Question

Home Depot or Lowes - Global Expansion into Great Britain

Cultural Influence

Economic/Legal Influence

Political/Gov Influence

Involvement in International Organization

Import/Export

Recommendations

Answer 1

For expanding into the market of Great Britain, Home Depot needs to analysis the following macro-environmental factors that might influence its business operations.

Cultural Influence- There exist various cultural differences between US and UK cultures. Thus, Home Depot needs to analyse the cultural environment of the foreign country before expansion. The culture in the foreign market is characterised by the norms, values, beliefs, customs and principles of the people. British culture emphasizes treating all people equally, however often tensions are created due to the presence of its historical class system. Besides, the people here are highly individualistic who respects privacy. The culture is performance-driven, success-oriented and the people are comfortable with unpredictable situations. Thus, Home Depot must take into consideration these cultural aspects of the country before entering into the market.

Economic/Legal Influence- British economy is the sixth-largest in the world. The growth has decreased since the event of Brexit. The economy has been facing weak growth in real income and public debt since 2018. Furthermore, uncertainties such as the ongoing negotiation process of Brexit, an increase in future trade costs, the slow accumulation of capital, persistently low productivity and decline in net migration influences the British economy. However, the government has been investing in infrastructure, increasing the supply of housing and encouraging women participation in labour market for sustainable growth. These factors would help Home Depot analyse how to enter into the market.

Political/Gov Influence- There exists political stability in the country, however, Brexit has created some uncertainties recently. Furthermore, the government maintains good relations with the US and other countries in the world. Taxation in the British economy is classified into direct and indirect taxes and progressive, regressive and proportional taxes. Some of the main taxes include income tax, corporation tax, capital gains tax, excise duties, value-added tax, council tax, inheritance tax and national insurance contributions. Thus, the good relations of the UK and US governments and overall political stability would help Home Depot in its expansion plans.

Involvement in International Organization- the UK possesses one of the permanent seats in the United Nations Security Council and is an essential contributor to the UN's peacekeeping operations. Besides, it plays an important role in the European Union (EU) for enabling economic cooperation between the nations. Besides, it belongs to the IMF, who are responsible for monitoring the international financial system and helping nations with financial difficulties.

Import/Export- It is one of the key players of international trade comprising of 61.8% of the country's GDP in 2018. UK imports vehicle equipment, transport, fuels, machines, data processing and electronic devices, organic materials, medicines, gold and food. The main export partners of the country are Germany, the US, France, Ireland and the Netherlands. The main suppliers are the US, Germany, China, Netherlands and France.

Recommendation- Home Depot should analyse each of these factors for entering Great Britain. It would be beneficial for the company to enter into a joint venture with a local UK company. A joint venture refers to a business strategy where two or more entities agree on carrying out business operations by pooling their resources to accomplish a specific task. This expansion strategy would help Home Depot in sharing the profits, losses and costs associated with the business to share with a local partner. Furthermore, it would be able to leverage the local distribution channels for delivering the products to customers. Besides, the human resources of the UK company would help in resolving the cultural differences and identifying customer preferences in the foreign market. Thus, Home Depot would be able to successfully market itself by utilizing the skills and knowledge of the local company’s employees.

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