluded that Next plc
company can expand its business in China and India. Because market condition of these
countries is fairly good as compared to other countries. Therefore, in order to know understand
more properly the market condition of this two countries, Porter's 5 stage competitive model has
been used (Terpstra, Foley and Sarathy, 2012).
Porter's 5 forces competitive analysis of China
1. Threat of new potential entrants: - In China entry of new potential company is high
because it is a growing country with large number of population. Taste and preferences
of the large number of population defers from customers to customers. This in turn aids
the different companies to easily enter into the market. Threat of new entrants is high.
2. Threat of substitute product/services: - China is a country with large number of
population who wants variety in the products. In China there is no ban on any type of
clothes because it is the country with much religion. Therefore, the threat of substitute
product is high.
3. Bargaining power of suppliers: - Bargaining power of the suppliers in the country like
China is low. Because company has variety of option to purchase the raw material from
the suppliers who offer them better quality of raw material at low rates (Ghauri and
Cateora, 2011).
4. Bargaining power of buyers :- Bargaining power of the buyer is very high. Because
lost of substitute products are available in the market. This in turn aid the buyers to select
the best thing they want at low price.
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5. Rivalry among current competitors:- Rivalry among current competitors is high.
Extreme rivalry among the competitors firm reduce the profitability margin of the
company.
Porter's 5 forces competitive analysis of India
 Threat of new potential entrants :- Threats of new potential entrants is high in country
like India which has a high growth rate. Indian policies makes the entry of new
companies very easily. In India rate of multinational companies has been constantly
increasing.
 Threat of substitute product/services:- As entry of new companies is very easy in
countries like India, so in lieu of which threats of substitute products and services is
constantly increase. Because India is a country in which people of variety of culture are
living (Chong and Kasturiratne, 2009). Different culture people prefer different variety of
products which in turn increases the threat of substitute products.
 Bargaining power of suppliers:- Bargaining power of the suppliers is nearly high as
compared to that of China. Because large number of suppliers are not available in India
due to high labor cost.
 Bargaining power of buyers:- Bargaining power of the buyers is very high in country
like India where entry of new substitute products is very easily. Customers are available
with the variety of products to purchase.
 Rivalry among current competitors:- Rivalry among current competitors is low
because of the availability of large number of competitors in the market (Terpstra, Foley
and Strathy, 2012).
Therefore, analysis the both the countries situation/condition it can be conclude that Next plc
company can expand its business in country like India where enter of new companies is very
easily.
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4) Market entry strategy which Next plc should follow to enter in India and China.
There are different types of types of market entry strategy which company can take into
consideration at the time of entering into the new market in the new country. Some of the market
entry strategy are as follows – Merger, acquisition, strategic alignment, licensing, f ranching and
many more (Dev, Brown and Zhou, 2007). Thus, Next Plc Company should follow the strategic
alignment strategy in order to enter into the new market like India and China where variety of
population is present with different culture. Strategic alignment is the process of bringing all the
actions and activities of the organization into a line. In this case all the divisions and staff
members are operated in line. This is done by the company to increase the ability of all the
individual employees working in the organization. This process is followed by the company to
assure that all the divisions and employees are working together to collectively achieve the
organization objectives. Thus in order to expand its business in e-commerce sector; Next plc
company can flow the strategic alignment process in order to achieve its desired target/goals.
Company can also use licensing in order to expand its business in countries like India and China
where growth rate is high and large number of population is present there. Licensing is the
permission given by the government to use intellectual property rights like patent, trademarks or
technology under certain defined condition (Uhlenbruck and et.al., 2006). This aid the company
to protect themselves from the competitors which in turn increases the sales. Increased sales will
increases the profitability ratio of the company. Therefore, Adoption of latest technology by
both the countries will also aid the Next plc to expand its retail business in e-commerce sector.
5) Marketing mix of both the countries.
Marketing mix refers to the set of action and measure which company undertake in order to
promote its product and brand image in the market. Thus, marketing mix is made up of 4Ps
which are used by the company to promote and sale its products. The 4Ps are Product, Price,
Place and Promotion (Pehrsson, 2009). Therefore, marketing mix of both the companies through
which Next plc can expand its business are as follows:-
INDIA CHINA
Product In India company can sell all
its products (i.e. clothes,
footwear and home
In China company can also sell
all its products like clothes,
footwear and home products
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products)because it is the
country of mixed economy
where variety of peoples are
present.
because it a country which
follow socialist market
economy.
Price Company in India should
focus on selling better quality
product at low price due to the
availability of large number of
competitors (Teece, 2010).
Company should sell out its
products at low price because
there are number of firms
available. On the other labor
cost is very low which can be
proved as one of the beneficial
factor for the company.
Place In India company should focus
on selling its products in the
developed states where people
want to use variety of products
In China company should
focus on selling its product
where large number of adults
and young people are living.
Promotion In India company can use
advertising, public relation
and direct selling method in
order to expand its business.
In China company can use
advertising , sales promotion
and direct selling method in
order to expand its business.
Thus , these are some of methods and elements which Next plc company can use in order to
expand its retailer business in e-commerce sectors in the countries like India and China which
are up of mixed and socialist market economic system where large variety of people are present.
Conclusion
From the following report two countries are identify which can be proved beneficial for the
Next plc to expand its business in the e-commerce sector. These two countries are identified by
conducting the PESTLE and Porter 5 forces analyses. In this report market entry strategies of
both the countries are concluded. At last marketing mix of the country is done in order to find
out how to increase the sales in the particular market.
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References
Books and Journals
Constantinides, E., 2002. The 4S web-marketing mix model. Electronic commerce research and
applications. 1(1). pp.57-76.
Craig, C.S. and Douglas, S.P., 2005. International marketing research. Chichester: John Wiley
& Sons.
Czinkota, M. and Ronkainen, I., 2012. International marketing. Cengage Learning.
Dev, C.S., Brown, J.R. and Zhou, K.Z., 2007. Global brand expansion how to select a market
entry strategy. Cornell Hotel and Restaurant Administration Quarterly, 48(1), pp.13-27.
Doherty, A.M., 2007. The internationalization of retailing: Factors influencing the choice of
franchising as a market entry strategy. International Journal of Service Industry
Management. 18(2). pp.184-205.
Kamau, A., 2014. Market entry strategy. GRIN Verlag.
Leelapanyalert, K. and Ghauri, P., 2006. Managing international market entry strategy: the case
of retailing firms. Advances in international marketing, 17, pp.193-215.
Papadopoulos, N. and Heslop, L.A., 2014. Product-country images: Impact and role in
international marketing. Routledge.
Pehrsson, A., 2009. Barriers to entry and market strategy: a literature review and a proposed
model. European Business Review, 21(1), pp.64-77.
Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning,
43(2), pp.172-194.
Terpstra, V., Foley, J. and Sarathy, R., 2012. International marketing. Naper Press.
Uhlenbruck, K. and et.al., 2006. The impact of corruption on entry strategy: Evidence from
telecommunication projects in emerging economies. Organization science, 17(3),
pp.402-414.
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