Coe's Store Global Strategy

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In expanding to the UK, Coe’s needs to exploit benefit from those distance differences using AAA framework. Since environments in the UK and the US are quite similar, Coe’s can apply both aggregation strategy and adaptation strategy for different value chain activities. To begin with, as Coe’s has a very successful business model in US, it can leverage this expertise to its new operation in the UK. Coe’s should use aggregation strategy to parts of its operation. For example, it can set up its store near big retail store in the UK to capture customers who need alternative when they have been turned down for credit. However, British culture have some distance to American culture and Coe’s should be aware of this difference and use adaptation strategy in some of its operation. In addition, Coe’s lease-to-own store is a service business, so the cost of changing some of its operation to suit new environment might not be so high. In the US, Coe’s is able to mark its prices up by 60-90% from retail prices and claim that it is providing must-needed service for customers. Whether duplicating this in the UK conforms with its laws and regulations needs to be studied. In addition, Coe’s needs to test the British market; whether the British people are willing to pay higher prices and allow for shorter contract periods in order to access the credit Coe’s provide. Also, promoting conversion to own furniture is also key strength of Coe’s operation that it should try to adapt to UK’s culture and regulation.

There are many way for Coe’s to enter UK market, and we use Internalization theory to see how much transaction cost to penetrate its business in UK. From the micro point of view, lease-to-own is a service business that Coe’s and leaseholders would have to engage in the similar transactions repeatedly over time. Coe’s might leverage its brand to form an alliance. However, it is risky for them to secure its unique strategies since its ally can easily use the know-how to open their own stores in the future. These indicate high transaction costs in micro point of view. From the macro point of view, the UK has high property right protections and strong political, social, and economic institutions. These indicate lower transaction costs in macro point of view. In conclusion, assuming the UK laws are open to a foreign lease-to-own business, Coe’s should set up its own operation in the UK.

In summary, Coe’s should expand its operation in to the UK since the country has similar culture and regulatory environment to the US. Also, with high GDP per capita, its population has the potential to be creditable Coe’s leaseholders. When expanding to UK, Coe’s should follow aggregation strategy for its unique operation with high conversion rate to own products and strategically locate its stores near big retail stores. In addition, it should localize its strategy and modify parts of its business model to suit the British cultures and regulations by doing in-depth research about local needs. Lastly, with its service nature that can be easily imitated, Coe’s should set up its own operation in UK.