Strategic International Business Plan: Woolworths' Expansion in China

This report provides a comprehensive international business plan for Woolworths, focusing on its potential expansion into the Chinese market. It begins with an executive summary and an introduction that sets the context for the plan. The report includes a background of Woolworths and a detailed overview of the Chinese market, highlighting its economic and political climate, consumer behavior, and market dynamics. A SWOT analysis from a previous assessment is summarized, providing a foundation for further analysis. The report employs Porter's Five Forces to analyze the competitive landscape in China's supermarket industry, assessing the threats and opportunities. It explores competitive strategies, market entry options (including distribution, export, and licensing), and recommends a preferred approach. The report also considers marketing, research and development, and production strategies. Finally, it addresses international HRM issues and provides a conclusion summarizing key findings and recommendations. The report aims to guide Woolworths in making strategic decisions for successful entry and operation in the Chinese market.

Running Head: INTERNATIONAL BUSINESS 1
International Business
Name
Affiliation
Date

INTERNATIONAL BUSINESS 2
Table of Contents
Executive summary.........................................................................................................................3
Introduction.................................................................................................................................4
Background of the company and selected country...................................................................5
SWOT analysis.............................................................................................................................7
Additional analysis reflecting your further country analysis.....................................................8
Competitive strategy analysis.........................................................................................................9
Market entry option analysis.......................................................................................................10
Marketing and Research and Development considerations.......................................................12
Recommendation regarding production..................................................................................12
International HRM issues and considerations.........................................................................13
Conclusion..................................................................................................................................13
References.................................................................................................................................14
Executive summary

INTERNATIONAL BUSINESS 3
The purpose of this paper is to develop strategic recommendations of Woolworth
Company. These recommendations will base on the previous assessment two which was about
the Macro Environment Analysis. The reports present an introduction by illustrating its
relationship with assignment three. For effective argument concerning this paper, the analysis
of the previous paper will be included. The recommendations of the report will base on
"international business plan" for Woolworth Company. The company will be provided with the
recommendations basing on the results obtained from the analysis of the macro environment
in assessment two. Therefore, the assessment will aim at developing the remaining aspects in
the "comprehensive business plan for Woolworth Company in China. The report will provide a
detailed analysis and research to make a recommendation on the strategic entry in the market
by the company. The recommendations will aim at helping the company to achieve its
objectives of investing in the new market. The report will comprise of various sections such as
the background of the company and the selected international country. The conclusions of the
SWOT analysis discussed in assessment two, The additional analysis of the study that reflects
the detailed analysis of the selected country, option analysis for entering into the new market
and the necessary recommendation options, R&D and marketing considerations,
recommendations concerned about production and finally the international Human Resource
Management considerations and issues
Introduction
As was discussed previously in the report, the Chinese, market is largely a competitive
market. This means that no single producer influences the market. It is also worth noting that
the Asian country has one of t he biggest GDP as it is second to that of the US. Expanding into

INTERNATIONAL BUSINESS 4
the Chinese economy comes with various benefits. These include the wide market that the
country can offer. The 16,760 ppp dollars per capita imply that the citizens have strong
consumption ability. The advantage with having strong purchasing is that it increases demand.
All such are findings in favour of Woolworths as a new producer in the economy. The other
important aspect associated with china is that the country has a relatively stable political
climate (sigh, 2012).
The unfavorable findings that Woolworths can come across include tendencies such as
corruption. This is due to the high levels of red tap procedures. These can be met especially
when obtaining legal documents allowing the company to operate in the country (Rodrigo,
2014). Since this process is usually very long, authorities often at times ask for bribes to help
the company get done quickly (wunker, 2011). However there are steps towards correcting this
trend of events in the country (masters, 2019).
It is operated on a single political system and such a facto greatly promotes economic
activity even for the new business entity. The strategies available to Woolworths include the
use of distributors. This type of market strategy will best be applicable when testing the
product or service on the Chinese new market (martin2014). The market analysis strategy
requires the company of Woolworths to consider a number of factors. These are what are
known as the risk, threats, weaknesses and alternatively opportunities. Along with using the
distribution strategy, Woolworths can opt to use the export strategy as well; the other market
entry strategy is the licensing strategy (martin, 2014). This involves giving other local firms in
the Chinese market operate under the name of Woolworths. This is almost similar to
franchising as it would as well involve operation under the Woolworths brand name.

