Joint Venture entry mode of Marks and Spencer in China Essay

Joint Venture entry mode of Marks and Spencer in China - Essay Example This research will begin with the statement that entering into a new market has been commonly accounted as one of the major challenges faced by companies seeking the benefits of internationalization market expansion. In its course to diversify in the global plethora, the company needs to deal with many barriers including cross-border trade regulations, cultural paradoxes and various other socio-economic factors that are deemed to influence business operations in the targeted host country. Contextually, entering into the market of China also posed considerable challenges to Marks & Spencer (M&S), which is a renowned British multinational retail chain. Critics have thereon argued that it is fundamentally owing to lack of market understanding and appropriate strategies adopted by companies to mark its failure in Asian countries like China. Several challenges and problems encompass the entry of M&S in the market of China. With the opening of their first outlet in the Chinese market, the company experienced a dip in its performance, which was accounted as considerably lower than the expected level in the Chinese market. The outlets opened by M&S, at the initial phases of its operations in the Mainland China, failed to satisfy the needs of the Chinese local customers owing to the company’s lacuna to identify customers’ preferences in the market and offer services accordingly. For instance, the M&S stores were unable to provide garments of smaller sizes, as preferred by the customers in China. (Wood, 2012). Reportedly, the supply chain of the company was also lacking its usual effectiveness, which further inhibited the reputation of the company in the Chinese market, at its introductory phase. Additionally, it was also known that the management of the retail chain was implementing its strategic experiences gained from its operations in Hong Kong, irrespective of the fact that the consumer buying behaviour are found to be considerably distinct in these two regions. This again depicts the lack of market survey of the company taking into account the tastes and preferences of customers in the host country (China Retail News, 2009). In addition, the decisions taken by the company for not collaborating with any of the local firms in China, i.e. ignoring the benefits of JV also barricaded the utmost efficiency of its strategies by restricting the cooperation of local firms to a certain extent. It was thus considered as a mistake made by M&S, which retarded its smooth entry in the Chinese market. However the company focused on concentrating on its size and range of services offered to the Chinese customers as its major Unique Selling Propositions (USPs). Subsequently, the first shop of the company was opened in the Mainland and was propounded to be one of the biggest shopping centres in Asia. Nonetheless, this decision of the company came as a surprise for many investors in the stock market, as opening of the store came just after the global economic turmoil that kept investors wondering regarding the finances of M&S. It has also been noted that competition level from the local marketers were observed to be quite h igh in this area, as the local retailers are more competent in serving the customers in the market providing products preferred by customers of lower age groups and lower income groups. On the contrary, it would be vital to mention that the products