Robert Kennedy College MSc Procurement, Logistics and Supply Chain Management Programme
Strategic International Business Management Module
By Mark Brady
Student Number 00483281
7th April 2018
(Word Count ****)
I declare that the work undertaken for this MSc assignment has been undertaken, written and produced by myself. The work has not been submitted in part or in whole regarding any other academic qualification.
Table of Contents
Strategic management is an essential activity for all organisations, providing important background enabling identification of potential opportunities in their outward looking view of the external environment to ensure its ability to leverage internal capabilities and strengths to be able to take maximum advantage of any opportunities discovered. With many notable developments within the field of organisational strategic management, with multiple concepts and model frameworks that assist with analysis of the external and internal environment of an organisation (David, 2011; Freeman, 2010). This report defines the critical analysis required for the strategic global environment for Lidl for global expansion into Norway or Mexico, therefore represents and requires a concise evaluation of external and internal factors of these global regions. The following business models are utilised within this research including the PESTLE framework, Porter’s Five Forces, and VRIO. Thoroughly evaluating these two potential markets of entry for the purpose of strategic decision mechanism to enable creation and aligned strategic values and subsequent plans through recommendations that are in keeping with Lidl strategic vision, mission and values to further promote financial performance and competitive advantage (Thompson ; Strickland, 2001).
2.0 PESTLE Analysis
The use of PESLTE analysis for the purpose of selecting a preferred new market to enter is presented and analyses the macro-environmental factors that will likely impact Lidl’s operations, this analysis through the use of PESTLE evaluates six core functions within the macro-environment, identifying how various forces influence performance and attractiveness of a country (Yuksel, 2012). The evaluation of the macro-environments of Mexico and Norway with weighted scoring against six key factors that can influence Lidl’s potential strategic direction of operations within the country. Appendix 1 presents PESTLE analysis of Mexico and Norway for reference.
The analysis undertaken was primarily quantitative, comparing the scoring from global ranking performance indicators, following this research we look further at the implications of these macro factors specifically for Lidl by discussing the rationale within each PESTEL heading and sub section to be able to carefully consider the implications of these factors when strategically planning new market entry.
From a political stand point Norway ranks well amongst other countries, with high stability in its political establishment, with very high scoring against key factors in its political environment, governmental policy taxation, industry regulations and global trade agreement, this stability provides reassurances that the market Lidl enters in the short term will be considerably familiar over the long term, this confidence provides a stable political landscape for long term planning, in addition the ability to focus resource to other macro factors that require more consideration or mitigation work to be undertaken as part of any new entry.
Economic conditions within Norway provide by comparison an attractive alignment for Lidl from a stability view point, taking the view of currency performance compared with local and likely supply chain regions we witness considerably small fluctuations enabling a stable cost base for a large percentage of its products (Oanda). Economic growth is stable with all-time measured average of 0.64% and 2018 predictions of some 2.60% providing stable however with recent increased growth predictions, leading to a stabilised and mature business market, allowing predictable planning and result expectations from its operations within Norway. With high cost of living, an educated demographic and established supermarket sector Lidl has a market closely aligned to its current operation, with a marketing campaign similar to that witnessed in the UK offering low price for now higher quality produce Norway has the market dynamics attributable to success.
Ranking on social factors within a quantitative spectrum provide a like for like comparison, however there is a more subjective element to this area of macro behaviours, therefore I included a more subjective however comparable data set to aim to better understand how socio-cultural factors impact decision making within strategical landscape. Moreover, the scoring provided Norway as a clear choice on a social spectrum there remained the question of how the behaviours of the population wholly and by demographic could influence the decision to enter a market, when Star TV entered Asian markets by following quantitative bias data it experienced significant issues where socio-cultural elements had been neglected (Ghemawat, 2001) by understanding the culture of a market the marketing mix can be arranged in a way to maximise success (Lal ; Rao, 1997).
Technological advancement in Norway is at a high level and ranks high against other global territories, linking to socio-cultural findings within this country we witness some strong alignment to strategy that would offer technological advantage for Lidl entering new mar-kets. Whilst Lidl business model is of a low technology model of simplification of how peo-ple go grocery shopping, within its operating markets to date by comparison to competitor operations it provides a low-tech customer experience by design, until recently in Europe it’s stores were cash only. Where the technological superiority of a Norway is the ability to mar-ket across multiple media aligned to demographics aligned to those media. Also the future proofing of any technological transformation will be supported in a tech-culture savvy coun-try, where the technology is used in very different ways from customer marketing, supply chain integration and operation, the front of house of Lidl may well remain low-tech however clever use of technological advances protect this façade, whilst maximising the available technology footprint to deliver competitive advantage. ?
Factors within the legal framework of Norway offer stability and protection when entering, with its relative ease by comparison of doing business. The salient points of legality are found to be the established planning and control laws protecting multiple areas of Norway, for Lidl the awareness of this is particularly important where new brand aligned stores make up part of its strategic plan, should greenfield sites be difficult to obtain how would this affect, many global brands such as Ikea, McDonalds, Apple, Aldi et al have an instantly recognisable brand of store, further research in this legal factor pre- entry would be advisable.
Norway has multiple resources that it works to protect through sustainable development and policy making designed to cultivate these resources. Norway ranks high in the globe in areas associated to protection and restrictive activity within its environment. Whilst this may lead to complications with creating new stores it is in alignment with Lidl’s brand values and operating footprint in its current global locations, “we are an economically, socially and environmentally responsible company” (Lidl.com).
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Insert PESTLE tables here.