Coles Group: Detailed Analysis of Market Entry Strategy in New Zealand

This report analyzes Coles Group's market entry strategy in New Zealand, specifically focusing on their licensing agreement with Kmart. The report highlights the use of a long-term licensing agreement as a method to enter the New Zealand market, where Coles Group provides the Kmart brand name and product labels. The report also explores alternative market entry strategies, such as mergers and acquisitions, and compares the advantages and disadvantages of each approach. The analysis considers the potential for aggressive market share acquisition through M&A and the brand recognition benefits, while also acknowledging the potential integration issues. The report references sources to support the analysis of international expansion entry modes. This analysis provides a comprehensive overview of Coles Group's strategic decisions in expanding its business internationally.

Identify a company from Australia or Asia that has entered another country’s market.
Using the company website or other media coverage
Coles was first established in the year 1914 George Coles. Coles Group Limited is second-
largest retailer in Australia after Woolworth and having 2500 retail outlets nationally. Out of
which 800 are super market. It serves almost 21 million customers each week.
Recently, Coles group entered in New Zealand by means of long-term licensing
agreement entry strategy with Kmart. Coles group has been given licensing rights to use
Kmart brand name and sell general merchandise in New Zealand.
The Kmart of New Zealand has shared its merchandise, brand name and product labels with
Kmart Australia, which is 100% stake-owned outlet by Coles group. Hence, long term license
agreement was found as one of the easiest methods to enter in any international market
(nz.kompass.com, n.d.).
There are major five types of market entry mode which are studied as a part of international
business: Exporting, Licensing and Franchising, Strategic Alliance, Acquisition, and
Greenfield Venture. Out of these five, I could have opted for merger and acquisition, by
collaborating and acquiring small retailers in New Zealand. Coles can come up with its own
stores (has strong cash reserves) by employing local workers in New Zealand. By M&A
strategy, Coles could have pitched the market more aggressively by quickly acquiring the
market share; maintaining its brand name. However, there are few integration issues in
mergers and acquisitions strategy but it still proves to be a better and aggressive strategy as
compared to licensing strategy (N.A, 2012).

Harvard references
N.A, 2012. International-Expansion Entry Modes. [Online]
Available at: https://saylordotorg.github.io/text_international-business/s12-03-international-
expansion-entry-.html
[Accessed 1 October 2019].
nz.kompass.com, n.d. COLES GROUP NEW ZEALAND HOLDINGS LIMITED. [Online]
Available at: https://nz.kompass.com/c/coles-group-new-zealand-holdings-limited/nz004826/
[Accessed 1 October 2019].