PGBM143 Global Strategy: Next plc's International Expansion

This report provides a comprehensive analysis of global strategies, specifically examining the international expansion of Next plc, a UK-based retail company. The report delves into the application of strategic alliances, mergers, and acquisitions as modes of entry into global markets, evaluating their advantages and disadvantages. It explores the different types of strategic alliances, such as joint ventures, equity alliances, and non-equity alliances, and how they can facilitate growth and profitability. Furthermore, the report critically assesses the role of mergers and acquisitions, including horizontal, vertical, conglomerate, and concentric types, in achieving corporate objectives. The report concludes by recommending strategic alliances for Next plc's sustainable growth and corporate profitability, emphasizing knowledge and resource sharing, opportunities for growth, and access to target markets. The report highlights the benefits of strategic alliances in mitigating risks and fostering long-term success in the global market. The analysis is based on the provided assignment brief and supporting academic sources.

GLOBAL STRATEGY

Table of Contents
PART A...........................................................................................................................................3
INTRODUCTION.......................................................................................................................3
Question 1:...................................................................................................................................3
CONCLUSION............................................................................................................................9
REFERENCES................................................................................................................................1

PART A
INTRODUCTION
Global strategy is defined as method in which different organization try to globalize their
business at international level. It is used by different companies when they try to expand their
business at global level. Company and business also use this strategy to spread their business
internationally. It helps company to create plan for development. The Company try expansion in
internationally, multinationally and global level with the assist of global strategy. This part help
to understand that how global strategies affect any Multi national Corporation like Next plc. This
is a retail company operate in UK (Thompson, and McLarney, 2017). Next plc offers cloths,
home appliances, foot wear etc. This report will critically evaluate the role of strategic alliance,
mergers and acquisitions to fulfil sustains growth and corporate profitability for Next plc
company in domestic and international market.
Question 1:
Next plc is a multinational corporation which is famous brand in UK. Company try to
expand their business globally. For international expansion there are different modes of entry
which can firm can choose for expand their business globally. Some types of modes of entry
with their advantages and disadvantage are as follows,
Strategic Alliance:
It is a type of agreement in two or more than two independent companies in which they
manufacturer, develop or sale the product and service with mutual understanding and for their
growth. In this Next Plc combine there capabilities, strengths, respective resources and
competitive advantages for generate profitability, and higher performance.
There are different types of Strategic alliance which help companies to grow in global
market. Types are described below,
Joint Venture: In this type of strategic alliance two companies with mutual understanding
and with to achieve their business objective form new company. For example Company x and
company y try to form company z with mutual understanding and for growth in international
market.

Equity Strategic Alliance: This strategic alliance occurred when one company purchase
other company's equity percentages (Nguyen, 2020). For example if company X purchase 30%
of the equity in the company Y then an equity strategic alliance are formed.
Non-equity Strategic Alliance: In this two or more than two companies try to sign
agreement in which they both try to pool their capabilities and strength to rise their profit
percentages and two expand their business in international level.
These different types of strategic alliances are beneficial for the Next Plc to achieve success in
international market. In strategic alliance there are different advantages and disadvantages are
present which are as follows,
Advantages of Strategic Alliance: It is beneficial to attract new customers and add
competitive advantages. It also helps company to enter in new business territories in this
company explore new areas which them to rise their profit and attract more customers, It also
helps to create different source of additional income (O'Dwyer, and Gilmore, 2018). This also
help to build valuable intellectual capital and affordable alternative idea for the company.
Strategic alliance beneficial for the company because it reduces risk with the help of other
company it beneficial for both company to earn more profit with low risk because both
companies capability and strengths are pooling. Gain new resource and get chance to updating
their existing resource and it also creates different perception for all companies these are also an
advantage of strategic alliance. It also helps companies to enhance their image in the global
market.
Disadvantages of Strategic Alliance: Same as advantages it also has some disadvantage.
Its main disadvantage are cultural and language barrier in which it makes difficulties in business
and to achieve its target. Language barriers create difficulties in communication with clients and
other companies. Uneven alliance also make difficulties in business because weak alliance and
uneven distribution of power give negative results to the company. Strategic alliance is basis on
trust but if lack of trust is present in agreement then increase stress and frustration between
alliance partners and because of lack trust few alliances don't work and leading to unsolved
issues. It also leads lack of understanding. Difference in management style is also a disadvantage
for the company, because of differences both companies never corporate in decision-making and
give result of distrust between alliances company. Potential conflict, damage goodwill and loss

