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Advantages of international market entry strategies
Advantages of international market entry strategies
Foreign market entry plan
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Intrigued by Canada’s strong economy, more and more American retailers are coming to Canada. Entering the Canadian market strong, Target bought the 220 Zellers stores that Hudson’s Bay was looking to sell. Target will be converting these Zellers stores and opening its first stores in major cities such as Vancouver and Toronto. Canada is especially exciting to companies such as TJX, who have recently been struggling in the U.S. market. TJX is looking to open 100 new Marshall’s stores, as it starts its Canadian expansion. High-end retailer, Victoria Secret is finding that space is in high demand in big malls like Yorkdale Shopping center in Toronto, where the wait for a store opening can easily take up to 3 years. These foreign retailers seem …show more content…
to be hoping to have the same luck as Wal-Mart, who entered the Canadian marketplace in 1994 and has seen great success since. Additional companies results in more competition for Canadian retailers, as Loblaw and Canadian Tire are experiencing. However, Loblaw has also been expanding by opening its first Joe Fresh store in Vancouver, right beside big names like H&M and Aritizia. As Canadian retailers are gearing up for the competition, foreign retailers are eyeing at the stability of the Canadian marketplace. Issue 1: Reduced threats in the global market place in Canada for American retailers. Canada’s marketplace offers a reduced risk to American retailers compared to other international marketplaces.
Canada’s stable economic environment has reduced the threat for foreign companies to invest in the Canadian marketplace. Companies like TJX, who have been struggling in the U.S. economy have to come to Canada to find stability. Others, such as Target, have seen little growth in America and are expanding into Canada due to the economy. In addition, Canada’s culture and societal structure is extremely similar to America, thus reducing the risk of failure for retailers. Companies do not have to translate or change their brands to fit into the Canadian culture. Numerous brands are already known and embraced by Canadians like Target and Victoria Secret. Finally, entering the Canadian Marketplace is simple, as there are no tariff barriers due to NAFTA, the North American Free Trade Agreement. Wal-Mart was the first American retailer to take advantage of NAFTA in 1994, when it opened its first stores in Canada. The same year that NAFTA was established. All of these factors make Canada very appealing to American retailers who want to test the international market for further expansion. Canada offers a much friendlier and more familiar market to American retailers, making it ideal for companies to start their expansions north of the border. Canada’s economic environment, culture and lack of barriers have significantly reduced the risk for American companies to venture into …show more content…
Canada. Issue 2: Monopolistic competition and supply and demand in relation to the Canadian economy and American companies The current Canadian retail market is under monopolistic competition.
There are many companies in the current market that offer similar products and services, yet the products differ slightly from one another by brand, quality and price such as, Wal-Mart and Target. Wal-Mart offers the cheapest products in the market with a variety of brands and services, yet Target offers unique brands not available at Wal-Mart or other retailers. However, as it pertains to a monopolistic competition, it is relatively easy to enter the Canadian marketplace as demonstrated by the continuation of expansion from retailers, such as TJX and Victoria
Secret. The demand for American products in Canada has invoked the interest of many American retailers. Every day, Canadians cross the border seeking products that were, until recently, unavailable in Canada. Research shows that 10 % of Canadians cross the border to shop at Target and many more are aware of its brand. Furthermore, with the Canadian economy booming, consumers have more money to spend than their American counterparts, increasing the demand for goods and services. This is especially important to the success of high-end retailers, such as Victoria Secret, who struggle during the economic downturn. Many retailers have noticed that the Canadian market has not reached its saturation point yet and are taking advantage of it. In Canada, the per capital square feet of shopping space is 13 to 15, whereas in the United states its more than 20 square feet. This allows for additional retailers to enter the market. Of course with more companies coming to Canada, the market is going to be flooded with perhaps more supply then the current demand. However, the challenge for any company is finding the sweet spot between supply and demand, the equilibrium, which Wal-Mart seems to have mastered. An additional benefit for American retailers is that Canada is located right next door, allowing for companies to use their existing supply chains. American retailers are clearly aware of the increased demand of their products and are hoping to enter the market with just the right supply of products. Issue 3: Benefits of Globalization for Canada in relation to American retailers Canadians will reap the benefits of the globalization of foreign retailers into Canada. The increase of retailers in the markets leads to an increase in competition which is beneficial to consumers. Many retailers will not be able to compete with prices, since Wal-Mart is already dominating the market with the cheapest products. Thus, companies will have to be more innovative in keeping customers. Excellent customer service will be extremely important in doing so. To keep up with the competition and stand out from the crowd, retailers will also have to be creative with their products and marketing, as Joe Fresh has demonstrated. The fashion retailer opened its first store in Vancouver, beside popular stores such as H&M, Aritzia