SM Malls Global Expansion Proposal

Running Head: SM MALLS GLOBAL EXPANSION PROPOSAL 1

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SM MALLS GLOBAL EXPANSION PROPOSAL 2

SM Malls Global Expansion Proposal

The retail market has seen the rise in major companies not only providing the demanded

goods and services to customers but also customizing the products to suit the internal desires of

clients. On this basis, the Philippine market has experienced the growth SM Group Malls as one

of the leading retailers in the country. And with the diverse desires of the Philippine consumer,

the retail giant has maintained a healthy position in the market. Nevertheless, even though the

greatness and power of SM in Philippine is unrivaled, the growth in other outside markets is vital

for the expansion of the client base and ranking as number 191 worldwide in the retail market

(Deloitte, 2017). Thus, with the aim of venturing into the outside world market, as a group, we

saw that evaluating foreign direct investment (FDI), buying and piggybacking as helpful in

assisting SM Group Malls gain a positive reception in the abroad retail market is essential.

In the retail arena, SM Group faces global competition from other global retailers like

Auchan/RT Marts and Lianhua Supermarket in China, Wal-Mart Stores Inc, Carrefour, Costco as

well as Kroger Company (Deloitte, 2017). It is thus apparent that with the fight for the customer,

application of strategies that increase the visibility of SM and its marketing strategies is

important. Currently, SM Malls have a vast network in the Philippines with other well-

established malls in China. Among the key malls in China include SM Zibo (2015), SM Xiamen

(2001), SM Chengdu established in 2006 as well as SM Chongqing established in 2012 (SM

Investment Corporation, 2017). Notably, with the aim of venturing into the abroad market, SM

has various strategies vital in attaining its goals. These include foreign direct investment or

buying an already established company and redefining the operations of SM (Gioeli, 2014).

Notably, with a market like Malaysia, Singapore, China, Vietnam, the USA and Britain, the vast

establishment of other retail stores like Kroger and Wal-Mart pose a huge competition. Thus, as

SM MALLS GLOBAL EXPANSION PROPOSAL 3

an entry methodology, the purchasing of other minor retailers and rebranding to the SM Group is

a positive method suggested by the group.

On a positive side, SM Group is endowed with financial stability vital in making key

investment market. With annual revenues as high as 1.7 billion, with a well established and

dedicated workforce, venturing into the market abroad simplifies. As a group, we also noted that

SM Group has significant ownership in BDO Unibank Inc. and China Banking Corporation

(Oxford Business Group, 2016), but also possesses massive properties in Metro Manila,

Paranaque, and Mandaluyong among other areas (SM Investment Corporation, 2017). Thus, with

wealth deposits and investments across the nation, the establishment of SM Malls in overseas

markets is feasible. Hence, to increase its marketing strategy, spreading the wealth using new

platforms abroad by analysis of the client cultural differences and needs is a viable plan in

increasing its market share (Lavin & Cohan, 2011). Moreover, SM Group is under the leadership

of Henry Sy, possessing both the vital managerial skills and expertise in delving into the wider

Asian or USA and Britain market. On the client side, customer attachment ranks as another

essential concept for application in expanding in the American and European market (Lavin &

Cohan, 2011). Notably, with a home presence of malls in almost every city in the Philippines,

SM has an added advantage of loyalty and customer affinity. And with the many Philippines

abroad, associating with a home company in the host nation is a step in gaining buyer support.

Additionally, since the local market in the host country may be accustomed to locally

known retailers, partnerships ranks as another method vital in allowing SM Group set foot in the

abroad market (Gioeli, 2014). Remarkably, with the partnership methods, SM is highly able to

focus on gaining market share in the host nation by applying not only the host nations’ strategies

but also improving on the methods applied in doing business in Philippines and China malls.

SM MALLS GLOBAL EXPANSION PROPOSAL 4

The piggybacking marketing strategy ranks as a sufficient methodology useful for

application by SM in the global expansion. Notably, piggybacking is a marketing strategy

allowing one company to be represented by another alternative and competing firm but also raise

the viability and positivity of the organization in the host nation. Notably, with piggyback

marketing, SM goods are represented by global retail firms like Costco, Wal-Mart, Kroger Co.

and Carrefour (Deloitte, 2017) within the well-established client base on complimentary goods.

By representing the complimentary items and services provided by SM Malls, the firm has an

easier means of finding focus and footing in the international market in a cheaper manner. As a

Philippine top retailer, SM uses key diversified operations in the food and none-food sector. In

the food sector, SM deals with the retail segments of SM Markets, Alfa Mart and WalterMart in

providing and the SM STORE dealing with none-food items for lifestyle, home and office

products exemplifying quality standards (SM Investment Corporation, 2017). The diversified

recognizable brand position makes venturing into the broad market easier for SM Malls.

Apart from the ease of entry, SM Mall Company arenas have dwelt on delivering quality

goods at reasonably affordable rates for the clients. In this essence, with the zeal to set shops and

malls in Singapore, Japan, the USA, South Africa, Egypt as well as other developed countries,

focusing on quality and reasonable prices sets the benchmark for progress. However, although

the views of group members varied in several ways, it was apparent that competition and risks

rank as major setbacks in SM Group and Malls global expansion. Thus, dealing with the cultural

differences, legality matters, and local customer needs is important for success (Lavin & Cohan,

2011). Therefore, with the resources, manpower and managerial expertise, the rise of SM Malls

in China is an indication of gaining great progress abroad. Thus, through foreign direct

investment, piggybacking and buying, SM is well placed in growing its global market.

SM MALLS GLOBAL EXPANSION PROPOSAL 5

References

Deloitte (2017). Global Powers of Retailing 2017: The art and science of customers. Deloitte

Touche Tohmatsu Limited. Accessed from

https://www2.deloitte.com/content/dam/Deloitte/global/Documents/consumer-industrial-

products/gx-cip-2017-global-powers-of-retailing.pdf

Gioeli, A. (2014). International business expansion: A step-by-step guide to launch your

company into other countries. Los Angeles, CA: Over and Above Press

Lavin, F. L., & Cohan, P. S. (2011). Export now: Five keys to entering new markets. Singapore:

John Wiley & Sons, Asia.

Oxford Business Group (2016). The Report: The Philippines 2016.

www.oxfordbusinessgroup.com

SM Investments Corporation (2017). SM Malls in China. A new frontier for growth. Accessed

from http://www.sminvestments.com/sm-malls-china

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