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A proper business strategy is very important to make a perfect business and to launch a new business in the international market. Some factors are important to follow to make a perfect business strategy and also to run a business following all the important trends and rules. Analysis of the macro and microenvironment is very important for any company to make a perfect idea about the strengths and weaknesses of the company. This also helps to understand the opportunities and threats in the market and to make strategies taking different factors of the market into account. This is also important for the companies to understand the competitive environments of the market and plan to cope with the market. Different theories and models are helpful to make a proper analysis of the market and understand the competition. This report discusses the important factors of the microenvironment of “Next PLC” and the macro environment of the Chinese market. This report also discusses the competition of the company in the Chinese market along with the competitive advantages of the company. Furthermore, the report discusses the strategies the company is planning to follow in the market and the important recommendations for the company.
“Next PLC” is one of the most popular and leading fashion retail industries in the UK. The company has a good reputation and b background and the company is operating a very successful business (Kwon et al., 2022). “Next PLC” operates its business in the fashion retail market locally in the UK and the international market.
The company was founded in 1981 by J Hepworth and is running with a good reputation. The company has almost 700 stores in the local markets of the UK and the international market, 500 local and 200 internationally (Gouveia, 2021). The main products of the company are clothes, footwear, and fashion accessories. Nearly 45,000 employees are working with the company and they are dedicated to their jobs. The company earned a revenue of more than 3.5 billion dollars in 2021.
The company is planning to expand its business and they are willing to make a proper strategy for business expansion. The company is expanding its business in the international markets of China and they need to make a proper internal and external analysis to understand the changes and threats they can have in this plan.
A PESTLE analysis is helpful to understand the external environment of the international market in China (Eierle et al., 2021). A PESTLE analysis for the country is as follows:
The political factors in China are quite risky for a company to start a business in the Chinese market. The reports say that the socialist government of the country makes changes in business rules and regulations so rapidly which is a problem for the local and international traders of the market (Beckley, 2021). Also, the “communist party” of China is very strict about its ideals. The company must follow the ideals of the “Communist Party of China” to avoid bans and political threats on their products. The company can face challenges with this party in its promotional and advertising strategies (Jin et al., 2020). However, the international policies of the country are very helpful for the company and this can help the company to grow in the market.
The economic factors of the country are very helpful for the company to launch their new business in the Chinese markets. The country is having high economic growth nowadays and this will bring a positive effect on the company. The country is dealing with a GDP rate of approximately 18 trillion US dollars which is higher than that of the USA (Qiu et al., 2020). This makes the country one of the best choices for “Next PLC” to start the business. The labor cost is low in the market which is helpful for the company to launch their business (Li et al., 2019). However, the high property rates in China can be problematic for the company.
There is a huge number of potential customers present in the Chinese market which is helpful for the company. The customers of the country are looking for the best products and they are trustworthy to the companies who are fulfilling their changing needs (Sun et al., 2020). However, this is important for the company to take care of the cultural and social beliefs of the customers which brings a good reputation and trust of the customers. Most of the population of the country is well educated. According to the reports, almost 97% of the citizens are literate and almost all of them have access to the internet (Zhu et al., 2019). This is a very helpful trait for the company to make a successful online business in the country.
China is one of the most technologically advanced countries in the world and there is a huge chance for “Next PLC” to make a proper business using the technological factors of the company. The important software and digital technologies are easily available in the country and the company can use these at a negligible cost (Lin and Chen, 2020). The reports say that there are more than 400 million internet users in the country which serves a great number of online customers for the company (Tong, 2019). Different online payment methods are available in the country which helps to make the business easy for the company.
The legal factors in the country are not quite helpful to making a perfect business in China. Various issues have emerged in the country with legality and this makes the business difficult. The “intellectual property rights”, “consumer rights” and “tax policies” are making international business troublesome in the country and causing problems for the companies (Zhou, 2022). Apart from that, there are some constant changes in the legal factors which are difficult to cope with for foreign companies. As e-commerce is not so popular in the country, this can be a challenge for “Next PLC” to make a proper online business in China.
The environmental factors in the country are challenging for the company to make a proper business. There is a huge population in the country and many industries are forming in the country. This is causing pollution and the Chinese government is looking for factors to reduce pollution (Du et al., 2021). They are making rules for the companies to produce eco-friendly products and this is charging the industries financially. These environmental factors can cause some difficulties for the company to make a successful business in the country.
The PESTLE analysis of the Chinese market says that there is a moderate chance for the company in the market. The company needs to make a proper plan to launch its business in the country. The political and legal factors are needed to tackle briefly and the environmental factors can make the business vulnerable to the “Next PLC”. However, there are changes in the social, technological, and economic factors in the country.
