Managing International Trade

Individual report

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Contents

Introduction..............................................................................................................................3

About the company...............................................................................................................4

The specific industry.............................................................................................................4

The Country..........................................................................................................................4

The factors that need to be considered by Next PLC for their international business..........4

Analysis tools or models for assessing international market................................................5

PESTEL analysis..................................................................................................................5

Porter 5 forces Model...........................................................................................................7

SWOT analysis.....................................................................................................................8

International market expansion strategies............................................................................9

Recommendation...............................................................................................................10

The planning for implementing recommendations..............................................................10

Conclusion..............................................................................................................................11

References.............................................................................................................................12

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Introduction
This report will be on the expansion of business of Next PLC in the Indian market and
establishing their sales office in the major regions or cities of India. This report will consist of
different analytical tools or models, strategic factors which need to be considered before
market expansion and the strategies for global business expansion. International trade will
be conducted by the management of Next in the Indian market by establishing subsidiaries
in the form of physical stores. This report will cover different analytical tools of international
business for example a PESTEL and SWOT analysis Along with Porter’s model. In the
formative assessment, various sections will be demonstrated for example about Next PLC,
the particular industry. Additionally, the country selected for expansion and prime trade
issues will be presented.

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About the company
The world's largest retailer of clothing, Next PLC was established in 1864 and its
headquarters is situated in England, UK. This is a global retailer of clothing as well as
footwear which has approximately 700 stores worldwide (Iyer, 2019). Every kind of fashion
clothing are available in this retail brand for male, female, and babies and additionally,
different home furnishings, beauty products and gifts are available. The founder is Joseph
Hepworth, and the serving areas are the UK, Asia, Europe along with Middle East.

The specific industry

The industry is the fashion industry in the UK which is approximately worth £27 billion. It is
one of the largest industries in the UK to contribute to the employment sectors. This industry
is also booming around the Indian market and therefore Next PLC management decided to
make an entry into this market.

The country
The country is India in which the Next PLC wants to expand its business and wants to
establish its sales office (Rahman, 2022). The Indian market is gigantic and will provide
ample opportunities for the Next PLC. To enhance their corporate recognition, for instance,
and to take advantage of the Indian marketplace, executives have to endeavour to fortify
their solid points.

The factors that need to be considered by Next PLC for their

international business
Internal factors
The resources as well as capabilities of the organisation
The internal resources of the corporations need to be assessed as well and the capabilities
need to be determined to manage the obstacles and capitalize on the opportunities of global
expansion. In the case of Next PLC, they need to evaluate their resources and abilities for
example financial strength, human resources, and technological advancement and
operational efficiencies.
Management expertise
Organisations like Next PLC also need to understand their expertise of management who
can handle and negotiate different complexities regarding international expansion (Shenkar
et al., 2022). For example, the regulations related to foreign trade and countries and also
cross-cultural barriers along with communication and the management capability to adapt to
the local people's needs.
Risk appetite
The management of Next Company is required to identify their risk tolerance from the
perspective of currency fluctuations and political instability along with cultural barriers. The
ability to mitigate the risk needs to be assessed to get the rewards appropriately.
Brand appeal
The brand appeal and equity in the foreign market needs to be evaluated by Next PLC for
example in the Indian market. For example, a high brand reputation will certainly facilitate
Next PLC to manage their business in India.
External factors

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Market size along with competition
The market size of the target market and also the potential growth of the market and the
competitive environment need to be assessed by the management of Next PLC (Kopnina,
2023). The Indian market is gigantic and the potentiality of growth is very high with intense
competition.
Regulatory environment
The regulations of the Indian government will be different from the government of the UK
and therefore it must be assessed by the management of Next. For example the text
regulations, employee regulations.
Cultural barriers
In the Asian subcontinent, the culture will be different compared to the UK. Therefore this is
a significant factor to be evaluated by the management of Next for example language
barriers and the differences in consumer preferences.
Currency fluctuations
The conditions of the economy and the fluctuations in the currency need to be properly
assessed by the management (Herliana & Lawiyah, 2019). The economic downturn and
other related factors can crucially impact the operations of Next PLC in India.
The trade agreements
The business agreements and regulations between the UK and Indian governments need to
be properly understood by the management of Next. The proper utilization of these
agreements will provide many advantages as well as market access.
These internal as well as external components of international market expansion need to be
appropriately assessed and understood by the management of Next PLC.

