Dual Award

Programme Individual

Assignment Cover Sheet

Please complete the form (in capital letters) and attach it securely to the front of your assignment before

submitting your assignment.

Student ID: ROSHINI VIVEKANAND KRISHNAN

Name of module: TRANSNATIONAL MANAGEMENT

Name of tutor: Dr Thivashini Jayakumar

Module code: MGT60604

Assignment title: Individual Assignment

Due date & time: 19th may 2023 @2pm

We have read and understood the TU Dual Award Regulations on cheating, plagiarism and collusion. We declare that

this piece of work is our own and does not contain any unacknowledged work from any other sources.

We authorise the University to test any work submitted by us, using text comparison software, for instances of

plagiarism. We understand this will involve the University or its contractor copying our work and storing it on a

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Note: The attachment of this statement on any electronically submitted assignments will be deemed to have the same

authority as a signed statement.

Signed: Roshini Date: 19th may

2023

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QUESTION 1

First possible contributing factor to Budgetmart's shortcomings in Canada was a lack of market research and

localization efforts. According to a study by Hsu and Yang (2017), successful international retailers must

conduct in-depth market research to understand local consumer preferences and adapt their product offerings

and marketing strategies accordingly. But Budgetmart's decision to launch 100 stores in Canada and hire 15,000

employees in just two years suggests that the company did not take a localized approach to its expansion.

As a result, many Canadian customers may have perceived the company's offerings as ill-suited to their needs

and preferences, which could have contributed to the company's struggles to gain traction in the Canadian

market. This rapid expansion led to poor operational management, empty store shelves, and a lack of customer

service, which further damaged the company's reputation in Canada. Additionally, many of the company’s

stores were located in low-traffic areas, far away from consumers, which made it difficult for the company to

attract customers. This poor location strategy ultimately led to lower sales and contributed to the company's

eventual failure in the Canadian market.

Several academic articles provide support for these contributing factors. For example, Zhang, Li, and Zhang

(2018) argue that the failure of American retail giants in foreign markets can be attributed to the "curse of initial

success," which refers to the overconfidence that comes with early success and can lead to complacency and

lack of adaptation to local market conditions. In the case of Budgetmart, the company's success in the United

States led it to believe that it could replicate this success in Canada without adapting to local conditions, which

ultimately led to its failure in the country.

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Next, the company did not take into consideration the unique cultural and geographical differences between the

United States and Canada, which led to poor performance and customer dissatisfaction. For example, the

company did not account for the fact that Canada is a bilingual country with French and English as its official

languages, and instead relied solely on English signage and product labels.

This oversight led to confusion among French-speaking customers, who felt that the company did not value

their business or respect their culture. Additionally, the company failed to account for the differences in

consumer preferences between the two countries. Many Canadians were dissatisfied with the selection of

products offered by Budgetmart, which were not tailored to the Canadian market. For instance, Canadians

preferred more local and regional products that were not available in Budgetmart's stores. As a result, many

customers chose to shop elsewhere, leading to low sales and poor revenue.

In conclusion, Budgetmart's shortcomings in Canada can be attributed to its lack of adaptation to the Canadian

market and its rapid expansion without adequate planning and consideration of local conditions and also lack of

consideration about geographical differences. These factors ultimately led to poor performance, low sales, and

customer dissatisfaction, which damaged the company's reputation and led to its eventual withdrawal from the

Canadian market. Going forward, it is important for Budgetmart to take these factors into consideration when

expanding into new markets, to ensure that the company is able to adapt to local conditions and provide value to

customers in these markets.

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QUESTION 2

As the CEO of Budgetmart, I would not immediately close down operations in Canada. Instead, I would take a

comprehensive approach to address the issues that led to the company's failure in the Canadian market and

make necessary changes. Here are my reasons:

Firstly, according to a study by Deloitte, Canada's retail market has a strong growth potential due to the

country's expanding population, increasing household income, and rising consumer confidence (Deloitte, 2019).

These factors present an opportunity for Budgetmart to make a successful comeback in the Canadian market.

Secondly, Budgetmart can learn from its mistakes and make the necessary changes to tailor its operations to the

Canadian market. For example, the company can conduct thorough market research to understand the unique

needs and preferences of Canadian consumers and adapt its product offerings accordingly. It can also

collaborate with local suppliers and manufacturers to offer products that align with Canadian tastes.

Furthermore, Budgetmart can improve its supply chain management to avoid the issues of empty store shelves

that frustrated Canadian customers.

However, before making any decision, the company needs to assess the costs and benefits of continuing its

operations in Canada. According to a study by Harvard Business Review, the costs of exiting a foreign market

can be substantial, including reputational damage, legal fees, and potential lawsuits (Henisz & Zelner, 2018).

Therefore, Budgetmart needs to evaluate whether the potential benefits of staying in Canada outweigh the costs

of withdrawing from the market.

