Strategic International Business Management

This assignment explores the opportunities and challenges of international business expansion with a focus on Mexico and Norway. It includes a rationale for selecting the chosen market, critical analysis of external factors, application of Porter's 5 Forces model, and value chain analysis. The assignment also evaluates various modes of entry and recommends the best option for international market entry.

Strategic international business management

Table of Contents
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................5
International Business Opportunities of Mexico and Norway (Refer to Appendix)....................5
Task 2...............................................................................................................................................5
Rationale of selecting the chosen market along with critical analysis of the external factors.....5
Political........................................................................................................................................5
Economic.....................................................................................................................................6
Sociological..................................................................................................................................6
Technological...............................................................................................................................7
Legal.............................................................................................................................................7
Environmental..............................................................................................................................7
Task 3...............................................................................................................................................8
Application of Porters 5 Forces Model for analysing Industrial competitiveness......................8
Threats of New Entrants:.............................................................................................................8
Bargaining Power of Supplier:.....................................................................................................9
Threat from Substituted Products:.............................................................................................10
Rivalry among existing industry:...............................................................................................10
Task 4.............................................................................................................................................11

Application of value chain model for analysing the internal value adding activities................11
Primary activities:......................................................................................................................12
Inbound Logistics:......................................................................................................................12
Operations:.................................................................................................................................12
Secondary activities:..................................................................................................................14
Infrastructure of a company:......................................................................................................14
Management of human resource:...............................................................................................14
Development of Technology:.....................................................................................................14
Procurement:..............................................................................................................................15
Task 5.............................................................................................................................................15
Evaluation of various modes of entry available to Lidl with suitable recommendations and
selecting the best option for international market entry.............................................................15
Franchising:................................................................................................................................15
Acquisition:................................................................................................................................16
Greenfield Venture:....................................................................................................................16
Best fit option (Green field investment)....................................................................................16
Conclusion.....................................................................................................................................17
Reference List................................................................................................................................19
Appendix........................................................................................................................................22

Introduction
The term international marketing refers to the function of marketing standard that is used to
persuade the varied wants and needs of different customers that exists across the countrywide
borders. In this assignment, the evaluation of two countries (Norway and Mexico) with respect
to Lidl (a supermarket company) based in Germany has been taken into consideration to identify
the target market for international strategy expansion. Lidl is a global super chain market
founded in the year 1930 with its headquarters based in Germany (Lidl.de, 2019).

Task 1
International Business Opportunities of Mexico and Norway (Refer to Appendix)
Task 2
Rationale of selecting the chosen market along with critical analysis of the external factors
Based on the Pestle analysis in Appendix 1 , the score of Mexico is 34/60 and that of Norway is
49/60 which suggests that Norway will be the ideal international market expansion choice due to
its economic feasibility and the country uses more advance technology in production and
manufacturing process of a product. In Mexico, the business environment is relatively unstable,
as the political structure is bureaucratic by nature. Moreover, Mexico also has higher prevalence
of crime rate that makes the business environment vulnerable. Also, from the above table it is
quite clear that, Norway is a highly developed economy having higher Human Development
Index. The environmental hazards in Mexico are considerably higher than that of Norway.
Therefore, from the above discourse, it can be said that Norway is more suitable for international
business expansion of Lild. Critical analyses of the external factors are detailed below.
Political
One of the major constraints associated with the political environment of Mexico is its
Bureaucratic structure which could make the internal business expansion of Lild unstable.
Irrespective of having a relatively safe political environment, the bureaucratic environment refers
to a set of complex rules and regulations which might be challenging for an international
business expansion. Chances of duplication and imperialism are quite common with Bureaucratic
environment which could be challenging for Lild. Furthermore, it is prone to conflicts, which

