Assignment on Analysis of Lidl in International Market

Running head: ANALYSIS OF LIDL IN INTERNATIONAL MARKET
ANALYSIS OF LIDL IN INTERNATIONAL MARKET
Name of the Student
Name of the University
Author note

ANALYSIS OF LIDL IN INTERNATIONAL MARKET1
Table of Contents
Task 1: Comparative PESTLE of the Market of Norway and Mexico......................................3
Task 2: Rationale for Selection of the Market Place for Lidl....................................................5
Task 3: Five Force Analysis Competitive Environment of Norway..........................................7
Task 4: VRIO Framework, Evaluation of Resources and Capabilities of Lidl........................10
Task 5: Critical Evaluation of Various Modes of Entry..........................................................11
Chosen Mode of Entry.........................................................................................................12
Appendix..................................................................................................................................13
References for Appendix......................................................................................................20
References................................................................................................................................21

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Task 1: Comparative PESTLE of the Market of Norway and Mexico
The market in which the company has to enter can be decided by applying the
PESTLE analysis in both the countries. The comparison of the markets of both the countries,
Mexico and Norway can be compared and contrasted by using the PESTLE framework. The
PESTLE framework of both countries is presented in Appendix 1 and is interpreted below:
 Political Factors: The political factors in Norway are comparatively more
stable than that of Mexico. The country of Norway has better trust and belief
in the government that is there. The government also has less intervention in
the establishment and the execution of the business. The government of
Norway also shows less favoritism than the government of Mexico (Schwab,
2019). The government of Mexico is known for being corrupt and having
policies that are not transparent. The Mexican government has a great impact
on the working of the business and has a lot of corruption and bribery that
happens in the establishment and working of the country. Norway, on the
other hand, has a more stable government that helps the businesses in the
country grow more. For Lidl Norway is a better country to expand into
considering the political scenario.
 Economic Factors: The population of the country, Norway, is 5.3 million
while the GDP is $380.00 billion in the year 2019. The growth that the
country has seen is 1.8% in the GDP of the country (Heritage.org 2020). The
rate of inflation in Norway is 1.9%. The country has many natural resources
and also has an extensive social safety that makes the economy of the country
more stable. Mexico, on the other hand, has a GDP of $2.5 trillion and the
growth rate of the country is around 2.0% of the GDP. The rate of inflation of

ANALYSIS OF LIDL IN INTERNATIONAL MARKET3
the country is approximately 6.0% and the FDI inflow of the country is $29.70
billion (Heritage.org 2020). The economy of Mexico is better than that of
Norway and is growing at a much better and faster rate.
 Social Factors: The country of Norway has a modernized lifestyle in the
majority while many people still prefer the nomadic style of life (Zabko,
Fangen and Endresen 2019). There is a lot of variation in the style of living in
the country. The outdoor activities are one of the most central themes of the
lifestyle of the people in the country. Mexico, on the other hand, is a country
that has the majority of the people living in urban areas speaking Spanish (de
Blanco and Mirtallo 2016). The social structure that Norway follows is more
adaptable and suitable for more people to live there than there is in Mexico.
 Technological Factors: There is a lot of advancement that is happening in
Norway and the technology has integrated itself with the lifestyle of the
country (Nguyen and Petersen 2017). The data collected from the information
society development suggests that every individual of the country has access
to the internet. The business and the organizations of the country, Norway, use
technology and the internet for their daily activities and marketing (Black and
Muddiman 2016). Mexico as a country has also utilized the technological
advancement for the business and also has access to the internet for every
person (Cantu-Ortiz, et. al. 2017). Both countries are developed in terms of
technology and have utilized the technology to its utmost usage.
 Legal Factors: Norway has a transparent and efficient framework of
regulations. The transparent framework is important as it facilitates better
innovation, invention and many entrepreneurial activities (Kulish, et.al 2018).
The country has one of the most stable governments and economies and is

ANALYSIS OF LIDL IN INTERNATIONAL MARKET4
more suitable for any company to enter the market. Mexico can be compared
by considering the factors that there are many regulations in the country and
that affect the working of the company in the country. There are rigid laws
that have to be followed by companies in the country (Botello and Dávila
2016.). The rigid laws make it a little less appealing for the companies to
establish themselves in the country.
 Environmental Factors: The policies in the country of Norway regarding the
environment have made it compulsory for the business to follow the laws
regarding the protection of the environment (Grave 2017). The government
takes initiatives to reduce the damage that is done to the environment and is
urging people and businesses to move towards a renewable source of energy
that reduces the impact of waste on the environment. The Mexican
government also has come up with many laws that are there to protect the
damage on the environment. The General Law of Ecological Balance and
Environmental Protection is the act that the country has implemented for
protecting and reducing the damage that is caused by the practicing of a non-
eco-friendly way of operations (Navarrete-Báez and Purcell 2019).
Task 2: Rationale for Selection of the Market Place for Lidl
As per the pestle analysis conducted for both the countries, it is evident that the Lidl
business expansion would be more profitable in Norway, considering the favorable political,
social, economic, and technological environment (Fitjar and Rodríguez‐Pose 2020). It has
been identified that Norway has better public trust and comparatively lesser governmental
regulations as compared to Mexico. The governmental laws and policies are transparent in
Norway as compared to Mexico, which has complicated legal procedures for foreign market
entry. Henceforth, Norway has better prospects and opportunities to conduct its business

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operations. The political systems of Norway are favourable for Lidl. Norway has political
stability with low rate of corruption and bureaucracy. On the other hand, the Mexican
government has low political stability. Norway has a rich endowment of natural resources
with high level of economic stability (Karstensen, Engelsen and Saha 2020). This ensures
smooth flow of business operations in the country. As per the GDP of Norway, the country
has a growth rate of 1.8% with 73.0 score in economic freedom. Although the GDP rate of
Mexico and the growth rate are higher than Norway, it scores less in economic freedom,
which is not favourable for the business organization. As the economic freedom in Norway is
higher than Mexico, this situation makes it favourable for business expansion in Norway.
Considering the social lifestyle of the people, it can be seen that Norwegian people are more
inclined towards outdoor activities, they have modernized lifestyle (Ravneberg and
Söderström 2017). Majority of the people lives in urban areas. This makes it favourable for
Lidl to expand its business operations in the Norway. Further, Norway is technologically
advanced country, which provides greater scope for the business organization to further
develop its products and innovate them. The Norwegian people are also technologically
advanced, majority of the population living in the country, using internet for daily activities.
However, both the countries are equally advanced in technology. Moreover, the laws and
regulations of Norway are clearly defined and highly efficient. This facilitates invention and
innovation. Norway has high monitory stability, which is also favourable for business
organizations. The country is least corruption with its well-established laws and regulations
regarding its anti-corruption policies (Cooke 2016). On the other hand, acquiring license in
Mexico is challenging for the company due to its rigid governmental policies and procedures.
Both the countries Have policies concerning environmental taxes and value added benefits.
Norway has rigid laws and regulations to mitigate environmental damages caused by the
business organization. Therefore, the business organization needs to adhere to the business