Contents

Introduction 2
Kmart Launch in New Delhi
1. Why New Delhi for Kmart 2
2. Entry Strategy... 3
3. Operating Environment... 4
4. Cultural Profile of New Delhi.. 5
5. Organization Structure 6
6. Staffing Policy7
7. Communication Issues.8
8. Leadership and Motivation..9
9. Legal and Compliance Issues10
10. Communal concerns between India and Australia.10
Recommendations...11
Conclusion.12

Introduction
This report examines and illustrates the various components of the launch
strategy of the discount retail giant Kmart into the Indian capital of New Delhi.
Kmart is the third largest US discounter behind Wal-Mart and Target.
Headquartered in, Hoffman Estates United States. The company founded by
S.S. kresge in year 1962. Company delivers numerous types of products;
clothing, appliances, toys, food, house wares and jewellery, serving more than
978 locations all over the world. Kmart Corporation is wholly owned subsidiary
of sears holding corporation from 2005. This report clarifies on the strategy for
launching and challenges Kmart would face while launching in India.
1. Why New Delhi for Kmart
The Indian market has immense potential and lots of opportunities for
outsiders to invest.
It provides a huge market for any new business in the field. Our
expansion plan to Delhi has a reason we are going to focus on lower to
upper middle class people. According to statistics there is 28% middle
class and 20% fall in the lower middle class which constitutes
approximately half of the Delhi population (Delhi development
authority).
Our target is the Middle class, as they can easily afford buying from the
discount store, rather than going to small vendors around the streets. A
good number of migrants every year shift to Delhi that will also add a
point for growth.
Our strategy is to influence the traffic by low pricing and multi product
store under one roof. By giving our future customers world class
shopping experience.

Because of huge traffic its hard for shoppers to travel from one retailer
to another retailer our focus is to provide all products in one roof.
Moreover, geographical area of Delhi is too large, future plans will be to
open more stores throughout the city of Delhi. One more good future
indication is that Delhis per capita income for previous financial year
increased by 13.50% in the year 2014-2015 (The times of India, 2015).

2. Entry strategy
Kmart will come up as a new hope for the population of New Delhi, as we are
established from long time and know how to deal with diverse culture.
Company is dedicated to provide convenient and accessible place to shop.
Further strategies are discussed in detail:
a) Exchange and return: This will be totally new concept in India, to
give leverage to customer. Now they can decide whether they like to
keep that product, if not they will get their money back. By doing this,
we are giving customers more flexibility.
b) Social media marketing: Being a Discount retailer to launch in a new
market, we need the best marketing strategy. Using social media
channels like Facebook and twitter, to promote and create awareness
among

existing

customer

about

low

price

commodities.

c) Strategic partnership: Strategic tie-ups with already renowned firm

Reliance Fresh. They have strong back-up with 1691 outlets all over
the country and the company is planning to invest more in next 4
years (Rediff business, 2013).

3. Operating environment
New Delhi used to be a place for local markets but now its growing and
developing. Moreover, there is a huge competition like pantaloons, BigBazar, Lifestyle, Vishal Mega mart etc.

Location- Kmart will be located in the mall because there we will

have a key advantage of car parking and transports. In Delhi,
there are some good developing areas where we can establish

the business and make a good image in the society.

Economic factors- The currency would be a matter of concern.
As there would be the use of foreign exchange. Currency risk
would be on higher side. Furthermore, there is low-risk chances
and high income. There are some advantages for investing the
money India like
- A well democratic system that can ensure the business stable.
- A good administration and a well-independent judicial system.

Social and cultural factors- We have an idea about the

traditions and customs of Delhi like what type of product people
like in India. In addition, we have planned to use the traditional
stuffs with great customer service. In Delhi, people like to
bargain so we are going to provide them with special offers and
discounts.
5

Political and legal factors- This is a significant factor that

should be considered. We will have a legal valid license to run
the business in Delhi and valid Tax registration number which is

equivalent to ABN of Australia.

