International Business Strategy for Debenhams: Nigeria Market Analysis

This report presents an international business strategy analysis of Debenhams, a British multinational retailer, focusing on its potential expansion into the Nigerian market. The report begins with an introduction to Debenhams, its history, and current operations. It then analyzes the company's product and service offerings, followed by an internal and external analysis, including a SWOT analysis to identify strengths, weaknesses, opportunities, and threats. A macro-environmental analysis, using the PESTLE framework, assesses the political, economic, social, technological, legal, and environmental factors relevant to Nigeria. The report explores various market entry modes for Debenhams in Nigeria, such as joint ventures, FDI, and acquisitions, and discusses the challenges the company might face. The report concludes with a summary of the key findings and recommendations for Debenhams' international business strategy. The assignment aims to provide a detailed understanding of the company's potential for international growth and the strategic considerations involved in entering a new market.

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Degree Title: Global Business (Top Up)
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Module Title: International Business Strategy
Module Code: 301LON
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Date of Submission: 17th December 2018

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INTERNATIONAL BUSINESS STRATEGY
https://www.debenhams.com
Module Name and Number: 301LON International Business Strategy
Module Tutor:
Student Name and Number:
Word Count: 2,452

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Table of Contents
Introduction................................................................................................................................3
Choice of the product and service..............................................................................................3
Internal and external analysis.....................................................................................................4
MACRO Environment Analysis................................................................................................6
Mode of entry into the international market..............................................................................9
Challenges faced in entering the international market.............................................................10
Conclusion................................................................................................................................11
References................................................................................................................................13

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Introduction
The international business strategy can be used to focus on exporting products and services in
the foreign markets. The company striving to expand internationally can try this strategy. It
refers to guiding commercial transactions taking place in different countries. This report
includes an international business strategy of Debenhams which is a British multinational
retailer. Debenhams was established in 1778 by William Clark. Its store has located in 44
Wigmore Street in London's West End selling exclusive fabrics, caps, gloves and sunshades.
In the year of 2007, a corporation acquires 9 stores from Roches in the Republic of Ireland. In
the year of 2009, Debenhams acquires Magasin du Nord and the prominent department store
chain in Denmark. The company is thinking to expand its operations in Nigeria and India.
Debenhams has a biggest department store in UK, Denmark, and Republic of Ireland
(Debenhams, 2018). Debenhams offers its clients an exclusive, differentiated and special
combination of own brands along with the global brands. This report comprises the internal
and external analysis of the Debenhams. Out of which SWOT analysis represents the
strength, weakness, opportunities, and threats of the company. The macro environmental
analysis includes the pestle analysis of Nigeria. The modes of entry chosen to enter in the
Nigerian market are joint ventures, FDI and acquisition (Agho, et. al., 2018).The report also
includes the challenges to be faced by the country while entering the Nigerian market.
Choice of the product and service
Debenhams deals with all products and brands. The company operates in 3 different
divisions. Out of which one is department stores distributing with all products. Desire stores
are minor and make available accessories, children swear, health, and beauty. The last one is
license stores which run globally only. Its major objective is to please customers by offering a
series of distinguished products and services (Ewetan and Ese, 2014).
Debenhams makes available a series of diverse products like women’s wear, lingerie, home
ware, health, beauty and more. The brand portfolio comprises company possessed brands like
Mantaray and Bluezoo (Debenhams, 2018). 25 brands are designed by the Debenhams itself
only. The website is also available for online shopping. The company aims to make available
specifically women wear as a product in the market of Nigeria.

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Internal and external analysis
Debenhams is one of the prominent companies in the industry. The company has several
strengths which assists to prosper in the marketplace. The SWOT analysis of the Debenhams
is given below:
Strengths
Product innovation and superb performance
Strong distribution network
A higher level of customer satisfaction
Record of participating complimentary firms
Weaknesses
Lack of financial planning
Poor demand forecasting
Low investment in Research and
development
Opportunities
Trends in consumer behaviour
New technology
New taxation policy
Lower inflation rate
Threats
Lack of skilled workforce
The increasing strength of the local
distributions
Currency fluctuation
Strengths
Product innovation and superb performance: Debenhams has a successful record of
developing innovating products. The company has even accomplished expertise in arriving
new markets and making an achievement of them (Agho, et. al., 2018).
Strong distribution network: The Company has develop a consistent delivery network
which can extent most of its prospective market. The distribution network is increasing on a
constant basis and is getting stronger.
A higher level of customer satisfaction: Debenhams can achieve an advanced level of
gratification due to its devoted customer relationship management department. The company
is having worthy brand equity among the prospective customers.
Record of participating complimentary firms: Debenhams has an effective record of
integrating admiring firms by mergers and acquisitions. The company has effectively united
various technology companies in the last few years to reorganize its processes and to develop
a consistent supply chain (Ezenwa, Stella and Agu, 2018).

