Strategic International Business Management: Lidl's Expansion Plan in Mexico

Strategic International
Business Management

1
Executive Summary
International business challenges have increased. This report will make a choice for Lidl
about to which company they should enter into. The political condition of Mexico is not so
good but still government policies supports new investments. The economy is performing
well, purchasing power of people is on the higher side as well as legal, technological and
environmental factors will support Lidl in its expansion in Mexico. The industry analysis of
Lidl suggests that competition is on the higher side, threats related to substitution is high,
bargaining power of people is also on the higher side, while that of suppliers is on the lower
side and the threat of new entrants is moderate. It was also found in the report that the
resource capability of this company is good and it is able to provide competitive advantage to
the firm. The mode of entry that can be suggested for the expansion is Joint Venture.
Content

2
s
Executive Summary..................................................................................................... 1
INTRODUCTION....................................................................................................... 3
Task 2...................................................................................................................... 3
Choice of Market..................................................................................................... 3
Task 3.................................................................................................................... 5
Porter’s five Forces model..................................................................................5
Task 4.................................................................................................................... 7
VRIO framework.................................................................................................. 7
Task 5.................................................................................................................. 10
Mode of entry................................................................................................... 10
Conclusion.............................................................................................................. 11
References.............................................................................................................. 11
Appendix................................................................................................................ 15
Task 1.................................................................................................................. 15

3
INTRODUCTION
In the supermarket industry there is a very competition especially in the European market.
Due to this their growth has not been so significant. Due to this, many companies are
searching for new markets for their expansion. The firm such as Lidl which is a German
supermarket firm has a chain of supermarkets and are operational in the retailing industry.
This firm has its operation in across 29 nations operating in over 10,500 locations (Shaikh,
Karjaluoto and Häkkinen, 2018). This report will choose the best suitable market for Lidl
among Mexico and Norway in order to ensure growth. Different strategic development tools
will be used to evaluate and analyse suitability of the market for the expansion plan of Lidl.
Resources and capabilities of this company will also be evaluating using strategic tools so as
to understand the aspects that give them competitive advantage over the rivals. At last mode
of entry into this suitable market will be provided in this report.
Task 2
Choice of Market
According to the PESTLE analysis done in the Appendix section it can be said that Mexico is
a choice for the Lidl expansion. In Mexico there are more growth opportunities available with
the firm when compared with the Norway. This can be understood by the PESTLE analysis
of Mexico.
 Political: However the Norway has a more stable political environment still Mexico’s
political environment provides better growth opportunities for the company. As
Mexico is an emerging market hence the government policies are more likely to
support Lidl (Fernandez-Dengo, Naderpajouh and Hastak, 2012). Mexican
government runs corporate welfare program which gives the strategic support to the
supermarkets. Government is also providing land at lower rate to the company when
compared with Norway. The taxation in the Mexico is also lower down than the
Norway. One major disadvantage with Mexican political condition is that it has its
rivalry with U.S. which is putting negative pressure on the companies in their
expansion plans. Government’s gross debt was slightly decreased where it had gone
to 53.8% from 54.3% and public deficit stood at 2.6%. New trade agreements such as
United States-Mexico-Canada Agreement will give boost to the economy of this
country.