Next, Research by Bearden and Teel (2017) emphasizes the importance of reputation management in the retail

industry. Rebuilding trust and reputation would be a priority for me as the CEO. While Budgetmart's mistakes

in Canada damaged its reputation, it is not an insurmountable challenge. I would focus on implementing

strategies to rebuild trust among Canadian consumers, such as transparent communication, enhanced customer

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service, and improved product quality. By demonstrating a genuine commitment to rectifying past issues and

meeting customer expectations, Budgetmart can gradually regain trust and loyalty.

Moreover, the company needs to conduct a thorough analysis of its strengths, weaknesses, opportunities, and

threats (SWOT analysis) to determine its competitive advantage and position in the Canadian market. By

leveraging its strengths and addressing its weaknesses, Budgetmart can develop a strategic plan that aligns with

the Canadian market's demands and expectations.

In conclusion, as the CEO of Budgetmart, I would not close down the Canada operations immediately. Instead, I

would take a comprehensive approach to address the issues that led to the company's failure in the Canadian

market. By conducting thorough market research, collaborating with local suppliers, improving supply chain

management, and developing a strategic plan that aligns with the Canadian market, Budgetmart can make a

successful comeback in Canada.

QUESTION 3

As a consultant for Budgetmart, I would recommend expanding into Mexico due to its geographical proximity,

growing middle class, and similar cultural values to the United States. Mexico is the second-largest economy in

Latin America, with a GDP of $1.27 trillion in 2020 (World Bank, 2021). Mexico is also the United States'

third-largest trading partner, with a total bilateral trade value of $614.5 billion in 2019 (U.S. Census Bureau,

2020). The North American Free Trade Agreement (NAFTA), now known as the United States-Mexico-Canada

Agreement (USMCA), provides a framework for conducting business between the two countries. Furthermore,

Mexico's population of over 128 million people, 32% of whom are under the age of 25, presents a significant

opportunity for Budgetmart to tap into a large and youthful consumer base (World Bank, 2021).

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Cultural differences can significantly affect the way a firm operates in America versus the country being

recommended for expansion. In the case of Budgetmart, it is important to understand that Mexicans have

different cultural values and norms than Americans. For example, Mexicans value personal relationships and

prefer to do business with people they know and trust (Shaw & Ji, 2019). Thus, Budgetmart will need to invest

time and effort in building relationships with local suppliers, partners, and customers to gain their trust.

Furthermore, Mexicans are known for their love of food and tend to shop for groceries daily rather than weekly

or monthly (Shaw & Ji, 2019). Thus, Budgetmart may need to adjust its product offerings and store layouts to

cater to local tastes and preferences.

Another significant cultural difference is the importance of family in Mexican culture. Family ties are strong,

and it is common for several generations to live together in the same household (Shaw & Ji, 2019). This

presents an opportunity for Budgetmart to offer products and services that cater to families, such as affordable

and high-quality household goods, childcare products, and services, and family-friendly store layouts.

Budgetmart can also engage with local communities by sponsoring family-oriented events and activities.

Moreover, Mexicans tend to be more relaxed and less time-oriented than Americans (Shaw & Ji, 2019).

Therefore, Budgetmart may need to adopt a more flexible approach to scheduling and be prepared to adjust its

operating hours and staffing levels to suit local preferences. Additionally, Mexicans tend to value personal

interactions and are more likely to visit physical stores than shop online (GlobalWebIndex, 2020). Therefore,

Budgetmart may need to focus on creating an engaging and personalized in-store experience to attract and retain

customers.

In conclusion, expanding into Mexico presents an attractive opportunity for Budgetmart due to its proximity,

growing middle class, and cultural similarities with the United States. However, it is crucial to understand and

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adapt to the local cultural values and norms to succeed in a foreign market. By investing in building

relationships with local suppliers, partners, and customers, adapting product offerings and store layouts to local

tastes, and creating an engaging and personalized in-store experience, Budgetmart can successfully expand into

Mexico and achieve long-term growth.

QUESTION 4

Predicting the future growth potential of a company like Budgetmart involves considering various factors that

can influence its performance. While it is important to note that actual outcomes may vary, we can assess the

potential growth of Budgetmart based on current market trends and industry analysis.

Firstly, the retail industry is expected to experience continued growth in the coming years. According to a report

by Grand View Research, the global retail market is projected to reach USD 31.94 trillion by 2027, growing at a

CAGR of 7.9% from 2020 to 2027 (Grand View Research, 2020). This growth is driven by factors such as

increasing consumer spending, urbanization, and the rise of e-commerce. Secondly, Budgetmart operates in a

large market with a high demand for retail products.

Secondly, Budgetmart has the advantage of its established brand image and reputation. The company's focus on

offering goods at reasonable rates, combined with its commitment to customer service, has helped build

customer loyalty. This can be a significant driver of future growth, as loyal customers are more likely to make

repeat purchases and recommend the brand to others. According to a study by Reichheld and Sasser, increasing

customer retention rates by just 5% can lead to a profit increase of 25% to 95% (Harvard Business Review,

1990).

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Furthermore, Budgetmart has the opportunity to leverage technology and digital transformation to enhance its

growth potential. With the increasing popularity of e-commerce and mobile shopping, the company can invest

in online platforms and omni-channel strategies to reach a wider customer base. By providing seamless

shopping experiences across various channels and adopting data-driven approaches for personalized marketing,

Budgetmart can attract and retain customers in a highly competitive market.

