International Expansion of Primark in Japan: Strategies and Challenges

This report discusses the international expansion of Primark in Japan, including market strategies pursued by organizations, advantages and obstacles, cultural differences and ethics, SWOT and PEST analysis, and strategies for market entry. It also provides a plan for successful expansion and monitoring KPIs.

Business

Table of Contents
INTRODUCTION ..........................................................................................................................4
MAIN BODY ..................................................................................................................................4
TASK 1............................................................................................................................................4
Reason behind internationalization and market strategies pursued by organizations when
entering international market ...................................................................................................4
Advantages and obstacles in global expansion ..........................................................................5
Significance of international business for growth and current trends ........................................5
TASK 4............................................................................................................................................6
Impact of cultural differences and ethics on successful international expansion ......................6
SWOT analysis of Primark ........................................................................................................6
PEST analysis of Japan...............................................................................................................6
Actions Primark need to take to overcome challenges...............................................................7
Role of management when expanding in new market................................................................7
TASK 5............................................................................................................................................8
Strategies that can be used by Primark to enter international market ........................................8
Plan for market entry ..................................................................................................................8
Support provided by proposed plan in successful expansion of Primark ..................................9
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Primark is Irish clothing retailer headquartered in Dublin and currently the firm operates
380 stores in more than 13 countries across Europe and America. The present report centres
around international expansion of Primark in Japan. The concept of global business including
market strategies are provided in this report. Operational and managerial challenges faced by
business firms during international expansion are described in this report with ways to overcome
them. Plan of entry for Primark in Japan is also provided in this report.
MAIN BODY
TASK 1
Reason behind internationalization and market strategies pursued by organizations when entering
international market
One of the primary reasons for global expansion is to offer better services to their
international clients. In addition to this strong presence in various international reasons help
business firms gain brand recognition and global credibility which is beneficial for progress of
the company (Curtis, (2020)). In case of clothing retail firms, intentional expansion provides
opportunity for diversification of assets. Successful global expansion of Primark enables the
company to reduce dependence on saturated domestic market and complete demands of
international consumer to purchase clothing from brands with global outlook. The business
strategies pursued by organizations during internationalization are described below;
 Market Penetration; This involves enhancing sale of current products in existing
market.
 Product Development: This involves offering new products to current market (Dotzel &
Shankar, (2019)).
 Market Development: Expanding to new market with current products is the aim f this
strategy.
 Diversification: This strategy includes expanding to foreign market with new products.
The recommended strategy for Primark is market development in which the company
offers its existing fashion line to new international market. The market recommended for this
strategy is Japan as western fashion is hugely popular in the region. This is beneficial strategy for

Primark as it will help the company increase revenue and gain competitive edge in the global
fashion industry.
Advantages and obstacles in global expansion
Advantages of global expansion
 Access to local talent: Expansion to new markets enables business firms to hire talented
employees from the local talent pool (Fabeil, Pazim & Langgat, (2020)). Primark will be
able to globally versatile and talented individuals by expanding to Japan. Increased Revenue Potential: Global expansion provides assess to large number of
consumers and contributes to increase of revenue potential. Primark will be able to
improve profitability through international expansion.
Obstacles of global expansion
 Cultural Barriers: cultural barriers impacts consumer behaviour and brand perception in
the market which can reduce growth potential of the company in the market. Primark
needs to eliminate cultural barriers in order to ensure success.
 Language Barriers: Very few people in Japan, less then 3%-5% are able to converse in
English which creates management barriers for smooth control of Japanese subsidiaries
of international firms. His challenge need to be addressed by Primark in order to expand
successfully.
Significance of international business for growth and current trends
Engaging in international trade is highly important for growth of business firms. This is
because it helps reduce dependency on business cycle of their domestic market and reach new
consumers. This leads to financial growth of the firm while increased brand recognition plays an
important role in building longevity of the firm (Gill, Sridhar & Grewal, R. (2017)). International
expansion is critical for long-term success and growth of Primark. The current trends in global
fashion industry are sustainability, ethical fashion, increase in digital spending and diminished
demands. Demand for fashion will not return to pre-pandemic levels because of unemployment
and restrained spending power of consumers. Sustainable and ethical fashion are main concerns
in global fashion industry as consumers become aware of plight of vulnerable fashion workers
building momentum for change. Costumers will shift towards shopping from digital channels
because of COVID-19.

