Canadian Tire - New market penetration (UK, Italy and Ireland) PDF

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Summary

Country Analysis
PESTLE
SWOT
New-market penetration
Market Research
...

Description

COUNTRY PROFILE - PHASE 2 BICG9303-02

Instructor: Professor Stefan Johnson Team members: Tin Phan Thuy Nguyen Ahmed Ogbondah

Table of Contents Executive Summary.................................................................................................................3 Ireland.....................................................................................................................................4 Economic Background:.......................................................................................................................4 Political Background:..........................................................................................................................5 Legal Background:..............................................................................................................................5 Social Background:.............................................................................................................................5 Environmental Background:...............................................................................................................6 Market - size and growth....................................................................................................................6 Factors affecting size and growth of the market.................................................................................6 Description of major competitors - market share and growth, the source of competitive advantages and disadvantages, future prospects..................................................................................................7

Italy.........................................................................................................................................7 Economic Background:.......................................................................................................................7

Italy is suffering budget deficit during the last decade................................................7 Political Background:..........................................................................................................................8

Democracy plays a vital role in Italy................................................................................8 Have a strong relationship with the United States of America....................................8 Legal/regulatory Background:............................................................................................................8 Social Background:.............................................................................................................................9 Environmental Background:...............................................................................................................9

Market Industry: Food & Grocery Retail..........................................................................9 Buying force: Neutral........................................................................................................10 Supplying power: Neutral................................................................................................10 UNITED KINGDOM.................................................................................................................10 Political Background.........................................................................................................................10

Well placed in global politics:.........................................................................................11 Good relationship with china..........................................................................................11 Economic Background......................................................................................................................11

Brexit...................................................................................................................................11 Reduction in fiscal deficit................................................................................................11 Social Background............................................................................................................................12

Quality health care............................................................................................................12 Aging population...............................................................................................................12

Legal Background..............................................................................................................................12

Doing business freely.......................................................................................................12 Tax reduction for companies...........................................................................................12 Environmental Background...............................................................................................................12

Its global presence/influence is strong.........................................................................12 Increase in pollution.........................................................................................................13 Market structure and competitive analysis size and growth.............................................................13 Factors affecting the growth of the market.......................................................................................13

Shop closure......................................................................................................................13 Online shopping................................................................................................................13 Major competitors............................................................................................................................14 3. Recommendation.........................................................................................................................14

Bibliography..........................................................................................................................15

Executive Summary Every business organisation needs to have an understanding of the external factors within their business environment. And most times they tend to have less control of these external factors. One of the business tools used to have an understanding of the external factor is the pestle analysis tool. The pestle analysis tool is use to have an understanding of the political, economic, social, technological, legal and environmental factors. In this report, we will be taking a look at the pestle analysis of United Kingdom, Italy and Ireland. And which of these countries are fit for Canadian tire to go into. The pestle analysis tool is a good tool to use because it will give Canadian tire an understanding of the external factors of United Kingdom, Italy and Ireland. We will also be taking a look at the major retail competitors in United Kingdom, Italy and Ireland. The strength and weakness of the competitors will be discussed, their market share and size. Furthermore, after analysing the strength and weakness of our competitors in the United Kingdom, Italy and Ireland, we will decide which one of them will be good for entry base on our competitive advantage and opportunity spotted in that in that country.

Ireland Economic Background: According to the CIA world fact-book, “Ireland’s low corporation tax of 12.5% and a talented pool of high-tech laborers have been some of the key factors in encouraging business investment.” On the other hand, the inflation rate in Ireland is -0.2% in 2016 and 0.3 in 2017 (by CIA); however, the inflation rate is expected increasing to 1% in 2018 and 1.3% in 2019 (by The Irish Times, 2018). Moreover, Ireland’s trade balance is surplus which the report in 2017 show the indicators of $219.7 billion of export and $98.13 billions of import. It has implicated the wealth of Ireland in term of a healthy country. However, Ireland trade and the economic situation still confront many adverse such as the budget deficit, public debt, debt-external. According to CIA, these indicators emphasis by the disadvantage number consist of in 2017 public debt is 68.6% of GDP, Ireland debt-external in 2016 is $2.47 trillion, and budget deficit in 2017 is -0.3% of GDP. Thanks to a healthy economy, Ireland can be a positive friendly environment for Canada Tire to investment. It can implicate for prices, quality, the number of Canadian Tire products. Due to the variable substitute products of Canadian Tire brands, Ireland can support for the broad market product from automotive, household, sport and tools.

