The global retailer's strategic proposition and choice of entry mode

Abstract

PurposeThe main aim of this paper is to provide research propositions that explain global retailers' international expansion. Global retailers are considered to be concentralized‐standardized retail formats.Design/methodology/approachResearch literature is used to develop the concepts related to predicting international expansion. Examples from retailers are used to set the stage for proposition development.FindingsSeven propositions are provided for further examination. These propositions are related to unique retail concept, private brands, unique capability, internalization advantages, pioneering advantages, resource availability, governance resources, and growth experience.Research limitations/implicationsThis is a conceptual paper leading to development of propositions for further testing. An empirical analysis is required to determine whether the theoretical connections can be proven.Originality/valueThe major value of the paper is the melding of theory and retail examples to explain the international expansion of a particular type of retailer. Global retailers are centralized and standardized, thereby providing an expansion opportunity in the area of franchising.

Insights on International Franchising: Entry Mode Decision

“…TCA argues that market potential influences the amount of resources a firm is ready to commit to a market. Hence, franchisors will select high-equity entry modes (direct investment) when market conditions are favorable (Park & Sternquist, 2008). Conversely, when consumer demand is perceived to be stagnant in foreign markets, franchise chains tend to favor lower equity modes (i.e., direct or master franchising) to limit costs in case the investment fails (Lu et al, 2011).…”

Strategic Options for the Expansion of South African Retail Businesses within Africa: Consequences on Operational Management

“…Also, Dow and Larimo (2011) found experience, both locally and internationally to play an important role in making the entry mode choice. On the issue of resource availability, Park and Sternquist (2008) argue that a retailer's entry mode choice is contingent upon its assortment of resources.…”

“…Retailing has become a global phenomenon, and retailers can no longer rely solely on their home country markets for survival because they run the risk of having to compete with global contenders even in their own backyards. As Park and Sternquist (2008) observe, global retailers' segment of customers have similar needs, behaviours and expectations, making them independent of any one country; therefore, these retailers expand into cities where such similarities might be found. This is even more possible with the increase in Internet and mobile technology usage by both retailers and customers, and the social change in which customers are now moving into the formation of "virtual communities" (Pentina, Prybutok & Zhang, 2008:114).…”

Culture Determines Business Models: Analyzing Home Depot's Failure Case in China for International Retailers from a Communication Perspective

“…Market segmentation is usually defined as the process of dividing potential customers into distinct groups for the purpose of targeting and designing segment–specific marketing strategies. A market strategy for China or any other foreign market must begin with an understanding of the cultures of the target market (Park & Sternquist, 2007).…”