International Business: Kmart's Market Entry Strategy in India

This report analyzes Kmart's international business strategy, specifically its potential expansion into the Indian market. It begins with an executive summary and an introduction that outlines the report's scope and objectives, linking it to a previous assignment that included a SWOT analysis of Kmart. The report then delves into an additional country analysis, using the CAGE framework and the 12 pillars of competitiveness to assess the Indian market. The analysis reveals India's competitive standing and its attractiveness for foreign companies. The core of the report focuses on competitive strategy, recommending a combination of cost leadership and differentiation for Kmart's market entry. It explores various market entry options, suggesting direct marketing or partnering as the most viable strategies. Marketing and R&D considerations, including the marketing mix, are addressed, alongside recommendations for quality control and policy actions. Finally, the report examines international HRM issues, emphasizing cultural diversity and compliance with Indian laws and regulations. The conclusion summarizes the key findings and recommendations, providing a comprehensive overview of Kmart's potential for success in the Indian market.

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Executive summary
This report defines the international business of Kmart which is an American
departmental store. Kmart has planned to make expansion in India. The report first provides
the introduction of the report and its link with the previous part of the assignment. An outline
of the previous assignment in the form of SWOT analysis has been given. The report
describes the strategy recommendations concerning international business. The research has
been made on the articles, academic journals, text books and the websites.
The report initially comprises the additional country analysis comprising cage
framework and 12 pillars of competitiveness. The analysis found that the India is the 40th
most competitive economy out of the 137 countries. The market size of the Indian market is
large enough to welcome the foreign companies. The exclusive product chains serves to a
large number of the customers having several requirements. It offers a considerable
competitive advantage to the selected organizations in attaining the preferences of the
customers. The differentiated products chain of the organizations enables the company in
retaining the customers in the appropriate manner. The Cage framework is accommodating in
finding out the impacts and differences between the demonstrated countries. This framework
has been useful for the Kmart to comprehend the pattern of capital, occupation, flow of
people and information which work as the critical factors for the organization.
Afterwards the report moves to the competitive strategy analysis. This analysis is
going to be mixture of cost leadership and differentiation. The competitive strategy can assist
Kmart to attain substantial market share in India. It will even help to conquer dominance over
the competitors. Kmart can set up in the Indian market as a low cost producer. The
differentiation strategy can also be accompanied by Kmart to be unique in the industry along
with some measurements which are widely valued by the buyers. Thirdly the market entry
options are suggested to the Kmart. There are various ways through which Kmart can enter
into the Indian market. The company can make use of the strategies like direct exporting,
joint venture, licensing and more. But the suggested market entry strategies are direct
marketing or partnering.
The next segment focuses on the marketing and R & D considerations. It comprises
the marketing mix such as product, price, place and promotion to be conducted before the
launch in India. It will give an outline to the company for conducting operations in India.

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Further, the recommendations have been given such as quality control and policy actions to
boost manufacturing. Kmart can apply six sigma mechanisms as a part of quality control for
reducing defects and modifications. The company will be capable of producing high quality
products if quality check is done at every stage with all the compulsory measures
Finally, the international HRM issues and considerations are undertaken like cultural
diversity and compliance with the laws and regulations. The culture diversity can be
enhanced through adopting an open minded and global company culture. It will assist Kmart
in comprehending clients, customers around the globe. Kmart has to follow different
employment laws in India. Ignoring employment laws can result in the law suits to the
company. Kmart can tackle such issues by keeping up with the Indian laws and regulations.

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Contents
Executive summary...............................................................................................................................1
Introduction...........................................................................................................................................4
Background of Kmart Company and India............................................................................................4
Conclusions of SWOT analysis.............................................................................................................5
Additional analysis................................................................................................................................6
Competitive strategy analysis................................................................................................................7
Market entry option analysis and desired option recommendation........................................................7
Marketing and R&D considerations......................................................................................................8
Recommendations.................................................................................................................................9
International HRM issues and considerations......................................................................................10
Conclusion...........................................................................................................................................10
References...........................................................................................................................................12
Appendices..........................................................................................................................................15

