Strategic Analysis and Expansion Plan: Woolworths in China and India

This report provides a comprehensive analysis of Woolworths Limited's international strategy, specifically focusing on its potential expansion into the Chinese and Indian markets. It begins with an introduction to Woolworths, highlighting its position in the Australian and New Zealand retail sectors, followed by an audit analysis and global scan of the target markets. The report examines the opportunities and risks associated with entering the Chinese and Indian markets, considering factors such as population size, economic growth, labor costs, and cultural differences. It also includes an assessment of Woolworths' strategic capabilities, including its financial position, brand image, and a SWOT analysis. The report further identifies the risks involved in these markets and concludes with recommendations for successful market entry and expansion. The report emphasizes the importance of understanding cultural and market dynamics in both China and India, discussing factors like distribution of information, attitudes, and values of the people. The report provides a detailed analysis of the company's strengths, weaknesses, opportunities and threats (SWOT) and provides the risks involved in the Chinese and Indian markets. The report concludes with a recommendation for Woolworths' expansion strategy.

Running head: International strategy
International strategy

International strategy
Table of Contents
Introduction.................................................................................................................................................3
Audit analysis and Global scan....................................................................................................................3
Woolworth Limited’s Strategic capabilities................................................................................................6
SWOT analysis............................................................................................................................................7
Risks involved in the Chinese and Indian markets......................................................................................8
Recommendation.........................................................................................................................................8
Conclusion...................................................................................................................................................8
References.................................................................................................................................................10
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International strategy
Introduction
Woolworth’s limited company has been selected for the report.The report consists of the
global scan and audit analysis and this required to be done for expanding the business entity to a
global level in the chosen destinations that are China and India. Woolworths Limited is the
biggest retailing Australian company. It is the second leading company in Australia by revenue.
It was the ninth biggest retailer across the world in 2008. It operates its business in Australia and
New Zealand. The company was founded in 1924 and it’s headquarter is located in Bella Vista,
New South Wales Australia. The profit of the company is approx $ -1.2 billion (2016) and
revenue of the company is approx $59 billion (2016). There are approx 202,000 employees
working in the company. It is the second largest company in New Zealand.
Audit analysis and Global scan
Woolworths is planning to expand its business operations and activities to global of
China and India. Therefore, the marketing team, sales executive, and management are planning
to evaluate and measures the opportunities and risk in the selected countries. The opportunities
and risk in China and India are discussed below (Bayne, Schepis & Purchase, 2017).
Chinese market
After the various researches, it has been analyzed that China is the biggest country in the
world. It is one of the biggest countries with a highest population and economy. It is using
effective policies, rules, strategies and norms for effective business operation. The country is
using effective technology and resources to gain the competitive advantages. It has been
analyzed that China is first largest country in terms of population and it is the highest populated
country in the world (Lee et al, 2015). The country uses effective human resources and capital
for the successful and growing economy. It is the biggest producer of the various brands and it
maintains the low labor cost. The current GDP of the company is approx $11.8 trillion and the
growth rate is approx 6.7%. The country is the world leader in technical innovation in textile
manufacturing, producing of steel, aluminum and agricultural revolution. China is using the
different modern technique for business. Now it has been noted that Woolworth’s limited
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company can expand its business easily through its effective policies and technology. It has been
analyzed that high population is the major factor for the company to expand its business in such
country. The high population will help to increase in demand for the products. Due to the low
labor cost, the company will manage the workforce for the channels at very low cost. Efficiency
and effectiveness will also help to expand the business operation of the company. The company
can utilize the available resources in very effective way. It is the other benefit for the company
(Lynch, 2014).
Indian market
The company can also expand its business activities and operation in Indian destination.
Thus, the company needs to analyze and measure the risk and opportunities of the Indian market.
The business of the company depends upon the risk and opportunities of the country (Gunjal,
2017). Thus, before starting the business operation in the foreign country, the marketing team
and management of the business entity should analyze and identify the risk and opportunities
available in the foreign market (Guha et al, 2014). The business entity also evaluates the
environment of the country. Environmental factors affect the business operation of the company
and these factors play a significant role in growth and success of the company. It has been noted
that Woolworths has a great scope and opportunities to establish its supermarket in the Indian
market. It has been noted that India is the second largest country in terms of high population. It
will also help to enhance and expand the business of the organization. The GDP and income
level of the country are favorable in India. Thus, the current GDP of the country is approx
$2.454trillion which has been increased by 7.2% as compared to the last year (Gereffi & Luo,
2015).
After the various researches, it has been analyzed that agriculture is the primary sector of
the country which generates higher revenue for the Indian economy. Industrialization and
modernization also influence the business of the company (Jie, Parton & Chan, 2015).
