MBA: Lidl Malta's Internationalisation Strategy for UK Expansion

This report provides an analysis of Lidl Malta's potential expansion into the United Kingdom. It includes a company overview and assesses the readiness for internationalisation. The report critically evaluates the impact of host country conditions, covering macro environment factors through PESTLE analysis and national competitiveness. It also analyses the host country's culture using Hofstede's Cultural Dimensions model and its impact on the internationalisation process. Franchising is recommended as the most appropriate entry strategy, justifying its selection based on brand recognition, lower failure cost, and higher profits. The report concludes that international markets offer significant opportunities for Lidl to capture new markets and increase revenue.

International Business

EXECUTIVE SUMMARY
International business may be referred as trade of technology, goods, service and knowledge
across borders at transnational or global scale. This process involves cross border transactions of
products and services between two countries. There are various factors that may impact while
taking business to internationalisation. Company needs to analyse macro environment factors
that may impact on business functioning. In addition to that, analysation of host country culture
and its impact on internationalisation of business. It will cover most appropriate strategy of
taking business to international level.

Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
TASK...............................................................................................................................................4
Company overview......................................................................................................................4
Impact of host country in International business.........................................................................4
PESTLE Analysis........................................................................................................................5
Cultural Dimension Model..........................................................................................................6
Strategies of internationalisation.................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business activities that done across national borders is known as International Business. There
are numerous business organisations which are making passage into worldwide business that
presents them with an opportunity for growth and development (Monaghan, Tippmann and
Coviello, 2020). There are various opportunities that lies in internationalisation of business such
as capturing of new market, growth opportunities, more revenue, more profit and expansion of
business at international level. This project report is based on Lidl Malta Ltd, a grocery retailer
and supermarket located in, Malta. It wants to expand its business operations to a new country
and country chosen for expansion is United Kingdom. This project report will cover a brief
introduction of chosen organisation along with its products and services. In addition to that, it
will cover macro environmental factors and national competitiveness. At last, it will depict
culture of host country and most appropriate internationalisation strategy.
TASK
Company overview
Lidl Malta is a leading discount supermarket chain in Malta. It offers various grocery products
such as yogurt, curd, veggies, meat products and many other daily essentials. It was founded in
2008 with its first outlet in Santa Venera. It operates 9 stores units out of them 8 are in Malta and
1 in Gozo. In few years, it become one of the greatest player in international retail market. The
two factors which are responsible for company’s success is team behind the organisation and
endeavour to offer quality products at best available prices. It has more than 400 employees and
company considered them as pillars of success. Now company wants to expands its business
horizon and company chosen is UK. It wants to generate more profit and wants to take business
to next level. This will help company in generation of profit effectively and efficiently.
Impact of host country in International business
There are various factors that may impact while taking business to international level. It is
imperative for company to analyse factors that have potential to impact on company’s operations
(Woldegiyorgis, Proctor and de Wit, 2018). In relation to Lidl Malta, it has to conduct market
research so as to identify taste, preference, culture and beliefs of people so that it can serve

accordingly. In addition to that, company can able to mitigate risk associated with international
process. In order to evaluate macro environment factors, PESTLE analysis is used.
PESTLE Analysis
 Political- This factor is related to political interventions that may impact company’s
operations. This factor involves trades, tariffs and political instability (Zainuddin and et
al.,2018). By analysing political factor, it has been analysed that Brexit have adversely
impacted retail industry. Along with this, there can be seen a huge demand of products
after pandemic.
 Economic- This factor relates to economy of country and GDP of UK is significant. This
factor covers interest, inflation and economic growth that may directly impact on
company’s functioning. Purchasing power of customers is quiet good in UK and this will
help company in generating more profit. Having a good economy reflects prosperity in
country and it will positively impact on Lidl supermarket.
 Social- It relates to taste, preferences and market trends of country. It is important for
company to conduct market research so that it can offer quality products at affordable
prices. After pandemic, people are more conscious about groceries and they opt quality
product but by paying low amount. Company can segment its customer according to
demographics and frame strategies so as to attract them.
 Technological- While taking business to international level, company can opt latest
technology so that it can gain competitive advantage in market. Along with this, it can
make its process easier and can save time, cost and efforts. By lowering down production
cost, company can offer better price to its customers.
 Legal- While taking business to international level, company have to complete all legal
formalities and accept all terms and conditions related to business operations. It is
important for company to comply with all rules and regulations framed by UK
government so as to avoid penalties. It has to follow employment laws and safety law at
workplace.
 Environmental- This factor relates to surrounding of business that may impact on
company’s operation. It consists of natural calamities, increased pollution and global
warming that can adversely impact on company’s functioning. Company have to take
initiative to minimise negative impact of its operations.