TASK 4
Impact of cultural differences and ethics on successful international expansion
Cultural diffidences impact consumer perception about specific brands, it creates
workplace cross-cultural challenges includes communication barriers. Japan is low context
culture in which communication is based on inherent understanding (Kohnová, Papula &
Salajová, (2019)). On the other hand Ireland has low context in which communication is focused
around precise and clear meaning. These cultural differences impact the daily functioning of the
company and consumer relationships which plays deciding role in the success of the firm.
Long-term expansion in foreign markets introduces various ethical challenges to business
firms which needs to be resolved so that enterprises engage in international business in
responsible manner. Equal opportunities, workplace diversity and working conditions of
labourers are some of the primary ethical issues which impact brand image of a company. As
consumer agitation against unethical behaviour of enterprises is increasing which has enhanced
the significance of ethical expansion in global business.
SWOT analysis of Primark
SWOT analysis is a situational analysis tool which provides information about internal
capabilities and opportunities and threats in external environment (Ortiz-Villajos & Sotoca,
(2018)).
 Strengths: The extensive product rang of the company is major strength of Primark.
 Weaknesses: The firm outsources most of their products which affects consistent quality
of their apparel.
 Opportunities: The firm can exploit the opportunity provided by fast growing product
segment of sportswear.
 Threats: The economic downturn caused by COVID-19 affects consumer segment and is
threat to growth of Primark.
PEST analysis of Japan Political Factors: Japan is constitutional monarchy and has strong diplomatic ties with
Ireland and UK. In addition to this the current Prime Minister of Japan Yoshihide Suga
will not be running for re-election. This can lead to return of political instability in Japan
(Japan’s Suga to Resign, Signaling Possible Return to Political Instability, 2021).

Positive Impact: Strong diplomatic ties between Japan and Ireland can facilitate smooth
expansion of Irish retailer in UK.
Negative Impact: The unstable internal political environment can negatively affect consumer
perception towards foreign brands. Economical Factors: Japan is worlds third largest economy and is member of global trade
blocks including ASEAN. COVID-19 has reduced economy of Japan by 4.8% in 2020
(The State of Fashion 2021: In search of promise in perilous times, 2020).
Positive Impact: High position of Japan in global economy provides growth opportunities to
Primark.
Negative Impact: Low economic growth of the country negatively affects sale of foreign
organizations. Social Factors: Japanese culture is highly different from Ireland and miniscule part of the
population understand English which creates barriers for Western brands.
Positive Impact: Primark has the opportunity offer appeal with new and unique aesthetic because
of high cultural difference and gain success.
Negative Impact: Language barrier create challenges for rapid growth in the region. Technological Factors: Japan has high internet connectivity and advanced technological
infrastructure which is renowned globally.
Positive Impact: High internet connectivity provides growth opportunities in e-commerce sector
of Japan.
Negative Impact: Digital advancement of the region also introduces threat of cyber crime.
Actions Primark need to take to overcome challenges
 In order to face ethical challenges Primark needs to invest in sustainable supply chain
management to ensure that outsourced products are manufactured in responsible manner.
In addition to this the company needs to implement inclusion policies in order to maintain
diversity in Japan.
 Language barrier of the company can be resolved by creating workforce which consists
of Japanese Citizens who are fluent in local language and understand local culture. This
will help the company navigate in unknown culture and attract consumers by building
suitable brand image.