INTERNATIONAL BUSINESS 5
For product or service related strategies, Woolworths can utilize the product adaptation
strategy, low price strategy, total adaptation strategy among others (korostoff, 2010). The
product adaptation strategy for example would involve modifying the existing products or
services. Woolworths can use this if it intends to modify the product that will satisfy the
Chinese tastes and preferences (Zappone, 2009).
Background of the company and selected country
Company background
Considering the previous assessment, the chosen company for this paper is Woolworth.
This is an Australian based grocery or supermarket. The company is also known as Woolies.
Records indicate that the company was set up in 1924. The company has gained control of the
Australian market at over 80 percent. With the help of online platforms such as "Woolworths
Online", the company has been in the position to sell its goods. The company deals in various
business such as household products, pet and baby supplies, stationery items, groceries, beauty
and health products, and many others. The company has acquired various companies across
the world as part of its international marketing practices.
The company has also involved in Joint Ventures with an intention of marketings its
goods across the globe. The company trades with different companies in differentiated areas,
for example, it trades as Countdown in "New Zealand." Woolworth is also performing its
business activities with assistance from other companies across the world that is to say JSE in
S.Africa. The company has been in the position to attract various people across the world with
the helping of their marketing tools that is to say loyalty schemes and gift cards. The company

INTERNATIONAL BUSINESS 6
may enter the new markets of Asia like China due to the favorable environment for conducting
business. As a result of the strong political and socio-economic situation of the selected
country, the company will be in the position to perform its business activities. In addition, China
is considered among the Asain countries with a high level of income per-capita and increased
incomes among the people in the region (McGregor, 2012).
Background to the selected country
The Asian region comprises of very many developing countries among them include
China, India, and many others. The regions are in the position to help new firms gain increased
income. As a result of the increased competition in Australia, the growth of firms has been
affected in the region. Inj order to attain increased growth in the long run, Australian countries
are advised to invest in other countries with a stable environmental condition. Also, the market
for supermarkets in Asia is competitive because the region has no company which has gained
market control over others. For this paper, the selected country is China. In this case, the
country is considered to have the largest population across the globe.
The region is among the fast-growing countries across the world. China is considered to
be the second largest nations with the highest level of Gross Domestic Product across the world
behind the United States of America (Croy, 2015). The country's income per capita is estimated
at US$16,760PPP. Considering the status of the country, it qualifies as an appropriate country
than any other company can invest in. The company has invested much of its concern on the
development of infrastructure. Further, the government of China has put much focus on
developing its transport sector in three modes. After going through economic reforms, the

INTERNATIONAL BUSINESS 7
country has been considered among the diversified economies across the world. The region has
also been considered as the major player in international trade (Greenblat, 2013).
SWOT analysis
For effective evaluation of the business activities in terms of “strengths, weaknesses,
opportunities and threats" this tool is the most recommendable. This section provides a
conclusion of the SWOT analysis from Assessment two. By analyzing the strength of the
company, it is considered to have a competent brand portfolio for many years. The company
values the importance that arises by building its brand that is aimed at providing good products
and services and also invetsi9ng in different new products. The company has also invested in
technological development by using different technological tools to perform business activities
hence improving service delivery. The company's home financial base will help it maintain its
economic performance. In brief, the company has a strong connection with its distributors and
dealers which may result in increased benefits to the business.
Also, the company experiences various weaknesses such as, the incompatible
organization structure of Woolworth as considered to the present business framework which
may affect the company's expansion. For very many years, the company been performing
poorly in the management of their inventory which may result in higher inventory costs (Wang,
et al, 2010). The company also has some opportunities like high business opportunities in
"semi-urban" areas of China. Further, Woolworth has many opportunities in regards to online
marketing which is a trend in China. Finally, Woolworth has experienced various threats that is
t9 say; poor adoption speed to innovation. As a result of the increased level of inflation in
China, has raised the cost of raw materials in the region (Buckley, 2010).

INTERNATIONAL BUSINESS 8
Additional analysis reflecting your further country analysis
This section provides further analysis for China by using the most popular analytical
instrument for analyzing regions in regards to international business. The analysis has been
carried out as follows;
Porter's 5 forces analysis or model
Porter's model is an analytical tool that uses five major forces to evaluate or determine
an industry's profitability in a given market environment. The model analyses and classifies the
major important forces that affect market competition in an industry. The model was formed by
"Micheal Porter" way back in 1979 with an intention of understanding how the major five
competitive forces affect industries in a given economy. In this case, the model will be used to
make an analysis of China's market especially supermarkets (Steve,&Lin,2016). Studies indicate
that China is going through economic growth as evidenced by increased revenue from
supermarkets or groceries. China's P5F analysis examines the following, first, the threat to new
business entrants. this factor is very common in the country as a result of, very many
supermarkets in the country, and the weak laws on intellectual property in the country that
allow increased copying which is easier, cheap and faster as considered to development in
innovation and research (Hill, and Charles, 2014).
Second the customers' or buyers' bargaining power. China has a high bargaining power
for supermarket products as a result of a competitive industry in the region. In China,
customers are not stuck about the products to purchase because they are very many

