Business Organisations and Environment Report
Belgium , Kaufland
With more than 600 international branches Kaufland is one of Germany`s most dynamic retail business. The quality, the diversified range of products and specially the low prices are the most important criteria of customer`s choice. With Kaufland , the customer is always in the spotlight .These are the basis of our success .The Kaufland group sells both food and non-food items. Kaufland`s brand is known as an ever-expanding brand always looking for a wide-ranging venue , giving to people as many jobs as possible.
The headquarters of the group is in Neckarsulm, Germany . The history of the company begins in 1930 when Joseph Schwarz started the partnership with Sudfruchte Grobhandlung Lidl & Co in Heilbronn. Company`s name was changed then becoming ” Lidl & Schwartz KG ” . In subsequent years the company expanded its range and became a food wholesale . Company`s expansion was interrupted after the Second World War , after that the company was rebuilt in Heilbronn . In 1954 it entered the A&O-chain.. The first regional warehouse was opened in northen Wurttemberg.
After Joseph Schwarz`s death in 1977, his son Dieter Schwarz took over the management of the company.The first department store outside of Germany was established in Ostrava , Czech Republic. In subsequent years , the company established branches in Slovakia , Croatia , Poland , Romania, Bulgaria and Moldova. In 2006-2007 , other store openings followed in Germany and Kaufland also took over shares of competitors. In February 2009 the corporation claimed to have 73,000 employees in Germany.
The Kaufland Group takes part regularely in European competitions in the field and has already been many times awarded for outstanding achievements and for the good quality of the offered products.
As one of Europe `s largest grocery retailers , we are offering a unique shopping experience by bringing our values to life and making “a difference” in our customers lives. We are a growth-oriented corporation continually assessing our expansion possibilities in existing and potential markets.
With this in mind, we are currently conducting a feasilibity study by analyzing the Belgian market.
Year ending in 2017 , Kaufland recorded a revenue of £9,503.65 with a net income of £374,52 . Compared with another retailer, Schwarz Group is the Germany`s third-biggest grocer , followed by Aldi with £7,603.25 in annual sales.
Belgium`s key-role in Europe is given by the fact that is the headquarter if the European Union and other major international organisations, such as NATO.
Belgium is a small and densely populated country , it covers an area of 30, 528 square kilometres and has a population of more than 11 million. It is also a developed country , with a open and advanced high-income economy. Belgium achieves very high standards of living
Belgium is one of the Benelux States. The official name of the country is Kingdom of Belgium. It`s located in west Europe at borders with France, Germany, Luxemburg , the Netherlands and the Northen Sea. The territory of Belgium is geographically divided into three regions : the coastal plain in the northwest , the central plateau and the south-east Ardennes. The territory of Belgium is located in a temperate climate. The average age if the inhabitants is 40.9 years. Belgium is a constitutional monarchy that has a federal democratic parliament government form .The capital of the country is Bruxelles with almost one million habitants. Regarding religion , roman-catolics are the one who prevails with 75% , the rest of 22% of the population are protestants. Belgium is considered the crossroads of the Western Europe and Bruxelles is only 1000 km away from all the Western`s Europe biggests capitals . Belgium gained its independence in October 4, 1839 , when the government declared Belgium`s independence to the Netherlands. In 1831 the King Leopod I came to the throne . Belgium has a modern economy based on private enterprises taking advantage of the central geographic position of the country , the well-developed transport infrastructure the industrial base, and the well-established economy of the country. Most industrial units are concentrated in the populated region of north Flanders. Due to the fact that Belgium has limited natural resources , Belgium is forced to import the vast majority of the raw materials and export many products , being dependendant to world`s market. In 2002 , it joined the European monetary union. The most developed industrial branches are : the machinery industry , the metallurgy industry , transports , chemical , textiles , glass and petroleum industry. In agriculture`s field we have to mention the sugar beet , fruits and vegetables, tobacco , cereals , beef , pork and milk.
Generally friendly to free-market competition , Belgium`s economy has long benefited from openness to global trade and investment. Among notable reforms instituted since 2014 are measures to strengthen competitiveness and consolidate public finances. The government has also pledged to improve Belgium`s competitiveness through changes in tax policy, labor market rules and welfare benefits. These changes have generally made Belgian wages more competitive regionally but risk worsening tensions with trade unions and triggering extended strikes.
The table below shows wages in Belgium increased to 3445 EUR/Month in 2015 from 3414 EUR/Month in 2014 . Wages in Belgium averaged 2855.71 EUR/month from 1999 until 2015 , reaching an all time high of 3445 Euro/month in 2015 and a record low of 2238 Euro/Month in 1999.
Economic growth increased in 2017 and is projected to stabilize at 1.7% in 2018 in 2019. Due to thightening labour markets and higher wages , inflation will increase substantially. Wages in Belgium is expected to be 3600.00 Eur/Month by the end of this quarter, according to Trading Economics Global Models and analysts expectations. In the long-term , the Belgium Average Gross Monthly Wages is projected to trend around 3700.00 Eur/month in 2020, according to our econometric models.
The overall regulatory environment is efficient and transparent. The business resistration process can be completed within one week.
Unemployment among skilled workers is low. In 2008 the unemployment rate was 8,2%.
Non-European Union nationals must apply for work permits before they can be employed.
Over the last three decades Belgium became a permanent country of settlement for many different types of migrants. In a short period of time, EU citizens make up just over half of the total foreign population in Belgium .1, 057.666 inhabitants are of a different nationality. In 2015 the largest group of non-Belgian nationality were French 159, 352, followed by Italians and dutch nationals, who numbered 156, 977 and 149,199 . The fourth position were moroccans numbered 82,009, followed by poles 68, 403 .
