Strategic Analysis of Lidl's International Expansion into Norway

This report analyzes Lidl's strategic international business management plan focusing on its potential market entry into Norway. It begins with an overview of Lidl, followed by a rationale for choosing Norway as a target market, considering political stability, GDP growth, and consumer behavior. The report then assesses the competitive intensity of the Norwegian market using Porter's Five Forces, evaluating the bargaining power of suppliers and buyers, the threat of new entrants and substitutes, and the competitive rivalry. It also examines Lidl's internal environment using VRIO analysis to determine its competitive advantages. The report explores potential market entry modes for Lidl, concluding with recommendations and a comprehensive overview of the market entry strategy. Appendices include detailed PESTLE analyses for Norway and Mexico and economic data. The report provides valuable insights into the challenges and opportunities for Lidl's expansion into the Norwegian market, including an examination of the economic state of Norway.

Running head: STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
Name of the student
Name of the university
Author note

1STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
Table of Contents
Background of the organization.......................................................................................................2
Rationale for choosing the target market.........................................................................................2
Competitive intensity of the market................................................................................................4
Internal environment of the organization......................................................................................10
VRIO analysis............................................................................................................................10
Market entry mode.........................................................................................................................13
Conclusion.....................................................................................................................................18
References......................................................................................................................................19
Appendices....................................................................................................................................23
Appendix 1: PESTLE analysis of the two countries- Norway and Mexico(1250 words).........23
Appendix 2- Economic state of Norway...................................................................................37
Appendix 3- Economic state of Mexico....................................................................................38

2STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
Background of the organization
Lidl Stiftung & Co. KG is a German based global discount supermarket which was
established in the year 1930 (Lidl.com 2020). The organization is based in
Neckarsulm, Germany and operates through over 10,800 stores across Europe and the United
States (Lidl.com 2020). The concerned organization took the initiative of improving the
propositions in accordance with the needs of the customers. In this context, the report will
delineate the competition that might be faced by the organization while making an expansion in
the chosen target market and the market entry strategy that might be selected by the same for
increasing the scope of market expansion.
Rationale for choosing the target market
The chosen target market for the concerned organization is Norway, which is a politically
stable nation. The lower rate of government intervention in the different business operations
would allow the concerned organization in improving the scope of expansion of the business in
the different regions of the economy. The nation also facilitates an improved scope of FDIs
through increased partnership between the private and public enterprises (Svalund et al. 2018).
Moreover, the growth of GDP of the Norwegian economy after the downturn in 2019 and the
minimization of corporate taxation in the economy would empower the growth of the business in
the markets (Shaikh, Karjaluoto and Häkkinen 2018). It has been observed that the nation held
9th position in terms of financial markets in the year 2014 with increased market innovativeness
as per the reports of the World Economic Forum (Weforum.org 2014).
The GDP growth and increased employment rates would allow the organization in
attracting the attention of huge number of prospective customers. However, it has been noted that

3STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
the Norwegian markets are saturated with the existence of a range of retail organizations like
Kiwi, Meny, Jacob's, Spar and Eurospar, which might reduce the scope of the concerned
business’ growth (Schmid et al. 2018). On the other hand, it has been noted that the free trading
policies and legislations that are being imposed by the government would encourage the growth
of the organization while operating in the different regions in the Norwegian markets. It has been
observed that the increased employability of the Norwegian communities has influenced the
growth of the disposable income among the same.
Bladowski and McCowan (2017) stated that the improved employability of the people in
a nation influences the growth of the disposable income while improving the scope of growth
and sustenance of a business in the markets. The factor that might influence the growth of the
organization in the Norwegian markets are reliant on the availability of natural resources and the
improved infrastructural designs. It has been observed that the work culture in the nation
portrays egalitarian values along with improved educational rates among the people. Therefore,
the nation provides a scope for the businesses through the improvement of skilled labor supplies
increasing the scope of uninterrupted functioning of the venture. Egalitarian values and educated
workforce would allow the organization in improving the overall operational performance in the
markets. It has been observed that the improved technological innovations and maximized
penetration of the broadband services in the different regions of the Norwegian markets would
allow the concerned organization in influencing the expansion of the business.
Moreover, the increased affordability of the Norwegian customers have significantly
reduced the rate of price sensitive customers. It has been observed that the people in Norway
expects quality propositions disregarding the price of the propositions. The reduction in the rate
of unemployment from reduced rate of unemployment in the nation from 4.2% in 2017 to 3.6%

4STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
in 2019 has improved the buying power of the consumers in Norway (Huang et al. 2019).
However, the fact that the market situation Norway is saturated with the existing players might
increase the market competition. The infrastructural developments are the key factors that would
influence the growth of the organization in the markets. Moreover, the increased innovativeness
in the nation and different improvements in networking facilities through ICT would support he
organization in increasing the sustenance of the same in the markets.
The ICT would assess the organization in improving the rate of operation of the venture
through enhanced interconnectedness and networking. Appleton (2019) stated that the improved
interconnectedness in the different departments of an organization enables the same in increasing
the efficiency of the operations while meeting the common goals of the venture. Moreover, it has
been observed that the growth of the service sectors in the Norwegian economy would allow the
organization in increasing the rate of operations of the venture while operating in the different
markets. The growth of the service and the support sectors in the economy would allow the
organization in increasing the effectiveness of the business operations in accordance with the
needs of the venture.
The legislative and regulatory impositions that are made by the Norwegian government
and clarity of communication along with integrity would empower the growth of the
organization in the markets. Therefore, the clarity of communication on the legislations and the
minimized rate of corruption and bribery practices in the governmental and non- governmental
agencies in the economy would boost the growth of the concerned organization in the Norwegian
markets.

5STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
Competitive intensity of the market
Competitive rivalry
(strong force)
 A large number of retail chains
operates in the Norwegian markets
including companies like Kiwi, Meny,
Jacob's, Spar, Eurospar and the like.
The different changes in the
organizational operation are based on
the efficient functioning of the
different systems in accordance with
the needs of the venture. However, it
has been noted that very few market
players holds a larger portion of the
market share in the economy which
might be an advantage for growth of
the organization.
 The technological developments that
are being made by the competitors
might affect the capability of the
organization in gaining a competitive
edge while operating in the Norwegian
markets (Xie and Li 2017).
 The higher rate of differentiation of
the propositions that are made by the

6STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
concerned organization in the industry
would support the same in gaining a
greater share of the market through
competitive edge over the propositions
that are made by the existing players.
Bargaining power of the suppliers
(weak force)
 The Norwegian markets holds a large
number of suppliers for ensuring
uninterrupted functioning of the
business units as per the needs of the
venture. The availability of large
number of suppliers in the Norwegian
markets has minimized the bargaining
power of the same while operating in
the different markets.
 Moreover, the propositions that are
made by the suppliers are fairly
standardized and have lower switching
costs. Again, the propositions are less
differentiated. The factors would
allow the organization in switching
between the suppliers in accordance
with the different needs of the
ventures. The lower switching cost

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between the suppliers minimized he
bargaining power of the suppliers in
the given economy (Ahi et al. 2017).
The wider availability of propositions
from the different suppliers would
allow the organization in promoting
the uninterrupted flow of operations in
accordance with the needs of meeting
the common organizational objectives.
Bargaining power of the buyers
(strong force)
 The existence of huge number of
competitors in the industry might
affect the capability of the venture in
dominating over the bargaining power
of the buyers. The increased
bargaining of the buyers might be
attributed to the factor relating to the
existence of large number of retail
supermarket chains in Norway. Again,
the lower switching costs from one
organization to another has influence
the growth in the bargaining power of
the Norwegian customers
 The price and quality of the

8STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
propositions are the major
considerations that are made by the
buyers while choosing between the
propositions that are made by the
concerned organization with the other
market players (Tulung 2017).
Therefore, the marketing activities of
the organizations in the retail sector
and the influence that is created by the
same among the minds of the users
has backed the bargaining power of
the same
Threat of new entrants
(weak force)
 The capital requirements in the retail
industry are high which incapacitates
the scope of the new entrants to
influence the market conditions. It has
been observed that high rate of initial
investments might be made by the
new entrants with the purpose of
improving the effectiveness of the
business operations in accordance
with the need of the market demand.
 The government policies within the

9STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
industry require strict licensing
activities which might again restrict
the scope for the new entrants in
entering the Norwegian markets.
Therefore, the new entrants creates a
weaker force of threat in the
Norwegian markets for the growth of
the concerned organization
 The economies of scale is difficult to
achieve in the industry which
restricted the capability of the new
entrants in improving the prospects of
growth and development. Therefore, it
weakened the force of the new
entrants while operating in the
different markets.
Threat of substitute propositions
(weak force)
 The substitute propositions are costly
to manufacture which increases the
price. It has been observed that the
rebates and discounts that are being
provided by the concerned
organization would enable the same in
retaining the trust and commitment of

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the Norwegian customers towards the
propositions. A fairly weaker force of
substitute propositions are made by
fewer organizations in the economy.
However, the high priced propositions
that are proposed by the same
restricted the businesses in retaining
the competitive edge over the retail
supermarket giants like the concerned
venture. The minimized force of the
substitution in the markets holds a
greater prospect for the concerned
organization in ensuring the market
growth while operating in the
Norwegian markets.
Internal environment of the organization
VRIO analysis
Factors Valuable Rare Inimitable Organization
Competitive
edge
Organizational
model
Yes No No Yes Sustainable
Value Yes No No yes Sustainable

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propositions
Highly trained
Human
resource
Yes Yes Yes Yes Strong
competitive
edge
Financial
resource
Yes Yes Yes Yes Strong
competitive
edge
Distribution
network
Yes Yes Yes Yes Strong
competitive
edge
Cost structure No No No Yes Weak
competitive
edge
R&D Yes No No Yes Sustainable
(Source: Lidl.com 2020)
The VRIO analysis aims at identifying the different resources of the organization and the
manner in which the same contri8butes to the efficiency of the organizational operations in
accordance to the needs of the venture. The organizational model of the organization is valuable
and well organized while contributing the sustainable edge of the venture. However,
organizational model is neither rare and nor inimitable as most of the competitors in the retail
industry follows similar business model in their operations. The absence of uniqueness in the
business model would likely affect the capabilities of the organization in gaining a competitive
edge over the existing market players. Likely, the value propositions of the venture are valuable