To What Extent Is It Advisable for Successful Uk Retailers to Diversify Abroad?

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To what extent is it advisable for successful UK retailers to diversify abroad? Many UK retailers investigate heavily in to the idea of expanding their business and entering in to foreign counties. However only a minority decide that they have adequate resources and that the possible benefits outweigh the huge risks and actually take the steps to diversify abroad. Igor Ansoff studied these risks and rewards involved with different marketing or corporate strategies, and created Ansoff’s matrix, a useful tool for businesses to use when weighing up the strategies and the risks involved. Ansoff’s Matrix shows that diversification is the riskiest strategy, this if for a business to create a new product in a new market, which is a strategy which is commonly used when a business expands abroad e.g. Tesco’s ‘Fresh and Easy’ stores in America. If executed perfectly, there are many possible benefits to UK retailers diversifying abroad. They will greatly increase their customer base, exposing their product to the population of the foreign country gaining more potential customers. The businesses will also benefit from a larger market size, again creating more potential. This is particularly useful if their home market is saturated with similar products yet there product is useful or necessary, as it is likely to be wanted by the potential customers in the countries being entered. Entering a less saturated market will also mean that there is less intense competition, a benefit that Mothercare experienced when entering in to countries such as Poland and Bulgaria. These countries also have an increasingly developing infrastructure and economic growth, increasing the prospects of businesses such as Mothercare etc being successful. A bigger business will also mean they experience economies of scale; bulk buying will give them a price advantage and they will be less affected
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