Wilko Retail Ltd: Globalisation and Market Entry Strategy Report

This report examines Wilko Retail Ltd's strategy for global expansion, focusing on entering the US market. It begins with an executive summary and an overview of Wilko, a British retail chain. The report then conducts a situational analysis, including PESTLE, SWOT, and Porter's diamond model analyses to assess the external and internal environments impacting the company's growth. The PESTLE analysis evaluates political, economic, social, technological, legal, and environmental factors within the USA. The SWOT analysis identifies Wilko's strengths, weaknesses, opportunities, and threats, particularly concerning competition from major US retailers. The report proposes strategic formations for the global market, including targeted audience identification and market penetration strategies. It suggests that Wilko can gain significant market share by initially offering low prices. The report concludes with recommendations for successful internationalization, emphasizing the importance of understanding the cultural, political, and economic factors of the American market and adapting strategies to meet the specific needs and demands of the target audience.

GOING GLOBAL
STUDENT DETAILS
STUDENT DETAILS

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Table of Contents
Executive Summary...................................................................................................................2
Overview of the Wilko Retail Ltd..............................................................................................3
Section 1.....................................................................................................................................4
1.1 Current situation analysis of the company.......................................................................4
1.2 PESTLE Analysis of Wilko Retail Ltd............................................................................4
1.3 Opportunities for Wilko Retail Limited through Globalisation in the emerging market.6
SWOT analysis.......................................................................................................................7
Section 2.....................................................................................................................................9
2. 0 The opportunities of going global in relation to the opportunities that outweigh the
threats.....................................................................................................................................9
Evaluated opportunities........................................................................................................10
Proposed strategic formation into the global market...........................................................11
Targeted audience & market penetration:............................................................................11
Conclusion................................................................................................................................13
Recommendations....................................................................................................................14
References................................................................................................................................15
Appendices...............................................................................................................................17
Figure 1: Porter's diamond model..............................................................................................9
Figure 2: Consolidated statement of financial position............................................................18

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Figure 3: Consolidated cash flow statement............................................................................18
Figure 4: GDP Rate of the USA...............................................................................................19

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Executive Summary
For this study, the selected company is the Wilko Retail Ltd. The management of the
company has decided to expand its operations at the global level and the management has
selected the American market because the USA has the world's largest consumer market. The
company has taken this decision due to the opportunities of emerging markets from the
aspects of global market opportunities. The management has selected the USA as the
emerging market because of the flexible foreign direct investment of the country. In the
initial stage, the company will also get various tax subsidies and rebates for conducting their
operations, this will help the management to lower down their production or setup cost.
Moreover, this report will focus on the situational analysis which will include PESTLE
analysis, SWOT analysis and Porter’s diamond model analysis. Apart from this, this study
will also focus on the targeted audience of the company in the American Market. In this
report, it is suggested that the company can gain major market share if in the initial phrase
they started selling their products at the low prices. Moreover, it is possible that it can start a
price war among the retail sector of America. There are various big players in the retail sector
of the country such as Walmart, Costco, Kroger, The Home Depot, etc. Going global is the
process by which an organization becomes increasingly interconnected with each other.
Under this process, it increases the trade and cultural exchange of the business in an effective
and efficient way. However, going global also increases the competition of the business.
Going global also forces the business for technological adaptation, forces for effectively
analysing consumer behaviour at the global level, forces for modifying their existing
strategies, etc

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Overview of the Wilko Retail Ltd
Wilko Retail Ltd is the British high street chain that deals in household goods. The company
has a wide range of house product categories such as home living, decorating & DIY,
Garden, Health & Beauty, Woodcare, Garden tidy essentials, fencing & screening, products
for pets and cleaning products. Wilko operates in the market of the United Kingdom,
headquarter of the company is situated in Worksop, England. The company was founded in
1930 by James Kemsey Wilkinson. In 1960, Tony Wilkinson has joined the company as a
branch manager. After 20 years, he was replaced by his niece Karin Swann. In 2014, Karin
Swann had sold 50% of the company’s holding to the Lisa Wilkinson. In this year the
company has earned net revenue of £1,501 million with an operating income of £67 million.
On 3rd February 2020, Christian Robert Philip, Neil Alastair Feakins and Jeffrey Moore are
appointed as the director of the company. Currently, there are 400 Wilko stores present in the
United Kingdom (Wilko, 2020).
Apart from this, the company offers a wide range of products of different brands with their
own labelled brand. In the Wilko stores, there is a large proportion of the products which are
labelled under the company's brand. The company runs a separate brand known as “Wilko”.
Under this brand, the management sells a wide range of seasonal line goods such as
gardening products in the summer season, Christmas decorations products in winters and
gaming range from September to January. Moreover, according to the financial report
analysis, in 2012 the turnover of the company was £1565million with a trading profit of
23million but there in the year 2013 their turnover was declined and reached £1530. In the
same year (2013) the trading profit of the company was increased by £4.6million and reached
£27.6. Apart from the Wilko’s first warehouse was opened in 1938 near Syston, Charnwood.
In 1970, the warehouse and office of the company were relocated to Carlton-in-Lindrick,

