International Business Strategy for House of Fraser: A Detailed Report

This report provides a comprehensive analysis of the international business strategy for House of Fraser, a UK-based department store. The report begins with a brief overview of the company and its operations. It then delves into an environmental analysis, utilizing PESTLE and Porter's Diamond frameworks to assess the external and internal factors influencing the company's potential for global expansion, particularly in the context of its move to Abu Dhabi. The PESTLE analysis covers political, economic, social, technological, legal, and environmental factors, while Porter's Diamond examines firm strategy, factor conditions, demand conditions, chance, and related industries. Based on this analysis, the report identifies opportunities and threats, leading to the recommendation of a market penetration strategy as a suitable path for the organization's international growth. The report concludes with a summary of findings and recommendations.

Running head: INTERNATIONAL BUSINESS STRATEGY
International Business Strategy for House of Fraser
Name of the Student
Name of the University
Author’s Note:

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Executive Summary
The main aim of the report is to understand about international business strategy for a popular
UK based organization called, House of Fraser. This type of strategy is the plan or action of
various private organizations rather than governments, so that the overall profit is increased
to a high level. Maximum organizations of a specific size eventually deal with minimum of
one international partner at any particular point in the supply chain as well as in several
competition of the established fields. Proper globalization continues in influencing economy
of the world for increased capital mobility and even connecting to the global financial
markets and even expanding the businesses internationally. This report has analysed the
organizational environment with strategic tools and have recommended two suitable
recommendations for House of Fraser. The recommendation of market penetration is being
provided to this organization.

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Table of Contents
1. Introduction............................................................................................................................3
2. Discussion..............................................................................................................................3
2.1 Brief Description of House of Frazer...............................................................................3
2.2 Environmental Analysis and Implications of the Company of going Global..................4
2.3 Establishment of the Findings to be whether Opportunity or Threat.............................11
2.4 Suitable Recommendations for the Organization..........................................................12
3. Conclusion............................................................................................................................13
References................................................................................................................................15

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1. Introduction
International business strategy could be referred to as different distinct plans that are
responsible for guiding the commercial transactions taking place within different entities in
diversified countries (Shenkar, Luo and Chi 2014). A proper understanding of several
linguistic and cultural barriers, legal systems and political system for ensuring high
commercial success. The developing countries are becoming prominent for bringing new
changes and sources of good to become available. However, the developed countries and
long established organizations comprise of a viable international business strategy
(Morschett, Schramm-Klein and Zentes 2015). Three vital aspects of international business
strategy are being focused, which include industry based aspect, resource based aspect and
finally institution based for ensuring that the relevant societal differences are kept on top
priority. The following report outlines a brief discussion on international business strategy for
House of Fraser with relevant details related to environmental analysis, implications of going
global as well as suitable recommendations for the company.
2. Discussion
2.1 Brief Description of House of Frazer
House of Fraser is a popular British department store group with around fifty one
stores across Ireland and the United Kingdom. It was founded in the year of 1849 and the
headquarters of this company is in London, England, the UK, by Hugh Fraser and James
Arthur (House of Fraser. 2020). Several acquisitions are responsible for transforming the
organization into a specific national chain. The major products and services of this particular
organization include fashion clothing, shoes and boots, accessories, homeware, furniture,
toys, gifts, cosmetics and many more. The next income of House of Fraser has been
14,700,000 pound sterling for the year of 2017 and as a result, in spite of not doing business

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in the international market, they gave been referred to as one of the most significant and
successful organizations in the entire world. More than 6000 direct and 11500 concession
employees are working in this company currently (House of Fraser. 2020). From the year of
1936, they have expanded majorly through different acquisitions like Scottish Drapery
Corporation, Binns, Harrods Group, Dickins and Jones and Barkers of Kinsington. The other
acquisitions include Army and Navy Stores and Howells.
2.2 Environmental Analysis and Implications of the Company of going Global
Environmental analysis is a strategic tools that is responsible for better identification
of each and every external and internal element that could eventually impact the
organizational performances (Cavusgil et al. 2014). This type of analysis eventually entails
subsequent assessment of the level of opportunity or threat that the factors may present.
These distinct assessments are being interpreted into the process of decision making and as a
result, the strategies are aligned with the organizational macro environment. Several new
aspects and features are being developed over time to check if basic alterations are possible
or not. The respective organizations are highly influenced by the respective environment and
every situational factor is responsible for determining daily circumstances impacting the firm
(Forsgren and Johanson 2014). Hence, the companies should continuously analyse the market
as well as the trade environment. PESTLE analysis is considered as the best strategic tool for
analysing the external environment.
2.2.1 PESTLE Analysis
A PESTLE analysis would be a specified framework required for the core purpose of
analysing the major factors of political, economic, social, technological, legal and
environmental that influence the organization from its outside environment (Harrigan 2017).
It eventually offers the HR practitioners insight into the external factors for impacting the