This is important for the company to do research on its internal environment before launching the business in a completely new international market. A SWOT analysis is helpful to understand the internal forces of the company. The SWOT analysis of “Next PLC” is as follows:
The SWOT analysis of the company can clearly say that the company is quite b and has some good opportunities in the Chinese markets. However, there are some weaknesses and threats that are also present. The company can mitigate the threat factor by overcoming its weaknesses and can launch a successful business in China.
“Next PLC” is planning to launch its new business in the international market of China and the company is studying the markets thoroughly. The competitive environment of the Chinese market is essential for the company to make a proper business strategy in the country.
The company is making good business in the international markets of a few other countries and earning a good profit. This can also be true for the Chinese markets if there is a clear report on the competitors in the Chinese market. An analysis of the competitors in the Chinese market using “Porter’s five forces” is as follows:
There is huge competition in the Chinese market for the company. The Chinese fashion industry is appealing and it covers more than 18% of the whole Chinese market. The net worth of the fashion market in the country is 1,773 billion US dollars which is very high (Iqbal et al., 2020). However, the company itself has a good revenue percentage which can be helpful for the company to make a good business there.
The Chinese market is one of the greatest markets for business and almost all the companies in the world are planning to enter the Chinese market to launch their business. According to the reports, there are more than 48 companies that have launched their business in the market in 2021 (Feng et al., 2021). This result shows that the company can face threats in the market from other new companies.
As China is a huge country and has an advanced transport system, the supply chain in the market is good. “Next PLC” can make a good distribution channel in the market which can be helpful to launch the business in the country (Yu et al., 2021). The technologically advanced country makes the promotional strategy easier and supports the supply channel. This makes a huge chance for the company to cope with the Chinese legal forces.
There is a huge number of potential customers in the Chinese market and this brings a huge opportunity for the company to make a successful business in the market. Almost all Chinese citizens are well educated and have access to the internet which helps to make a perfect online business in the market (Zhang et al., 2021). The customers used to spend good money on fashion and this is helpful to make a great business with them.
As the Chinese fashion market is huge, there is a great number of substitute products available in the market. This makes a threat to the company and they can lose customers easily (Ching et al., 2021). Product quality and cost are some of the essential factors for the company and the company needs to make a perfect strategy for its business.
Analysing the competitive environment of the Chinese market, this can be said that there are some good chances in the market for the company. However, some threats can make the business vulnerable. The company needs to make a perfect plan to run a successful business in the Chinese market and earn a good profit.
The Chinese market brings some moderate chances for “Next PLC” to launch the business in the market. There is good competition in the Chinese market for the company and this makes some challenges for the company.
However, there are some advantages the company has to mitigate these challenges and make a good competition in the market. These advantages bring some opportunities for the company to make a successful business. The “VRIO framework” is helpful to analyse the competitive advantages of the company (Lecaze, 2020).
An analysis of the competitive advantages of “Next PLC” using the VRIO framework is as follows:
There is a great reputation of the company in the market which is valuable to make a good business. The company has been operating for a long time which makes the company trustworthy to the customers. Apart from that, the company is operating in other international markets which can help the company have experience. The brand value of the company is high and this makes a great value for the company. This can be said that the company already has a good reputation in the international market which brings a good competitive advantage for “Next PLC”.
The company is rich with resources and is operating a great business using these resources. The different distribution channels and advanced supply chain help the company to make a perfect business in the local and international markets. Also, the product quality provided by the company helps to make the customers happy and retain customers for the company. The company provides products to customers of all age groups that help to attract customers from all segments of the market.
The products that are provided by the company are unique and come at a very reasonable price. This makes a huge opportunity for the company to be different in the market. This serves as a good competitive advantage for the company. Apart from that, there is no match for the reputation of the company which is helpful to make a perfect business for the company. The unique supply chain of the company makes the company competitively advanced and serves as an advantage for the competition in the market. The useful resources make a suitable business platform for the business which is almost impossible to crack. This makes a good business for the company.
The company has a secured headquarter in the UK and they are operating a very successful local and international business for the company. There are 700 local and international stores in the market of the company and this serves as well financial support to the company. Nearly 45,000 dedicated employees are working with the company who are making the achievements possible. The yearly turnover of the company makes the company financially stable which is important to make a good business.
This can be said that there is a huge competitive advantage the company has and they can make a successful business in the Chinese market. The reputation and uniqueness of the company make the company trustworthy and helps to retain customers the company.
The Chinese market is a huge, competitive, and potential market for “Next PLC” and the company is planning to launch its business in the market. The company needs to make a proper business strategy to understand the market and run its business successfully in the Chinese market.