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Nottinghamshire. At that time, the management of the company had decided to install a high
bay stacking system in their warehouses and distribution centres (Wilko, 2020).
Section 1
1.1 Current situation analysis of the company
Current situational analysis is an effective way to obtain information by evaluating the
internal and external conditions that impact the management of the Wilko. Situational
analysis empowers the management to identify opportunities and challenges that may hamper
the growth of the organizations in an effective and efficient way. This situational analysis has
been conducted based on the internal and external environment. As the management of the
company is planning to incorporate its operations in the USA, thus external analysis will be
done for the USA's market and internal analysis will include those factors through which the
company can set up their successful operations in the USA (Caro, Kök and Martínez-de-
Albéniz, 2020).
1.2 PESTLE Analysis of Wilko Retail Ltd.
Political factors
The USA is known as the second-largest democratic country in the world. The county has a
positive view of the FDI through the aspects of globalization. Wilko Retail Ltd will get a
positive response through the political factors of the country. Through the aspects of political
factors, it is concluded that the company should need to follow US corporate rate structure
which rates between 35% to 21%, these tax percentages are higher than the UK as in the UK
corporate tax lies between 19% to 18%. The company also has to fulfil all the requirements
of the Federal Trade Commission (FTC) (Amadeo, 2020).

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Economic factors
Through prime economic factors are considered such as the impact of the GDP growth and
impact of large consumer markets on the Wilko. In the USA, Wilko will get exposure to the
vast number of people because the population of America is more than 327million people,
America offers a large consumer marketplace. Through the aspects of the economic factor,
Wilko can sustain a net growth of 9.5% per annum. In 2017, the GDP of the country was
$19.39trillion (Amadeo, 2020).
Social factors
Social factors will incorporate the discussion about the socio-cultural factors. Age, population
growth, health factors, lifestyle attitude plays a significant role (Dicken, 2010). The
population of America is health-conscious, thus Wilko should incorporate more of the
nutrients and health care products in order to fascinate the targeted audience (Daniels,
Radebaugh and Sullivan, 2014).
Technological factors
The USA is also known as the technological hub in the world. The management of the Wilko
should effectively utilize the present technology of the USA in their production and
distribution function because it will be resultant to reduce the cost of production. The USA is
moving towards the age of Artificial Intelligence (AI) and Machine Learning (ML), the
company should utilize this technology in order to give a better customer experience
(Ferreira, Lee and Simchi-Levi, 2016).
Legal factors
While establishing operations for conducting the business in the USA, Wilko Ltd needs to
fulfill the legal requirements of the law. Failure in following these requirements can put the

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company in serious legal trouble. Wilko has to fulfil the legal requirement in the USA such as
the Fair Labour Standards Act, Medical Leave Act, etc (Ghemawat, 2017).
Environmental factors
The USA has a diverse geography, climate and wildlife. The country also has various
environmental protection laws. Wilko has to take care of the environment by utilizing those
types of machinery which emit low emission rates. In the USA, the Environmental Protection
Agency (EPA) operates for the welfare of the environment and the company has to operate in
accordance with the EPA guidance (Hanson, 2018).
1.3 Opportunities for Wilko Retail Limited through Globalisation in the emerging
market
 Cultural: The culture of the USA is primarily incorporating Western origin but it still
incorporates multicultural ethos such as African, Native, American, Asian and Pacific
Island, etc. Wilko will have the opportunity to understand the cultural aspects or from
another viewpoint, it can be said that diverse cultural aspects will allow the company
to produce different products and to enhance their sales (Hill and Hult, 2015).
 Political: America's political system always supports FDI in order to strengthen its
economy. Due to the positive outlook of the political system towards the FDI, Wilko
can also gain various tax subsidies and other rebates.
 Economical: The economy of the USA is calculated among the world's strongest
economy because currently, their GDP stands at $19.39trillion. Through globalisation,
Wilko can gain major growth benefits (Silver, 2019).
 Financial: In the market of the USA, Wilko can gain the annual growth of the $9.5%
per annum. However, this rate of growth can be changed as per the inflation and
deflation condition in the country (Hosken, Olson and Smith, 2018).

