Strategic Analysis of Lidl's Market Entry into Norway (Module Name)

This report provides a strategic analysis of Lidl's potential market entry into Norway. It begins with an executive summary and table of contents, followed by an assessment of Norway's macro-environmental factors, highlighting its economic and political stability, technological advancements, and environmental policies. The report then applies Porter's Five Forces model to analyze the competitive landscape, including threats from new entrants, competitive rivalry, the threat of substitutes, and the bargaining power of customers and suppliers. Furthermore, the report uses the resource-based view and VRIO analysis to evaluate Lidl's internal resources and capabilities, assessing their value, rarity, imitability, and organization. The report concludes by discussing the implications of these factors for Lidl's market entry strategy and the selection of an appropriate entry mode. The analysis considers the external environment, internal capabilities, and strategic recommendations for Lidl's expansion in Norway.

Running head: STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
Strategic International Business Management
Name of the student
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Executive Summary
The primary purpose of this report is to elaborate on the macro-environmental factors for
Norway and its implication for Lidl. The report elucidates on the Porters Five Forces model
and about the internal environment of the firm. This report talks about the various kinds of
modes of entry and the suitable mode of the entry for Lidl in Norway.

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Table of Contents
Task 2.........................................................................................................................................4
Task 3.........................................................................................................................................6
Task 4.........................................................................................................................................8
Task 5.......................................................................................................................................10
References................................................................................................................................14
Appendices...............................................................................................................................16
Appendix A..........................................................................................................................16
Appendix B..........................................................................................................................18

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Task 2
Lidl is the discount supermarket chain of Germany which operates in 10, 000 stores
within Europe along with the United States. The company sells various kinds of products like
the baked goods, meat and the wine that have served the demands of the people (Lidl.com
2020). The company can expand in Norway that can help the company in strengthening its
presence in the world. Norway can act as the ideal market for Lidl as the country is
economically and politically stables that can increase the reputation of the company in the
world. The country have the monarchy and there does not exist opposition pressures that have
ensured the stability in the country. It is one of the stable country in the world that can help in
the facilitation of the business. It can aid in the market entry of Lidl and provide it with a
sound footing in the country.
The business in the country is carried out with a great level of the transparency and
the Penal Code of Norway criminalises the active and the passive bribery in the country. The
judicial system of Norway enjoys a great deal of the public trust and it has the reputation of
the competence along with the integrity. The world is suffering from the brunt of the
fractured societies along with the wealth gaps that is affecting quality of life of the people.
Norway ranks higher among the inclusive economies of the world that can aid in the growth
of Lidl. It can help in sustaining the growth of the company in the coming years that can be
instrumental in increasing the customer base of the company (Weforum.org 2020). The
country have lowest income inequality among the various countries of the world and it
supports the education that can pave the path for the growth of Lidl. Norway have high
quality of the schooling and the government of Norway have laid stress on the aspect of
education that have improved the social conditions of the people who are living in the
country. The unemployment rate in Norway was found to be 3.92 % and the government
have laid emphasis on the aspect of inclusiveness that have provided merits in the arena of

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employment (Statista.com 2020). The country have the statutory minimum wage and 70 % of
the workers are protected with the help of the collective agreements that specifies the wage
hours. It have been found that 54 % of the paid workers are the members of the unions that
have helped the company in performing well on the arena of employment. The workers are
paid well that have helped in providing a stable environment in the country (Cuervo-Cazurra
2016).
Norway is a technologically advanced nation of the world and the Norwegians want
to adapt the new technology that can aid the prospect of the business within the frontier of the
country. It can act as a stimulus for the development of business of Lidl and it can make its
position stronger in the competitive environment. The people in the country are highly skilled
in the various fields of the IT, design along with the finance that can act as a positive factor
for Lidl. The population of Norway is 5305383 and the number of the internet users are
5120225 which shows that around 96 % of the people make use of the internet in their
everyday life. The country have delivered superior performance in the arena of innovation as
the government in the country lays a great deal of stress on the promotion of the Science,
Technology, Engineering and Mathematics (STEM) subjects that have helped in inculcating
the entrepreneurial skills in the people. The country runs the Research Based Innovation
Programme that have helped the companies in getting the grants that have made a positive
influence on the people living in Norway. The government have implemented the Innovation
Norway programme that have helped in developing the Norwegian enterprises along with the
industry. The government have provided the essential support to the companies that have
helped them in enhancing the competition (Ganintegrity.com 2020). It have aided in the
promotion of the enterprises of Norway and it have been able to secure the development in
the rural areas of Norway. It have provided the enterprises with the support system along with
the financial means that have helped in the development of the competitive advantage for the

