M&S International Expansion: Market Selection and Entry Methods Report

This report analyzes the international marketing strategies of Marks & Spencer (M&S), focusing on its potential expansion into new markets. The report begins with an introduction to international marketing and the importance of a well-defined marketing mix. It then presents a comparative analysis of India and China as potential markets for M&S, evaluating factors such as economic growth, population, political stability, resource availability, and consumer demand. The report identifies direct exporting, licensing, and franchising as potential market entry methods for M&S. The report concludes that based on the comparison between India and China, M&S should expand its operation in the Indian market. This report provides insights into market selection, entry methods, and business strategies for international expansion, offering valuable information for marketing students and professionals.

INTERNATIONAL MARKETING

Table of Contents
INTERNATIONAL MARKETING ...............................................................................................................1
...........................................................................................................................................................2
ASSIGNMENT ........................................................................................................................................4

INTRODUCTION
International marketing is the practice in which manager of firm make use of different
marketing resources in order to mark their effective presence in new market in an effectual
way. To pursue such expansion, the company is first required to develop a suitable marketing
mix plan for the country in which it wants to expand its services or products (Stoddard and
Carbone, 2011). It can be as straightforward as using existing marketing strategies, mix and
tools for export on the one side, to a highly complex relationship strategy including
localization, local product offerings, pricing, production and distribution with customized
promotions, offers, website, social media and leadership.
The report will be based on the scenario where the British multinational retail
organization Marks & Spencer (M&S) is planning for expanding its operation in the new
market (About Marks & Spencer, 2016). In order to determine the best suitable option among
alternative the company is carrying comparison on the basis of attractions in between India
and China. In this report, clear understanding will be shown about the different market entry
methods that can be used by entity to expand its business operations in emerging market.
Thereafter, learning will be shown about the business strategies that company can be used in
new market.
ASSIGNMENT
Market selection
Market selection for the Mark and Spencer play an important role as the company has
to choose the best geographical market through which it can increase its revenue as well as
sales. Marks and Spencer is a British multinational retail organization that is situated at
Westminster, London. And is also listed in London Stock Exchange as well as is a constituent
of FTSE 100 index. It is specialized in selling clothes, home products, luxury food products
etc. From November onward it also had started selling branded food products such as
Kellogg's Corn Flakes etc. (Gatignon and Bowman, 2010). Historical background of the
company is financially sound. In 1998 the organization became the first retailer to make
pretax profit of £1 billion. The respective organization have around 852 stores in United
Kingdom, India, Russia, Greece, France, Poland, Hungary, Finland, Spain and also in Egypt.
The company is now planning to expand its business in other countries as well. In order to
select the best market for expansion a comparison has been carried out between two markets
on the basis of varied points which are depicted in below:

The economy of the India is prospering one because it stands at the seventh- the largest
economy. It stands at the third in the purchasing power (Gatignon and Bowman, 2010). The
service sector of the India is also going faster. The economy of the country rises because it
has young population. The growth of the service sector in India is almost increase because it
has about the 9% in 2001 and it increases up to 57% in 2012- 2013. It is also major sector in
the export of IT services, BPO services ans software services with $ 167.0 million in 2013-
2014. India is also topped in the World Bank’s growth having risen by the 7.6% in 2015-
2016. With the use of given information, cited firm can make the decision that whether it
should expand its operation in the given market or not. Mark and Spencer has taken the
advantage of this economy related to the exports and the services which they run in their
organization. (Webster, 2010).
The China is among the growing country of Asia. It is also known as maximum populated
state with population of over 1.38 billion. The country is regulated by the Communist party
of China as per the capital of the country. It is the globes second largest state by land area and
either the fourth largest by total area. In accordance with 2014 statistics, the economy of
China is among the globes highest growing economies and ranked at second number as of
nominal GDP and largest by purchasing power parity. Further, it has been ascertained that
China is world’s largest exporter and second largest importer of products and services.
Therefore, Marks and Spencer can use export method to enter into the market of China. The
government also support the country by ensuring favorable export- import policies. Hence, it
can be said that the export and import policy of company also assist manager with respect to
make the decision that whether it should expand its operation in the given market or not.
The grounds for selection of appropriate market are described as follows:
Since its inception that M&S is planning to expand its business in developing
markets. The major reason for the same is that there are high growth opportunities available
in target nation. By expanding in emerging market, company can make optimum utilization
of the available resources. Further company will be able to take advantage of economies of
scale by doing maximum production and offering the wide range of products in diverse
market. This will also help in resolving the issue of high dependency on home country
market. The prime reason for the choice of two market are discussed as follows:
 Large population base: Both India and China are listed among highest populous
countries. Here, China holds first position in terms of population and India is ranked
at second position. This clearly, indicates that company can target maximum
customers by offer their product to target group. By increasing the customer base

