1) The current situation of Lindex in 20103
2) Problem definition3
3) Analysis of recommended country3
4) Brewer country selection model5
This management briefing has been devised for the management of Lindex. The topic is ‘International Market Selection’ and this briefing deals with the intention of Lindex further expansion into the European market. 2010 is base year of the information of this briefing and its recommendation. 1) The current situation of Lindex in 2010
Lindex, a Swedish fashion chain, which offers a range of priceworthy lingerie, woman’s wear, children’s wear and cosmetics with right quality and fit, has established more than 400 stores in Scandinavia, the Baltic States, Russia, central Europe and Middle East and employs around 5,000 people. Lindex have done well in expanding and opening of new shops in Scandinavia, Eastern Europe and Middle East. But they faced some problems with entering the German market. They opened too many stores in a short matter of time without considering foreign market demand, buying behavior and competition. 2) Problem definition
Lindex, a company with international experience has not considered factors which are important in internationalization. Lindex did less research on new foreign markets; they just focused on growth and profit without taking care about the nature of the new market, rivalry, the customers, their buying behavior pattern and their culture. Since Lindex failed in entering the German market the company tries to improve and increase their research about new market to decide which country to enter next. 3) Analysis of recommended country
We recommend Lindex to enter Poland as next step of their internationalization. These are internal and external factors which lead us to this recommendation: Internal factors:
Personal networks are used for creating cross-border alliances with suppliers, distributors and other international partners. Lindex has already networks in different countries close to Poland. For example they are already operating in neighbour countries of Poland; for instance Czech Republic and Slovakia. Therefore it will not be difficult for them to set up a network in Poland because many suppliers, distributors and other international partners operating not only in one country. But nevertheless Lindex needs at least one international manager who is familiar with the Polish culture, the market characteristics, the Polish customer behaviour and the local distribution chain.
Lindex offers a range of price-worthy, trendy quality clothes for women and children. The most important factor for Polish consumers is the price of the product. Polish customers prefer trendy clothes at low prices. Generally to be successfully in Poland you have to be aware of 3 factors: -selling of products at moderate prices
-chain of shops
Due to these factors Lindex which is established in the low-price segment, fits perfect to the Polish buying behaviour.
Since Lindex has been a successfully operating company with revenues of about EUR 263.7 million (period June 2009-2010); the company has enough resources to expand their foreign operations. But since they had difficulties in introducing their product in Germany; Lindex focus only on countries close to their head quarter. On that account Poland is a perfect suitable place to enter, because wages, overhead costs and real estate are lower than in other European countries. Poland is easily accessible through their land - and water ways. It is located close to Sweden and to other countries which have already been entered by Lindex. These facts will limit the costs of distribution. Additionally Poland is member of the EU which makes trading easier, more efficient and of course due to the non-existing tariffs Lindex will save money. External factors: