Strategic Management Analysis: Lidl's Expansion into China

This report provides a comprehensive strategic management analysis of Lidl's potential expansion into the Chinese market. It begins with an executive summary and introduction, followed by an in-depth examination of the external environment using PESTLE analysis and Porter's Five Forces, ev...Read More

STRATEGIC MANAGEMENT

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................4
EXTERNAL ENVIRONMENTAL ANALYSIS............................................................................4
INTERNAL ENVIRONMENTAL ANALYSIS.............................................................................7
IDENTIFICATION OF COMPETITIVE STRATEGIES...............................................................9
STRATEGIC DIRECTIONS.........................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

EXECUTIVE SUMMARY
Strategic management refers to managing the company integrity in relation to monitoring
the planning or the company, analysing the data or resources which is used in producing the
products or assessing all the necessary information to helps company to meet its goals. Present
report is based upon the Lidl which is the retailer based industry carrying groceries or household
products in Germany. They are presently located in around 10,000 places across Europe and US.
They mainly carry the tag line as providing higher quality products with less price. They are
planning to expand the business in china which is considered to one of the most developed
country. In this report, it also examined the internal and external factors which causes impact in
expanding the business in china. It also examine various competitive strategies in which the
porter generic strategies is undertaken to gather information through the company working. Thus
at last the strategic directions are applied in respect of undertaking the future vision, objectives
and goals to be achieved in right manner through adapting various methods of expanding the
business in china.

INTRODUCTION
Strategic management refers to the managing the overall activity of the company such as
monitoring the planning of the company, analysing the data which is collected and than assessing
the information to identify better results. The management can be done on the bases of both
internal and external factors. The results are indicated in perspective of determining the strategies
which is undertaking in relation to adapting the effective strategies to promote the business in
right manner (Strategic management, 2019). Present report is based upon the Lidl which is
retailer based industry carrying the super market chain at global level. The concept is brought by
Josef Schwarz in 1930 having having headquarter in Germany. The business is carried by around
3,15,000 employees and also they are operated over 10,000 stores in Europe and US. This report
will includes the matters relating to planning to expand the business in China. Thus, various
factors are identified in relation to determining the internal factors such as by applying Strength
and Weakness or conducting the VRIO or values chin analysis to identify the usefulness of the
Lidl management. It also carries the external matter such as by conducting PESTLE or
opportunities or threats to gather information. Lastly it ends up with applying the competitive
strategies to collect the information and also undertake aspects to determines effective results.
The major challenges which is examined is relating to environment impact as Lidl
company mainly deal in grocery products, thus it is examined in 2030 the planet will had to deal
in producing the high quality food with less utilization of land.
EXTERNAL ENVIRONMENTAL ANALYSIS
In this aspects, the external factors are considered which helps Lidl to determined the
factors which affect their working and such impact can be in positive or negative aspects. It
carries the following:
Political: The impact which arises is resulting to causing the political norms which affects the
company integrity to expand the business in china. As china is engaged with various rules and
regulations and thus they restrict the foreign companies to enter the business in their own
country. Lidl carries the renowned brand image in market and also they provide products to the
customer with best quality at low prices (Ansoff and et.al., 2018). As the issue arise in respect of
not carrying the IP protection security which is difficult for the china people to invest the money
in this company.

