Lidl's Global Expansion Strategy: A Comparative Market Analysis Report

This report presents a comprehensive analysis of Lidl's potential for international expansion, focusing on a comparison between Norway and Mexico as target markets. The analysis begins with a comparative PESTEL analysis, evaluating the political, economic, social, technological, environmental, and legal factors of both countries to determine their attractiveness for Lidl's market entry. Subsequently, the report applies Porter's Five Forces model to assess the competitive landscape within the Norwegian supermarket industry, identifying potential threats and opportunities for Lidl. Finally, a value chain analysis is conducted to examine Lidl's internal activities and how they can be optimized to gain a competitive advantage in the chosen market. The report concludes with a recommendation for Lidl's expansion strategy based on the findings of these analyses, providing a strategic roadmap for successful international growth.

Running head: EXPANSION OF LIDL
Expansion of Lidl
Name of the student:
Name of the university:
Name of the Author:

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EXPANSION OF LIDL
Table of Contents
Task 2...................................................................................................................................2
PESTEL analysis of Norway...........................................................................................2
Task 3...................................................................................................................................4
Porters Five Force Model................................................................................................4
Task 4...................................................................................................................................6
Value chain analysis........................................................................................................7
Task 5...................................................................................................................................9
Reference List....................................................................................................................12
Appendix............................................................................................................................15

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EXPANSION OF LIDL
Task 2
From the analysis which have been conducted on Norway and Mexico it is clear that
Norway will be the best option for Lidl to enter. The future plans which have been made by Lidl
must be implemented in Norway and the company must look forward to expand its business in
Norway.
PESTEL analysis of Norway
Political factors: In the present time it has been seen that Norway is politically stable as
compared to Mexico (Normann 2015). There are absence of any kind of political disruptions in
the country and the various implications which might hamper business in the country is absent.
There are huge implications of political disruption on a business (Normann 2015). The public
residing in Norway have full trust on their government and there have been seen that the
government efficiency is increasing in the country. The Monarchy system in the country is
keeping the country in a political stable condition and it has also been seen that that there are less
number of crimes in Norway as compared to Mexico. The political environment of Norway is
ready to allow new companies like Lidl in the country as there are no political upsurges in the
country and also there are no viable terrorism act in the country.
Economic factors: The various economic rates of the country as well as unemployment
rates in the country suggests that the business of Lidl in the country will be viable for the
company. With the implementation of better business proposition in the country Lidl will be
easily settling up its business in the country. The GDP per capita in the country is 81, 695 USD
which is a very good number for Lidl as it shows that the country is economically stable and the
various values of the products and goods which were produced by the country in 2018-2019

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EXPANSION OF LIDL
(Gullberg, Ohlhorst and Schreurs 2014). In Norway it takes an approximate time of 4 days to
start a business in the country which is quiet less as compared to Mexico.
Social factors: The life expectancy in Norway is 82.1 years which ensures that the
country is adaptable to the various labor needs of the country. The 99 per cent literacy rate in the
country the country will be understanding the value of Lidl in the country (Pacolet, Bouten and
Versieck 2018). The labor efficiency in the country is 76 per cent which ensures that Lidl will be
easily able to gather a lot of staffs in the country.
Technological factors: It have been seen that Norway is 87 % technologically advanced
and 94 % ready for the adoption of newer technology (Fei, Rasiah and Shen 2014). This will be
very helpful Lidl as the company is already technologically advanced and it will be easy for the
company to adapt itself in Norway. The main aim of Lidl on entering Norway is to bring
innovations in its products as well as services which will become easier looking at the
technological advancement of Norway. The government of the country invests a huge amount of
money on various technological advancements which enables the various industries of the
country to use those technology.
Environmental factors: The various state controlled business of the country is producing
different kinds of cutting edge technology which is keeping the country ahead of many. This
environment of the country will be very helpful for Lidl to grow in the future. The people of the
country are slowly moving towards the various energy sources which have less impact on the
environment (Høgevold et al. 2014). Lidl have been known to be environment friendly so that
people of Norway will be readily welcome Lidl in their country keeping in mind the environment
friendly practices of Lidl.

