Lidl's Global Strategic Management

Introduction

Strategicmanagement of the companies is important part of the business, where the companies in the recent years try to expand their business activities across the international countries through developing appropriate strategic and planning so that the multinational corporate firms can manage their activities internationally for successfulbusiness establishment (Ferreira et al., 2017). The aim of the study is to analyse the activities of Lidl in the retail market and conduct internal and external analysis through utilising different models such as PESTEL, values Chinaanalysis, Porter’s five forces analysis and Porter’s generic strategy so that it is possible to analyse the business environment, which have crucial impacts on the business activities of the company Lidl. In this regard, the study also provides a scope to evaluate the business environment and recommend some suitable strategic planning through which the company can expand their business in the Asian countries like India, which is a great customers market for the retail firm to target in the upcoming years for gaining high marketshare and strengthening theircustomer’s base.

Background of the organisation

Lidl is a German based retail discounted supermarket chain, providing quality products and services to the customers, where the aim of the company is to strengthen their customers base and create values of all the customers by delivering quality products at affordable price, so that the customers can make effectivepurchasedecision as per their choice and budget constraints. The company is efficient to deliver the retail product includinggroceries, clothing and accessories as well as daily necessities of the customers and there are more than 315000 employees who try to deliver quality service to the customers. Headquarter of the company is situated in Germany and it is successful to expand their operational activities across 10000 locations across 28 European countries and the United States (Lidl, 2019a).

The values of the company are such as,

Customer’s satisfaction is the highest priority of the company

Superior quality and lowest price are the major aim of the organisation for creating customer values

Fostering environmental sustainability

Recognition and acknowledgement for operating in the suitable organisational culture

Managing fairness and accountability

Creating values for all the stakeholders including the employees, shareholders, suppliers, government, distributors, managers and the social communities as a whole

Respecting and encouraging others or better performance and contributing positively in achieving brand success

The areas served by the company are Europe and Unite States and it is the aim of the organisation to expand their company in one of the Asian counties in order to improve their global presence and enhance branding at the international retail industry. In his regard, India is one of the best countries in the Asian countries, where there is a string customer’s base and efficient retail industry, where the company Lidl can expand their business and gain high market share in near future (Lidl, 2019b).

External analysis of Lidl

PESTEL analysis:

PESTEL analysis is appropriate for external analysis, where the business environment can be analysed and evaluated well for understanding the external market structure, where the organisation can expand their business ethically. The factors such as political stability, economic growth and social development as well as technological advancement, legal factors and environmental protection are effective to understand the external environment of the business (Muellerand Naffziger, 2015).

As per the political factors, the political stability and support from the India government for FDI isappropriate for Lidl to invest inthe Indian market. The retail industry is growing rapidly in India, where economic growth and increase in national income further attracts more foreign investment. In 2018, the retail industry reach US$ 950 billion (Muellerand Naffziger, 2015) and it is expected to growth rapidly and reach above $1 trillion by the end of 2020. Hereby, the in Indian retail market is one of the effective place, where Lidl can expand their business and gainmarket share by attracting the audiences with diversified products at affordable price. Social development and the high literacy rate are also contributing factors in India, where people try to gather knowledge through social media and it further provides a scope to promote the brand through social media for successful branding in the Indian retail market. In addition to this, the environmental rules and ethical considerations are also supportive, where strong customer protection laws, privacy laws are important to maintain the business ethics and expand the businesssuccessfully. The technology and IT industryis also growing rapidly which influence the company Lidl in near future to support the operations with latest technological innovation

for further creativity of the firm in serving the customers in the market. moreover, the environmental awareness among the Indian population are also effective, where the activities such as solar panel, using organisational resources and utilisation of electric cars for reducing greenhouse gas emission are effective to support the operational activities of Lidl in an ethical manner which helps the firm to secure future sustainable development by providing greenenvironmental footprint. The major opportunities for the company are stable political environment and enhancing ecommerce service as well as increasing retail industry in India. The major threat is intense competition in the Indian retail sector.

Internal analysis of Lidl

Porter’s five forces analysis:

The Porter’s five forces analysis is effective for analysing the existing market position and competitive threats in the market for the company. As per the model, there are five forces which are threats of substitute products, threats of new entrants, competitive rivalry, and bargaining power of the customers and the bargaining power of the suppliers, which are discussed further.