Market/Demand- We have a good knowledge about the market
like whats the demand. We would be facing many competitors so

we are ready with a competitive strategy.

Technology- We will use the latest technology like online
shopping, self-checkouts, price check machine. These kind of
services are not used in Delhi. Therefore, we will have a good
competitive advantage that can attract people.

4. Cultural Profile of New Delhi

Delhi is a place where people follow modern trends as well as customs.
These are as followFrom local governments- we would anticipate a lot from the local
government like any tax exemption scheme, good security system.
Moreover, economy should be contained properly that can attract to
spread the business on many different locations.
Suppliers & Distributors- we will have good suppliers that we can get
good traditional items on good price. In contrast, we can start our own
manufacturing factories that can also help us to reduce the product
cost.
Competitors- We will have a competitive advantage like for entry in the
market. Our good competitive strategy will help us to sustain in the
competitive market of New Delhi.
Customers & Community groups- we are going to give customers
discount vouchers if they will give their precious time of filling the
customer feedback form online.

5. Organization structure of Kmart

CEO
(KMART)

AUSTRALIA

CORPORATE MANAGERS
(HR, FINANCE,
OPERATIONS)

GEOGRAPHIC
DIVISIONS MANAGERS

AUSTRALIA

STORE
MANAGERS

NEW
ZEALAND

STORE, MANAGERS

INDIA
STORE MANAGERS

The organization chart for Kmart for entering the Indian market will be
divisional organization structure as it is suitable in offering products in a
variety of different markets which customers have different preferences and to
give customers product and services they require(Meyer, Mudambi & Narula
2011), divisional organization structure gives geographical managers the
ability to make autonomous decisions according to the market they are
serving this way they can swiftly react to changes in their specific business
environment(Snow 2015), India is a perfect example of a dynamic market that
has a lot of cultures and having someone that can make changes quickly will
make a big difference.
With each division structured like a functional structure, and having a strategic
business unit to satisfy the different market groups and in this case , the
Indian culture is so diverse with so many cultures from different regions all
7

meeting up at New Delhi where Kmart will make its maiden entry to the Indian
market. And one of the advantages of the divisional organization structure is
that its suited for an environment that is fast changing and it allows for units
to adapt to differences in products and customer preferences and this is seen
in the Indian market which has a lot of competition from small to medium
sized enterprises.

6. Staffing policy
The staffing policy to be chosen in India will be polycentric policy, polycentric
approach contains host country nationals that are recruited to manage
subsidiaries in their own country and in this case the unit manager will be from
India and a person who understands the local market structure and culture of
India and especially the market structure of New Delhi(Hill 2008). While the

parent country nationals occupy positions at corporate headquarters,

which are based in Australia, in the polycentric approach recruitment is going

to be done in India and special consideration will be given to Indian nationals
who have an extensive knowledge of the market and can realize and act on
changes in the market when they occur and thus minimizing mistakes and it
will be cheaper for the parent company as it wont undertake extensive
training on the culture and language as by selecting and recruiting the correct
employees it would only train its Indian employees on the company culture
and it would be an opportunity for the company also to get first hand
information about the Indian market(Sebastian Reiche 2007).