Economic: By providing the products at reasonable prices resulting in gaining big advantages to
Lidl company. The negative impact arises in respect of less involvement of china people towards
the business as they focus on improving their own country economy instead of giving chances to
other company to grow (Ansoff, Kipley and Ansoff, 2019). Thus, impact arises in respect of
fluctuation in inflation rates, as every country had their own rates of earning profits and also the
demands of the labours are also different. Thus, issues faces in relation to managing the integrity
of the business in china.
Social: The impact arises in respect of changes in taste in products. As Chinese people prefer the
products with high quality and also the products is hygienic and prepared or covered with eco
friendly materials. As they mainly focus on getting innovation in products which fulfil their
needs in right way (Burmann and Schade, 2017). Thus, impact arises in respect of conducting the
proper research regarding the taste of the customer in context of availing the lidl products.
Technological: In context of technology, it plays the important role in Lidl as they mainly use the
web services such as Alibaba Tmail, JD.com to promote the products in china. But the issues
arises in relation to not managing the online sites in right manner. As customer of china are not
attracted with the company services for longer time period. Thus, in such aspects the issues
arises in respect of not promoting all the products of the Lidl, they mainly focus on particular
products which not highly fulfil the customer needs.
Legal: The issues which is faced by Lidl in respect of promoting the business in china is relating
to not managing the IP protection laws and not carrying the data protection laws in respect of
securing the information of the customer. As mainly the issue is raised in respect of dealing the
business online, thus there are more chances of failure of business in relation to approaching the
customer through digital platform (David and David, 2019). The laws are also to be undertaken
in relation to health and safety norms. As the working criteria of the china people are different
thus proper care is to be maintained in respect of securing the right at work place.
Environmental: Lidl most of the business is suffered through environment changes. As they
interpreted that due to climatic changes, they faces losses through delivering the goods to that
particular place. Through this aspects, the impact arises in relation to facing lot of wastages in
products and lidl company deal in groceries products. Thus, changes in climatic condition
resulting in shortages in raw materials which affects the company integrity to sustain the
business at larger scale.

Porter 5 force analysis :
In context to this analysis, it is undertaken to determines the strategies of the Lidl
company to expand the business in china. It includes the following aspects such as:
Threats of new entrants: In respective of Lidl, the threats of new entrants is weaker as company
if offering high quality products with less prices. Thus, through this aspects they attract lot of
china people towards the business and also the threats resulting in following the government
norms which is restricted for the company to enter the other company and earn profits. As
government mainly impose restriction to company to import their products in their own country
(Desislava, 2017). As they provide changes to their own company to enhances their business for
sustaining economy for longer way.
Bargaining power of suppliers: As Lidl, carry the specific supplier through which deal in
ordering the products. Thus, in such perspective the impact arises in respect of facing high
demand of supplier regarding providing the products with high pricing or also reducing the
quality of the products. Thus in such manner the impact arises in respect of bargaining from
supplier regarding providing the products with accurate pricing polices.
Bargaining power of Buyers: As china people are more health conscious and also they prefer
food which is hygienic and eco friendly. As customer mainly demand the products with low
pricing and also specials discount after imposing the low prices (Dujak, Kresoja and Franjković,
2017). Thus, in such manner, it impact upon the marketing strategies of the company to bring
innovative techniques to enhances their interest towards the services.
Industry rivalry: It occurs in relation to facing high competition in context of grocers products.
Thus, the impact raises in relation to changes in price wars. By this perspective, the customer are
comparing the products with prices and than prefer the right one. If they prefer the online
services, their main focus in on special discount or any scheme which attract their interest
towards such products. As in china, there is lot of competitor of Libl regarding providing the
groceries stores to customers.
Threats of substitute products or services: In this perspective, Lidl company is offering the
products with low pricing, thus in such manner the threat arise through offering the same
products with less pricing by other company. This resulting in bringing competitors in market
regrading preferring such products or availing their services to get timely delivery of orders.

Thus, in such aspects to attract china people towards the products for longer way, the innovation
is to be done to differentiate the produce from other company products.
The opportunities which is identifies through this perspective is that Lidl company can
grab the new taxation policy which is emerged in china. As this is one of the major opportunity
for business growth and also emerge the business at larger scale. As china people are happy if
they find the products which improve the health condition and also hygienic, thus, this
opportunity can be easily grab by the Lidl in respect of retaining the customer towards the
business.
The threats which is examined in respect of dealing the business externally is relating to
dealing with the competitors in market regarding engaging with same pricing strategies (Friedl
and Biagosch, 2019). As customer find that most of the products which are of similar products as
of Lidl are selling in market and carrying the same ingredients with low pricing. Thus, this is one
of the major threats which is emerge in china in respect of expanding the business into such
countries.
INTERNAL ENVIRONMENTAL ANALYSIS
In context of determining the working of the Lidl internally, it carries various aspects
which helps in identifying its overall working techniques such as:
Strength: The major strength which is identified is relating to carrying the private label brand
which reflect the own brand integrity in market and also they deal in carrying good range of
other brand products. Through the renowned brand image in market, more than 3,00,000 people
are engaged in carrying the business at large scale (Jenkins and Williamson, 2015). Their main
motive is to serve the best quality products at reasonable prices and also retain the customer
interest through offering innovative scheme while preferring the products online.
Weakness: The weakness of Lidl company arises in respect of not focusing on customer
segment, as they offer scheme or discount to all class of customer. Thus, in such case the low
class families feel that company in not focusing on them particularly. The weakness also arises in
respect of not maintaining ethical issues. As numerous employees fell that there is violation in
company terms which affecting their rights in working smoothly.
In relation to VRIO analysis, it is examined that
Factors Value Rare Imitate Organized

