Preparing A Management Report On Debenhams’ International Business Strategy

Choice of the product and service

The international business strategy can be used to focus on exporting products and services in the foreign markets. The company striving to expand internationally can try this strategy. It refers to guiding commercial transactions taking place in different countries. This report includes an international business strategy of Debenhams which is a British multinational retailer. Debenhams was established in 1778 by William Clark. Its store has located in 44 Wigmore Street in London’s West End selling exclusive fabrics, caps, gloves and sunshades. In the year of 2007, a corporation acquires 9 stores from Roches in the Republic of Ireland. In the year of 2009, Debenhams acquires Magasin du Nord and the prominent department store chain in Denmark.

The company is thinking to expand its operations in Nigeria and India. Debenhams has a biggest department store in UK, Denmark, and Republic of Ireland (Debenhams, 2018). Debenhams offers its clients an exclusive, differentiated and special combination of own brands along with the global brands. This report comprises the internal and external analysis of the Debenhams. Out of which SWOT analysis represents the strength, weakness, opportunities, and threats of the company. The macro environmental analysis includes the pestle analysis of Nigeria. The modes of entry chosen to enter in the Nigerian market are joint ventures, FDI and acquisition (Agho, et. al., 2018).The report also includes the challenges to be faced by the country while entering the Nigerian market.  

Choice of the product and service

Debenhams deals with all products and brands. The company operates in 3 different divisions. Out of which one is department stores distributing with all products. Desire stores are minor and make available accessories, children swear, health, and beauty. The last one is license stores which run globally only. Its major objective is to please customers by offering a series of distinguished products and services (Ewetan and Ese, 2014).

Debenhams makes available a series of diverse products like women’s wear, lingerie, home ware, health, beauty and more. The brand portfolio comprises company possessed brands like Mantaray and Bluezoo (Debenhams, 2018). 25 brands are designed by the Debenhams itself only. The website is also available for online shopping. The company aims to make available specifically women wear as a product in the market of Nigeria.

Internal and external analysis

Debenhams is one of the prominent companies in the industry. The company has several strengths which assists to prosper in the marketplace. The SWOT analysis of the Debenhams is given below:

Strengths Product innovation and superb performance Strong distribution network A higher level of customer satisfaction Record of participating complimentary firms	Weaknesses Lack of financial planning Poor demand forecasting Low investment in Research and development
Opportunities Trends in consumer behaviour New technology New taxation policy Lower inflation rate	Threats Lack of skilled workforce The increasing strength of the local distributions Currency fluctuation

Internal and external analysis

Strengths

Product innovation and superb performance: Debenhams has a successful record of developing innovating products. The company has even accomplished expertise in arriving new markets and making an achievement of them (Agho, et. al., 2018).

Strong distribution network: The Company has develop a consistent delivery network which can extent most of its prospective market. The distribution network is increasing on a constant basis and is getting stronger.

A higher level of customer satisfaction: Debenhams can achieve an advanced level of gratification due to its devoted customer relationship management department. The company is having worthy brand equity among the prospective customers.

Record of participating complimentary firms: Debenhams has an effective record of integrating admiring firms by mergers and acquisitions. The company has effectively united various technology companies in the last few years to reorganize its processes and to develop a consistent supply chain (Ezenwa, Stella and Agu, 2018).

Weaknesses

Lack of financial planning: The financial planning is not done appropriately and proficiently. The current asset ratio and liquid asset ratios show that Debenhams can use cash more competently than what is exploiting at current.

Poor demand forecasting: Debenhams is not very good at product demand estimating and it is leading to missing advanced opportunities at the marketplace (Agbolade Obasan, 2014). The days inventory is great as paralleled to the contestants because the company is not very good at demand estimating. It ends up in higher inventory in-house and in the channel.

Low investment in Research and development: Debenhams invest less in the Research and Development compared to its competitors. However, the company is spending beyond the industry average on research and development but still not capable to strive with the foremost players in the industry (Gavinelli, 2016).

Opportunities

Trends in consumerbehavior: The new trends in consumerbehavior opens up the new market for the company. It offers a great prospect to generate new revenue streams and differentiate into the new product classifications as well.

New technology: The new technology offers a prospect for the company to practice discriminated assessing strategy in the market. It enables the company to retain devoted customers with the excessive service. It can even appeal to new clients through value-oriented propositions.

New taxation policy: The new taxation policy can considerably affect the company’s way of conducting business. It can even expose new business opportunities for the recognized players like Debenhams to raise the profitability (Gifford and Nilsson, 2014).

Lower inflation rate: The lower inflation rate brings further constancy in the market. It empowers credit at a lower interest rate to the clients of the company.

Strengths

Threats

Lack of skilled workforce: The deficiency of the expert staff in the international market signifies threat to the evolution of the Debenhams in the subsequent markets.

The increasing strength of the local distributions: The increasing strength of the local distributors represents a threat in some markets. Such competitions pay advanced margins to the native suppliers.

Currency fluctuation: The Company is more exposed to currency fluctuations as it is operating in various countries. The volatile political climate in the various markets specifically affects the Debenhams (Im, Vorhies, Kim and Heiman, 2016).

MACRO Environment Analysis

The Macro Environment Analysis Comprises the PESTLE Analysis:

Factors	Description
Political factors	Nigeria seems stable political rebellion of bombers in the Northern part of the country. The country drives a multi-party system with more than ten political parties.
Economic factors	The youth employment rate is 21.5% and the economic inference of it can lead to corruptions and other communal immoralities. The cost of borrowings is quite great in Nigeria in the form of loans.
Social factors	Nigeria has around 200 million people which referred to it as a giant of Africa. There are huge market opportunities. The population in Nigeria is enough to attract investors.
Technological factors	Nigerians are fetching computer savvy. Though laptop and computers quiet remain luxury to some people and the use of smartphones appears to bridge the gap.
Legal factors	The income tax in Nigeria is 30% whereas VAT is 5%. Federal Inland revenue service drives cohesive tax system which made tax elusion practically difficult.
Environmental factors	The absence of electricity, level of noise and pollution from the power creating sets is great. It upsets the residential, marketable and industrial areas singly.

Political factors

Nigeria seems stable political rebellion of terrorists in the Northern part of the country. It has been 16 years; Nigeria is operating under the constant democratic system of governments. Though, there are only 2 leading political parties. One is playing the part of antagonism party whereas the other one is the dominating party and has popular seats in both upper and lower cavities of the judicial arm of the government (Ekpe, Alobo and John, 2014). The term of the government in Nigeria is usually for the four years. The elections involve a huge spending there. Any company which is likely to conduct business in Nigeria can involve media and printing and record huge turnover during this period.

Economic factors

The economic factor in Nigeria considers the level of employment. The youth employment rate is 21.5% and the economic inference of it can lead to corruptions and other communal immoralities. On the other side, entrepreneurs can have right to cheaplabor. So, it can be cost-effective for the Debenhams to expand business in Nigeria. Additionally, it can even benefit the company to sub contract labor-intensive arm of its business to Nigeria. The cost of borrowings is quite great in Nigeria in the form of loans.

Social factors

 Nigeria is the most populated country on the African continent. Nigeria has around 200 million people which referred to it as a giant of Africa. There are huge market opportunities. The foreign direct investment is increasing in spite of the instability in the country. The population in Nigeria is enough to attract investors. Nigeria has different ethnicity and religion. Yet the country still celebrates unity in the diversity. It is required to understand the religion and cultural values of each group before conducting business in Nigeria (Abdel-Rahman, et. al. 2017).

Weaknesses

Technological factors

 Nigerians are fetching computer savvy. A huge crowd of youth is computer literate in the country. People are vigorous internet users and have a social media existence by using smartphones (Amesi and Giami, 2018). It is the best way to advertise online for the Debenhams to conduct business in Nigeria. It is the best way to reach target customers.

Legal factors

As a part of the legal factor, the country runs a progressive tax system for the personal income tax. The income tax in Nigeria is 30% whereas VAT is 5%. The companies want to conduct or expand business in the country are required to obey with the appropriate tax laws. Otherwise, companies can be applied fines if it has been found that these are not paying precise taxes. Federal Inland revenue service drives cohesive tax system which made tax elusion practically difficult. Any company that wants to open a bank account in the country is anticipated to offer the bank with TIN (Tax Identification Number). It is essential for the companies to get open account number for the transactions taking place (Oladokun and Ogunbiyi, 2018).

Environmental factors

The centralized government of Nigeria has a significant part in defending the biology of the country. Each state in the country is authorized to articulate commandments or policies which ensure that the environment is hygienic to avert diseases and other external factors. The absence of electricity, level of noise and contamination from the power creating sets is high (Akanni, Oke,and Akpomiemie, 2015). It affects the residential, commercial and industrial areas singly.

