Principle of International Business Assignment Sample

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Introduction to the Principle of International Business Assignment

Primark is a global fashion retailer providing employment to more than 80,000 workers and has its business operations in 17 countries and further growing more. The company was founded within Ireland in the year 1969, it intends to offers reasonable options for each and every individual, ranging from premium quality day-to-day essentials to differentiating style crosswise kids, men’s and women’s, together with homeware, beauty products and accessories. The key strategy or focus of the company is delivering reasonable fashion options by the help of flawless supply chain, minimal marketing and effective business operations, and also at the same time consider current important factors like corporate social responsibility and environmental substantiality (Primark Corporate. 2025). Moreover, competitive advantage or edge to the company is through it high-volume, and low-margin strategy, which signifies its capability to offer customers with reasonable and inexpensive fashion. Other areas where the company has competitive advantage involve swift response to evolving fashion trends and effective supply chain management. Primark belongs to or operates in retail industry, specifically fast fashion sector. The closest competitors of the company are Zara, H&M, Marks and Spencer, Burberry, Prada, and Chanel.

The purpose or aim of this report is to examine and analyse the decision of Primark to tap into the market of Germany, assessing the way through which the company circumnavigated the business landscape, as well as the strategies it adopted to launch its products within the country. The report will critically evaluate the aspects impacting the expansion of the company, involving its strategy to enter the market, the potential risks it can go through as well as the way company coped with such risks. Collectively, this report is intending to comprehend that why the company choose the German market to expand its operations, the way it prospered in that country and what risks the company has been present with.

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Main Body

Business Environment

International business environment is defined as surroundings within which international enterprises maintain or do their businesses. This involves diverse facets such as exchange risks, taxation challenges, cultural differences and so on. For better placement of Primark in Germany, external business environment in the country can be analysed through PESTLE analysis.

SWOT of Primark in German market

Principle of International Business Assignment Sample

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Chief strengths of the company are its well-positioned and placed brand, effective supply chain, low prices as well as fast fashion approach. All such strengths have helped Primark to attract customers looking for affordable fashion within the German market, where the demand for reasonable fashion choices is growing. Further, weaknesses of the company involve its sustainability and ethical concerns, which can hamper its appeal within the German market where the customer are progressively becoming eco-conscious. The company has around 460 stores globally, such dependence on these numbers of stores may become an issue within an environment transforming to digital platforms. Market of Germany provides several opportunities because it has cultured infrastructure, steady political system and consumers in the country have good purchasing power (Dalirazar, & Sabzi, 2023). Though, threats in front of the company have been increased operational costs, high competitive, increasing want for sustainability.

Porter’s five forces model

For better understanding the forces which impact the Primark’s entry into German market, analysis of Porter’s five forces can be helpful, these include:

• Supplier’s bargaining power: This is moderate in German retail sector, thus, Primark has accessibility to a large number of suppliers, though they can put some impact by aspects like quality regulation and value negotiations.
• Buyer’s bargaining power: In German retail industry bargaining power of buyer is high, as consumers have various options to choose from.
• Competitive rivalry: There is intense competition within the concerned market, with various competitors like big established organisations.
• Threat of substitute product: Substitute goods threat in German retail industry is moderate, as there are various other established companies offering similar or same products as Primark (Yu, Chiu, & Chan, 2023).
• New entrants threat: This is moderate, as the already positioned companies have robust brands and also distribution channels, Primark has to make great efforts to capture a share in the market of Germany.

Entry Mode

Primark choose wholly owned subsidiary arrangement, for entering the market of Germany. While setting of the subsidiary is completely controlled by the parent company or the company which has hundred percent of its shares. Such tactic enabled the company to uphold complete hold on its brand reputation, business operations, as well as business tactics. The business decision of opting for this setting lined up with the long-run vision of the company, which is to form a robust presence within the market, and also at the same time have full control over the experiences of customers and also the pricing arrangement. In addition, the entry of the company within the German retail market includes big stores located within prime urban retail passages. All such flagship stores are tactically placed in cities like Bavaria, Hessen, Berlin, Bremen, Hamburg and many more (Primark locations in Germany, 2025). The usage of big retail properties enables the company to showcase its broad variety of offering as well as appeal large number of customers. The distribution network of the company supports a blend of developing online presence and also shopping within the physical outlet, although the company’s presence on online platforms is not as much improved as compared to the other competitors.

