Assignment task:
Read the Case: "To Enter or Not to Enter Competitive Environment of Supermarkets in Hong Kong" and Answer the Questions Below
Case Synopsis: This case describes a hypothetical situation faced by a fictitious international conglomerate, ICL, that intends to enter the retail grocery market in Hong Kong. The conglomerate's interest in the Hong Kong supermarket industry was initially kindled by the plan of Hutchison Whampoa, Ltd. (HWL) to sell its leading supermarket chain PARKnSHOP in August 2013. However, in October 2013, HWL reversed course and decided not to sell PARKnSHOP, saying that the sale would not deliver maximum value to its shareholders. Before embarking into new territory, ICL wanted an in-depth understanding of the Hong Kong grocery market environment, competitors, and potential barriers to entry. The conglomerate was aware that the new Competition Law, which was expected to take effect in 2015, might have profound implications on the grocery market landscape in Hong Kong.
Learning Objective
This case provides students with an understanding of the competitive behavior of dominant players in an oligopolistic industry and the importance of competition laws to counteract certain anticompetitive conduct. Drawing on the experience of failed and successful entrants, students can explore various business strategies and formulate a strategy for a new supermarket entrant in Hong Kong to maximize its chances of success.
Case Study Question:
Q1. Analyze the competitive environment of the supermarket industry in Hong Kong and the competitive response of the two leading supermarket chains. Does the competition of the two leading chains' parent companies in multiple market segments have an impact on the competitive environment?
Q2. Analyze the strategic positions of PARKnSHOP and Wellcome in the market, and in particular, their bargaining power vis-a-vis suppliers and consumers. What are their keys to sustaining leadership in the market?
Q3. What strategies did PARKnSHOP and Wellcome use to overcome the challenges posed by their competitors? Are there legal risks in pursuing such strategies with the Competition Ordinance in place? What is the impact to consumers when the supermarkets try to defend their market share?
Q4. Should the international conglomerate enter the retail grocery market in Hong Kong? If so, what could it do to increase the chance of a successful and profitable entry?