company will be able to boost the sales and enhance the proficiency. Furthermore, the
given thing will also increase the possibility for Marks and Spencer with respect to
develop the new target group of customers for the company.
 Political stability: From economic analysis of political situation of both the nations,
it has been identified that there is high degree of political stability in India. The
government encourage foreign direct investment so as to improve the economic state
of the country. The given thing can be proved as beneficial aspect for Marks and
Spender. This is because, due to the presence of given policy it will become easier for
enterprise with regard to get entry in the given market in an effectual way. It is
business friendly and favors new business ventures coming up with innovative
business ideas, high quality products and services. However, the country have
drawback in terms of high level of corruption. On the other hand, government of
China is also refereed as the people republic of china. The government of China is
regarded as communist and socialist. There are many restrictions in the country
regarding freedom to access internet, press etc. This will further become barrier in the
marketing activities of company in target market. Therefore, it is viable for M&S to
expand its operation in market in an effective way.
 Availability of resources: The Company can avail resources easily in the target
market. There is abundance of skilled labor in both India and China. The
unemployment rate in China is averaged up to 4.13% in China till 2016 while in India
it is 4.90%. Since, there is high supply of manpower, company can easily obtain large
number of human resources at low wages.
 Technical development: The target nations are developing at fast pace. For this
aspect, the government and corporations are focusing more on technical innovations.
In this respect a new campaign is initiated by prime minister in India named as
“Digital India”. The online shopping trends, use of mobile application for buying is
increased showing positive indications for growth in retail industry. Being technically
equipped company, M&S can get competitive advantage in India.
 High demand of the retail product: Nowadays the demand of retail products is
rising so much because the population in both the countries is very high. The income
and status of the people in both the nation is also improving a lot so this the better
option for opening the company in this country.
 High economic viability: there are large number of banks open in that country
because both are going on the phase of developing nation. The competition increases

among the bank so they provide easy finance to Mark and Spencer for opening a
company (Hartline and Ferrell, 2012).
Criteria INDIA CHINA
Population 127,42,39,769 1.39 billion
Target market Youth Working class and
professional.
Target audience Specific age group High income level
Market base
Advertisement campaign Increasing customers
through banners and social
media marketing.
Competition Low Moderate
Standardization
Products served are of standard
quality.
Meets the expectation level
of individual.
Major competitors ITC, Pantaloons, Shoppers Stop etc. Carrefour china, metro
China, CP lotus corporation
etc.
Table 1: Comparison between India and China
On the basis of comparison, it can be said that Marks and Spencer should expand its
operation in Indian market. This is because, the level of competition in India between retail
firms is lower than China. Hence, the given thing will provide opportunity to cited firm in
terms of exemplifying its presence in the Indian market in an effectual way.
Select a market entry method
There are various ways through which a company can enter into the new markets. No
one market entry method works for all international markets. Direct exporting is the most
popular, common or appropriate method used by the companies while expanding their
businesses at internal level (Internationalization and entry strategy of enterprises, 2016).
Some of the other ways joint venture, license your manufacturing. As Mark and Spencer
Company deals with the variety of the products like clothing, shoes, cosmetics, home
furniture, food and drink products, gifts shops etc. There were availability of the cheap labor

