River Island's Operational Strategy for Expansion in Malaysia Report

This report provides an in-depth analysis of River Island's expansion strategy, focusing on its potential entry into the Malaysian market. The report begins with an executive summary and table of contents, followed by an introduction to River Island and its current market position. The core of the report examines the market entry strategy, emphasizing the advantages of franchising for rapid expansion with reduced investment. It then assesses River Island's strengths, such as brand recognition and customer-friendly stores, and weaknesses, including seasonal store layouts and customer service. The report outlines corporate objectives, including market dominance and customer-centric development. The operational strategy and organizational design are also discussed, along with the scope for expansion and financial requirements. The report concludes by reinforcing the benefits of franchising as the most suitable market entry method for River Island in Malaysia.

Running head: OPERATIONAL STRATEGY FOR RIVER ISLAND
OPERATIONAL STRATEGY FOR RIVER ISLAND
Name of the Student
Name of the University
Author Note

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OPERATIONAL STRATEGY FOR RIVER ISLAND
Executive Summary
The analysis in the report is based on the expansion policy of River Island which is an UK
based organization. The organization operates in the fashion retail industry and they more
than 60 years of experience in this field. The company is planning to expand its operations in
Malaysia. The different aspects that are analysed in this report are based on the market entry
strategy of the organization. The strengths and the weaknesses of River Island have also been
analysed in the report. The strategy of operations of the company and the objectives are also
discussed in the report. The organizational design is also formulated with respect to the
market in Malaysia. The scope of expansion and the financial requirements are also
discussed. The report is concluded with the learning that franchising is the best way of
entering the market and this will require less investment as well.

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Table of Contents
Introduction....................................................................................................................3
Market Entry strategy for River Island in Malaysia.......................................................3
Strengths and Weaknesses of River Island....................................................................5
Corporate Objectives of River Island.............................................................................7
Operational Strategy.......................................................................................................8
Organizational design of River Island............................................................................9
Scope for expansion of River Island in Malaysia..........................................................9
Financial requirements of River Island........................................................................10
Staffing policy of River Island in Malaysia.................................................................10
Conclusion....................................................................................................................11
References....................................................................................................................12

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Introduction
River Island is one of the largest and famous fashion retailing brands in the United
Kingdom. The organization has more than 60 years of experience in the retail market sector
and it is considered to be one of the most loved and well-known brands on High Street. River
Island is one of the most renowned retail brand for affordable and stylish fashion. The unique
features that are brought to the collection help the brand to stand out from the other retailers
on High Street. The customers are able to rely on the occasional wear of the brand and going-
out looks as well (Aghdaie & Alimardani, 2015). The other products of the organization
include, denims, shoes and bags as well. River Island can aim to bring the original and new
fashion to the customers along with great design. The products of the organization are
designed within the premises as River Island has one of the biggest teams of designing and
they proudly deliver fabulous fashion related items in the stores as well as on the online
platform. River Island has more than 350 stores in the United Kingdom and Ireland. The
organization also has its operations in the Middle East, Europe and Asia. The company has
around six online websites that operate in more than four currencies (Aguirregabiria &
Suzuki, 2015).
The report is based on the expansion plans of River Island in Malaysia. The
operational strategy of River Island in the new area of expansion will also be discussed in the
report with the help of which it can continue its functions in Malaysia.
Market Entry strategy for River Island in Malaysia
The analysis is based on the plans of River Island related to expansion in Malaysia.
The market entry strategy is the most important factor related to the expansion of any
organization. The strategy related to market entry can be defined as the method related to the
delivery of the services or goods to a relevant target market in a new country. The

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organizations which plan for expansion need to devise appropriate strategies for market entry
so that they can increase their profitability (Ahi et al., 2017). The major aims of an
organization when they enter a new market are, mainly, to increase their sales, to get business
stability and to increase brand awareness as well. The market entry strategies need to be
developed by the companies by analysing the competitors and the potential customers or
target market. The major factors which are relevant in deciding the viable entry to the market
include factors like, localized knowledge, competition, price localization and export
subsidies. Entry of an organization to a completely new market is related to many types of
risks which include systematic risk, weather risk, sovereign risk, liquidity risk, cultural risk
and foreign exchange risk (Blackburne & Buckley, 2017).
The major competitors of River Island in UK are H & M Clothing Company, Asos,
Forever 21, Gucci and Topshop. The closest competitor of River Island amongst all these
retail organizations is the H & M group. The H & M Group is a Swedish multinational
organization who also have their operations in the clothing retail sector. The major target
related to growth of H & M group is to increase their sales by 10 to 15% within a year and
increase their profitability as well (Cavusgil et al., 2014). The company had opened its stores
in 2017 six new locations in the world including Taiwan, Turkey, Macau, Hong Kong,
Malaysia and Singapore. The online store of the organization has also been expanded into as
many as 41 new markets.
The expansion strategy that is adopted by River Island clothing retail store for the
expansion plans in Malaysia is franchising. Franchising can be defined as the process by
which an organization can aim for rapid expansion in the markets. Franchising is the best
possible way to enter a new market area with the least investment. This process is applicable
for business models which are repetitive in nature and are easily transferrable to other
markets (Chen et al., 2017). The two major aspects of the business that are required for