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Introduction
This report is the second part of the international business report. This report is going
to evaluate the expansion proposal of the Kmart in India. The first part of this assignment has
been covered in the first assignment. The first assignment includes the overview of the Kmart
along with the introduction of India. The internal environment analysis of the company has
been done comprising SWOT analysis. The pestle analysis has been also done. Now the
second part is going to focus on the strategy recommendations.
This report is having objective of offering recommendations for Kmart in the multiple
aspects of the international business like identifying market opportunities, recommendations
for the market access, market entry strategy, R&D considerations, recommendations
regarding production and international HRM issues. The company will be recommended on
the basis of the macro environmental analysis and additional country analysis.
The report initiates with the background of the company, conclusion of the SWOT
analysis which is comprehended from the earlier assignment. Additional analysis of India has
been undertaken comprising cage analysis and 12 pillars of competitiveness. The competitive
strategy analysis has been used in the report to better define the scope of making expansion in
India. The market entry option analysis and desired options are recommended in the report.
The marketing and R&D considerations are also undertaken including competitive strategy.
Finally, the recommendations regarding production are deliberated along with the
international HRM issues and considerations.
Background of Kmart Company and India
Kmart is American retail chain markets general merchandise mainly through the
discount and variety stores. Kmart started its large scale discount stores in 1962 and
continued to 85 discount stores on the annual basis throughout the United States. The
company made expansion throughout the twentieth century and started operating 2200 stores
like Kmart, Big Kmart and Super Kmart by 2000. The stores functioned effectively in the US,
Guam, Puerto Rico and US Virgin Islands.
India is having large retail industry and has been constantly launching stores offering
unique products. The country welcomes to the foreign companies by offering fixed

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percentage of FDI. India is even regularly promoting its relationships with other countries.
Further analysis has been given in the appendices.
Conclusions of SWOT analysis
Kmart has competitive advantage by offering diversified chain of the products. The
company has attained significant demand in the foreign countries for its range of the
products. The diversified product portfolio of the company even helps in retaining customers
in the proficient manner. The store location is also a competitive advantage for Kmart which
has helped in maintaining position in the competitive market. The organization mainly set up
its stores in the most populated areas which help in gaining required attention of the
customers. The company has gained strength in setting the special lay plan for the customers
who like to pay in the instalments. It has great role in retaining customers. It will also assist
company in increasing sales in the Indian market. The option of the EMIs provided by the
company helps in targeting low and middle class income group. The company has even
gained capability of enhancing the customer loyalty through the customer interaction policies.
The brand equity of the Kmart is high in the retail sector. The quality products of the
company like food and perishable section has potential of gaining competitive advantage
(Jackson, Joshi & Erhardt, 2003).
Kmart is having substantial amount of financial woes which is evident from the cases
like bankruptcy. The overleveraged financial position of the Kmart is one of the severe
weaknesses. The supply chain of the organization is also a serious concern when it comes to
compete with the market giants like Walmart. There is absence of the flexibility in the supply
chain of the organization which creates price war. The increasing number of the stores also
affects business operations of the organization (Pattanaik, Mishra & Moharana, 2017).
Kmart has attained opportunity to make expansion in the developing countries. The
variety provided by the company has capability of attaining a significant growth in the
developing markets. The variety provided by the company can have significant role in
attaining substantial growth in the developing markets. Kmart has even opportunity of
strengthening the brand and enhance the profit by focusing on the private label growth. The
everyday low prices help organization in making expansion.
The slowdown of the economy forces customers to opt for the companies like
Walmart as it is capable of establishing a cost advantage. Kmart is anticipated to face

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competition from the organizations like Walmart or Target Corporation in increasing the
market share. The price war can even affect profit margins of the organization (Farooqi &
Shahid, 2017).
Additional analysis
CAGE framework
The CAGE framework recognizes the administrative, cultural, geographic and
economic differences between the several countries which companies are required to address
and take precaution while working on the strategies. This strategy is useful for the Kmart to
comprehend the pattern of capital, occupation, flow of people and information which work as
the critical factors for the organization. The Cage framework is helpful in finding out the
impacts and differences between the demonstrated countries. It is a perfect tool for the Kmart
to develop strategy required to expand operations in India. Under this strategy, cultural
differences are tough to change while differences regarding legal and economic structures can
be changed certainly (Neelakandan, Jiménez, Thoburn & Nitschke, 2015). This framework is
definitely helpful to the Kmart in identifying the middle group between the one which fits all.
It also makes possible customization of the dissipations which are mainly applied to the
global strategies towards the development of the products. It can be determined from this
framework that the administrative, cultural, geographic forces determine how similar
products function in the different countries. Kmart can successfully develop the products
which can help in venturing into the Indian market in an efficient manner (Nair, 2018).
12 pillars of competitiveness
The 12 pillars of competitive can be used by the Kmart as the set of rules, institutions
and the features which determine the level of productivity of India. The level of productivity
as a result sets the level of prosperity which can be reached by the economy. The productivity
level has also capability of determining the rate of return attained by the investments in the
economy. These are the central drivers of the growth rates. More complicated an economy is
more likely to grow faster over the time. The Indian economy is competitive globally and
undertakes a new methodology for the index taking into account the future promptness. It
comprises adaptability and agility in the context of the industries. India has even enhanced its
ranking on the technological readiness pillar of the global competitiveness index. The country
is always to adopt internet and communication technologies like mobile phone, internet