triggers instability within the business environment. In comparison, Norway has a democratic
political environment where the rules and regulations are much simpler, thus assisting foreign
market entry with ease. Furthermore, a democratic environment tends to be more supportive
towards free trading (Fleximize, 2019). It is usually responsive towards the altering requirements
of business as it is subjected to fair laws and tax regulations.
Economic
As mentioned, Mexico ranks 15th in terms of nominal GDP in the year 2018, however, economic
disparity is also visible within the economic environment of Mexico. Enhanced rate of inequality
has resulted in economic disparity for Mexico, which ultimately gives birth to poverty. In
contrast, Norway is subjected towards a developed economy having the highest per capita
income, which makes it a preferential choice for Lidl for its international market expansion
(En.portal.santandertrade, 2019).
Sociological
Openness, gender equality and provision of equal rights have a positive influence on the life style
of individuals residing in Norway (Norway, 2019). Individuals with physical disabilities are
also subjected to equal opportunities and the cultural intolerance is relatively less in Norway as
well. The broader cultural perspective will be an ideal situation for international business
expansion of Lidl. In case of Mexico, there is a lot of cultural clash and there is a disparity
between rich and poor.
Technological
The technological connectivity amongst Mexico and USA are strong in handling mechanical
constraints, however, it directly highlights the dependency of Mexico over US. While technical

education has enhanced, the rate of technological advancement is relatively slower than that of
Norway. It is heavily influenced by US, however, as far as the technological infrastructure is
concerned, there is still a long way to go. In contrast, Norway is anticipated to be the next largest
centre of technology after China. It is an advanced industrialised nation by investing 1.6 of the
GNP towards scientific research and technological advancement, therefore, making the
international business expansion more feasible for Lidl.
Legal
It is considered that Law and rules within Mexico is a lacklustre, as the criminal rates are
relatively high resulting in financial offence. It could be a constant threat for an international
market expansion, as the productivity of the business might get hampered due to the unstable
environment. Therefore, Lild will be more vulnerable towards legal lawsuits if they expand their
business in Mexico. The implementation of SDI strategy by Norway ensures proper mantainence
and monitoring of rules and regulations, thus reducing the chances of corruption within the
business environment of Lidl.
Environmental
Urbanisation, industrialisation and increasing population reflects upon the environmental
constraints in Mexico. Not only industrialisation has resulted in increasing of waste resulting in
water population, it has also resulted in air pollution, resulting in many chronic diseases for
humans. Since the population is rising, the environmental hazards tend to rise, affecting the
health of more individuals. The environmental policies in Mexico are weak and are reluctant
towards initiation of strict measure against such occurrence. In contrast, the government of
Norway is much more active in resisting air and water pollution. Improvisation of city life by
transforming into a care free city and progression of zero emission vehicles are efficient in

tackling air pollution (UN Environment, 2019). Considering the environmental feasibility,
Norway could serve as a safe internal business expansion for Lidl.
Task 3
Application of Porters 5 Forces Model for analysing Industrial competitiveness
Porters Five Forces is a framework of holistic strategy that takes planned decision away from
identifying the present competition. This framework analyses that how Lidl Company would
construct a sustainable competitive strategy in grocery super chain market. The below five forces
helps Lidl Company to expand a strategic position in Norway and thus explores cost-effective
opportunities in grocery chain super market sector.
Threats of New Entrants:
In a country like Norway, Lidl Company would tackle the new entrant’s threats by innovating
new goods and services. As new products not only attract new consumers, but also appeal sold
consumers, therefore, the company will have a competitive advantage (Shaikh, Karjaluoto and
Häkkinen, 2018). The company would also minimize the fixed cost by building the products
scale economy. As Norway focuses on advancement of technology, Lidl Company would invest
on Research and Development. In Norway, the new entrants would not enter in a dynamic
grocery chain industry; where the recognized company like Lidl Company keeps defining the
products standards regularly.
Bargaining Power of Supplier:
Almost all the companies associated with the grocery chain super market buy their products from
different suppliers. The suppliers in the leading position would reduce the margins of Lidl
Company earnings in the market. The stronger supplier may negotiate their power to remove

high prices from the company in grocery chain super market. The overall impact of suppliers
bargaining power is that it reduces the overall earnings of grocery chain super market. In a
country like Norway, Lidl Company would tackle supplier bargaining power by constructing the
proficient supply chain management with numerous suppliers. The company would experiment
the product by using various materials from different suppliers so that if the products prices rises;
the Lidl Company can shift to another. As the third party producer has low bargaining power in
grocery chain super market, the company would also develop enthusiastic dealer to deal with
high bargaining supplier power in Norway (Fossum, 2019).
Figure 1: 5 Forces Analysis of Lidl Company
(Source:Shaikh, Karjaluoto and Häkkinen, 2018)
Bargaining Power of Buyers:

