As Lowe’s seeks new international markets to expand its highly successful home improvement model, the opportunities in the Asia market provide a unique untapped region. In Korea, recent political changes have opened its economy to foreign investors and businesses. Korea’s strong economic growth provides Lowe’s with the ideal situation of opening up stores before their competitors. Based on research I conducted, this assessment considers the potential of expanding Lowe’s into the Korean market.
With any major investment, it is important to consider the monetary and non-monetary aspects including gaining an understanding of the culture, the ideal management approach, past ...view middle of the document...
Lowe’s is focused on sales growth, increased profitability and enhanced shareholder value through long-term customer loyalty so that Lowe’s is the first choice for home improvement. During fiscal year 2012, Lowe’s had sales of $50.5 billion and served approximately 15 million customers a week at more than 1,825 home improvement and hardware stores in the United States, Australia, Canada and Mexico. (Lowes.com, 2013)
Lowe’s core values include maintaining high ethical standards in the workplace and around the world where they do business. Integrity is demonstrated every day through interactions with customers, fellow employees, vendors, shareholders and nonprofit organizations. Employees must comply with all applicable governmental laws, rules and regulations, and avoid engaging in unethical conduct. Lowe’s holds vendors and suppliers to the Lowe’s Code of Business Conduct and Ethics by providing clear guidelines for product quality and safety, and social responsibility by manufacturers. Lowe’s has more than 500 vendors in 19 countries with the largest concentration in Asia. (Lowes.com, 2013)
Lowe’s current growth plans are to expand stores in "high density" U.S. markets and international markets. International expansions begin in 2008 with several stores opening in Canada and Mexico. Lowe’s now has over 65 international stores in three countries. As stated by Bridgeford, Lowe’s Chief Customer Officer, in HomeTextiles "We believe international markets are part of our future, and to meet this long-term challenge we need a constant stream of knowledge and innovation. As we partner to expand into Australia and New Zealand…a smaller format retail model is needed, it serves as a vital educational tool as Lowe's looks to grow elsewhere beyond U.S. borders." He further added that the time is ripe to increase their number of international stores. (Corral, 2009)
Why South Korea
~ 2020 50,221,000
South Korea is officially known as the Republic of Korea and is located in the southern part of the Korean peninsula, which neighbors China to west, Japan to east and North Korea to the north. Korea covers a land area of 99,392km (squared) and has a population of approximately 50 million people. Korea’s economy is listed as Asia’s fourth largest and the world’s 15th largest. It is the planet’s most densely populated country with 400 people per square km mainly due to the nearly 70% of uninhabitable mountainous regions. The largest cities are Busan (5.5 million inhabitants), Seoul (11.6 million), Daegu (4.0 million), Gwangju (2.9 million), Incheon (5.4 million) and Daejeon (2.9 million). Rapid urban growth has resulted in various problems for South Korea including housing. High-rise apartments were constructed in order to help alleviate housing shortages.
South Korea is the United States’ seventh largest trading partner. The U.S. is the...