of autonomy are also some disadvantages of strategic alliances which reduce company growth
and profit.
Basically from above discussion if Next Plc use strategic alliance then it will be beneficial for
them to attract more customer at international market for their product such as cloths, footwear
etc. It also helps company to grow in international market with the help of other company,
because of other company risk is low to get failure (HU Consultancy Private Limited, 2010).
Other company strengths and capabilities help Next plc to grow in global market. It also assists
company for sustain growth in international market as well as it also provide corporate
profitability to the Next plc for rise their profit and for create brand name in new market. Its
different factors also help company which include critical to the success of core business goals
and objectives, blocks competitive threats, maintain strategic choice for the firm, and justify a
significant risk in the business. These factors help Next plc to achieve their long term goals and
objective related to global market.
Mergers and Acquisitions:
It is basically integration of different companies. In this merger means combination of
two companies which is represented as one and in acquisition one company taken over by other
company. It is major type of modes of entry in the world. In this two separate companies
together work and create more valuable product. They also help each other to fulfil their
objectives and in this their main objectives is rise their profit and wealth maximization they also
use different opportunities to complete their target through the way of merger or acquisition
(Ficici, 2018). This type is famous in finance world and help companies to rise their wealth and
profit in global market. It is basically divided into different types which are as follows,
Horizontal: In this merger combination happen between two companies which are from
in same industries, and they might be competitor or not. In horizontal merger and acquisition
companies try to expand their range in existing area here is not important that they try something
new.
Vertical: In vertical types companies use join forces in same market, but they different
supply chain and different points. In this they try to improve their logistic staffs and try to
reduce their time in market for products.

Conglomerate: This type of merger and acquisition is done for diversification between
different industries companies. It helps company to reduce their cost and it also beneficial to
reducing risk in global market.
Concentric: In this type companies share their customers and provide different services to
them. It helps company to attract different customer and explore in new market.
These different types of merger and acquisition are helpful to the Next plc for their expansion in
the global market(Miriko, 2020). It also has some advantages and disadvantage which are as
follows,
Advantages of Merger and Acquisition: It is beneficial for the company in terms of
network economics, It provides national network for economics growth to the organization
which help them rise their profit and wealth. It also helps company in research and development,
in merger and acquisition companies invest huge amount in research and development and it
helps companies to discover new technologies and methods for expand their business globally. It
also assists company to development (Maury, 2018). This is helpful for the company in
economic scale it provides profit. In economic scale potential arise by bulky buying, technical
economics, marketing economics etc. In horizontal merger its quite extensive but in vertical and
other merger its lower. Merger and acquisition help companies to avoid duplication. Regulation
of monopoly and prevent unprofitable business from going bust are also an advantage of merger
and acquisition.
Disadvantages of Merger and Acquisition: Similarly as an advantages merger and
acquisition has disadvantages which are affect companies growth and economic profit. Higher
prices are disadvantages of merger and acquisition. Its main disadvantage are that it is good for
companies but is bad for consumers and it creates high pricing for customers because
competition is reduced due to merger. Its results also comes as some employees losses their jobs
because of merger and acquisition. Customer also has less choice and diseconomies sale also
occurred. In merger companies also experience diseconomies of scale because of increased in
size.
Merger and Acquisition help Next plc to achieve their wealth and economic objectives with the
help of other company. It also helpful for the company to maintain growth in global market and
its different advantages also help in corporate profitability of the Next plc.

Sustain Growth and Corporate Profitability
From the above explanation Next plc must use strategic alliance for company sustain
growth and for corporate profitability because it can be better option in compare to merger and
acquisition because its not create permanent relationship with companies its relations is based
their goals and targets. It also beneficial for the company because it takes low investment cost
compare to merger and acquisition. Alliance can be extremely effective for new strategic
opportunities and pursue new sources of growth and it also contributes to rise the business in
international market, it is useful in a particular situation of high uncertainty. For Next plc main
reason to choose strategic alliances in compare to merger and acquisition because it reduces risk
and share with other company and risk can divide in various forms (Gaur, Ma, and Ge, 2019).
For example financial risk can be reduced if it is occurred than both companies share and get the
best solution which help to overcome this risks. Multi carrier alliance also help Next plc and it
also takes advantages from their network and create their name at global market. Alliance can be
beneficial in future for the companies to join the capabilities and to explore new international
market and opportunities. It also gives shape to the future. So it's recommended to the Next plc
that for sustain growth of the company they must use alliance for expansion in compare to
merger and acquisition.
There are various benefits for the Next plc to use strategic alliance for the sustain growth
and corporate profitability which are as follows,
Knowledge and Resource Sharing: It helps company to sharer their knowledge
experience with other company. In strategic alliance firms can share their resources with each
other. These gives benefit for both organization because it increases their competitive advantages
and also create their brand name in global market by creating name it also helpful for them to
attract new customers and consumers. In resource sharing it includes products, distribution
channels, funding, intellectual property, and manufacturing capabilities (Buckles, 2019). It also
includes other benefits such as expertise transfer, knowledge sharing and economic
specialization. In strategic analysis knowledge and resource sharing also help to share marketing
skills management etc. This help to increase company skills and resource values.
Opportunities for Growth: Strategic alliance also provide some opportunists for sustain
growth. This growth helps Next plc to maintain their economy without running into problems.
Different opportunities such as reach new market help company to grow their business in new

