International Market, Selection, And Market Entry For The UK Report

Part A

The list of European Union countries are:

• Austria
• Belgium
• Bulgaria
• Croatia
• Republic of Cyprus
• Czech Republic
• Denmark
• Estonia
• Finland
• France
• Germany
• Greece
• Hungary
• Ireland
• Italy
• Latvia
• Lithuania
• Luxembourg
• Malta
• Netherlands
• Poland
• Portugal
• Romania
• Slovakia
• Slovenia
• Spain
• Sweden and
• The United Kingdom

The European Union exports large number of products to the UK such as:

i) Spain exports potato at a value of 13991000 USD

ii) France exports meat at a value of 3823000 USD

iii) Netherlands exports eggs at a value of 4024000 USD

iv) Germany exports coffee at a value of 8440000 USD.

A 2.5 kilogram Redmere Farms White potato costs £1.29

The Beef Lean Steak, which contains 5 percent fat and is packed in 500 grams pack costs £4.00

The pack of 12 eggs in Tesco supermarket costs £1.75

The 227 grams Italian blended ground coffee costs £2.29 at a Tesco supermarket.

On converting the values to AUD it can be seen as follows:

Potato costs 2.193 AUD

Meat will cost 6.8 AUD

Eggs will cost 2.975 AUD

Coffee will cost 3.893 AUD

Comparing with Australia

The price of potato is AUD 4.90 for a pack of 1 kilogram

The price of meat is AUD 6.50 for 500 grams pack

The price of eggs is AUD 6.00 for a pack of 12

The price of coffee is AUD 4.00 for 100 grams.

                                                                                     

                                               (Source: www.afgc.org.au/wp-content/uploads/AFGC_State-of-the-Industry-2016, 2017)

                                                                             

                                                                                                 (Source: Abs.gov.au, 2017)

The purpose of this report will be to analyze the strategies that have been taken up by Woolworths so that they can enter the United Kingdom market. The company will adopt various strategies that will help them in successfully entering the market, which will help them in expanding their business and earn better revenues (Schultz, Patti and Kitchen 2013).

The scope of the report will be that it will help the company in establishing the company in a better manner within the country so that they can attract the customers in purchasing the products from their stores. The structure of the report will be that the analysis of the product that the company will be offering to the customers of the country (Belch et al. 2014). The attractiveness of the market that is present in the UK will be evaluated according to the product with the help of macro analysis of the environment. The environmental analysis will help in providing the differences and the similarities that are present in the new country and the parent country of the company. The competitors that are present in the UK market will be analyzed so that it can provide a better opportunity for the establishment of Woolworths in the market.

Step 1: List of European Union countries and products exported to the UK

The Woolworths Company was established in the year 1924 at the Imperial Arcade in Sydney by Percy Christmas. The company was successful in selling its products and was able to open its second chain of stores by the year 1927 in Brisbane. The company also opened its first overseas chain in New Zealand in the year 1929 and by 1930 the company was able to establish itself in different locations in Australia (Akbar and Ahsan 2014). By 1959, the company was able to establish its 300^th store in New South Wales, which showed the rapid development of the company on the Australian market. The products that are offered by the company are given at low and competitive prices, which make it difficult for other brands to survive in the market. The company provides a wide range of products of the customers to choose from, which helps the customers to purchase according to their buying capacity (Dos Santos, Svensson and Padin 2013).

The aims of the company are to give preference to the choices of the customers in all the brands that are being provided by the company. For achieving the aim, the company uses a team that is diverse in nature and listens to the choices of the customers, which helps them in generating better sales for the food products (Methner, Hamann and Nilsson 2015).

For the past 3 years, the company has been witnessing a change in their profit ratio. The year 2016 turned out to be a $1.2 billion dollars loss for the company, as the company was not able to sell its food products and the petrol pumps that it has had suffered major losses. By the mid of 2017, the company was able to earn a revenue of $1.5 billion dollars, which helped them in covering their losses and earn an extra of $0.3 billion dollar, which will help them in continuing their business for the coming years. The company has been facing difficulties in the last 3 years but is able to manage themselves by pulling out different strategies that has helped them in surviving in the market (Spillan and Ling 2015).

