International Business Management: An Analysis of Marks and Spencer's Expansion into the Nigerian Market

INTERNATIONAL BUSINESS MANAGEMENT

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Introduction

Marks and Spencer, commonly called M&S, is a retail, international retailing group specialising in clothing, food and textiles. Although the brand has achieved good growth in Europe and North America (Marks & Spencer, 2024), it needs to establish itself in Africa, which could be more robust. This paper thus aims to analyse the feasibility of M&S in the Nigerian market, whose political, economic and social environment is quite different from that of the U.K. The analysis will also reveal marked contrasts between Nigeria and M&S's established markets in London and New York. In addition, it will point out how these factors affect market access and illustrate theoretically and practically possible cultural differences that may prevail in the Nigerian multi-cultural workplace. With this insight, M&S can adequately position itself for successful operation in this emerging market.

Understanding the Political, Economic, Social, and Environmental Differences

When M&S extends into global markets such as Nigeria, the political, economic, social, and environmental factors bearing on the country must be established. Based on this context, this paper contrasts Nigeria with the more advanced markets of London (U.K.) and New York (U.S.) to highlight the difficulties and prospects in each respective environment.

Political Factors

Political Stability

The Nigerian political environment can mainly be described as unstable due to military coups, ethnic conflict, and tension. Persistent issues related to the insurgency in the northern areas remain considerable risks to many organisations. Looking at the Global Peace Index in 2023, Nigeria was at 149 out of 163 because it has many internal conflicts and governance problems, which make investment decisions complicated (Akindoyin and Akuche, 2023).

The political stability of the U.K. and the U.S. relative to South Africa is relatively higher than South Africa’s political stability. The United Kingdom has a stable parliamentary democracy and has been efficient in governing despite recent fluctuations such as Brexit. The USA is politically stable given that the country has a sound, democratically based political system, which gives a predictable business climate for long-haul investments.

Regulatory Environment

That distinctiveness makes the political context of Nigeria a world of regulation in which complexities can pose challenges to business. According to the World Bank Group’s ease of doing business index, Nigeria stood at 131 out of 190 countries in 2020, which shows that the company is faced with a lot of challenges, having to deal with bureaucrats to find their way in the business environment (World Bank, 2020). The social environment can pose risks to M&S through weak and uncoordinated policies, tax structure and corruption.

On the other hand, both the U.S. and the U.K. have relatively straightforward regulatory environments. The U.K. has a favourable business environment that comprises bureaucracy and transparent regulations, while the U.S. has a legal framework for investors but an elaborate structure of laws protecting investors.

Economic Factors

Economic Growth

Nigeria has the largest economy in Africa, estimated at $450 billion in 2023. Nevertheless, the country's economy is almost entirely dependent on oil exports, and there are vast changes in world oil price differences. According to the World Bank, the GDP over time in billion U.S. dollars in 2021 was 432.3 and the GDP per capita forecast was 3.4 % for 2022. However, economic structure challenges, including inflation and unemployment rates, remain broad.

Figure 1: Africa's Biggest Economies (GDP over time in billion U.S. dollars)

Source: (Zandt, 2021)

The difference in sizes of the two economies is that while the United States has a complex economy, the U.K. ranks slightly higher with its GDP of around $ 3 trillion and is more diversified. The service industry is significant, contributing to about 80% of the country’s Gross Domestic Product. The United States is the largest economy globally with a GDP of well over $25 trillion, it is characterised by many industries, for instance, modern industries such as technology and finance and advanced convenience consumerism.

Consumer Market

The nature of consumers in Nigeria is, therefore, both a threat and an opportunity for businesses. More than half the 168 million people in Nigeria are under 30, meaning there is potential to increase the proportion of the middle class who form the bulk of future retail consumers. However, the bad news includes the high unemployment rate of 33.3% in 2023, according to the National Bureau of Statistics, and restricts overall purchasing power.

On the other hand, the U.K. and the U.S. have strong and developed consumer markets and higher consumer buying capacity. The per capita disposable income in the U.K. in 2023 was £30 000, and in the United States, about $74 580 (Bakertilly.com, 2024). Such inequality in wealth distribution should come with certain risks regarding the Nigerian market.

Social Factors

Demographics

Nigeria is the largest country in Africa, with more than 220 million inhabitants, and the population’s median age is approximately 18 years (Cia.gov, 2023). It also means that M&S has a youthful customer audience and a brand that can effectively target a young and energetic market.

The U.K. population is about 67 million, and the median age is about 40, while the U.S. population is 331 million, and the median age is 38. Demographic factors affect consumers’ tastes and decisions to buy goods in these areas.

