Expansion into Diverse Business Environment - Coursework Example

?[Type the company OF THE CHAIN i.e. The UK Based Supermarket Expansion into Diverse business Environment [Pick the The Business Sector And The Retail Market: A business has to explore options before it expands itself across borders. The nature of this exploration can depend on the type of similarities between business activities of the business and the type of business environment the business wants to expand in. If the analysis does not show much compatibility between the business activities and business environment the business wants to expand in; the business should remove the selected country from its options. The business should seek alternative strategies so as to adjust itself according to the business environment prevailing over there because the business can make changes and adjust itself as its activities are comparatively much easier to change for a particular geographic region or segment. The retailing sector of the business is the most developing sector these days with all of the technology converged at it to extract most out of this business sector. With the highest amount of returns and compensating to major portions of countries globally retailing has laid its root deep into the business world. Now considering the facts that retailing is also divided into various sectors which cater to different needs ranging from daily household items to luxury products, from products for the masses to products tailored to match to the needs of few. Food Retailing Business & Supermarkets: Food retailing is major share holder in the retailing sector. Traditionally if we analyze the food sector retailing majority of the sales were made by supermarkets. But there has been a shift in trend which has put the traditional supermarkets down to just a 61% share holder in food retailing and now 39% of the sales are made newer formats of stores now opening which include supercenters, warehouse clubs, convenience stores etc. As a result of this superstores have stepped back a little introducing new varieties of services and products offered; variety of non-food items like electronics, cosmetics, toiletries, cutleries and services like bank atms, cafes etc. Selection of the Business Environment for Expansion: A business environment has to be selected where population has Stable knowledge about big box stores but don’t have much exposure The population there enjoys shopping Has the buying power Population is high ( will explain this fact later on ) Will be fascinated by new retail store formats. Our consideration set is now reduced to few countries which include Bangladesh, Pakistan, Nigeria, Vietnam and some more. Pakistan stands out the as the demographics and psychographics indicate a population who look up to the western lifestyle as the ideal lifestyle and are a followers of western culture. Pakistan although overall is economically weak but it’s a known fact that it’s one of those few countries where the public is much richer than the government. A detailed analysis will highlight major points of the business environment. ANALYSING BUSINESS ENVIRONMENT: There are a lot of the factors that affect the business ,the external factors which are called the Macro-Environmental factors (beyond the control of the business) and the internal factors called the Micro-Environmental factors. Analyzing these factors in detail a conclusion can be made whether the environment is favorable for the business or not. PEST ANALYIS, RECOMMENDATIONS AND STRATEGIES A detailed analysis of the Pakistani macro environment, strategies pertaining to them along with recommendations for executing these strategies is mentioned in detail in this section. Political Factors: The Government of Pakistan are looking for opportunities and investors interested to invest in infrastructure development of Pakistan and are willing to offer helping hand. Although there are strict governmental policies on sale of things which are forbidden in Islam and for that policies have to be worked upon in collaboration with the government. Trade policies have been reworked upon and have been made lenient to attract foreign investors to explore opportunities available. Also the cities are expanding and talks on leasing of plots on key sites can be negotiated upon. There have been openings of supercenters in Pakistan by big box retailers like Metro, Makro, HyperStar etc. and government has been quite supportive in negotiating terms. Government will support this initiative as the superstore will offer employment and will help government in decreasing the unemployment and poverty. Economical Factors: One peculiar fact about Pakistan is that although the nation is declared as a poverty stricken nation but it’s a nation where the wealth is distributed unevenly. There is a significant chunk of population which belongs to the SEC A & B classes, are quite affording and posses reasonable buying power. We have to keep in mind that the economical factors effect demand, the pricing of products and the amount of profit earned. This factor cannot be controlled and the Superstore has to shift its marketing strategy monitoring the economical condition. The pricing strategy should be formulated according to following facts Keep in mind the psychology of the population. The population prefers products in offers, discounts and packages. This will make the Supermarket earn a reputation as an affordable store and will attract scores of customers. Store should maintain an image of providing quality goods then it will also attract customers who are stable economically. Social /Cultural Factors: The biggest point to be noticed while analyzing the Pakistani market is that shopping for grocery has been made a family activity and a middle class family plans their grocery shopping such that each member participates in it. The Superstore should make use this fact and make the environment more inviting and comfortable so that