International and Global Business: Market Entry Analysis for Woolworths

This report analyzes the geo-political and macro environmental factors affecting the market entry of Woolworths, a major retail supermarket chain in Australia, into Germany and China. Based on the assessment, China is found to be more suitable for market entry by Woolworths considering the current economic, political and social status of the country.

Running head: INTERNATIONAL AND GLOBAL BUSINESS
International and global business
Name of student
Name of University
Author note

1INTERNATIONAL AND GLOBAL BUSINESS
Executive summary
Woolworths, being an established and reputed business organization within the
retail industry in Australia, wanted to make a market entry into both Germany and
China, which are major countries within the European and Asian continents. There were
various geo-political factors and macro environmental factors that affected the business
functioning, favored as well as hindered the successful entry into the markets to attract
more customers and generate higher revenue in business. It was found that good trade
relations and more scopes for making investments had created ease and convenience
for Woolworths in Australia to enter these two countries and for managing international
business expansion too. Based on the assessment of macro environment and geo-
political forces, China possessed a stable economy and good political condition, and the
good trade policies could make it suitable for Woolworths to make an entry into the
foreign market. Thus, China would be more suitable for market entry by Woolworths
considering the current economic, political and social status of the country.

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Table of Contents
Introduction........................................................................................................................4
Identification of two countries selected for market entry...................................................4
Analysis of macro environmental and geo-political forces.............................................4
Legal & Environmental Factors...................................................................................6
Development of trade and business policies.....................................................................8
Challenges, risks and opportunities in the policies...........................................................9
Conclusion.......................................................................................................................10
References.......................................................................................................................11

3INTERNATIONAL AND GLOBAL BUSINESS
Introduction
The international business or globalization refers to the business organizations
like Woolworths, Australia shifting towards a more incorporated and independent
economy while managing business properly. The company has tried to enter the new
markets to attract people from the global market segments, furthermore overcome the
falling trade barriers and facilitate the selling of products and services globally
(Woolworths.com.au 2018). The needs and preferences of the consumers are
converged on the global norms, rules and laws, which has helped in promoting various
trends related to the delivery of products and making those available worldwide.
Woolworths Supermarkets is one of the major retail supermarket chains in
Australia that accounts for more than 80 percent of the Australian market. The company
employs over 111000 employees and has even formed a near duopoly of supermarket
chain in Australia while working in partnership with Coles. The company is present at
various locations all over the world and has a revenue of 3655.93 crores AUD, as it was
in the year 2017.
Identification of two countries selected for market entry
Woolworths has selected two countries for entry into the market, which are
Germany and China within the European and Asian continents correspondingly. Both
these countries have been selected as market entry because of the good market
conditions that can be beneficial for the Australian retail giant to start its business and
furthermore control the macro environment and geo-political forces with much ease and
effectiveness (Scarborough 2016).
Analysis of macro environmental and geo-political forces
Germany
Political

4INTERNATIONAL AND GLOBAL BUSINESS
Germany is considered as one of the leading political powers in Europe and has
been a major technological leader, which has made the country the fourth largest
economy in the while world. The standards of living and social security are quite high,
because of which, the political conditions are quite stable. Being a democratic republic,
the political systems function properly and the Constitutions have laid down the
fundamental structure of the Government. The value systems are followed by the
nation, which has been the major source of authority and power (Piekkari, Welch and
Welch 2014). The independent federal judiciary could affect the administrative
operations, financial aspects, labor conditions and social matters to ensure uniform
interpretation of constitutional provision and even protect the fundamental rights of
people who would come to work in the new brand to be opened by Woolworths (Ferraro
and Briody 2013). The political factors are influenced by application of sales tax, service
and income tax by the Government, which can enable privatization too.
Economic factors
The fifth largest economy and a major exporter of vehicles, machineries,
equipments and chemicals, Germany has been benefited by modernization and thus the
unemployment rate is quite low. The growth average is considerably low and one of the
major challenges faced could be the financial recession. The service sector contributes
70 percent of the GDP and most of the products are engineering products, which can
allow the retail giant in Australia to enter the market and make wide range of retail and
grocery items available for the customers (Shenkar, Luo and Chi 2013).
Social factors
The multicultural environment of Germany with the diversified culture, there are
enough scopes for Woolworths to establish itself within the foreign marketplace. The
organizational structures are flexible, due to which educational and working
opportunities are immense, which can create convenience for the retail company to
manage proper distribution of income among the workers, furthermore experience
growth and development in the future too (Cavusgil et al. 2014).

