Next Plc: A Report on International Business Expansion Strategies

This project report examines the concept of international business, focusing on how Next Plc, a multinational retail company, can successfully operate and expand in international markets, specifically South Korea. It outlines internationalization approaches, the rationale behind global expansion, and potential growth opportunities. The report also identifies barriers and obstacles Next Plc may face, such as cultural differences and high competition, and evaluates implementation strategies for navigating these challenges. It further assesses the advantages and disadvantages of expanding into South Korea, including its modern infrastructure and trend-conscious customers. The study concludes by emphasizing the importance of adapting to local market conditions and leveraging government incentives to ensure sustainable business growth. Desklib offers similar solved assignments and study resources for students.

INTERNATIONAL
BUSINESS

EXECUTIVE SUMMARY
The project report will define the concepts of international business and how a business can
successfully operate in international market. The project highlights all necessary information
which defines the internalization approaches which can be followed by an organisation to expand
their business in international markets. The study defines the purpose of companies behind their
global expansion and how this global expansion can be helpful in attracting business growth
opportunities and meeting organisational objectives. The report will also outline various barriers
and obstacles which can be faced by an organisation in the business expansion into global
markets and the approaches of internationalisation which will be followed by an organisation to
function and run a business in global industry.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION ..........................................................................................................................4
ANALYSIS AND DISCUSSION...................................................................................................4
Company overview and rationale for going international...........................................................4
Recommendation for place for business expansion and justification..........................................5
Define the barriers which will be faced while expanding internationally...................................8
Critically evaluate an implementation approach for internationalization process for specified
target market................................................................................................................................9
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
International business refers to the trading of good, services, technology and knowledge
across national borders of two or more countries. The mediums through which an organisation
can operate internationally are exporting, licensing, franchising and Foreign Direct Investments
(FDI). The business operating at international level are large in size and creates more
employment opportunities through which unemployment rates can be reduced. International
business is the opportunity for an organization for their business expansion across different
borders and global markets which also helps in increasing the revenues, ensure effective risk
management strategies, disposal of surplus goods and supports in decreasing the competition.
Next Plc formerly known as J Hepworth & Sons is a public limited multinational company
which offers clothing, footwear and home products. The company was founded by Joseph
Hepworth in the year 1864 in Enderby, England, UK. Next Plc is current operating as one of the
largest clothing retail companies which is operating in UK (Apetrei, Kureshi and Horodnic,
2015). The study will revolve around business expansion in international markets and
identification of such obstacles which are faced while business expansion and how these
approaches can be implemented for internalization process.
ANALYSIS AND DISCUSSION
Company overview and rationale for going international
Next Plc is a British retail brand which was established in the year 1864 in England, UK.
The retail company offers wide variety of products range and their product line involves
clothing, home decor products and footwear. Next Plc was established by Joseph Hepworth and
is operating in different regions such as UK, Europe, Asia and Middle East. In the year 1864, the
company was established and operated under the name of Joseph Hepworth & Sons which was a
partnership with James Rhodes and this partnership agreement further dissolved in the year 1872.
Next Plc is a public limited company and the owner is Next Holdings Limited. In the year 1986,
the parent company Joseph Hepworth & Sons changed its name to Next Plc (Buckley and
Ghauri, 2015). Due to rapid incline in technology and digitalization, the company has also
expanded their business through incline platforms in the year 2018. the operations of Next Plc
can be broadly classified under three channels which involves more than 550 branches in UK,
Next International with more than 180 stores and Next Directory with more than 3 million active