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EXPANSION OF LIDL
Legal factors: Lidl have to look forward to the various laws in the country including
consumer laws, international laws and health and safety laws (Forbord, Bjørkhaug and Burton
2014). Since it have been seen that the country has 79 per cent efficiency in legal framework and
75 per cent efficiency in investor protection it will be very helpful for Lidl to invest in its
business in Norway (Forbord, Bjørkhaug and Burton 2014). Whenever there will be any kind of
dispute in the country the money which will be invested by Lidl will be protected. The judicial
system in the country is very efficient in solving different kinds of conflict in the system.
Task 3
Porters Five Force Model
Porters Five Force Model will be used to make a detailed analysis of the competitiveness
which might be faced by Lidl while entering the market of Norway.
Threat of new entrants (low): The threat from the new entrants is relatively low for Lidl.
Over the timer it has been seen that the grocery market have slowly turned into superstore
chains. Lidl is already a well-established supermarket chain and there are a lot of customers of
the company in different countries (Geppert, Williams and Wortmann 2015). With the presence
of so many existing big supermarket chains it is very hard for new companies to make their place
in the supermarket industry. The various steps which are used by supermarket chain over the
years like marketing mix strategy makes very hard for new companies to enter the business
(Hernando Cuñado, Colvin-Díez and Enríquez Román 2019). Lidl have implemented certain
strategies like one stop shopping and many different kinds of policies which allows the company
to have the option of standing out from the crowd. The newer companies which will be trying to
enter the market are unable to get any kind of scope and area in which they can stand out from
the crowd of the existing supermarket in Norway.

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EXPANSION OF LIDL
Bargaining power of buyers (Medium): The power of buyers in the Norway if medium as
there various options which are used by the buyers while making their purchase. When the price
of certain product increases then buyers look for other options to buy that product from. This
must be taken into account by Lidl as the company needs to ensure that the products which are
available to the customers must be given at a reasonable price as compared to the existing
supermarkets in the country. Various supplements such as loyalty clubs as well as club cards are
used by the buyers to decrease the price of the products they are buying (Hovav 2015). These
strategies must be used by Lidl to ensure that a better customer retention is carried out by the
company. Implementation of lower priced products along with good quality products must be
ensured by the company in order to gather more customers.
Bargaining power of suppliers (low): In Norway and the supermarket chains the power of
suppliers are considerably low. Supermarkets like Lidl dictate their suppliers about the price they
want to pay to them. Supermarkets which are well established have the power to rule over their
suppliers as if one supplier is gone then there will be many other supplier who will be ready to
supply products to the company (Shaikh, Karjaluoto and Häkkinen 2018). The suppliers are in
threat from other suppliers regarding the fact that they might lose their business to other
suppliers. If the suppliers of the country do not agree with the price of the supermarket then they
will be losing their retailers. The suppliers of the company are very much dependent on them and
they have very little or no power over the supermarket chains.
Threat of substitutes (low): In supermarket industry an entire product can never be
replaced but innovations can be brought in the supermarket industry. The products which is sold
by each and every supermarket companies can never be entirely replaced by any other products.
The various process which is used in the production of an article can be improved and renovated

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EXPANSION OF LIDL
in such a form that the cost of producing the product will be reduced. Lidl is already
technologically advanced and is ahead of the existing supermarkets in Norway (Metzger 2014).
With the implementation of better technology and innovation the company will be staying ahead
of its competitors in the country. The various aspects which needs to be addressed by the
company are the certain factors like bring innovation in the retail stores which will be attracting
the customer and also implement innovation in reducing the production cost of certain items.
Threat from existing competitors (high): Rivalry between supermarkets is a never
competition which will also be faced by Lidl in Norway. There are many well established in
Norway who are in constant competition with each other. Supermarkets such as Norgespuppen,
Bunnpris, Coop and Rema are some of the well-established supermarket in the country (Morais
2016). The company have to understand the various ways by which these companies operate and
make sure that it stays ahead of them in attracting customers and provide good quality products
to the customers in cheaper prices. The supermarket industry in the country is accelerating at a
very high pace and Lidl have to adapt to the speed if it wants to make its place in the country.
The newer retailers like Lidl have to make sure that it brings innovation in the system if its wants
to stay ahead of the existing competitors in the market. In Norway the competitive threat is very
high for Lidl.
Task 4
Some of the internal value adding activities of Lidl are:
 Inbound logistics of the company
 Outbound logistics of the company
 Marketing and sales department of the company

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EXPANSION OF LIDL
 The various services which are provided by the company in the various countries
 The firm infrastructure of the company
 The human resource management of the company
 Developments in the technologies which are done by the company
 The procurement method followed by the company (Tench 2016).
Value chain analysis
A value chain analysis of the company will be conducted to assess the relevant activities
which needs to be followed by the company in order to enter the supermarket business of
Norway.
Inbound logistics: High quality inputs must be followed by the company to ensure that
the product which is being provided to the consumers of Norway are of high quality (Hovav
2015). There are already presence of a good number of supermarket chain in Norway so the
company needs to implement the policy of providing good quality products so that they can
compete against the existing companies and attract more customers (van Ekeren 2014). Keeping
in mind the growing demand of customers the company will be able to gather a good number of
customers if they provide them with good quality products.
Another step which can be taken by the company is that to implement the policy of an
effective input handling to ensure that the products are not damaged (Tomasevic and Spasojevic
2018). Since the company is going to enter a highly competitive market so it must ensure that the
products which are provided by the company must be of optimum quality. The company cannot
provide its customers with damaged products and it will be direct loss for the company. The
company needs to establish itself in the country in a proper way so it must ensure that the
products which are being shipped by it in Norway are not damaged while transportation.

