The Location of Lidl Shops and the Headquarters in Switzerland - Research Paper Example

 Introduction This investment plan is being prepared to provide the necessary pieces of information about the establishment of Lidl Switzerland. It contains vital instructions about the choice of locations for store, shops, distribution center and the headquarters of the shops and the reasons for making such a decision. It highlights the financial, marketing, personnel, logistic, management and operational aspects of this plan. Some significant analyses are carried out to determine how suitable and profitable will Switzerland be as a location for brand supermarket like lidl. Lidl as a frontline grocery supermarket could make an easy inroad into Switzerland if all these contents of this investment plan is given a serious consideration. Overview of Available Resources for Investment A sum of 100 million Euro has been allocated for the establishment of Lidl Switzerland; and this money would cover all expenses including hiring of staff, training, rent payments, purchase of vehicles and other transportation and the provision of grocery to be marketed in different regions of Switzerland. Understanding Swiss Demographics Though a small country of just over 7 million people, Switzerland has been classified as developed Western European nation. The Swiss Federation consists of cantons (administrative divisions). The prominent of these cantons is Zurich, the largest Swiss city with a population of about 1.3 million. The cantons are self-governed, modern and enjoy high standard of living. Strategic Locations of shops etc Some important factors are considered for the location of Lidl shops/stores and the headquarters in Switzerland. Density of population: The shops/stores would be sited in cantons where the population is dense, and the percent of the population that enjoy shopping is significant. Closeness to major transportation channels: Closeness to major transportation channels like airports, train stations and metro bus stations is another helpful index to decide where the shops/stores would be located. Availability of feeble competition: The shops/stores would do well in places where there are fewer brand supermarkets like Lidl, and hence the availability of little or no competition. Center of political/economic power: The Switzerland Lidl would be sited at the center of political/economic power, which is Bern, the capital of the country. Taking all the reasons above into consideration, five cantons have been earmarked as the proper places to locate the stores/shops and the headquarters. CANTON POPULATION SHOPS/HEADQUARTERS Bern 962,982 Chosen to locate the headquarters Zurich 1,307,567 Chosen to locate the biggest shop Geneva 438, 177 Chosen to locate a shop Fribourg 263,241 Chosen to locate a shop Thurgau 238, 316 Chosen to locate a shop SWOT ANALYSIS Carrying out SWOT analysis is very helpful to understand the internal factors like Strength, Weakness, Opportunities and Threat Lidl that may affect Lidl as it attempts to open five unique stores/shops in Switzerland. (i) Strength: The strength of Lidl lies in several factors: some of which include the company’s current recognition worldwide as it operates in 17 countries with a total annual revenue of 45.9 billion dollars. Lidl has stores in prominent parts of the world like U.K, Ireland, Austria, and of course, Germany where it originates from. (ii) Weakness: Lidl weakness includes marketing mainly its own brand products while allowing only a few other brand products to be sold in its stores. Local Swiss grocery companies may find this practice unfavorable. And there are unfounded reports that Lidl doesn’t treat its employees well. (iii) Opportunities: The financial capability, highly experienced employees, attractive and affordable brand products are some of the opportunities Lidl have over any other operator of supermarkets in European Union. (iv) Threats: Lidl would face some threats in form of stiff competitions from operators of supermarkets in Switzerland, which include Migros, Coop, Denner, Coop Pronto, Pick-Pay and Manor. PESTLE ANALYSIS Understanding the following external factors are essential for projecting how successful Lidl Switzerland would be after its establishment. PEST analysis is a pragmatic analytic tool that could show how factors like Political, Economic, Social and Technological could influence the operations of the proposed Swiss Lidl. Political: Having its parent company originates from German, a staunch member of European Union, Switzerland Lidl would experience little or no political bottlenecks, unlike companies from the North America or other continents. And encouraging enough, the political stability of Switzerland is a great plus: unlike volatile Eastern European countries. Economic: As a EU company, Switzerland Lidl would enjoy the benefits of economic cooperation that has existed between German and Switzerland: which include reduction in taxes, freedom of repatriating capital gains without much hassles and benign employment laws. Social: As a European company, Lidl would naturally be welcomed by Swiss shoppers. And since the company has earned respect for its brand products in almost all European countries, this would encourage more Swiss shoppers to patronize Lidl products. The Swiss shoppers should have been familiar with the tastes and values of the products, because it is basically European. Technological: Lidl uses some of the best technologies in supermarket industry in each of its operations. And the company has invested money on purchasing some communication IT systems like Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) to be sure its activities can withstand the modern requirements. Legal: Lidl may not necessarily confront legal constraints in Switzerland except some few legal suits that may arise from local grocery industries that would want their products included on Lidl’s shelves. Environmental: Switzerland doesn’t have several occurrences of natural disasters like earthquakes, tornado and hurricanes every year. However, like every other company, Lidl is susceptible to vagary effects of global warming and other seasonal disasters. Logistic issues Some new vehicles would be purchased for logistic purposes: The shop in Zurich, being the biggest, would be supplied with two big trucks and four vans; the other four shops would have one truck and three vans each. The trucks would be used to convey products from the airports, train and bus stations, while the vans would be used