Marks and Spencer's Expansion Into China

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FDA Business and Management level I
Working in an International context
Marks and Spencer’s Expansion into China

Contents Page
1.Introduction
2.Main factors influencing M&S to invest so heavily in china 3.Methods of FDI used by M&S In China
4.Differences in Business Model from China and Europe
5.Cultural & Organisational Risks
6.Future recommendation
7.Bibliography
8.Appendix


1.Introduction

The following report will address the expansion options available to Marks and Spencer (M&S) in China and Europe. The report will outline a recommended strategy plan for expansion in both areas, as well as give recommendations for future expansions in other countries. Marks and Spencer is one of the leading retail companies in the UK. M&S strategy is based on its vision mission and values which are: Vision: The Standard against which all others are measured

Mission: Making inspirational quality accessible to all
Values: Quality, Service, Innovation and trust. (Company Report, 2005)

Marks and Spencer operates in 29 countries across Asia, Europe and the Middle East with a total of 361 stores between them. M&S are already operating in a wholly owned store in Hong Kong. The Focus of this report is on the store in Shanghai as it is the first in mainland China. There are various influencing factors that contribute to M&S’s attraction into China.

For any company doing business abroad there are practices and customs that they need to take into consideration these will be outlined through the report.

2.Main factors influencing M&S to invest so heavily in china

China is continuously increasing its attraction to business around the world resulting in more companies looking to do business with China. BRIC countries are becoming a very popular option for companies in regards to expansion however China has the largest market size which is the sum of all three other BRIC countries together. Market growth in China is stable as it has continued to grow with a double digit growth rate since 2005 up to 2010. China has also the largest population in the world and is continuously growing with over a billion people currently settled their. This acts as a very positive influence to companies contemplating an expansion as their products will have the opportunity to be accessed by over 20% of the world’s population. China is also the largest exporter in the world, although they are starting to decrease their exports. This is a benefit to any company as the cost of their logistics would have a significant decrease. It is also important to notice that some of Chinas old culture is disappearing enabling this new ‘showboating culture’ to take place. Increasing amounts of the Chinese population are becoming more interested in western brands as they believe it’s a social/wealth indicator. This would be a benefit to English retailers as it grants them security in their products being bought by the Chinese population. Products would be viewed as a luxury and this is very important to the Chinese population as they very conscious as to what others think of them. Another appealing factor that makes china a good expansion move is there industry structure as it has a very fragmented market; most Chinese retailers tend to be regional, as well the size of retailers are very small resulting in a massive opportunity for foreign retailers to come in. Technological factors also play a big part in making China a more appealing expansion prospect. They have the best infrastructure compared to other developing nations such as India. On top of this their government encourages retailers to embrace a more advanced information system.

3.Methods of FDI used by M&S In China

There are a number of different market entry strategies that allow retailers all over the world to expand into foreign countries. There are two main methods of Market entry; Direct and indirect distribution. M&S use both types of market entry...
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