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franchise model are, strong recognition of the brand of the organization in market and future
competition to be created in the franchisee. Franchisee is mainly done in a long-term
partnership basis and the nature of relationship can be maintained based on the
responsibilities that are taken by the partners. A fee related to license or purchase fee is paid
by the franchisee to the franchisor (De Villa, Rajwani & Lawton, 2015).
River Island can adopt this method to expand its business in Malaysia as this is a
complete new market for the organization and they need to understand the needs and desires
of the customers of that area. Therefore, franchising is the best possible manner of expanding
the business in this area. River Island can further think of making a greater investment in this
area after they have a created a base for their products (Deutschmann, 2014).
Strengths and Weaknesses of River Island
Strengths of River Island
River Island is a clothing retail organization which is in the business for more than 60
years and they offer affordable fashion for the consumers of the United Kingdom. The major
strength of the company lies in the large window area that they can display their products in a
proper way. The largest store of River Island is located on Oxford Street and this store
provides huge variety for the citizens of UK. The stores of River Island have more than four
locations of cash desk. The fitting room of the stores are located in the first floor of the stores
so that the footfalls of both the floors can increase (Frambach, Fiss & Ingenbleek, 2016). The
structure of the stores is pleasing to the eyes and the entire is properly lit along with the
display of huge variety of menswear, womenswear and kidswear. The visibility of the staff
available in the stores is quite high on the major areas of service in the stores. River Island
has great brand recognition which can be of immense help for the expansion plans of the
organization. The stores of River Island are quite customer friendly and the customers can

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also relax in the areas within the store (Gollnhofer & Turkina, 2015). The other internal
strengths of River Island include, the strong builds of the outfits which are displayed by the
organization in the carriages and the walls. The denim department of the stores is strong in a
visual manner and the shopping experience of the consumers is quite good. The boutique line
offered by the stores has the ability to make the brand feel more exclusive for the
organization. The layout of the floors and the placement of fixture makes the store look more
appealing to the customers (Holtgrave & Onay, 2017). The company offers packages and
offers related to the products all throughout the year. The standards of the stores are quite
high as compared to the size. The quality and customer friendliness of the stores of River
Island are the major factors for strength and recognition of the organization. The external
strengths of clothing retail store include, the huge number of footfalls per week in the stores.
The average footfall in the stores of River Island per week amounts to 4 million and the
annual footfall amounts to around 200 million (Kim, 2018). The stores are located in the
prime area of the city which is able to attract many customers as the restaurants and many
other entertainments related organizations are not quite far away.
Weaknesses
The layout of the stores is seasonal in nature which can affect the sales of the products
and the profitability of the organization. The knowledge of the staff regarding the different
products is not that high which can affect the customer base of River Island. The build of the
store is not that strong. The interaction of the staff with the customers is not strong enough so
as to attract more and more customers to the store. The staff who are present in the stores are
not proactive enough to interact wisely with the customers (Kim, Min & Chaiy, 2015). The
major weakness that has been analysed in the report is the weak customer service of the
organization which can lead to a loss of loyal consumers for the store.

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The strengths that are already possessed by River Island can be improved so that they
can gain customers in the new market area. The attractive stores of the organization will be
able to attract customers in Malaysia and the company can use its brand recognition to attract
more customers towards the stores (Miller & Yang, 2016).
The major weakness of the organization related to customer service needs to be
improved as this is the major and most important part of the business for any retail store. This
will help the organization in creating a new customer base and increase their profitability.
Corporate Objectives of River Island
Corporate Objective is essential in nature for River Island Company as this helps in
setting realistic and defined goals that is necessary. The corporate objectives have to be
analysed, as that will help in influencing the strategic objectives and decisions of company.
They can gain the corporate objectives with analysis of specifying the period for achieving
the desired goals in an effective manner. The steps have to be analysed by the employees of
the organization that will lead to improvement of the assessments that is made by the
company.
Protection and improving the position of River Island in such a manner that helps
them in becoming number one retail stores both online along with offline
Building a strong momentum in the growing fashion retail market as this will help
them in making their position in fashion retail market
Intensifying the efforts of the organization in developing the needs and wants of the
customers in the competitive market (Slack, 2015)
Exploring the market in such a manner that this helps River Island for the different
products that are designed in such a manner that will suit the requirements of different
customers in the market (Sekaran&Bougie, 2016)