Financial
resources
Highly valued Strong Costly to imitate It can be well
organised to
capture the
valuable things
Food products High Not so rare Not so much
costly
Sustainably
organised
Employees Valued Rarely found Less expenses
incurred on
employees
They are
organised in
respect of
attaining the task
in right way.
Network channels Medium valued Rarely found Very costly It is organised
Cost structure Not valued Lot of investment Significant
amount of
investment
It results in highly
competitive
disadvantages
In occurring the value chain analysis of Lidl, it indicates that:
Inbound logistics: In this aspects, company stability depends upon the strong commitment with
supplier regarding delivering the raw materials within stipulated time period. As it is necessary
that they must carry every minute information regarding the detail of the products, the quality of
the products orders and many more. Thus through this aspects the value of the Lidl is examined.
Operations: In this aspects, the procedure is started when the raw materials is arrived from the
supplier and its time to produce such ingredients into final products (Lasserre, 2017). In this
process it carries packaging, labelling, testing the products and than delivering such products to
the required places.
Outbound Logistics: In respective of matter related to inbound logistics, it is carried in relation to
focusing on fulfilling the needs of the customers. As customer are happy if they find any unique
innovation in products which maintain their health and also hygienic to avail such products.
Thus, in such aspects it is undertaken to satisfy the customer needs and also build the strong
commitment with them.

Marketing and sales: Lidl mainly highlights the products through Alibaba's web online services,
where they personally build the strong linked with customer in relation to promoting their
products. Thus, in relation to sales procedure, it is examined through carrying the high quality
products at reasonable prices. In this perspective, the sales man and the marketer play the most
important role to sustaining the reputation of the business in developed market i.e. China.
Services: It is necessary to retain the customer interest towards the services of the company if
business is moving in online platform (Lauer, 2019). Thus, in such aspects pre service and post
services is necessary in building the strong base with customer and also helps in increasing the
sales and growth in business.
IDENTIFICATION OF COMPETITIVE STRATEGIES
In relation to Porter's Generic strategies it is mainly adapted in case of identifying the
potential capability of the Lidl company in respect of gaining advantages from the competitive
strategies in relevant to retail sectors. Thus, it carries 4 major aspects through which they can
manage the Lidl integrity in better way. It concludes the following such as:
Cost leadership: In this management is to be undertaken through reducing the wastage in the
products. As customer are attracted if they find the lower cost producer in company regarding
delivering the products with low pricing. In context of beating the competitors strategy in
market, they offer the price lower than the averages market price to attract the customer interest
towards such products for longer way (Meyer, Neck and Meeks, 2017). In relation to expanding
business in china, this is helpful in managing the cost through reusing the waste products.
Differentiation: This is generally undertaken by Lidl in relation to differentiating the products
from the other company products. As it is examined that their is lot of competitors in china
regarding promoting the same products and also using unique techniques to promote the business
in local market. Thus, in such manner it is necessary for the Lidl company to promote the
products with unique concept so that they can differentiate the products with other company
products in market.
Market focus: It is necessary that market is to be segment so that, Lidl gets the accurate strategies
to promote the products among which segment. As the products must be kept in every range so
that all class of people can easily avail the company products at higher scale. As china is covered
with large number of the people, thus it is necessary that the products must be promoted to all
class of people living in country.

