International Business: Kmart Corporation's Market Expansion Analysis

This report provides a comprehensive analysis of Kmart Corporation's international business operations, focusing on its potential expansion into the Indian market. It begins with an executive summary and company overview, detailing Kmart's history and current market presence. The report then delves into an internal environment analysis, identifying the company's strengths (diversified product chain, strategic store locations, customer service) and weaknesses (financial woes, supply chain inefficiencies). Following this, a macro-environmental analysis is conducted, specifically focusing on the Indian retail market, including PESTEL factors (political, economic, social, technological, legal, and environmental) and the impact of governmental policies like the FIBP. The report uses SWOT analysis to summarize key findings, and concludes with insights into the opportunities and threats Kmart faces when entering the Indian market. References and a table of contents are included to provide a structured approach to the analysis.

Running head: INTERNATIONAL BUSINESS
International Business
Name of the Student
Name of the University
Author Note

1INTERNATIONAL BUSINESS
Executive Summary:
The paper discusses regarding the business operations of a renowned retail organization
named as Kmart Corporation. The paper conducts an internal environment analysis for the
identification of the effectiveness of the resources and the capabilities of the selected
organization. The findings of the analysis is pretty significant in stating the strengths of the
organization such as the strong presence across the globe and the diversified product chain
and on the other hand, the analysis also portrayed the weakness of the company such as the
inefficiency in the supply chain of the organization and the repetitive financial setbacks that
the company received. Apart from this, the paper also includes a macro environmental
analysis of a profitable Asian market in the form of India. The paper identifies the impact of
the establishment of the FIBP, liberalization of the foreign capital along with the taxation
policies to be of great significance for the organizations operating in the retail industry of
India.

2INTERNATIONAL BUSINESS
Table of Contents
Introduction:...............................................................................................................................3
Company Overview:..................................................................................................................4
Introduction to India:..................................................................................................................5
Internal Environment Analysis:.................................................................................................6
Strengths:................................................................................................................................6
Weakness:..............................................................................................................................7
Opportunities:.........................................................................................................................8
Threats:...................................................................................................................................9
PESTEL Analysis:...................................................................................................................10
Political:...............................................................................................................................10
Economic:............................................................................................................................11
Social:...................................................................................................................................11
Technological:......................................................................................................................11
Legal and the Environmental:..............................................................................................12
Conclusion:..............................................................................................................................12
References:...............................................................................................................................14

3INTERNATIONAL BUSINESS
Introduction:
The modern business world has become significantly competitive over the years and
one of the main reason responsible for the increment in the level of competition is seen to be
the entry of the increased number of new organizations in the business industry. The retail
business industry is observed to be one of the most affected business industry and the
significant growth of the mentioned business industry is considered to be one of the
fundamental reason for the intense competition faced by the organization operating in the
industry (Gregory, 2015). The existence of the market leading organizations is seen to be in
major threat with the increased entry of the new organizations. Apart from this, the intense
market competition is observed to have the potential of affecting the growth of majority of
the market leading organizations and that forces the business organizations operating in the
business industry, to restructure their strategies in order to effectively manage the detrimental
impact of the competition (Cao & Li, 2015).
The business organizations operating in the retail industry are seen to put strong
emphasis in the improvement of the quality of the services of the employees and along with
products and the services that they offer to the customers in an attempt to manage the impact
of the competition. Apart from this, many of the organizations operating in the mentioned
industry, are seen to apply the strategies such as the low or competitive pricing for gaining
the much required cost advantage in the intensely competitive market. On the other hand,
some of the organizations with the influence of globalization are seen to consider the business
expansions as their preferred strategy for managing the impact of the competition. However,
the test of viability of expanding the business to a new market is significantly crucial in
conducting a sustainable business and in order to do so, the evaluation of the market
opportunity is seen to be one of the top most priority for the managers of the business

4INTERNATIONAL BUSINESS
organizations. The paper is focused in the evaluation of the business operations of one
specific organization of Australia named as Kmart. The paper analyses the macro
environmental factors that can affect the chosen business organization in expanding their
business to India and long with that, the paper also analyses the strengths, weakness, threats
and the opportunities for the selected organization. In addition to this, the paper provides an
in depth analysis of the resources and the capabilities of the organization.
Company Overview:
The chosen organization Kmart Corporation is one of the renowned names in the
Australian retail industry and that excellent operations of the selected organization has
enabled it to serve the customers in major countries such as United States, the U.S. Virgin
Islands, Puerto Rico and Guam for a significantly longer period of time. The mentioned
organization has a rich history of foundation which started from the year 1899 and with a
series of changes, the company started its operations in the name of Kmart Corporation from
the year 1977 (Kmart.com, 2019). The organization was established by S. S. Kresge is
currently headquartered in Hoffman Estates. ESL Investments the owner of the selected
organization and along with that, Transform Holdco LLC is seen to play the role of the parent
organization of the company.
The company operates in more than 250 number of locations of the above mentioned
nations and serves a range of products such as the jewellery, health and beauty products,
shoes, electronics, toys, food, Clothing, sporting goods, automotive, hardware, linen and
bedding, appliances, pet products and accessories to the customers and the significant product
diversification of the selected company enabled it to achieve 25.146 billion UD dollars in the
year 2015 (Kmart.com, 2019). One of the crucial reason responsible for the generation of
such significant revenue, is seen to be the excellence of the selected organization in