customers. The company is also operating their stores and e-commerce platforms for Victoria
Secret in UK. Next Plc focuses on addressing all business related social, ethical and
environmental matters through which business can be operated and sustained for longer time
span in the industry. The company focuses on adding value of business by offering more product
choices, establishing strong third-party label relationship and by responsibly sourcing the
materials through which customer demands and satisfaction can be met and this will also be
helpful in enhancing the brand image in the industry.
The rational for making business operate in internal borders and markets is to target more
geographical area and have wider target audience through which higher revenues can be
generated and this will also be helpful in strengthening the brand image in the industry. By
business expansion in the global markets, it will support Next Plc to identify opportunities which
will be helpful in diversifying the markets and ensure more stable revenues which can be earned
by the company (Buckley, Enderwick and Cross, 2018). Next plc with the help of business
expansion in global markets will help in providing a reliable service to international customers of
the company and it will also support business in building global reputation which will be helpful
in attracting higher number of customers. Next Plc while expanding their business in
international markets will help the business in raising their potential customers by enlarging their
growth potential which will be a helpful strategy for increasing the potential clients. As it can be
seen that internalization is one of the important factors and its importance has been increased
rapidly and it holds the tendency of ensuring borderless world and thus, it helps organisation to
increase their sales. This helps in acquiring resources and it will also help Next Plc in reducing
the competitive risk which can hinder the profitability and goodwill of the company.
Recommendation for place for business expansion and justification
International business expansion is the expansion of business services across international
borders through which the organisation can generate higher revenues and target more diversified
market.
Next Plc will be expanding their business in South Korea through which will focus on
generating higher revenues and gaining competitive advantages. The business expansion in the
South Korean market will help the company in diversifying their target market and product range
which will also help them in attracting a greater number of customers and increase the
profitability of business (Cantwell, 2017). As Next Plc will be expanding their business in

international markets of South Korea, the company has faced many advantages as well as
disadvantages which are discussed below:
Advantages of business expansion of Next Plc in South Korea
Internationalization is the business expansion method which helps the company in
diversifying their target market and operate into new market through which they can attract more
number of customer and safeguard the brand image of the company in international borders.
Some of the benefits which has been faced by Next Plc while expanding their business in South
Korea are outlined below:
 Great infrastructure- As the infrastructure in South Korea is modern and well
maintained which supports the organisation in managing their logistics by focusing on
maintaining effective communication and management of all activities through which
goods can be transported regularly through which the company can meet customer
demands continuously (Derudder, B. and Witlox, F., 2016). In relation to Next Plc, the
company derived many benefits and infrastructure has been one of the primary advantage
which has helped the company in maintaining effective management of all operations and
logistics activities.
 Perspective and educated customers- As the customers in South Korea are highly
literate which makes it easier to understand demand of customers as companies
communicate values to customers through which organisation can understand the
demands of the customers and also helps in meeting their requirements. In relation to
Next Plc, the company has driven many advantages as the customers in South Korea are
highly literate and educated which supported in meeting the organisational objective,
generate higher revenues and maximize the profitability of business.
 Populated cities- As Next Plc expanded their business in South Korea, this has been one
of the major advantage as the company expanded their business in populated city where
number of people are high and this will help in generating higher revenues and this will
also be helpful in attracting more number of customers (Gligor, D. M., Esmark, C. L. and
Gölgeci, I., 2016). By expanding the business in South Korea, it offered opportunity for
Next Plc in targeting and attracting higher number of customers and also supports in
building positive goodwill in the industry.

 Strategic location- By opting South Korea for business expansion, Next Plc will be able
to strengthen their roots in the market as it will create an opportunity for business for
attracting greater number of customer and gain a foothold in Asia.
 Government incentives- By following all laws, regulations and all governmental plans
and policies, it will help Next Plc in operating in economic free trade zones and tax
rebates while running their business in South Korea(Kingsley, Noordewier and Bergh,
2017). This will also be helpful in safeguarding the business position and brand image of
the company in the industry.
 Higher income source- Next Plc can generate higher income through the sources while
operating in South Korean market as this market is based on strong customer culture
where the demand of clothing products and services are higher which will also be helpful
in leading to incline in sales of the company.
 Diverse market with variety of industries- The market of South Korea has derived
many advantages for the organisation by offering diversified product range and by
providing different type of products, it helped the organisation in getting higher customer
attention and establish strong brand image of the company.
Disadvantages of business expansion of Next Plc in South Korea
International business expansion has derived many different factors which has created
several adverse impacts on the sustainability and profitability of the company. Some of the
benefits which has been faced by Next Plc while expanding their business in South Korea are
outlined below:
 High competition- As the competition in the global markets and in South Korea is high,
this has affected the revenue generation and easy establishment of the brand in the
industry and it s one of the responsible factor which has divided customer attention.
 Cultural difference- The cultural difference between the parent and subsidiary company
are responsible for affecting the continuity of business operations and are also responsible
for business facing loss (Kolk, Rivera-Santos and Rufín, 2018). In relation to Next Plc,
the company was not able to manage the cultural differences which has affected the
ability of management to communicate and this also created direct impact on the progress
towards the achievement of organisational objectives.

