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Marks & Spencer China

Extracts from this document...

Introduction

CONTENTS Abstract 3 INTRODUCTION 3 Background 3 Analysis of the Chinese Market 4 Definition of the Chinese Market 4 Competitor analysis 5 Demand in China 6 PEST 6 Marks & Spencer in China ? 9 Marketing Mix 9 PORTER 10 The SWOT 12 CONCLUSION 13 REFERENCES 14 APPENDIX 17 LITERATURE REVIEW 19 Abstract More and more enterprises want to invest in foreign countries in order to remain competitive. China is a country highly appreciated in particular thanks to its power in the global market and its rapid growth. In fact, in recent years, China has evolved very rapidly. It is developed in many areas. For this reason, many companies such as Carrefour have come to invest in China. Carrefour, French retailer, is the first in Europe and second in the world after Wal-Mart. Understanding how and why retailers wanted to invest in China. Therefore, it explains the internationalization of Marks & Spencer on it. Moreover, it is necessary to ask a question which will be answered thanks to the development of the essay. This research question is: How Marks & Spencer could become a good competitor in China? Then, in order to be more accurate, in the different part of this dissertation, it is important to study: � What is the Chinese market currently? � What is the macro environment of the Chinese market? � What is the position of M&S in China? � How M&S differentiates its company compared to the others? INTRODUCTION Background At first, it is important to define the retailing. This is the fact for a company to sell products food or non-food to customers in a fixed place in order to earn money and generate profits. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. ...read more.

Middle

Indeed, this tool summarizes the factors affecting a company's performance by five forces: � The bargaining power of customers � The bargaining power of suppliers � The threat of potential entrants � The threat of substitutes � The intensity of competition In the case of M&S, the analysis of these five forces allows for the group to know the key to success factors in its industry. In other words, the strategic elements that should be controlled in order to obtain a competitive advantage. The power of customers: Since 1960, the population has almost doubled. The Chinese are now more than 1.3 billion. The fact that China has developed, the standard of living has also evolved. Unfortunately, for 80% of the Chinese, their wages were only enough to feed their families despite the low cost of living. In addition there are large gaps between socials classes so it is difficult to give a real purchasing power. Thus, we can say that by the number of inhabitants, consumers have a lot of power but seen in their wages, it is not really the case. (www.chinafrique.com) Finally, some experts believe that Carrefour's success can be attributed to the fact that it has already established a stable consumer group. The power of suppliers: 80% of the products sold in competitor's hypermarkets in China are purchased from more than 22300 local suppliers. (www.carrefour.com) Indeed, after his setting up, M&S has to develop a large network of point of purchase. It enables its Chinese suppliers to sell their products across China and realised advertising. The threat of entrants: The arrival of new competitors is limited since the major groups worldwide are already established in China (Wal Mart, Metro ...). However, since the opening of barriers in 2004, many foreign companies have a real desire to establish business in China. However, in order to compete with them, M&S need maturity. But also, a lot of experience, a significant capital, the ability to provide the low-price with the quality of products, and finally, a good knowledge of the market. ...read more.

Conclusion

Attract by a potential of consumer (more 1, 3 billions), China is becoming the target of multinationals. Thus, more and more of foreign companies come in to establish their firms in China. Even if they are minority compared to the local retailers, they are more and more present. However, as said by a report of Li & Fund, lots of companies have invested in China before 2004 and in an illegality. So this has created conflicts with the local retailers who have fear for their market share. The foreign retailers also have a problem with the suppliers and the workers who claim their exploitation. We can so conclude for this theory that China has a potential to welcome the foreign retailers and create a growth but that creation will be a severe competition. Therefore, the local retailers, the suppliers and the workers feel ridiculed by newcomers. Concerning the second theory of this literature review, that is to say the opening of China Market, we can notice that there was lots of change. Indeed, since the cancellation of restrictions in 2004, enormously of foreign retailers are becoming established in China. They have the same statues as the Chinese retailers because they can create their firms in legality and to be in competition with the local retailers but with famous products of their brand. It is a success for them. But we can see thanks to Gamble that the Chinese are more worried and that they want a good customer service. This is the success of the multinational because this service can't be copy by the competitors and it is a competitive advantage. We can conclude this literature review saying that the internationalization of the foreign retailers in China is fruitful for them and for China. China is a gold mine for them. But there are two negatives side especially concerning the competition, the workers and the suppliers who are threatened by the giants of retailing. ?? ?? ?? ?? ...read more.

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