Strategic Management Report: Analyzing Lidl's India Expansion Strategy

This strategic management report examines the potential for Lidl's expansion into the Indian market. The report begins with an executive summary highlighting the rationale for targeting India, emphasizing the country's large population and potential for profit. The introduction provides background on Lidl's history and mission to provide quality products at low prices. The overview section outlines the company's strengths, such as well-trained employees and strong cash flow, and weaknesses, including outdated business models and challenges with product demand. The external analysis includes a PESTLE analysis, evaluating political, economic, social, technological, legal, and environmental factors favoring expansion. Porter's Five Forces analysis assesses the competitive landscape, threats of new entrants, substitutes, and bargaining power of customers. The internal analysis focuses on the value chain, assessing how Lidl can maximize value creation in the Indian market. The report concludes by summarizing the key findings and recommendations for Lidl's successful entry into India.

INDIVIDUAL
STRATEGIC
MANAGEMENT
REPORT

Executive Summary
The company Lidl wants to expand itself in Asia and India will be the best option for the
company to expand itself because if they target the right customers then the company will be
able to make profits easily. The report is a detail study as to why the company must expand itself
in India. The customers will be easily attracted to the store of Lidl because of good quality of
products at low price.

Table of Contents
INTRODUCTION...........................................................................................................................5
OVERVIEW....................................................................................................................................5
EXTERNAL ANALYSIS................................................................................................................6
Pestle Analysis............................................................................................................................6
Porter's Five Forces Analysis......................................................................................................8
INTERNAL ANALYSIS.................................................................................................................9
Value Chain Analysis..................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
 In 1930, Lidl opened its first independent grocery store and in the present time it has
spread itself over Europe and in 1994, Lidl opened the first store in United States too.
Lidl is German store which wants to expand itself in different countries.
 The motive of this store is to provide the customers the best of quality in products but in
low rates so that the customers feel satisfied and get the best of bests. Today Lidl has
over 10,000 stores in Europe and United States.
 The store wants to expand itself in India which could be an easy target according to the
objective this company has for the customers. The numbers of employees in this
company are over 315,000 and the company wants to expand itself all over the world.
Turnover of Lidl is just increasing every year and the company is doing very well in the
past few years.
OVERVIEW
Strengths
 The strengths of this company is that they are making the best because there employees
are well-trained and are very skillful. Lidl is spending a lot in the human resource
department so that the employees can be trained and the customers do not have complains
with the store.
 There is a strong flow of cash in this company which is making the expansion of different
projects take place in the company. The customers coming to the stores are very satisfied
because the relationships the employees and the customers share are very fulfilling the
needs of the store and the customers.
 Over the years the company has invested a lot in making a strong portfolio therefore the
company is working so well. There are a lot of technologies which are being used in the
company so that the company can grow (Bromiley and et.al., 2015).
Weakness
 There are a lot of other competitors coming in this field and the company is not being
able to decide as to how they should be dealing with these problems. The business model
the company Lidl is following is very out dated and is not practical for the present
business strategies which is limiting the company to grow.

 The company will get impacted if they raise there capital so that they can invest in other
channels for a long term run of the organization. Lidl company is not good with
integration with other companies who have a different work culture in the organization
and that is turning out to be a failure for the company. A gap is visible in the products
which range and are getting sold by the company and that could be a strength for other
companies to get in this market (Hambrick, 2015).
 The products demand when goes high the company is not being able to produce more and
make the customers get the products on time which can be a major draw back for the
company to expand itself and the flow of cash in the company can reduce.
Opportunities-
 The new taxation polices are really in favor of the business of Lidl and can really make it
grow all over the world and make the profitability grow at a very fast rate. Getting new
technologies in the company could be really great for the company to grow because the
products they are selling are very environment friendly and will make the company one
of the best.
 The change in the customers trends is another great opportunity for the company to grow
and expand itself in all the field possible (Morschett, Schramm-Klein and Zentes, 2015).
The change in the strategies of the business growth for the company could also give the
company different opportunities to grow further in the market.
 Shipping and delivery changes have reduced which means the company will be able to
grow better. The charges are lesser the company makes more profit from the customers.
Over few years the company has invested a large amount of money in the online platform
of the company which will help the company to make a huge profit in the near future.
The customers preferring to order online which will make the company get a great
advantage for themselves since they have already expanded themselves on the online
platform.
Threats-
 The competitors are investing a lot of amounts on the technologies of the company which
is making the other companies get a lot of advantage over Lidl company. There is a raise
in the raw materials which Lidl is getting in which could be a great threat for the
company and its profitability.

