INTERNATIONAL RETAILING
MARKS & SPENCER
CASE STUDY (re do) Sem - iii
Submitted By: Shubhankar Mishra Course: PGDRM (04) Roll No: 51
1. What are the factors which led M&S to internationalize?
Ans. Internationalization of the company was mostly due to the domestic factors. Internally, the company started to feel that it has saturated to domestic market and that expansion will have to come from overseas. Externally, some Labor Party members were suggesting nationalizing the leading domestic retailers. Internationalization was, therefore, seen as a tool of diversification.
2. What is the sequence of country entry and why was that sequence selected?
Ans. Sequence of country entry is: i. ii.
Canada (1973) European market (1975) France Belgium Spain Germany
iii.
United states (1988)
iv.
Far East Japan Hong-Kong
This sequence was selected because M&S saw these countries as a developed economy like their own country. They started with Canada and then with European countries because people living in these countries having high incomes, good infrastructure and use of English language. So they thought to expand through these countries.
3. What are the modes of entry used in the various countries and why?
Ans. There are many modes of entries used in the various countries are: i.
Exporting and Franchising : - these are less risky modes of entry in markets where market and political risk are high.
ii.
Sole-ownership and Acquisition : - where the purchasing power is high, large population and developed infrastructure.
iii.
Joint venture : - when there is less knowledge about the culture and political climate of a country.
4. Which host country factors M&S seems to value and which do they don’t?
Ans. M&S seems to value the factors of France as they adopt the store to French life styles. The French stores offered snugger fit clothing, a wide selection of French wines, and less British imports.
i.
ii.
They also valued the factors of US after buying Brooks Brothers they did not change the name of the US chain, probably because of their loyal customer base.
iii.
They don’t value the factors of Canada because they thought that the economy and infrastructure of Canada is somewhat like UK , which will lead to the closing down of the stores in Canada.
5. Describe and explain the adaptation to M&S business model in different countries.
Ans. i.
Canada: - M&S enters in Canada through acquisition of Canadian people’s Department stores (budget retailer), DiAllaird’s (older women’s store), and Walker’s store (modeled after British M&S format).
M&S perceived little cultural distance; they transferred their business formula almost unchanged from the UK to Canada. They quickly found that even Canada requires some modifications. ii.
France: - M&S entered their in 1975; they decided to adopt the store to French life styles. The French stores offered snugger fit clothing, a wide selection of French wines, and less British imports.
iii.
6.
United States: - there also they entered through similar strategy they used in Canada, acquisition. M&S bought Brook Brothers a department store, to market their clothes. But they did not change the name of the US chain because of their loyal customer base.
Is M&S multinational or global retailer? Explain and defend your answer.
Ans. M&S is a multinational retailer because they are having different strategy for different countries. Example: i.
In Canada, they customize the products according to the needs of the people.
ii.
In France, M&S decided to adopt the store to French life styles.
iii.
In United States , they did not change the name of the acquired department store because of their loyal customer base. M&S invested in a new warehouse management system to increase service efficiency.
7. Where is M&S on the internationalization life cycle? Explain how you formed your answer.
Ans. i.
ii.
8.
M&S is on the maturity stage of internationalization life cycle in case of European countries and United States because they are dealing in international market since 1973. And they are having their outlets in most of the European countries. M&S is on the growing stage of internationalization life cycle in case of Asian countries because they are having less number of stores in Asian countries.
Should the company standardize more of their international operations? Compare Europe and Asia .
Ans. No, the company should standardize some of their international operations because there is a difference in the market conditions in Europe and Asia. Most of the European
countries are developed so that the purchasing power of the people is high, good infrastructure is there. But in Asian country, most of the countries are developing so that the purchasing power of the people is less. Most of the sourcing of products done by M&S is from UK, so that the price range of those products will be higher. These products are easily saleable in European countries because of higher purchasing power of the people. It is necessary for M&S that they will manufacture or acquire products from the local vendors of an Asian country so the cost of the product remains low and people will prefer to buy their products in Asian countries.
9. What should be the future strategy of the firm?
Ans. i.
ii.
iii. iv.
M&S should acquire top management personnel from the host country. So that M&S will have better knowledge about that countries scenario. M&S should increase advertisements, which will help them to be recognized by the people of a country.
Decentralization of authority to the employees. M&S should buy their clothes from the domestic manufacturer so that the cost of the product decreases or lower down. And new innovations and ideas took place.
10.
Evaluate top management’s response to the crisis?
Ans. i.
ii.
iii.
Job cuts: - company announced to cut 15% of its 1900 managers jobs. Senior management numbers were cut by 25%. The board has been reduced from 22 to 7. Price cuts: - many of the clothing lines are discounted by as much as 15%. The prices of a third of all merchandise have been cut by 2%-3%. Reorganization: - M&S was reorganized into three profit centers: UK retailing
Overseas retailing, and Financial services iv.
New marketing department was set up to help create improved Competitive analysis Information gathering Proactive communication Advertising clarity, and Customer targeting
v.
11.
The company will attempt to develop a more balanced sourcing policy to its domestic and international outlets and will review global logistics to streamline distribution and lower costs. Evaluate M&S cross-cultural skills?
Ans. M&S cross-cultural skills are very much correct as they are able to enter in different countries and are able to survive in different situations. Example: i.
Like in case of France, they adopt the store to French life styles.
ii.
In US, they acquire a department store but they did not change the name of that store because of its loyal customer base.
iii.
In Canada, they customize the product according to the needs of the customers at later stage but they are not able to survive over there.
