Debenhams - Locating Abroad

Topics: Wage, Government, Dubai Pages: 3 (884 words) Published: March 7, 2011
Evaluate the advantages and disadvantages to Debenhams of having international locations. (16 marks)
Debenhams has 36 international franchises in 16 countries across the world. It has stores in Dubia, Turkey, Bahrain, Qatar, Sharjah, Indonesia and Kuwait.
A huge disadvantage is that it’s could be very difficult for Debanhams HQ to communicate with the stores abroad. This can cause a lack of control as senior managers are unable to have face-to-face meetings with store managers which are lower down the hierarchal structure. Moreover they are likely to incur language barriers, for example in Turkey. Turkish is not a popular language to learn and therefore not many people are able to speak it. This emphasises the problems which Debenhams HQ could face when trying to get a message across or explain a new strategy.

It may become difficult for senior managers to keep a tight control on every single site. This might result in some sites underperforming because there is an inadequate level of control, supervision and accountability. This could lead to diseconomies of scale if Debenhams has too many sites abroad.

However, there are also advantages for Debenhams who locate in international locations. The cost of labour is likely to be cheaper in places in Indonesia as there are many LEDCs there. The average wage is much lower in that area of the world and the same can be said for Qatar, Dubai and Turkey. Therefore as Debenhams is able to reduce costs this will lead to an increase in profits - therefore probably fulfilling Debenhams main aim. This benefit would be much bigger if it was concerning suppliers. Since the text mentions franchises as appose to suppliers it is suggesting that the workers will mainly be those working on the shop floor. The main disadvantage with this factor is that although these workers might not need to be paid very much they will lack qualities which workers in MEDCs are likely to have and therefore the quality of Debenhams...
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