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Weaknesses
Lack of financial planning: The financial planning is not done appropriately and
proficiently. The current asset ratio and liquid asset ratios show that Debenhams can use cash
more competently than what is exploiting at current.
Poor demand forecasting: Debenhams is not very good at product demand estimating and it
is leading to missing advanced opportunities at the marketplace (Agbolade Obasan, 2014).
The days inventory is great as paralleled to the contestants because the company is not very
good at demand estimating. It ends up in higher inventory in-house and in the channel.
Low investment in Research and development: Debenhams invest less in the Research and
Development compared to its competitors. However, the company is spending beyond the
industry average on research and development but still not capable to strive with the foremost
players in the industry (Gavinelli, 2016).
Opportunities
Trends in consumerbehavior: The new trends in consumerbehavior opens up the new
market for the company. It offers a great prospect to generate new revenue streams and
differentiate into the new product classifications as well.
New technology: The new technology offers a prospect for the company to practice
discriminated assessing strategy in the market. It enables the company to retain devoted
customers with the excessive service. It can even appeal to new clients through value-
oriented propositions.
New taxation policy: The new taxation policy can considerably affect the company’s way of
conducting business. It can even expose new business opportunities for the recognized
players like Debenhams to raise the profitability (Gifford and Nilsson, 2014).
Lower inflation rate: The lower inflation rate brings further constancy in the market. It
empowers credit at a lower interest rate to the clients of the company.
Threats
Lack of skilled workforce: The deficiency of the expert staff in the international market
signifies threat to the evolution of the Debenhams in the subsequent markets.

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The increasing strength of the local distributions: The increasing strength of the local
distributors represents a threat in some markets. Such competitions pay advanced margins to
the native suppliers.
Currency fluctuation: The Company is more exposed to currency fluctuations as it is
operating in various countries. The volatile political climate in the various markets
specifically affects the Debenhams (Im, Vorhies, Kim and Heiman, 2016).
MACRO Environment Analysis
The Macro Environment Analysis Comprises the PESTLE Analysis:
Factors Description
Political factors Nigeria seems stable political rebellion of
bombers in the Northern part of the country.
The country drives a multi-party system with
more than ten political parties.
Economic factors The youth employment rate is 21.5% and the
economic inference of it can lead to
corruptions and other communal
immoralities.
The cost of borrowings is quite great in
Nigeria in the form of loans.
Social factors Nigeria has around 200 million people which
referred to it as a giant of Africa. There are
huge market opportunities.
The population in Nigeria is enough to attract
investors.
Technological factors Nigerians are fetching computer savvy.
Though laptop and computers quiet remain
luxury to some people and the use of
smartphones appears to bridge the gap.
Legal factors The income tax in Nigeria is 30% whereas
VAT is 5%.
Federal Inland revenue service drives

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cohesive tax system which made tax elusion
practically difficult.
Environmental factors The absence of electricity, level of noise and
pollution from the power creating sets is
great.
It upsets the residential, marketable and
industrial areas singly.
Political factors
Nigeria seems stable political rebellion of terrorists in the Northern part of the country. It has
been 16 years; Nigeria is operating under the constant democratic system of governments.
Though, there are only 2 leading political parties. One is playing the part of antagonism party
whereas the other one is the dominating party and has popular seats in both upper and lower
cavities of the judicial arm of the government (Ekpe, Alobo and John, 2014). The term of the
government in Nigeria is usually for the four years. The elections involve a huge spending
there. Any company which is likely to conduct business in Nigeria can involve media and
printing and record huge turnover during this period.
Economic factors
The economic factor in Nigeria considers the level of employment. The youth employment
rate is 21.5% and the economic inference of it can lead to corruptions and other communal
immoralities. On the other side, entrepreneurs can have right to cheaplabor. So, it can be cost-
effective for the Debenhams to expand business in Nigeria. Additionally, it can even benefit
the company to sub contract labor-intensive arm of its business to Nigeria. The cost of
borrowings is quite great in Nigeria in the form of loans.
Social factors
Nigeria is the most populated country on the African continent. Nigeria has around 200
million people which referred to it as a giant of Africa. There are huge market opportunities.
The foreign direct investment is increasing in spite of the instability in the country. The
population in Nigeria is enough to attract investors. Nigeria has different ethnicity and
religion. Yet the country still celebrates unity in the diversity. It is required to understand the

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religion and cultural values of each group before conducting business in Nigeria (Abdel-
Rahman, et. al. 2017).
Technological factors
Nigerians are fetching computer savvy. A huge crowd of youth is computer literate in the
country. People are vigorous internet users and have a social media existence by using
smartphones (Amesi and Giami, 2018). It is the best way to advertise online for the
Debenhams to conduct business in Nigeria. It is the best way to reach target customers.
Legal factors
As a part of the legal factor, the country runs a progressive tax system for the personal
income tax. The income tax in Nigeria is 30% whereas VAT is 5%. The companies want to
conduct or expand business in the country are required to obey with the appropriate tax laws.
Otherwise, companies can be applied fines if it has been found that these are not paying
precise taxes. Federal Inland revenue service drives cohesive tax system which made tax
elusion practically difficult. Any company that wants to open a bank account in the country is
anticipated to offer the bank with TIN (Tax Identification Number). It is essential for the
companies to get open account number for the transactions taking place (Oladokun and
Ogunbiyi, 2018).
Environmental factors
The centralized government of Nigeria has a significant part in defending the biology of the
country. Each state in the country is authorized to articulate commandments or policies which
ensure that the environment is hygienic to avert diseases and other external factors. The
absence of electricity, level of noise and contamination from the power creating sets is high
(Akanni, Oke,and Akpomiemie, 2015). It affects the residential, commercial and industrial
areas singly.
Mode of entry into the international market
The market entry strategy is a deliberate method of the distribution of goods and services to
the fresh target market. Here are certain market entry modes are given below which can be
practiced by the Debenhams at the time of entering the Nigerian market.