In context to United Kingdom, the competitiveness Index is project to trends approx.
80.60 as per 2021-22. The economic and fiscal policy of country is high and this elevates
overall growth of UK. The reason behind opting UK as host country is that it has
numerous opportunities which lies in Retail industry. By analysing customer needs and
wants and based on that company can offer quality product to each segment. The labour
productivity and product market competitiveness of UK is quiet high and foe this
purpose, UK has been chosen. It will help company in capturing new market which leads
to high profit generation.
The strategy opted by company is Market development in which it would sell existing
products to a new market. In order to make this strategy effective, company have to carry
systematic market research so as to understand what customers are demanding for (de
Wit, and et al., 2017). Taking business to international level needs detailed information
such as market segment, macro environment, consumer profile, market size and
profitability and intensity of competition.
Cultural Dimension Model
This model was propounded by Dr. Geert Hofstede in 1970. It is used to understand
cultural difference along with basis of work oriented cultural training. In relation to UK,
following are elements of Hofstede model and how it impacts in process of taking
business to international level.
 Power distance- UK scores low for power distance and it is a measure of extent which
less power society member except with unequal distribution of power. People of UK
believes in minimising inequality. This has many implications on society but in terms of
retail business, it has flat team structure. This will positively effect on functioning of
company as it can focus more on talented professionals.
 Individualism- UK scores high for individualism that reflects degree in which a person’s
self-image is defined in terms of “I” and “We”. People of UK are more interested in
themselves and immediate family and less invested in community and society. By opting
professional from this type of society tends to polish their skills and this will positively
impact on company’s operations. Personal relationships are important for company while
taking business internationally and maintaining healthy relationship with customer can

attract huge base. In addition to that, it makes it easier for company in
internationalisation process.
 Masculinity versus Feminity- UK may be considered as fairly masculine country as per
Hofstede analysis. The society of UK tends to value achievement, competition, success
and place less value on attributes of being well with others. They tend to value their
career and are quite comfortable in expressing ambition. Hiring of these professional
helps company in attainment of objectives and in understanding of market. It makes
company comfortable in terms of taking business at international level. Along with this,
fair masculinity facilitates in healthy competition by proper analysis of market.
 Uncertainty avoidance- UK is considered as low interest in uncertainty avoidance and
this reflects that people of UK are more comfortable with uncertainties and can tolerate
about lack of information of future. It will help Lidl Malta in framing of
internationalisation strategies as people does not forecast uncertainties. Company can
take advantage of this by formulating effective strategies while taking business to UK.
 Long term orientation- UK scores neutrally for its time orientation. This reflects that
how a society resolves present challenges whilst remaining links to past. Societies having
high orientation are basically more pragmatic about accommodating change so as to
solves challenges. Whenever they face any issue regarding their needs and wants they
tends to resolve by searching new product or company. As company can conduct market
research and based on that frames strategies which leads towards attainment of
objectives.
 Indulgence- UK have shown a weak impulse control and people from high indulgent
culture are likely to be more motivated. As UK have low indulgence and it may
negatively impact in process of internationalisation. It becomes difficult for company to
operate business in country who have low indulgence culture.
Strategies of internationalisation
There are many internationalisation strategies that company may opt when it wants to
expand its business to another country. Example of such strategies are licensing,
franchising and exporting. Among all, franchising is most appropriate method that Lidl
supermarket can opt. In franchising, one party grants permission or rights to another party

to franchisee and in return it charges fee. Lidl Malta can sell its rights and name to
another party who can use its name and brand equity to sell products. Following are some
benefits of franchising that company would enjoy after opting this alternative.
 Brand recognition- It is one of the major advantage of franchising which helps in
enhancing brand image of company (Ugrin, Pearson and Nickle, 2018). In franchising,
people are aware about well-established business and this establish customer base. So
when company opts this alternative, people can automatically know what your business is
and what it is providing.
 Lower failure cost- In franchising, the failure rate is quite low as compared to solo
business (Couto and Ferreira, 2017). When two parties agree to do business, it reflects
that they are joining a successful brand customer will automatically capture by brand
equity of company. Thus, it results in higher efficiency of company.
 Higher profits- In franchisee, franchises see more profit rather than in doing business
solely. Most franchises have well-known brands which brings customer in drove. It
results in generation of higher profits.
By analysing all alternatives, it can be recommended that opting Franchising is best
option that company may opt for. It contributes in generation of more profit along with
low failure rate. Along with this, company can enhance its brand image into a new
market. By enhancing brand equity of company, it would benefit establishment in
numerous ways.

CONCLUSION
From the above project report, it was concluded that there are various opportunities which lies in
international market. By taking business internationally, company can capture new market which
results in high revenue. It is important for company to analyse all macro environment factors that
may impact company’s operations. In order to evaluate macro environment factor, PESTEL
analysis is used. Along with macro environment factors, company have to analyse market trends,
culture and tradition so that effective strategies can be framed. Hofstede dimension model is used
to analyse host country’s culture. From various internationalisation strategies, Franchising is
recommended to company as there are numerous benefits of this alternative. Due to low failure
rate and high profit, this alternative has opted by company so as to take business internationally.

REFERENCES
Books and Journals
Couto, M. and Ferreira, J.J., 2017. Brand management as an internationalization strategy for
SME: A multiple case study. Journal of Global Marketing, 30(3), pp.192-206.
de Wit and et al., 2017. The globalization of internationalization: Emerging voices and
perspectives. Taylor & Francis.
Monaghan, S., Tippmann, E. and Coviello, N., 2020. Born digitals: Thoughts on their
internationalization and a research agenda. Journal of International Business
Studies, 51(1), pp.11-22.
Ugrin, J.C., Pearson, J.M. and Nickle, S.M., 2018. An examination of the relationship between
culture and cyberloafing using the hofstede model. Journal of Internet
Commerce, 17(1), pp.46-63.
Webber, R., 2017. An introduction to franchising. Bloomsbury Publishing.
Woldegiyorgis, A.A., Proctor, D. and de Wit, H., 2018. Internationalization of research: Key
considerations and concerns. Journal of Studies in International Education, 22(2),
pp.161-176.
Zainuddin and et al., 2018, December. Alternative Cross-Cultural Theories: Why Still Hofstede?.
In Proceedings of International Conference on Economics, Management and Social
Study (pp. 4-6).