Leeds University Business School

The Uppsala Model

of Marks & Spencer

Leeds University Business School

Introduction
About a century ago, M&S started its business
from a single store to become an international
chain retailer.
Operate in 54 countries
Employ about 86000 people
UK business is split between food and
merchandise.
798 stores in UK
455 international stores
10.3 billion pound sterling global revenue

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Uppsala Model - Assumptions

The models assumption are:
That lack of knowledge in relation to foreign markets
and operations is a major hurdle for firms wanting to
internationalise.
That the this form of knowledge is primarily gained
from certain operations abroad.
Since International operations can be risky it is believed
that the move towards internationalisation should be done
so gradually to mitigate the risk.
Thus, the model dictates a series of incremental
decisions.
N.B. This model is based on empirical findings of Swedish
Firms.
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Uppsala Model - Stages

There are four main stages (Johanson and
Wiedersheim-Paul, 1975):
No regular export activities;
Export via independent representatives (agent);
Sales Subsidiary;
Production/manufacturing.

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Why Asian Market ?

China and India contain a large part of the
population.
There is a rise in the middle class in both the
countries.
People are seeking to adapt to the western
heritage and taste.
Also, these two are a fastest growing economies in
the world.

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INDIA

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Why it went to Indian Sub-continent

Population size of over 1 billion therefore long term
potential.
Indias retail industry is around 200 pound sterling.
Indian middle class is growing especially in urban
areas
One of the fastest growing economies.
Asia Pacifics retail growth volume would be around
5 % in 2016.
India is 4th in Asia in terms of growth in retail sector.
Consumers transforming to international taste in
retail area.
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How they started ?

Came into franchising agreement with Planet
retail in 2001.
2007 : exited the franchisee agreement and came
into a joint venture with Reliance Retail.
Proper stores for Lingerie and Beauty products in
Mumbai
Initially had 14 stores with franchising and with JV
they went upto 40 stores.
Opened stores in tier 2 cities like Kanpur, Kochi
and Surat.
64% products are locally sourced.
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Reasons for Failure in India

Not too many stores when it franchised

Over priced clothes (due to import duty)
Promotion of the brand was a failure
Tend to have problem with the size of the clothes
Import duty was high
Aggressive expansion of other retailers

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Future in India
Having 100 stores in India by 2016
Plans to increase the local sourcing to 70%
Plans to invest 750 pound sterling million

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