5INTERNATIONAL BUSINESS
expanding their business to the regions such as Canada, New Zealand, Singapore, Mexico
and Australia.
With a precise focus on the urge of the selected organization in expanding their
business across the globe and the significant growth of the Indian retail industry, the selected
organization has the possibility of entering the Indian market with their diversified product
range. As the product chain of the selected organization includes many products that are daily
requirements of the customers, the company has the potential to achieve a significant growth
in the Indian markets. Apart from this, the increasing population of the selected nation has the
potential to influence the managers of the organization in taking the decision of entering the
Indian markets. With a precise focus on the scope of gaining a significantly large customers
base, it is pretty evident that the products and the services or the organization will be
subjected to notable amount of demands.
Introduction to India:
The retail industry of the selected nation has developed in a significant manner over
the years and that is evident with the fact that, the retail space demand of the selected nation
is expected to increase at a rate of 81 percent in the year 2018 which will make sure that the
retail space demand of the selected nation is 7.8 million sq. ft. (Ibef.org, 2019). The retail
industry of the selected nation is considered to be one of the most fast paced industry of the
nation. The Indian retail market is expected to increase at a rate of 60% which will enable it
to each 1.1 trillion US dollars in the year 2020 (Ibef.org, 2019). Apart from this, the retail
business in the nation is seen to be notably boosted by the factors such as the increase in the
average incomes of the people in the nation, the changes in the lifestyle of the middle class
society along with the increase in the strength of the digital connectivity.

6INTERNATIONAL BUSINESS
The people of the nation is seen to use the digital applications in an increased manner
in recent years which provides substantial strength to the retail organizations in connecting to
the customers through the online applications and even conduct their business in an efficient
manner. The Indian retail industry is seen to achieve a notable growth in recent years and that
is visible with the significant increase in the total consumption expenditure which is expected
to reach to 3600 billion US dollars in the year 2020 from 1824 billion US dollars of 2017
(Ibef.org, 2019). The sum is more than 10 percent of the GDP of the nation and that places it
to the 5th position in the list of largest global destinations for the retail spaces (Ibef.org, 2019).
Hence, from the above discussion, it is pretty visible that the retail industry of the
mentioned nation is expanding in a significant manner and is expected to increase the growth
as well. This provides a significant base for the selected company in entering the market of
India for conducting a profitable business.
Internal Environment Analysis:
Strengths:
One of the noteworthy strength of the organization is the diversified product chain of
the organization. The company sells a range of the products that has significant amount of
demands as majority of them are daily needs of the customers. The exclusive product chain of
the selected organization enables the company to serve a large number of different
requirements of the customers which provides notable amount of competitive advantage to
the selected organization in gaining the preferences of the customers (Pashaei & Olhager,
2015). The diversified product chain of the selected organization enables the company in
retaining the customers in an efficient manner.
The store locations of the company provides it notable amount of competitive
advantage in the market competition. The company is able to place the outlets majorly at the

7INTERNATIONAL BUSINESS
centre of the populated urban areas and that helps the company in gaining the much required
attention from the part of the customers for their products.
The chosen company is able to set the special lay away plan for the customers who
prefer to pay in instalments and that is of great significance for the selected organization in
retaining their customers in an efficient manner and at the same time, it will enable the
organization to increase their sales as well. In targeting the low and middle class income
groups, the strategy is significantly helpful for the organization.
In addition to this, the company is able to improve their customer services and the
customer interaction policies in a notable manner which helps it to increase the level of
customer loyalty amongst the customers (Yu, Ramanathan & Nath, 2014). Apart from this,
the brand equity of the selected organization is seen to be substantially high for the early
presence in the retail sector.
The company’s excellence in providing quality products in the food and perishable
section is considered to be one of the crucial factors that has the potential to provide
considerable amount of competitive advantage to the selected organization in the market
competition.
Weakness:
The organization faced considerable amount of financial woes over the years and that
is pretty evident with the incidents such as the bankruptcy. The overleveraged financial
position of the selected organization is one of the major weakness of the selected
organization.
The supply chain of the selected organization is observed to be a major concern for
the organization in competing with the market giant such as the Walmart. The absence of the

