Global and Transitional Business: Marks & Spencer Case Study Analysis

This report provides a comprehensive analysis of Marks and Spencer's (M&S) global business operations, focusing on its international ventures and challenges. The report begins with an introduction to global and transnational business, followed by an examination of M&S's historical background and expansion strategies. A significant portion of the report is dedicated to a case study of M&S's experience in China, including a PESTLE analysis to identify political, economic, sociological, technological, legal, and environmental factors influencing its performance. The report utilizes Porter's Five Forces model and the BCG matrix to assess the competitive landscape and strategic positioning of M&S in the Chinese market. Furthermore, the report explores M&S's withdrawals from other markets like France and Canada, examining the reasons behind these decisions. The report concludes with recommendations for potential re-entry strategies and overall conclusions regarding M&S's global business approach, referencing relevant sources throughout.

Global And
Transitional
Business

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
CHINA.............................................................................................................................................1
FRANCE..........................................................................................................................................7
CANADA......................................................................................................................................11
RE-ENTER INTO EXISTING MARKET....................................................................................15
RECOMMENDATION.................................................................................................................16
CONCLUSION .............................................................................................................................16
REFERENCES..............................................................................................................................17
APPENDIX....................................................................................................................................18
.......................................................................................................................................................19

INTRODUCTION
Global business is considered as an international trade in which an organisation conducts
its business across the globe. A transnational corporation is refers as a huge firm that operates its
business activities within several countries (Ferraro and Briody, 2013). In the modern business
environment competition is so high at market place and the basic purpose of each small as well
as large business enterprises is to attaining higher growth and success within the commercial
centre. The present report is based on the case study of Marks and Spencer. The company was
established in the year of 1884 by the significant efforts of Michael Marks and Thomas Spencer.
The company has expand their business in different countries in respect to boost their
profitability or revenue in international market. This report contains the study about the reasons
why Marks and Spencer have withdrawn their business from countries, thus China, France and
Scotland are the major country's from where Marks and Spencer has withdrawn their business.
Along with this entry modes used by company will also explain and different strategy Marks and
Spencer can be adapting to apply for re entry in to the markets.
MAIN BODY
Background of Marks and Spencer
Marks and Spencer Group Plc is a major British Multinational retailer company with its
headquartered is in Westminster, London. The company was established by the potential efforts
of Michael Marks and Thomas Spencer in the year of 1884 (Luo and Zhao, 2013). Marks and
Spencer is grew to be an iconic British retailing brand with many retailing rand with many firsts
to its credit. The company expended its business to overseas through the late of 1990's it create
aggressive investment around the globe and planned to push international business to a quarter of
its overall profitability or revenue in less than a decade. (Refer to appendix 1 point 3)
CHINA
Pestle Analysis for China
This approach is used by company to identify the factors which would be affecting
company's performance in specific country. China is one of the attracting point for many
countries due to high number of potential customers, high profit margin, low labour cost etc. But
still Marks and Spencer have been withdrawing their stores and production unit from China.
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Factors which are affecting their performance in a negative way is given below with credible
examples,
Political factor: It includes all the factors which is made by the ruling party like
taxations policy, anti dumping duties, rules and regulations etc (Hines, 2013). Though China
government is stable but their policies always prefers local companies to grow. Besides this UK
government regularly increased anti dumping duties on Chinese product due to which their
relationship is not good in the context of ease of doing business.
Economical factor: It is made up of various factors due to which economic conditions of
country is directly affected like disposable income, growth rate, currency fluctuations etc. China
is one of the largest consumptions of clothing due to high numbers of potential customers which
creates a favourable environment for business. But still they have failed due to currency
exchange between both the countries.
Sociological factor: It consist of different factors like distribution age group of people,
population growth in every year, lifestyle, attitude of handling things, superstitious activities etc.
Most of the Chinese believes in superstitions due to which company has incurred high loss.
When M&S stores opens their stores for the first time, one accidents happens which cause one
death of a customer. This enhance the fear of Feng Shui and people decrease their frequency of
visiting their stores. Besides this, according to the survey done by the BCG company, Chinese
people prefers to buy products from the local brand instead of going to foreign brands. Both the
factors directly affect the sales and profitability of company in a negative way.
