As one of Europe’s oldest and largest over-the-counter retailers Karstadt GmbH, subsidiary of Karstadt Quelle AG (Figure 1), operates exclusively in Germany. The present assignment puts forward the proposal that Karstadt GmbH should attempt to penetrate the Swedish market. Furthermore, a PEST analysis and a risk assessment as well as a market entry plan and a final conclusion will form different parts of this work
Table of Contents
1. Introduction
1.1. Information about the Company
1.2. Scenario and Product/Services
2. PEST Analysis
2.1. Political factors
2.2. Economic factors
2.3. Sociocultural factors
2.4. Technological factors
3. Risk Assessment
4. Market Entry Plan
4.1. Market Entry Strategy
4.2. Corporate and strategic marketing objectives
4.3. Market to be entered
4.4. Market Entry Alternatives
5. Operational Plan
5.1. Detailed Target Market Analysis
5.1.1. Demography
5.1.2. Geography
5.1.3. Psychography
5.2. Market Positioning Statement
5.2.1. Product
5.2.2. Price
5.2.3. Place
5.2.4. Promotion
6. Management Implications
6.1. People
6.2. Profits
6.3. Physical Evidence
7. Monitoring, Controls, Budget
7.1. Measurements
7.2. Control Systems
7.3. Budget
Project Goals and Scope
This report evaluates the strategic feasibility of Karstadt GmbH entering the Swedish retail market as a response to the challenging economic climate in Germany. The research investigates the environmental conditions in Sweden and proposes a structured entry plan to establish department stores in key urban centers.
- Strategic analysis of the Swedish business environment using the PEST framework.
- Risk evaluation utilizing the Sheth-Lutz model for foreign market entry.
- Development of a comprehensive market entry strategy centered on a wholly owned subsidiary model.
- Formulation of an operational marketing mix, including positioning and logistical considerations.
- Financial and management oversight, including budget allocation and control mechanisms.
Excerpt from the Book
3. Risk Assessment
Due to insufficient information concerning the BERI index the author decided to select the Sheth-Lutz model for the evaluation of the risk. Obviously, the aim of the Sheth-Lutz model is to identify and to analyse the market potential of countries in order to determine which appear to be most promising for foreign investments (Paliwoda 1993 p. 109). In general, the Sheth-Lutz model contains six environmental factors which can be sub-divided into 15 variables. The Swedish government can be seen as very stable. As a result of this we can state that from the 1930’s onwards the Social Democrats have been the dominating party in Sweden. Their policy and their position were secured among other things by economic prosperity (www.sverigedirekt.se).
Opposition groups or parties are the Moderates, the Liberals, the Centre Party and the Christian Democrats (www.sweden.se). As a result of dissatisfaction of the voters an anti-Socialist coalition came into power from 1976 to 1982 and from 1991 to 1994 (www.sverigedirekt.se). Approximately 87% of the Swedish population belongs to the Lutheran church (www.cia.gov). Due to extensive immigration since the 1940’s there are 166,000 members of the Roman Catholic Church, 98,500 members of Orthodox and Oriental churches, some 200,000 Muslims, 18,000 Jews and 8,000 members of other communities (www.eu2001.se). Most of the 8,9 million Swedish inhabitants speak Swedish. Besides, minority languages are Finnish, Meän Kieli, Yiddish, Sami and Romany Chib (www.eu2001.se).
Summary of Chapters
1. Introduction: This chapter provides company background on Karstadt GmbH and outlines the rationale for geographic expansion into Sweden due to declining retail consumption in Germany.
2. PEST Analysis: This section evaluates the Swedish business environment by examining political, economic, sociocultural, and technological factors to determine market suitability.
3. Risk Assessment: Applying the Sheth-Lutz model, this chapter analyzes environmental stability and country-specific variables to determine the risk level for foreign investment.
4. Market Entry Plan: This chapter outlines the selection of a wholly owned subsidiary as the primary market entry mode and defines the strategic marketing objectives.
5. Operational Plan: This section details the target market analysis and defines the application of the four Ps (Product, Price, Place, Promotion) within the Swedish context.
6. Management Implications: This chapter addresses the human resource and organizational requirements for managing international department stores and discusses profitability expectations.
7. Monitoring, Controls, Budget: The final chapter establishes metrics for business success, identifies control systems like the BCG matrix, and details the financial budget for initial store openings.
Keywords
International Marketing, Karstadt GmbH, Swedish Market, PEST Analysis, Sheth-Lutz Model, Market Entry Strategy, Wholly Owned Subsidiary, Retail Management, Marketing Mix, Strategic Planning, Risk Assessment, Business Expansion, Consumer Demographics, Financial Budgeting, Department Stores.
Frequently Asked Questions
What is the primary focus of this assignment?
The assignment focuses on the strategic planning required for the German retailer Karstadt GmbH to enter the Swedish department store market.
What are the central themes of the document?
The document covers market environment analysis, risk evaluation, entry strategy selection, operational marketing mix, and financial management for international expansion.
What is the main research question or objective?
The primary objective is to evaluate the feasibility of penetrating the Swedish market as a solution to the problematic economic situation and declining retail growth in Germany.
Which scientific methods are applied in this work?
The work utilizes the PEST framework for environmental analysis, the Sheth-Lutz model for risk assessment, and the BCG matrix for portfolio control.
What does the main body of the text cover?
The main body details the specific entry strategy (wholly owned subsidiary), target market demographics, logistics, marketing campaigns, and budgetary requirements for opening stores in Swedish cities.
Which key terms characterize this analysis?
Key terms include International Marketing, Market Entry Strategy, PEST Analysis, and Foreign Investment Risk.
Why did the author choose the Sheth-Lutz model for risk assessment?
The author chose the Sheth-Lutz model due to insufficient information regarding the BERI index, finding the Sheth-Lutz model better suited for identifying promising foreign investment potential.
How does Karstadt plan to handle potential cultural misunderstandings during its market entry?
Karstadt plans to carry out its advertising campaign with the assistance of Swedish marketing experts to ensure that promotions are culturally appropriate.
What is the significance of the wholly owned subsidiary approach in this context?
This approach offers maximum flexibility and control for the company, although it requires high initial investments and time-consuming location acquisition compared to other methods like franchising.
- Quote paper
- B.A. Sebastian Meyer (Author), 2004, Entering the Swedish market: The Karstadt GmbH case, Munich, GRIN Verlag, https://www.grin.com/document/75509