Threats of substitute:

The threats of substitutive products for the company Lidl is high, as there are others substitute produces, offered by the competitive firms in the market which raise the threats fair the organisation Lidl to operate in the market. Thereare high threats of the substitute products and the customers can switch their brand preferences any time in the retail market due to presence of variety of products in the market. Due to this threat, the company may lose their market share as it is difficult for the brand to strengthen their customer’s base in the global retail market by delivering diversified products and efficient price range (Smith, 2017). The substitute products of the company are such as existing fashion industry of India, organic products; quality raw material based final clothing and other accessories available in the market.

Threats of new entrants:

The threats of new entrants is low for the organisation Lidl, as the company is efficient to strengthen their customers base across the UK and USA, through store expansion, where the company has strong customers base which is gathered by delivering the quality products and services since 1930. In 1973, it opened the first store, and it is effectiveof them to retain the customers after that, as since then, the company tries to expand their business through store expansion across the UK and the USA. Hereby, it is not possible for the new entrant to grab the market of retail and attract the customers at a first stage, where Lidlalready developed their position in the market.

Competitive rivalry:

Competitive rivalry is high for the firm, as there are many efficient retail firms, operating in the market and they are also successful to expand their business across the international borders. In this regard, Lidl face high threats from the competitive brands such as Tesco, Aldi, Sainsbury’s and Walmart which are operating in the global retailchainefficiently and successfully by providing their quality products to the huge range of customers across the globe. The customers are also satisfied with the products and services of the competitive firm which raise concern for Lidl to gain market share due to high competitive rivalry.

Bargaining power of the customers:

The bargaining power of the customers is medium for the organisation Lidl as there are othersbrands operating in the market and there is other option for the customers to witch their preferences and make their decisionsaccording to their choice and preferences. Hereby, the customers have the chance to switch the brand and make effective purchase decision and this is why there is medium bargaining power of the customers (Malaquias, and Hwang, 2016). On the other hand, Lidl is also efficient in strengthening their customer’s base and for which the company has medium bargaining power of the customers.

Bargaining power of the suppliers:

The bargaining power of the suppliers is also medium, for the organisation Lidl, as there are suppliers of the company, who are satisfied by working with the organisation. However, there are other suppliers, who have the power to switch and go for better compensations and it is possible as there are many competitive firms in the retail market, who grab the opportunity to hire efficient suppliers at higher compensations. Hereby, the supplier’s power to bargain in the organisation Lidl is medium. The company Lidl should focus on mitigating the bargaining power of the suppliers by strengthening their supply chain in the emerging market and maximise satisfaction of the supplier and distributors by creating values, fulfilling their requirements, freedom to work, high incentives to work.

Porter’s Value chain analysis:

Through the model of porter’s value chain, it is possible to analyse the competitive position and activities of the organisation in order to maximise their market share. Through the activities, the multinational corporate firms are trying to achieve future success, where the human resourcemanagement, financial management, technology enhancement and creativity are effective for managing the organisational operations and strengthening their corporate value successfully. According to the model, there are primary and secondary factors. Under the primary value activities, there are inbound and outbound logistics, operations, marketing and sales and services (Shockley et al., 2015). Apart from that, the secondary values activities are firm infrastructure, human resourcemanagement, technology development and procurement.

The organisation Lidl focuses on managing their inbound and outbound logistics, to serve the customers in the market, where managing warehouse and maintainingthe stock of the products at the physical store of the company are appropriate to handle the operational activities,where the suppliers and distributors are also efficient to manage their operations and serve the customers with quality products. In addition to this, the marketing activities of the firm needs to be improved to expand their operations and promote the brand for successful branding, so that the customers can be attracted with the qualityproducts and services. Additionally, the company also focuses on the service quality for customer’s relationship management where instant services and proper cooperation and communication are effective to interact with the customers and retail them for long run by delivering high quality services and improving trust and respect to each other. Under the primary activities, the marketing and sales as well as customers service as well as developing outbound logistic are the major activities that are helpful to expand the business of Lidl in emerging markets.

