Feasibility of Business Expansion of Lidl: A Comparative Analysis of Mexico and Norway

Running head: MANAGEMENT
Management
Name of the Student
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Author Note

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The increasing intensity of the business competition is seen to be one of the major
concerns for the modern business organizations. Majority of the established business
organizations are facing an intense level of the competition and the increasing entry of the
new organizations is considered to be one of the prime reason for the increment of the
business competition. With a precise consideration towards the concept of the globalization,
it is evident that the companies are trying their level best for acquiring increased number of
the customers and under such situation, the idea of the business expansions and entry into the
new regions for improved business operations is a significant idea for the companies
(Dunning 2014). Hence the paper is focused in testing the feasibility of the idea of business
expansion of one of the German supermarket chain named as Lidl. The paper includes a
comparative analysis of Mexico and Norway on the basis of the PESTEL analysis. Along
with that, the paper identifies the preferred market for the company on the basis of the
findings of the PESTEL analysis. In addition to this, the paper provides significant
information regarding the competitive environment of the chosen market and along with that,
it also discusses regarding the resources and the capabilities of the company that will be
crucial in entering the market with the application of the VRIO framework. Along with that,
the paper analyses the significance of various forms of market entry and identifies the most
suitable form of market entry for the company.
Task 2: Justification for the selected country
With a precise focus on the findings of the PESTEL analysis, it is evident that Mexico
will be the most suitable destination for the mentioned company. One of the main
competitive advantage for Mexico is the significant strength of the economy of the company.
For the establishment of any sustainable business, it becomes important for the managers of
the organizations to make sure that they enter a market that has the capability to contribute in
the growth of the company (Bocken et al. 2014). Under such situation, Mexico is one of the

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most preferred destinations for the companies across the world. In comparison to Norway,
Mexico is seen to have a better Gross Domestic Product and that is evident with 1150.89
billion US dollars worth of GDP in the year 2017 of the nation (Tradingeconomics.com.
2019) whereas Norway’s GDP is seen to have a worth of 398.83 billion US dollars
(Tradingeconomics.com. 2019). Along with that, the GDP of Mexico is seen to be
approximately 1.86 percent of the global economy (Tradingeconomics.com. 2019) whereas
Norway’s GDP is 0.64 of the global economy in the year 2017 (Tradingeconomics.com.
2019). Hence it is evident that the contribution of the Mexico in the global economy is almost
twice the amount of Norway. It is visible that Mexico has the capability to provide the much
required market and the growth that the company requires for establishing a profitable and
sustainable business.
However, it is evident that Mexico has considerable amount of challenges in the
effective management of the law and order inside the country which has the potential to
create considerable amount of challenges for the companies in conducting their general
business operations. Along with that, a high Gini co- efficient of 49.8 signifies the fact that
the country is affected with the unequal distribution of the wealth (Data.worldbank.org.
2019). Under such situation, Norway has a low Gini Co- efficient of 27.5 in the year 2015
which shows that the distribution of the wealth amongst the citizens of the country is majorly
equal (Tradingeconomics.com. 2019). Other than this, both the countries show high Hunan
Development Index which clearly portrays the excellent quality of the life style of the people
of the nation.
On the other hand, the population of Mexico is seen to be 132,280,845 in the year
2019 (Worldpopulationreview.com. 2019) whereas Norway’s population is approximately
5399490 (Tradingeconomics.com. 2019). From the statistics of the population, it is evident
that Mexico provides a larger number of the customers for the mentioned company in

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comparison to Norway. Considering the technological aspect, it is visible that, citizens of
both the countries have significant amount of expertise in handing the technological
advancements. Apart from this, the political context of Mexico is a major concern for the
country, where Norway has significant amount of advantage. With a precise focus on the
recent history of the criminal offences, Mexico is seen to improve a bit, however, that is far
from being capable of gaining the trust of the multinational organizations. Both the counties
are seen to be notably concerned regarding the environmental or the ecological balance and
that becomes pretty evident with the formation of the environmental legislations from the part
of the government. Considering the legislative framework of the countries and the
legislations, it is evident that the significantly strong bond of Mexico along with other nations
of World Trade Organizations provides the base for the country in attracting the multinational
organizations for conducting a sustainable business in the nation (Wto.org. 2019). On the
other hand, Norway is seen to be one of the main member of the European Free Trade
Association and is eminent part of the European Union (Efta.int. 2019). Along with that, the
government of Norway is seen to be focused in maintaining the liberal trade and investment
regime with all sorts of industrial products (Ec.europa.eu. 2019).
While majority of the aspects are similar between the mentioned countries, Mexico
provides the better chances to the company for the achievement of the desired growth and the
success in conducting a stable business.
Task 3: Five forces analysis
Competitive Rivalry: High
Considering the competitive framework of the retail business of the mentioned
country, it is evident that the market of Mexico is notably populated by a series of companies
such as Walmex, Organización Soriana, H-E-B and Comercial Mexicana (Walmex.mx/en