markets. It also increases awareness of brand in entirely new market. It is also increased market
size and with this it gives various opportunities to business or firm to grow in market and to
attract new consumers it also helps firm to maintain their position in market. This is beneficial
for different strategic management in the company and also for stake holder because they prove
them different opportunities for growing in international market.
Access to Target Markets:Enter in new market is always has some risk for the individual
company but strategic alliance help company to access target market and it also beneficial for
increasing corporate profit. Alliances are beneficial to entering and developing business at
international market. It assists to the company for target market and also attract loyal customer.
Access target market are help Next plc to sustainable their grow rate in the industry and global
market. Sustainable growth rate aid benefits in company growth and improve chance of success
in business and in new international market.
Economies of Scale: In strategic alliance companies try to pool their capabilities and
distribution channels for the growth and to increase overall profit of the firms. By pooling their
capability and their strengths organization achieve the economic scale. If the company choose
right partner at the time of forming strategic alliance it will be effective for the companies and
help to compete with large competitors (Nastiti, Atahau, and Supramono, 2019). Alliance help
company to increase their production at low cost and it assists company to reach at economic
scale after reaching at economic scale cost advantages are reaped and production of the company
will be become efficient. By the help of alliance company can achieve internal and external both
economies scale which are give different benefits to the organization which include reduce long-
term unit cost, increase profits, larger business scale, product improve and higher wages etc.
Increased Brand Awareness:Strategic alliance allow Next plc to reach their target
audience without giving extra time and money. Alliances also provide opportunity to the market
to increase their brand awareness. It is they key factor for Next plc for constant success and
corporate profitability. There are different brand awareness befits which include building brand
equity, increased customer loyalty, increase sales and keeping MNC brand in top of the mind
with potential audiences.
Market/ Geopolitics Risk: By strategic alliance entering in global market help Next plc to
minimize their influence to the market and political risk. It happens because in international
market if alliance is happened with their local market then they know their market rules and

politics so the help company to prevent with there political and marketing risks. It also helps to
company to reduce competition in market with the alliances.
These all above discussed benefits help Next plc in business sustain growth and in constant
corporate profitability and it also beneficial for company to improve their performance. Strategic
alliance also assist company and help to understand market and consumer requirements.
According to customer requirement company can explore new areas and generate profits which
help in sustain growth and achieve corporate profits.
CONCLUSION
This report concludes that for expanding the business company must use global strategies
because it is helpful to expand the business globally. In above discussion it explains that different
modes of entry in international market helps Next plc to achieve their long term as well as short
term goal related to international market. Strategic alliance are better than merger & acquisition
for Next plc for sustain growth and for corporate profitability because strategic alliance different
advantages such as economic scale, access to the target market etc. help company to increase
their profit and brand name. Basically global strategies are beneficial for the company expansion
in international market and to attract new customers or target audience.

REFERENCES
Books and journals
Ficici, A., 2018. Econometrics analysis and application of event study methodology on
international mergers and acquisition activities of MNCs from Eastern Europe. Journal
of Economic and Social Thought. 5(1). pp.1-8.
Gaur, A.S., Ma, H. and Ge, B., 2019. MNC strategy, knowledge transfer context, and knowledge
flow in MNEs. Journal of Knowledge Management.
Maury, B., 2018. Sustainable competitive advantage and profitability persistence: Sources
versus outcomes for assessing advantage. Journal of Business Research. 84. pp.100-113.
Miriko, M.R., 2020. The Influence of Mergers and Acquisitions on Performance of Britam
Holdings Limited, Kenya. Journal of Finance and Accounting. 4(3). pp.45-60.
Nastiti, P.K.Y., Atahau, A.D.R. and Supramono, S., 2019. Working capital management and its
influence on profitability and sustainable growth. Business: Theory and Practice. 20.
pp.61-68.
Nguyen, N.T., 2020. Performance evaluation in strategic alliances: A case of Vietnamese
construction industry. Global Journal of Flexible Systems Management. 21(1). pp.85-
99.
O'Dwyer, M. and Gilmore, A., 2018. Value and alliance capability and the formation of strategic
alliances in SMEs: The impact of customer orientation and resource
optimisation. Journal of Business Research. 87. pp.58-68.
Thompson, J. and McLarney, C., 2017. What effects will the strategy changes undertaken by
next Plc have on themselves and their competition in the UK Clothing Retail
Market?. Journal of Commerce and Management Thought. 8(2). p.234.
Online
Buckles, J., UNDERSTANDING THE BENEFITS AND CHALLENGES OF STRATEGIC
ALLIANCES, 2019 [Online]. Available through: <https://www.franchise.org/franchise-
information/understanding-the-benefits-and-challenges-of-strategic-alliances>
HU Consultancy Private Limited, Stratgic Allainces, 2010[Online]. Available through:
<http://huconsultancy.com/strategic-alliances>