Mode of entry into the international market

The market entry strategy is a deliberate method of the distribution of goods and services to the fresh target market. Here are certain market entry modes are given below which can be practiced by the Debenhams at the time of entering the Nigerian market.

Joint ventures: The joint ventures comprise the creation of a 3^rd independent managed company. In the joint ventures, two companies agree to work together in the particular market to produce specific products. Debenhams can come in agreement with the local Nigerian company to produce products (Mika, Warren, Foley,and Palmer, 2017). The risks and profits will be shared equally between both the partners. The joint venture agreement sets out the right and obligations of the partners. The joint venture is beneficial for the already existing distribution network of the company. It can be political ramifications, tax implications, type and size of investment to be made in the country (Yan and Luo, 2016).

Opportunities

FDI: The decision of foreign direct investment can be made by the Debenhams for making an investment in Nigeria. The company can establish foreign business operations in Nigeria. It comprises establishing ownership and controlling interest in a foreign company. It also includes provisions of management and technology as well (Blonigen and Piger, 2014).

Acquisition: Debenhams can acquire controlling interest in the existing company of Nigeria. Debenhams can purchase shares of the Nigerian company to take control. Debenhams is required to obtain more than 50% ownership in the host company. Debenhams can purchase the stock and other assets of the acquiring company in the process of acquisition (Shaban, Yao, Darun, and Alkhateeb, 2017).

Challenges faced in entering the international market

Debenhams can make use of the Blue Ocean Strategy in the Nigerian market as there is very less or no competition at all. The blue ocean strategy spins around searching for a business in which a few firms work and there is no pricing burden. This strategy helps to seizure new demand and makes opposition inappropriate by presenting products with higher features. It can help Debenhams in making huge revenues as the products can be little price steep because of the unique elements (Mebert and Lowe, 2017). The company can easily capture the growing demand of the consumers with the blue ocean strategy. Here are some challenges which Debenhams can get to face while entering in the Nigerian market. These challenges can be understood with the help of Porter’s five forces:

Factors	Description
The threat of new entrants (High)	The new entrants in the retail bring innovation in products and the way of conducting activities.
Bargaining power of the suppliers (Moderate)	The power suppliers of Nigeria in the consumer amenities sector use conveying power to abstract higher prices from the retail companies
Bargaining power of the buyers (high)	It is seen that buyers are normally demanding a lot. They are often interested in buying the best options available by paying the least prices possible
The threat of substitute products (High)	The profitability of Debenhams can suffer in the Nigerian market as the new products and services are kept on producing to meet similar customer needs in the diverse ways.
Rivalry among the prevailing competitors (High)	The rivalry among the prevailing players of the retail industry of Nigeria is penetrating and it can drive decline the overall profitability of the company.

The threat of new entrants: The new entrants in the retail bring innovation in products and the way of conducting activities. It puts pressure on the Debenhams over lower pricing strategy, sinking costs and new value proposals.

Bargaining power of the suppliers: The suppliers are in the prominent position to lessen the margins. The power suppliers of Nigeria in the customer services sector use conveying power to abstract advanced prices from the retail companies (E. Dobbs, 2014). The influence of the higher supplier bargaining power can lower the overall profitability of the Debenhams.

Bargaining power of the buyers: It is seen that buyers are normally demanding a lot. They are often interested in buying the best options available by paying the least prices possible. It can put an impact on the profitability of the company in the long run.

The threat of substitute products: The profitability of Debenhams can suffer in the Nigerian market as the new products and services are kept on producing to meet similar customer needs in the diverse ways (Michalski, Montes-Botella and Guevara Piedra, 2017). The threat of the substitute products is great as it proposals a value proposition which is exceptionally diverse from the assistances of the Debenhams.

Threats

Rivalry among the prevailing competitors: The rivalry among the prevailing players of the retail industry of Nigeria is penetrating and it can drive decline the overall profitability of the company. Debenhams already functions in the competitive retail industry and such competition does not take the ring on the whole profitability (Peter, 2016).

Conclusion

In this report my conclusion is that Debenhams is capable enough to conduct its operations in the Nigerian market. The market entry modes applied by the company like joint ventures, FDI and acquisition are suitable enough to operate in the market of Nigeria. The Blue Ocean Strategy is efficient in conducting operations in the environment of Nigeria as there is less competition in the retail industry. The SWOT analysis represents the internal analysis of the Debenhams whereas Pestle analysis represents the external environment of the country. The company can face challenges in the Nigerian market. But the strength and the opportunities of the company are capable enough to overcome challenges.

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