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EXPANSION OF LIDL
Operations: The operations which are conducted by the company must be planned in a
better way. The implementation of flexible manufacturing system of the products must be
implemented in the company to ensure that they can meet the needs of the target market (Gielens
2018). With the implementation of flexible manufacturing system the company also make sure
that they are providing its customers with a wide range of products so that it can attract more
customers in its retail stores. Another policy which might be adapted by the company to gain
advantage over its competitors in the market is to improve the appearance of its products. The
pre-mature failure of the various products of the company must be stopped by the company in an
effective way.
The various unique specifications which are expected by the customers in the target
market must be addressed by the company to ensure that the various needs of the customers are
met (Morais 2016). If the company succeeds in responding to the various needs of the customers
they will be staying ahead of the competitors in the market. Providing better quality products to
the customers by decreasing the lower defect rate must be ensured by the company. If the
company is able to provide better quality products than its competitors in a steeper price then the
customers will be turning towards the company.
Marketing and sales: The department of marketing and sales of the company must ensure
that a better marketing of the company is conducted in Norway so that more number of people
are aware of its presence in the market (Morais 2016). The marketing team of the company must
ensure that a better relationship is maintained with the suppliers and the customers of the
company. Various information regarding the products of the company must be provided to the
customers. A well maintained brand awareness must be conducted by the company and the
image of the company must be enhanced in the country. An effective method of advertising must

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EXPANSION OF LIDL
be implemented by the company. A wider number of states in the country must be covered by the
company so that it can gather more customers.
Technological development: The Company can stand out from the numerous number of
existing grocery stores in the country by the aid of introducing new product in the country. With
the implementation of new product in the country the company will be able to stand out from the
crowd (Morais 2016). Various innovations must be brought about in the company which are
related to the designing of the various products which will be provided by the company in
Norway. The patented technology of the company must be enhanced so that the company can
stand out from the crowd and stay ahead of the competition in the market of Norway. With the
implementation of these steps the company can easy establish itself in the market of Norway and
attract more customers than its existing competitors in the market.
Task 5
For entering a foreign market there are certain things which needs to be considered by
Lidl:
Licensing: This needs to full filled by Lidl and the company will be selling the various
rights to the intellectual property of the country (Chetty, Ojala and Leppäaho 2015). Licensing
might include various patents and various information about Lidl and in future they will be
exchanged for loyalty fee. Keeping in mind the political stability of Norway it will be quiet easy
for the company to get license for conduction of business in the country. With the aid of
licensing a foreign company can either get the opportunity to exclusively manufacture its
products on the foreign land or under the trademark of the franchisers. Looking at the economic

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EXPANSION OF LIDL
structure of the company it can be safely said that Lidl will be getting the opportunity of
manufacturing its products exclusively in Norway.
Joint venture: Keeping in mind the economic stability of the country joint venture might
be a viable option for the company. Since Lidl is entering a new market and is targeting new
customers, so the company needs to assess the fact that joint venturing with other existing
companies will be very helpful for. By collaborating with existing brands the company will be
able to get a better exposure to the public. If the company shares its fame with other company
then people will be interested in the company. If the company provides better quality products to
the customers of the company with which it collaborating then the company will be able to
gather customers of other companies as well. Joint venture is the plan which can be adopted by
the company for long term profits. The various issues which will be implemented in joint venture
are ownership control, issues related to the pricing of the products, intentions of the government
and period of the agreement (Powell 2014).
Strategic alliances: Since the main focus of Lidl must be to bring innovation in the
market, it might be a good option for the company to form strategic alliances. In strategic
alliance the company will be partnering up with some other company for a limited period of time
and renovate some existing products or services or bring some new products in the market
(Hollender, Zapkau and Schwens 2017). With the help of strategic alliances it will become easier
for the company to bring newer products in the market and stay ahead of its competitors. If the
company succeeds in bringing innovation in it then the company will be able to get more
customers. The main focus of forming strategic alliance with other companies of Norway is to
bring newer products in the market to gain customer retention and customer attraction.

