Global Strategy Report: Primark's Expansion Strategy in Romania

This report provides a comprehensive analysis of Primark's global strategy, specifically focusing on its potential expansion into Romania. It begins with an introduction to global strategy and then delves into the reasons for Primark's international expansion, including an evaluation of its historical performance, product range, market share, and competitive position. The report then explores possible strategic choices for the parent company, such as direct exporting, joint ventures, and strategic alliances, with justification for the preferred entry option. It also discusses the reasons for choosing Romania as a location, supported by a PESTEL analysis and an examination of the 4 P's of marketing. The report further examines strategic methods of entry, potential organizational and managerial problems, and provides strategic advice for overcoming these challenges. The analysis is based on the provided readings and aims to offer actionable insights for Primark's global expansion strategy.

Global Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Reasons for International expansion............................................................................................3
Possible strategic choices for the parent company......................................................................6
Reasons for the choice of location...............................................................................................8
Strategic methods of entry.........................................................................................................11
Problems of operating internationally........................................................................................12
Strategic advice for the overcoming of problems......................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Global Strategy refers to the various types of plans which are prepared by an
organization which helps in ensuring that the implementation of various types of
strategies can be done in a highly effective manner within the organization (Arnaud and
et.al., 2016). This report is based on Primark. It is looking forward towards expansion in
Romania. In this report, detailed analysis will be made on reasons for parent company's
international expansion, possible strategic choices for the parent company, reasons for
the choice of location, strategic methods of entry and possible consequences, potential
organizational and managerial problems. Additionally, specific analysis on strategic
choice for the subsidiary to overcome the problems will be discussed as a part of this
assignment.
MAIN BODY
Reasons for International expansion
There are various types of reasons due to which Primark wishes to expand its
operations in Romania. Some of these reasons are-
Evaluation of the company's historical performance- In 2019, Primark generated
a revenue of 7.79 billion pounds. However due to the impact created by the COVID-19
pandemic the overall profits of the company have taken a hit (Collinson, Narula and
Rugman, 2017).
Products/Services Range- There are a wide range of products and services
which are offered by Primark to its different types of customers (Cuervo‐Cazurra, Doz
and Gaur, 2020). .
Share of the market- Before COVID-19, Primark had an overall market share of
13% in the market. After the reopening of its stores, the share is down to 8%. Thus it
can be said that due to the impact of the COVID-19 pandemic the overall market share
of the company has reduced. This has created an impact on the level of revenues and
profitability in the market of the company.
Competitive Position within the industry- The different types of competitors of
Primark are Mothercare, Select Fashion, M&S, New Look, Hansae, Pimkie, M&Co.,
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Loavies, Crew Clothing and Terranova (Cuervo‐Cazurra, Mudambi and Pedersen,
2019).
Therefore, after the study of the data it can be determined that Primark is a
company which can strategically expand its wide range of operations within the market
and therefore can attain the specific goals and objectives in the future (Solodova and
Golubyonkova, 2017). Thus, it can be said that by using the strategy of
Internationalization, the company will be able to make sure that the attainment of the
goals and objectives can be done in Romania which will help in maintaining its own
level of efficiency and effectiveness (Agarwalla and Mukhopadhyay, 2017).
Porter’s Diamond Model is a model which can be used to focus on the
explanation of why certain industries in a particular nation are competitive internationally
whereas the others are not that competitive (Albino‐Pimentel, Anand and Dussauge, 2018).
The explanation of this model is as follows-
Chance- It means factors like random events, natural disasters, Scientific
breakthroughs etc. (Biermann, Kanie and Kim, 2017).
Firm Strategy, Structure and Rivalry- It mean factors like Company strategies,
Structure of the organization, Managerial system etc. (Bouclier and Passieux, 2018).
Factor conditions- It means factors like Natural resources, Human resources,
Capital resources etc. (Cesnik and et.al., 2016).
Demand conditions- It refers to the factors like Size of the domestic market,
Sophisticated and demanding domestic customers. (Chaban and Holland, 2019).
Related and Supporting industries- It means factors like Presence of
competitive related and supporting industries and Domestic suppliers that are strong
global players themselves. (De Zamaróczy, 2017).
Government- It means the factors like Government policies, Industry regulation
etc. (Dell’Acqua and et.al., 2018).
Analysis- Thus, through making the use of Porter’s Diamond Analysis an
organization like Primark can make sure that the overall assessment of the market can
be done by it in a proper manner which will thus lead towards the enhancement in the
overall level of efficiency and effectiveness.
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Possible strategic choices for the parent company
There are various types of strategic choices which are available for Primark to be
able to extend its operations effectively and efficiently in the region of its choice (Tocci,
2017). Some of the options which the company can consider in order to extend its
operations are as follows-
Direct Exporting- It is the option in which an organization can make use of either
the intermediaries or can provide its products directly to the different types of customers
in the market (Cui and et.al., 2018).
Advantages of Direct Exporting-
 In this option, there are higher chances of making profits for the company which
can offer it an advantage (Vietor, 2007).
 This option allows making the use of Improved and Faster Communication so
that the interaction with the customers can be made in the right manner (Wall
and Minocha, 2015).