8INTERNATIONAL BUSINESS
flexibility in the supply chain of the selected organization is seen to restrict the organization
in the price war with the market giants of the industry (Christopher, 2016).
The closure of considerable number of outlets in recent years has tremendously
affected the business operations of the selected organization.
Opportunities:
One of the major opportunity for the selected organization is the expansion of their
business to the emerging markets. With such variety in the product chain of the selected
organization, it has the potential to achieve a significant growth in the emerging markets.
The company has the possibility of strengthening their brand and improve the margin
of their profit through concentrating on the private label growth.
The organization has tremendous potential of serving the multi-ethnic customer
groups of the nations such as United States or India and through undertaking the new ethnic
marketing and promotional activities, the company has the possibility of establishing a
profitable business (Teck Weng & Cyril de Run, 2013).
In future, the company has great opportunity in expanding their business to the
culinary schools and healthcare sectors. Apart from this, the company has the potential of
targeting the new customer segments in nether Friday sales. This will notably boost the
organization’s customer base and will enable it to serve a larger number of customers.
The selected organization has the possibility of expanding their business to the rural
regions and their pricing policy significantly supports that as the conversion of the
organization from a departmental store to an organization that is more focused in establishing
the Every Day Low Prices (EDLP) concept, enables the selected organization in introducing

9INTERNATIONAL BUSINESS
low priced products. The average selling prices for the selected organization in recent times is
nearly 7 dollars (Kmart.com, 2019). Hence it is pretty evident that the idea of expanding the
market through opening more outlets in the in the rural region is a feasible option for the
selected organization.
In addition to the point of expansion, the company has great opportunity of achieving
new organizations and market entries through acquisitions of brands and labels and that has
the potential of improving the sales of the selected organization in a significant manner.
Threats:
The economic uncertainty or the slowdown across the globe will force the customers
to choose the companies like Walmart which is able to establish a cost advantage over the
selected organization with the low priced products and services (Barata-Salgueiro & Erkip,
2014).
The selected organization is expected to face significant amount of competition from
the organizations such as Walmart or Target Corporation in increasing the market share of the
organization.
The significant intensity of the price wars in the industry has the potential to affect the
business operations of the selected organization and this can slow down the profit margins of
the selected organization (Sotgiu & Gielens, 2015).
In addition to this, the business operations of the selected organization is observed to
be notably influenced or affected with the frequent changes in the external factors such as
taxation policy or the government rules and regulations.

10INTERNATIONAL BUSINESS
The economic downturn is affecting the purchase intentions of the customers across
the globe and that is pretty evident with the reduction in the quantity of purchases from the
part of the customers.
Hence it is pretty evident that the economic downturn and the cost advantage of the
competitor organizations have the potential to pose notable amount of threats for the selected
organization. This is expected to lead to decline in the profit for the selected organization and
that can affect the financial stability of the mentioned organization.
PESTEL Analysis:
India, a country that is formally recognized as the Republic of India, is at the seventh
position in the list of the largest countries in terms of area. The selected country is seen to
expand in a significant manner in terms of population and that is pretty evident with the
achievement of the second position in the world in population with more than 1.3 billion
people (Censusindia.gov.in, 2019). The selected nation is known for its rich history of
cultural diversity and along with that, is considered to be one of the most significant
destinations for the business organizations in the Asian market. The selected nation is
observed to be of one of the fastest growing economy and that is pretty evident with the GDP
(PPP) of 10.505 trillion US dollars and a nominal GDP of 2716 trillion US dollars
(Data.worldbank.org, 2019).
Political:
The selected country is the largest democracy in the world and a federal form of
government is in charge to govern the nation. The business organizations of the mentioned
nation and their operations are seen to be notably influenced with the changes in the
government policies, the different ideologies of various parties along with the interests of the
politicians. The business operations of the various multinational organizations operating in

11INTERNATIONAL BUSINESS
the nation is observed to be largely affected with the taxation policies and by the impact of
several taxes such as income tax, sales tax and service tax (Finmin.nic.in, 2019). Apart from
these taxes, the local governing bodies are seen to charge the octrai and utilities tax.
However, the government of the selected nation is notably active in encouraging business
organizations through various programs and along with that, the influence of the government
is seen to be crucial in privatization of the businesses.
Economic:
As mentioned earlier, the economy of the selected nation is significantly strong and is
growing in a rapid speed. The growth of the economy of the selected nation is observed to
reach newer heights with the introduction of the industrial reform policies in the year 1991.
With a precise focus on the policy, the factors such as the establishment of the FIBP,
reductions in the industrial licensing along with the liberalization of the foreign capital is seen
to be crucial for the improvement of the economic environment of the selected nation. Apart
from this, the per capita GDP (PPP) for the nation is seen to be 7873 US dollars and nominal
GDP has reached 2036 US dollars and that provides a strong economic base to the selected
organization in entering the Indian retail market (Finmin.nic.in, 2019).
Social:
The selected nation was notably behind the major nations in creating an environment
which will be able to attract the business organizations in an efficient manner, however, in
recent years the environment changed in a significant manner and that is pretty evident with
the rise in the Human Development Index and a medium scale Gini co-efficient. The Human
Development Index of the selected nation increased to 0.640 in the year 2017 (In.undp.org,
2019) and along with that, the Gini co-efficient of the selected nation of 33.9 is pretty
significant in stating the partial equality in the business society (Hdr.undp.org, 2019). With