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access, internet bandwidth per user and more. The customers can order online products over
the website of Kmart with the help of the internet. India has even added the score which has
improved across most pillars of the competitiveness (Bhand & Goel, 2017). It comprises
technological readiness, infrastructure, education and training.
Competitive strategy analysis
The competitive strategy recommended for Kmart is mixture of cost leadership and
differentiation. The competitive strategy can help Kmart to attain significant market share in
India. It even helps to attain dominance over the competitors. Kmart can set up in the Indian
market as a low cost producer (Grant, 2016). The low cost leadership will be effective for the
company as most of the population of the India belongs to the middle class. The middle class
population believe in purchasing high value products at the lower prices. Kmart need to
discover and exploit sources of the cost advantage. It will assist company to establish itself as
an average performer in the Indian industry. Kmart can even equally command prices at the
industry average (Chong, Pappu & Tombs, 2016).
The differentiation strategy can help Kmart to be unique in the industry along with
some dimensions which are extensively valued by the buyers. The company can provide the
items which are not that popular in India but are quite popular in the foreign countries like
ready to eat food. Kmart can even select one or more attributes which can be considered
important by the buyers in the industry. The company can position itself to meet those needs
only. Kmart can even reward itself for the unique products offered by charging the premium
prices (Boscagli, 2019).
Market entry option analysis and desired option recommendation
There are several ways through which Kmart can enter into the Indian market. The
company can make use of the strategies like direct exporting, joint venture, licensing and
more. There are several factors which influences to the strategies like tariff rates, degree of
the adaptation of the product requisite, marketing and transportation costs. Such factors can
increase the costs but it is anticipated that the increase in the sales can compensate these costs
(Murphy, 2018).
The direct exporting is selling directly into the Indian market by using own resources.
After establishing the sales program, the agents and wholesalers can represent the company in

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the local market. The agents and wholesalers work thoroughly in signifying interest of the
company. They even become the face of the company so it is significant to choose agents and
wholesalers in the same way, key personnel are chosen. On the other side, licensing can also
be used as market entry option (Hofer & Baba, 2018). It is a relatively refined arrangement
where the company can transfer the rights to use of a product or service to another company.
This strategy is mainly useful if the purchaser of the license have relatively great market
share in India. It is mainly used for the marketing or production. Partnering is also effective
while entering into the foreign market. The partnering can be done in the several forms from
co-marketing arrangement to the refined strategic alliance. Franchising can also be used for
the rapid market expansion. It works well for the companies like Kmart which have
repeatable business model. It can be easily transferred into other markets. The requirement
required for using the franchise model are unique business model and capability of creating
future competition in the franchisee. The joint venture is a specific form of partnership
comprising creation of a 3rd independent managed company. In this process, two companies
agree to work for together in the specific market (Hamilton & Webster, 2018).
Kmart is recommended to use either direct marketing or partnering. The direct
marketing can be effective to use as profit can be earned by the company through selling
directly into the market. Kmart can even easily pick its agents and distributors in the country
which will help to set up the operations (Thompson, Strickland & Gamble, 2015). The
partnering is effective in countries like India where culture, business and social are practically
different than own local partners. It even assists in bringing local market knowledge, contacts
and customers if partners chosen wisely.
Marketing and R&D considerations
Products: The Indian customers are influenced by the varied offered. They like to view
several options before making final decision hence Kmart will offer variety of products to the
customers. The products of the Kmart are going to comprise toys, jewellery, apparel, office
supplies, pet supplies, beauty products, health products, medicines, electronics, home décor,
hardware, food items, frozen items and more. Kmart is focusing on the low pricing model as
people in India are attracted towards low prices. The company can even replace other brands