Political Background: Ireland is counted as an initial member of Euro United (EU) and World Trade Organization (WTO) which absolutely effect on Ireland’s policy. Ireland has entitled a lot of advantage when becoming the member of EU including Ireland economy’s interests, voice, image. It brings Ireland to the state of global. Promotion can be a part of marketing strategy which can implication by on the incentive of Ireland policy. In term of increasing the awareness of Canadian Tire as well as rising the image of its reasonable products. Besides, the target market in the future is not only Ireland but also EU; therefore, according to the EU membership, our business is easier to widen our market.

Legal Background: According to HSBC UK (2016) global business guide, there are many advantage keys to start up a business in Ireland. In order to start up a new business, a business requires approximately four days and six procedures. Besides, to apply for a visa, it takes a process within eight weeks. “Ireland was ranked 12th in a comparison of 36 countries' intellectual property systems that assesses cost, speed, quality of judges/tribunals, quality of advice and the fairness and predictability of decisions”. In addition, to become a public company, the company must publish audited accounts for at least three years. Canada Tire can exploit the advantage of Ireland legal situation which tries to attract the foreign investment; as a result, to start up a business in Ireland or open the first Canadian Tire brand avoids the confronting of the legal troubles.

Social Background: Ireland, the country transfer from agriculture to a fast-paced western European country, believe that family and relationship is as important as business itself; therefore, acknowledge this point can be an advantage for any business in Ireland in term of negotiation or corporate condition decision. There are several implications which should be contemplated carefully before doing business in Ireland. Nowadays, corporate social responsibility is the significant feature in Ireland country so that they have a prize for the winner namely the Chambers Ireland President’s Awards consist of Excellence in Diversity & Inclusion, Excellence in Community - Partnership with Charity, Excellence in Community – Volunteering, Excellence in Community - Community Program, Excellence in Environment, etc. The second implication is punctuality which expects to arrive on time. By businessculture.org, punctuality means polite and considerate. Maximum late is 15 minutes; however, reschedule the meeting if the timetable has changed better than late. Gift giving is a kind of traditional way to communicate in Ireland social; however, in general, a gift is not expected in doing business. In some special situation or invited dinner, a boutique of flower or a bottle of wine is expected to bring.. Base on the importance of family role on Irish social, to marketing product of Canadian Tire, the product should emphasize the association between our product and family meaning. Furthermore, the marketing strategy can emphasize the place to locate our store in Ireland and the style which refer more professional.

Environmental Background: Ireland can be considered a good environment to live according to those factors of temperature, green area, and the pursuit law of environment protection. According to climate to travel website, Ireland’s geographic creates comfortable weather with the temperature around 7 °C to 17 °C with the maritime western weather. According to European Commission (2018), “an average sea level rise of just 0.5m to 1m by the end of the century, in combination with storm surge events, could result in as much as 1,000km2 of coastal lands around Ireland being inundated by the sea”. The biggest problem is public drinking water supplies which were a plan for long-term by the project of Boil Water Notices and the EPA’s Remedial Action List. Air quality in Ireland, in general, is quite good with the abundance of green area. Ireland’s environment is an advantage when doing business which implicates the factor “people” in our marketing strategy. The wonderful environment can be an additional point plus into the attitude and style of Irish. Therefore, environmental variables will influence the initial element in getting the insight of Irish perception.

Market - size and growth Despite the fact that Ireland is a small country, they still a potential market to enter due to the lack of a giant company which dominates most of the market segment. According to Trading Economy website, the consumers’ spending of Ireland increases continuously from 2015 to 208 from 23455 EU million to 25015 EU million which indicated the ability to spending changing in Ireland’s market. Besides,

Factors affecting size and growth of the market

According to The Irish Time (Jan 6, 2018), the market and customer behavior is affected and changed from 2008 until now due to the number of following factors. First of all, e-commercial become a trend with direct competitors to the traditional retails. The article also emphasized that “Irish people spent about €9 billion online last year, with spending set to grow to €14 billion by 2021.” Besides, the program of Pips - personal insolvency practitioners in order to let people handle their debt problem without destroyable. Furthermore, the factors of household recover influence the customer behavior in the market. The article has shown that “net worth rose €16.9 billion or 2.5 percent in the second quarter of this year, reflecting a substantial increase in housing assets (€16.1 billion) and a decrease of liabilities (€1.5 billion) over the quarter.” There still many factors influence the Irish spending on the market, but those indicators have revealed one main point is that the Irish market is in the growth process which appropriates to invest by Canada Tire. To target the Irish market, Canadian Tire should understand how Irish spent their money on the product with the association with their present financial situation and their behavior. Therefore, to maximize the market cake, Canadian Tire must establish their physical retailers as well as their online channel distribution.