5INTERNATIONAL AND GLOBAL BUSINESS
Technological factors
The advancement in technological aspects has led to the production of numerous
engineering products and services at Germany. The technological benefits obtained are
reduction of costs of operations and management of traditional projects. The use of
information technology system could further assist the new business to maintain a
proper structure, develop and integrate the business processes with the implementation
of technology for successful international business expansion. Germany’s position
within the EU has facilitated the use of advanced technologies, which can also allow
Woolworths to conduct research and development activities to assess the market
conditions before making entry to those for attracting the customers (Papadopoulos and
Heslop 2014).
Legal & Environmental Factors
There are certain laws that prevent discrimination and have affected the
structures of wages paid to the workers. The environmental concerns are considered by
keeping the environment clean and this has kept the pollution level under control, which
has created a positive environmental impact. Woolworths need to consider several
environmental factors and ensure that the pollution level is reduced and the harmful
gases’ emissions are stopped largely through sustainable management activities
(Preston and Windsor 2013).
China
Political
The Government laws and regulations impact the way the business operates and
the Government has focused on e-commerce through management of legislations
related to the protection of intellectual property rights and tax. There are no other laws
and rules regarding consumer rights, validation of electronic contracts and digital
signature recognition.
Economic

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The GDP growth rate has been good for China’s economy and with the increase,
it will soon move beyond the GDP in US. The major factors contributing to the higher
GDP are export businesses, urban growth, abundant skilled labor, though the cost of
labor is considerably lower. The growth rate is effective though it can affect the
businesses that are willing to make an entry into the marketplace due to high price of
property and higher rate of inflation (Reiche et al. 2016).
Social
The growth in population and distribution of age and income fluctuates from time
to time, which has affected the social and cultural trends. The size of family and social
behaviors also affect the ways decisions are made and these are based on consumers’
lifestyles, behaviors, culture, etc. The population in China has a high literacy rate, which
has made them tech savvy and there is huge scope for Woolworths to start its e-
commerce business here to draw in potential customers (Hooper 2016). The customers
will also be provided with physical stores opened by Woolworths to avoid the perceived
risks, furthermore influence their buying behaviors and create positive mindset among
them too.
Technological
The technological advancements are immense and it has influenced
development of new products, innovative distribution mechanisms, mobile
telecommunications, production technology and use of intranet and extranet. One of the
major problems though is the lack of maintenance of a proper online payment system.
Woolworths can overcome this myth by presenting the customers with ease of buying
the products by visiting various stores opened at different locations.
Legal and environmental
The increased awareness of protecting environment by focusing on lesser
pollution and preventing environmental damage could also make the new business
aware of the promotion of e-commerce business through sustainable approaches
(Brannen, Piekkari and Tietze 2017). This would reduce the pollution level and keep the

