Introduction

Internationalization can be described as “the process of increasing involvement in international operations”. (Welch and Luostarinen, 1988). It deals with how the firm adapts operations like strategy, structure, resources etc. to perfectly fit the international environments. The firms objective to internationalize their processes is to have a prominent global existence keeping them shoulder to shoulder with their competitors. International retailing is commonly believed to concern retail operations owned by a single company in more than one country. According to Gilbert:

“International retailing is the process of transferring retail operations, concept, management expertise, technology and /or buying function across national borders”.

Therefore international retailing is not the transfer of concepts to new environments but it is the establishment of operations in new markets. A concept can be internationalized without an international transferring organization but international retailing requires physical presence. Their influence is experienced both in the marketplace and within the supply chain, exercise their buying power and influence the development of suppliers within the markets they establish operations. The increase in size of retail operations has resulted in the international expansion on a large scale

Literature Review

Most leading retailers in different sectors have multiplied their foreign sales in the last two decades, but this growth is always accompanied by challenges in fields such as internationalization strategy, market selection and operations. Thus the change from emergent to planned activities (Dawson 2006), complex decisions (Goldman 2001; Sternquist 1997) and culturally influenced performance (Evans/Mavondo 2002) is particularly relevant in firms’ practice. Reasons for increase in retail internationalization can be credited to (1) attractiveness of foreign market (2) entrepreneurial ambitions, and (3) limited growth opportunities in home market (McGoldrick 2002; Alexander 1995a). Evidence suggests, out of 30 largest retailers, one in two retailers have already suffered failures in foreign countries (Alexander/Quinn/Cairns 2005; Burt/Dawson/Sparks 2004b). Many researchers examine in detail how retail internationalization can be managed successfully. These studies emphasize the development of explanatory concepts for the internationalization of retail firms, majority of them analyze internationalization on a conceptual basis. Thus they develop explanatory concepts on a theoretical and often a case study oriented basis in order to analyze the mechanisms on retail internationalization. Researchers have identified specific characteristics of retail firms’ internationalization which they extensively use as benchmark to base their theories of internationalization upon (Appendix 1).

There are several extant models that explain the internationalization of retailing and each of these models approach the internationalization process from a different perspective although the benchmarks are consistent with all the theories. The roots of most of these internationalization theories describing the internationalization process lies in industrial organization. In addition most of them were developed in the 1970’s and 1980’s. Researchers tested and provoked these theories every now and then, especially the Uppsala model of Johanson and Vahlne but were seldom able to replace them. Often researchers come up with further ideas about improvements and development to the existing models. Let us look at the most preferred internationalization models although these are not the complete set of models which are available but each of them considers different aspects of the internationalization process.

In this research The Uppsala model (Appendix 2) and the Strategic Choices (Appendix 3) build the base of the conceptual framework. We would use these models to analyze the internationalization strategies of the three companies which are Royal Ahold (Appendix 4), Delhaize (Appendix 5) and Carrefour (Appendix 6) in the US market. We would then use these findings to categorize the companies according to the Treadgold’s (1988) typology of transnational retailing (Appendix 7) which is based on entry, operating strategy and geographical presence of international retailers. The Eclectic paradigm and Transaction cost analysis only consider the cost side of internationalization and deciding about entering a new market on the basis of cost and benefits is improper. Also financial data is not being considered so Eclectic paradigm or the TCA as the conceptual framework would not be appropriate. The Industrial Network approach assumes company as a part of a network with long lasting relationship with business partners. The existence of networks is already considered in Uppsala model. Taking into account too many factors and the complexity of Retail internationalization model prevents it from being a basic framework. Also, seeing the internationalization process as an innovation does not seem enough. Uppsala model sees the internationalization process as an evolutionary process the Innovation model is considered to be very close to Uppsala model so the innovation model is left out.

Summing up, our framework consists of Uppsala model and Strategic choice model which very well complement each other so the analysis can give a good overview of the internationalization process of the company.

Royal Ahold

Began as a family firm in 1887 and went public in 1948, Ahold’s operations in food retail business spread across Europe and United States of America. It was not until 1970’s when Royal Ahold’s management realized that for the company to grow limiting its operations to Netherlands would not help as it dominated the retail grocery market in that country. At the end of 2009 Ahold operated 2,909 stores, excluding the joint ventures with ICA and JMR with a net increase of 12 stores. The first store outside The Netherlands was opened in 1976 as they opened supermarkets in Spain post which Ahold did an acquisition in US of a company named Bi-Lo a South Carolina based food chain. Other US holdings included acquisitions of five additional food retail chains which operated over 1600 stores.

Let us consider the Uppsala model of internationalization to analyze these strategies. Uppsala model consists of two different parts, we will start our analysis with the stage model which sees the internationalization process as a stepwise process through four stages. The importance of psychic distance is also stressed. Ahold’s expansion can be considered to be quick and consistent. Ahold focused on internationalization in a new country directly with a sales subsidiary enforcing its expansion strategy by the means of acquisitions as engine of growth. Referring to the Stage model this is the third out of four stages. Ahold, therefore starts and stays in the third stage of the model although it had few differences in operations when compared