Disadvantages of Direct Exporting-
 In it, additional expenses may be incurred by the company which can create an
impact on its overall profitability level.
 In it, there is a requirement of making a lot of effort so that a strong customer
base can be built which is quite time-consuming.
Joint Venture- It is a method in which the organizations can make sure that they
are able to combine their available resources in the right manner in order to successfully
enter the market so that they can enhance the overall level of profits effectively and
efficiently in the right manner (Daniels, Radebaugh and Sullivan, 2019).
Advantages of Joint Venture-
 Access to new markets and distribution networks can be provided in this
particular strategy so that the company is able to ensure that it can penetrate the
market of the country in a better way (Wheelen and et.al., 2018).
 There is an increase in the capacity in the use of this strategy because by
making its use the company can make sure that it is able to attain higher-level of
goals and objectives in the future in the right manner.
Disadvantages of Joint Venture-
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 There can be problems related with communication in this particular strategy
because if the communication between the companies in Joint Venture is not
great then this can create an impact on the overall level of operations.
 Sometimes there is no equal distribution of the work and the resources in Joint
Ventures which can create an impact on the organizations in Joint Venture
thereby hurting their prospects in a new country.
Strategic Alliance- In it, two companies come together and pool their resources
so that they can take a project which is mutually beneficial for both of them (Gupta and
et.al., 2019).
Advantages-
 Entering into new business territories can be made possible through the use of
Strategic alliances which help in ensuring that the overall level of profits can be
enhanced (Wild, and Wild, 2020).
 Entering into Strategic alliance ensures that the reduction in the level of risk can
be done in the right manner. In this way, the attainment of the various types of
goals and objectives can be done effectively and efficiently (Wei and Nguyen,
2017).
Disadvantages-
 Lack of proper communication between the various types of partners can create
a disadvantage for the businesses which are in Strategic Alliance.
 The allocation of the work and the resources is not done equally sometimes in
such an alliance.
Further, the use of following strategies can be made for the purpose of
Internationalization-
 Transnational- It is a business strategy in which the business organizations aim
to make sure that they can guide commercial transactions which are taking place
in different countries (Haq and et.al., 2020).
 Multidomestic-It is a business strategy in which the needs of a local market are
taken into account instead of making a global approach (Li and et.al., 2017).
 Global- It refers to the plan which can be used by an organization through which
the growth can be targeted beyond the borders. Therefore, it can be said that the
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use of this strategy can be helpful in the attainment of the goals and objectives
(Mariotti and Marzano, 2020).
 International- It means a strategy in which the focus is on the exporting of the
products and services in the foreign markets so that the overall goals and
objectives can be attained (Mintzberg, Etzion and Mantere, 2018).
Justification- Direct Exporting should be chosen as a preferred entry option by
Primark in order to enter into the market of Romania because by choosing this option
the company will be able to make sure that it can directly provide its various types of
products and services to the customers effectively and efficiently.
Reasons for the choice of location
There are different types of reasons for choosing Romania as a preferred choice
of expansion of business by the organizations (Vogelmeier and et.al., 2017). Some of
these reasons are explained as follows-
 FDI- Romania is a country where there is a higher flow of FDI i.e. Foreign Direct
Investment (Hamilto and Webster, 2015). Thus in this way it opens up attractive
business opportunities for the different types of companies who want to consider
investing here for the purpose of targeting maximization of their overall level of
profits (Hill and Hult, 2019).
 European Union Funding- In Romania, European Union Funding is available
which can be quite helpful in ensuring that the businesses are able to receive
their funds in the right manner (Hartman and et.al., 2017).
Country Analysis-
PESTEL analysis-
Political factors- Romania have political stability and thus this factors acts in the
favour of the company.
Economic factors- Romania has a booming economy and thus this can help in
ensuring a higher-level of economic growth quite effectively and efficiently in the
future.
Social factors- Romania have a society which accepts the entry of foreign
companies in the market which can benefit Primark.
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Technological factors- Romania has good technological infrastructure which
can benefit the company in the long-term.
Environmental factors- Romania has strict environmental rules and regulations
which are required to be followed by Primark.
Legal factors- Romania has strict laws which are required to be followed so that
the companies are able to conduct their business activities and thus Primark is
required to follow them.
Thus, from this analysis it can be concluded that Romania is a country in which
all of these factors create a high-level of influence and thus it becomes
necessary that these factors are taken into account while taking important
decisions. Based on this analysis it can be said that Romania offers attractive
opportunities for the purpose of investment.
4 P’s of Marketing-
Product- Primark provides a wide range of fashion products to the customers
which help in enhancing their satisfaction level.
Price- Primark has a price range of goods which have a low price and the goods
which have a high price.
Place- Primark has its stores which are located in the different countries of the
world which provide a variety of products to the customers.
Promotion- Primark makes the use of promotional methods and techniques
which will help in ensuring that it is able to attain the goals and objectives in the
future in the right way.
Thus, from this analysis it can be concluded that Primark has to make the use of
marketing strategy in a highly effective manner so that the attainment of the
marketing goals and objectives in the future can be done effectively and
efficiently.