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company properly. Since, the gaps and weaknesses are highlighted successfully, it becomes
quite easier for the organization to take up new steps for bringing innovation and creativity
within the business. PESTLE analysis of House of Fraser is provided in the following
paragraphs:
i) Political: The first and the foremost factor of this PESTLE analysis of House of
Fraser is political factor. These political factors majorly affect the business for gaining
maximum importance (Ferreira et al. 2014). The organization is moving to Abu Dhabi after
expanding their business. Politics of the country takes place within a framework of a
constitutional and presidential monarchy. Several distinct features of the governmental policy
could impact the business and since the organization is shifting from a developed country to
another developed country, it is quite important for them to ensure that they are facing any
type of issue related to change in government. These organizations would be following the
law and the managers could find out about the procedures of any type of upcoming
legislations affecting the activities (Kolk 2016).
ii) Economic: The first vital aspect of economic factor is the respective downturn in
the economy and even high competition from different UK based supermarkets like
Sainsbury and Asda (Rugman and Verbeke 2017). Moreover, the low disposable income and
increment in the sales tax are also referred to as vital aspects of economic factor and should
be considered on top priority for gaining maximum success in the business. Furthermore, the
movement to Abu Dhabi market, would also increase their chance of losing maximum
customers in the UK market. As a result, the increase or decrease in tax is the most
subsequent requirement for better result within the business (Brannen, Piekkari and Tietze
2017). One of the major effects that the organization of House of Fraser has faced was with
the collapse in economy of the respective financial market that initiated in the year of 2008. It

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occurred since Bauger had purchased a larger share of minority in the company and several
retail stores. Hence, there was difficulty in gaining new investors for the business.
iii) Social: The third important and noteworthy factor of this PESTLE analysis of
House of Fraser is social cultural. There exist different people, who are looking to cut down
on their expenditure and even observing the changes within the trends of clothing types
(Buckley 2014). As a result, resources are being saved for the core purpose of the personal
interests and expenditure. Moreover, different leisure activities are also affected by these
social factors and these should be considered on top priority. The customers in Abu Dhabi
have the tendency to explore new shops and hence the organization would not face any
complexity related to social crisis. Since, House of Fraser is a customer centric organization,
it is evident that the customer would be ensured about shopping for the low brand name
goods and also looking for saving a huge portion of the income (Sinkovics et al. 2016).
Several individuals are looking for staying stable, since there had been a large push from the
respective government about such distinct measurement.
iv) Technological: It is considered as one of the most distinct and vital factor for the
business to ensure that a massive change and effectiveness in the business is being gained
without much complexity (Guillotin and Mangematin 2015). The surge of different online
retailers and counterfeiting products being sold through different popular online web sites.
Abu Dhabi is a highly developed country and they allow technological development and
advancement to a high level. As a result, the organization would not face any type of issue
and complexity with technological aspect. Another vital factor is their faster technological
growth that is being highlighted to gain high success in the business (Gray 2019). As a result,
technological change and growth are responsible for increasing chance and opportunity in the
respective business.

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v) Legal: The organization did not have to face any type of legal proceedings in their
business and hence as a result, they are following all types of legislations and laws in the UK
domestic market for leading the entire market eventually (Dzever and Jaussaud 2016).
Moreover, Abu Dhabi is also a legalized country and hence the organizational growth would
not be affected by the legal terms and conditions. The major legal factors of this particular
organization include product regulation, employment regulation, competitive regulation,
patent infringement and many more.
vi) Environmental: The location is majorly responsible for influencing different
business trades and hence the changes within different climatic alterations could impact on
the trade for the Abu Dhabi market (Peleckis 2016). These consumer reactions to the
offerings could even become a vital issue. These environmental aspects involve geographical
locations, weather and climate, law of waste disposal, energy consumption regulations and
finally customers’ attitude towards environment.
2.2.2 Porter’s Diamond Theory
Porter’s Diamond Theory is referred to as a diamond shaped framework, which
eventually focuses on proper explanation of the factor for certain industries in a specific
nation is being internationally competitive in nature (Zander, McDougall-Covin and Rose
2015). These distinct industries in various nations eventually possess six distinct factors,
which are explained for House of Fraser in the following paragraphs:
i) Firm Strategy, Structure and Rivalry: The strategy of House of Fraser is
considered as one of the most distinct and important for the business growth as they have
focused on customers’ demands and choices (Dunning 2014). Moreover, they are following a
hierarchal structure and hence the managers follow instructions of their senior management;