grocery shopping becomes a pleasant experience for the whole family. A product line consisting of items for each individual of the family should be made available so that combination of such a product line and time spent by the family will result in purchase of materials which were not initially planned. As population is influenced by western culture in terms of style then products related to style should reflect some western touch and elegance to grab the customer’s attention. The demographics of Pakistan indicate a population consisting of 70% youngsters hence they’ll be interested in products which that will be lively, contain adventurous touch . Product line like this will maintain the interest of the majority of customers. Also as they are young they will tend to buy products in shorter period of time and for this there should be store staff always at hand to direct them to their necessity. Technological Factors: A macro-environmental factor; Surprisingly Pakistan is one of the most techno-savy nations in the world. It ranks amongst the top countries with most number of mobile users. Internet connectivity is available in unexpected rural parts of the country. Latest stats indicate Pakistan has overtaken America in Wimax connectivity. The Super market chain can make use of the technological availability and introduce smart cards for regular individual customers or families given one smart card which will contain the information of all the previous purchases made by the customer. As a result the customer can be informed of any new offers or promotion. Also billing services can be made easy and no delay in billing will be faced hence making the experience even more pleasant. Also information systems can be placed which will order inventories of goods which are running. SWOT ANALYSIS SWOT analysis will reassure whether expanding into the Pakistani Business environment is viable or not. Strengths: As it’s a UK based superstore chain , it’ll be familiar to dealing with Pakistani customers. UK has a Muslim population of 2million people , majority of which belong to the South Asian Subcontinent and Pakistan. Hence they are already familiar with the attitudes, beliefs, emotions, needs, interest etc. They can utilize this information and imply this while formulating a strategy for the Pakistani target market. Also there are not many International Superstore chain in Pakistan. There are local superstore chains though but there are on local levels like Imtiaz, Chase-Up, Naheed, HKB, Victoria etc. but are not present throughout the country. This factor can also be utilized and start off from areas where such formats are not present. Weaknesses: As the Supermarket has not expanded at all before then the risk of failing can make the company take upon a defensive approach and might not try to grab the target market instantly fearing retaliation from local competition. Also looking at the previous openings of international chains opening up in Pakistan and failing so we have to be careful and learn from what these chains experienced and lead to their failure. Opportunities: The superstore will include many new things within its store format. Psychographic analysis of People in Pakistan suggests that they like to Shop or at least visit such stores or malls where everything is available, offers variety and an ambience which portrays it as a family site. Along with that not much of variety is available to select from imported range of products for people who belong to affording backgrounds and have a taste for high end eminent products. Threats: The major threat is of failure, if the store doesn’t offer good service and has higher rates available then market and it fails on making impression then the Supermarket chain will not get a second chance of making an impression as Pakistani population is very price conscience and once an impression is set in the mind of the Pakistani consumer its hard to re-build it. *********************************************************************** Some important factors to be kept in mind while operating in Pakistani business environment: Pakistani’s demand privacy while shopping and don’t appreciate much interference. In case of a service based product keep the discussion relevant to context as friendly attitude can be assumed as peculiar attitude. Central location should be targeted near malls or shopping complexes as more families head towards such sites. Arbitrage trading scheme can be implied while investing as there is a lot of difference between both the economies which can result in profits on a higher scale. CONCLUSION: In the light of the analysis and facts mentioned Pakistan seem to offer a favorable retail market with high ROI. The political and the cultural factors offer great opportunities of growth if the strategies are implemented in a coordinated and planned manner. Being one of the first mover in the retail format of superstore into this business environments promises a bright road ahead which include customer loyalty, trust and reliability in the market; all the measures necessary for success while stepping into a new business environment. REFERENCES: Ivory Research. 2009. Business Analysis . [ONLINE] Available at: http://www.ivoryresearch.com/sample5.php. [Accessed -]. Management Guru. 2009. Analyzing the business Environment. [ONLINE] Available at: http://www.mgmtguru.com/mgt499/TN6.htm. [Accessed -] Hub Pages. 2007. How to Analyze Business Strengths, Weaknesses, Opportunities and Threats. [ONLINE] Available at: http://hubpages.com/hub/How-to-Analyze-Business-Strengths--Weaknesses--Opportunities-and-Threats. [Accessed -]. Oxford university Press. 2007. Pestel Analysis of Macro Environment. [ONLINE] Available at: http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm. [Accessed -]. My Strategic Planning. 2006. Internal and External Analysis. [ONLINE] Available at: http://mystrategicplan.com/resources/internal-and-external-analysis/. [Accessed -]. Read More