Evaluate the business diversification strategy for a retail company.

International Business


Evaluate the business diversification strategy for a retail company.

Case Studies

CASE STUDY (20 Marks)

“Chile’s Falabella – Succeeding through an Integrated Retail Strategy” traces the journey of Chile based retailer S.A.C.I. Falabella (Falabella) to becoming one of the largest integrated retailers in Latin America. A brief history of the company shows that the company progressed with an insight into its business diversification and internationalization strategy. Falabella’s adoption of the ‘integrated retail’ strategy was quite fruitful for the company. The case also depicts the company’s focus on catering to the distinct needs of the various customers across Latin America, which helped it in not only creating a strong market position for itself, but also in staving off competition from multinational retailers. The case concludes with a look into the company’s future plans, which included an expansion of its retail footprint and strengthening of its ecommerce business.


Answer the following question.


Q1. Evaluate the business diversification strategy for a retail company.


Q2. Analyze the international expansion strategy undertaken by a strong regional player.

CASE STUDY (20 Marks)

Mehta & Company is an Indian manufacturer exporter of aluminum profiles. Mehta & Co always use open top container for export. This exporter sent his one FCL consignment to foreign buyer at Germany. After receiving consignment at Hamburg Germany, importer (Buyer) found that there was water inside the container. Aluminum profile was also damaged. Therefore Germany buyer rejected this consignment. Mehta & company were ready to take back container in India for repairing and reengineering. After  repairing and reengineering they want to re export same container to original buyer at Germany.

Answer the following question.


Q1. Is it possible to bring back exported container in to India? Explain.


Q2. What are Customs formalities while import of exported container?


Q3. What are Customs formalities while re export of repaired material?


Q4. As per Customs, What the main conditions for re export of repaired /re conditioned items.

CASE STUDY (20 Marks)

EU Trade Commissioner Karel De Gucht, the Belgian Minister of Foreign Affairs Steven Vanackere representing the Presidency of the Council of the European Union (EU), and the Korean Minister for Trade Kim JongHoon today signed a Free Trade Agreement (FTA) between the EU and South Korea. This FTA is the most ambitious trade agreement ever negotiated by the EU and the first with an Asian country. Today’s signature signals a significant step on the road to its implementation and is one of the main events of  the EUKorea  Summit taking place in Brussels today. “The agreement between the EU and South Korea marks a significant  achievement in improving our trade links. It will provide a real boost to jobs and growth in Europe at this critical time. This wide ranging and innovative deal is a benchmark for what we want to achieve in other trade agreements”, said Commissioner De Gucht. “Tackling the more difficult nontariff barriers to international commerce can cut the costs of doing business as much if not more than getting rid of import duties.” The text of the FTA was initialed between the European Commission and South Korea on 15 October 2009. Since then the text of the Agreement was translated into Korean and 21 EU languages. All EU Member States have signed the FTA ahead of today’s official signing ceremony. The date of provisional application will be 1 July 2011, provided that the European Parliament has given its consent to the FTA and the Regulation of the European Parliament and of the Council

implementing the bilateral safeguard clause of the EU South Korea FTA is in place. The EU Member States will have to also ratify the agreement according to their own laws and procedures. One study estimates that the deal will create new trade in goods and

services worth €19.1 billion for the EU; another study calculates that it will more than double the bilateral EU South Korea trade in the next 20 years compared to a scenario without the FTA. The agreement will remove virtually all import duties between the two

economies as well as many nontariff barriers. It will relieve EU exporters of industrial and agricultural goods to South Korea from paying tariffs. Once the duties are fully eliminated, EU exporters will save € 1.6 billion annually. Half of these savings will be

applicable already on the day of the entry into force of the Agreement. The FTA will also create new market access in services and investment and will make major advances in areas such as intellectual property, procurement, competition policy and trade and sustainable development.

Answer the following question.


Q1. What are the objectives and contents of the recent free trade agreement signed between the European Union and South Korea?


Q2. What are the economic underlying principles of this agreement?


Q3. Why has the agreement been questioned both in the EU and South Korea?


Q4. Why are Japanese businessmen worried about the agreement? Why are Japanese policymakers trying to sign a similar deal with the EU?

case (20 Marks)

In September 1988, Warner Hindustan was merged with Parke Davisboth offshoots of the same parent, Warner Lamber Company of  the US. Parke Davis had a single location at Mumbai, and Warner Hindustan was multilocational. The vagaries of the oppressive

Drug Price Control Order (DPCO), the fact that both the companies belonged to the pharmaceutical industry, and the potential of realising synergies had ied to the merger. The objectives to forge an alliance were : creating a scope for growth, building complimentarily in product portfolio, and leveraging their brand power. The two companies had very contrasting cultures. Parke Davis was a people driven company which practiced participative and democratic values. It was basically a positively oriented conservative company. Here employees had interpersonal relationship based on trust and respect for each other. On the other hand, Warner Hindustan had a task oriented culture. There was a high level of cost and profit consciousness, and a controlled, formal, and documented work culture. Risk taking by managers was encouraged. After the merger, the management focused on the rationalizing of facilities/resources, structuring departments, and allocating designations. However, no attention was paid to the two different sets of operating rules being followed in one post merger company. After the merger there was a continuous clash in the culture and working system for a long time, as if two separate companies were working under the same roof. The average employee felt alienated and insecure. It also led to the formation of cliques. After four years, in 1992, when conflicts manifested themselves in the form of works top page and low productivity, the top management of the company got together and created a new vision and mission statement for the company. The purpose was to create a common set of goals for the employees of both the companies. Though the efforts to resolve the problems had been taken; still differences were evident from the departure of several top managers. The process of cultural integration had apparently not succeeded.

Answer the following question.


Q1. Discuss the manner in which merger of the two entities took place. Analyse the case and find out the reasons as to why the process of cultural integration had not succeeded? Justify your answer.


Q2. What strategy you would have suggested to merger of the two entities successfully? Justify your suggestion.

Evaluate the business diversification strategy for a retail company.


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