Impact of Foreign Business Environment on Marks

Executive summary:

The international business environment has several factors such as social, political, legal, demographic, technological and environment which pose a potential impact on the multinational companies. In terms of conducting cross-border trade, multimerization companies cab face both the support and barriers in the foreign country. There are many factors in the foreign business environment which need to be considered while operating any business. For example, customers, labours, suppliers, dealers, clients, investors and distributors are the important entities that also impact on operation and transaction of multinational business. This report will discuss the impact on foreign environment in which the selected company, Marks & Spencer operates its business. This study will also discuss the cross-border trade of Marks & Spencer with discussing the impact of different foreign environmental factors such as economic, cultural, social and political factors on the overall trade operation. Also, for those seeking in place to delve deeper into these complexities, business dissertation help can provide the needed insights and proper guidance.

Introduction:

For grabbing high level of success while operating any business into foreign market, it is important to understand the business environment of that market. Environmental factors play important roles in influencing the operation, decision-making process, policies and procedures of business. By analysing different components of internal business environment, marketers can be able to understand the impact of these components on the overall, business operation of an organisation. This report will discuss the impact on foreign environment in which the selected company, Marks & Spencer operates its business. This study will also discuss the cross-border trade of Marks & Spencer with discussing the impact of different foreign environmental factors such as economic, cultural, social and political factors on the overall trade operation. Finally, the report will also depict the issues that the Marks & Spencer can face in terms of operating its business into foreign market.

Demonstrating critical understanding of features of international business environment and its institution:

While it comes to understand the important features of international business environment, it is important to analyse its forces, factors and institution that have direct as well as indirect impact on the business operation. Marks & Spencer, the UK based multinational retailer needs to analyse the characteristic feature of different institutions of factors of international business which will impact on transaction, operation and decision-making process of this company. International business has the following institutions which have features that are involved in making apparent changes in the overall business process of Marks & Spencer.

Features of business environment:

International business environment has the following features:

Business environment can be referred to as the integration of entire external factors that have direct as well as indirect impact on the environment (Ayodele et al. 2019). Marks & Spencer operates its business in 57 countries, it has a direct impact on the institutions or factors of the foreign market. These external factors include social, political, cultural, socio-economic, demographic, legal and economic factors which interfere with organisational policies, marketing strategies, decision-making process and operation of Marks & Spencer.

There are many factors in the foreign business environment which need to be considered while operating any business. For example, customers, labours, suppliers, dealers, clients, investors and distributors are the important entities that also impact on operation and transaction of multinational business (Barnier and Wright, 2017). Marks & Spencer needs to consider the availability if these entities during operating in foreign countries. Marketing strategies and business framework are different based on these factors in different countries, for example, marketing managers of Mark & Spencer need to take completely different strategies for India and Australia, as the labour market, availability of suppliers and dealers in these two markets vary from each other.

Changes in the internasal business environment are highly unpredictable which makes uncertainty for multinational companies (Jona and Guxholli, 2018). For example, the marketers of Mark & Spencer have faced challenges in the political, economic and social aspects in the European country due to Brexit. The sudden changes in the political framework in European countries and the UK, pose a positive and negative impact on the operation of Mark & Spencer during its operation in European countries. Sudden changes in the international business environment make the marketers of a company set the organisational strategies, marketing agendas and business policies based on the changing needs of that environment.

Business environmental factors change from country to country, place to place and region to region (Johannessen and Johannessen, 2018). For example, socio-cultural and political factors in India is entirely different from that of Pakistan and China. In this context, Mark & Spencer needs to take different marketing strategies that will be relevant to the environmental factors in that foreign country. For example, the price list of clothes in Australia and India is different based on the economic condition of the two countries. In Australia, the price of each item in Mark & Spencer is higher than in India as Australia has a highly developed economy as compared to India.

Main institution of international business environment:

Following are the main institutions f forces of international business environment which have a direct and indirect impact on operation and transaction of Mark & Spencer.

Political factors:

Political aspects in a foreign country are the major institution of international business environment which impact on the decision-making process, operation, marketing strategies and organisational policies of any Company (Jona and Guxholli, 2018). In this context, Mark & Spencer has to consider different political factors such as:

Business policies are taken by the foreign government

Stability of the foreign government

Ideology of the different political parties in the country in which Mark & Spencer is operating

Strikes, labour disputes and lockout in the international market

Changing political agendas regarding the business operation of foreign companies into this country

Economic factors:

Marketers of Mark & Spencer will face the following impact on economic environment in foreign country.