Description of major competitors - market share and growth, the source of competitive advantages and disadvantages, future prospects According to the Statistic Portal website, there are three biggest giant companies which share the Irish market in 12 weeks ending October 8, 2017. SuperValu and Tesco is the same market share at 22%, and the third one is Dunnes at 21.9%. There is not a giant corporation which has the same products as our company Canadian Tire. Most of the giant corporation focus on grocery retails; therefore, even if SuperValu, Tesco, and Dunnes take most of the market share, Canadian Tire still cannot consider them as the direct competitors. For examples, the number of large companies such as Arnott, Tesco, SuperValu shares the grocery supplier market. While the other substitute products which is considered as the main products of Canadian Tire consist of automotive, tool and hardware, fashion, sport, outdoor living does not exploit by any large company or a big chain. Some names can be contemplated as the same market consists of Arnott (retails), Irish Auto parts (Automotive), Handy Hardware (tools and hardware), Oxendales (Fashion), Buff (sport and style), Ikea (out-door living); However, most of them are small businesses. Due to the discussion below, there are not really specific competitors which can compare to the Canadian Tire market. In term of entering into the Irish market, Canada Tire must wonder the scale of their business which should be an outstanding phenomenon. However, if Canadian Tire can achievement in the Irish market, the consequence is also attracting other giant company to create the Irish own-brand name which can compete to our company products.

Italy Economic Background: Italy is suffering budget deficit during the last decade Despite many fiscal consolidation methods, Italy still falls below Europe average in term of budget deficit. According to Marketline, Italian government's general gross debt ranks second, only below Greece. That's a huge problem.

Being hit too hard by financial crisis in 2008, Italian is now starting to recovery with the real growth of GDP floating above zero since 2015. (Marketline) Italy is a well-developed country which is coming back despite many difficulties. They are offering many opportunities to grow business that can't be found in any developed countries. Therefore, with the strong financial base and experience, Canadian Tire is now having a huge potential to penetrate this market.

Political Background: Democracy plays a vital role in Italy According to strategy + business, Democratic principles have taken firm root in Italy since the adoption of the constitution in 1948. Under democracy, elections are known as fair and reflect the truly actual expectation of citizen; a less efficient government can be totally voted out of power. According to the World Bank’s Worldwide Governance Indicators for 2017, Italy had a percentile rank of 90.1 in terms of voice and accountability (90% confidence interval) This number represents for the ability that citizen in a particular country can join in and vote for their expected government. More than that, it also shows their freedom of expression and association in political aspects. Italy achieve high percentage in this term thanks to their openminded government recently. Have a strong relationship with the United States of America Not only within the G8, Italy and the States also cooperate strongly on many other political aspects. The US helps Italian government in forming a precise regulation in terms of defense and security. Corruption is still a headache for Italian authority: Italy is well-known with corruption Cosa Nostra of which reality is reflected in Mario Puzo's Godfather in 1972 and it stays still. On these days, it is not rare when a high-profile politician arrested in Italy being accused of corruption. According to Corruption Perceptions Index 2017, the country was in 54th position out of 180 countries, with a score of 50 out of 100. Source : Transparency International Thanks to the increase of democracy, Italy's business environment will be improved in terms of fairness and competitiveness; this is a huge opportunity for a foreign-based company like Canadian Tire. However, along with democracy, there is also a considerable raise of corruption, it will lead to the increase of terrorism and probably organized crime.

Legal/regulatory Background: Being a member of European Union, Italy need to follow EU's legislation of accepting funds from outside EU. And the fact is that: EU is a tough 'playground' with any kinds of business because of their high requirements. By the way, Italy's tax rate is one of the highest taxation in not only EU, but also all over the world. Tax rates are progressive and range from 23% to 43%. Additional taxes are due at the regional (0.9% to 1.4%) and local (0.1% to 0.8%) levels (according to International living)

Social Background: Italy has a long-time experience in human management. They have a well-improved citizen management system, ...