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however ideas from these managers are also undertaken for the business. Intense competition
is being faced since they are dealing in the domestic market.
ii) Factor Conditions: The second important and distinct factor of this model is factor
condition. It involves natural resources as well as human resources and capital resources
(Brouthers, Nakos and Dimitraton 2015). They have also had to focus on the organizational
infrastructure and hence technological innovation and creativity is enhanced to a high level.
iii) Demand Conditions: House of Fraser has also focused on different demand
conditions of the respective business. A home demand subsequently impacts on the
favourable industries in a specific nation (Grayson and Hodges 2017). The larger market
refers to extra challenges, however even enhances opportunities for growing and becoming
better as an organization. The presence of their sophisticated demand conditions from the
local clients in the UK even pushes the business to grow, innovate as well as improve the
overall quality majorly (Åkerman 2014). Moreover, striving for satisfying a demanding
domestic market is responsible for propelling the organization in scaling new heights and also
obtain earlier insights into the futuristic requirements of clients across Ireland and the United
Kingdom.
iv) Chance: House of Fraser even gets distinct chance in their business and have
focused on the random events as well as natural disasters, occurring in the United Kingdom
(Dodgson 2018). Furthermore, there are also chance of terrorist attacks and scientific
breakthrough outs, which could cause major damage to the organizational growth and
development.
v) Related and Supporting Industries: Another distinct and important factor in the
Porter’s demand model is related as well as supporting industry. There is a presence of
different competitive industries and the domestic suppliers, which are stronger globalized

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players themselves and hence should be considered on top priority (Veit et al. 2014). The
most intense competition of this particular organization includes Sainsbury.
vi) Government: The UK government is extremely effective and have focused on
different government policies as well as industrial regulation (Aragón-Correa, Marcus and
Hurtado-Torres 2016). The government plays a distinct role as a catalyst as well as a
challenger in the respective domestic market of the United Kingdom and Ireland.
2.2.3 Porter’s Five Forces
The Porter’s Five Forces model is yet another important and significant model that is
responsible for understanding the external environment of House of Fraser.
i) Competitive Rivalry: This is the first and the most significant force of the Porter’s
model for House of Fraser. The major and the most significant rivals of this specific
organization include Marks and Spencers Group Plc, Laura Ashley Holdings PLC,
Debenhams PLC and many more (Brouthers, Nakos and Dimitratos 2015). The management
should consider these organizations in their business for understanding overall growth and
development of the company eventually.
ii) Potential Entrants: The second important and noteworthy force of the Porter’s
model for House of Fraser is the potential entrants. There had been a huge growth amongst
the retailers of the United Kingdom that are selling different clothing items under one
particular store (Zander, McDougall-Covin and Rose 2015). Asda is one of the newest entrant
that has entered as a merger of the US Walmart.
iii) Substitutes: There could be several distinct substitutes to the organization of
House of Fraser. It involve a variety of web sites that sell clothing, footwear as well as
furniture directly to the consumers (Dzever and Jaussaud 2016). The mail order organizations

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are other significant examples of the substitutes that involve popular organizations like
Littewoods.
iv) Buyers: Maximum buyers do not comprise of the bargaining power. However, for
the respective downturn in their economy, these buyers have also become more price
sensitive. The customers, who can purchase a specific brand name items could easily lower
the need for staying within budget (Guillotin and Mangematin 2015). As a result, House of
Fraser is gaining maximum success in their business.
v) Supplier: The organization is moving towards creation of more of the similar name
products and goods. Hence, there does not seem to be extra threat from different suppliers
and also comprise of maximum bargaining power.
2.2.4 Key Factors related to Change in House of Fraser and Implications of going
Global
After analysing the major factors for House of Fraser related to the environment, it is
being observed that they could be gaining maximum success and advantages for going global
(Brannen, Piekkari and Tietze 2017). They have faced a change of management during the
period of 90’s for having huge losses and it has led to closing down of several stores. The
organization has moved towards the more upmarket brand and have gained extra advantages
for their private label. The implications of global business of this specific organization
include high success, increased competition as well as introduction of new and diversified
opportunities within the foreign markets (Rugman and Verbeke 2017). This type of global
competition would eventually encourage the company in becoming much more efficient and
innovative for their better utilization of different resources. Such international business would
introduce them to a variety of services and goods. Hence, House of Fraser would be highly
benefitted without much complexity and issue. International business strategy would also be

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involved in the business for ensuring contractual agreements to enable foreign firms for
utilization of products, procedures and services (Forsgren and Johanson 2014).
2.3 Establishment of the Findings to be whether Opportunity or Threat
According to the major factors and findings, it is being analysed that entry to the
international market would be a major advantage for the organization of House of Fraser.
Since, they are already leading the domestic market in the United Kingdom, it would not be a
major problem or issue for entering into the international market (Shenkar, Luo and Chi
2014). The first and the most significant advantage that the organization would be gaining in
their business include new revenue potential. They would be able to get accessibility to a
much large base of clients and when the product and service gets a massive success, they
would be able to enjoy incremented revenues from the newest clients even when they have
saturated the market domestically (Morschett, Schramm-Klein and Zentes 2015). Better
access to talent is the next opportunity that would be gained by House of Fraser by going
global. As a result, several potential employees are being accessed with unique mind sets and
skills. Moreover, the organization would be able to get exposure to foreign investment
opportunities and hence improvising the organisational reputation (Harrigan 2017). The UK
government has greater relations of business with different countries in the world and hence
they would be able to improve their position to a high level.