Strategic International Business Management.

Strategic International
Business Management

INTRODUCTION.................................................................................................................................3
TASK 1.................................................................................................................................................3
Identify target market........................................................................................................................3
TASK 2.................................................................................................................................................5
PESTLE Analysis..............................................................................................................................5
TASK 3.................................................................................................................................................7
Five force Model...............................................................................................................................7
TASK 4.................................................................................................................................................9
VRIO Model......................................................................................................................................9
TASK 5...............................................................................................................................................10
Modes of Entry................................................................................................................................10
CONCLUSION...................................................................................................................................11
REFERENCES....................................................................................................................................12

INTRODUCTION
Strategic international business management is defined as procedure of planning and
developing internationals strategy in order to achieve strategic among competence, resources
and global market in which business are operating their functions (Castillo-Apraiz and et al.,
2019) . It is very important for organisation to analyse market while operating business at
global level for attainment of positive outcomes. The given assignment is based on Lidl
organisation which was founded in 1930 headquarters at Germany. It is global discount
supermarket business that operates in many countries. Currently, it is planning to expand
internationally. The main aim of report is to chose right market for expansion of business at
international level and attain set goal. This is possible by using different models such as
PESTLE, porter five forces, VRIO for business. They tools help organisation to know their
actual position, threats, resources and capabilities in order to expand business in other
marketplace. It has also highlights about different entry mode for entering into new market.
TASK 1
Identify target market
Lidl is planning to expand their business at international market for which they have
chosen two countries such as Mexico and Norway. In order to know about their target market
at international level, Lidl has to conduct PESTLE analysis of both countries i.e. Mexico and
Norway. This helps them to know more about both countries and accordingly they can decide
to chose best as well as potential target market (Iamratanakul, 2018). They are described
below:
PESTLE Analysis Mexico Norway
Political Factors It is regarded as second largest
country that has maintained
effective trading relationship with
Canada and USA. This is present at
global market and maintains
diplomatic relations with other
countries. Mexico is facing
problem of corruption and bribery.
Norway is the country which
possesses proper structure and
stability of government in order
to run business. There is no
frequent change in their policy
which make easy for
businessman to conduct their
business.

Many politicians misuse
government programs in order to
help poor people for gaining
advantages (Wadström, 2019).
Economic Factors It is 15th biggest economy in
worldwide market. There is rise in
GDP rate which is 4.25% and
represents 1.97% of world
economy (PESTEL analysis of
Mexico, 2017). Mexico is part of
MNIT group which will be
emerging after BRICS. Tax rate is
also low in this country.
Norway has raised their GDP to
417.63 billion in 2019
(NORWAY: ECONOMIC AND
POLITICAL OUTLINE, 2019).
There is decline in
unemployment rate which is
followed in country. It is
improving on daily basis. In
service sector, it contributes to
78.9% of total employment.
Social Factors Mexico is regarded as county
where natural beauty, poverty,
urban lights goes side by side. It
possesses approx 125.3 million
where 53% belongs to poor
category. There is high poverty and
corruption which has made life of
people difficult in serving.
Norway believes in providing
equal opportunity and equal
distribution of wealth for
people. They pay duty and tax
in fair manner. Both male and
female believe in equal
opportunity and play same role
(Hania and Ahmad, 2017).
Technological
Factors
Mexico is target market for large
companies such as Amazon,
Google, Uber and so on. It is
removing trade barriers and
uncertainties by adopting
technology in their business.
In context of technology,
Norway has spent huge amount
of money for research and
development to implement best
technology in their business.
They also follow technology
policy.
Legal Factors It is the beautiful country in
worldwide area due to beaches,
landmarks, weather and so on.
Mexico is facing issues of
environment where air pollution
Norway legal factor support all
legislation which are required to
be followed in country in
effective manner. This highly
believes in providing equal

has reached to high level and
impacting health of human beings.
Apart from this, it is facing
problem of toxic waste, water
pollution and loss of resources and
so on.
opportunity for people.
Environmental
Factors
It is the country which follows all
legal rights for their people. Rights
of employment are protected
through labour law, written contract
is provided to employees along
with annual holiday, maternity
leave and so on.
Norway is rich in oil nation,
high standard of living along
with large number of hospitals.
Currently, it is facing issues of
environment such as industrial
pollution, waterways and
several islands and so on.
After analysis of Mexico and Norway, it has concluded that Lidl should expand their
business in Norway because it is largest country which focuses on following of all legal right
and law where political condition is stable which is easy to run business. Therefore, it has
concluded that Lidl should chosen Norway as target market for future expansion of business.
TASK 2
PESTLE Analysis
It is very important for organisation to analyse market in an effective manner for
attainment of positive results. Lidl has analysed two different countries with help of PESTLE
model where they found that Norway is best country for international expansion. Moreover,
this can be made clearer by explaining about PESTLE analysis of Norway market. They are
explained below:
Political Factors- It concerns about what and how government intervenes in industry or
economy. This includes different factors like political stability, corruption, foreign trade
policy, government policy and so on. The respective organisation has chosen Norway marker
for international expansion because it has stability of government and no change in plans and
policies (Chi, Zhao and Li, 2016). This creates easiness for Lidl to conduct their activities and
operation in positive manner.