INTERNATIONAL BUSINESS 9
businesses in the country providing similar products. The supermarkets or groceries in China
are owned by both foreigners and Chinese (Dess, 2018).
Third, "the threat for substitute products",as a result of high prices of supermarket
products, some Chinese opt to buy their products in other shops. Some people in the country
wish to buy their products directly from the industries or retailers with the intention of avoiding
increased prices of goods in supermarkets (Luthans, &Doh, 2015).
Forth, the suppliers' bargaining power, this is high in China as a result of the increased
number of manufacturers and suppliers in the area. It is understood that China has a bigger
number of supermarkets as compared to other regions in Asia (Henisz, and Zelner, 2010).
Lastly, "the amount of rivalry among competitors", as a result of the increased number
of supermarkets in the country, the market competition is very high. This indicates that the new
entrant into the market should consider this factor more seriously (Henisz, and Zelner, 2010).
Competitive strategy analysis
The most important aspect that a company such as woolworths needs to understand is
the type of population in china. With a clear understanding of the market, the Woolworths will
be in position to derive the best competitive strategy. However from the report provided, the
company can rely on factors such as the social and cultural behavior of Chinese people. From
the report, it is evident that the Chinese people highly treasure their culture. Therefore to a
profit seeking company such as Woolworths, this is an opportunity to utilize. The company can
decide to design a product or service that is associated with the Chinese culture. Over time this

INTERNATIONAL BUSINESS 10
would create royalty among the Chinese customers because they will feel an attachment to the
product.
The other completive strategy that the company can apply is the use of technological
advancements. The Chinese people are known to have a high interest in technological
innovations. Therefore if the company comes up with an attractive method of online marketing,
then it is most likely to attract a lot of Chinese consumers. Eventually wool worths will build a
wide network of customers basing on the online platform. Such strategies can however be
made even much more attractive if the company takes a further step to incorporate other
activities such as practising corporate social responsibility and the Chinese ethical standards.
Market entry option analysis
Strategies of market entry can be defined as the approaches that a company can utilise
when joining a new market. As hinted in about in the executive summary, they include
strategies such as exporting, franchising and so many others. A further analysis of these
strategies is provided below.
To begin with, licensing would be an important strategy that Woolworths can utilise so
as to join the Chinese market (kokemuller,2019). This involves the franchising and signing
manufacturing contracts. Under such a strategy, Woolworths has the liberty to either charge

INTERNATIONAL BUSINESS 11
fees or simply collect loyalty payments from the local Chinese firms. These would be [paying
such fees for one simply one reason which would be operating under the wool worths name.
For the product or services, Woolworths can use distribution as one of the strategies.
This means that the company will employ either a national or an international distributor to act
as the supplier in the Chinese market. Woolworths Company will be required to sign operating
contract with these distributors. They will partially be considered as the part of the employees
of the company and in most cases these people are paid commissions for their services. The
other point to note is that these agents or distributors can either be companies or individuals.
Below is an illustration of the how the Woolworths Company can join the new Chinese market.
This can be used under the distribution strategy or even under the market mix. This matrix
would involve what is known as the 4ps of marketing. These include the product, price,
promotion, and place. The market mix however means that woolwlorths will have release the
right product, sell it out at the right price, and as well give the product the necessary promotion
on the market and in this case china.

INTERNATIONAL BUSINESS 12
Through the above systematic flow, Woolworths would be in position to move into the
Chinese market. Therefore the above options are not the only available strategies the company
can use but they would be of great assistance overtime.
Since the Chinese market has a wide range of producers, the most recommendable
approach that the Woolworths Company can use is the distribution strategy. This would be
combined with the pricing method of the marketing mix.
.
The most immediate outcomes of joining a new market such as china are the
opportunities to get new customers. Among these one will get those who embrace the new
product, and with time the loyal customers. The other outcome is the ability to exploit the large
economies of scale for the company due to the wide and broad market base. On the other hand
the Woolworths risks chances such as spreading too thin. This means that the company could
actually anticipate that nit has enough capital and then decides to expand and spread its
liabilities to china. The problem would arise when Woolworths fails to meet such liabilities
Marketing and Research and Development considerations
The major factors the company of woolworhts needs to consider include the social
trends of the Chinese people. a well conducted study on the tastes and preferences of the
Chinese population would imply that the company produce what the market wants. For
purposes of the best market entry option research should be conducted basing on the type of
distributor to use. It will be of great importance when evaluating the cost factor. For the