Evaluation Of Launching John Lewis Partnership Into The German Market Essay.

Micro and macro situational analysis of the German market

1. The UK based company John Lewis Partnership which is operational in the retail industry is looking to expand into the other new markets and has decided to expand into the business market of Germany. 

The important entities of the PESTLE analysis have been outlined by the below given figure-

Figure 2: Components of PESTLE Analysis

Source: (Created by the Author)

A PESTLE analysis of the business environment of the nation of Germany would reveal the following facts-

The nation of Germany is a federal parliamentary democratic republic and the majority of the power within the framework of the nation is vested in the Constitution and the people of the nation (Make-it-in-germany.com 2018). The nation of Germany is not only of the oldest democracies of the world but at the same time one of the most stable nations of the world (Bah and Fang 2015). In addition to these, it is generally seen that the nation is free from political turmoil and the national government takes active initiatives for the promotion of trade and commerce (Bah and Fang 2015).

Germany has the 4^th largest economy among the various countries of Europe in terms of nominal GDP and the 5^th largest one in terms of the GDP (PPP) (Make-it-in-germany.com 2018). As per an estimate of 2017 the annual revenue generated by the nation is $3.684 trillion and the nation contributes more than 28% of the total revenue generated by the various countries of the European Union (Make-it-in-germany.com 2018).

The citizens of Germany generally like to shop in the various supermarkets wherein they can get all the products as well as the services that they require from one place itself (Valentine 2014). In addition to this, it is generally seen that the people of the nation actively take the help of the credit cards and the other financial services provided by the banks and other financial institutions (Valentine 2014).

Germany is one of the most technologically advanced nations of the world and the various business enterprises of the nation are known for the use of recent as well as advanced technology. Furthermore, it is seen that more than 93% of the citizens of the nation take the help of technology and electronic in their everyday life (Make-it-in-germany.com 2018).

The business of the business enterprises of the nation of Germany are not only regulated by the laws dictated by the Constitution of the nation but at the same time by the policies of the European Union since Germany is an active member of this particular economic block. In addition to these, it is seen that the various business enterprises of the nation are required to follow the various precepts of the “Fair Trade Policy”, “Stock Corporation Act”, “Antitrust and Competition Law”, “Act Against Unfair Competition” and others (Make-it-in-germany.com 2018).

Germany has been ardent supporter of the “Paris Agreement” of 2016 and thus the various business enterprises of the nation are required to take regulatory measures whereby they can curb the amount of pollution caused by them by almost 2% (Make-it-in-germany.com 2018). In addition to this, the various business enterprises of the nation are also required to follow the other environmental regulations as well as safety regulations provided by the national government of the nation.

Analysis of Kotler's "All good marketing is local" theory

The important entities of this particular framework are outlined by the below given figure-

Figure 3: Components of Porter’s Five Forces

Source: (Created by the Author)

An analysis of the retail industry of Germany on the basis of this particular framework would reveal the following facts-

The nation of Germany has some of the largest retail business enterprises of the world like Aldi, Tesco, Metro AG, Carrefour, Rewe-Zentral AG and others and to a certain extent it can be said that they have already monopolized the retail industry of the nation (Make-it-in-germany.com 2018). Thus, the threat that they face from the new entrants in the retail business market of the nation is very low and therefore it becomes very difficult for the new entrants to develop a sustainable competitive advantage in the business market of the nation.

The business enterprises like Aldi, Tesco, Metro AG, Carrefour, Rewe-Zentral AG and others have monopoly over more than 90% of the entire nation of Germany (Sodeyfi 2016). However, in the present times it is generally seen that the preferences of the customers have become more fickle than ever and they frequently like to change the brands (Sodeyfi 2016). Furthermore, in the present times it is seen that the customers like to do market research for themselves and generally like to opt for the best quality products or services that are being offered at lower prices (Sodeyfi 2016).

It is significant to note that if the bargaining power of the suppliers is high then it is likely to adversely affect the business of the concerned business enterprise (Wensley 2016). Furthermore, it is generally seen that the bargaining power of these suppliers in the nation of Germany is low on the score of the fact that the majority of the business enterprises take the help of multiple suppliers.

Germany has some of the top retail business enterprises of the world and because of this particular fact the choices that are available to the customers is very high. Furthermore, in the present times it is generally seen that the customers like to try out new brands and thus they regularly switch from one brand to another (Lusch and Vargo 2014). The high bargaining power of the customers therefore serves as an opportunity for the company under discussion here as it can effectively utilize this particular concept to capture the retail business market of Germany.