to deliver mail-ordered products to different homes or residencies of the customers. Good Swiss roads are added advantage that would necessitate smooth transportation of the company’s products. Financial Plan Switzerland Lidl is expected to yield an annual turnover of 150 million Euros if the following financial plans are put into consideration. Budgeting: Each shop would be operated with a closely monitored budget. The contents of the budget would handle employees’ salaries, cost of operations, rents, utilities, transportation cost and other financial requirements. Accountability: Preparing the right financial instruments, which include balance sheet, income statement and cash flow statement would present a condition of accountability through which the company’s financial success or gains could be measured. Investing 100 million Euro to set up Switzerland Lidl is a good investment. Switzerland has been one of the best places to start a business in the entire European Union, because of its encouraging tax regime and incentives from the Swiss government. Paying reduced taxes mean Lidl could save some money off tax rebates and the company could repatriate its capital gains without facing any hindrances from the Swiss government. Another indicator that Switzerland is a nice country to make an investment is the country’s response to the current global financial crisis: while other European countries are seriously affected by the financial meltdown, Switzerland survives the depression and maintains stable economic atmosphere like it was before the crisis began. None of Swiss banks is affected by the crisis, and Swiss companies are not going bankrupt, as it is the case in other European countries. Switzerland has a Gross Domestic Product (GDP) of 492.6 billion dollars. And it enjoys a sustainable growth of 2% for the past four years. Being a service-dependent country, establishing a supermarket like Lidl would be an outstanding business venture. The banking industry in the country is one of the best-organized financial institutions in the world. Swiss banks offer cheaper interests and moderate overheard charges in case Lidl would like to send its capital gains to Germany. Human Resources Management Plan The majority of staff for Switzerland Lidl would be local people who have had some years’ experiences working as salespersons in supermarkets or other shops that deal in grocery or other cooking products. Great attention would be paid to their experience and readiness to adopt Lidl’s philosophy of sales. The following steps would be undertaken in hiring qualified salespersons and local managers. An advert would be put in the common daily newspapers in that appropriate locality and requests that any qualified person should apply. First interview would be conducted to assess the candidates’ levels of experience. The highly suitable candidates would be short listed and invited for second interview. Final selection of the best candidates and organize some trainings for them by using experienced Lidl employees. However, supervising managers would be current employees at Lidl who have spent some years working for the company. They could be brought in from Germany Lidl or from the nearby Sweden or Austria. The essence of having experienced Lidl personnel to be the supervising managers is to inculcate and constantly encouraged the new workers to follow Lidl sales strategies. The issue of salary would be handled according to Swiss salary structures. And the new employees would be subjected to routine training and staff development programs. The matter of workers’ health insurance, bonus and pensions would be handled following Swiss Employment Laws. As an international company operating in Switzerland, it is imperative that the mode of punishing an erring worker must be clearly explained in the employment contract. Switzerland Lidl is expected to accept Swiss way of terminating a worker’s (Swiss national) employment or undertaking a retrenchment. This would prevent future legal suits for improper maltreatment of employees, a charge Lidl has been struggling to dispel in other countries. Marketing plan Marketing plan involves several processes: these include product’s description, marketing budgeting, description of business location and pricing strategy and sales expansion. The products of Lidl are groceries and other household products. They vary in prices but generally affordable. For the next five years, a sum of 2 million Euro would set apart as the marketing cost of advertising Lidl’s products on TV, radio and in the newspapers. The five locations chosen for the shops and headquarters are convenient for shoppers to come to, and also make the transportation of products to and from the airports easy. Talking about pricing strategy, the price of Lidl’s products would be based on the Swiss purchasing power: that is, the price of each product would be an amount the local people could afford. Sales expansion is an important step in making Switzerland Lidl a success. It is customary that Lidl brand products are always displayed inside the shops. This means shoppers would have to come in and choose what they want to buy and pay for them at the counters. But it is also interesting to adopt other modern marketing strategies. Examples of these strategies are highlighted as follows: Mail order: Mail order has made shopping easy for busy people. All they need do is fill out their order on a sheet of paper and mail it to any Lidl shop closest to their residence. Internet Marketing: As the use of Internet increases, it has become a useful medium to market any products, even grocery and other household consumables. Shoppers could log in onto Lidl Online and make their orders, which would be delivered to them at the specified time. Door-to-door sales: Now, Lidl products could sold from door to door by salesperson working for the company. Operations Schedules The shops would be operated twenty-four hours a day: and seven days a week. And the employees would be asked to do at most 8 hours shift a day. This is in accordance with Swiss working hours per day, if the employee is going to work for 6 days a week. The security would be available twenty-four hours and the shoppers could confidently do their shopping without any worry. Legal Issues Switzerland Lidl is expected to operate under Swiss laws, and any litigation may be resolved at Swiss courts or at European Union Arbitration Center. Reference 1. Lidl Germany (2008), Official Website of Lidl, accessed on February 20, 2008. Read More