The Uppsala model is well-known models of the way through which firms set about the process of internalization. The framework states that the enterprises first opt to take entry in neighbouring market with less market commitment. This model is based on core concepts which are market knowledge, commitment decisions, market commitment and current activities. The practices of Primark lines up with this model, as the model states that the companies should begin the process of internationalization from the regions which are economically as well as culturally alike to their own home countries (Cuervo-Cazurra, & Li, 2021). In the present scenario, the home country of Primark is UK, and Germany is economically steady and close to the UK in geographic terms. This represents an action by the company which is influenced by model. This type of step-by-step entry strategy allows Primark to acquire perception in relation to global business operation, decrease risks, as well as align its plans as per that, prior to tapping within highly complicated marketplaces.

Furthermore, decision of Primark to set up a wholly owned subsidiary within German market can be evaluated using OLI theory, where O stands for ownership, similarly L for location and I for internalization. Further, ownership benefits involve the effective supply chain of Primark, and its great comprehension in relation to retail business operations at large scale. Moreover, location benefits within the expansion country are its large numbers of customers with high purchasing power, and strong economy, which provides various opportunities for growth. The capabilities to diversify its business functions confirms that the company can efficiently handle and improve its logistics, personalise experiences of its customer as per the German consumers’ requirements and regulate expense, ultimately improving profit margins.

Moving ahead, the chief benefits of opting for such entry strategy is the control it offers over the business operations, that enables the company to straightaway impact is management of stock, customer assistance standards and also outlet functions. This consecutively, decreases the probable risks related to dependence on third-parties, and permit for responding better to the needs of the local customers (Igwe, Rugara, & Rahman, 2021). Nevertheless, there is a requirement of substantial investment for establishing a subsidiary which is completely owned by other company, this could be a financial restrain, especially within the competitive German market. Along with this, aligning with the situations and trends in local market, like local laws as well as customer needs, might represent operational issues, and thus, Primark will require to regulated is business strategy and operations in order to cope up with these influences.

Critical Risk Factors

As the company diversifies its business operations within Germany, various critical risk factors require to be taken into consideration for confirming Primark’s growth within the market of Germany. Such risks could be characterised into various aspects, each of which poses diverse issues which the company should alleviate. One of the factors is political factors which poses probable risk related to government or political system steadiness and also its practices and laws to foreign direct investment. Though, the government of Germany is steady, there still can be transitions in the political landscape which can impact the Primark’s operations. These can be alteration in employment regulations, taxation policies and much more. Moreover, political changes within the EU can also influence the trade policies of Germany, as well as shifts in product laws or import-export rates can impact the logistics of the company. In order to manage such risks, the company can adopt insurance plans (Luo, 2021). Through shifting or transferring political dangers with the help of political risk insurance or utilising global trade contracts, Primark can reduce revelation to political instability. Further, consistently monitoring international issues can also be helpful.

In addition, Germany is one amongst the leading and constant economy, although issues like increase in salary packages, depression or economic downturn, or inflation can influence the spending by customers. Though the country has a solid customer segment appealed by fast-fashion and stylish clothing and accessories, an immediate rise in inflations can result into decreased customer spending, affecting need for the company’s products. Further, variations in exchange rates among Germany and the United Kingdom could impact profitability on products imported. The company can tolerate such risk through expanding its business operations to other countries, reducing its heavy dependence on any one economy. The influence of currency variations, can be made steady through using tools of financial hedging. Other than this, the company may also consider adopting a highly supple strategy in relation to prising in order to cope up with fluctuating economic situations, while upholding brand image.

