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Extract of sample "The entry strategy mode for NEXT to Expand into China"
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Their sufficient answers equipped me with in-depth knowledge and better understanding of NEXT Plc, the fashion industry, and the Chinese clothing market. Their shared knowledge enabled me to critically analyse the issue in consideration.
NEXT Plc is the UK third-largest clothing retailer operating through 400 retail stores across the UK and Ireland, more than 50 stores in Europe, Asia and the Middle East. (http://en.wikipedia.org/wiki/Next_plc). It is a prominent retailer, whose strategy is aimed at capturing new markets through global expansion.
This research project investigates the current literature on the internationalisation process and reviews alternative modes of market entry strategy. Various primary and secondary sources provide the necessary data to sufficiently asses the internal health and the external market of NEXT PLC. These data are then carefully analysed in order to gauge the company's capability to expand internationally. Alternative expansion options are evaluated and recommended for the company's successful expansion into the Chinese market.
The research concludes that the Chinese market is a fertile ground for the expansion of a foreign apparel retailer. However, the existence of various environmental, industry specific-forces, and the current resources limitations of the Inditex group, requires the establishment and employment of an optimal expansion strategy.
It should be noted that due to certain limitations imposed by environmental and internal factors, the findings of this research cannot be utilized in terms of all market expansions, although they can be amply used as an example for further theory building in the area related to the Chinese market entry and expansion strategies.
Table of Contents
1.1 Background to Study
The rapid growth of the textile industry in China which is facilitated by the continuous economic reforms, improving living standards, and increasing demand conditions has been widely recognized (USINFO, 2004). Furthermore, the emergence of the Chinese middle class gives way to the development of a very attractive and large market (Wang et al., 2004). However, the earlier attempts to enter the Chinese market reveal that various multinational corporations (MNCs) have not fully gained adequate knowledge of the population. Their generalisations have underestimated Chinese consumers by treating them as a homogeneous group (Jagersma & Van Gorp, 2003). In reality, China's unique political andsocial environment creates a very fragmented market with the existence of various segments (Wang et al., 2004).
1.2 Research Aim and Objectives
Based on the findings of the study, the researcher will attempt to draw recommendations for NEXT PLC on its entry and expansion to the Chinese market. Several objectives are set to support the research process:
Define and investigate present and future key environmental factors present in the Chinese market which are likely to affect the performance and success of NEXT Plc should it decide to operate in the geographic region;
Assess the financial and strategic capability of NEXT Plc to expand in the new market;
Evaluate alternatives for the successful market expansion and identify main issues involved; and
Recommend the best option
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TABLE OF CONTENTS
CHAPTER I - ABSTRACT 3
CHAPTER II - INTRODUCTION 4
Aims & Objectives 5
Research Questions 5
CHAPTER III - LITERATURE REVIEW 7
Mode of Entry 7
Ownership & Control 12
Conclusion of the Literature Review in Entry Strategy 15
IKEA in China 16
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The company has over 35 products catering to different needs at different ages, all of which provide excellent nutrition to children. They work closely with the medical profession to develop the best foods for babies. Demand for foreign milk power has been high in China since 2008 when at least 300,000 children fell ill after consuming milk laced with industrial chemical melamine (Shanghai Daily, 2013).
To serve customers outside domestic market, a firm needs to choose the best entry mode to penetrate the foreign market. Proper selection of the entry mode to a particular foreign market is important for a firm and it has been identified as a "frontier issue" in international marketing (Wind and Perlmutter, 1977; Anderson and Gatignon, 1986:2).