and Holt Renfrew. Joe Fresh closed down the whole street with their marketing stunt to cater to their younger consumers, by having a rock concert with artists such as Marianas Trench and Divine Brown. Another great example of forward thinking from companies is Costco. When Sam’s Club, an American warehouse retailer, was coming to Canada, Costco quickly reacted by opening more stores to cater to their existing customers and continuing to provide them with excellent service. This ultimately led to the demise of Sam’s Club, one of the few major foreign retailers to fail in Canada. Competition also helps keep inflation down by forcing companies to stay competitive with their prices, benefiting the Canadian economy. Overall, the globalization of foreign retailers into Canada will increase competition, which in turn spurs innovation and hinders inflation. In essence, the continued expansion of foreign retailers into the Canadian market brings both challenges and opportunities. For American retailers, Canada is a great place to start their global expansion due to the reduced global threat the Canadian market offers. Furthermore, American companies benefit from the already present demand of their products in Canada. While on the other hand, Canadians reap the benefits of globalization of foreign companies in the market place, since it increases competition. This increase spurs innovation and helps keep down inflation. Overall, the Canadian economy has caught the eye of many foreign companies, who present both benefits and controversy to
They anticipate competition between supermarket chains will be fierce this year as food prices continue to stay low. The Canadian grocers have been grappling with declining food prices, especially for meat, and Loblaw’s said “The notion of a shift into a steady inflationary environment is going to be offset by what we see as a continued level of competitive intensity”
Owing to the fact that HBC is a parent company, which owns and operates Zellers, Home Outfitters, Lord & Taylor, Designer Depot and Sportarena, it has been challenging in order to manage all to be profitable. In 2013, Baker added one more company to its list, that HBC bought an American fashion apparel retailer Saks Fifth Avenue(Saks), and it is successfully opened in Toronto in 2016. Moreover, it is noticeable that HBC’s new CEO and management team seeks for a growth. According to company’s official goal, which is more commonly known as a mission statement, it states, “HBC targets $1.5 billion in incremental sales and revenue” (“About HBC”), that one of HBC’s main values is Growth-oriented. “We have a 900,000-square-foot store in downtown Toronto,” Baker told the Financial Post after buying HBC in 2008 from American investor Jerry Zucker. “It’s not productive. Instead of having anemic sales in this building that’s too big, why not do something truly exciting?” (Shaw, Financial Post). Additionally, and luckily, Torontonians want Toronto to be more modernized, wherein 2016 John Tory a Mayor of City of Toronto has announced details of a plan to modernize Toronto, (Draaisma, "Tory announces the plan to improve service, save money"). Thus, HBC’s decision of buying and bringing Saks Fifth Avenue to Toronto, a modernized mall with an elegant atmosphere was a rewarding decision and
Target’s first foreign store investment was in Canada; American stores look to Canada as their first foreign investment because the differences between the two countries are relatively minor. Other stores that have expanded to Canada include Wal-Mart, and Sears, each of these companies proved to be prosperous in Canada. Canada is one of the wealthiest countries in the world and is dominated by the service industry, Wawa would have no trouble fitting into the culture Canada has and dominating the market as they do here, in the United States. After reading about Canada and Wawa, we have realized this move could only benefit Wawa and help their reputation and build their company.
The Italian Centre Shop shows many attributes as for how they are able to build on their strengths. This in the end helps a company to expand and grow further to improve their internal performance and as well by gaining more consumers (Kerin, et al., 2015). Firstly, the company’s main strength relies on the location of the different branches, being placed strategically so it is easier to bring in more consumers as well as being easily accessible for people around those areas. Two of the three locations in Edmonton are situated beside shopping centers, Southgate mall and West Edmonton mall, which in the West end is the most popular attraction of the city. The third branch is located in North Edmonton which is known for the heart of “Little Italy”(Spinelli, 2016). Secondly, the Italian Centre Shop sells a variety of merchandise and different cuisine from all around the world, the main place being Italy and others which include: Spain, Romania, Portugal, Ukraine and Poland (Spinelli, 2016). This helps to expand the company’s target market while still keeping
A positive to expanding to Canada is that Canadian shoppers are similar to American shoppers, ideally making this a good target market for growth (Fiorletta, 2015). In an interview regarding expansion in Canada, CO-CEO Walter Rob said, “Our efforts in Canada are part of the effort to grow.” “We think the opportunity for fresh, healthy foods is larger now that it’s ever been”. “And we intend to grow as fast as we have ever grown — 40 new stores next year, 42-44 for the following year.” “That’s 10% square footage growth on top of 15 million square feet of retail we already have.” “People have said maybe we should stop our growth.” “I said, no, we are not going to do that because our strategy is working.” “There’s no reason to stop.” “There’s every reason to keep going.” (Vieira,
The retail industry is an important indicator for the overall situation of the Canadian economy. Being one of the biggest employers, according to the latest census conducted in 2011, it was ranked first in terms of share of total employment at 11.5%, with more than 1.9 million workers, which clearly demonstrates the strength of the sector.