7INTERNATIONAL AND GLOBAL BUSINESS
environment safe through maintenance of environmental laws and regulations
implemented by the Government. The Disability Discrimination and Fair Wages Act
should be maintained by Woolworths to ensure that the workplace remains free from
discrimination.
Development of trade and business policies
The bureaucratic procedures and policies and laws, rules and regulations
implemented by the Government in Germany could create certain issues and
complexities for the companies who want to enter the market and often need attention
by the exporters in United States. The safety standards are quite complex and some
discriminatory policies might complicate things and prevent the organization to gain
access to the market. Woolworths must be aware of the standards applied to the
products, furthermore ensure proper testing and certification to manage the import and
export activities properly (Luthans and Doh 2018). The Import tariff or TARIC
determines the license that is required for the specific product, furthermore obtain
information about the licenses and applicable restrictions that shall be considered while
making a market entry. An Authorized Economic operator or AEO program was
implemented to simplify the rules and customs legislations, which could ensure
maintenance of safety and security while entering the foreign markets for Woolworths,
Australia. The Consumer Protection Act ensured protecting the consumers by
preventing misguidance and making them know about the kinds of products and
services to be delivered (Picciotto and Mayne 2016).
The trade surplus was to be reduced by China, which should result in stopping
the flagship industrial policy, furthermore improve its intellectual property system. The
business and trade policies have often motivated the public authorities to apply
restrictions on the exports and increase the scopes for managing global business.
According to China’s export tax policies, the Government revenue would increase,
which could result in growth of the retail industry and at the same time, prevents conflict
with the foreign trading partners (Cano-Kollmann et al. 2016). This would assist
Woolworths in overcoming the trade barriers as well as manage successful functioning

8INTERNATIONAL AND GLOBAL BUSINESS
by following the trade and business policies properly and setting the right prices for the
products too. The foreign trade accounts a good percentage of the GDP of both the
countries, especially China. Due to this, the import and export activities are managed by
the Ministry of Commerce, which has also opened new ways for the company to
become sustainable in the global marketplace (Ho 2014). The combined foreign
investments including the earnings from capital and reinvestments along with the inflow
of equity is huge and thus with the agreement made by World Trade Organization on
the management of trade, Australian retail company, i.e., Woolworths should manage
the import and export activities much more easily. With the customs’ clearance and
impose of Taxation Bill, the value added tax and costs would be implemented properly,
thereby create convenience for the company to manage global business successfully. It
could be thus believed that market entry in China would be more effective for
Woolworths than entering the foreign markets of Germany (Haley and Haley 2013).
Challenges, risks and opportunities in the policies
Due to the shift from subsidiaries to policies concerned with the insurance, there
could be political issues and even increase the prices of products, thus create difficulties
during global business expansion. The lower rate of tariffs and risks of bargaining might
arise, which could also disrupt the business functions and deteriorate organizational
performance. The policies could create barriers for investments made due to the EU
laws and rules. The application of environmental and safety standards would also
complicate things and create issues while accessing the market for various products
(Woolworths.com.au 2018).
For the companies in Australia, the Chinese market could be attractive for the
retail sector and this would promote export strategies though the costs of doing
business would be quite high. China, with its focus on environment has opened up new
opportunities for Woolworths to become sustainable and at the same time reduce the
negative environment impacts largely. The agricultural products represent positive
export prospects for the products from Australia and Woolworths, being a major
supermarket chain, can make wide range of products available in the marketplace for

9INTERNATIONAL AND GLOBAL BUSINESS
access by the costumers. To make a market entry, Woolworths needs to manage
experienced representation as a major asset to implement the right marketing strategies
and create a strong brand presence within the competitive business environment
(Scarborough 2016). The opportunities should be grabbed by the company and setting
the right prices would further influence the buying behaviors of people. The risks and
opportunities are considered by the company to ensure that the economic risks are
overcome and the rate of inflation, fiscal discipline are kept under control for ensuring
continuity of business and monitor the rates of interest and exchange too for setting the
right prices and keep customers satisfied (Ferraro and Briody 2013).
Conclusion
The report was prepared to discuss about the international and global business
management considering how entry into the Chinese market could be beneficial for
Woolworths when compared to market entry in Germany. Based on the geo-political
forces and macro environmental factors, the various challenges associated with the
market entry along with the opportunities to become successful in the global market
were analyzed. The business and trade policies also depicted the entire scenario and I
showed that the political condition and financial status of China could be more fruitful for
Woolworths to make a market entry. The technological advancements facilitated the
growth rate while the management of legal aspects and environmental awareness could
allow Woolworths to manage its e-commerce business with much ease and
effectiveness. The licensing strategies should be beneficial for managing the import and
export activities as well as comply with the various laws, rules and regulations for
ensuring successful global business expansion for Woolworths, Australia.

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References
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