in India. This can provide opportunity to Marks and Spencer with respect to employ workers
for its shops at low wages or salary. Apart from the transportation cost of the company is very
low in the country then it affects the company relating to the export and import of the
product. There are different factors that will influence company choice of strategy, including,
but not limited to, tariff rates, the degree of adaptation of your product required, marketing
and transportation costs. While these factors may well increase your costs it is expected the
increase in sales will offset these costs.
Direct Exporting
Direct exporting is a method in which the company sells directly into the chosen
market. Many companies, once they have established a sales program turn to agents and/or
distributors to represent them further in that market (Alpert, Kuhn and Pope, 2008). Agents
and distributors work closely with you in representing your interests. They become the face
of your company and thus it is important that your choice of agents and distributors is
handled in much the same way you would hire a key staff person.
Licensing
Licensing is a sophisticated arrangement where a firm is needed to transfer the rights
to the use of a product or service to another firm. It is a particularly useful strategy if the
purchaser of the license has a relatively high share in the market the company wants to enter
into. Licenses can be for production as well as marketing (Hartline and Ferrell, 2012).
Franchising
Franchising is also a method that can be used by an organization to expand its
business in the international markets or the markets of its choice. It is a typical North
American process for rapid market expansion but it is gaining traction across the globe
(Kourdi, 2010). Following method works well for organization that have a repeatable
business model that can be easily transferred into other markets. Two caveats are required
when considering using the franchise model. In this regard, Marks and Spencer can give its
franchisee to the other individual operating in particular market where it is planning for
expansion. This option is effective as it helps in saving different cost of firm such as cost of
constructing building and making recruitment of employees etc.
Partnering
Partnering can be consider as another option which is available with cited firm.
Although firm has the ability to build its own infrastructure, but by adopting the same firm
can get thorough information about the new market and thus can effectively lean the tactic to
run its operation in new market with the help of its partner. In order to offer products and

services within that market different methods can be used by company (Kotler, 2010). The
following method take a variety of forms from a simple co-marketing arrangement to a
sophisticated strategic alliance for manufacturing. Partnering is entirely different from the
franchising because in franchising there are more restrictions on the company but in
partnering there will be very fewer restrictions. In franchising the royalty fees has to be given
while in partnering there is no payment of any kind of fees
Joint Ventures
It is another method in which where two or more organization come together to fulfill
their objectives and goals of expansion or for increasing their markets share, profitability
elsewhere. Joint ventures are a particular form of partnership that involves the creation of a
third independently managed company (Kumar, 2012). Two or more organizations agrees to
work with each other in a particular market, either geographic or product, and create a third
company to undertake this. Under such venture the companies’ shares profits and risk
equally.
Mergers and Acquisition
Mergers and acquisition is a transaction were the ownership of the organizations
transfer or gets combined with other companies. In other words, it is a legal consolidation
takes place in between two entities. Acquisition or takeover is the purchase of one business or
company by another company or other business entity (Hyun and Kim, 2011). Such purchase
may be of 100%, or nearly 100%, of the assets or ownership equity of the acquired entity.
Consolidation occurs when two companies combine to form a new enterprise altogether, and
neither of the previous companies remains independently. Whereas an acquisition occurs
when one entity takes ownership of another entity's stock, equity interests or assets.
Greenfield Investments
Greenfield investments are another for expansion of product and service into another
geographical area requiring the greatest engagement in global business. A Greenfield
investment is where you buy the land, build the facility as well as operate the ongoing
business in a foreign market. Such type of methods holds the highest risk and cost. However,
in some markets may require you to undertake the cost and risk due to government
regulations, transportation costs, and the ability to access technology or skilled labor
(Sinkovics, Henseler and Ringle, 2009). The greenfield investment method is very useful for
the Marks and Spencer because it will enable company to have direct control on the
investment. Apart from that the company also enters into the foreign market through this
investment

After going through above methods Marks and Spencer it can be suggested that it
should go for franchising methods. As this method will help it in better way to penetrate its
products into the hearts of the target customers. It is appropriate model which will help brand
in engaging with local business partner in the overseas market under franchisee agreement. It
will help brand in making low capital investment. It will also provide opportunity to business
to control the activities of franchisee and assure quality of product (Ghuman, 2010). On the
other hand, merger can be used where two companies can be combined to form new business.
M&S can merge with local retail company and take advantage of local market knowledge,
available resources of acquired company. Being associated with local company, M&S can
avail tax benefits and subsidies that are provided by local government. This also help in
getting the advantage of economies of scale.
Critically evaluating any contemporary issues that impact the chosen market-entry method
In today's International economy people are more concerned about the impacts of
culture on the global business environment. These days’ companies such as M&S are
crossing the international boundaries in order to increases their markets share and
profitability. Similarly, the retail organization M&S is using the mergers and acquisition as
mode of entering into the markets of India. In such case cultural difference are the major
factor that places impact on the mergers and acquisition methods. There are various cultural
differences such as hierarchical differences (Cultural Differences in International Merger
and Acquisitions, 2016). That is M&S is completely a hierarchical company with a clear
chain of command and respect for authority. On the other hand, the company to whom it
planned to merger or acquisition it was more of team-oriented and egalitarian approach.
Other cultural difference can be of reliability as well as achieving the highest levels of
quality, while acquiesced organization was placing its bets on catchy designs and offering the
products for competitive prices. That further resulted into conflict of orders and goals in
different departments (Hartline and Ferrell, 2012). In this regard, company can take help from
the Hofstede model. With the help of given model organization can analyse different culture
aspect associated with respective country and on the basis of this firm can transform its
operation. For India is considered as high in masculine aspect but low in feminine aspect.
This mean that here male plays very dominant role within country. Thus, in this regard cited
firm should also follow the given approach. This is being done by it by giving major or high
level position in firm to some male candidate. Through this way, firm can maintain
satisfaction level of its male employees.

