International Retail Market Development - Essay Example

When, as a strategic goal, a firm wishes to expand its retail operations, it chooses to go abroad as soon as it sees its local market being saturated. This concept ha been better described with the help of many models and theories. Other motivators for internationalization are resource seeking, market seeking, efficiency seeking and strategic asset seeking. Resource seeking and market seeking are usually motivators for a firm’s initial internationalization strategy, while the other two are for sequential internationalization.

Moreover, there are a number of factors that need to be considered by retailers before expanding overseas. These are factors, if considered appropriately, will determine success or failure. These typically include selecting the right market, knowing how much to adapt, getting the timing right, having a strong store brand image, and controlling the supply chain. H&M focuses most on getting their information right about the selected market and the attractiveness of this market. Another very important factor that would determine success is the mode of market entry chosen.

There are a number of modes of foreign entry but the most common ones are licensing, franchising which has significantly increased the number of retailers expanding overseas and joint ventures. There are many others such as acquisition, mergers and contracts, but are not a part of the scope of this paper. In the past, retailers were thought of as localized entities that had little power (Alexander, 2009, pp.3). However, recently - in the past 20 years, this perception and way of operation has changed, and the existing concepts are no longer fit keeping in mind the recent changes (Dawson, 2006).

One of the recent popular retailer strategies is ‘Retail Internationalization’, whereby, a retailer, like many manufacturing firms, decides to go international – or have operations in more than one country (Dawson, 2006; Alexander,