The Marketing Book 5th Edition

800 The Marketing Book

of the internationalization process, such as the
EMD alliance, with a turnover across 13 coun-
tries of over 100 billion Euros.
Table 30.12 compares the scale and extent
of international participation by 10 of the
world’s largest retailers. This helps to explain
why a retailer which leads at home, such as
Tesco, is motivated to expand abroad in pursuit
of growth.

Motives for internationalization

The pressures towards/reasons for interna-
tionalization are diverse, but may be summa-
rized as ‘push’, ‘pull’ or ‘facilitating’ factors:

1 ‘Push’ factors, including the maturity or
saturation of home markets, domestic trading
restrictions, unfavourable economic conditions,
rising costs, adverse demographic changes and
imitation of trading styles.
2 ‘Pull’ factors, including more enlightened
corporate philosophies, perceptions of growth
opportunities abroad (niche or
underdeveloped markets), established
bridgeheads in other countries and imitative
‘bandwagon’ effects.

3 ‘Facilitating’ factors, including the lowering of

political, economic and perceived barriers

between countries, the broader vision of

senior management, an accumulation of

expertise, the ability to assess other retailers’

international moves and the improvement of

communication technologies.

The particular mix of these factors often

determines the most appropriate route to inter-

nationalization. Also relevant are the avail-

ability of capital, the level of understanding of

market needs within other countries, and the

compatibility of the domestic trading format(s)

with those needs. It is clear that retailers have

sometimes adopted the wrong approach to

internationalization. There are several exam-

ples of leading retailers in domestic markets

running into difficulties abroad.

Entry strategies

A number of alternative approaches are avail-

able, including the following:

1 Self-start entry, the chain being built up from

scratch, or developed through organic growth

Table 30.12 Major retailers with international involvement

Company Domestic base Main activity Sales

(million Euro)

Number of

countries

Foreign

sales (%)

Wal-Mart USA Discount stores 194 290.2 9 17.2

Carrefour France Hypermarkets/grocery 65 609.8 27 47.5

Ahold The Netherlands Supermarkets 49 170.4 24 80.8

Home Depot USA DIY 49 154.2 4 5.5

Metro Germany Diversified 47 489.9 22 42.1

Sears, Roebuck USA Department stores 39 573.3 2 11.6

ITM Enterprises France Supermarkets 36 272.1 8 36.0

Safeway USA Supermarkets 34 365.3 3 10.8

Costco USA Warehouse clubs 33 982.5 7 18.7

Tesco UK Supermarkets 33 680.3 10 12.5

Source: PricewaterhouseCoopers (2001).