Strategic Analysis of Next Plc's International Expansion into Latvia

Global Strategy,
Development and
Implementation

Contents
INTRODUCTION...........................................................................................................................1
Analysing the performance of the company for internationalisation...............................................1
Analysing different types of internationalisation Strategies ...........................................................3
Evaluating Country's environmental analysis..................................................................................4
Analysing different types of mode of entry.....................................................................................6
Analysing 3 key issues of organisational and managerial in internationalisation...........................7
Analysing the solutions in order to overcomes the above problems...............................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Global strategy refers to the strategy which is developed by the company in order to
expand their business in global market. The main purpose of using this strategy is to increase
their sales in all over the world (Aaker and Moorman, 2017). For the following report, selected
multinational company is Next Plc of UK which is a retailing company founded by Joseph
Hepworth in 1864. The number of employees in this company are about 41,547, it operates its
business in more than 70 countries across the world and its turnover is £3.28 million
(Information about Next Plc, 2022). The company is planning to enter in another country which
is Riga, Latvia in order to enhance their international expansion. The report covers the reason
for parent company's international expansion, possible strategic choices available for the parent
company and the reasons for choice of location for the subsidiary. It further analyses the strategic
methods of entry with their possible consequences as well as potential organisational and
managerial problems for the subsidiary operating in the new international environment. It also
provides the strategic advice in order to overcome the problems faced by the subsidiary.
Analysing the performance of the company for internationalisation
Internationalisation refers to the process of increasing the involvement of the company in
international market (Arregle, Hitt and Mari, 2019). Next Plc is an international company that
provide service or products of footwear, clothing and home product and its headquarters is in
Enderby, England, UK. The company popularly known as the largest retailing company of UK
as per their sales. The company is planning to open its subsidiary company in Latvia in order to
enhance its competitive growth in global business environment. In order to understand its
competitive advantages Porter's Diamond model is used. Porter's Diamond model refers to an
economic model that was given by Michael Porter with a objective to highlight as well as explain
why the specific industries can become the more competitive in their special location along with
international and national levels (Baines, 2017). In context of Next Plc, the important factors of
this model that help them to increase their competitive advantages in national and international
market are described below:
Firm strategy and rivalry- This factor of Porter's Diamond model focus on the home
market competition their contemporary industry that challenges the company to come up with
the innovative and novel products, manufacturing techniques and efficient level of customer
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service in order to help the companies to increase their growth. This makes Next Plc to find an
effective strategy that help them to become more competitive from their competitors.
Factor Condition- This factor of Porter's Diamond make their focus on home country
customers or local target market with the sophisticated nature as well as has more information
about the class and quality and innovation of the product (Becker and Abrams, 2017). This
makes Next Plc to make their focus on providing best quality products to their home country
customers instead of focusing on international level.
Related and Supporting industries- In order to make overall success and growth of the
country or companies, this makes essential for the companies stay or being interconnected with
each other in order to improve their growth (Bloom, 2019). The management of Next Plc need to
make interconnection with the company of same industry in UK in order to improve their
growth.
Demand Condition- This factor focus on company's input factors that are required in
order to make products are raw material, expert and talented human resources, skilled labour,
skilled labour, education capital, well placed infrastructure along with the favourable weather
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Illustration 1: Porter's Diamond Model, 2018