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various business within the boundaries of the country. The amalgamation of the local industry
knowledge along with the international network have acted as the foundation that have
helped in the creation of the successful business in the country.
Norway have taken the steps so that it can become zero-emissions society and the
public values lay a great deal of stress on the green policies of the country. The current rank
of the country is 14 on the basis of the Environmental Performance Index that speaks of the
sound environmental policies which have been adopted in the country (Foreignpolicy.com
2020). The country have given priority on the aspect of international environmental co-
operation and it have implemented the bilateral activities with the neighbours that have
helped in developing the country. The country follows the civil law system that have helped
in enforcing the laws in the country. It have aided in enforcing the constitution that have
proved to be profitable for the various business that are situated within the country.
Task 3
Threat of new entrants- The threat coming from the new entrants is low on account of the
brand equity of Lidl. The company have been able to achieve the product differentiation that
can help it in attaining the success in the market of Norway. The company have been able to
revolutionise the grocery shopping experience that have helped in providing great
experiences for the people. The company have made the partnership with the local along
with the regional farms that have helped the company in meeting the strict requirements of
the market of Norway. The products that are offered by the company have gone through the
process of the quality testing that have helped the company in matching the high standards of
the product integrity. There exist the government regulations in Norway that can act as a
barrier in the path of the new entrants (Strange and Zucchella 2017). There exists the
concentrated market structure in the country that can deter the emergence of the new

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supermarket stores in the country. The business should have the minimum capital that can
help them in starting a business within the framework of the country.
Competitive rivalry- The grocery retail market of Norway has been expected to grow in the
coming years that would pose competition for Lidl. There are various kinds of supermarket
chains in Norway like 7 Eleven, Coop Marked, Joker and Narvesan that can threaten the
presence of the company. 7 Eleven refers to the international chain of the convenience stores
which has stores within 17 countries of the world (7-eleven.com 2020). The products that are
offered by the company are of diverse nature that have helped in establishing the credibility
of the company before the common people. Coop Marked refers to the chain of the 384 local
stores which is owned by the local cooperatives. Joker is the name of a grocery store chain of
Norway that have the partnership with the Norgesgruppen. Chain have the 450 outlets that
can pose stiff competition for the German supermarket chain. The company have rebranded
the local stores that have acted like an advantage for the popular grocery store chain.
Narvesan is the largest retailer of Norway that have 370 outlets spread across the world. It is
in the present time a part of Reitan Group that can act as a competitor for Lidl.
Threat of substitutes- The threat of the substitutes can be said to be high for Lidl in Norway
owing to the fact that there are retailers like Norgesgruppen, Coop along with Bunnpris that
can hamper the sales of the company. In the year 2018, Norgesgruppen emerged to become
leading grocery retailer of Norway that was able to reach market share of 43 % on the basis
of the sales (Norgesgruppen.no 2020). The grocery retailer operates various kinds of
supermarkets like the Kiwi, Jacob’s, Eurospar along with Joker that can make the
competition high for Lidl. The Norwegian cooperative Coop was able to amass a great deal of
revenue in between the years 2011-2018 as it offers wide variety of the food, beverages along
with the household products. It is greatly popular as it have the aisles for the meat, baked

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goods along with the fresh produce. Bunnpris is the retail chain of Norway that have 216
grocery stores that have been able to attain the favour of the people (Bunnpris.no 2020).
Bargaining power of customers- The bargaining power of the customers is high as the
customers can put the supermarket chain under pressure as there are large number of
supermarket stores in the market. The buyers can get various kinds of the alternatives that can
be instrumental in reducing the bargaining power of the buyers. The existence of many
supermarkets like Coop, 7 Eleven and Norgesgruppen can prove to be threatening for
expansion of Lidl within the framework of the Norwegian market. The buyer switching cost
can be said to be minimal that can make the consumers buy from another supermarket store.
The buyers can get the information easily about the various kinds of the supermarket chains
that can make them take recourse to an alternative retailer (Picciotto 2017). The customers
can get the opportunity to buy the products from many retailers that can threaten the position
of Lidl in the Norwegian market.
Bargaining power of suppliers- The bargaining power of the suppliers is high owing to the
dearth of the suppliers in Norway. The supplier of the raw material along with the
components can gain the prominence in the event of the existence of the fewer number of
suppliers within the framework of the market. ASKO takes care of the effective distribution
of the products to grocery along with the retail convenience stores (Asko.no 2020). It have
helped in setting the stage for the effective distribution network that have helped the
customers in getting the products in the lower pricing range. The company have 13 regional
warehouses along with the central warehouses that have helped in providing the benefits to
the retailers situated in Norway.

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Task 4
Lidl possess the resources along with the capabilities that can help the company in
establishing the dominance in the new market. The resource based view can be helpful in
making the better strategic decisions in a company. On the basis of the VRIO Analysis, it can
be stated that the food products are of local nature that have helped the company in the
production of the highly differentiated products. The products are valued more when
compared to the competitors owing to superior value along with the quality of the products.
The workforce of the company is highly trained that acts like a valuable resource for the firm.
It creates the way for the productive output as it have helped in maximising the potential of
the employees. The workers of company are loyal and retention levels of employees are high
that have contributed to the success of the firm. The patents can be said to be a valuable
resource for the company as it have allowed the firms in selling the products without any kind
of the competitive interference (Meyer and Peng 2016). This have helped in the production of
the greater revenue for the company. The patents have provided the company with the
licensing revenue as it can license the patents to the other manufacturers. The distribution
network of the company helps the company in reaching out to large number of the customers.
The cost structure proves to be a valuable resource for the organization as the method of the
production of the company have helped it in achieving a superior position when compared to
the competitors (Kolk 2016).
The financial resources of the company are of rare nature and the strong financial
resources have enabled company in going ahead of competitors. Local food products are also
provided in the market by the other competitors. Local food products have resulted in the
competitive parity for the Lidl. The products are not rare within the framework of the global
market however the company possess the unique brands which are not found in other
supermarkets of the world. It have been able to create the rarity owing to the large number of