Target, a high-end discount department store, hoped to continue expanding and adding to the company’s 1,752 stores, by purchasing 200 Zellers stores, located in Canada. One of Target’s, longtime goals was to expand into Canada , and after a decade, the company took a jump across the border (Shaw, 2011). Because many thousand Canadians hold a Red Card, Target’s reward card, Target assumed this would be a successful expansion, increasing the amount of US brands that encompass Canada’s market. Target spent a year converting the Zeller stores, altering and renovating them to transform them into Target Canada, a subsidiary of Target (Shaw, 2011). They opened 124 stores in locations all over Canada, hiring back only one percent of the former Zellers employees, desiring to make a fresh start for the department store chain (Target Refused Zellers Workers).
Especially those that do e-business. Many small businesses start out and struggle to survive the first year with saturated markets or being shut down due to shopping malls or Walmarts popping up everywhere. If a company can establish themselves online and provide a product that can influence those outside of our borders, then many can sustain themselves for the long-term. In Target’s case, I had no idea they were not more globally situated in other countries. I think those responsible for the expansion into Canada were too quick to penetrate a market that was not readily accepting of Target’s overall performance. Unfortunately, many of the errors the retailer encountered could have been avoided. If another attempt is made at going global, Canadian Target should be a valuable lesson of what should be
Given the dominance and fiercely competitive nature of Wal-Mart and Target within the big box discount retail industry, Dollar General avoided competing head-to-head with these larger rivals by differentiating a classic generic bu...
Although Canada is dependent on trade with the United States, NAFTA proves that the relationship goes both ways. Canada proved its worth in the global financial crisis, showing that it can practice good policy despite the dependence. Canada has undergone a wealth of changes in the past fifty years, many of which have progressed this country from loyal soldiers of Britain to prominent world bankers. Through the evolution of legislature, economic policy, and the actions of the Canadian Forces, Canada’s global image has developed since the end of World War II. Canada’s current global image, an amalgamation of actions in the past fifty years, demonstrates Canada to be an independent entity with substantial belief in people’s well-being and equality, a strong economic policy that is widely regarded, and a military that is equal parts peacekeeping and combatant forces.
In the last 20 years the penetration of the Canadian market by American cultural industries is still extremely strong. The United States is still the main source of culture products. American products represent 81% of all culture commodity imports. Canadians watch American TV shows, listen to American music, love American sports teams, drive American cars and buy American goods at American stores like Walmart. They eat American food, drink American beer (sometimes).
Large players can offer competitive prices if they buy in bulk. Smaller players can differentiate themselves by offering niche products and superior customer delight at a premium price.
The purpose of this presentation is to provide a comparative analysis of business activities of two well-known representatives of the US retail industry, Target and Walmart. My research is focused on a business strategy of these largest and most experienced American merchandising companies; particularly, on their activities in Canada. Based on the data collected from the various sources, I would like to detect, analyze, and demonstrate the obvious causes that have lead to a catastrophic failure of Target in its unsuccessful attempt to win a Canadian market.
This section will be examining the anchor tenants that are present at Vaughan Mills. The main formal, traditional anchor at Vaughan Mills is Bass Pro Shops Outdoor World. This is a traditional anchor because it is a department store and additionally it is located on one end of the mall. Many people are drawn towards this retailer because it has a waterfall and small pond at the entrance and a large fish tank inside the store. Additional formal, traditional anchors include The Children’s Place, Designer Depot, DSW, Forever 21, and H&M. Moreover, these are all traditional anchors because they are department stores and all these anchor stores happen to sell apparel. An informal anchor that is located in the mall is LEGOLAND Discovery Centre. This is an informal anchor because, although it is an amusement park for children, it attracts many families. The reason for this is because it is the only location in Canada, whereas the rest of the locations are in The United States of America. These anchors help define the specialty of the mall because they all
If competitors offer equally attractive products and services, then one will most likely have little power in the situation, because suppliers and buyers will...