Analysis tools or models for assessing the international market

The corporation Next wants to expand its business in India which is colossal in size and this
country has billions of customers in the market. Therefore the management of Next
Corporation considers India as the most profitable market for expanding their business and
for establishing their subsidiary sales office in the different regions of this country.
International market expansion is the procedure of expanding business over the national
boundary by integrating different cultures and brainstorming ideas and products to exploit
the best opportunities (Czinkota et al., 2021). For the market expansion of Next Corporation
in India various analytical tools will be utilized to understand the market and the possible
opportunities for expansion.

PESTEL analysis
Political factors
The analysis of the macro environment involves the political factors which can positively
along with negatively impact the business expansion of the Next company. For example,
political instability can cause trouble for the management of Next because in this
subcontinent political turmoil Can be observed frequently. Therefore the management of this
corporation should be fully aware of the political instability in this country over the years.
Additionally, there are many positive impacts for example flexible government regulations in
this country which will allow them to enter the market and compete to gain customers.

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moreover, the regulations related to foreign trade are also much more flexible and due to this
many other corporations from the UK are managing their business in India.
Economic factors
Different economic components also need to be properly assessed before making the entry
into the Indian market and the recent economic growth is obviously a blessing for expanding
business here. The regulations related to the exchange rates are also appropriate in this
country which provide flexibility to the multinational corporations for example Next. Different
rates for example the interest rates and the rate of inflation are also under control in this
country which will benefit the operation of business of Next in this country (Wall & Minocha,
2015). Sometimes government takes different monetary policy controls as well as fiscal
policy controls for managing the interest rates and inflation rates in this country. These
fluctuations in the rates can both positively along negatively impact the management of Next
Company.
Social factors
The cultural barriers must be admitted by the management of Next before making entry into
India because the culture is almost different from the European nations. In this country the
density of the population is very high in other words the growth rate of the population is
much higher in India. But the positive thing is that the high-class people and to the extent
the middle-class people will be very much enthusiastic to embrace the clothing retail brands
Next in India. The high-class people are ready to pay premium prices for branded products
in this country which will positively affect the rate of sales of this retail corporation (Rundh,
2022). The people's attitudes towards multinational companies are very much positive and
they prefer to purchase their clothing and home furnishings from international brands and
retailers.
Technological
The expansion of the business highly depends on the process of adapting to the new as well
as upgraded technology and also to effectively apply them in the country decided for
entering. Different technological components for example the innovation level also will make
an impact on the business expansion of Next to the India from UK. The research and
development team must be very dynamic in understanding the comparative factors and
industry specifications in India to understand the needs of the customers. The research
team should be able to understand the customer preferences and they should adopt the
technological upgradation very quickly to get the market appropriately.
Environmental
The nature of the atmosphere is very much different in India compared to the UK because
different seasons which are comprised of summer seasons as well as winter and rainy can
be observed in this country. Therefore the weather conditions and climate exchange need to
be considered by the management of Next Company (Daniels et al., 2022). The
environmental impact needs to be evaluated to reduce the carbon footprint and sustainable
practices must be introduced and implemented in such countries for operating business.
Additionally, the regulations regarding the environment must be evaluated and properly
justified by the management before making the entry.
Legal
The regulations related to foreign trade and foreign multinational firms must be assessed by
the management and different other company regulations must be understood properly. For
example, the labour laws as well as the regulations regarding consumer protection and

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copyright regulations must be understood clearly (Minnikova, 2015). Additionally, the
regulations regarding the health and safety of the employees at the stores and the factories
must be complied with by the Next management. Adhering to these regulations will
positively impact the operation of Next stores.