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the retail stores that have helped the company in the area of management of the resources.
The products that are sold by the company are produced by the independent manufacturers
that have proved to be a positive factor for the company (Hamilton and Webster 2018). The
company have a wide range of the items at their disposal that can aid in growth of the
company. The company have adopted the distribution network that is highly streamlined that
have helped in the operations of the company.
The company have higher number of the stores that have been fully established and
hence the new entrants cannot act as a competitor for the company. The company was
established in the year 1930 and other companies cannot attain the stature of the company. It
have helped the company in the area of gaining of the loyalty that have strengthened its
position within the framework of the global market. The company takes recourse to
continuous process of the recommendation from that of operational level that helps in
ensuring smooth functioning of the company. The strategic capabilities have helped the
company in adjusting to the changes in the market that can help the company in running in a
successful manner.
Lidl have been organized into different stores within Europe that have helped the
company in supplying the food products to the customers. The company have been successful
in establishing the presence across the world that have helped the company in achieving the
stability in the society. Lidl have proper access to banks that have helped in furnishing the
benefits for the company in the arena of organization. The company have the better
infrastructure that have helped the company in the area of collection of the information (Peng
2016). The organization of the company have helped the managers in adapting to national or
the regional level. There exists the strategic alignment in between the commercial and the
supply chain strategies of the company that have furnished the benefits in the area of
organization. It have helped the company in effectively balancing the elements of the demand

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and the supply. The company works closely with the suppliers that have helped the company
in the minimisation of the cost relating to the supply chain.
Task 5
An organisation can adopt various kinds of the entry modes in the event of
internationalizing of the operations. Lidl can make use of various kinds of market entry
strategies that can enable its expansion within the framework of the international market.
There are various strategies like exporting, licensing, franchising, wholly owned subsidiaries
and the joint ventures that can help a company in establishing dominance within the
framework of the foreign soil. Exporting refers to process of selling of the goods which have
been produced within one country to that of the other countries. The direct exports can take
place with the help of the sales representatives and the importing distributors. The indirect
exports take place with the help of the export trading companies along with the export
merchants. The advantage of the direct exports is that it can protect the trademark and the
patents however it can lead to the high start-up cost for a company. The positive aspects of
the indirect exports is that it can help in the area of the fast market access and the negative
effects rise on account of the fact that it has lesser amount of control over the aspects of the
distribution along with the sales (Watson et al. 2018). The licensing can pave the path for the
future investments within market but it also carries the risk of loss of the control of licensee
manufacture along with the marketing operations. The advantages of franchising is that there
exists low political risk however the process of the maintenance of the control over the
franchisee can prove to be difficult for a company. The merits of the wholly owned
subsidiary rests in the fact that it can give the full control to a firm that can help it in earning
profits. The risks lie in the field of the green field investment as it incurs high amount of the
cost on the part of a firm as they have to establish a business within the framework of the new

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country. The joint venture can prove to be favourable when the strategic goals of the partners
converge and on other hand goals of competitors diverge. The problems pertaining to joint
ventures rise on account of the fact that there exists the cultural clashes that can stall the
progress of a company.
The company can start the business venture in Norway with the help of the wholly
owned physical stores that can prove to be advantageous for the company. The expansion can
be carried out with the help of wholly owned subsidiary that requires little amount of the
bureaucracy and is considerably cheap when compared to the other modes of the entry
strategies. Lidl can make use of green field operations that can help in the creation of the
legal entity within the framework of the foreign market. It can aid in the process of the
creation of a new organisation with the minimal amount of the risk in the foreign land. It can
aid in maximising the exposure of the company to the foreign market and increase the
reputation of the company in Norway (Ayden, Demirbag and Tatoglu 2018). It can help Lidl
in getting the competitive advantage as it can keep the cost down for the business by making
the savings on the area of the additional costs. It can provide the superior customer services
that can help in establishing the name of the company in Norway. Lidl have the discount
retailing model that can help the company in establishing its name in the other country. The
company saves a large amount of the financial resources on the transportation costs and this
helps the company in keeping the prices of the products low so that it can serve the
customers. The company can make the benefits with the help of the foreign exchange rate
benefit that can prove to be advantageous for the company. The fluctuations are taking place
in the foreign exchange rate and hence the green fields investment can prove to be
advantageous for Lidl. Lidl possess the patents and it can prove to be useful for the company
when spreading its name in the new country. It can aid in the creation of the new production
capacity that can help Lidl in making the successful entry in the foreign land. Norway