M&S in Global Markets: Entry Strategies, Performance & Recommendations

This report delves into the reasons behind Marks and Spencer's (M&S) withdrawal from international markets, focusing on China, France, and the United Kingdom. It assesses market structures, demand conditions, and obstacles encountered by M&S, utilizing theoretical frameworks like PEST analysis and Porter's Diamond to evaluate both external and internal factors contributing to the company's retreat. Furthermore, the report examines M&S's entry and adaptation strategies, performance in foreign countries, and cultural issues using Hofstede's Dimensions. Ultimately, it provides recommendations for a successful re-entry into a chosen foreign market, emphasizing marketing mix strategies to enhance revenue generation and achieve a competitive advantage. Desklib offers a variety of solved assignments and past papers for students.

Running head: GLOBAL AND TRANSNATIONAL BUSINESS
Global and Transnational Business
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Table of Contents
1.0 INTRODUCTION................................................................................................................3
1.1 M&S background.............................................................................................................3
1.2 M&S international strategy..............................................................................................4
2.0 MARKET STRUCTURE.....................................................................................................4
3.0 DEMAND CONDITIONS...................................................................................................9
4.0 ENTRY STRATEGIES FOR FOREIGN MARKETS......................................................12
4.1 Pest analysis....................................................................................................................13
4.2 Porter’s diamond analysis...............................................................................................14
5.0 ADAPTATION STRATEGY FOR FOREIGN MARKETS.............................................15
5.1 EPRG framework...........................................................................................................15
6.0 M&S PERFORMANCE IN FOREIGN COUNTRIES.....................................................16
7.0 ISSUES FACED BY M&S IN FOREIGN MARKETS....................................................17
7.1 Hofstede Dimensions of culture.....................................................................................18
8.0 RECOMMENDATIONS FOR RE-ENTERING INTO ONE FOREIGN COUNTRY:.. .20
8.1 Marketing mix................................................................................................................21
9.0 CONCLUSION..................................................................................................................23
References................................................................................................................................24

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1.0 INTRODUCTION
The report is presented to discuss about the reasons due to which Marks and Spencer
has withdrawn its business from the international markets with the assessment of market
structure and conditions for demand. The three major foreign markets from which, the
business has withdrawn are China, France and United Kingdom and the obstacles due to
which, he company has withdrawn from are illustrated in this report. The report will also
demonstrate the three theoretical frameworks that shall be used for determining the external
factors associated with the retreat of Marks and Spencer from the international markets along
with the internal factors as well (Piekkari, Welch & Welch, 2014). Based on the analysis, the
topic will also present ideas about how the business can re-enter any of these foreign markets
with ease and make sure to succeed within the competitive business environment considering
the fact that he business aims to generate higher revenue and attain competitive advantage
within the business as well.
1.1 M&S background
Marks and Spencer is a well-known British multinational fashion retailer located in
London that sells clothing products, home products, luxury food products, as listed in the
London Stock Exchange and thus has been a major constituent of the FTSE 100 Index. At
present, the company has more than 979 stores all across UK and over 600 stores that sell
only food products. It is a public limited company and it has its headquarters in London,
United Kingdom. The key persons include the chairman named Archie Norman and the Chief
Executive is Steve Rowe (Banalieva & Dhanaraj, 2013). The operating income is £690.6
million and the net income is £115.7 million with a revenue generated over £10.622 billion.
The total number of employees is 84939.

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1.2 M&S international strategy
For the management of improved business effectiveness and enhanced level of
responsiveness and optimisation, Marks and Spencer made sure to integrate the
organisational structure with the transnational network for transferring consumer and market
knowledge to ensure international business expansion and generate higher revenue to attain
competitive advantage in business as well (Twarowska & Kąkol, 2013). For example, to enter
the Chinese market M&S adopted the franchise model and opened up new stores for targeting
the foreign market segments and manage good internationalisation strategy to sustain in the
competitive marketplace. The e-business further contributed to the management of global
business expansion with the delivery of products and services online, furthermore created
strategies scopes and opportunities to ensure future growth and development in terms of
design, size, nature and trends in the international markets. The consideration of foreign
culture and reviewing the global strategies along with use ownership models also assisted the
organisation to gain higher global market share and manage cultural differences with ease
and efficiency (Tian, 2016).