Globalization also a significant factor to show the foreign countries interest in investment in such
country. It will help to increase the GDP of the country (Grant & Jordan, 2015). The policies,
strategies, and norms which are implemented by the government will also provide the financial
support to Woolworths to expand its business. Further, the service sector is also considered the
biggest sector to achieve the goals and objectives of the company. Now it has been observed that
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if Woolworths Company establishes its supermarket in Indian economy then it will not face any
kind of issues and challenges in such country (Boutabba, 2014).
Culture and market of China and India
After the various researches, it has been noted that business factors play a significant role in
the growth and success of the business entity in Chinese as well as Indian markets. The various
cultural factors influence the business environment and performance of the company. Along with
this, if the company operates its business in other destinations then various challenges are also
faced by the company (Frynas & Mellahi, 2015). The cross cultural factors influence the
business operation of the organization adversely because the team members of the company are
not able to able to understand the culture of the India and China. On the other hand, social factors
also affect the purchasing power of the people. Hence, it affects the trade activities of the
company negatively. In India, there is a tendency to buy the products from local shops at the low
prices (De Mooij, 2013). There are many cultural factors exist in the China and Indian market
which are discussed below.
 Distribution of information and knowledge: Distribution of income also plays a
significant role to develop and expand the business in the foreign market. An expansion
in the transparency level is required to be created by Woolworths Ltd between its benefits
and the cost of merchandise sold. Situating of the brands is very troublesome in the event
of Indian markets and furthermore constructing trust and picking up a piece of the pie.
For example, Uber is a multinational company which offers private taxi benefit and it is
established in the United States of America (Fang, 2014). The business entity moved
towards the Indian market and for influencing the customers they introduced attractive.
This helped them in picking up trust and acquired an expansion the goodwill and piece of
the pie.
Apart from the previously mentioned factors, there are some market section modes which
are available in the worldwide market condition. These market passage choices can be
used by the business substance for entering in the host economy for extending the
business. While choosing the market passage modes, the business company should
contemplate a portion of the satisfactory standards and controls (Das Nair & Dube,
2017).
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 Attitudes, values, and styles of people: The attitudes, values, and styles of the people
influence the business operation and activities of the organization. Bargaining power of
people also affect the supermarkets of Woolworths limited company. If the company
wants to start operation in India and China then the company will have to start and
develop some offers and discount schemes to gain success in the Indian market. This
issue does not exist in Chinese market therefore, it builds and increases the foreign direct
investment rate in the Chinese market (Cappelli, Singh, Singh & Useem, 2015).
Woolworth Limited’s Strategic capabilities
The business entity has successfully attained and builds the image Australia. Moreover,
the business corporation is also planning to expand the business operations in the international
markets (Kleinmanand Lin, 2013). The chosen destinations for the expansion plans are India and
China and these markets are chosen as they are the two economies who have the highest
population density. A highly crowded economy can be considered as one of the factors which
can be proven beneficial for the business as it leads to an increase in demand. The below
presented are the factors which dictate the strategic capabilities of Woolworths Ltd:
 Financial Position: On the basis of the recent survey it has been observed that the past
years or from the period of the establishment of the entity, an approx. count of more than
1000 stores has been launched in the region. This presents a high level of success attained
by the business organization (Lee et al., 2015). Moreover, the establishment of new
outlets will require the business entity to make huge investments. And this also shows
that the business entity is financially stable. On the basis of the conducted survey, it has
been noted that Woolworths Limited has attained a growth rate of 7.96% in past five
years which has been considered quite high as compared to its competitors.
 Brand Image: Developing a brand image is a crucial task for the business entity and
which requires adaptation of appropriate strategies. The basic element in this concept is
providing high-quality products, offering discounts and special schemes to the customers.
Moreover, adoption of better and improved mechanisms of promotional and
advertisement etc. can also be considered as relevant for establishing the brand image of
the entity (De Mooij, 2013). According to the survey report of 2005, Woolworths Limited
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has been ranked on top in retail charts, for adapting the best innovation strategies.
Afterwards, in the year 2012, it was listed at the peak position for as the sustainable
retailer and recently it is ranked as the major online distributor of products and services in
Australia.
SWOT analysis
The below presented is the SWOT analysis which has been executed over Woolworths
Ltd. This has been done as the management of the business entity is planning to develop the
establishment strategies for the new markets. Moreover, this analysis will also make the
business corporation aware of the risks and the expenses which will be incurred by the
business:
 Strength: the Brand image of the business corporation has been considered as one of the
biggest strength of the organization (Mukherjee, Cuthbertsonand Howard, 2014). The
brand equity of the Woolworths aids the business corporation in developing the trust of
the consumers. Moreover, the firm also provides a quality of products, which makes the
entity more strong in the market. Further, the business entity has been focusing on the
strategies which are developed for maintaining strong relations with the customers. This
is also considered as one of the strengths of the company, as it will bring a hike in the
goodwill of the firm.
 Weakness: On the basis of the conducted survey report in 2012, it has observed that the
business entity has been facing an increase in the debt ratio and for the last year the debt
ratio was at peak as compared to the last five years and this has been considered as one of
the weaknesses of the business Corporation (Grantand Jordan, 2015).