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SWOT analysis
Strengths: Wilko has a strong distribution network and in the UK they have over 400 stores.
Now, the company can utilize the same leadership and understanding parameters to create
even stronger distribution network in the USA. However, may be possible that due to the
changing market condition of the emerging market, the management have to adopt or change
their leadership format (Hill and Hult, 2015). Moreover, Wilko Retail Ltd manufacturer their
own products and they can modify the structure of their products to satisfy the needs and
demands of the targeting audience.
Weakness: Wilko has a limited organization structure which is only compatible with its
present business model. Thus, while operating in the market of the USA, the company have
to modify their organization structure. For the market of the USA, Wilko has to make
effective changes in their organizational structure process. If management do not change their
operational structure as per the new market condition then it can create various other barriers
(Hosken, Olson and Smith, 2018).
Opportunity: Globalization is creating various opportunities for the company. The
management has made a great decision to opt for the United States for its further operations
because America has the largest consumer market in the world with stable economic growth.
The market of the USA will give a chance to the company to target number of audiences.
Although, targeting vast number of audiences is directly linked to more market opportunity.
Thus, it can be said that globalization is delivering an effective opportunity for the company
(Lechner and Boli, 2020).
Threats: In the retail industry of the USA, there are various big players such as Walmart,
Costco, Kroger, The Home Depot, etc. These retail stores can process a major threat to the

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company (Nisar and Prabhakar, 2017). The company have to make effective strategies so
that they can gain competitive advantage in the market by outperforming other competitors.
Figure 1: Porter's diamond model
(Beck, 2018)
Factors conditions: In the initial stage, in order to gain a competitive advantage, the
management has to offer various discounts and offers to fascinate consumers on a large scale.
Apart from this, it can also be concluded that if management will sell products at low prices
then it may start the price war among the retail competitors (Pantano, et. al., 2018). Wilko
will also introduce its own brand in the market of the United States of America. Wilko will
also incorporate their own production for making products while conducting their production
the company has to take care that the USA has a diverse geography, climate and wildlife. The
country also has various environmental protection laws. Wilko has to take care of the
environment by utilizing those machinery which emits low emission rates. In the USA, the

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Environmental Protection Agency (EPA) operates for the welfare of the environment and the
company has to operate in accordance with the EPA guidance (Peng and Meyer, 2016).
Demand conditions: It can be expected that the company will gain effective demand in its
initial stage because according to the statistics, the market of the United States is the largest
consumer market. Although, it is suggested that the company should incorporate various
methods to catch the audience's attention in an effective and efficient way (Rodrik, 2018).
Relating and supporting industry: The consumer market of the USA is extremely health
conscious thus through this porter’s diamond model it is suggested to the company that they
should work in coordination with the food and nutrition industry. The biggest food and
nutrition industry in America is Herbal Life (Steger, 2017).
Firm strategy, structure and rivalry: Under this, the company has to make effective
guidelines to make and sustain their process of creating the framework about the nature of
domestic rivalry that the company may experience in the near future while operating in the
market of the United States. This process will help the management to bring sustainable
results in their business operation. However, the management of the company should create
effective allocation, coordination, supervision and leadership in order to gain market shares
Wild and Wild, 2010).
Section 2
2. 0 The opportunities of going global in relation to the opportunities that outweigh the
threats
The framework is the essential foundations and open offices whereupon an economy's
advancement depends. It incorporates the cash and banking framework that gives the
significant venture advances to our country's organizations; the instructive framework that

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turns out the unbelievable assortments of abilities and fundamental research that really run
our country's creation lines (Steger, 2017).
Evaluated opportunities
 New market: Globalization provides the opportunity for the company for new market
access. Through the aspects of the globalisation, it will bring various opportunities for
the company to work within the immense market conditions and to get the large
exposure of the different kind of consumers. Globalisation also helps the business
practically understand the perspective of the different kind of customers. However, in
the initial stage it is suggested that Wilko can from the strategy of merger and
acquisition to get major support from the market condition (Pantano, et. al., 2018).
 Diversification: Through the aspects of the globalization, Wilko have the opportunity
to bring the product diversification in their process. Diversification will help the
management to incorporate various activities such as product diversification, the
management can utilize this activity with the risk management approaches (Peng and
Meyer, 2016).
 Access to talent: Another top advantage of going worldwide is the chance to access to
new ability pools. Much of the time, global work can offer organizations special
points of interest as far as expanded profitability, propelled language abilities,
different instructive foundations and that's just the beginning. (Silver, 2019).
 Competitive advantage: Globalization will also help the company to gain the
competitive advantage because when Wilko will start their retail stores in the USA
then at the initial stage, they will get two major things which will help them to gain
the competitive advantage. First, they will get the subsidies from the government, in
this way the company can lower down their production cost. Second, when audience