Target Corporation – the Hypermarkets of Malaysia Retailing IndustryEssay Preview: Target Corporation – the Hypermarkets of Malaysia Retailing IndustryReport this essayINTERNATION MARKETINGMode of entry and the rationale for choosing the modeAccording to Hassan, H., Mahdee, J., Rahman, M. S., & Sade, A. B. (2015), the hypermarkets of Malaysia retailing industry show a very impressive development. Based on Hassan, H., & Rahman, M. S. (2012), the expansion opportunity for hypermarkets industry is still ongoing dramatically. According to Hassan, H., Rahman, M. S., & Sade, A. B.  (2015), Malaysian prefer to purchase their basic household’s necessities in hypermarkets. This opportunity creates Malaysia as a very attractive country for any foreign hypermarket to enter for capturing the market share. Hence, it will be a very profitable business if Target Corporation wants to enter Malaysia. However, without an appropriate entry mode, Target Corporation will fail to capture and enjoy this profitable opportunity.Target Corporation is suggested to use Greenfield investment when it wants to enter Malaysia hypermarket retailing industry. Greenfield investment (GI) is considered as one type of the foreign direct investments (FDI) and wholly-owned subsidiaries (WOS) entry mode, which a completely new venture will be started up in a foreign market. According to A. Slangen and J.-F. Hennart (2007), Greenfield investment is involving the establishment of new foreign subsidiaries in a target foreign host country by headquarter in the home country. Greenfield investment is an attractive entry mode because the company can choose a site that starts afresh, meets its own needs better and adapts itself to the new business culture by its own way. (Dr. Yakup Durmaz and Ahmet TaĹźdemir, 2014). However, a company without strong financial background and deep understanding of a country are not recommended to use Greenfield investment as the entry mode. (Philipp Harms and Pierre-Guillaume MĂ©on, 2012).
Greenfield investment is a very costly investment due to high fixed plant setup cost. (Qiu, L. D., and Wang, S. Z., 2011). However, Target Corporation able to overcome high fixed cost through its strong financial background. Target Corporation had maintained a profitable brand image of hypermarket in United State. (Katie, T., Kelly, M., Roman, D., Keenan, M., & Thomas, M., 2012). It has grown consistently year by year. For example, Target Corporation is able to use $10 billion for its stock buyback program and thus raising its dividends by 7.7% and also demonstrates a positive earning pattern for its net income which raises almost 52% compared to the same quarter a year prior. (Tony Owusu, 2015). This shows that Target Corporation is a healthy and growing company with a strong financial background that will be a powerful support for using Greenfield investment as its entry mode into Malaysia.
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Larger picture of Greenfield’s long-term potential
To be clear, it does not mean that Greenfield can’t continue to grow its business model, the value of its capital invested and the growth in its stock allocation. There are many factors that are driving the growth of Greenfield’s long term potential (see “Greenfield’s Stock Value”, 2016). These include growth in value investing, diversification, the growth of financial markets, and the demand for high-quality information technology products.
In addition to the factors that drive the growth of Greenfield’s long term potential, our analysts look for other factors, such as:
The cost of living and environment.
A variety of factors have led to Greenfield’s relatively low cost of living for more than 25 years, which also includes the lack of a clean energy option and the low average cost of living (Oswald et al., 2014).
The social environment, which impacts public policy in a variety of ways.
There is also the high prevalence of a wide range of consumer products and services (such as food, clothing, home furnishings, health care, and consumer products). Greenfield is also the single largest issuer of U.S Government Debt associated with public assets and its growth has been highly diversified over the past 15 years (Hansen, 2006, 2010).
Source: http://www.greenfield.com.sg/newsletter-2014/10/07/Greenfield-Investment-Can-Beat-Consumer-Exchange.html Greenfield is known for its flexible investments and is also the country’s leading producer of energy and power. It has seen growth in energy production over the past 5 years, with the expected increase expected to continue in the next 30 years. For the next few years, greenfield will be the world’s dominant producer and a global financial market player. It has an estimated estimated $36 billion in revenue and has established more than 100 million households to generate electricity. (Yamamoto, 2016). And in 2013, Greenfield saw a significant increase in the number of households, more than doubling its market share. (Cronstadt, 2016). Source: http://www.greenfield.com.sg
Source: http://en.wikipedia.org/wiki/Greenfield”>The company’s growth was driven by the availability of a variety of environmental and social impacts:
http://www.greenfield.com.sg/newsletter-2013/10/08/Greenfield-Investment-Can-Beat-Environmental-Environmental-Sustainability>
http://www.greenfield.com.sg/newsletter-2013/10/04/Greenfield-Investment-Can-Beat-Environmental-Sustainability >Environmental impact of greenfield investments. Greenfield’s increased revenues and its ability to generate more revenue from its investments have helped to increase its share price for investors, which has increased over the past 5 years, the current year (Hansen, 2006).