Market Entry Project - Research Paper Example

Considering this strategy in mind Target has planned to expand in the market of their neighboring country Mexico. We choose to enter Mexico, with the idea to expand our business base obviously, to cater to their competitor Wal-Mart who is doing great business in Mexico by providing the experience of ‘Like shopping in the US’ (Luhnow, David), with similar purchasing trends observed in US, Low Land and Central Mexico it was easy to understand consumer’s psychology (Portilla, Fabiola de la), people in Pacific, North and Southeast tend to spend more (Portilla, Fabiola de la).

If we look at the Nielsen’s survey results closes we’ll come across the fact that Big Supermarkets still capture a very small proportion of the retail universe in Mexico-Pacific, 26%, Valley of Mexico 30%, (Portilla, Fabiola de la), which is extremely low and reflects the fact that markets displays huge blue spaces for expansion by large retailers like Target. Consumers tend to visit markets in weekdays in Pacific and on weekends, Sunday etc in Low Land, Central Region and Valley of Mexico (Portilla, Fabiola de la).

Negligible tariffs on trade between US and Mexico is acting as a major incentive for businesses to expand across borders and become transnational in nature. Target also has the advantage of learning and getting insights from Wal-Mart’s experience (Luhnow, David) so far in the Mexican market. Hence all the factors mentioned above drove us to the conclusion of tapping into Mexican market as our host country. The environmental opportunities which the host country offers are as follows; Economic factors, the country’s economy is back on track with a GDP of 3.

8% in 2011 (6 Reasons why US retailers should enter Mexico), and shows good signs of growth with huge margins of blue spaces left to be exploited by the retailers with retail sales of 5.4% by may 2011 (6 Reasons why US retailers should enter Mexico), this increased economic stability has also impacted the purchasing power of Mexicans resulting in growing confidence in retail; Legal factors, like there are very low trade tariffs in Mexico as compared to the US, the act named NAFTA (North American Free Trade Agreement) made in 1994 and renewed in 2008 created the world’s largest free market with almost negligible trade tariffs between US, Mexico and Canada (6 Reasons why US retailers should enter Mexico), hence very low legal restrictions act as an opportunity; Social Factor of emerging middle class in Mexico (6 Reasons why US retailers should enter Mexico) has given foreign retailers a hope that more people now have the power to experience a purchase in huge retail stores and with the emerging and still weak middle class discount stores can actually help the people and strengthen their own presence in the market as well.

Cultural factors changes and flexibilities (Hernandez, Mariana) also act as an opportunity an opening for foreign retailers to jump into the market, thought it took time but now Mexicans have accepted and encourage foreign brands specially those manufactured or originated from US because of their own growing aspirations. Upon further analysis I would not exactly put this as a threat but a disadvantage faced by the retailers in Mexico’s trade environment could be of the huge power distance (Hernandez, Mariana) amongst the people living in the same region, existing large amount of