On 1 January 2017, Belgium`s population was 11, 267, 910. The number is fairly evenly distributed between sexes, although women outnumber men by approximately 200,000. The population density is 363 people per km2 (2015) , although the north of the country is much more densely populated than the south .
Our customers are in the 18064 group , i.e largely the working population , number 6, 919.768 and accounts for the bulk of the population . 2,062.561 Belgian residents are aged over 64 . The number of people aged 18 or under is 2, 285, 581.
In 2017 there were 4, 877.805 households in Belgium, of which 1, 674.218 were single person household. There are 930.665 couples without children. Couples with children number 1,985.029.
Considering the massive size of market we strongly believe it is worth to go after this expansion in Belgium as it is compatible with our objectives and resources.
Our target segment is the middle class household , who is looking for quality with a low cost price. Our customer is generally seen as the cheerful and communicative type, who is looking for the well-being state , which is difficult to be achieved through the classical marketing methods. By analysing customer`s behavior in our hipermarkets , we noticed that he is amazed by the large variety of brands . Sometimes he might not be informed about the new products and that doesn`t help none of us. Lack of information leads to loss of confidence in certain products . That`s the reason why we made available in each district of the hypermarket specialized personnel to provide all the customers with all the information about the products.
Is an extremely important element in Belgium`s economy. The combined value of exports and imports equals 167 percent of GDP. The average applied tariff rate is 1,6 percent . Non-tariff impede some trade. In general, government policies do not significantly interfere with foreign investment. The financial system remains relatively stable , but the banking sector has undergone restructuring and is now smaller than it was.
Belgium seems to have an odd relationship with corruption. While most people condemn it, many consider (minor) occurrences of corruption as inevitable. Likewise, while evidence shows that corruption harms competitiveness and growth and a number of indicators point to the underperformance of Belgium in the fight against corruption, the current government agreement does not contain any mention of anticorruption measures.
Belgium is the 16 least corrupt nation out of 175 countries, according to the 2017 Corruption Perceptions Index reported by Transparency International. Corruption Rank in Belgium averaged 19.87 from 1995 until 2017, reaching an all time high of 29 in 1999 and a record low of 15 in 2013.
The trickledown effect of corruption usually ends up feeding black market interests and may even support the effort of organized crime as the activities infiltrate various business levels. Corruption fuels the growth of criminal enterprises and eventually affects the society in which the business operates.
(In the table below we can see corruption rank in Belgium averaged 19.87 from1995 until 2017 , reaching a time high of 29 in 1999 and a record low of 15 in 2013 . )
Import restrictions on quality and quantity of product – all EU Member countries accept the ” Community acquis” , , the entire body of EU laws and obligations associated with the treaties and international agreements to which the EU is a party. EU Member States share a customs union, a single market in which goods can move freely , a common trade policy and a common agricultural and fisheries policy. Most but not all food legislation is harmonized at the EU level. Imported products must meet existing Member State requirements in cases where EU regulatory harmonization is not yet complete or absent. U.S. exporters should be aware that products not covered by EU-harmonized food law may be subject to different national rules. That`s the reason why Kaufland will store over 50 percent of products made in Belgium, encouranging the local economy.
In the same time, this will be the first store in Belgium through which Kaufland implements the expansion project for fresh fish section , which will be brought in stores in the network. Red tuna, Saint Jacques shells , crawfish , organic salmon sill be the among specialities.
Secured parking places
Informational office at the entrance of the shops
Quality and fresh products
A grill-dining space provided
Dynamic and active personal always happy to support the customers
Strong financial position and marketing in the European countries
Large variety of products in different SKU with lowest price.
Weaknesses :Strong competition means the brand has limited market share
Limited penetration , so not accessible to everyone
Opportunities :The Belgian government has encouraged hypermarket installation
Kaufland adopts a flexible mindset when it comes to new store locations often taking on projects rejected bt competitors , turning failed locations (such as derelict Karstadt sites no one wants ) into winners.
Kaufland is highly competitive sector due to many players , so maintaining low margins is big challenge
Lack of information of the costumers can affect the progress of the hypermarket
How we can convert weaknesses to strengths by expanding the market share which means greater sales and lesser effort to sell more and a strong barrier to entry for other competitors.
Also, we can neutralize threats by identifying our competitors and the clearest way to do it is to figure out what would happened if we weren`t around. Who would supply our customer`s needs, and what would customers buy to solve their problems?
In Belgium,our direct competitors are Lidl, Aldi and Shop& Go . With this group, we are vying for the same customer dollar .
Lidl and and Kaufland are getting closer to each other – in many ways.
Substitutes and new entrants
In terms of competition we cannot restrict to think only about companies similar to ours. We need to consider firms outside of the realm of possibilities, such as those who compete in the market from a corporate strategic viewpoint. When contemplating the future, we need to envision any number of possibilities. And Belgium has infinite and unexpected possibilities.
Kaufland has an ambitious Belgian investment and development programme. Our management has carefully considerend its market, the potential customer base and its ability to grow its sales average to capture market share in the supermarket`s industry.
We monitor existing and potential barriers to working strategically and indentify implement actions to eliminate them ; focusing on having a successful business that will bring benefits to Belgium`s economy and its people. Kaufland aims to achieve the objectives proposed in terms of high profitability and social utility.
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