Most of the companies within the supermarket grocery chain sell products at low price to their
buyers. Consumers always seek for offers and discounts. The lesser and more dominant the
consumer base is; the larger would be the buyers bargaining power. As the Lidl Company would
be shiftingin Norway, the company would construct a huge customer base which would be
helpful in minimizing the buyers bargaining power (Baade, Decker-Lange and Brexendorf,
2018). It would also give an opportunity to streamline their production and sale process.
Threat from Substituted Products:
When any similar type of product and services in the market are likely to meet the needs of
consumers in various ways; then the profit of the company suffers. The danger of product
substitute is very high from the present value proposition of the company (Johannessen and
Sterud, 2017). The Lidl Company would implement the strategy of product oriented rather than
the service oriented in Norway.
Rivalry among existing industry:
If the competition between the companies is strong; then it would drive low prices and reduces
the company revenue. This rivalry would toll the entire company long term revenue. The
company can face certain competition from existing rivals such as REMA 1000 and Jacob’s
Majorstuen (Kim et al. 2019). However, since the company has a global consumer base and
established branding, the rivalry from existing industry will be low. In Norway, the Lidl
Company would build a sustainable segregation by constructing an economy of scale so that it
can contend in an efficient way. The company would work together with Norway competitors to
maximize the size of market.

By identifying the five forces analysis of Lidl Company with respect to Norway country, the
strategy of Lidl Company would gain a complete image of what impact the company profits in
grocery chain super market. The company would analyse the changing game trends at the
beginning and would softly develop the opportunity. From the study above, the analysis had
shaped the strategy of Lidl Company in Norway that what threats might occur and what type of
competition the company may face in Norway.
Task 4
Application of value chain model for analysing the internal value adding activities
The concept of value chain analysis is a process of separating various business activities in
primary and secondary interface. It is used as a very important tool for analysing activities
around the industry and relating the activities to a company competitive assessment.
Primary activities:
The primary chain value activities of Lidl Company are openly engaged in advertising and
producing the product to the existing consumers. The primary activities of Lidl Company
comprises of inbound logistics, operations, outbound logistics, sales and marketing and services.
All these activities are considered primary activities of a company because with the help of the
primary activities, an organisation is able to manage its operational activities properly.
Inbound Logistics:
It is very crucial to extend the tough relationships with different suppliers as their help is very
essential to distribute, receive and store the product. The absence of inbound logistics in Lidl
Company in Norway may face severe challenges in development of product phases. The concept
of inbound logistics needs Lidl Company to spotlight on every aspect of product transformation.

Some instance of inbound logistics may include: input storing, product retrieval and distributing
the products (Minner, 2019). With the help of inbound logistics like the input storing and product
distribution, the company is able to improve its operational efficiency.
Operations:
The concept of operations generally includes service and manufacturing operations. It is very
important for Lidl Company to identify the operation strategy for efficiency maximizing,
competitive success and production improvisation. In Norway, the productivity maximization
would help Lidl Company to increase profit, achieve constant growth and set strong bias for
product competitive benefit.
Outbound Logistics: It generally comprises the interfaces that distribute the product by passing
via several mediators. There are some of the outbound logistics in Lidl Company which
generally include product handling, development, warehousing, transportation, andproduct order
dispensation (Chandra, Ghosh and Srivastava, 2016). In Norway, the Lidl Company would
optimize and identify the product logistics in order to explore the source competitive advantage
and accomplish industry goal.
Sales and Marketing: At this step, the Lidl Company would emphasize on the product
differentiation and the benefits of proposed products to influence consumer in Norway.The
product with different features and standardized functions does not create consumer value till
Lidl Company invests on the activities of marketing and sales of the product in Norway. Several
instance of Lidl Company marketing activities are advertising, force sales, costing, constructing
relations and selection of product channels. In Norway, the Lidl Company would use the funnel
market approach to reconstruct the product marketing.

Services: The Lidl Company offer pre and post-sale services in developing the loyalty of
consumer in Norway. The contemporary consumer may consider the pre-sale service as
significant as promotional marketing activities. The Lidl Company would identify the product
activities to ignore business brand reputation in the Norwegian market.
Figure 2: Value Chain Analysis of Lidl Company
(Source: Chandra, Ghosh and Srivastava, 2016)
Secondary activities:
The secondary activities of Lidl Company play a very essential role in fascinating and organizing
the chain of primary activities. The secondary activities of Lidl Company generally comprises of
company infrastructure, management of human resource, technology development and
procurement.