 The wages for the employees in China has increased to $15 per hour which could be a
serious threat for the profitability of the company. There are different laws in different
countries so Lidl has to really careful of the countries they want to expand in because
sometimes it can be another great threat for the company (Bryce, 2017).
 There is a decline on the over all sales and profitability of the company because of the
competitor's growth in the past two years has made the company have a lot of pressure on
them of not being able maintain the stability of growth of the organization.
EXTERNAL ANALYSIS
Pestle Analysis
Political Factors-
The political factors of the company would be very good for making the company expand
in India if they would want to because India is the largest democratic in the world and federal
form of government. There are a lot of taxation in India but because of the population and intake
of the population the company will be able to grow faster. The company will have to pay taxes in
rupees which will not be much for the company and the company will be able to grow very fast
because Indian's explore different stores and go for the best quality and the cheapest price which
will make the company grow even faster (Trigeorgis and Reuer, 2017).
Economic Factors-
Since, the introduction of industrial reform policies the country has faced a stable
significant growth. The economic growth of the country is very good which means the company
Lidl will be able to make a stable growth in the country as soon as they open. The GDP of India
is over $5.07 trillion which makes and attracts lot of companies to come and invest in the India
and Lidl must not wait longer to open its branch in India too because they can make a fast
growth in this country.
Social Factors-
The population of India is on a high rate which means there are more mouths to feed in
the country which would turn out to be a great success for the country (Wilton, 2016). India has a
population over 1.2 billion of people and there is 70% of people between the age 15 and 65 that
could be a great reason to open the store of Lidl in India. There is a lot of unemployment in the
country which means the company can get employees at a very low wage and that would also

make a profit for the company (Noe and et.al., 2017). The company will have to invest a huge
amount on the human resource department so that the training and developing can take place of
the workers in the company.
Technological Factors-
There are a lot of skilled employees in India because India has the strongest IT sector in
the world. The technologies available in the country are very good and the company Lidl will be
able to grow even faster because they lack in producing the finished products quickly. The
customers always have been complaints about that factor so now the company can product its
own products in India and make the company a big hit in the country which is selected. India is a
developing country and this is going to be a very good reason for Lidl to open its branches in
India.
Legal Factors-
There are a lot of changes which have taken place in the laws of the country which are
making the least waste in the country, recycling the waste and no harm to the environment
(Webb, 2017). There are a lot of health issues to the Indian's already because the air is so
polluted because of urbanization and industrialization. Lidl is already taking care of these factors
in the countries have already expanded themselves in which means they will be able to grow in
India without any problems. The legal factor of India will not make Lidl not expand itself in this
country.
Environmental Factors-
The environment factor is not a problem for Lidl because they are already very careful of
the waste material they have of the company. The waste material of the company is being
recycled and reused so that they do not harm the environment. Factors of the company are total
in favor so that the company can grow in India. Legal and Environmental problems are solved
already even before the company steps in the country because they already follow those
measures in their own countries. Lidl is Germany based and Germany does not allow the
industry to product any product which is harmful for the country and the environment (Morden,
2016).
Porter's Five Forces Analysis
Threat to new entrants