Therefore, in this way it can be said that Romania is the right choice for Primark
because it offers it a wide range of opportunities and therefore this can be quite
helpful in ensuring that the company is able to make a rapid progress in the
market of Romania thereby enhancing the overall level of profitability.
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Strategic methods of entry
There are various types of strategic methods of entry which can be used by the
organizations in order to make sure that they can enter into international markets. The
different types of methods which can be used by them are as follows-
 Franchising- In this strategy, the organizations allow another company to run
their business in an international market in the exchange of a fee (Hunger and
Wheelen, 2014).
Possible consequences of using this method- If Primark makes the use of this
particular method then this can lead towards setting up of various types of franchises in
the different countries (Stadler and et.al., 2018).
 FDI- FDI refers to Foreign Direct Investment. In it, the businesses invest their
money in the international markets by identifying a particular foreign company or
the foreign assets which can be used for the purpose of investment (Johnson
and et.al., 2018).
Possible consequences of using this method- When the organizations make the
use of this method this can help a lot in ensuring that they are able to invest directly in
the different assets in the foreign countries so that they are able to maximize the overall
returns on the investments quite effectively and efficiently in the right manner.
(Tacconelli and et.al., 2018).
Primark will make the use of Franchising method in Romania as it will allow
Franchises to use its Brand Name in the market. This will allow it to target a higher-level
of growth in the country which will be helpful in ensuring that the use of this particular
strategy can be done so that the overall goals and objectives can be attained.
Problems of operating internationally
There are different types of problems which can be faced by the organizations
when they begin to operate internationally. Thus the various types of problems which
can be faced by Primark when it is operating in Romania are as follows-
Managerial problems-
 International Company Structure- When a company starts to operate its
business internationally it has to follow an International Company Structure
(Johnson, Scholes and Whittington, 2017).
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 Foreign laws and regulations- An organization needs to make sure that the
various types of Foreign laws and regulations are followed in the right manner
(Kunisch, Menz and Cannella, 2019).
 Higher-level of financial requirements- In an organization, there may be
higher-level of financial requirements when it starts to operate internationally
(Larik, 2018).
Operational problems-
 Restrictions on Exports and Imports- Government of some countries place
restrictions on the exports and imports (Lynch, 2018).
 Improper analysis of Foreign Markets- Some companies is not able to analyse
the foreign markets in the right manner which can create various sorts of
problems and difficulties for them (Mälksoo, 2016).
 Skill development of the staff members- Skill development of the staff
members is crucial because it is helpful in ensuring that the staff members are
able to attain their own goals and objectives in a right way in the future.
Therefore, the company can face this problem in Romania if the skill
development of staff members is not according to the set standards.
Analysis- Therefore, in this way it can be said that there are various types of
problems which can be faced by Primark in Romania and therefore it is quite
essential that the analysis of these problems is made in a proper manner by the
managers of the company.
Strategic advice for the overcoming of problems
The overcoming of the problems is quite important for the businesses so that
they are able to make sure that their international business can be operated in a smooth
manner (Hill and Hult, 2018). The various types of problems faced by the companies in
Foreign Countries can be solved in this manner. Primark can make use of the following
strategies for solving its problems related to Business in Romania-
 Following a right structure- It is important for the organizations that they are
able to follow a right structure effectively and efficiently in the right manner
(Pananond, Gereffi and Pedersen, 2020).
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 Following Foreign Laws and Regulations- It is crucial for the firms that they
are able to study the foreign laws and regulations quite effectively and efficiently
so that a proper strategic action can be taken by them (Porter, 1998).
 Arrangement of funds- It is important for the different types of organizations
that they are able to arrange their funds in the right manner (Radebaugh, Sullivan
and Daniels, 2019).
 Following of Export-Import Policy- It is quite crucial for the organizations that
they are able to follow the Export-Import Policy so that they can operate their
international business successfully (Ritz and D’Andrea, 2018).
 Analysis of foreign markets- In the organizations it is quite crucial that the
analysis of foreign markets is done so that the international business can be
operated in a proper manner (Singh and et.al., 2019).
 Skill development sessions for the staff members- In the firms, it is essential
that the overall skill development of the staff members can be done in a proper
way so that the goals and objectives can be attained in the future.
Thus, in this way Primark can make sure that the solutions to the problems can
be found so that it is able to manage out its business operations in a proper
manner effectively and efficiently in Romania. Therefore, in this manner the
company can make sure that the attainment of the future goals and objectives
can be made and thus this will be quite helpful in ensuring that the overall
efficiency and effectiveness can be raised in the country. The company has to
make sure that it attains a much-required strategic and competitive edge over the
competitors in the market.
CONCLUSION
From the above report, it can be concluded that Global Strategy refers to the use
of different types of methods and techniques so that the organizations are able to
operate their business globally in a highly effective manner. There can be different types
of reasons due to which the companies can target international expansion. There can
be various strategic choices available for the company for this purpose. There can be
different reasons for choosing a location for the company. A lot of strategic methods can
be used with varying consequences. The companies can face a wide variety of
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