The company has some competitive advantages that are helpful to make a successful business coping with the competition in the market. The advanced technological and economic advantages in the Chinese market are also helpful to make a proper business for the country.
This is important for the company to understand the proper positioning for the company. The “Bowman’s Strategic Clock” is helpful to make a proper positioning for the company (Desai, 2019). The positioning of the company in the Chinese market using the “Bowman’s Strategic Clock” is as follows:
The Chinese market has a good number of potential customers and they can make a good profit having a business. There is no need to make low-value products. Thus, this is not a perfect position for the company.
The Chinese fashion market is the largest in the world. The citizens of this country spend good money on fashion products. Keeping a reasonable price is possible in the market and the company can make perfect business with this.
The price of the products can be kept hybrid for the company. As there is good competition in the Chinese market, the company needs to make a pricing strategy to cope with the competition.
Putting “high perceived value” is not helpful for the company. There is a good number of substitutes in the market and the company can lose customers from this. However, providing unique and quality products can make the company ahead in the market competition.
Putting high prices on the products can make the company vulnerable as this can cause a loss of customers for the company. The company needs to produce high-quality products for this and they can face losses in the market.
A very high margin of price for the products is not a very suitable option for the company. This can make the customers choose substitutes and the company can lose customers. The customers will switch despite the higher quality of products.
There is not a very good chance for “monopoly pricing” for the company in the Chinese market. Many companies are operating in the market and they all are achieving success. The company needs to make good competition in the market to achieve success.
Making a business lose market share is not at all helpful for the company to make a perfect business in the Chinese market. This can make the business vulnerable and they can face losses in the international market.
The company needs to make a proper position in the Chinese market and compete with other companies to make a good business. Differentiation is helpful for the company to make a proper business and to earn good profit from the Chinese market.
“Next PLC” is making a good profit from the local and international fashion market. The company is planning to launch the business in the Chinese market and they are researching the market.
The business strategy of the company for the Chinese market is accurate and it gives some competitive advantages to the company. The company has a great reputation and this serves as a background for the company in the Chinese market.
However, some of the disadvantages can make the company vulnerable in the market. The company needs to overcome these factors to make the business successful.
“Porter’s Generic strategy” is helpful to understand the advantages and disadvantages of the strategy properly. Analysis of the business strategy in the Chinese market using the “Porter’s Generic Strategy” model is as follows:
According to “cost leadership”, the company needs to make a reasonable price for their products to attract more customers. There is huge competition in the market and the company needs to reduce or hike the product price to get more customers. As the company keeps the price reasonable for the UK market, they are having a huge number of customers. The company can keep the same rate of price for the Chinese market. This helps to make a proper business for the company.
The differentiation strategy is helpful for the company to make a proper business in the Chinese market. There is huge competition in the market and the company can differentiate its products and services to grab more customers. The quality and price of the products can make a proper business for the company in the Chinese market. The reputation of the company can help to differentiate the products and services in the market and this can make a good business for the company.
This is helpful for the company to make a perfect business using the “cost focus” strategy. The “niche market” of the company is divided into competitors and the business strategies followed by them. This can help the company to make a proper business and to focus on the demands of the customers in the Chinese market. There are a huge number of products the company provides and all these products are helping to make a perfect business for the company.
This strategy is not a very helpful strategy for the company to make a perfect business. Differentiating the products according to the size of the market is helpful, but it leads to high investment for the company. This can make less profit for the company and they can lose in the market competition. The “niche market” of China deals with the demands of the customers and the changing demands make business difficult for the company.
The business model of “Next PLC” is helpful to make a proper business for the company and the company is making a huge profit from the market. The new business strategy of the company is to make good business in the Chinese market. However, some recommendations can be made to enhance the business plan for “Next PLC”.
The important recommendations for “Next PLC” using the “Ansoff matrix” are as follows-
A “strategic management plan” is very helpful for the company to make a perfect business in the Chinese market. There are huge chances for the company in the Chinese market and the company needs to use the business strategy in the market. As the company already has a good reputation in the market, there is a huge chance to cope with the competition in the market. The company needs to understand all the important factors of the market before launching a business in the Chinese market.
Some of the important strategies are as follows-
This is very important for “Next PLC” to conduct proper market research and find out the important factors of the market. The company also must check for the competition in the market and produce a perfect plan to cope with the competition in the Chinese market. Various theories and models are helpful to understand the market and a proper study of the country will help the company to know about the local society and culture of China. This report found the important factors of the microenvironment of “Next PLC” and the macro environment of the Chinese market. This report also found the competition of the company in the Chinese market along with the competitive advantages of the company. Furthermore, the report found the strategies the company is planning to follow in the market and the important recommendations for the company.
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