Industrial policy is one of the most important economic aspects that any company needs to consider while operating in the foreign country (Katz et al. 2016). Mark & Spencer needs to analyse the impact of industrial policies of foreign government on the regulations, rules, procedures and industrial guidelines that directly and indirectly influence the operation of this company.

Organisational needs to consider the fiscal policy while operating in foreign environment (Kukovec et al. 2018). In the case of Mark & Spencer, marketers need to overhaul the overall impact of governmental policies regarding taxation, expenditure, public debt on the entire transaction process of this company.

Mark & Spencer needs to consider the monetary policies set by the foreign government in term of ensuring smooth supply of credit into the business.

Mark & Spencer will also consider the impact on monetary policies of foreign government in terms of setting proper price of each item, that will be relevant with the economic condition of the country. Moreover, the marketers of this company will also analyse the monetary policies in terms of understating the guidelines and financial rules that the foreign government has set up for supporting the operation of multinational businesses into this country.

Mark & Spencer will also have a direct impact on Exim policies of foreign government on its operation and decision-making process. This policy will directly impact the prices set for import and export operation of this company. Moreover, the taxes and duties imposed on import from the foreign companies will also raise economic burden for this company.

Legal factors:

Whiles operating in the foreign countries, marketers of Mark & Spencer needs to consider the different legislation and facts in terms of conducting smooth business operation. The marketers of Mark & Spencer need to follow entire legislation and acts that are developed by the government of foreign country in which the company operates its

business. For example, in terms of operating its business in India, Mark & Spencer has followed different acts such as

Companies Act 1956

The Factories Acts, 1948

Payment of Gratuity Act 1972

Prevention of Food Adulteration Act, 1954

Trade Marks Act, 1999

The Standards of Weights and Measures Act, 1956

Technological factors

In today' fast-paced technological world, of a business needs to survive it should use and implement appropriate technologies in terms of improving its service as well as quality (Madhavaram and Hunt, 2017). Being a famous retail multinational company, Mark & Spencer has already switched to digital processes in term of making its operation as well as transaction faster than earlier. It uses different application programs, software and operating system for promoting high-quality service and products to its customer in the foreign market. Through updating its online website, Mark & Spencer has reached millions of customers from any corner of the world, for making them able to do window shopping of wide ranges of products and services.

Social factor:

Along with the economic, political, legal and technological factors, a business needs to analyse the social factors of a foreign country while going to operates in this market (Martinez et al. 2019). Social factors of a foreign country that impact on the decision-making process, operation and transaction of business are employment, education, the living standard of people, social belief, rituals, traditional views, income level and occupation. For example, Mark & Spencer has set relatively higher price for its products and services in the USA as compared to India, because, the income status and living standard in the USA is much higher than that of India.

Environmental factors:

According to Milani (2019), natural environment includes ecological and geographical factors that pose an important impact on the operation and productivity of a business. Being a multinational company Mark & Spencer needs to consider the environmental factors such as climate condition, topographical factors, location aspect, weather and natural resources while operating in a foreign market. For example, in tropical countries such as India, Bangladesh and Pakistan, the types of clothes that are displayed in the website of Mark & Spencer is different from that of Australian and USA, due to the different climatic nature. Summer has occupied most of the part of the weather in India, which is the reason the Mark & Spencer stores has wide ranges of summer collection in its selves. On the other hand, environmental policies set by the foreign government also poses important impact on the company. For example, while operating in the USA, Mark & Spencer needs to focus most on selling ecological and renewable products that can be recycled easily thereby reducing the chances of pollution.

Understanding cross border trade and investment and explain the key actor that support the cross-border trade:

Cross border trade can be referred to as any transaction or business operation that crosses the geographical birder of a nation (Pati et al. 2018). Cross border trade generally occurs within the neighbouring countries which share the common geographical borders.