Economic Factors- This determinant about specific performance of an economy
which impact business and their activities. It includes inflation rates, disposable income,
growth, exchange rates and so on. Such factor creates direct or indirect impact to company.
Lidl is planning to expand their business at Norway whose economy is good as GDP is
growing, high employment opportunities. Moreover, respective country has high rate of
service sector that can provide opportunity to individual at time of expansion of business.
Social Factors- This factor includes demographics characteristics such as customs, values
and norms of population that is operating at market. It determines trends of population in
terms of career attitudes, age, income, safety, health, cultural barriers and so on. As
organisation wants to expand their business in that place where they can fulfils need and
requirement of consumers along with rise in their profit margin (Khoshtaria, 2016). Norway
follow equality in every aspect which is easy for consumer to buy any products and service as
per their own choices and preferences in most effective manner.
Technological Factor- It impact operation of business in terms of innovation in
technology that includes automation, research and development, change and so on. The
respective organisation has as opportunity to follow new technology while expanding their
business at Norway market. This helps them to manufacture products and service in unique
and innovative manner which is preferred by consumers surviving at respective place.
Moreover, Norway has spent money in adoption of new technology as well as market
research.
Environmental Factors- Such factors are significant because of rise in scarcity of materials,
pollution targets, carbon foot prints which includes weather, climatic change and others.
Norway is the place which consists of large number of hospital to provide services to their
people. If Lidl expand their business in that place then it can easily life insurance of their
working force for secure and security of their life. Respective organisation is retail sector
business which does not harm environment while carrying out manufacturing process so it is
easy to run their operations as well as activities in that market for positive gains (Gorondutse,
and Abdullah, 2017) .
Legal Factors- This includes all legislation such as employment law, health and
safety law, consumer protection, copyright and many more. Norway is the country that
believes in equality among male and female. As they provide equal opportunities to both
segment so that they can become independent and attain goal and objectives of their life. Lidl

can expand their business at Norway as they follow each and every law for their employees
and worker to provide them with safety, health, insurance, employment. This assist working
force to create positivity towards organisation and attain desired set target.
Thus, PESTEL analysis assists business to know about different factors and
accordingly making of plans and policies for expansion of business at international market.
TASK 3
Five force Model
In order to survive and sustain at competitive market, it is essential for business to
analyse strategy of competitors for attaining positive outcomes. This is possible by using five
force models which is described below:
Five Force Model
It is defined as framework that is applied for analysing competition of business. This
is the tools which are used by industry for intensity of competitors and their profitability
level. There are five aspects which should be considered by respective organisation. They are
described below:
Threat of New Entry- It is defined as aspect which identifies about threat of new entry for
existing business. This can be low, moderate and high depending upon situation. In context of
Lidl, it is facing low threat of new entry because it is not easy for other retail sector to enter
into new market as they are different laws and regulation that are required to be followed
(Chen, Eshleman and Soileau, 2017). There is following of aggressive marketing as well as
pricing schemers by large business so it is not easy for new business to cope up with them
and survive in new market. Market research and investment in such sector is high that is
difficult for small firms to run their business (Lidl Porter Five Forces Analysis, 2018).
Threat of Substitute- This is defined as second aspects where goods and services for
competitive environment are challenging for existing business. In context of retail industry
there is large number of substitutes which is available for consumers. For food retail sector
substitute is food service which is presented through restaurants, sit down restaurants and
delivery services. As there is change in taste and behaviour of consumers which leads
difficulty for organisation to survive and sustain at market. The respective organisation

knows about their consumers and taste which has created brand loyalty in mind’s of people.
Due to this factor, there is a low threat of substitute for Lidl (Mazzei and Noble, 2017).
Bargaining Power of Suppliers- This is the element of model that defines about
bargaining power of suppliers of raw materials and ingredients to organisation. If there are
large numbers of supplier, then their bargaining power is low and in case if there are low
numbers of suppliers then power is very high. Lidl is German company which has large
number of supplier for raw materials, resources. In this case, bargaining power of supplier is
low because business can easily shift from one supplier to another without bearing any cost
and get materials at low cost. This leads supplier to sell their raw materials at those price
which are charged by organisation otherwise they have to bear loss.
Bargaining Power of Consumers- This is the components that identifies about bargaining
power of consumers while purchasing products and services. It is very important for
organisation to consider such factor because consumers are final people who will buy product
and services of business. In context of Lidl, bargaining power of consumers is high because
there are large number of retail sector providing same products and services. In current time,
consumers are more health conscious, prefer high quality products and ready to pay high
prices for goods and services. They can easily switch from one product to another due to
availability of several options (Gorondutse. and Gawuna, 2017).
Competitive Rivalry- This represents about number of competitors available at marketplace.
It impact overall growth and survival of organisation to attain business goal and objectives.
The respective organisation faces high rivalry of competitors as there are large number of
organisation such as TESCO, Marks and Spencer and so on providing same category of
products and service charging same prices and quality. Also these competitors come up with
new strategy in order to attract large number of consumers to buy their products and service
for attainment of maximum profits and gains (Grünig and Kühn, 2018).
Therefore, it is very essential for organisation to analyse market in an effective
manner to know about their competitors, policies, strategy and others in order to survive and
sustain at marketplace. The respective organisation can know about threat of their new
entrant, substitute, bargaining power of suppliers, consumer and competitors in order to make
decision at business.