The company offers wide range of products for the customers, which has made it easy for them in generating better revenues. The company is known to provide better quality of potatoes to the Australian customers than any other supermarket. The vegetable that is provided by the company is procured freshly from their suppliers on a regular basis, which has helped the Australians in consuming more of the product from their store. The consumption of potatoes in the Australian market has increased on a rapid manner, as it contains the essential carbohydrates that are required by the people in the country to carry on their tedious jobs (Stindt et al. 2017).

The company has targeted most of the customers, as this particular vegetable serves the purpose of most of the households that are present in Australia. Moreover, the restaurants in the country also have a huge demand of this product, as most of the dishes that are made by the restaurants require the product at some point of time. The customers who are in to various kinds of activities require the product so that it helps them in gaining the energy, which will result in carrying out the tasks in a better manner by the customers (Schu and Morscett 2017).

Step 2: Prices of products in the UK and Australia

The major supplier of potato in the Australian market has not been able to meet up to the expectation of the customers, which has led to the loss for the company. Thus, Woolworths have taken up this strategy, as it has helped them in generating better revenues for the company. The product has been helping the company in generating better revenues, as most of the customers are in need of it (Ragland, Brouthers and Widmier 2015).

The company has been established long back in Australia, which has helped them in earning the goodwill from every household. The company provides the goods at a cheaper price, which makes it difficult for the rival companies to match the prices. The company promotes its products by using better advertisements methods so that the customers can be aware of the products that are being sold by the company. This has helped the company in attracting more number of customers towards it and increases the opportunity of generating revenue. The advertisement of the company is done through electronic and print media, which includes the ads that are being shown on the television and provided in the newspapers and magazines as well. This helps the company in attracting the customers who are readers of newspapers and are part of regular viewers of television (Buckley and Ghauri 2015).

The company has enough profit and capital resources for entering in to an overseas market such as the United Kingdom because of the accumulated profits that the company has managed to earn in the past years. This will help the company in hiring an expert who will provide better strategies to the company for its settlement in the United Kingdom market with its first chain of supermarkets (Lin and Yang 2015).    

The political landscape of the country is that it follows a democratic style of governance, which helps them in maintaining consistencies with the policies that are being formulated. The country has developed in to a global force after the end of the world wars and has been developing ever since. The strength of the country lies in its setup of democracy and the governance policies that are effective in nature, which is led by the prime minister of the country. The country is successful in applying the laws so that it can control the rate of corruption and the effectiveness of the government according to the World Bank. The country is a permanent member of the Security Council in the United Nations and is a member of G8 and NATO.

The challenges that the country face with respect to the political scenario is the tensions that are present in the alliance between the ruling parties and the decrease in the popularity of the government has created a major impact on the politics of the country. The disputes between these parties are creating major impacts on the retailing business and the overseas firms that are trying to set up their business in the country (Bogomolova et al. 2015).

Step 3: Converting values to AUD

The country has a better percentage of Gross Domestic Product (GDP), which has made most of the foreign companies in investing in the UK. The government on the other hand, has increased their spending, which has led to high spending and has been appealed in curtailing their spending. The decrease in the corporate tax has helped the nation in growing in its entire sector except the banking industry, which is vulnerable, as it has to compete with most of the banks that are exposed in Europe. The economy of the nation is open and competitive, which has helped in the growth of many companies and the foreign companies that have established their networks in the nations. The presence of advanced technologies and the capabilities with respect to manufacturing by the nation has helped them in being one of the advanced nations in the world. The banks provide better loan facilities to the companies so that they can flourish in the competitive market, which helps the companies in operating freely within the country (Boateng et al. 2014).

The residents in the country have a higher standard of living as compared to the other developed countries in the world. The growth in the economy has helped the country in developing a better infrastructure in the society, which has led to the overall improvement of the healthcare and the education sector in the country and has diminished the equality of income among the residents. The market of the country is single and unified, which has helped in the migration of the young people and solving the problem of overgrowing aged population. The provision of better infrastructure in education has helped many students in coming to the universities and experiences a better process in learning so that they can serve the society in a better manner. The qualifications that are gained by the student in their universities are recognized on a worldwide manner. The purchasing and the spending capacity of the customers are very high, as the standard of living of the residents is high. This helps the companies that are established in the market to generate better revenues. The dependency rate of the residents is also less, as the residents are able to manage their own expenses and is not dependant on any other people. This will help the companies in being successful with their respective products, as the high power of purchasing will help in increasing the chances of better revenues for the company (Ho 2014).