Infrastructure of a company:
The infrastructure of a Lidl Company symbolizes a range of behavior like quality of matters,
management of quality, auditing, financing, operating and planning management. The efficient
infrastructure administration would allow the Lidl Company to administer the entire chain of
value. The company would controls the activities of infrastructure to expand the rivalry position
in the Norwegian market.
Management of human resource:
The Lidl Company would identify the management of human resource by assessing the several
aspects of HR which include selection, retention, training, recruitment, awards and other
performance interface activities (Noe, Hollenbeck, Gerhart and Wright, 2017). In Norway, the
valuable management of human resource allows the Lidl Company to minimize the competitive
market pressure based on skills workforce.
Development of Technology:
The integration of technology generally involves product production, product marketing and its
distribution which require Lidl Company to understand the value of technology advancement. In
Lidl Company, the technology advancement would be divided into process and product
development activities.
Procurement:
In Lidl Company, the term procurement symbolizes the process that is engaged in the input
purchase and that might ranges from product machinery, product supplies and product
equipment. Due to the connection of Lidl Company in Norway market the company would

sorely considers the activities of procurement to expand the outbound, inbound, operational
value chain analysis.
Task 5
Evaluation of various modes of entry available to Lidl with suitable recommendations and
selecting the best option for international market entry
Based on the above study, the three international entry expansion modes with respect to Lidl
Company in Norway had been taken into consideration which includes franchising, acquisition
and Greenfield venture.
Franchising:
The term franchising defines the business scale once it is proven successful while licensing refers
to the ownership rights that might be transferred to other after granting access. In Norway, the
Lidl Company would make a fast entry because of its brand entity. The company variable cost
may be reduced and very low risk may be measured as the company entitles the brand entity
policy (Fossum, 2019). Franchise is therefore considered as a better option for an organisation to
gain its desired growth as well as expand their products in vast areas. Franchise is considered as
a positive influence for an organisation. Therefore, Franchise is considered to be highly
impactful for an organisation. However, lower control, lack of local knowledge and negative
environmental influence of transportation could surpass the positives associated with the
licensing and franchising entry mode for Lidl Company. Considering the case of Lidl Company,
it can be stated that the concerned organisation may flourish by implementing the concept of
franchise which will help them in flourishing their reputation along with their business and
products.

Acquisition:
The term acquisition is a contract in which the company gains control of another company by
buying its stock or by paying the purchase price. In a grocery chain of super market, the concept
of traverse border acquisition has proved a constant appealing as they offer company to get
established in a new market area. But, due to huge cost in integration many companies stood
back step. In a country like Norway, the idea of acquisition might prove a very high rate of
capital investment for Lidl Company, as it may face certain integration constraints with the home
office. The concept of acquisition is not holding good for the organisation and this LIdl
Company must not look for holding good. It is easy for acquisition of organisation in Norway
and therefore the organisation must look for franchise.
Greenfield Venture:
The concept of green field venture is also known as the procedure of establishing a wholly and
newly owned subsidiary company.The green field venture would help to gain confined market
knowledge and gain maximum control over competitors. It has enhanced quality control in
regards to manufacturing, products selling and services (Lee and Ries, 2016). Furthermore, it
gives an opportunity to bypass the restrictions of trade. As per the demerits of this process is
considered, the risk and the cost are relatively very high to set up the newly operations of
business in the new country like Norway. The entry of Lidl Company would be very slow, and it
might take an ample quantity of setup time in Norwegian market. Considering the position of the
organisation, it can be considered that the organisation’s best position is to go for a venture with
other organisation. This will help the organisation in getting the market entry point as well as it
will help the organisation in getting the market reputation.