Also may go through corporate culture issues such as issue of trust between employer
and employees. Mainly the reason behind such cause is of realization that the agreed term
“merger of the equals" was pretty far from reality. During the initial stages of organizational
integration, huge bulks of acquisition organization's key executives either resigned or were
replaced by Germans counterparts. was much more imposing and tried to dictate the terms on
which the new company should work (Mergers & Acquisitions: Organizational Culture &
HR Issues, 2016). Such a situation didn’t inspire trust in other company’s employees and
raised some serious communication challenges. Differences in corporate cultures and value,
lack of coordination, severe lack of trust among the employees etc. are some of the issues that
a company suffers at the time of merger and acquisition. All three resulted in communication
failures which in turn caused a sharp reduction in productivity. Elsewhere there are some
other issues that also results in the conflicts among both companies. Such as lack of cross
departmental communication, financial difficulties that is fluctuations in the exchange rates
(Ronkainen and Czinkota, 2012).
Secondly, the company has also to face social, political economical as well as
environmental issues while entering into the new market of India with the help of mergers
acquisition. Social issues can be termed as a reception of individuals in the India. If their
perception is bad about the organization that they might lead to loss failure in penetrating
their product in that markets. Same if happens with the Marks & Spencer than it is
immediately required to take measures against that and adopt them to overcome such issues.
Thirdly, the issue of political that is stability (Gatignon and Bowman, 2010). That if
there is stability of policies and practices that it would be very difficult for the organization to
set its business over there as it is very difficult to make changes in the polices from time to
time.
Also factors such as environmental climatic factors etc. also places its impact over the
functioning of the company. As in India people wore more of formal clothes so accordingly
the company will have to manage with the other organization and make changes into its
policies accordingly. And also start producing products as per the requirements of the people
in India. Otherwise one will not purchase its products and will get into losses (Stoddard and
Carbone, 2011).
Also the M&S can go for franchising method to enter into the markets of India.
However franchising leads to create some issues such as cost, lack of flexibility etc. Cost can
a disadvantage of franchising for M&S to enter into the markets of the India, this is because it
involves continuous managing of services to the franchiser and also is required to send

certain percentage of the profit to the franchiser. Although this can be a benefit for the M&S
but might get into loses if the franchisee is not able to strategies or advertise it properly into
the markets of the India. Direct exporting is another method that M&S can implement to
penetrate its products into the markets of target nation.
Leading toward a clear evidence-based recommendation
On the basis of above research, it has been determined that market of India will be
more beneficial for Marks & Spencer rather than the market of China. This is because India
has favorable international business policy, quality of skilled labor, stable economic
conditions and less competition etc. And also the market of India is efficient as it has low cost
labor force as compared to the workforce of the China. Further also determined the method to
enter into the new market those are direct exporting, franchising as well as merging and
acquiescing (Gagnon and Bowman, 2010). Although each method has some kind of issues
but that can be solved through various solutions. Such as issue faced in the merger and
acquisition is of cultural difference that can be sorted out by employing manpower of India
only. That will help in managing those issues. While coming forwards to the issue arising
through franchising are of costing and lack of flexibility. Those can also be managed by
changing polices and reducing the amount of commission etc.
CONCLUSION
Population, target market, target audiences, market base, competition as well as
standardization were the criteria takes to choose the best alternative form India and China.
Direct exporting, licensing, franchising, partnering, joint venture, mergers and acquisition are
some of the methods that the company such as M&S can use to penetrate its products into the
new markets. Accordingly franchising, mergers acquisition as well as direct exporting were
selected as a best method for penetrating the products into the markets of India. Different
marketing mix are used by the company in offering the products of their company in different
parts.

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