Nowadays, due to globalization, an increasing number of retailers in developed countries are shifting their priorities and focusing more on a growth strategy by reducing their dependence on their home markets and making expansion into more attractive foreign markets. This foreign market expansion and retailer globalization strategy generally pose a threat and cause panic to the local retailers and local businesses that have been targeted for such foreign market expansion.
Especially when such a market expansion strategy is coming from a giant retailer or a successful business brand. (2013)In such a threatening situation, most times, the local markets and industries operating in those market sectors strive to make such expansion that is springing up from a new corporate entrant impossible.
Given that, globalization is a risky business that involves a substantial investment of time, money and resources. Local retailers and indigenous corporate competitors tend to utilize what is known as “home advantage” in team sports to frustrate these moves, considering also that (new entrants) moving into unfamiliar and unpredictable territory usually face different economic, political, and cultural environments challenges. These challenges may become an advantage to the local market segments, according to Porter’s five forces analysis.
However, Porter (2008) rightly posited that those challenges could easily be mitigated if the new entrants to these new markets are among the business leaders in the industries; that maintain an established competitive advantage or successful business model, that can easily penetrate the new market. In many cases, Porter also argues that such new entrants seeking a global market reach may have the financial capacity to also acquire local markets and thereby avoid the challenges of establishing new markets.
To understand how this works in real life and to explore how local markets may react to foreign entrants seeking market expansion in their environment, we intend to study a case of a giant US retailer Walmart, which intends to move to a Finnish market. The author will examine and highlight the possible strategic decisions that finish retailers may take when Walmart, a giant US, retailer enters the Finnish market.
In this study, the author will build the theoretical framework based on Porter’s five forces analysis and also explore some other methods, models and techniques in strategic management to develop strategic plans and decisions that Finnish retailers should implement to maintain their competitive advantage over foreign market penetration.
When Walmart enters the Finnish Market what should a Finnish retailer do strategically?