There is a high level of rivalry among the different business enterprises in the genre of retail industry on the score of the presence of some of the largest retail enterprises. Furthermore, these enterprises already hold monopoly over the retail industry of the nation and thus it becomes very difficult for the new entrants to sustain themselves in the retail business market of Germany.

The process of glocalisation can be defined as the process of conducting business which takes into consideration both the local as well as global requirements (Jaworski 2018). The term can be seen as a conglomerate of the two terms globalization and localization, both of which have emerged as the major factors that affects the business of any business enterprise in the present times (Jaworski 2018). The scholar Roland Robertson in the article “Globalization and Indigenous Culture” defines the term as the process wherein “simultaneous occurrence of both universalizing and particularizing tendencies in contemporary social, political, and economic systems” (Marshall 2014). One of the most important theories which try to explain the process of glocalisation is “Hollensen theory of glocalisation” (Marshall 2014). According to this particular theory, during the process of expanding into the other host the business enterprises are likely to find a strong culture in that particular nation and thus the enterprise is required to absorb the positive aspects of that particular culture and reject the negative aspects of the same(Marshall 2014). The below given figure provides an overview of the entire concept of glocalisation as per the above mentioned theory-

Advantages and disadvantages of standardisation and adaptation in international marketing

Figure 4: Components of Glocalisation as per “Hollensen theory of glocalisation”

Source: (Created by the Author)

The company under discussion here can take the help of this particular theory for the process of their expansion into the business market of Germany. Thus, as per the precepts of this particular the company under discussion here are likely to find various entities of the national culture of Germany that would be almost similar to the ones that it had encountered in the nation of the United Kingdom and the company can take the help of these cultural entities to further the prospects of the business in the nation of Germany. On the other hand, the company is also likely to find various cultural entities that are not only different from the ones which it has encountered in Germany but at the same absorbing these cultural entities would adversely affect the prospects of their business in the longer run in the nation of Germany. More importantly, the concerned company should try conglomerate both the local as well as global entities within the framework of their business to achieve better quality of results in the nation of Germany.

The process of standardization helps the various business enterprises to make the quality of the products or the services offered by them to the customers on par with the same kind of products or services offered by the other business enterprises operational in the same sector as well as location (Goworek,  McGoldrick and McGoldrick  2015). Experts are of the viewpoint that the major benefit of this particular process is that this process ensures that a uniform quality benchmark is achieved and the customers have access to same quality of products as well as services at almost the same price (Solomon et al. 2014). In addition to these, it also provides the opportunity to the various business enterprises to compete on equal footing with the business market with each. However, there are various negative aspects of the same aspect as well. For example, it is seen that some of the enterprises are ethical and more environmental friendly means to manufacture their products and thus they end up incurring a high production cost and this significantly reduces the profit earned by them (Goworek,  McGoldrick and McGoldrick  2015). Another common disadvantage of this particular process is the fact that this particular process has significantly enhanced the level of competition within the domain of the business world.

The process of adaptation, on the other hand, enables the various business enterprises to synchronize the values offered by their products or services with the expectations or the requirements of the customers (Botha, Kourie and Snyman 2014). The use of this particular strategy has significantly helped many companies to earn not only the loyalty but the satisfaction of the customers and this in turn has helped them to gain a higher percentage of profit (Botha, Kourie and Snyman 2014). Furthermore, the use of particular strategy also helps the various business enterprises to take into effective consideration the key requirements of the customers and thus provides them with the opportunity to gain sustainable competitive advantage in the business market (Botha, Kourie and Snyman 2014). However, there are various disadvantages of the same process as well. For example, in the present competitive world of business if the companies go on to incorporate all the requirements of the customers then they are naturally bound to incur a higher production cost which the customers are not willing to pay since the majority of the customers look for the best quality products at affordable prices. Thus, this process sometimes can impact adversely the profit earned by the companies.

Appraising the traditional marketing mix for the German market

The present day competitive world of business has made it imperative for the various business enterprises to take the help of diverse kinds of innovative marketing strategies to gain a significant amount of sustainable competitive advantage in the business market (Foxall 2014). It is with this particular that the majority of the business enterprises of the present times take the help of the framework of marketing mix to outrival their business competitors and to further enhance the prospects of their business (Foxall 2014). Furthermore, the detailed business environment analysis of the business market of the nation of Germany indicates that the business environment of the nation of Germany is a very congenial one for the business of the retail company under discussion here. More importantly, most of the business environment factors that the company under discussion here is likely to encounter in the nation of Germany are very congenial for the process of its business apart from the environmental ones. For example, the stable as well as the safe political conditions that the company under discussion here is likely to encounter in the nation of Germany would serve as an opportunity for the company under discussion that it can utilize to further enhance its growth in the nation of Germany. The company under discussion here at the same time can use the sound economic framework of the nation of Germany to fix the base prices of the products as well as the services offered by them to the customers at a higher rate and thereby earn a higher rate of profit. Furthermore, it is significant to note that the products as well as the services offered by the company under discussion here are specially designed for the customers belonging to the upper class and the middle class and thus it is generally that they are being priced at a much higher price range than the same kind of products or services offered by the other companies operational in the same field of business. Thus, it would be apt to say that the sound economic is likely to act an opportunity for the company.