Technological factor: Technology advancement plays an important in the success of
organisation but in china market it makes an adverse impact on the profitability and sales of
M&S. China have more than 600 million of mobile users and most of them prefers to buy online
rather than physically visiting the store. It creates a negative impact as footfall of M&S store is
low as their expectations and it is hard for them to recover cost which they have already invested
in the country. Moreover, Chinese people prefers to use online transaction on stores instead of
swapping cards on POS on the other side stores have facilities of cash and card payment only.
Legal factor: It consist of different laws like employment laws, labour laws, working
conditions etc. which foreign companies should follow while entering in other countries so to
avoid legal issues (Qihao, 2018). Another factors which hampered the conditions of M&S in
china is one child policy. Parents can not give birth to more than one children which decrease the
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potential growth of customers in China though it have been remove in the recent past but still it
will take time to get back to normal situations.
Environmental factor: Global warming has created a buzz in the market due to which
government and people are concerned about the environment they are living into. Opening an
store required large space which will persuade to less agriculture land. Besides this pollutions
generated from manufacturing company is also lethal for those who are consuming it. All these
factors are against the success of M&S due to which they are planning to withdrawing their
amount and stores from Chinese market.
PORTERS FIVE FORCES MODEL
It is one of the model which is used by M&S to identify various issues which they were
facing in the Chinese market more specifically retail industry of china. Industry in which
company is working plays an important role as is directly affects the working operations of M&S
and their sales and profitability. Different type of factors are given as follows,
Factors High/medium/low Reason
Bargaining power of supplier Medium Apparel industry is vast in
nature as it also includes
textile and clothing industry.
They have medium bargaining
power as raw materials
required to make cloths should
be high in quality due to which
company holds bidding for
getting highest quality
material so that they can attain
product differentiation on the
basis of quality.
Bargaining power of buyer High Full power is based in the
hands of customer as in retail
industry, switching cost is very
low. In other words, if
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customer is getting product is
low price as compare to their
favourable brand then they will
switch it to low cost brand.
Competitive rivalry High Competitive rivalry is high as
there are many big players
who are offering better
services and products in the
Chinese market like Zara,
Alibaba, H&M, Levis etc.
Threat of new entry Low There are less chances of entry
of new brand as it requires
high scale of economies to
enter in to Chinese market.
Moreover, it is really hard for
new company to understand
customer needs and demands
because it is too complex in
nature.
Threat of substitute Medium Though there are substitute in
the clothing industry but still
factors through which clothes
are sell in market can be
considered in this. M&S were
selling there outfits through
their physical store in store
which is opposite to the needs
of Chinese people because
they prefer to buy product
from online platform rather
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than offline.
BCG matrix
This approach is used by company to identify their internal strengths and how it could be
improved so that company can achieve new heights of success in the industry. It is an framework
which is made by the Boston consulting group and its helps in identifying various strategic
approach which a company can opt to gain competitive advantage over others for a longer period
of time. (Refer to appendix 1)
Factors Explanation
Stars Those products which have highest market
share in the market and generate higher amount
of revenue as compare to other products are
comes under stars. Those product who has the
monopoly in the market is considered as stars
product. But company also have to invest
larger amount of funds in the product for their
marketing activities. One of the famous
product which M&S has in the market is Men's
shirt. Shirts has the big amount of chunk in
overall revenue of M&S in china. But due to
bad strategies they could not maintain their
success and resulting in losing share of market
to other competitors.
Question mark These are the kind of products in which
company has small share in the market but still
product has the opportunity to come under
stars product if company are investing
regularly in to the product. However chances
of getting failed in the business is also high
that's why company has to analyse and monitor
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activities which is related to the success of
product. For instance, M&S have two products
in the Chinese market i.e., kids-wear and
women wear which is favourable in the market
but company could not utilise their funds to its
fullest due to which their market has been
captured by other brands like Levis and H&M.
Cash cows All the products which has high rate of return
is considered in the cash cow brands. It assist
company to increase their profitability in the
coming future as company gets more money as
compare to their investment in the product. For
instance, M&S lingerie is one of the product
which satisfies customer needs and interest
because it is cheap as compare to other
company's product with high quality of
material used to make this product. But
company like M&S can not depend on a single
product to earn profits.
