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Hudsons Bay Company Restructuring In A Retail Decline Case Solution

Solution Id Length Case Author Case Publisher
1764 1261 Words (8 Pages) Kelly Whitehead, Steven Campbell Ivey Publishing : W18265
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USA, Canada, France, and Germany are included in world's largest e-commerce markets, but even then none of them has a share of e-commerce sales in total retail sales greater than 15% which proves the importance of retail marketplaces. However, growth in e-commerce is high, which signifies that it cannot be ignored. Moreover, 57% of customers purchasing online buy from oversees retailers, which also signifies that international retailing is now not just limited to physical presence (Orendorff, 2019). As shown in table 4 (Ecommerce News, 2019), (Reuters, 2018), (Nielsen, 2019), (Pariona, 2019), more than 80% of the population has access to internet and more than 70% has access to smartphones which shows that technology is remarkably transforming international retailing by not just making it more efficient and far-reaching but also more competitive.

Following questions are answered in this case study solution

  1. International Retail 

  2. Factors transforming International Retail

  3. Impact of the factors on the operations

  4. Conclusion

Case Analysis for Hudsons Bay Company Restructuring In A Retail Decline Case Solution

1. International Retail

One of the most booming sectors in recent times is international retailing. It involves taking the retail operations, retail ideas, management expertise, technology, and purchasing role out of the domestic market. According to Hollander, there are 5 main reasons why companies go for international retailing, and they are (Gilbert, 1999): 

  • Unintentional: Sometimes, national boundaries shift, resulting in inadvertent internationalization.

  • Non-monetary reasons: some companies move the retail operations out of the home market due to ethical or social reasons.

  • Money motive: gaining market knowledge, learning new techniques and attaining higher profits are some of the commercial reasons. 

  • Expansion Opportunities.

  • Strict regulations: to avoid severe regulations and control in the domestic market.

This report includes an assessment of four significant macro-environmental factors that are transforming international retailing and the impact of those transformations. 

2. Factors transforming International Retail 

i. Political 

A lot of political factors have a significant impact on international retailing because they play a role in determining the cost and ease of doing business in a particular country as well as future sustainability. One of the most important factors is the governance system. According to Legatum Index Government Ranking, Canada is one of the best-governed countries in the world ranking 7th, closely followed by USA ranking 11th, then Germany 16th, Belgium 17th, and France standing at the 20th place (Cago, 2017). This highlights that there is no political instabilities and long-term and consistent policy formulation. 

As table 1 show (Heritage, 2019), all the countries have strong property rights and judicial effectiveness leading to low corruption percentage. Also, due to sound governance and powerful authorities, there are fewer chances of civil unrest and terrorist attacks. 

 

Canada

USA

Belgium

France

Germany

Government Integrity (%)

84.6

77.4

72.5

67.9

81.3

Judicial Effectiveness (%)

69.4

78.6

61.4

66.1

75.4

Property Rights (%)

87

79.3

81.3

82.5

79.9

Table 1: Governance Statistics

ii. Economical

Table 2  (Heritage, 2019), (OECD, 2019), present major economic factors that play an important role in transforming international retailing. In terms of GDP, the USA is the biggest economy; however, Canada followed by Germany is the fastest-growing ones. Also, Germany has the highest disposable income per capita, followed by France, which means higher spending. On the contrary, the USA and Belgium have higher inflation, which reduces purchasing power. Expanding retail operations from Canada to these countries is costly due to their higher currency. Moreover, France has the highest unemployment rate, and Germany has the lowest.

 

Canada

USA

Belgium

France

Germany

GDP ($)

1.8 trillion

19.4 trillion

528.5 billion

2.8 trillion

4.2 trillion

Growth (%)

3.0

2.3

1.7

1.8

2.5

Inflation (%)

1.6

2.1

2.2

1.2

1.7

Disposable Income/Capita ($)

30,854

31,099

30,364

31,304

34,297

Exchange rate (equal to $1.00 CAD)

$1.00

$0.75

€0.67

€0.67

€0.67

Unemployment (%)

6.3

4.4

7.4

9.4

3.8

Table 2: Economy Statistics

iii. Social

Major social factors that impact international retailing include demographic trends, class structure, spending ideology, etc. These factors determine not only consumer demand patterns but also the quantity and quality of the workforce available. In terms of population, the USA has the lead and Belgium ranks last compared to others. However, as shown in Figure 1 (World Bank; World Development Indicators, 2019), all the countries have ageing population because the percentage of the population in the 0-14 age bracket is low. Very high literacy rate, as depicted in Table 3 (Burton, 2018), (Ventura, 2018), hints a high level of awareness and income. Majority of the people make their own buying decisions. All the countries, especially Canada, Belgium, and France, have consumption-oriented society as their household saving rate is very low.

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