For Kroger, probably the best way to expand its operations
in Mexico is through acquisitions of existing companies in the country or
through building entirely new plants and facilities. Both of these options have their advantages and
disadvantages. Acquisitions of an
existing supermarket retailer in Mexico would be the natural choice for
Kroger’s expansion plans. Kroger
already has tremendous experience in acquiring competing businesses in their
operations in the United States. Kroger
has acquired the locations of many of their main competitors throughout much of
the United States and have done so with great success. Acquiring competitor’s locations continues
to be a big part of Kroger’s strategy.
They should be able to use this experience to ease the process of taking
over another business and make the transition more efficient even though it is
in a new country. Acquisitions in
Mexico will require the approval of the CNIE when Kroger is acquiring more than
49% of their capital stock. However,
many large acquisitions of local firms will require Kroger to be cleared by the
Federal Competition Commission. Other
approvals must be reached for Kroger to build its own stores and distribution
centers before construction begins. If
Kroger takes this route they must provide specifications for new buildings to
the Secretariat of the Economy. Certain
factors are then reviewed, such as zoning, water use, and environmental impact,
before approval is granted. Kroger will
have to get special permission from the Department of Health before beginning
construction due to their pharmaceutical and food-processing activities. With careful research, Kroger should not
have a problem in getting their construction plans passed.
Kroger Expansion Prospects
Given all of this information Kroger has a good chance to
succeed and meet some of their strategic goals by initiating and expanding
sales into Mexico. Although it could be
a tough prospect at the beginning considering that this will be Kroger’s first
foray into a global market, the conditions are right for entry into the Mexican
market. The economy and the specific
industry of retail and supermarkets are booming and showing signs of continuing
this positive trend. On top of that the
market for grocery and supermarket chains is relatively open, Walmex being the
only major competitor. Kroger can
definitely take advantage of this fact and hopefully gain market share at a
quick rate. Given all of these
strategic advantages to expansion, Mexico looks to be a country that is not
extremely difficult to begin investing in.
Regulations and barriers to entry are all fairly low or simple to
complete if the proper research is done.
If Kroger can take advantage of these opportunities I believe expanding
operations into this country will provide Kroger with the continued success
that they see in their US counterparts.