Being a multinational company Mark & Spencer operates its cross-border trade across several countries such as USA, Australia, Germany and Belgium. Through operating cross border trade, this company maintain strong business relationships with potential investors, suppliers and marketers of these countries. Cross border trade assists this company to understand the market trend, economic and social condition and business framework in these countries, which assist the marketers of Mark & Spencer to understand the actual customer needs and demands. During conducting the cross border trade Mark & Spencer have grabbed support from several factors in these countries which are as follows:

Political:

In terms o conducting cross border trade, multinational companies can have political support from the local and central government of the country, in which it is operating (Prajogo, 2016). While operating in foreign countries, Mark & Spencer grab support from many political aspects in the foreign county. Today's government focuses on attracting potential investors to make a massive investment in that country. In developing countries such as India, Mark & Spencer has support from the major political party and central government to enhance their business into this country, that will not only generate employment in this country but also improves the living standard of people. Moreover, most of the developing and developed countries have taken political agendas to multinational retail companies to operates in these countries in terms of improving their economic status and international reputation. As Mark & Spencer is associated with wide ranges of CSR activities, it gets support from the government into foreign countries to operates its business smoothly.

Social:

In the case of Mark & Spencer, the marketers prioritise the social values, beliefs, traditional approaches, employment and incomes level of foreign country, while operating this country. Although changing social trend in developing countries such as the shift of customer preference towards eco-friendly products, enhance the economic burden of the company, there are some positive aspects associated with these social factors in a foreign country. First, Mark & Spencer gets support from society people, in which the young generation welcomes the innovative styles of clothes and trendy products of this company. Second, today's society prefers wide ranges of products and service which will provide them many choices. In Mark & Spencer, customers in foreign countries can have wide ranges retail products with several alternatives which not only provides opportunity to customers to buy the best product but also assist them to analyse the comparative market price of each product.

Economic:

The economic condition of the foreign country poses an important impact on the cross border trade of a company. In the case of Mark & Spencer, marketers grab financial support from the local and central government if the country in which this company operates its business has strong finical condition. For example, in Australia, Mark & Spencer gets a high level of financial support from the government in terms of extending its business in different locality of this country. Moreover, the recent economic boom in Australia assists the marketers of Mark & Spencer to grab the attention of overseas investors in terms of investing in the company.

Analyse key decision of choice of market and entry strategies and various modes of engagement in the market:

Mark & Spencer can use the following modes of entry strategies or engagement processes which will assist the marketers of the company to operate in foreign market smoothly.

Exporting:

Exporting is one of the most important market entry strategies in international business (Radzi et al. 2017). There are two types of export, indirect export and direct export.

Direct export:

Indirect export, the multinational business firm sets an export management board inside the company which supervise the overall process of exporting products to the foreign marketers (Ratten et al. 2017). Mark & Spencer uses direct export process as an entry strategy in the foreign market, in which the products and services are sold directly to the foreign customers as well as marketing intermediaries. In developing as well as developed countries, Mark & Spencer use this entry strategy in terms of operating the business.

Indirect export:

This is the process in which a firm sells it's export its products and services through foreign export agents situated in the local market (Rydehell et al. 2019). Generally small and medium-sized companies use this process as an entry strategy, in which they contact the foreign export agents that are situated in their home country to communicate with foreign customers and marketers. Although Mark & Spencer operates most of its cross-border trade through direct export, sometimes it uses foreign export agents in the UK market in terms of connecting with overseas market sand customers in terms of entering into the new market.

Licensing:

Licensing is one of the most important and preferable entry strategies, which most of the multinational companies use for operating cross border trade (Salyova et al. 2017). Mark & Spencer also uses this strategy for operating its business in an overseas country, in which it has gained legal rights to opens its branches and sells its products into these markets.

Franchising:

Franchising is another form of licensing which assist Mark & Spencer to opens its branches into different foreign countries by using the trademark, logo, methods of operation and products codes of the head office of this company.

Explain the international business issues and discuss theoretical approaches in analysing such issues:

Being a multinational company, Mark & Spencer is going to face the following international issues in term of operating the cross-border trade

Political issues:

Political issues include unstable government, political disputes and irrelevant policy set up (Shaaban and Magsi, 2019). Mark & Spencer has chances of facing political issues in foreign countries, which will pose an adverse impact on the decision-making process, marketing strategies and business operation of this company. In this aspect, the marketers of Mark & Spencer can use Heckscher-Ohlin Model, which will assist them to focus on export more products in terms of improving the overall issues in their operation. This theory will assist the marketers of Mark & Spencer to understand how to use political aspects in foreign country to improve the export process.

