Acquisition Mode of Entry for Woolworths Entry into the Thailand Retail Market - Case Study Example

The paper "Acquisition Mode of Entry for Woolworths Entry into the Thailand Retail Market" is a perfect example of a business case study. An increase in competition at home and the urgent need new markets support growth has led multinationals to look for investments opportunities in the developing world. The Asian region is among one of the most attractive destinations for investment by developing world multinationals. Thailand is among Asian economies that have experienced spectacular growth in the past two decades and provide an attractive market for Western multinationals keen on expanding internationally. In this report, the South East Asian economy of Thailand is analyzed for the suitability of FDI investments in its retail industry. Thailand is shown to be a promising economy with attractive opportunities in the retail industry. However, the report also finds out that Thailand’s attractiveness as an investment destination is dampened by political instability and frequent civil unrest in the country. Economically, Thailand has been able to recover from devastation after the 1997 economic crisis and remained resilient in the wake of the 2009 financial crisis. Thailand economy also recovered from devastation by floods in 2011 to record impressive economic growth. The level of income in the country has continued to rise in the past decade creating a wealthy market in many sectors of the economy.

This report starts by introducing Woolworths Australia, the second biggest retail chain in Australia. In the report is based on the assumption that Woolworths is seeking to enter the Thailand retail market to take advantage of the growth potential in the country’s retail industry. In the second part, the report analyzes the Macro environment of Thailand with an aim of discovering political, economic, social, environmental and legal factors that may impact the operations and the entry of Woolworth’s into the Thailand retail market. Secondly, the report provides an industry analysis of the Thailand retail market with the aim of finding whether it is attractive for FDI investment. Finally, the report recommends the application of acquisition mode of entry for Woolworths entry into the Thailand retail market.

2.0 FDI investor

Woolworths Australia is the proposed investor seeking an investment opportunity in the Thailand retail industry. Woolworths Limited is an Australian holding whose main business is large format retail trade. The company also has interests in liquor retailing and is also involved in the gaming and hotel industry. The company has stores spread over Australian and New Zealand (IbisWorld 2015). Woolworths is ranked as the second biggest retailer in Australia after Wesfarmers. Woolworths is also the second-largest retailer by sales revenue in neighboring New Zealand. In 2008, Woolworths was the world’s 19th largest retailer (IbisWorld 2015).

Woolworths derives the bulk of its revenue from trade in groceries, food, liquor, general merchandise, petrol and home improvement products. Woolworths operations employ over 198,000 employees spread over 3,000 locations in New Zealand and Australia (IbisWorld 2015). Recent trends in the Australian retail industry indicate that time Woolworths needs to look for growth opportunities beyond its traditional market. Recently, German discount retailer, Aldi entered the Australian market and has been chipping away at the market share of Woolworths and Coles(The Economist 2015). Woolworths is not new to expansion as it acquired the stores of local rivals as it seeks to expand into regional areas in Australia (IbisWorld 2015). Woolworths also made its first foray into foreign markets by starting operations in New Zealand. The Thailand retail market provides another attractive opportunity for the expansion of Woolworths as the chain seeks new opportunities for growth. Woolworths has shown it has the competence to successful enter, and thrive in a foreign market as evident from their success in New Zealand.