Should Kaufland Exit the International Market in Australia?
(5 pages of text)
Case (Pub Mat)
The case considers the entry of Germany’s leading retailer, Kaufland Warenhandel GmbH & Co KG (Kaufland), known for its hypermarket retail format and low prices, into the Australian market. Before entering Australia in 2016, the retailer had only expanded into Eastern European countries. Australia was its first developed market. In April 2019, a change in chief executive officer (CEO) took place at Kaufland, with the new CEO, Klaus Gehrig, demanding more centralized decision making. In Australia, Kaufland was struggling to get approval for its larger stores. Competitors in Australia, such as Woolworths and Coles, were also gearing up for the competition, with Coles sending a team of executives to study Kaufland’s operations in Germany. In November 2019, after a series of weather-related issues in Australia, the retail price of several grocery items increased. Kaufland was still searching for suppliers and working on opening its stores. Experts felt that Kaufland Australia had the potential to make an impact on the grocery market, as higher prices offered by other retailers would lead consumers to shift to it. Going forward, Gehrig faced a challenging decision: Should he revisit the decision to expand into the Australian market? How might his competitors retaliate?
This case is intended for undergraduate- or graduate-level courses in international business, international marketing, and strategic management. The case elaborates on the international market entry decisions faced by firms. It also discusses the challenges a company faces, the strategies it needs to take to combat those challenges, and the criteria to consider if it intends to make exit decisions from an international market. After working through the case and assignment questions, students will be able to
- explore customization of the business model according to a country’s needs;
- evaluate the response of competitors when a firm enters international markets;
- conduct market entry feasibility studies; and
- evaluate the criteria for an international market exit decision using net present value analysis.
Australia; Germany, Large, 2019
$5.30 CAD / $5.00 USD Printed Copy
$4.50 CAD / $4.25 USD Permissions
$4.50 CAD / $4.25 USD Digital Download