Social issues:

Social issues that Mark & Spencer will face during its cross-border trade are social values, traditional social beliefs, unemployment, lower economic standard of society, poor income level of consumers and lack of education. In developing countries, Mark & Spencer face these social issues which make it obligatory for the marketers to change their marketing agendas and policies based on the social structure of the country. In this context, the marketers of Mark & Spencer can use Porter’s Diamond Theory, which assist them to understand the importance of competitive advantage in terms of improving the overall business operation, through using this theory marketers can improve the competitive position of this company which will improve the social aspects such as employment, education, living standard and social perception.

Trade issues:

Trade issues that Mark & Spencer can face in foreign country are tax and tariffs, which enhances the market expenditure of this company. In this aspect, the marketers of Mark & Spencer can use Heckscher-Ohlin Model, which will assist marketers in how to make effective marketing strategies in terms of improving their export and reducing the overall expenditure.

Conclusion:

From the above-mentioned discussion, it can be concluded that international business environment has several factors such as social, political, legal, demographic, technological and environment which pose potential impact on the multinational companies. In terms of conducting cross-border trade, multimerization companies cab face both the support and barriers in the foreign country. There are political, cultural, trade and legal barriers which can pose obligations on multinational company. Therefore, through developing effective market strategies and useful market decision, multinational companies can transform these barriers into supportive forces that will assist the company to expand its business footprint in international market.

Recommendation:

Mark & Spencer is recommended to implement following strategies in terms of operating successful business in international level:

Marketers should analyse the customer buying behaviour and market trend of the foreign market

This company needs to focus on improving the overall quality of its service and products, that will meet the customer’s needs in the foreign country

The company should comply with the industrial policies and guidelines set by foreign government for operating its business peacefully

The market analyse should make researches on comparative marketing approaches in international level which will assist this company to take useful marketing agendas in operating successful business.

Reference list:

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Barnier, B. And Wright, C., 2017. The many facets of risk: internal auditors need to consider the variety of perspectives business functions have for managing risks. Internal Auditor, 74(2), pp.20-22.

Brunton, M., Eweje, G. And Taskin, N., 2017. Communicating corporate social responsibility to internal stakeholders: Walking the walk or just talking the talk?. Business Strategy and the Environment, 26(1), pp.31-48.

Johannessen, J.A. and Johannessen, J.A., 2018. Knowledge Management and Internal Training', Knowledge Management as a Strategic Asset.

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Barnier, B. And Wright, C., 2017. The many facets of risk: internal auditors need to consider the variety of perspectives business functions have for managing risks. Internal Auditor, 74(2), pp.20-22.

Brunton, M., Eweje, G. And Taskin, N., 2017. Communicating corporate social responsibility to internal stakeholders: Walking the walk or just talking the talk?. Business Strategy and the Environment, 26(1), pp.31-48.

Johannessen, J.A. and Johannessen, J.A., 2018. Knowledge Management and Internal Training', Knowledge Management as a Strategic Asset.

John, J.K., Kilumile, J.W. and Tundui, H.P., 2019. Internal Branding: An Engine in Building and Sustaining Brand Equity–A Conceptual Paper. American Journal of Management, 19(5).

Jona, P.U.C.I. and Guxholli, S., 2018. Business Internal Auditing–An Effective Approach in Developing Sustainable Management Systems. European Journal of Sustainable Development, 7(2), pp.101-101.

Katz, B.R., Du Preez, N.D. and Louw, L., 2016. Alignment of internal and external business and innovation domains. South African Journal of Industrial Engineering, 27(1), pp.61-74.

Kukovec, D., Mulej, M. And Žižek, S.Š., 2018. Professional languages alone do not suffice for successful and socially responsible internal communication between different cultures. Naše gospodarstvo/Our economy, 64(3), pp.47-55.

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Madhavaram, S. And Hunt, S.D., 2017. Customizing business-to-business (B2B) professional services: The role of intellectual capital and internal social capital. Journal of Business Research, 74, pp.38-46.

Martinez, M.G., Zouaghi, F., Marco, T.G. and Robinson, C., 2019. What drives business failure? Exploring the role of internal and external knowledge capabilities during the global financial crisis. Journal of Business Research, 98, pp.441-449.

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Appendices:

Appendix 1:

Forces of international business environment

Appendix 2:

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