The company can also benefit in a significant manner through the technological development of the nation of Germany. The company under discussion here can take the help of the technological advancements of the nation of Germany not only to improve the manufacturing process that they are currently using for the manufacture of the products as well as the services offered by them to the customers but at the same time they can utilize the technological advancements of the nation under discussion for the other processes of their business as well. Therefore, it would be apt to say that the technological advancements of the nation under discussion here acts as an opportunity for the concerned company since they can utilize the technological advancements of the nation to further enhance the prospects of their business.

The company at the same time would gain in a significant manner by means of the legal framework of the nation of Germany and also the corporate law that are being followed in the nation of Germany. However, the company under discussion here would have to follow the various environmental guidelines of the nation in an effective manner since the nation of Germany strictly follows the various environmental regulations of the United Kingdom.

A brief overview of the framework of marketing mix is provided by the below given figure-

Figure 5: Components of the Marketing Mix

Source: (Created by the Author)

The company under discussion here belongs to the retail sector and provides diverse kinds of products to the customers starting from simple daily necessities to banking as well as financial services (John Lewis Partnership - Home 2018). In addition to this, it is also seen that the customer have appreciated the electronic products offered by them. Furthermore, the company is also known for providing safe and sound banking and other kinds of financial services to the customers. The company wishes to provide the same kind of services to the customers of the nation of Germany.

The majority of the products as well as the services offered by the company under discussion here are designed to cater to the interests of the people belonging to the middle-class and the upper-middle class (John Lewis Partnership - Home 2018). Thus, the prices of the products as well as the services offered by the company under discussion are slightly higher than the ones charged by the other companies which offer similar kinds of products or services to the customers. The company under discussion here intends to follow the same kind of pricing strategy in the nation of Germany on the score of the sound economy of the nation. The economy of the nation of Germany is a fairly stable one and thus the price of the products as well as the services offered by the company will not be much of a concern for the customers of the nation of Germany. However, the major factor that the company under discussion here needs to take into effective consideration is the quality of the products as well as the services offered by them to the customers since there are many companies in the nation of Germany that are operational in the retail sector and thus the quality will be a major factor that would help the company to gain sustainable competitive advantage in the nation of Germany. 

In terms of technology, Germany is one of the most advanced nations of the world and more than 93% of the people of the nation tend to take the help of electronic in their everyday life (Make-it-in-germany.com 2018). Thus, the best possible promotional strategy that the company can take the help of is to use the electronic media and more precisely the social media for the purpose of promoting the products as well as services offered by them to the customers. In addition to these, the company can at the same time take the help of the traditional means of promotions like newspapers, television and others for the purpose of reaching out to the people and also informing them about the kind of products or services that they are offering. The company at the same time can take the help of various kinds of marketing campaigns as well as the YouTube videos and others for the promotion of the products as well as services offered by them. In addition to these, the organization of various youth events and other kinds of social events is also likely to help the company in a significant manner. At the same time the company under discussion here needs to use the various means of promotion in an effective manner. For example, through these online advertisements the company not only needs to provide the information to the customers about the existing products as well as services that they are offering to the customers but at the same time they need to provide the customers with prior information about the new products and the services that they would be launching in the market. This will be help the company in a significant to capture the customers of the nation of Germany.      

Initially the company under discussion here will open its business centers in some of the major cities of the nation of Germany like Berlin, Hamburg, Cologne and others. However, one the company has been able to gain a certain degree of stability as well as sustainability in the business market of Germany it will open its business centers in the other cities of the nation of Germany as well. Thus, it can be said that this is a long-term process and the company will have to analyze the business environment of the cities thorough before it can expand in those location.

The effective use of the above mentioned four entities of products, prices, place and promotion strategies of the marketing mix is likely to help the concerned company in a significant manner in the nation of Germany. However, there are others factors like people, processes and others also that are likely to impact the business of the concerned company in the nation of Germany in a significant manner.

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