Porters 5 forces model

New entry threats
The corporations which decide to go for business expansion in foreign countries need to
properly assess their threats from the new entry corporations. For example, if it is very easy
to make an entry into the industry then it will be a vulnerable decision to expand the
business in that particular country or industry (Venkatesh, 2022). Otherwise, if the entry
process is complex for the newcomers then it will be a wise decision for expanding business
in that sector or country. In the Indian market, it is not very easy to make an entry in the
fashion industry because there are large fashion brands and retailers who have made their
Kingdom. Therefore relatively fewer threats have been identified for Next Company to make
an entry into the Indian fashion market.
Customers bargaining power
The bargaining power of the consumers depends on the choices they have and in the Indian
market the customers have plenty of choices and fashion brands they look for. That is why
in this market the customer's bargaining power will be higher due to their more available
choices from other fashion brands like Nike, Adidas, Calvin Klein And others. The customers
are price sensitive in this region but also the high-class customers are ready to pay a
premium for quality brands. The switching cost from the perspective of customers is low
therefore it also stimulates the higher customers' bargaining power.
Suppliers bargaining power
This depends on the number as well as the size of the different suppliers in the country and
therefore the management of Next should make a plan to maintain relationships and contact
with multiple suppliers. As a retail brand, this company should maintain their relationship
with the brands from which it will collect its fashion products consistently (Sarjana & Khayati,
2019). multiple suppliers will reduce the bargaining power of a particular supplier with the
retailer because in that case, the management will have more available options to choose
from.
Substitute threats
The substitute products also can impose threats on the management of Next company
because if the customers have available options as substitutes then they will switch
immediately. Due to the high number of substitutes in the market, it will be difficult for the
Next company to reduce the threats of substitutes. In this country, the purchasers have the
propensity to switch to substitute brands for example H&M and Marks and Spencer. Due to
the low switching cost, it will create hurdles for the management to reduce their estimated
threats of substitutes.
Competitors
In the Indian market, the corporation Next has many competitors for example Nike, Zara,
H&M and also Marks and Spencer, US polo, Levis, Adidas and others. These competitors
already established their market and loyal customers in the Indian market and therefore at
the beginning much complexity needs to be phased by the management of Next (Krueger,
2020). To convert loyal customers and enhance their lifetime value significant promotions

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and value-providing activities must be visible by Next Company. To increase the market
share the rate of sales needs to be enhanced by managing strong relationships with all the
stakeholders.

SWOT analysis
Strength
Brand reputation
The brand equity as well as brand reputation
can be associated with the retail corporation Next and this will highly benefit them at the
Indian market. Premium-quality clothing and footwear with attractive designs will captivate
customers in the Indian market (Boldyrev, 2021). With this reputation, this brand can
enhance its market share and generate millions of loyal customers in this country.
Omni channel presence
This retail corporation has a significant presence from the Omni channel perspective for
example they also sell their products from their official websites online and they can
establish their physical stores. This Omni channel presence will highly benefit them to
enhance their visibility to increase their rate of sales as well as profitability in the Indian
market.
Successful expansion experience
This corporation has a previous record of successful expansion in different continents for
example Asia, Europe, Africa and others. This expansion experience will provide them
advantages to make their expansion plan in the Indian market for example analyzing the
competition and fashion industry in such countries.
Weaknesses
Scarcity of experience
This brand has a scarcity of experience in the Indian market that will impose obstacles on
the management to make their expansion plan smooth and successful. However, this
weakness can be mitigated by operating effective market research in the Indian market to
understand the market nature and customers' perspectives on fashion products (Peng &
Meyer, 2023). The latest market research will provide them positive view because the
customers are using popular brands nowadays.
Scarcity of physical stores
Limited physical stores in the different Indian regions are a crucial weakness of Next PLC.
therefore they need to increase their number of physical stores in the different major cities
for example Mumbai, Chennai, and Bengaluru in India to get visible in the eyes of
customers.
Competition from other retailers
In this country, there is fierce competition from different local as well as global retailers with
their fashion products. In this highly competitive market, Next PLC needs to make unique
offerings that stand out from the competitors.
Complex legislative atmosphere

