Lulu Group International Harvard Case Solution & Analysis

Lulu Group International Case Study Analysis

Political:

There is a direct impact of political factors on business profitability & sustainability. As the gateways have opened up China for international business, the customs duties on VAT the regulation of government to support the foreign policy and foreign direct investment is turbulent which makes the expansion of business abstruse in China.

Economic:

In China, the economic factors permit corporations - seeking to exploit the cost-effectiveness opportunity to expand their business operations. The labor cost is cheap in China & the labor force is trained, skilled and proficient. The business has the opportunity to consolidate business resources throughout the supply chain or setup the business location represented the retail market growth by 7.5 percent in the year 2019 tends to be one of the leading retail markets across the world.

Social:

The social factors have been emerging to shifting the business operations from anywhere to China for the skilled labor force, better resource management, and market capitalization. This favorable trend stipulates the trend in the future that would be attracting substantial organizations to capitalize on the market opportunity in one of the most emerging markets. Since the emergence of the Chinese market and a significant increase in the buyers’ purchasing power; the business has dual opportunity to cater to the internal markets & offer products/services to external players.

Technological:

Innovation and technology have become a core value for business art to endure sustainable & competitive in a highly competitive arena of the Chinese market. The business playersandsuppliers with high expertise in technology and support are more demanding. In China, the growth rate of retail industry is increased and it is witnessed that small players in the manufacturing service industry are benefited from focusing on low volume business.

Strategies for business expansion:

Based on the PEST analysis of both countries, the LuLu group is recommended to expand its retail services in China. This is due to the reason that currently China is serving as the fastest-growing retail industry all across the world. The rapid changes in the demographics, increased incomes, improved consumer spending and a significant increase in the open environment of the business assistsdifferent players in the market to remain attractive and demonstrate profitable growth. (Hedley, 2020)Thus, to enter the Chinese market, LuLu Group is primarily suggested to follow the strategies to enter the market which are as follows:

1. Export the products in the Chinese market through the Hong Kong distributor.
2. Export the products through the direct channels in China
3. Set a joint venture with the Chinese player in the market.

Conclusion:

Within a short period, the conglomerate demonstrated good-quality products with increased brand loyalty serving as a key factor in organizational success. Based on the PEST analysis of both countries, the LuLu group is recommended to expand its retail services in China.he market in China is emerging and buyers’ purchasing power is increasing; the business has dual opportunity to cater to the internal markets & offer products/services to external players...............................

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