 Trend conscious customers- As the customers in the market of South Korea are more
trend conscious and latest clothing trends, this has created an impact on the sales and
revenues of the company. In relation to Next Plc, the company has faced many issues
regarding the changing trends and demands of trend conscious customers which has been
a challenge and this factor was responsible for facing financial losses while expanding
their business in the markets of South Korea.
Define the barriers which will be faced while expanding internationally
International business is the source of production and sales of goods and services among
different countries and oversees. Due to difference in laws, policies, languages, cultures and
many other factors, it can create a barrier for an organisation while expanding their business
globally and this can create an adverse impact on the profitability and success of business. Some
of the barriers which were faced by Next Plc, while expanding their business in the retail
industry of South Korea are discussed below:
 Cultural gap- As companies operating in different locations reflects their own specific
culture which has been followed by the management while operating in the specific
location and this has acted as barrier. The cultural gap also creates a barrier while
managing teams in global locations and these differences can also be based on hours and
workdays which leads to lack of cooperation and it creates more difficult situation for
operating in the global markets (Malyarets, L and et.al., 2017). In relation to Next Plc,
the company has undergone through various cultural gaps as due to higher difference in
the culture and their beliefs which has been a barrier as the company expanded their
business in South Korea which affected the continuity of operations.
 Language barrier- This has been of the major barrier for business expansion in the
global markets as the spoken language of the country can create a direct influence on the
sales and continuity of operations of the company through which the company can face
huge loss and this can also create and portray negative brand image of company in the
industry. In relation to Next Plc, the company will face many linguistic barriers due to
language gaps and this also created the inability to understand the opinions and ideas of
others and lead to inability to meet customer demands.
 Management of global teams- This has been one of the barriers which has created
challenge while managing the employees due to cultural differences, language barriers

and varying levels of technology access and reliance (Meyer, K. E., 2017). The inability
to maintain the strong working relationship with global teams creates a challenge for
Next Plc while operating in the global markets.
 Physical distance- The physical distance acts as barriers which affects the
communication, logistics and other activities of the business. In relation to Next Plc, the
company has faced physical distance as a barrier which as affected the distribution
partners, logistic cost and cost which has been used and set by the company for operating
in the global markets of South Korea.
 Local competition- The company will have to deal with import fees and tariffs and
creates barrier while dealing with two currencies which can negatively influence the sales
and revenues of the company while expanding their business in global markets
(Nambisan, Zahra and Luo, 2019). In relation to Next Plc, the company faced high local
competition as there are several other companies which are already operating locally in
South Korean market and this also influenced the profitability of business.
 Tax codes and compliance barriers- Dealing with tax, fees and tariffs for international
trades has been barriers for the company in their business expansion in different market.
In relation to Next Plc, the company has faced many barriers regarding the completion of
tax codes and compliance barriers due to the inability to understand all barriers and the
lack of awareness of trading standards and regulations which must be followed by the
organisation while operating in the international markets.
 Supply chain risk and uncertainty- The barriers such as imports, exports, shipping and
logistics creates a barrier for a company operating across national borders which also
influence the continuity of operations of the company. In relation to Next Plc, the
company faced many barriers of supply chain management as this has affected the ability
to import, export and ship materials to companies operating in global markets.
 Operational risk with hiring staff- This has been one of the barriers which was
responsible for increasing the pressure and lack of personnel can affect the operational
activities and continuity in the business operations (Nielsen and Raswant, 2018). In
relation to Next Plc, the company faced barriers and challenges of operational risk while
hiring staff in global markets as due to cultural and language difference this has affected