The Research and Development division has been shown the right path by the government, which has helped in increasing the competitiveness of the companies within the country. The teams that the government has with respect to R&D and IT help the country in maintaining its competition with other countries. The country also has a strict rule in patent rights, which will help the nation in maintaining its competitive factor in technology in the international market in the future. The innovations with respect to technology within the country have led to the availability of many new opportunities within the country. The government of the nation has taken initiatives such as Research Council’s UK Energy Program along with various investments in the Department of Trade and Industry and Carbon Trust, which has helped in the development of many new technologies (Barbara et al. 2017).

Step 4: Comparison with Australia

The Woolworths Company will be able to market its product in a better manner in the UK market, which will help in increasing the profits of the company. The use of the better technologies and the facilities that are present in the company will have a positive impact on the company. The increase in the GDP of the country indicates that the purchasing power of the customers are strong, which will help the company in generating better revenues. The vegetable product that will be provided by the company will be done at a cheaper price, which will help the company in selling the product at a faster rate (Gupta 2013).

The Australian land was once a place of conviction where the British people used to keep the prisoners. The people of Australia are known as Aborigines who are the natives of that place. The presence of multiculturalism in Australia has helped in the companies in catering to the various needs of the customers. Most of the residents in Australia are from UK background who has settled there after the end of the Second World War. Therefore, it can be seen that the Australian market is similar to the UK market because of the same behavioral characteristics that is existing among the residents. The education of the Australian people has been at an increasing rate since the beginning of the 1900s (Ho 2014).

The economic condition of Australia is stable, as it can be seen that many companies have been established and has gained profits in their business. This shows that the purchasing power of the customers is strong and the people can afford to spend to maintain a healthy lifestyle. The government of the country has imposed corporate tax and sales tax at a lower rate, which has helped in the expansion of many retail companies in the country (Bogomolova et al. 2015).

The use of social and mass media creates a major impact on the Australian people, which has given rise to a contribution of 4.5 percent of the total Goss Domestic Product towards the education sector that has resulted in educating the youth population of the country. the health sector of the country is also sound, as the people spend 10 percent of their income on maintaining their health. The living standards of the people have increased and the Purchasing Power parity of the Australians is around $39,000 (Barbara et al. 2017).

The differences in the macro environment of Australia and UK are that both the countries have different geographical factors, which has given rise to different businesses in their respective environment. The use of the technological advances is different in both the locations, as the climate and the infrastructure of the places are different. The purchasing capacity of the customers in the UK market is still more than the Australian people, which have to be increased so that the companies can make better profits.

The marketing strategy that will be adopted by Woolworths will be to provide the vegetable product at a cheaper price so that it can help in creating a competitive environment for the existing supermarkets. The other supermarkets will be forced to change their pricing strategy so that it can attract the customers towards it. The company will try to sell this particular product, as the customers in UK are prone to consuming a dish known as ‘fish and chips’, which requires the need for potatoes. The company will open its store in front of the food markets, which will help in selling of the product at a faster rate. The food joints will purchase the product in bulk, which will help the company in selling the product at a faster rate. The cost of setup for the company will be less due to the various government subsidies that are being provided in the UK market.

Part B

The size of the UK market with respect to the food retail sector is that the majority part of the shares in the market are held by Tesco, which is around 28 percent along with Sainsbury’s who has a share of 16 percent. Asda also has a share of 16 percent, which is followed by the company known as Morrisons who holds around 11 percent of the shares. The other supermarkets constitute of about 29 percent of the market shares in UK (Glaister and Falshaw 2015).

The market is growing at a faster rate, as the purchasing capacity of the customers has increased to a higher rate. This has paved the path for new companies to join in the food retailing business in the country.

The growth rate of the retail segment is clear and distinct, as the companies are flourishing within the country due to the purchases that are made by the customers. The size of the market is growing on a constant manner due to the availability of the advanced technologies, which provides a better entry strategy to the new companies (Gopinath, Helpman and Rogoff 2014).

The market is in the developing phase in the product lifecycle chart, as there are many opportunities for the new and the existing companies to flourish in the market. The retail sector within the company will not get saturated in the near future, as the opportunity to grow is huge due to the availability of new products on a regular basis.