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Manage along with direct the market along with international business of the
company as this will continue the development (Slack, 2015)
River Island needs to continue the drive for increased margins with help of inventory
management and deliver better products in the market as well
Operational Strategy
There are different kind of operational strategies that has been adopted by River
Island fashion retail store. With the help of development of different kind of operational
strategies, the respective organization can examine along with implement efficient and
effectual systems for usage of different resources for the work process.
There can be different low cost strategies that are helpful in gaining sustainable
competitive advantage in the future. This kind of strategy will help in improving the
loyalty towards the potential customers in the market. This will help in reducing the
inventory and ordering cost and gain profitability in the entire market (Grant, 2016).
Proper stock keeping and be customer centric in nature is essential as this will provide
different essential information. River Island needs to provide convenience in selection
of different products in such a manner that this will help them in customizing the
products and services provided by them (Wu et al., 2015).
Proper mass customization is essential in nature, as this will help in providing
opportunity to offer different collection of clothes along with accessories. As River
Island is operating in both offline and online market, it is necessary for them to attract
the customers in so that this will help them to generate profit.
Proper relationship with the customers is essential in nature, as this will allow them to
gain competitive advantage in respect with other companies. The different operating
models can be used by River Island in such a manner that this will help in generation

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of integrated operations. The introduction of e commerce solutions by designing
website in a different manner (Sekaran&Bougie, 2016)
Organizational design of River Island
The process by which the organizations can achieve the perfect combination with the
help of integration and differentiation related to the operations of the organization with
respect to the uncertainty in the external environment. The two types of organizational
designs that are implemented on the organizations are, traditional and contemporary. The
traditional type of organizational design includes, simple structure, divisional structure and
functional structure. The contemporary structure includes, team structure, project structure,
matrix structure, learning organization and boundary less organization (Ozalp, Horwitz &
Malerba, 2014). The type of organizational design that is applicable for River Island in
Malaysia is the Matrix Structure. The management staff will be recruited from the United
Kingdom so that they can take care of the different operational processes and take decisions
related to financial investments and staffing as well (Griffin & Pustay, 2013). The customer
service staff will be recruited from the local employee base so that they can connect
successfully with the customers and increase brand loyalty. The employees will be selected
based on the specialised fields so that they can maintain the operations and increase the
profitability of River Island (Stevens & Makarius, 2015).
Scope for expansion of River Island in Malaysia
Malaysia has proved itself to be a great market for retail business after China and
India. Malaysia has been placed in the third position with respect to retail investment in the
whole world. The sales in the retail industry has grown by 3.8% in the year 2016 and the
sales was driven by the 6.1% increase in the private consumption of the products (Upson,
Sanchez & Smith, 2017). The retail market of Malaysia has been growing for the last few

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years after overcoming the slight fall in the domestic market. River Island therefore has huge
prospects in this country to grow and increase their profitability as well.
Financial requirements of River Island
The franchising of an organization requires different types of costs which can involve
low investment or high investment as well. The major cost related to this type of business is
the cost of entry which varies greatly. The franchise fee is another major factor related to the
financial requirements of the organization. The staff requirement is another major factor that
affects adds to the costs of the company (Yoboue, Yi & Antwi, 2017). The other major costs
include the taxes that are needed to be paid, the establishment costs.
The cost of entry – 20 million Malaysian ringgit
The cost related to staff – 10 million Malaysian ringgit
The establishment cost – 50 million Malaysian ringgit
Staffing policy of River Island in Malaysia
The staffing of the management of River Island will be done in an ethnocentric
manner, which means that the management staff will be hired from UK itself as they have
knowledge related to the processes of the organization. The management staff need to
understand the needs and desires of the other staff. The organizational structure can be
designed properly with the help of the management staff (Slack, 2015).
The staffing of the customer care executives or the sales executives needs to be done
in a polycentric manner. The major reason being that the Malaysian staff will be able to
understand the needs and the desires of the Malaysian customers can much easily and they
can interact properly with them. The major weakness of River Island related to poor customer

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service can also be overcome with the help of this strategy of staffing (Sekaran&Bougie,
2016).
Conclusion
The report can be concluded by stating that River Island has huge prospects in the
Malaysian retail market. The organization has some strengths related to the recognition of its
brand and experience in the retail market for more than 60 years. On the other hand, the
company has a major weakness which is related to the weak customer services and
interaction with the customers as well. This type of customer service has resulted in the loss
of many customers of the organization. The staff have less knowledge related to the products
and services that are offered in stores. This issue related to the company can be solved with
the help of recruitment of local staff in the store that River Island is planning to open in
Malaysia. The budget related to the opening of the new store also has been decreased by
franchising its operations in Malaysia. Therefore, it can be said that Malaysia is the suitable
market area for the expansion of River Island.