Best fit option (Green field investment)
Based on the above study of franchising and acquisition the mode of Green Field investment
would be the best fit entry mode in the Norway market. The franchising does not give a better
business opportunity for the company as it might lose the company revenue. Acquisition is not
the perfect option for Lidl Company in Norway. In addition to this, the concept of green field
investment incurs high risk cost, high pricing strategy with slow setup time entry; since it is
beneficial for Lidl Company. As the company maintains brand equity policy and brand
competence the risk factor and product pricing factor does not affect the Lidl Company in
Norway. There are several merits of green field investment with respect to Lidl Company. It has
high level of business operations control over sale and manufacturing of products and services.
The Lidl Company has high level of staffing and brand image. This would drive sales
maximization for Norwegian consumers (Lee and Ries, 2016). The perfect economy of scope
and scale helps Lidl Company to achieve proper market and development strategy in Norway.
Last but not the least, the expansion of Lidl Company through green field investment in Norway
drives jobs opportunities for the Norwegians peoples who are still unemployed thus, directly
reflecting in the nation economy.
Conclusion
Based on the above study, it has been concluded that Norway offers good chances to grocery
chain super market company to expand. Along with, the detailed discussion of PESTEL analysis
of the Norway has been done. The precise analysis of 5 Forces Model of Lidl Company and
Value Chain Model of Lidl Company internal environment with respect to the country Norway
has also been explained. The international business opportunities for a grocery chain super
market in Norway have been critically analysed with a German based Lidl Company.

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Appendix
Task 1
International Business Opportunities of Mexico and Norway
The international business opportunities in Mexico has its competitive advantage as the country
itself provides best investment promising opportunities with good return of investment and
better trade policies; Whereas, Norway is considered as one of the richest and less populated
country which lies in the north side of Denmark. The country offers good business opportunities
to the company as it is totally independent in controlling its own corporate affairs and trade
policies.
PESTEL ANALYSIS
Factors
Nation
(Mexico)
Nation
Norway
Score
(Out of 10)
Political The political atmosphere
of Mexico is relatively
stable. However, business
environment is unstable
This lack of stability is
due to the presence of
bureaucratic political
structure. However,
Mexico continues to
impress with low tax
Norway is deeply devoted to
the interface of humanitarian
and development assistance
overseas with US.
Furthermore, Norway is
classified among as one of
best democratic country in
the world (Manish., 2019),
thus making the business
opportunity feasible for Lild
Mexico=7/10
Norway= 8/10

wedge structure which is
ranked at 3rd among the
OECD economies
(OECD, 2019).
Economic
The Mexican economy is
classified as world’s 15th
largest by nominal GDP.
In 2018, Mexico’s
nominal GDP stood at
$1.99 trillion Mexico
mostly exports crude
petroleum at that accounts
for 11% of total exports.
However, among the
OECD countries, Mexico
ranks second in terms of
economic disparity.
Norway is considered to be
extremely developed
economy with world’s 4th
highest per capita income. In
2018, the nominal GDP was
$443 billion.
.
Mexico 7/10
Norway 8/10
Social In Mexico, there is lot of
disparity amongst the
social class of people
comprising of rich and
poor and therefore,
cultural intolerance is
In Norway, the individuals
are open, broad minded and
usually subjected to equality
with less influence of
cultural intolerance.
Mexico: 4/10
Norway 9/10

viable, which is definitely
not a positive sign for
international market
expansion
Technological
The technological
cooperation between
Mexico and US solves
many local and regional
mechanism issues. By
January 2016, Mexico
produced at least 25,072
research scholars. This
shows the improved state
of technical education.
Norway will be the next
large tech center after China
as advance and innovative
technology is used in the
manufacturing and in the
production process.
Moreover, Norway is
instrumental in utilizing
electric vehicles (Vigo,
2019).
Mexico: 6/10
Norway 8/10
Environmenta
l
Mexico’s environmental
issues consist of
industrializations,
urbanizations and fast
population expansion. As
a result the air quality of
Mexico has deteriorated
arising in chronic health
effects such as the
In order to curtail pollution
in ocean, the government has
come up with new strategies
that are expected to reduce
the emission in ocean by at
least 50% in the next 11
years (Government Europa.,
(2019).
Mexico= 5/10
Norway: 8./10

prevalence of higher
Particulate Matter
(Calderón-Garcidueñas et
al. 2015).
Legal
The law and order in
Mexico is lackluster. This
is justified by the fact;
Mexico has a higher rate
of crime and economic
offence (Knox, 2019).
Hence,
It is very tough for a
company to take serious
action without stumbling
on legal issues.
Norway maintains the
Strategy of SDI which
determines the framework of
various legal policies.
The government of Norway
introduces the concept of
PPP to maintain the
mechanism of finance
between public and private
companies
.
Mexico= 5/10
Norway= 8/10
Considering the above mentioned information it can be stated that Norway is a more feasible
option for international business expansion of Lidl