OCADO’S INTERNATIONAL EXPANSION ANALYSIS - Canada & Turkey
Comparison & Recommendations between Canada & Turkey
The clean government of Canada makes corruption remains a very low level and this can provide a good environment for companies to do business in Canada because all companies play by the same rules. On the other hand, Corruption is widespread in Turkey. Ocado might encounter some facilitation payments which will cost extra budget. A contributor to World Economic Forum, Kochanova (2015) states that in the unfair recruitment environment, Ocado could hire a non-optimal number of employees because of a misallocation of talent. Those unqualified workers might cause a high technology company like Ocado facing some operating problems.
Ocado makes lots of effort to progress their intellectual property (IP) which is the core of their business (Ocado n.d.). Therefore, intellectual property protection is very important for the company. Canada has a great performance in protecting IP, on the other hand, Turkey does not have an effective system to protect IP.
Canada's supermarket and grocery industry are stature and in a highly competitive environment. While Canadian grocery giant Loblaw and Walmart is going to expanding home delivery service (Massow 2017). In Turkey, it might be less competitive, but there are also some companies already launched online grocery industry such as Migros.
Although the GDP is in a high rank, the purchasing power growth in Canada is limited. This situation makes many customers purchase groceries in some more affordable retailers (IBIS World 2018). Based on the investigation of Atici and Bati (2010), 58.3% of the people thought the reason for shopping online is that they can get more economical prices. Thus, the low price of Ocado's products is possible to attract many customers either in Canada or in Turkey.
The unemployment rate in Canada is relatively low. This means fewer people were looking for a job, so the cost of hiring an employee will be higher than in past years. Moreover, since Canada is a developed country, the wages are already higher than in developing countries. Ocado can find highly skilled labour force in Canada easier, those workers are necessary for a technology-based company like Ocado. However, the unemployment rate in Turkey is much higher than Canada which reached 11%. It is easier for Ocado to recruit workers since there are more people are looking for a job. On the other hand, the company could probably affect crime and protest due to the high unemployment rate.
The continuing devaluation of Turkish Lira could make the price higher and the goods might face an unsatisfied sales volume. In contrast, the stable situation of Canada dollar provides a stable financing environment for Ocado.
The free expression could help companies to evade some unfounded litigation and could make it easier for business to access information. This is very important for a company like Ocado which highly relies on the online market to make a profit. Furthermore, Ocado's advent technology is related to the innovation of the company, freedom of expression could also impact the creative minds of local employees, because it requires different thoughts and actions. Due to the high level of civil liberties, innovative employees are more likely to recruit in Canada which could help Ocado to improve their current technology.
The authoritarian government in Turkey limited the free expression of their people, this could also affect the number of innovative employees and the ability for local people and the high score of uncertainty avoidance shows that Turkish cannot accept new things well which could cause some problem of choosing Ocado.
Because the consumption of alcohol and pork are prohibited in the Islamic doctrine and in fact, the consumption of these goods is extremely low in Turkey. Thus, it is almost impossible to sell pork and alcohol in Turkey. Ocado should take this issue into consideration and try not to offence their religion. In accordance with the data from the Central Intelligence Agency (n.d.), the major religion in Canada is similar to the United Kingdom, both are Christian. In this case, it is easier to decide the sellable goods categories in Canada.
As mentioned above, cyber attack is not only a serious issue in Turkey but also having a serious influence in Canada. However, because of the lack of a large number of cybersecurity experts and large-scale cyber attacks, the cybersecurity issue seems more serious than Canada. Moreover, internet safety has been protected by the government well in Canada. As an online shopping company, Ocado has vast quantities of customer data and it will be a serious problem is data disclosure happens. Therefore, Canada seems more suitable for operating an online business.
92.7% of internet user is a big advantage for an online grocery company to launch in Canada. In Turkey, the internet user only reached 64.68% and most of them are not familiar with online shopping, it is difficult for Ocado to increase their sales in this country.
Turkey has a more Turbulence political environment and the threats of terrorism that is not suitable to operate a business. There are also some cultural differences that a UK company has to face if they launch Turkey.
Although Canada has a more competitive grocery market and a high labour cost, the whole business environment is better than Turkey. Thus, the final country selection is Canada.