International Retailing

1. International Retailing Forms of Internationalisation Motives and Movements Understanding International Retail Markets Implementing Internationalisation

2. Worlds Largest Retailers - International Involvement Source: PriceWaterhouseCoopers (2001)

3. Worlds Largest Retailers’ International Involvement(continued)

4. What is Retail Internationalisation? International Consumer Spending Internationalisation of Management Functions Internationalisation of Retail Concepts Internationalisation of Retail Operations

5. Product Sourcing Process

6. Major Grocery Buying Groups and Alliances in Europe Source: Institute of Grocery Distribution (2001)

7. Internationalisation of Retail Operations Options for Market Entry

8. The Geographical Spread of Body Shop

9. The Geographical Spread of Body Shop (continued)

10. Driving Forces of Internationalisation

11. International Activities of Ahold and Delhaize le Lion * Projected strores for 2000 * Ahold’s Latin American interests also have stores in Peru, Paraguay, El Salvador and Honduras Source: derived from Annual Reports

12. Classifying International Retail Approaches Market and Operational Considerations HighMultinational Global Market Extension LowProximal Transnational Ethnocentricism Geocentricism Corporate Perspective

13. Stages in an the Development of International Retail Business Geographic presence Stage 3: Ambition Stage 2: Caution Stage 1: Reluctance Time

14. International Market Appraisal Checklist • Spending Power • Total GDP • Disposable incomes: • spending patterns • spending improvements • seasonal fluctuations • taxes on incomes • taxes on spending • savings ratios • Population size: • age profile • cultural/ethnic groupings • expatriates and tourists • lifestyles • religion • Residential structure: • urban versus rural • housing density • ownership levels • Adjacent markets: • cornerstone status • market proximities • market similarities • market accessibilities

15. International Market Appraisal Checklist • Barriers and Risks • Entry barriers: • tariffs • quotas • development restrictions • competition laws • barriers to foreign entry • religious/cultural barriers • Political risks: • change of government • nationalisation or controls • war or riot • international embargoes • Civil risks: • effectiveness of policing • rate of theft • rate of murder/violence • level of organised crime • Economic risks: • inflation • exchange rate fluctuations • employment structure & stability • taxes on business • Other risks: • geological • climatic

16. International Market Appraisal Checklist • Costs and Communications • Factor costs: • land availability and costs • costs of acquisition targets • taxes on business • energy costs • labour availability costs • training costs • development costs • Communications and costs: • telephone/fax/Internet connections • automatic international dialling • available international lines • costs of calls • Logistics and costs: • road networks • rail transport • air freight • sea freight • available carriers • distances between markets • transport safety • transport reliability • Marketing Communications: • TV/radio advertising • direct mail agencies • outdoor advertising • print/magazine advertising • cable TV penetration

17. International Market Appraisal Checklist • Saturation levels: • structure of outlets by sector • concentration levels • primary/secondary markets • Gap analysis: • positioning of competitors • viability/ size of gaps • reasons for gaps • age of existing stores • Competitive potential: • site availability • financial strength of home retailers • attractions to international retailers • opportunities to reposition • Competition: • Existing retailers: competition • same or similar formats • indirect competition • specialist retailers • other marketing channels • price competitiveness • extent of differentiation • Existing retailers: co-operation • synergies from partnerships • international alliances • franchising activities • cumulative attraction • acceptance of format

18. Hofstede’s Dimensions of Cultural Difference

19. Hofstede’s Dimensions of Cultural Difference

20. The Eclectic Paradigm • Dunning’s model suggests that the extent, form and • pattern of international expansion is a function of: • Ownership-specific advantages: an innovative product, • or production process which gives the firm a unique source • of competitive advantage; • Location-specific advantages: the host country has cost or • market opportunities not available at home (lower land or • labour costs are common examples); • internalisation advantages: organisational ownership of • corporate ‘secrets’ or mechanisms is crucial to success.

21. Value Chain and Network Theory The idea of a business activity as comprising a series of stages or activities involving relationships, often with other institutions, has drawn attention to network theory. The increasing emphasis placed upon managing the whole value/distribution chain as a single entry within retailing is clear. Therefore, a focus upon value chain and network considerations may provide explanations for international sourcing, increases in the use of franchising as a means of international expansion, and the growth and rapid international expansion of Benetton.

22. Result of international activity Predicted expansion pattern Low risk alternative Franchising Small size Limited operating experience Limited international orientation Low tolerance for risk Little competitive advantage Own store rapid expansion Large size Operating experience International orientation Tolerance for risk Competitive advantage Ownership Asset based Transaction based Global expansion Little learning Internalization Licensing Small size Limited operating experience Limited international orientation Low tolerance for risk Little competitive advantage Locational Cultural proximity Market size Competitors’ moves Geographic proximity Low cost land and labour Own store expansion in stages Countries with attractive locational advantages Multinational expansion Much learning

23. Carrefour’s International Market Shares

24. Carrefour’s International Market Shares

25. Impact of Business Distance upon Carrefour’s Entry to Taiwan and USA Source: Derived from Dupuis and Prime (1996)

26. Vicious or Virtuous Spirals STRONG DOMESTIC PERFORMANCE Underperform in new markets Greater Cash Flow REINFORCES DOMESTIC BUSINESS: INCREASES MARKET VALUE DRAIN DOMESTIC BUSINESS: DESTROY SHAREHOLDER VALUE Ability to make acquisitions Reduced flexibility: liability to ‘act local’ Improve performance Increased Business Complexity/ Diversity Over-extend financial & managerial resources Transfer best practice