However, it is important for Budgetmart to address the challenges posed by evolving consumer preferences and

changing market dynamics. Consumers are becoming more conscious of sustainability, ethical sourcing, and

social responsibility. Budgetmart can capitalize on this trend by incorporating environmentally friendly

practices, promoting responsible sourcing, and engaging in corporate social responsibility initiatives. This can

not only attract environmentally and socially conscious customers but also differentiate Budgetmart from

competitors.

Additionally, international expansion can be a growth opportunity for Budgetmart. The company can explore

emerging markets with favorable economic conditions and growing consumer bases. According to a report by

A.T. Kearney, emerging markets offer significant growth potential for retailers due to factors such as rising

incomes, urbanization, and expanding middle-class populations (A.T. Kearney, 2019). By carefully selecting

target markets and adapting its strategies to local cultures and preferences, Budgetmart can successfully expand

its footprint and tap into new revenue streams.

In conclusion, considering the expected growth of the retail industry, Budgetmart's strong brand image, and the

potential for technological advancements and international expansion, the company has a favorable growth

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outlook. By adapting to changing consumer preferences, embracing technology, and leveraging its brand

reputation, Budgetmart can seize opportunities and drive future growth.

(1970 words)

Reference list

1. Deloitte. (2019). Canadian retail industry: Overview and prospects. Retrieved from
https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/Consumer-Business/ca-en-
consumer-industry-outlook-2019.pdf

2. Henisz, W. J., & Zelner, B. A. (2018). Corporate Diplomacy: A New Framework for a Fragmented World.
Harvard Business Review, 96(1), 118-127.

3. Kim, S. (2014). Why did Walmart fail in Korea? Journal of Asian Economics, 33, 20-29.

4. Zhang, Y., Li, Y., & Zhang, J. (2018). Curse of initial success? The impact of early success on subsequent
firm performance in foreign markets. Journal of International Marketing, 26(1), 37-54.

5. Hsu, C. L., & Yang, S. T. (2017). The effects of market orientation and brand orientation on new product
performance: The role of cultural adaptation. International Journal of Marketing Studies, 9(3), 142-152.

6. Deloitte. (2019). Retail in Canada: Navigating the Complexities of the Canadian Market. Retrieved from
https://www2.deloitte.com/ca/en/pages/consumer-industrial-products/articles/retail-in-canada.html

7. Henisz, W. J., & Zelner, B. A. (2018). Exit, voice, and cooperation: The nature and consequences of early
firm exits from foreign markets. Strategic Management Journal, 39(1), 147-167.

8. Harvard Business Review. (1990). Zero defections: Quality comes to services. Retrieved from
https://hbr.org/1990/09/zero-defections-quality-comes-to-services

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9. GlobalWebIndex. (2020). Retail Trends Report. Retrieved from
https://www.globalwebindex.com/reports/retail-trends-report

10. Grand View Research. (2020). Retail Market Size, Share & Trends Analysis Report. Retrieved from
https://www.grandviewresearch.com/industry-analysis/retail-market

11. National Retail Federation (NRF). (2021). 2021 Economic Outlook. Retrieved from
https://nrf.com/insights/holiday-and-seasonal-trends/2021-economic-outlook

12. Reichheld, F. F., & Sasser Jr, W. E. (1990). Zero defections: Quality comes to services. Harvard Business
Review, 68(5), 105-111.

13. A.T. Kearney. (2019). The Global Retail Development Index. Retrieved from
https://www.atkearney.com/retail/article?/a/the-global-retail-development-index

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TURNITIN REPORT

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 Marking Rubric for Individual Assignment (25%)

MLO 3: Evaluate the efficiency of MNEs in decision making and the implementation of multidimensional global strategies.

TGC Performance levels Score Wt. Marks

Sub Traits Excellent (9-10) Good (7-8) Fair (5-6) Fail (0-4) (%)
2a.1 Identify the Identify the Identify the Identify the Identify the
problem problem critically problem with a problem with a problem listing
with an insightful well-defined moderately few relevant
problem problem detailed problem contextual factors
10
statement listing statement listing statement listing in a superficial
substantial major relevant some relevant way
relevant contextual factors contextual factors
contextual factors
Propose solutions Develop a Develop a Develop a Develop a plan to
to existing and comprehensive feasible and feasible plan to solve problems
emerging andconsistent consistent plan to solve problems and recognizes
problems plan to solve solve problems and recognizes few
problems and and recognizes some consequences of
recognise consequences of consequences of solutions that
2a.2
consequences of solutions that solutions that articulates a 5
solutions that articulates a articulates a reason for
articulates a reason for reason for choosing a
reason for choosing a choosing a solution
choosing a solution solution
solution.
Flexibility and Integrate Explore Generate Provide
divergent thinking information from information from information from information from
multiple multiple fewperspectives asingle
perspectives and perspectives perspective
2b.1
is able to shift 10
readily from one
perspective to
another
Total Marks

Comments

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