TASK 4
VRIO Model
This is significant for business to identify their resources and capabilities in effective
manner so that positive results are achieved. It can be measured through help of VRIO model
which is defined as tools that assist organisations to protect as well as uncover capabilities
and resources for attaining competitive advantage in long term aspects (Olson and et al.,
2018). VRIO model of Lidl is as follows:
Resources/Capabilities Valuable Rare Inimitable Organised
Manufacturing Process Yes
Customer Satisfaction Yes Yes
Technology Yes Yes Yes
Skilled Employees Yes Yes Yes Yes
Valuable- It is defined as those resources which are valuable in nature for
organisation. These are regarded as important elements for running business activities and
operations in an effective manner. Valuable resources of Lidl include manufacturing process,
customer satisfaction, technology and skilled employees. These are regarded as important
resources which are required to conduct business activities and operations.
Rare- These are those resources which are rare for other business. In context of
respective organisation, rare resources are customer satisfaction, technology and employees.
As it is not easy for other business to adopt provides high satisfaction to employees, adopt
innovative technology and possess skilled employees. The manufacturing process of Lidl can
be easily adopt by other firms and follow same procedure for manufacturing goods.
Inimitable- It is referred as those resources and capabilities that cannot be copied by other
business in their own due to possess of uniqueness and creativeness. The technology and
skilled employees possessed by Lidl cannot be copied by other business. Through help of
such factors they can attain high profit margins and gain in effective manner. Moreover, other
business can easily adopt manufacturing process and provide customer satisfaction to their
people (Grünig and Kühn, 2018).

Organised- It is the last element of VRIO model which should be organised in most
effective manner. In context of Lidl, organised factor is skilled employees who are liable to
attain goal and objectives of business. It is very important for respective business to provide
training and development to their employee to enhance their productivity level and
profitability ratio. They should be updated with new market opportunity in better way so that
they can work accordingly and organised each and every aspect for better work performance.
From the above analysis, it has concluded that respective organisation has different
resources and capabilities for running their business activities and operations in terms of
skilled manpower, technology, manufacturing process, providing customer satisfaction.
TASK 5
Modes of Entry
For expansion of business at international market, it is essential to analyse different
entry mode and select best one for positive results. These tools make easy for enterprise to
enter into any new market. Some of the entry mode methods which can be adopted by above
organisation are as follows:
Exporting- This is defined as procedure to sell products and service from one country
to another. In this mode, organisation directly sold all types of goods and services from their
own business country to other places (MODES OF INTERNATIONAL BUSINESS-MODES
OF ENTRY IN FOREIGN MARKET, 2019). Here, business establishes system to export and
procure foreign sales. The benefits of exporting are assisting in surplus distribution, less
costly & risky and fast accessing of market. Apart from these, it has some negative points that
charges high cost and exporting intermediaries leads to increase product cost.
Joint Venture- This is defined as strategy which are applied by companies in order to
enter into international market through joining hands as well as sharing of their ownership,
management with other business. Such types of mode are possible when both organisation
wants to attain same common objectives as well as expanding international operations. These
objectives are in terms of sharing of risk, technology, joint product development, foreign
market entry and so in an effective manner. This is useful in meeting shortage of physical,
managerial and financial resources in effective way. Joint venture provide benefits in terms of
attainment of technological competence, optimum utilisation of resources and keen to learn

new things. While adopting this venture, it leads to increase in cost, conflicts, cultural and
political instability.
Franchising- This is also another mode of entry into international market. In this
independent owner of business pays fees as well as royalty to parent organisation for using
their name, logo, trademark, product and services in proper format. It carry less risk and
employees are highly motivated. There are two parties involved in this mode such as
franchisor and franchisee (Bentley-Goode, Newton and Thompson, 2017).
After analysis of different entry mode, it is recommended to respective organisation to
adopt joint venture with retail business operating at Norway market so that both of them can
easily attain their set goal and objectives along with rise in profits margin, brand value,
goodwill at competitive market.
CONCLUSION
From the above report, it has summarised that organisation has to consider different
factors in order to expand their business at international market so that positive results can be
achieved. PESTLE analysis assist in knowing about different factors such as political,
economic and so on for positive results. This helps them to choose right market for expanding
business and accomplish desired goal. For knowing about competitors, it has to adopt Porter
five force models to determine high and low threats. The organisation should analyse their
resources and capabilities for attaining competitive advantage at marketplace in appropriate
way. Before entering into international market, it is very important for business to identify
positive and negative aspect of different entry mode to achieve their results. Thus, it is crucial
for each and every organisation to analyse market and their opportunities in advance while
planning for expansion at global level.

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