12INTERNATIONAL BUSINESS
the increase in the entry of the foreign business organizations in the mentioned nation, the
country has the possibility of achieving a significant generation of the employment.
Technological:
The usage of the technology in the mentioned nation has increased in a notable
manner over the years. With the precise focus on the price war between the telecom
organizations of the mentioned nation, the online activities of the people of country increased
in a notable manner. The improvement in the technology and the application of the
technology have significantly influenced the business organization in various aspects such as
the cost cutting procedures and the product development. The technological advancement and
the acceptance of the improvement in the technology from the part of the people of the
country are seen to be crucial in increasing the urge of the modern business organizations
operating in the industry, in increasing their online business activities.
Legal and the Environmental:
The government and the supreme court of the selected nation are observed to be
substantially strict in the effective implementation of the legislations such as the Labour and
Employment Act, Anti-discrimination Act along with the Work health safety Act (Wathen,
MacGregor & MacQuarrie, 2015). The ineffective management of these regulations are
largely considered as corporate offense and has the potential of affecting the business
organizations with monetary penalizations and with the reputational damage as well.
However, with the increase in the business activities, the organizations need to be
focused in the ethical and eco-friendly sourcing of the raw materials and at the same time, the
companies need to be cautious with the discharge of their waste.
Hence, it is pretty evident that the nation, India, will be a significant destination for
the modern business organizations in conducting their business.

13INTERNATIONAL BUSINESS
Conclusion:
On a concluding note, the chosen business organization Kmart has all the possibility
of achieving a notable growth in their business with the implementation of the business
expansion plans. Considering the business expansion to be one of the significant strengths of
the selected organization, the retail market of India is one of the most attractive market for
the selected organization. In addition to this, the macro environmental factors of the selected
nation are notably contributing in the business operations of the organizations operating in
the industry which is also significant for the selected organization in entering the Indian
market. With a precise focus on the low priced products, the selected company has the
potential of creating a cost advantage over the competitor organizations in the mentioned
nation.

14INTERNATIONAL BUSINESS
References:
Barata-Salgueiro, T., & Erkip, F. (2014). Retail planning and urban resilience. Cities, 36,
107-111.
Cao, L., & Li, L. (2015). The impact of cross-channel integration on retailers’ sales growth.
Journal of Retailing, 91(2), 198-216.
Censusindia.gov.in (2019). Home. [Online] Available at: http://censusindia.gov.in/
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Data.worldbank.org (2019). Home. [Online] Available at:
https://data.worldbank.org/country/india
Finmin.nic.in (2019). Finance Ministry of India. [Online] Available at:
https://www.finmin.nic.in/
Gregory, J. (2015). The Internet of Things: revolutionizing the retail industry. Accenture
Strategy.
Hdr.undp.org (2019). Income Gini Co-efficient. [Online] Available at:
http://hdr.undp.org/en/content/income-gini-coefficient
Ibef.org (2019). Home. [Online] Available at: https://www.ibef.org/industry/retail-india.aspx
In.undp.org (2019). Human Development Index. [Online] Available at:
http://www.in.undp.org
Kmart.com (2019). Home. [Online] Available at: https://www.kmart.com/

15INTERNATIONAL BUSINESS
Pashaei, S., & Olhager, J. (2015). Product architecture and supply chain design: a systematic
review and research agenda. Supply Chain Management: An International Journal,
20(1), 98-112.
Sotgiu, F., & Gielens, K. (2015). Suppliers caught in supermarket price wars: victims or
victors? Insights from a Dutch price war. Journal of Marketing Research, 52(6), 784-
800.
Teck Weng, J., & Cyril de Run, E. (2013). Consumers' personal values and sales promotion
preferences effect on behavioural intention and purchase satisfaction for consumer
product. Asia Pacific Journal of Marketing and Logistics, 25(1), 70-101.
Wathen, C. N., MacGregor, J. C., & MacQuarrie, B. J. (2015). The impact of domestic
violence in the workplace: results from a pan-Canadian survey. Journal of
occupational and environmental medicine, 57(7), e65.
Yu, W., Ramanathan, R., & Nath, P. (2014). The impacts of marketing and operations
capabilities on financial performance in the UK retail sector: A resource-based
perspective. Industrial Marketing Management, 43(1), 25-31.