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EXPANSION OF LIDL
Co-marketing agreements: This is another step which might be followed by the company
in teaming up with other existing firms in the country. With the help of this there are certain
advantages for Lidl like if the company face any losses upon entering the market of Norway it
will not be a huge amount since many firms will be associated with the business. The
collaborations with other firms will also be opening a lot of scopes for the company as it will be
getting more limelight (Coeurderoy and Murray 2014). More people will be coming to know
about the company and a lot of exposure will be gained by the company after it collaborates with
other existing firma in Norway.
Exporting: This is another important aspect which needs to be addressed by Lidl. Since
the company will be importing most of its goods initially into Norway the transportation must be
kept in mind. The sale of the various goods of the company to other parts from Norway will be
addressed by exporting. If the Company will be making most of its goods in Norway then the
company gains the opportunity of selling its products to other countries. Since the company has
lot of retailing stores all across the country it can easily export its products from Norway to other
parts. Direct exporting is one of the major aspects which needs to be taken into account by the
company. Direct exporting is a non-equity mode for the company in which it can easily export its
products and services to other nations directly (Askenazy, Caldera, Gaulier and Irac 2015). This
option is a good point for the company as it will be able to cover a lot of area from its new
country. With the implementation of direct exporting the company will be able to expand its
business to other countries easily and gather more customers. Indirect export is one of the option
which must be considered by the company in which it be getting the option to indirectly export
its business (Laufs and Schwens 2014) With the help of indirect exporting the company will be
able to export its goods and products by the aid of intermediate domestic based services.

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Reference List
Askenazy, P., Caldera, A., Gaulier, G. and Irac, D., 2015. Financial constraints and foreign
market entries or exits: Firm-level evidence from france. Review of World Economics, 151(2),
pp.231-253.
Chetty, S., Ojala, A. and Leppäaho, T., 2015. Effectuation and foreign market entry of
entrepreneurial firms. European Journal of Marketing.
Coeurderoy, R. and Murray, G., 2014. Regulatory environments and the location decision:
Evidence from the early foreign market entries of new-technology-based firms. In Location of
International Business Activities (pp. 226-260). Palgrave Macmillan, London.
Fei, Q., Rasiah, R. and Shen, L.J., 2014. The clean energy-growth nexus with CO2 emissions
and technological innovation in Norway and New Zealand. Energy & environment, 25(8),
pp.1323-1344.
Forbord, M., Bjørkhaug, H. and Burton, R.J., 2014. Drivers of change in Norwegian agricultural
land control and the emergence of rental farming. Journal of Rural Studies, 33, pp.9-19.
Geppert, M., Williams, K. and Wortmann, M., 2015. Micro-political game playing in Lidl: A
comparison of store-level employment relations. European Journal of Industrial Relations,
21(3), pp.241-257.
Gielens, K., 2018. The Competitive Price Effects of Lidl’s Entry in the US Grocery Market.
Gullberg, A.T., Ohlhorst, D. and Schreurs, M., 2014. Towards a low carbon energy future–
Renewable energy cooperation between Germany and Norway. Renewable Energy, 68, pp.216-
222.

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EXPANSION OF LIDL
Hernando Cuñado, J., Colvin-Díez, J. and Enríquez Román, J., 2019. Mercadona-A successful
business Case.
Høgevold, N.M., Svensson, G., Wagner, B., Petzer, D.J., Klopper, H.B., Varela, J.C.S., Padin, C.
and Ferro, C., 2014. Sustainable business models. Baltic Journal of Management.
Hollender, L., Zapkau, F.B. and Schwens, C., 2017. SME foreign market entry mode choice and
foreign venture performance: The moderating effect of international experience and product
adaptation. International Business Review, 26(2), pp.250-263.
Hovav, T., 2015. Business models analysis of Finnish food retailers-Case K-chain, S-chain and
Lidl-How to determine right channel to enter grocery retail market as a new supplier with new
products in Finland.
Hovav, T., 2015. Business models analysis of Finnish food retailers-Case K-chain, S-chain and
Lidl-How to determine right channel to enter grocery retail market as a new supplier with new
products in Finland.
Laufs, K. and Schwens, C., 2014. Foreign market entry mode choice of small and medium-sized
enterprises: A systematic review and future research agenda. International Business Review,
23(6), pp.1109-1126.
Metzger, K., 2014. Business analysis of UK supermarket industry. GRIN Verlag.
Morais, M.P.A., 2016. How can corporate social responsibility campaigns enhance marketing
strategies: LIDL’s approach (Doctoral dissertation).
Morais, M.P.A., 2016. How can corporate social responsibility campaigns enhance marketing
strategies: LIDL’s approach (Doctoral dissertation).