Dogs Dogs product are the one who has low market
share and growth rate. These are the kind of
products in which company can not even attain
the break even point and constantly getting loss
from the product. Company can not quit or
break their streak of investing in business
because organisation have already invested in
the business. For instance, premium clothing
for men has disappointed Marks and Spencer
as it was not according to the needs of
customer because of that it is hard for them to
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sell their product.
FRANCE
Porter's five forces model on apparel industry of France
Company business operations are based on two factors i.e., external and internal. External
factors are those which can not be controlled by company. Porters five forces model is used by
company to asses external factors which will help in the coming future at the time of making
business strategies. Though Marks and Spencer have failed in Frances due to factors which are
mentioned below,
Threat of new entry: If the market is profitable and has high margin of profits then it
will automatically attracts more competitors in the market. Apparel industry goes on one line i.e.,
high risk and high reward. Chances of new entry is less as it requires huge amount of cost of
capital in the starting and probability of succeedingly in the industry is less.
Bargaining power of suppliers: If there are more number of suppliers in the market then
power owned by them would be low and vice versa. There are high number of supplier in France
like kiddystores, French select. Pas par pas etc. due to which power relies in the hand of
companies rather than suppliers. So it can be said that bargaining power of suppliers is low in
France.
Bargaining power of buyers: Buyer refers to those individual who are using different
types of products to satisfy their needs and demands. France has more than 60 millions
population which depicts that market for M&S is high. But still they have not take the advantage
of opportunities (Zhao and Wang, 2018). According to the report. Company has lost more than
28 million dollar due to bad marketing and pricing strategies.
Threat of substitute: It states that how a customer can satisfy their needs without using
that product. There are no substitutes for food and clothes which makes the threat of substitute to
lower. If other competitor is considered as substitute then there are ample of local and global
companies who are running their business in France like H&M, Zara, Levis etc.
Competitive rivalry: It means how many competitors does M&S has in France market.
There are many big players like H&M, Zara and core brands like Chanel, Louis Vuitton, Pierre
Cardin etc. It is really hard to compete with them as every product they made are unique and
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satisfy every demands of customers. Besides this, other company are using different types of
marketing techniques like price skimming and promotions techniques due to which their brand
awareness are more than Marks and Spencer (Hamber, 2012).
PESTLE ANALYSIS
Companies performance are dependent on two different dimensions that is
external and internal environment. Company can handle internal factors as it consist of strengths
and weakness of the company. Apart from that, main role is played by external factors which
includes political, economical, sociological, technological, legal and environmental factor. This
strategy is used by company to analyse these factors and how it affects performance of company
in the competitive market.
Factors Explanations
Political France and the united kingdom are the only
countries in the European countries who have
nuclear weapons. This leads to cold war
between both the countries as both have bitter
relationship in the past due to many war which
fought by both the countries. France
government does not support working of
Marks and Spencer that's why they made
policies and regulations according to their
domestic firm which create a negative impact
on the working of company. Moreover Brexit
has also hampered the profitability of M&S.
Economical Company can only attain growth and high
profitability in foreign countries if their
economic conditions are good and favourable
for growth for company. France is suffering
from three different issues which they can not
resolve it like low unemployment rate and low
growth rate. Due to low disposable income,
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people of France can not buy expensive
products of Marks and Spencer due to which
their growth and customer acquisition rate goes
down in consecutive years.
Sociological M&S does not have a great history in starting
their operations in France as in 2005, they have
closed more than 18 stores in their country
which leads to loss of 1700 workers in a one
go. Lot of criticism has been faced by company
in that period of time and even former CEO
was fined for that also. Citizens of France are
still not happy with the company due to which
they are boycotting their product to its
fullest(Marks & Spencer opens in Paris again
ending a ten year drought for ex-pats, 2019).
Technological France has low internet connectivity due to
which there is no sense to invest on online
platform. On the other hand it is not possible
for store to cover large number of market
share.
Legal Legal issues are strict in France due to which
many companies faced problem to operate their
business operations. Marks and Spencer also
comes under this category as they have faced
many obstacles because of that they have
planned to withdraw their business or stores
from their. For instance, it takes around 100
days just to take electricity in the shops or
factory. Moreover internet is an essential part
while conducting business on the other hand it
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