As per the secondary value activities, the organisation focuses on the firm infrastructure, here the warehouse and stock of the products are managed well with proper CCTV cameras, staff hiring and technological advancement such as ERP system and GPS system, where the customer’s product are handled well and the stock can be managed through ERP system at the warehouse. The suppliers and the distributors are also efficient to utilise the firm infrastructure and provide the best quality products and services to the customers according to their order details at right place. Moreover, the human resource management is another important factor, where the organisation Lidl focuses on managing the people at the workplace by providing them proper remunerations and incentives. Moreover, suitable organisational culture with mutual respect and trust, harmony and freedom to work at the workplace with cooperation and communication are also effective to manage the people and enhance the cooperative working practice so that they can serve the customers in a better d unique way (Birkin, Clarke and Clarke, 2017). Thetechnological development is another activity, were the organisation implemented ICT in the workplace for enhancing the internal and external communication and additionally, the implementation of effective payment system and management of cloud computing for customer data management with privacy and security are effective to enhance the operational efficiency at Lidl. Hereby, the organisation is efficient to manage their operational activities and enhance their operations cross the international countries, where it has the capabilitytoexpand their business in India and gin high competitive advantage in the Indian retail market. Among the secondary activities, human resource management and technological up gradation are the major factors that are useful for gaining high competitive advantage.

Competitive analysis

Porter’s generic strategy:

Competitive analysis is important for understanding the businessenvironment, where the organisation tries to identify thestrategic position and planning to expand their business and run their operational activities strategically. Porter’s generic strategicmodel, it is possible to understand the advantages and future scopeof the company in order to analyse the strategic move of the firms (Banerjeeand Mishra, 2017). In this regard, there are different strategies such as cost leadershipstrategy, differentiationstrategy and focus strategy, where the organisations are able to develop effective tactics to conduct market segment and target the audiences where the chance of making effective purchase decision for the organisationalproducts is high.

In this regard the organisationfocuses on the pricing strategy by cost leadershiptactics, where the organisation aims at minimising the cost of the production and distribution of the final goods and services to the customers so that they can set affordable price and maintain their profitability ratio. In this recent era of globalisation, pricings strategyis important to retain the customers by delivering quality products at affordable price so that the customers can buy extra amount of retail goods according to their affordability. Hereby, the strategy of cost leadership in the firm is effete, where the company Lidl focus n minimisation of cost by increasing the production unit, producing at a huge amount of products and managing the economies of scale (Karakaya, Yılmazand Demiral, 2016). These are effective initiatives of the company for setting lower price for their products as well as maintain the cost of the production and distribution so that this possible for Lidl to manage their profitability and revenue generation.

Strategic directions and methods of expansion:

For grabbing the market opportunities and strengtheningtheircustomer’s base, it is necessary for the organisation to develop new strategic planning after the above internal and external market analysis. It is possible for the organisation Lidl to expand their business by more investment on the organisational operations as well as improve their efficiency to serve the customers in a better and unique way.

First of all, the company needs to invest in Indian retail market for launching the first store in India, where the physical store expansion is one of the best strategic planning for entering into the Indian retail market and attract the customers. As per the Ansoff matrix, it is the strategy of market development, where the firm can expand their business sustainably. There is strong customer’s base in India, who prefers to make purchase decision by analysing the products at the stores. The physical stores needs to develop well with proper interior decorations and management of the products successfully. The store managers need to handle the stick and improve the availability of the products so that the customers can access all the products and make effective purchase decisions.

Secondly, it is necessary for the organisation to focus on the variety of the products to attract the audiences. India is a great market base where there are diversified people due to cultural diversity and the differences in the choice and preferences of the customers. According to the Ansoff matrix, it is the diversification strategy through which the brand can handle effective product line and provide a huge variety of products successfully. In this regard, it is necessary for the organisation to provide diversified products and services to the customers. There is high threats of the competitors in Indian market due to the presence f many retail firms and recently Tesco launched their store in India and thus the competition becomes more intense. It is necessary for the firm Lidl to focus on product differentiation strategy for offering a huge variety of products to attract the customers.

