Introduction: Country for expansion: The UK
Considering the available opportunities for Target’s expansion, it is recommended for the company to view the United Kingdom as the location for new stores. There will be fewer language and cultural barriers while the country has a diverse and talented workforce. In terms of sales, the UK has a growing e-commerce market and lower corporate taxes compared with the US at just 19% (Nguyen, 2022). The presence of several freeports across the country offers improved logistics.
Industry rivalry
The grocery store market in the UK is highly competitive, with Tesco, Sainsbury’s, ASDA, and Morrison’s competing for leadership, while Waitrose and M&S are at the premium end of the market and are in a separate category. The total retail market is valued at GBP 205 billion, which offers excellent opportunities for expansion (Bedford, 2022). Notably, stores mainly compete to dominate based on price and product selection, while some competition also comes from smaller convenience shops.
Demand conditions
Similar to the US, the UK has shown a rising dependence of customers on online grocery shopping. For smaller purchases, UK customers choose local grocery shops of different chains, while for larger ones, customers opt for large and mid-sized supermarkets. In contrast to the US, smaller stores offer a more meaningful competitive constraint (Taylor & Warren, 2022). Notably, medium-sized stores remain the preferred method of shopping in the UK.
Related and supporting industries
The two UK industries that could significantly help Target enter the country’s market are logistics using freeports and e-commerce. Freeports are crucial as they provide an exemption from VAT, customs duties, and other taxes, this offering significant cost savings for new market entrants. In terms of e-commerce, it remains a dominating industry due to its boom after the COVID-19 pandemic. In the UK, e-commerce has been expanding in fintech, B2B, and SaaS areas.
Factor endowments
Factor endowments represent the resources and capital that the UK has that provide it a comparative economic advantage. Notably, the UK has a competent labor force with around 2.3 million professional services and finance specialists. Currently, the number of job vacancies is increasing, showing a demand for skilled personnel. When it comes to the country’s financial wellness, most profits come from exporting machinery and computers, pointing to the dedication of the UK to the high-tech sector. Finally, the UK makes entrepreneurship in the country easier compared to many other Level A economies.
Forces that will help succeed
Target has an excellent opportunity to succeed in the UK because of its mature and high-spending consumer market, an open and liberal economy, as well as an environment conducive to business operations. Besides, both the legal and funding environments are positive, which will make it easier to enter the market, especially since there is no language barrier with the US. The company will benefit from a diverse infrastructure system and a robust energy grid, which can reduce expenses and offer opportunities to provide customers with reasonable prices.
Forces that may hinder success
While the UK has an overall environment conducive to doing business, the country shows a cumbersome process of registering a business and greater control over companies’ financial reports. Target may also experience issues registering property and getting construction permits and encounter a more complex tax system than the US. The overall business climate is much slower, while interactions with UK professionals may seem unfamiliar because of the British humor and the way of communicating.
Leadership actions
When it comes to the global mindset, which is a leadership strategy recommended by Burkus (2012), the UK represents a familiar business environment. It is recommended for Target’s leadership to learn about the specific cultural characteristics of British businesses as a strategy for developing sensitivity to cultural differences. When expanding to the UK, the recommended level of involvement is high because of the need to control processes and capture the market.
Recommendations and rationale
Overall, the UK is a suitable environment for expansion; however, Target is expected to study the legal structure for market entry. Besides, it is recommended to get information on UK taxation and regulations and ensure that the company entering the market complies with UK employment laws. Despite the absence of language barriers, studying the cultural peculiarities of doing business in the country and being prepared to experience longer completion times is essential.
Conclusion
To conclude, for Target, the UK is a perfect expansion opportunity because the country is welcoming to new investors while its consumer profile fits the company’s target population. The UK’s logistics system is conducive to quick shipping of products, which will ensure that Target stores are always fully stocked with unique products. However, it is recommended to be prepared that business operations will take longer in the UK compared to the US, while Target will have to adjust to the business culture that has its unique traits, including a sense of humor.
References
Bedford, E. (2022). Market value of grocery retail in the United Kingdom (UK) from 2020 to 2026, by channel. Web.
Burkus, D. (2012). Essay: Developing global leadership: A review of barriers and adjustments for international expansion. International Management Review, 8(2), 83–84.
Office for National Statistics. (2022). Labor market overview, UK: March 2022. Web.
Taylor, A., & Warren, N. (2022). Competition Issues in UK grocery retailing. Web.
Workman, D. (2020). United Kingdom’s top 10 exports. Web.