Differentiation focus: In this aspects the products are differentiated on the bases of determining
the needs of the customer. As every customer had their own taste or preferences to choose the
products. Thus, through this aspects the needs and capabilities of the person is identified
regarding preferring the products of Lidl.
Thus through this manner, the competitive strategies of the china is determined which
helps Lidl to bring some innovative ideas or any new and unique concept to retain the customer
interest towards the business. As due to changes in time most of the companies are using the
digital platform to promote the products or also using innovative ideas to promote the business
through advertisement or also promotional techniques to make more creative logos to attract the
customer towards the business (Petrovska, 2017). Thus, these are the competitive strategies
which can beat the competitors by using porter generic strategies to rebuild the company polices
in better way.
STRATEGIC DIRECTIONS
In context of undertaking the directions of the Lidl, it is examined in relation to
determining the markets, products and services of the company. As Lidl is mainly engaged in
dealing in business is related to household products or other groceries products with best quality
at lower prices. AS the main aim of expanding the business into china is that china is the
developed country and also the customer are taste of the customer are similar to the products
which they offering in their own country (Schmid, 2018). As the positive aspects of the Lidl is
that they are carrying one of the largest groceries stores in UK and also found across Europe.
In relation to matters related to market, as Lidl is not having any physical stores in china
as before that they are dealing the business through web online such as Alibaba's Tmall platform,
where they promote the company products through digital platform. Through this aspects the
stability of the company depends upon the usages of the Alibaba sites (Rothaermel, 2017). As it
is examined that most of the people are not attracted through the Alibaba sites and thus resulting
in not promoting the complete products of the company. As they are limited to the products
which is available to the customer which are dealing with the company products through online
ordering.
In respect of matters related to products, it is examined that china is using the A brand
products while Lidl is promoting their own private label products. Thus through this aspects it
results in distracting the needs of the customer towards the services which is offered by the Lidl.

But they are also carrying the other brand products which bring in more confidence to customer
regarding preferring such products. It is also examined that they are mainly dealing the business
through online and also using innovative techniques to provide scheme or discount to customers.
Thus, in respect of retaining the customer for longer way, it is necessary to provide innovative
services on continuous bases and also the products which is offered must fulfils the needs of the
customer.
In relation to services though which the customer interest are retained, is relating to
choosing the quick delivery of the order if the products are orders through online platform. In
case of the company is physically present, than they must appoint the skilled person to handle the
matter in right way, so that they can interact with the customer personally (Schmid and et.al.,
2018). In respect of building the strong connectivity with the customers, it is necessary that
products must be delivered timely and also the order must be accurate which is ordered by the
customer. Thus, through this perspective, it helps in retaining the customer interest towards the
company products for longer time period.
Lidl had various methods in respect of expanding the business in China such as
 By choosing the acquisition procedure, as in this perspective they acquire the small
business companies which is already in existence in china to merge the business with
another business and carry on their activities for longer growth. Through this aspects they
can use the company own logos with mixing the logo of the acquired company.
 The another method which they can use is relating to franchising the business. As in this
manner, they give right to person to use the name of the company be selling their
products and before that both the parties enter into the franchising agreement to deal in
products or services (Strategy, 2017).
 Lidl can use the licensing methods to expand the business as in this aspects they give
rights to third party to use the company name for temporary purpose. But in this aspects,
the rights are strictly imposed as in case of violation of any right will affects the company
reputation in larger way.
CONCLUSION
From the above study, the report concludes that strategic management indicates the
overall activity of the company which is undertaken by the manager in respect of improving the
performances of the Lidl. It also helps them in adapting the best strategies to expand the business

in china. Mainly strategies are committed in relation to determining the future strategies which is
availed by Lidl in dealing in matter in right manners. It reduces risk in company by taking
appropriate decision which sustain the business in china for longer way. It also concluded that in
this report, the matter is examined in relation to identifying the impact on internal and external
factors which affects the company working at larger way. Through adapting the strategies
decision, it helps in fulfilling the objectives of the company in respect of using the methods to
expand the business in china.

REFERENCES
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<https://searchcio.techtarget.com/definition/strategic-management>.