Furthermore, there are various cultural differences in both the countries that is UK and Germany that can represent risks for the company, particularly related to social factors. For instance, German market might have diverse fashion demands, resulting into a mismatch among the company’s offerings as well as local customer preferences. Along with this, through the company value based pricing makes it attractive, but it might not reverberate with the consumers in German market who are most probable to prioritise high quality and environmental sustainability while shopping for products (Wuni, Shen, & Mahmud, 2022). Primark will treat this risk through arranging a comprehensive market research within Germany in order to comprehend demands of local customers, and acclimating its offering as per that. Moreover, the company should focus on upholding sustainability within logistics and encourage environmental-friendly policies, lining up with the rising customer demands for accountability in retail sector.

Conclusion

Based on above discussion, it can be concluded that entry of Primark within the retail market of Germany posed various critical risks which can possibly affect the company’s growth and overall success. Critical risk factors like political, economic and social risks represent problems, though with the use of proper risk management strategies, the company can handle such risks in an effective manner. Moving ahead, in the context of political factors, the company can manage risks through being up-to-date with the transition in regulations as well as using insurance for confirming political steadiness. Further, another critical risk factor is economic risk, this can be mitigated or tolerated through expanding the company’s access to diverse markets of other countries and utilising tools of hedging in order to reduce the effect of variations in currency rates.

Furthermore, another critical risk factor which has been discussed is social risks. This risk could be treated through assimilating the products of the company to line up with the preferences of customers in German retail market, and also at the same time uphold sustainability practice for fluffing the rising expectations of customers in the country. Through answering to such risk in a strategic or tactical way, the diversification of company’s business within the market of Germany could be success. The planned strategies properly address the business landscape, enabling the company to function in accordance with the domestic situations and work on its robust areas, like retail functions at large scale and cost-effectiveness, and also at the same time eliminate the issues represented by the foreign market. Collectively, these steps can confirm the company’s competitiveness and unceasing success within the retail sector in Germany.

References

Books and Journals

• Cuervo-Cazurra, A., & Li, C. (2021). State ownership and internationalization: The advantage and disadvantage of stateness. Journal of World Business, 56(1), 101112. ( https://doi.org/10.1016/j.jwb.2020.101112)
• Dalirazar, S., & Sabzi, Z. (2023). Strategic analysis of barriers and solutions to development of sustainable buildings using PESTLE technique. International Journal of Construction Management, 23(1), 167-181. ( https://doi.org/10.1080/15623599.2020.1854931)
• Eierle, B., Hartlieb, S., Hay, D. C., Niemi, L., & Ojala, H. (2022). External factors and the pricing of audit services: A systematic review of the archival literature using a PESTLE analysis. Auditing: A Journal of Practice & Theory, 41(3), 95-119. (https://doi.org/10.2308/AJPT-2019-510)
• Igwe, P. A., Rugara, D. G., & Rahman, M. (2021). A triad of uppsala internationalization of emerging markets firms and challenges: A systematic review. Administrative Sciences, 12(1), 3. (https://doi.org/10.3390/admsci12010003)
• Luo, Y. (2021). New OLI advantages in digital globalization. International Business Review, 30(2), 101797. (https://doi.org/10.3390/admsci12010003)
• Wuni, I. Y., Shen, G. Q., & Mahmud, A. T. (2022). Critical risk factors in the application of modular integrated construction: a systematic review. International Journal of Construction Management, 22(2), 133-147. ( https://doi.org/10.1080/15623599.2019.1613212)
• Yu, H. H. K., Chiu, D. K., & Chan, C. T. (2023). Resilience of symphony orchestras to challenges in the COVID-19 era: analyzing the Hong Kong Philharmonic Orchestra with Porter's five force model. In Handbook of research on entrepreneurship and organizational resilience during unprecedented times (pp. 586-601). IGI Global. (DOI: 10.4018/978-1-6684-4605-8.ch026)

Online

• Primark locations in Germany. 2025. Online. Available through: < https://geolocet.com/products/germany-primark-clothes>
• Primark Corporate. 2025. Online. Available through: <https://corporate.primark.com/en-gb/a/about-us/who-we-are>
• Trading Economics. 2025. Online. Available through: < https://tradingeconomics.com/germany/competitiveness-rank#:~:text=Germany%20is%20the%207%20most,by%20the%20World%20Economic%20Forum.>