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International or global marketing occurs when organization plans to expand its product line and services on international basis. This helps in increasing its target market, opportunities, market share, etc. It has the biggest barrier that is competition. In this report, the firm selected is Next PLC which is a British multinational company of clothing, footwear and home products (Czinkota and Ronkainen, 2012). Next PLC is looking for international expansion to boost its highly-profitable online sales over the coming years. This report will guide Next PLC to have the best international market for expansion.
Macro factors shape the organization to perform its business. This factor includes various elements like technology, government, climate, culture, interest rates, foreign competition, exchange rate etc. (Doole and Lowe, 2008) In order to understand the macro factors, tool of PESTEL analysis can be used which is as follows:
Illustration 1: Macro and Micro factors
Technological Factor: This helps in developing new products for companies of retail but it also plays a vital role in changing the way of doing business. Technology improvements like internet have enhanced more shopping options to the customers (Hanlon, 2014). Online retail companies like Amazon and e-bay have enabled the web based retail and online shopping. With the help of point-of-sale system, retail firms are able to process check, cash, credit cards, etc.
Government: Due to government policies, laws, rules and regulations, there are number of negative as well as positive effects on retail market. Bank loans, subsidies, etc. are very helpful for retailers to grow and allow established organizations to provide their customers with cost deduction on commodities (Brady, 2014). Government can also impose regulations which increase the costs for development, for adopting new system, etc. Further, government is also very supportive by providing various transportation facilities to the retailer like rail, road, water, etc. for exporting goods and services.
Economic Factors: The sale done by economic factors are driven by economic environment (Paul, 2008). When the demand of a commodity increases, then it allows selling more by the retailers. Vise-versa happens in the case when demand decreases.
Social Factors: Due to change in trends and values of society, it has a great impact on the products which retailers sell. Retailers should develop a product by keeping in mind the social responsibilities towards customers. Micro factors involve the availability of resources and its usage which have their impacts on businesses as well as on individuals. Following are the elements of micro environment:
Customers: They have a direct impact on the retail businesses. It is very simple to understand that business will not be successful if the firm does not attract customers (Curry, 2009). Developing a relation and attracting customers by adopting various offers are very important for the growth of retail industry.
Employees: They are the one who produce, provide or sell the services and goods. For an organization, it is very important to have skilled, motivated and hardworking employees for economic success.
Suppliers: They are the one who deliver materials to the firm. Organization should develop a strong relation with suppliers so that they would supply the material on time (Srinivasan, 2008). Maintains a strong relation will also help in getting quality products which will help in attracting more customers.
Investors: They are very helpful in providing funds to the organization. Funds are useful for the firm to grow. Investors are more supportive than creditors as they share the risk but fund taken from creditors has to be repaid.
Competitors: When competition increases, the level of risk enhances also as well as other firms will apply many strategies in attracting more customers (Glowik and Smyczek, 2011).
Intermediaries: These are the middlemen who come in between the manufacturer and customers. Cost of commodity increases due to these intermediaries.
The market potential is establishing maximum revenue for sales of suppliers of a product at a specific time. It is normally measured by the sales volume or sales value. A market research is important to know about the market potential and it will help to know the ability to compete, opportunity available, growth potential, etc. (Bergkvist and Rossiter, 2007). Following are the countries where Next PLC can establish its market:
From the above-given countries, Nigeria and Sri Lanka are the best-recommended markets. Points that will support them are as follows:
There are many ways through which NEXT plc can enter in the foreign market. There will be a number of factors like taxation rate, tariff rate, transportation cost, etc. which affect the market entry (Vorhies and Morgan, 2005). Following are the strategies which NEXT plc can adopt:
Direct Exporting: This refers to selling directly into the market by using company’s resources. When they develop their sales program, they turn into distributors or agents who would represent then in the market. These distributors or agents will work according to the interest of organization. In other words, they become the face of organization and should be hired as if the firm is selecting a key staff. This is the best strategy which Next plc can adopt to enter in Nigeria as these agents or distributors which are to be hired will be the local individuals who will be having complete knowledge about the market and the customers. This will have a great impact over the customers as these distributors will have a close contact with the customers and they will not be having any language problem. Along with that, these people know the tastes, preferences, culture, etc. better than outsiders (Czinkota and Ronkainen, 2012). There are other market entry strategies but this is the best one. In addition to this, it will also help the government as employment is provided through this.
Licensing: It is a type of arrangement where the firm provides rights to use the services and products to local firms. This strategy will be very useful if the purchaser of license have a large market share. This is also a market entry strategy which can be adopted by Next plc as there are many big retail firms in Sri Lanka like MAS Holdings. If Next plc provides licensing to MAS Holdings then it will be beneficial for the organization as this will help in covering the market or in other words, people will get to know about Next plc. Slowly when the brand loyalty will increase then firm can establish its own stores. Here, this strategy will be useful because the geographical area is less; as a result, covering all states in Sri Lanka will not be a difficult task through licensing. There are many states in Sri Lanka where there are no retail stores. These states are like Vavuniya, Trincomalee and Dumbulla that do not have retail stores (Doole and Lowe, 2008). Through licensing, when the brand loyalty increases then, Next plc should target these states for high growth.
The marketing mix is the set of elements which a company adopts for promoting its products and brand in the market. There are four elements like products, price, place and promotion. This 4p's are like pillars which help the organization to have a systematic plan for their growth. For Nigeria, following marketing mix should be adopted in order to increase their market:
For Sri Lanka, following marketing mix should be adopted in order to increase their market:
From this report, it can be articulated that in the macro environment, there are many factors which influence the retail industry and among these factors, government influences the most as it has the right to change the policies according to their preferences and change in culture. Further, Nigeria will be the best place for NEXT plc as there are many opportunities like people wear clothes according to their traditional customs. According to their customs, there are three groups and each group has a different style of fashion. This will help NEXT plc to provide products to the customers according to their preferences and it would help them in covering the market easily. Moreover, Next PLC should adopt direct exporting in Nigeria and licensing should be adopted in Sri Lanka for better market entry.
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