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The Indian government regulations can be sometimes complex and create obstacles for
foreign companies to expand their business in this country. All the regulations must be
complied with by the management of Next PLC to operate their business in India.
Opportunities
Enhancing demand for branded products
In the Indian market demand for branded fashion products is increasing day by day which is
a great opportunity for Next PLC to expand its business (Khan, 2023). The rising demand
will increase the sales which will enhance the profitability of Next PLC to grow their business
in the regions.
The rapid growth of e-commerce
The customers in this country now prefer online shopping and from this perspective, Next
PLC has a significant opportunity to sell their products from their official websites to the
customers. The attractive and lucrative website of Next PLC will captivate Indian customers
to make their purchases online.
Increasing disposable income
The disposable incomes of the people of India are increasing day by day which is providing
them additional money for spending on such fashion items (Keller & Vitturi, 2018). This
increase in disposable income will stimulate Indian customers to make their purchases from
the Next PC retailer which consists of numerous international brands.
Threats
Economic downturn
The cycle of recession as well as other economic instability can negatively impact the
business of Next in the Indian market. This kind of economic downturn can sluggish the rate
of sales and also the profitability rate of this corporation.
Political instability
The political volatile situation can negatively affect the business operation of Next Company
because this highly leads to social turmoil as well as unrest in the society (Cherunilam,
2021). This will create obstacles in the management of Next business.
Intense competition
The rate of competition from global and local fashion retailers is high and intense. This will
impose a great challenge for the management of Next PLC to operate their business in this
market.

International market expansion strategies

Export
Corporations can expand their business in foreign markets by the form of exporting their
products. In this way, the corporations can enter into the foreign markets which is exporting
their commodities to fulfill the needs of customers staying in the foreign markets.
Licensing
This approach also can be adopted by corporations to make entry into foreign markets for
example providing the rights to the foreign corporation for utilizing the brand name,
technology and intellectual property (Kopnina, 2023). Without large investments, this
strategy can be adopted by the firms.

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Franchising
In this process the corporation allows the foreign company to manage their business by
using the brand name for example Next PLC. In this way, the entering process can be done
in the foreign market with much efficiency as well as quickly.
Joint ventures
This approach can be adopted by collaboration with a foreign corporation in a foreign market
for example integrating the business process to enter the market. The sharing of resources
as well as expertise can be capitalised for mitigating the risk.
Wholly owned subsidiary
This process will be used by Next PLC which entered the Indian market which is established
its physical stores or subsidiaries in the different major regions and cities of India. This will
provide them with the most control over their management to operate the business in this
market. This approach will be most beneficial and suitable for the Next company.

Recommendation
To expand their business in the Indian market the management of the Next company should
take effective steps appropriately. For example, the management should evaluate their
macro environment for example political factors, technological, economic, social and others.
The management should also evaluate their competitors, the threats of substitutes and new
entries, and the bargaining power of customers and suppliers. The management should try
to strengthen their strong zones for example brand reputation and they should try to
capitalize on their opportunities in the Indian market (Iyer, 2019). The management also
should make strategies to reduce their weak zones and mitigate the threats. The
management also needs to apply effective promotional activities to captivate Indian
customers. Moreover, they need to communicate with their targeted customers from their
Omni channel presence for example the physical stores and online selling. The management
should make strong relationships with their customers and business partners to enhance
their sustainability in the Indian market. The executives of Next PLC should try to understand
the customer needs along with preferences before making an entry into the market of India
(Shenkar et al., 2022). The executive needs to offer value according to the customer's
demands in the Indian market. To increase market share the executives of Next should try
to offer unique value to the customers to get the competitive edge in the market.

The planning for implementing recommendations

Effective market research is highly necessary in the Indian market to understand customer
preferences as well as the needs of the management of Next PLC. Market research can be
done by gathering information about the customer’s attitudes, buying patterns, fashion sense
and lifestyles and from previous research articles. For effective promotional activities,
dynamic marketing strategies need to be applied by understanding customers' perceptions.
strong relationships need to be maintained by every stakeholder including customers,
employees, suppliers, and shareholders and for this effective CRM strategies need to be
implemented clearly (Baack et al., 2019). Sufficient retail stores in the major Indian cities and
promotions and offerings through the different social media platforms and websites need to
be well operated by the executives of Next. For understanding market demands extended
market research will be significant for the Next PLC to generate success.

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Conclusion
Doing business in a foreign nation can be a complex task and process if the organisations
do not prepare them from the very initiating stages. The corporation Next PLC needs to
operate and conduct extensive market research in the Indian market to understand the
customer demands, and different competitive factors such as competition, government
regulations, economic conditions, and the psychology of the customers (Feenstra & Taylor,
2021). Effective promotional as well as marketing strategies by understanding customer
preferences will provide success to the leading fashion retailer in the world which is Next
PLC. Sustainable relationship management will provide significant benefits to create loyal
customers.

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