Thirdly, it is necessary to develop effective retailchain in India, through hiringefficient suppliers and distributors. Hereby, managing the warehouse and strengtheningthegreen supply chain would be the beststrategic planning for the organisation, where Lidl would be successful in providing the quality final gods and services to the customers within effective time.

Fourthly, it is necessary for the organisation to improve sustainability to enhance branding and positive image in the society and in this regard, the organisation needs to utilise the electric cars in India which helps to reduce the greenhouse gas emissionin the society. It is another important strategic move, through which the company can expand their businesssustainably and apart from that, using the solar panel at the rooftop of the store would also be another efficient more to utilise the renewable resources and secure future sustainable development.

Additionally, the company also needs tofocus on the promotional activities, where the organisation needs to promote the brand successfully, so that the customers can identify the products and services of the organisation on the market. In this regard, the firm Lidl needs to invest on advertisementthroughtelevision and newspaper and magazines. In this regard, developing appropriate contentand sharing the information related to products range, service quality and prices are effective to attract the audiences inthe Indian retail market. The advertisement in the televisions channels, the newspaper such as Telegraph and English magazines are effective for theorganisation to promote their brand and improve branding.

Moreover, it is necessary for the organisation to invest in social media advertisement as tin the recent years, the people in India prefer to gather latest news and updates through social media such as Twitter, Blogs, YouTube and Facebook which are the source of sharing information and enhancing two way communications and it is considered to be an effective strategy for market penetration and strengthen their customers base in the emerging economy like India. In this regard, the organisation needs to promote the brand through creating Facebook posts, videos on YouTube and creating effective content on Twitter and Blogs. Facebook post is one of the effective ways to share the organisational information through which the organisation can provide proper information across the social communities of India. The population of India is high and it provides a scope to have effective customers base for Lidl and the social media advertisement is hereby appropriate through which the brand would gain high customer base n the India retail market.

In addition to this, the company needs to develop an effectivemobile application, where the organisation must focus on the pictures of the products and the offers as well as the content on the website, so that the customers can get properinformationfrom the website. In thisregard, the company needs to develop appropriate content which is helpful to share adequate information with the customers and after opening the page of the company, the customers can get proper information and knowledge about the organisational products availability, pricing and offers. Apartfrom that, the company’swebsite needs to be controlled properly, where instant reply to the customer’s queries and 24*7 services for the customers are required to be included so that the customers can get suitable services from the end of the organisation. In addition to this, the company needs to focus on the easy operations in the website, where the customers can place their orders by one click options and make the payments easily.

People management is another important activity, which needs to be developed by the organisation, where the staff members need to be efficient to serve the customers in a better way. The people need to get proper training and development program for improving their knowledge and capabilities to serve the customers with efficiency and organisationalresources, where the customer’s relationship management can be enhanced well. In addition to this, the leader needs to support the employees at the new market and provide and share proper information about the market demand and customer’spreferences, so that the employees can get proper knowledge about the customers and they try to create values for all the customers by delivering quality productsand efficient services.

Lidl focuses on expanding their business in Indian market and for this, another effective strategy for Lidl is celebrity endorsement, where in the Indian market the film industry is flourishing at a rapid rate and it further provides a cope to the company to focus and invest on celebrity endorsement for social campaigning and televisionsadvertisement. The celebrity needs to promote the organisational products and services throughtelevisionsadvertisement and social mediacampaigning, so that it can attract the fan followers of the celebrity and improve trust on the branding of the organisation. This is also another effective strategy for successfulpromotion and branding, where the organisation can expand their business and strengthen their customer’s base in the Indian market.

Conclusion

It can be concluded that, the organisation has the capability of proper expansion of the businessactivities across the Asian market like India, where there is string customer’s base, which provides an opportunity to the firm to attract theaudiences and strengthen their customer’s base for future. In this regard, product diversification strategy is appropriate to deliver high quality differentiated products to attract diversified audiences in the Indian market and apart from that the promotional strategic planning such as advertisement through television and newspapers and the social media advertisement are also effective for the organisation to expandtheirbusiness in India and grab the market opportunities for near future. These are also effective for Lidl to gain high market share in the Indian retail market as well as maximise their competitive advantage sustainably by strengthening their customer’s base and creating values for all the customers bydelivering high quality products and services at affordable price.

Reference List

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