India being a developing country all the other company's want to come and invest in this
country. There will be new entrances of other company's in the country but Lidl will have to
grow itself and improve on the business strategies and methods they have been using from a very
long time (Bryce, 2017). The strategies and methods the company has been using is very old and
is not practical in today's world and that will not let the company grow faster. There is a lot of
competition in India already because they have a lot of supermarkets in the country already and
if they have to create a unique place for them they will have to make the changes in the way they
approach the market. One method which will really work in India is campaigns and advertising
the brand and products of the store will help the company to establish itself in the market of the
country.
Threat of substitutes
There is a huge threat of substitutes in India because India has a lot of substitutes already
for almost all the products there are in the market. The company Lidl will have to invest a lot on
there research and development team so that they can make better products for cheap and make a
large scale of customers get attracted to it. The copyrights would really help the company to not
let the other competitors take away there uniqueness of the company and let the company grow
as fast as possible. Lidl can even let the others copy them but not let out the secret of their own
product get to anyone else in the market. There are a lot of competitors who will take out
substitutes for the products that the company is producing and serving to the customers
(Baumgartner and Rauter, 2017).
Bargaining power of customers
The company will have to get a control over the customers because the customers in
India are always looking for bargains and that can lead to the company's downfall. Lidl is already
giving the best of quality in low price which will have a control over the customers and that will
also help the customers get satisfied with the products that this company is trying to sell. The
customers main aim is to get the products in as slow price as possible with good quality and if
they succeed in that they are satisfied and will become loyal to the company. In India, it is very
easy to find loyal customers and get customers to the stores.
Bargaining power of suppliers
The company will have to find different suppliers for raw material because they must
have a command on the supplier. A person who is completely dependent on the company buying

the raw material from them will try to increase the price so that they can make profit but the
company can not buy it from that buyer and shift to another supplier. Having a command on the
supplier is very good because the company will make profit if they get the raw material for cheap
and the best of raw material because there finished good is supposed to be of the best quality
(Fratričová and Rudy, 2015).
Competitive rivalry
The rivalry in India is very strong and big and to make place for themselves in the market
it will be very difficult for Lidl, so they must try to make advertisements and promotions to get
the company have a great opening. Getting customers to the store is an easy task but making
them loyal to the store is difficult so the company will have to provide the best of quality for
cheap rates so that the company can grow. There are a lot of retailer stores in the store so making
a place for themselves will be the harder task for the company.
INTERNAL ANALYSIS
Value Chain Analysis
Inbound Logistics-
The raw material which are being obtained in India will have low rates according to the
rates of the raw material in the original countries of the company. There will be more people
willing to sell raw material to the company and the company will easily get more command on
its suppliers (Hill, 2017). There is a lack of employment in the country and the majority of the
population of the country in into agriculture which will help the company to get raw material for
products easily. The raw material which are going to be turned in to finished products is easily
available in India and resources available in India are very easy to have a command on it. Lidl
will find it very easy to get suppliers for itself and will be able to settle in India very easily and
will make a huge profit.
Operations-
The raw material which is easily available in the country will be converted into finished
products and the value of the raw material will be increased and the company can make a huge
profit out of it. The raw material which the company takes have to be taken at a low price so that
the price of the finished product can be increased because of the production method also takes
time and effort. Wages also have to be paid to the employees of the company and that requires
the company to set high prices of the finished product of the company. The production lines