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Normann, H.E., 2015. The role of politics in sustainable transitions: The rise and decline of
offshore wind in Norway. Environmental Innovation and Societal Transitions, 15, pp.180-193.
Pacolet, J., Bouten, R. and Versieck, K., 2018. Social protection for dependency in old age: a
study of the fifteen EU member states and Norway. Routledge.
Powell, K.S., 2014. Profitability and speed of foreign market entry. Management International
Review, 54(1), pp.31-45.
Shaikh, A.A., Karjaluoto, H. and Häkkinen, J., 2018. Understanding moderating effects in
increasing share-of-wallet and word-of-mouth: A case study of Lidl grocery retailer. Journal of
Retailing and Consumer Services, 44, pp.45-53.
Tench, R., 2016. The Corporate Social Responsibility in Lidl’s Communication Campaigns in
Croatia and the UK. The Qualitative Report, 21(2), pp.351-376.
Tomasevic, N. and Spasojevic, M., 2018. LIDL'S MODERN BUSINESS OPERATIONS IN
THE DOMESTIC AND INTERNATIONAL MARKETS. Economic and Social Development:
Book of Proceedings, pp.346-353.
van Ekeren, A., 2014. The circular supermarket chain.

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Appendix
Task 1
MEXICO NORWAY Preference :
1 (Not
preferable);
2(preferable)
Ratings
(1-7)
Ratings (1-
7)
Mexico Norway
POLITICAL
FACTORS
Trust of public
on the
politicians.
1.8 5.8 1 2
The various
favouritism
taken by the
government
officials in
taking
decisions.
2.0 5.1 1 2
Business cost
behind
terrorism.
4.7 6.0 1 2
How much
efficient the
government is
in its
expenditure
2.1 4.8 1 2
How public
funds are
diversified
2.3 5.9 1 2
Burden of the
regulations by
the government
on the
companies
2.7 4.2 1 2
Existence of
irregular
payments of
employees and
bribes in the
place.
3.1 6.3 2 1
Total: 8 13
ECONOMICAL
FACTORS
Per capita GDP
of the place.
9,807
USD
81,695 USD 1 2

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EXPANSION OF LIDL
Budget balance
government
GDP in %
2.8 2.8 2 2
Gross national
saving %
26.6 33.7 2 1
% of gross
national
savings.
2.8 3.5 1 2
Annual % of
inflation
2.8 3.5 1 2
% of
government
debt.
58.1 33.2 1 2
Credit rating of
the country.
71.0 94.8 2 1
Sophistication
of the buyers.
3.5 4.1 2 1
% of import
GDP.
40.8 32.2 1 2
The prevalence
of ownership
of foreign
market.
5.3 4.4 1 2
Present
intensity of the
local
competition.
5.2 5.3 2 1
Index of the
size of the
foreign market.
6.1 5 1 2
Inflation rate in
%
4.9 2.8 1 2
Time needed
for starting
business
(days).
8.4 4 1 2
Real GDP
growth in %
2.0 1.4 1 2
Total 20 26
SOCIAL FACTORS Education
system quality
3.0 5.3 1 2
Life
expectancy (in
years)
77.3 82.3 1 2
Literacy rate in
%
94.5 99 1 2

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EXPANSION OF LIDL
Population
(million)
124.7 5.3 2 1
Median age
(years)
27.5 39.2 2 1
Urbanization in
%
79.9 81.9 1 2
Labour market
efficiency
3.8 5.1 1 2
Female
participation in
labour
0.59 0.95 1 2
Total 10 14
TECHNOLOGICAL
FACTORS
Readiness of
technology
4.2 6.1 1 2
Latest
technology
availability
5.0 6.1 1 2
Foreign direct
investment,
transfer of
technology
5.0 5.1 1 2
Internet users
in %
59.5 97.1 1 2
Innovation
capacity
4.1 5.3 1 2
Total 5 10
ENVIRONMENTAL
FACTORS
Road quality 4.4 4.3 1 2
Port
infrastructure
4.3 5.1 1 2
Electric supply
quality
4.9 6.9 1 2
Air transport
quality
4.4 6.0 1 2
Rail transport 2.8 4.0 1 2
Total 5 10
LEGAL FACTORS Efficiency in
settling
disputes
2.7 5.5 1 2
Investor
protection
strength
6.0 7.5 1 2
Government
regulations
burden
2.6 2.4 2 1
Firm ethical
behaviour
3.2 5.8 1 2

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EXPANSION OF LIDL
Independence
of judiciary
4.1 6.6 1 2
Total 6 11
Grand total 59 84