 Opportunities: As discussed in the above-analysed report the expansion of the business
entity in the new markets and regions can be considered as one of the biggest opportunity
of the business corporation. Apart from the physical expansions the business entity
should plan and develop the brand name in the online market.
 Threats: The low-pricing policy adopted for aiding the consumers can be proven one of
the threats for the business corporation. Also, intensification in the competitive
environment is one of the biggest threats for Woolworths Ltd (Kleinman & Lin, 2013).
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Risks involved in the Chinese and Indian markets
The below discussed are the risks which can be observed and experienced by Woolworths Ltd in
the new markets, where the company has been planning for the expansion:
Legal system: As the business entity is operating in Australia, and the company is planning to
expand the business in Indian and Chinese markets, the business entity will be facing differences
in the rules and regulations followed and adopted by the new markets and regions. There are
huge foreign direct investments from across the globe, as China has an optimum number of
foreign companies and they are already operating in the same region. Woolworths Limited is a
supermarkets chain in Australia. For instance, the entity will face some issues in India while
dealing in some products such as Alcohol as there are some regions in India where consumption
and selling of alcoholic products are banned (Bailey, 2017).
Tax System: There is a big difference between the tax policies and the norms imposed by
Australian and Indian governing authorities (Muasa, 2014). Australian tax policies and the
exemption of tax policies differ from the Indian as well as Chinese tax system. Also in case of
India Sales Tax has replaced all other taxes and has made the tax system easier. These
differences in the tax system will be developing a number of issues for the business entity.
Recommendation
 The business entity has chosen India and China for expansion of the business operations
and so they should concentrate their focus towards the consumers more both the regions
have the best human resource and which will be proven beneficial for the business entity.
 Also, China will be proved a most beneficial option for the expansion purpose as the
region has there is a number of multinational corporations operating in this region and
also have a huge amount of foreign direct investments and which will be proven
beneficial for Woolworths.
Conclusion
In the limelight of the above-executed analysis, it has been inferred that Woolworths Ltd
is a multinational supermarket chain and is planning to expand the business operations in new
markets. And for this, India and China are the new regions which have been chosen. The above-
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presented report has been focused on the global scan and audit analysis of the risks which will be
faced by the business entity during the expansion process.
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References
Bailey, M., 2017. Absorptive Capacity, International Business Knowledge Transfer, and Local
Adaptation: Establishing Discount Department Stores in Australia. Australian Economic History
Review, 57(2), pp.194-216.
Bayne, L., Schepis, D. and Purchase, S., 2017, “A framework for understanding strategic
network performance: Exploring efficiency and effectiveness at the network level”, Industrial
Marketing Management.
Boutabba, M.A., 2014, “The impact of financial development, income, energy and trade on
carbon emissions: evidence from the Indian economy”, Economic Modelling, 40, pp.33-41.
Cappelli, P., Singh, H., Singh, J. and Useem, M., 2015, “Indian business leadership: Broad
mission and creative value”, The Leadership Quarterly, 26(1), pp.7-12.
Das Nair, R. and Dube, S.C., 2017, “Growth and Strategies of Large, Lead Firms-Supermarkets”.
De Mooij, M., 2013. Global marketing and advertising: Understanding cultural paradoxes. Sage
Publications.
Fang, T., 2014, “Understanding Chinese culture and communication: the Yin Yang
approach”, Global leadership practices, pp.171-187.
Frynas, J.G. and Mellahi, K., 2015, “USA Oxford University Press”, Global strategic
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Gereffi, G. and Luo, X., 2015, “Risks and opportunities of participation in global value chains”.
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risk of oral and oropharyngeal cancers: A meta‐analysis with implications for cancer
control”, International journal of cancer, 135(6), pp.1433-1443.
Gunjal, T.D., 2017, “A Swot Analysis And Recent Fdi Controversy Of Retail Sector In
India”, International Research Journal of Multidisciplinary Studies, 3(4).
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Resilience, 1(2), pp.121-138.
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abnormal behavior in Chinese culture (Vol. 2).
Lee, A., Yao, J., Mizerski, R. and Lambert, C., 2015. The strategy of global branding and brand
equity.Routledge.
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Lynch, R. 2014, What is global strategy? And why it is important?, Assessed on 10th September
2017, http://www.global-strategy.net/what-is-global-strategy/.
Muasa, S.M., 2014. Cost leadership strategy and sustainable competitive advantage of Naivas
supermarket limited in Kenya. Unpublished MBA thesis university of Nairobi.
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policy and strategy perspective. Routledge.
Tradingeconomics, 2017, China GDP, Assessed on 10th September 2017,
https://tradingeconomics.com/china/gdp.
Tradingeconomics, 2017, Indian GDP, Assessed on 10th September 2017,
https://tradingeconomics.com/india/gdp.
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