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2.0 MARKET STRUCTURE
China market structure
China, being one of the largest consumer markets in the entire world and with a huge
population, there has been increased in Gross domestic product or GDP, which indicated
accelerated growth in economy and influenced the consumption of clothing and apparel
products to expand scopes for businesses to expand in China as well. The increase in clothing
products’ consumption with the increase in GDP and disposable income has further
contributed to increase in per capita consumption expenditure (Shenkar, Luo & Chi, 2014).
Figure: Retail revenue generated in China (Shenkar, Luo & Chi, 2014)
The market has become more challenging for the fashion retail brands and with the
evolvement of Chinese consumer behaviours, the assessment of their ability to spend and
things that they are willing to purchase have been identified as well. With the market
fragmentation, there have been multiple small and medium sized enterprises that have
constantly allowed for enhancing the revenue generated from the retail sector. There has been

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consistent increase in revenue from 2007 to 2017 and with the online channels distributing
products and services, more customers are attracted to make purchases online (Puffer et al.,
2013).
Figure: Consumer expenditure in China (Puffer et al., 2013)
From the table, it is understood that the consumer expenditures have increased and
there has been increase in purchases of clothing and apparel products, which has further
influenced consumer buying behaviours. It shows that the fashion retail market structure is
quite good andthis can allow companies to expand into the Chinese foreign market with ease.
French market structure

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Figure: France clothing retail sales and forecast (Cuervo-Cazurra, 2016)
The clothing retail sales are moderate due to the weak economic structure and
increasein level of unemployment along with poor household income though the clothing
market has gained slight growth in the past few years (Cuervo-Cazurra, 2016).
TheGovernment of France has provided discounts in summer and winter and during
occasions where the consumers are willing to pay the most amount of money during
purchase, which has reduced the sales revenue.

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Figure: retail sales value and growth (Ang, Benischke & Doh)
The sales value and growth are very negligible with the years though it could be seen
that the online share for expenses done on clothing has increased, which can create new
scopes for the businesses to expand globally.
Figure: Online share for clothing consumptions (Musso & Francioni, 2014)
UK market structure
The market structure of UK in terms of fashion clothing is quite good and the growth
in higher than the previous years, though with the inflation rate, there could be weak pound
that should drive the costs of manufacturing and import activities, furthermore reduce the
disposable income and prioritise more on food & grocery or leisure activities. It is a fast
growing market

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Figure: Retail sales monthly(Ang, Benischke & Doh, 2015)
The retail sales are quite good and it has remained consistent from the year 2016 to
2018, though considering the fact that due to some major issues, the sale have declined
sometimes. Hough there has been fluctuations, still the retail market draws enough sales to
achieve the desired level of profit as expected from the clothing industry (Ang, Benischke &
Doh, 2015).

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The online share of retail trade is the highest in UK, and it has increased constantly like in
2015 and 2016, it is 15.2 % and 16 % while in 2017, there has been huge increase up to 17
percent.
3.0 DEMAND CONDITIONS
Market demand in China
The Chinese market comprising of high income groups and higher spending power,
there has been increased demands for the clothing items considering both the quality of
clothing and shopping experience. The Chinese clothing market has grown exponentially
with an increase of 6.2 percent over the previous year and it is considered as a fast growth,
which facilitates expectation of market value to reach RMB1096.1 billion by 2021.
According to Musso & Francioni (2014), the demand for personal style clothing has
increased and with limited edition fashion brands, niche brands, the clothing market has
gained increased popularity among the clients all over China (Musso & Francioni, 2014). The
e-commerce business has enabled changes and increased the demands for clothing items’
consumption largely, thus favouring the consumer market demand to increase consistently on
an annual basis.

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Figure: Global apparel retail industry value based on demands (Musso & Francioni, 2014)
Market demand in UK
Figure: Clothing market sales forecast(Holtbrügge & Baron, 2013)

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The clothing market in UK has increased and is expected to increase market value up
to 60.7 billion euros along with the increase in annual expenditures on clothing items and
increase in sales volume too. The majority of consumption of clothing is based on the
women’s consuming behaviours while with the major businesses like M&S, Primark, etc. and
online shopping, the demand have increased (Holtbrügge & Baron, 2013). This has also
allowed for purchasing clothing in physical stores and online platforms too, thus expecting to
reach more than 70 percent sales by the year 2020.
Market demand in France
The revenue generated from the clothing industry accounts to more than US$17,344m
in 2018 and there has been consistent annual growth of more than 7.6 percent, which can
result in market volume of more than US$23,262m by the year 2023 in France.
Figure: Growth in revenue for clothing industry in France (Laufs & Schwens, 2014)
4.0 ENTRY STRATEGIES FOR FOREIGN MARKETS
From the analysis of market conditions and global market penetration, it could be
understood that Marks and Spencer followed different market entry strategies for entering the
foreign markets in China, France and UK. The global growth strategy has been used by M&S