Cultural Practices

There are over 250 ethnic groups in Nigeria, and each has its way of working beliefs, and consumption patterns. Such diversity allows organisations to appeal to consumers through different marketing techniques and products. At the same time, it requires paying close attention to cultural differences and variations in branding approaches.

Unlike in some countries, where cultural diversity seems to drive consumers’ behaviour to a greater extent, consumer behaviour is more individualistic and globalised in the U.K. and the U.S. As a rule, market behaviour depends heavily on specific patterns, so brands generally can rely on explicit behaviour models that make it easier to foresee market response.

Environmental Factors

Sustainability Practices

As global retailing unfolds, environmental priorities become more significant in the international markets. Ecological concerns are experienced in Nigeria. Deforestation and pollution are among the many challenges facing the country. Sustainability is becoming more widely understood, especially among the middle generation of city residents, but regulatory requirements are still being established (Hill C.W.S and Hult, 2021). For instance, the country is beset with issues such as waste management and industrial pollution, which can affect corporate bodies.

Nevertheless, the rules in the U.K. are rather stringent regarding sustainability, and M&S is famed for its concern with ethical sourcing and cutting emissions. M&S also has a sustainability plan to make the company a zero net-carbon business by 2039/2040, and as part of working toward this goal, the company has started multiple sustainability endeavours.

Figure 2: Areas for transformation

Source: (Marks & Spencer, 2024)

The U.S. also demonstrates a high level of CSR concern with different legislation of particular states. It is also important to note that sustainability is typically integrated into large retail stores as part of a company's philosophy due to consumer preference for environmentally friendly products (Wheelen et al., 2018).

Impact of Political, Economic, Social, and Environmental Factors on Market Access

This paper analyses the forces likely to affect Marks & Spencer's (M&S) market access when expanding into the Nigerian market. These factors may work in different ways to influence M&S's operation in Nigeria, where many challenges and opportunities may prevail.

Market Access Challenges

Political Risks

Nigeria is afflicted with political risks associated with a political crisis, including military coups, corruption, and ethnic conflict. The Global Peace Index showed that in 2023, Nigeria was 149th out of 163 countries with high internal violence (Global Peace Index, 2024). Such a political climate could negatively affect the flow of FDI (foreign direct investment) profile and raise uncertainty about the company's operations. These risks should be managed by seeking more engagement with local partners and stakeholders to better appreciate the political processes. Developing close contacts with members of the target markets and with authorities may help minimise the threats related to changes in political scenarios.

Economic Barriers

Nigeria, too, faces this problem of being a one-product economy mainly relying on oil exports that are prone to shifts in global oil prices. According to the International Monetary Fund (IMF), Nigeria had a GDP of $450 billion in 2023, with a GDP growth rate of 3.4% (IMF, 2024). However, the economy has fairness, such as high inflation; the inflation rate was 22.8 % in July 2023, according to the National Bureau of Statistics. He and others noted that these economic changes may potentially affect consumer's buying power and their tendency to spend, for instance. For M&S to overcome these barriers, it has to implement a pricing policy that will cater to income strata that are substantially poor since more than half of the population lives below the poverty line. However, there are also more pros, firstly, when thinking locally about the products, it becomes possible to cut expenses, thus increasing the accessibility of the offerings in the market area (Zeufack et al., 2021).

Social Barriers

Nigeria is home to over 250 ethnic groups, which can act as both an opportunity and a threat to M&S’s business operation. Ethnic diversity means that marketers need to understand the consumer culture to be able to appeal to Africans. Pew Research Centre noted that more than half, meaning 52 per cent, of the population of Nigeria, is below the age of 30 years, and this is a generation that goes for contemporary and stylish products (Poushter, 2017). For the company to develop a loyal clientele, it must ensure its brands suit the prevailing trends within its region. It might include the presentation of new products that reflect regional culture and the implementation of various targeted marketing efforts in compliance with the cultural norms of the area.

Environmental Considerations

The company has made a reputation for itself with its policies on sustainability and sourcing of products. This is particularly important in Nigerian communities where issues such as deforestation and pollution are major concerns; M&S can use a firm commitment to such environmental challenges in that region to improve its brand image and achieve market entry. World Bank reported that more than 70 per cent of Nigeria's population living in urban areas is affected by environmental issues, some of which are dump site opening and air pollution (World Bank Blogs, 2020). Community-based activities are long-term, including waste management or supporting local ecological organisations, such activities give people a good perception of M&S. M&S requires the targets to correspond to a local environmental concern to achieve its sustainability mission. If this is well accomplished, it will enhance its stand in the market and consumer acceptance.