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Joint ventures: The joint ventures comprise the creation of a 3rd independent managed
company. In the joint ventures, two companies agree to work together in the particular market
to produce specific products. Debenhams can come in agreement with the local Nigerian
company to produce products (Mika, Warren, Foley,and Palmer, 2017). The risks and profits
will be shared equally between both the partners. The joint venture agreement sets out the
right and obligations of the partners. The joint venture is beneficial for the already existing
distribution network of the company. It can be political ramifications, tax implications, type
and size of investment to be made in the country (Yan and Luo, 2016).
FDI: The decision of foreign direct investment can be made by the Debenhams for making
an investment in Nigeria. The company can establish foreign business operations in Nigeria.
It comprises establishing ownership and controlling interest in a foreign company. It also
includes provisions of management and technology as well (Blonigen and Piger, 2014).
Acquisition: Debenhams can acquire controlling interest in the existing company of Nigeria.
Debenhams can purchase shares of the Nigerian company to take control. Debenhams is
required to obtain more than 50% ownership in the host company. Debenhams can purchase
the stock and other assets of the acquiring company in the process of acquisition (Shaban,
Yao, Darun, and Alkhateeb, 2017).
Challenges faced in entering the international market
Debenhams can make use of the Blue Ocean Strategy in the Nigerian market as there is very
less or no competition at all. The blue ocean strategy spins around searching for a business in
which a few firms work and there is no pricing burden. This strategy helps to seizure new
demand and makes opposition inappropriate by presenting products with higher features. It
can help Debenhams in making huge revenues as the products can be little price steep
because of the unique elements (Mebert and Lowe, 2017). The company can easily capture
the growing demand of the consumers with the blue ocean strategy. Here are some challenges
which Debenhams can get to face while entering in the Nigerian market. These challenges
can be understood with the help of Porter’s five forces:
Factors Description
The threat of new entrants (High) The new entrants in the retail bring
innovation in products and the way of
conducting activities.

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Bargaining power of the suppliers
(Moderate)
The power suppliers of Nigeria in the
consumer amenities sector use conveying
power to abstract higher prices from the retail
companies
Bargaining power of the buyers (high) It is seen that buyers are normally demanding
a lot. They are often interested in buying the
best options available by paying the least
prices possible
The threat of substitute products (High) The profitability of Debenhams can suffer in
the Nigerian market as the new products and
services are kept on producing to meet
similar customer needs in the diverse ways.
Rivalry among the prevailing competitors
(High)
The rivalry among the prevailing players of
the retail industry of Nigeria is penetrating
and it can drive decline the overall
profitability of the company.
The threat of new entrants: The new entrants in the retail bring innovation in products and
the way of conducting activities. It puts pressure on the Debenhams over lower pricing
strategy, sinking costs and new value proposals.
Bargaining power of the suppliers: The suppliers are in the prominent position to lessen the
margins. The power suppliers of Nigeria in the customer services sector use conveying power
to abstract advanced prices from the retail companies (E. Dobbs, 2014). The influence of the
higher supplier bargaining power can lower the overall profitability of the Debenhams.
Bargaining power of the buyers: It is seen that buyers are normally demanding a lot. They
are often interested in buying the best options available by paying the least prices possible. It
can put an impact on the profitability of the company in the long run.
The threat of substitute products: The profitability of Debenhams can suffer in the
Nigerian market as the new products and services are kept on producing to meet similar
customer needs in the diverse ways (Michalski, Montes-Botella and Guevara Piedra, 2017).
The threat of the substitute products is great as it proposals a value proposition which is
exceptionally diverse from the assistances of the Debenhams.

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Rivalry among the prevailing competitors: The rivalry among the prevailing players of the
retail industry of Nigeria is penetrating and it can drive decline the overall profitability of the
company. Debenhams already functions in the competitive retail industry and such
competition does not take the ring on the whole profitability (Peter, 2016).
Conclusion
In this report my conclusion is that Debenhams is capable enough to conduct its operations in
the Nigerian market. The market entry modes applied by the company like joint ventures,
FDI and acquisition are suitable enough to operate in the market of Nigeria. The Blue Ocean
Strategy is efficient in conducting operations in the environment of Nigeria as there is less
competition in the retail industry. The SWOT analysis represents the internal analysis of the
Debenhams whereas Pestle analysis represents the external environment of the country. The
company can face challenges in the Nigerian market. But the strength and the opportunities
of the company are capable enough to overcome challenges.