The market uses the local ingredients that are produced in a local manner so that the customers can purchase the items at a cheaper cost. The products that are imported are also used in the market, which cannot be produced locally. The local and the foreign sources are used in the retail sector according to the choices and the preferences of the customers (Symeonidis 2017).

The major sources of the foreign supply for the country is that it imports the products from the countries that are in the European Union (EU) along with the other countries such as Australia, Brazil, India, Japan, and Italy along with the major countries of the world. The availability of vast numbers of products help in providing better opportunities to the customers in purchasing the products from the local super markets.

The UK market uses a simple pattern of distribution channel. The products that are produced at a local level involve a one step channel of distribution where the products are supplied by the suppliers to the retail outlets for the customers to buy the goods. The products that are imported are passed through two channels where the products have to be taken from the wholesalers and supplied to the retail outlets so that it can be available to the customers for purchasing it (Ennew, Binks and Chiplin 2015).

The major competitors that will provide stiff resistance to the Woolworths group are Tesco, Sainsbury’s and Asda. They hold the majority of the shares in the food retailing sector and has a strong base of customers who are loyal to the brands that are being provided by these companies.

Company and Product Analysis

The size of the company is big and is well-established in the food market. The products that are available in the market are all based according to the needs and preferences of the customers so that these companies can maximize their profits by providing the best quality products. These companies are providing the customers a wide range of products and according to the needs and preferences so that the customers can be loyal to the company.

There are mainly four competitors that are present in the food sector known as the ‘Big Four’, which constitutes of Tesco, Sainsbury’s, Asda and Morrisons that will provide competition to Woolworths (Jung and Subramanian 2017).

The competitors in the UK market have been operating for a long time and have been providing the products to the customers according to their needs. The companies know the basic requirements of the customers, as they have been in operation for long periods and help the customers in choosing the right products. These factors help the companies in maximizing its profits so that they can operate in a better manner (Gu 2016).

Woolworths, being a new company in the market will adopt a low pricing strategy that will help them in surviving in the market. The company will position itself in the ‘low price, better quality’ segment in the positioning map so that it can attract the maximum number of customers.

The pricing position of Tesco is that it offers the products at a lower price along with Asda who has also taken up the same strategy. The companies such as Sainsbury’s and Morrisons offer the product at a higher rate and targets the high end customers.

The strength of Woolworths will be that it will be offering the quality products at a cheaper rate so that it can help the company in establishing itself in the market. The company will also provide free samples so that it can help in attracting the customers towards the brand (Chen and Miller 2015).

The company will use the one channel pattern of distribution so that it can help in keeping the costs down. This will help the company, as the prices will be low and the customers can be attracted in a better manner so that it can help in establishing the company in an appropriate manner with the UK market (Gawer 2014).

The company needs to evaluate the problems that are present among the buyers while choosing the products from the stores. This will help the company in supporting them in a better manner so that the choice of the products can be appropriate. The buyers look for any information that is available about the products so that they can get to know about the product before the purchase is being done. The customers also evaluate the alternatives that are p[resent with respect to the product so that they can get the same product at a cheaper price. After these considerations are done, the customers are willing to purchase the product. The company needs to provide an opportunity to the customers so that it can help in influencing them regarding the buying of the products from the company (Fleisher and Bensoussan 2015).

The company needs to take up the heterogeneous approach as the strategy for segmenting the market so that the wants of the consumers can be set in to different categories. This approach will help in finding out the differences that are present in the demands of the consumers. this will help the company in catering to the different needs of the customers, as the division in to sections will help in catering to the needs of the customers (Grant 2016).

The company will try to establish itself near the food stalls so that it will help them in selling off the products at a faster rate. This will help the company in making the customers get a better experience with the quality of products that are being offered by them. These places are weak in competition, as most of the supermarkets are placed in the best locations of the locality, which can be accessed in an easy manner by the customers. The setup of the store in front of the food stalls will help the owners in purchasing the products from the company so that they can lower the transportation cost and decrease the prices of the foods (McQuarrie 2015).  

The company needs to have an indirect method of exporting so that the products of the company can be introduced in the market with the help of an intermediary who has a better knowledge about the market. This will help the company in understanding the dynamics that are present in the market in a better manner along with the proper understanding of the buying pattern of the consumers. This will also help the company in gaining a better knowledge about the areas where the company can setup its store so that it can help in maximizing the profits (Leih and Teece 2014).

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