Cultural Differences: Theoretical and Practical Implications

For this reason, cultural differences are more important for staff management and business functioning in Nigeria's newly selected market. As M&S plans its expansion into Nigeria, the company’s decision will be informed by the fact that, owing to cultural differences, it is expected to deal with different values, practices, and expectations. Geert Hofstede’s cultural dimensions theory explains these differences, giving M&S ideas on how it might better adapt its management strategies.

Cultural Theories Relevant to Nigeria

Power Distance Index (PDI)

Hofstede insights put Nigeria at a PDI indicating a very high power distance. This points to a high tolerance level for using power structures in organisations in that authority and reverence for superiors will generally be achieved. It may be reasonable to assume that Nigerian employees want high levels of structural formalisation, particularly regarding authority and decision-making. On the other hand, the U.K. and the U.S. have lower PDIs, endorsing more gender equality in the workplace (Ducu, 2021). This difference means that M&S needs to foster absolute power listing in their Nigerian operations and adhere to the expectations of the value placed on authority and rank.

Individualism vs. Collectivism

According to Hofstede’s dimensions, Nigeria seems to be of a more collectivistic culture than the U.K. and the U.S. These cultural features make collective orientation clear, where group cooperation, community and relationship importance are highlighted rather than individual accomplishments. In the case of M&S, such concepts as teamwork and organisational community need to be addressed in HRM measures. The organisational culture tailored towards addressing the social needs of graduates and organising group events for employees’ happiness may be palatable with Nigerian staff.

Uncertainty Avoidance Index (UAI)

The uncertainty avoidance index is called cultures in variation, which refers to the number of benchmarks a particular culture avoids relative to uncertainty. Nigeria’s Uncertainty Avoidance Index (UAI) is moderate. This implies that even though Nigerians desire clarity and order in the workplace there is a positive attitude towards change and creativity (Riger, 2022). For M&S, developing a corporate culture allowing consistently high-quality while being open to innovations is essential. This dual approach can ensure the loading of the employees and, at the same time, compel them to come up with ideas that can be of benefit to the business.

Practical Management Implications

Recruitment and Training

The company should also consider changing its recruitment practices to fit the expectations of its target areas and emphasise community and cultural ethos. Focusing on aspects such as teamwork and cooperation in job postings will entice candidates enthralled with such values (Steers et al., 2023). Furthermore, training programs should also target cultural adaptability; because the Nigerian workplace operates in a collectivist business culture, they should enable the training of employees who can effectively work together in teams.

Leadership Style

While working in Nigeria, employees may depend on leaders for direction, which is different from the involvement expected by colleagues in the U.K. and the U.S. Another internal factor is that M&S management required reconsidering leadership by local expectations by being more commanding but accessible (Mutonyi et al., 2020). This can be done by persuading leaders to provide people in need with sponsorship and training to create desirable working conditions concerning culture.

Communication

Culture is another area which requires managerial communications, especially in the global environments, so culturally appropriate decisions can be made. The company should train employees regarding the different forms of language used in various regions further enhancing opportunities for sales. It can also foster interpersonal relations and augment the overall cad with its members. For instance, timely going native in policy can be insightful, say in internal communication where timely adopting local languages is a valuable way of reducing cross-cultural barriers and creates a sense of ownership amongst employees.

Employee Motivation

Knowing what drives employees in Nigeria is imperative to improving morale and productivity at the workplace. This also means incentives will likely work better when they target group results over and above personal outputs. This is in keeping with the culture bestowed on the people in the movie, which stresses group effort and achievement. Specific organisational improvement suggestions include Group-based performance incentives could be used to enhance the recognition of group achievements at M&S to support cooperation's importance (Alase and Akinbo, 2021).

Conclusion

The case in the form of the potential expansion of M&S into Nigeria has its benefits and issues. Peculiarities of the political, economic, social, and environmental contexts are crucial for strategy creation regarding access to and functioning in target markets. The observations of cultural differences show that it is necessary to adjust the management practices of M&S and the enterprise's organisational culture according to the local standards.

If M&S adopts these truths and supports its brand locally, the company can benefit from Nigerian society. This promotes sustainable business growth and complements societal culture. New to this market, the company must consider ethical factors and social responsibility to create a good relationship with Nigerian consumers. Besides potential economic benefits, it is necessary to note that the expansion of such businesses also carries the potential for creating a more significant social value desirable for M&S as a sustainable, ethically oriented company.

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