takes time and effort which means the employee who are doing that also have to be given good
wages and in India the wages do not have to be so high because there is unemployment in the
country (Lasserre, 2017).
Outbound Logistics-
The distribution of the finished good is known as outbound logistics. The products which
are made from the raw material of the company then has to send those products to the retailers,
wholesalers or the customers though their own methods. Company has to have a market of their
own so that the outbound logistics can take place easily and this is possible only when the
company has their own retailer stores or wholesalers in the country.
Marketing and Sales-
Lidl company will have to improve its strategies to make the production level and then
marketing them so that they can sell their products to the customers easily. The company will
have to have strategies so that they can sell there products to the customers and marketing is only
possible easily when the company has a strong method to promote and market there products
correctly (Bromiley, Rau and McShane, 2016). The company must try to target the customers
who will be willing to buy there products and the company should market their products through
different market strategies. Lidl should try online platform in India and advertise there products
through social media, advertisements, radio, television, etc.
Services-
The company must train and develop the employees they will be hiring in the country
because that will affect the customers a lot. The services make the customers even more satisfied
and willing to become loyal consumers of the brand. Lidl company will be giving the best of
products in low price which will be a great service from the companies side to the customers. To
get an upper hand on the competitors of the country then Lidl should try to make there service
more unique and acceptable for the country and the society of the country (Ginter, Duncan and
Swayne, 2018). The services they are providing must have sales and discounts on the products
because in India that method really attracts more and more customers.

STRATEGIC OPTIONS
Porter's generic strategies
The generic strategy is used for the direction the organization must go in or must follow.
Michael Porter is the one who have the porters generic strategies and that is divided into 4 stages.
Which are cost leadership, differentiation, cost focus and differentiation focus.
Cost Leadership-
The company must target the largest demand in the market and must offer it lowest prices
products so that they can easily grow in the market of the country. Or the other option is had a
large share of market so that the prices can be kept average for the customers. Lidl motive is to
give good quality of products at low prices so that the customers can be satisfied and happy. This
mode of making a place in the market is great and the company can easily find its place in the
market of the country. There is not a huge investment required for the company to be putting,
and they will just have to make the training and development of the employees a big factor. The
low prices can be set when the employee wages and the raw material is easily available and both
the factors are in favor of the company to sell there products in low prices (Sibony, Lovallo and
Powell, 2017). These methods could lead to the company's profitability margin to a great height
and the company will be able to solve its China employee problems if they expand in countries
like these.
Differentiation-
Lidl will target for high demand market because they already have the other issues solved
for them which is the employees and the raw material availability in the country. The services
and the products they would be selling must be unique so that they can make a place for
themselves in the market. The competitors in the market are too many so the company must
invest in its research and development so that they can come up with different products and
services which no other company is offering to the customers. Strategies Lidl is using must be
made again according to the modern market which has been developed in the present time and
that way the company Lidl will be able to make greater profits in the market (Bailey and et.al.,
2018). The company must become flexible because there are a lot of changes which are coming
in the market, and they must be adapting to them very quickly otherwise the company will not be
able to grow and the competitors will take there place.
Cost focus-

There has to be on the customers coming in the store. The company will have to lower
the prices according to the customers needs and wants and the market they have targeted must be
according to the needs of the products in the market. Lidl must study the needs and wants of the
customer, and they must be able to change there prices accordingly, and they will be able to get
able to meet there needs and the customers needs. The company is not so flexible and to get cost
focus they must try to get all the needs together of the company.
Differentiation Focus-
To get loyal customers in the company Lidl must provide the customers with unique
features and products and services which are liked by the customers of the country (Hitt, Ireland
and Hoskisson, 2016). This is very important because the company must remain ahead of the
competitors in the country and that is only possible when the company is selling products in the
market which are unique and different from the competitors. Lidl will have to take these steps
seriously if they want to grow over all if they come in India.
CONCLUSION
It will be a great idea for Lidl to expand itself in India since it is a developing nation and
it is very easy for the company to settle here. The employees will be easily available and the
social factors of the country will support the company to grow since there main motive or aim is
to provide its customers with good quality of products at low price. Lidl is facing trouble in
China regarding paying wages to the employees but if they company changes its methods and
processes according to the country's market then it will be very easy for the company to grow in
the country and also solve its problems regarding other countries. The flow of cash is very strong
in the company, and they will easily be able to expand themselves on the Indian market by
targeting the right customers. The customers will get easily attracted to this company in India
because of the vision and mission of the company.

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