7. Communication issues
9

Communications happens both internally and externally in an organisation,

which may also include some barriers like language barriers across nations,
also the new staff may not be able to connect well with the existing employees
that further causes communication gaps (George 2015). The issues, host
country may face would be the time difference between both the countries,
which varies from 4 hours and 30 minutes to 5 hours and 30 minutes
throughout the year as Australia follows daylights saving whereas India has a
standard time. Also, in India the stores operate from 10 in the morning till 9 at
the night whereas the stores in Australia shut around 5 in the evening, which
further leaves a very small window of communication of about 3 hours when
stores in both the countries would operate at the same time. Also,
communicating cross borders can be a bit hard at times as both the countries
have different linguistic approach and when we talk about India.
8. Leadership and Motivation
As we know the main element of Leadership is motivating the team or a group
of members or employees and leadership is one of the primary functions that
help run any business activity. So, in the case of setting up the business
overseas the leadership has to be as great as possible, also because the
business is expanding and exploring more opportunities and currently has a
great reputation and can possibly reach even higher stages of success as the
economy of India is growing gradually and shares a common border with
China where most of the electronics and other products come from, which can
definitely be an advantage to the company as it can take the benefits of free
trade and cut down on the transportation costs as well. In this scenario, the
leader must be inspirational and motivational to the employees. The staff will
be provided suitable training so that they are full of energy on the launch of
the store and could further provide the best quality of service and also, serve
every customer with a smile. The organisation should facilitate incentives or
other benefits like health insurance for the employees for achieving their KPIs.
All the employees must be shown the organisational goal and must be trained
accordingly so that every member has a common goal and a shared vision
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and further the best performer of the month could be awarded as the title of
the Employee of the month. Although every country has different ethics,
cultures and taste, but there must be a blend of the Australian practices in the
operating activities as well as Kmart has an outstanding reputation in Australia
and would be representing the country in the very first store of India for the
first time.

9. Legal and Compliance issues

The relationship between India and Australia is getting concrete over last few
years. There has been lot of improvement between India and Australia in
terms of Trade and Investment after the recent visit of Indian Prime Minister
Narendra Modi. The key challenge in launching Kmart in India is the issue of
bribery and corruption. There are many political issues and laws in doing
business with India. As per our study about business in India, speed money is
a very regular practice which is used for obtaining certain licenses, permits,
approvals from government units. Kmarts risk management team is aware
about the challenges which they are going to face in doing business in India
and they have also developed strategies to deal with these challenges. Kmart
is going to take help of anti-bribery and anti-corruption units which is an
initiative undertaken by the Indian Government. We are also going to include
clauses in our contract which will support anti-bribery and anti-corruption. Our
team will give successful training to all the staffs on the policy of anticorruption and anti-bribery. Apart from this, there have been employment
compliance issues while doing business in India.

10. Communal concerns between India and Australia

There are many factors influencing the host country when it goes overseas.
Factors like political environment, economic, technological and social stability
are the major concerns of our company in doing operations in India.
Launching Kmart in India will not only bring revenues but will also improve the
current retail trade scenario in New Delhi. The demand for skilled employees
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is always high because of high job opportunities. Doing business in India will
open the doors for unemployed individuals which will strengthen the Indian
economy. Investment in India will also create job opportunities for the people
in India while it might create negativity from small businesses as Kmart will
take a chunk of their businesses. This will help the Indian government in
solving the major issue of unemployment. Political stability and economic
stability are the major concerns of India. All our operations in India would be
as per the standards set by the Indian government. At every stage, our team
will take into account the moral values and ethics which will help in achieving
corporate social responsibility and to sustain in a competitive environment in
New Delhi. Our management accounting team is giving importance to the
major regulatory bodies and the laws set by them. Local community concerns
formed an important part in our planning process. Our aim is to build a strong
relationship with the Indian community through our business so that we can
think for future projects for other Indian cities.
Recommendations

Use of technology and high speed internet in the workplaces so that

messages can be conveyed efficiently through email and video calls.

Proper advertisement must be done in order to seek attention of the

audience.

As labour is cheap in India, setting up a manufacturing plant can be a

good idea.

Like most of the other online retailers, Kmart can provide free home delivery
within the radius of 10 kilometres and also, offer same day delivery on a
certain charge of about Rs100.

Conclusion

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Though India is a tough market to enter as it has a large number of small

family owned businesses which have survived generations and a culture of
haggling over prices which have enabled this small business to survive, our
strategy will be capitalising on the huge traffic jams that rock New Delhi and
enabling a shopper to get everything on one roof at competitive prices
targeting the middle class income earners, there would be a very small room
for failure.

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