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with this strategy. It has even progressed from discount store to the Every Day Low Prices
concept (Roy, Sethuraman & Saran, 2016).
Price: Kmart will follow target pricing strategies and competitive pricing strategies in India.
It will help company to fare well among the competitors in both physical and digital arena.
Kmart is going to focus on the affordable products so that middle and lower class customers
can buy the products that are price sensitive in India. Kmart can easily become price leader
among the locally sourced products. The company has planned to build strong relationships
with the local suppliers. The low cost and differentiation strategy will also be used to target
the local customers in India (Vernon, 2017).
Place: The retail market in India is highly fragmented and retail businesses are mainly of
small to medium scale. The company will use longest channel to attain cost economies in
association to the sales. The population of the India has been categorised into the urban and
rural region. The urban area is having more number of the stores when it is compared to the
rural areas. The numbers of the retail stores are increasing on the constant basis in the major
cities like Mumbai, Delhi, Kolkata and more. Kmart will also operate soon through its
website in India (Rossiter, Percy & Bergkvist, 2018).
Promotion: Kmart has positioned itself as a store which has everything and mainly targets
women and mothers. The company will use catchy pop songs in the commercials in India
instead of portraying itself as a funky and fun brand (Sharma, Nasreen & Kumar, 2019). The
customers in India are more influenced by the discounts and vouchers so the company will
offer Boxing Day sales and Black Friday. The company will even produce products as per the
preference of the customers and will consider their beliefs (Hunter, Saunders & Constance,
2016).
Recommendations
Policy actions to boost manufacturing: Kmart need to propose policy actions in order to
boost manufacturing. It can help company to recapture customers. The company can face
barriers in manufacturing growth because of the lack of the qualified staff and financing. For
the efficient manufacturing process, the company is going to focus on the training program
and rebranding in order to appeal customers. The company is going to encourage component
production in order to close supply chain gaps. It will promote manufacturing clusters
through the public private cooperation (Picciotto & Mayne, 2016).

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Quality control: Kmart focuses on the total quality management through making use of the
differentiation and low cost strategy. The company can initiate for the quality control by
asking for the quality raw material from the suppliers. Kmart will apply six sigma mechanism
for reducing defects and modifications (Korez-Vide & Tominc, 2016). The company will be
able to produce high quality products if quality check is done at every stage with all the
necessary measures. It will even ensure that the products are manufactured at the standards
sets by the company.
International HRM issues and considerations
Culture diversity: The workforce of the company is made up of diverse population. The
diversity at Kmart will bring difference in skills, abilities and experiences. There can be even
growth of stereotypes and prejudices due to the culture diversity. The culture diversity can be
improved through fostering an open minded and global company culture. It will also assist
company in understanding clients, customers around the globe (Stokes, et al. 2016). It will
also help in making workplace more interesting. Kmart can make use of the strategies to
boost culture diversity. The company can commit to boost its own cultural competency and
can make a point to educate itself. It can help company in actively seeking new perspectives
and ideas. Kmart will create a workplace where varied perspectives are valued and embraced
to foster productive business relationships (Stowell & Stowell, 2017).
Compliance with the laws and regulations: The HR issues can be faced in Kmart to keep
up with the changing employment laws. Kmart has to follow different employment laws in
the different country. Ignoring employment laws can result in the law suits to the
organization. It can even possibly demise the company. Kmart can tackle this issue by
keeping up with the Indian laws and regulations (Dickmann, Brewster & Sparrow, 2016). No
matter how Kmart initiates in India at small or large scale but should make sure that it
compliance with the local, state and federal labor laws. There are regulations on everything in
India from hiring to wage to the workplace safety. The employment laws in India do not
discriminate on the basis of the genders and equal opportunities. The employees are entitled
to the maternity and family leaves. The laws implemented ensure high degree of protection
for the workers. The employment laws even offers pension fund for the security in the old
age. The persons working in the organization are also insured as per the suitable policies
(Cano-Kollmann, et al. 2016). The employment agreement offers every detail of the company
regarding place of work, designation, compensation, working hours and more.

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Conclusion
From the above analysis, it can be concluded that India is highly competitive and
capable of tackling international business. Kmart can expand in the Indian market easily and
in an efficient manner. The country welcomes to the foreign companies by offering foreign
direct investment. Kmart can make use of the effective strategies in India like low cost and
differentiation. As most population of the country belong to the middle class and this class
prefer to buy unique products at the reasonable prices. In this manner, direct marketing and
partnering are the best suitable for the Kmart.
At the time of making expansion in India, Kmart is suggested to advertise its
products. The different channels will enable company to attain economies of scale. The
company is required to focus on the quality control as the key focus areas. This way company
can ensure quality of the products at the appropriate costs.
The analysis of India also suggests that the foreign companies are offered sufficient
opportunities along with the incentives. Kmart can operate in the Indian market with the
appropriate measures.