Role of management when expanding in new market
Effective management is key to successful international expansion as it helps build
talented workforce in foreign region. Implementation of corporate social responsibility policies
which ensure creation of sustainable supply chain and egalitarian workplace is also completed
with the help of management (Rachinger & Schirgi, (2019)). Management plays a crucial role in
handling cross-cultural issues. Primark needs to build effective management strategies to face
various challenges and expand to Japan successfully.
TASK 5
Strategies that can be used by Primark to enter international market
The strategies which can be used by Primark to enter Japan are provided below:
 Franchising: This involves giving IP rights to franchisor who established franchisee in the
by using brand name and business system. The company gains initial fee and royalty in
exchange of franchising rights. The advantage is that it reduces risk while the
disadvantage is that it leads to sharing information.
 Direct Export: This involves directly exporting products to importer in foreign country.
The advantage is maximisation of profits while disadvantage is high investment.
 Joint Venture: This involves forming joint venture with another firm for successfully
expansion. The advantage is gaining resources of other firm while disadvantage is lack f
control.
 Partnering: This involves collaborating with local firm for Market entry. The advantage is
that it provides more support to the firm while the disadvantage is instability.
Plan for market entry
Mission: “To provide consumers high quality fashion basics at value for money prices”
Vision: “To create unique resource for its consumers”
Business Objective
 To increase online sale by 20% in first three months
 To accelerate inclusion and diversity and act responsibly To increase brand recognition in Japan
Strategy Selection

The most suitable strategy for Primark to expand in Japan is Joint Venture. The firm
needs to form joint venture with local fashion brand to enter Japanese Market. This will reduce
risk of expansion and help the company eliminate cultural, language barriers while improving
workplace diversity and facilitation cross-cultural management.
Control and Monitoring
The KPI for controlling and monitoring the expansion plan are price response, cost per
lead, net profit and month on month sales growth.
Support provided by proposed plan in successful expansion of Primark
This plan will support Primark in expansion to Japan as the expansion strategy of
construing Joint Venture helps the company face cultural issues n the country and construct
brand image for long-term expansion in the region. In addition to this business firms will be able
to monitor expansion progress with the help of financial KPI to gain timely success in the foreign
market.

CONCLUSION
From the above report it is determined that international expansion and business is
important for growth of business firms. There are various challenges related to
internationalization which need to be address in order to ensure successful internationalization.
Are examples of some strategies which can be utilized by business firms for entering
international market.

REFERENCES
Books and Journals
Bocken, N. M., Schuit, C. S., & Kraaijenhagen, C. (2018). Experimenting with a circular
business model: Lessons from eight cases. Environmental innovation and societal
transitions, 28, 79-95.
Curtis, G. L. (2020). Big business and political influence. In Modern Japanese organization and
decision-making (pp. 33-70). University of California Press.
Dotzel, T., & Shankar, V. (2019). The relative effects of business-to-business (vs. business-to-
consumer) service innovations on firm value and firm risk: An empirical
analysis. Journal of Marketing, 83(5), 133-152.
Fabeil, N. F., Pazim, K. H., & Langgat, J. (2020). The impact of Covid-19 pandemic crisis on
micro-enterprises: Entrepreneurs’ perspective on business continuity and recovery
strategy. Journal of Economics and Business, 3(2).
Gill, M., Sridhar, S., & Grewal, R. (2017). Return on engagement initiatives: A study of a
business-to-business mobile app. Journal of marketing, 81(4), 45-66.
Kohnová, L., Papula, J., & Salajová, N. (2019). Internal factors supporting business and
technological transformation in the context of Industry 4.0. Business: Theory and
Practice, 20, 137-145.
Ortiz-Villajos, J. M., & Sotoca, S. (2018). Innovation and business survival: A long-term
approach. Research policy, 47(8), 1418-1436.
Rachinger, M & Schirgi, E. (2019). Digitalization and its influence on business model
innovation. Journal of Manufacturing Technology Management.
Bocken, N. M., Schuit, C. S., & Kraaijenhagen, C. (2018)
Online
The State of Fashion 2021: In search of promise in perilous times, 2020. [Online] Available
through <https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion>
Japan’s Suga to Resign, Signaling Possible Return to Political Instability, 2021. [Online]
Available through <https://www.voanews.com/east-asia-pacific/japans-suga-resign-
signaling-possible-return-political-instability>