the ability to form an effective communication and select the right candidate for
managing the daily operations of company effectively.
Critically evaluate an implementation approach for internationalization process for specified
target market
Internalization has been one of the activities which defines the designing of a product in a
manner which can be readily consumed in different countries. The process of internalization
supports business in expanding their global footprints beyond domestic markets through which
customer’s preferences can be determined. Internalization is the practice of designing products,
services and internal operations which helps in facilitating business expansion in global markets.
Internalization can be done through various processes and approaches through which business
can target market and expand their business across nations and borders. Some of these
approaches are discussed below:
 Exporting- When a business intends to expand internationally, exporting is often the first
step. To explain it another manner, exporting means selling to clients outside of the
country, either directly or indirectly via overseas distributors or agents (Roberts, J. and
Dörrenbächer, C., 2016).
Merits: Exporting is another approach of internationalisation and business expansion in
international markets which helps in expanding market by targeting large economies of scale and
engage in more diversified market.
Demerits: Exporting has driven many drawbacks which involves lack of focus and
administration cost can be increased due to export regularization and trading cost.
 Licensing- Licensing is another option for expanding global businesses. A licensor offers
a foreign company the right to utilise intangible (intellectual) property for a certain period
of time in exchange for a fee in the case of international licensing.
Merits: The approach of business expansion through licensing will help the company in
generating opportunity from passive income which helps in reducing risk, supports in easy entry,
into foreign market, increase as self-employment opportunities, offer freedom to develop unique
marketing approach and in creating new business opportunities.
Demerits: Such factors are responsible for increasing cybercrime and IP theft and also creates
and dependency upon the licensor licensee is accountable for taking all risk in arrangement.

 Franchising- In franchising, a parent corporation offers another company/firm the
permission to do business in a particular manner (Santacreu-Vasut, Shenkar and Shoham,
2017). Franchising differs from licensing in that it usually involves the franchisee
agreeing to much stricter operating standards than licensing. Furthermore, whereas
licensing is more popular among manufacturers, franchising is more prevalent among
service businesses such as restaurants, hotels, and rental services.
Merits: Franchising can support a business in exploring a new career in new industry as it
involves lower risk, support in maintaining loyal customer base and establishing a strong brand
image.
Demerits: The level of investment at initial level done in this approach of internationalisation
is high, the creativity and innovation is relatively low and financial information is shared with
corporates.
 Foreign Direct Investments (FDI)- Foreign direct investment (FDI) refers to operations
carried out in one country by companies headquartered in another country. FDI often
comprises the development of new infrastructure in another country.
Merits: Foreign direct investment is helpful in economic growth, development of human
capital, incline in exports, exchange rate stability and supports in creating a competitive market.
Demerits: While expanding business in the market of South Korea through foreign direct
investment, this can create a negative impact on business financial stability as it involves higher
cost, leads to hindrance of domestic investment, drives higher risk from political changes and
negative exchange rates.
In relation to Next Plc, the company will expand their business through franchising
approach and this approach will be implemented to target audience at larger geographical
market. By opening a franchise in the international market, it will be helpful in attracting higher
number of customers through by targeting them at larger geographical area and this will help in
achieving the organisational objectives (Shams and et.al, 2021). Next Plc will be using
franchising method by which they will strengthen their roots in markets of South Korea and meet
the demands of customers on time which will help them in maintaining the goodwill in the
industry. By implementing Franchising international process, it will help Next Plc in establishing
strong loyal customer base and also support in minimising the risk which can hinder the
continuity of operations and brand image of the company in the industry. This will also be

helpful for increasing the profitability of business and creating a platform, where higher
customer attention can be gathered.
CONCLUSION
From the above-mentioned information, it can be concluded that international business is
the operation of business activities across the national borders through which an organisation can
engage with larger number of audience and target more geographical area which will help in
strengthening the grand image of the company in the global markets. It can be seen that there are
various barriers which has been faced by the organisation while expanding their business in the
global markets and this has created an adverse impact on the profitability of the company. The
barriers have been obstacles which has adversely affected the continuity in operations of the
company and thus obstacles have also affected the profitability and success of the organisation
while expanding their business in the market of South Korea.