MOD009194 Critical Perspectives Cross Border Business Assignment Sample

Introduction Of Critical Perspectives Cross Border Business Assignment

The acquisition of Alliance Boots by Walgreens Group marks a significant milestone in cross-border business expansion. In 2012, Walgreens, a U.S.-based company, acquired 45% ownership of the UK-based Boots, and by 2014, it completed full acquisition, forming the Walgreens Boots Alliance. The total investment was approximately $5.3 billion in cash and shares worth 144.3 million. This acquisition enabled Walgreens to become a multinational company with its headquarters in the U.S. while operating in the UK market. However, international expansion requires strategic considerations beyond financial investment.

To ensure a successful acquisition, Walgreens assessed key global factors such as ownership benefits, location advantages, and internationalisation strategies under the Eclectic Paradigm framework. It recognised Boots’ strong brand name, established market presence, and expertise as valuable assets for global operations. Additionally, cultural compatibility between the U.S. and the UK, evaluated through Hofstede’s Cultural Dimensions Theory, played a vital role in facilitating business integration. Political stability, economic conditions, ethical norms, and legal frameworks further influenced Walgreens’ investment decision. Moreover, resource-based theory suggests that acquiring an established firm like Boots provides long-term competitive advantages. Thus, the Walgreens-Boots acquisition highlights the complexities of cross-border business expansion, requiring careful evaluation of strategic, cultural, and economic factors for success

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TASK 1 

Global consideration taken into account by Walgreens group while purchasing UK Boots

Cross-border business means the company is expanding its operations to different nations. In the year 2012, the US-based venture Walgreens took over 45% ownership of the UK-based Alliance Boots. This remaining 55% of the ownership was taken over in the year 2014 and it held the formation of the Walgreens Boots Alliance. The price of investment was around $5.3 billion in cash and shares were allotted worth 144.3 million (Walgreens Boots Alliance, 2024). After the acquisition, the company has become the multinational parent company having headquarters in the US and operating the in UK business. There are global strategic considerations Walgreens would have considered to decide to obtain Boots in the UK.

Acquisition of an international firm is a form of international expansion that is considered by the organisation. Based on the Eclectic Paradigm framework, the company decides on foreign direct investment by considering the ownership, location and internationalisation benefit. It was the framework developed by John Dunning in 1988. Browaeys and Price (2019) stated that the ownership benefits in the different assets, abilities and the competitive advantage that the company may bring in the new market. It involves the transfer of the technology, knowledge and expertise that helps the running of the organisation in the international marketplace. Walgreens have considered the strong brand name and the assets of Boots to benefit the firm in the global operations (Walgreens Boots Alliance, 2024). This has led to the decision-making regarding internationalisation through the investment made in acquiring the UK firm. 

As per the location, Walgreens has the advantage of the locations that have lower cost in the UK as compared to the US. It gave the benefit of better cost and at the same time acquiring the established business (Hill and Hult, 2022). This made the FDI decision to invest in the well-established UK firm and achieve the expansion aim of the organisation. Internationalisation benefits can be effective in making the decisions to invest into the foreign firm. That explains about the way the company chooses to enter into the new nation such as joint venture, acquisition, Greenfield investment, etc. Walgreens chose the complete acquisition of the organisation in the UK that had the potential to bring the benefit of the established brand recognition.

The model helps in making the strategic decisions based on these factors which are cost, ways to enter, expertise, etc. Marshall (2022) contradicted that this model has limited scope and does not pay much consideration to the cultural differences of the new country. Hofstede's cultural dimensions theory is emphasised on analysing the culture of the new country that can help in making the decisions on the investment. This was developed by Geert Hofstede during the 1970s and 1980s. It works based on six dimensions that analyse the compatibility of the two countries which are the existing and the new (Islam, 2025). Walgreens based on this considered the cultural differences and similarities while making the investment decisions in Boots. The six-dimension evaluation is given as follows: 

• Power distance: there is low power distance in both countries which is effective in influencing the decision of the international expansion of the US-based firm in the UK. Both countries value equality over authority and allow open communication, decentralisation of power, freedom in the decision-making at different levels, etc. (Pereira et al, 2023). 
• Individualism vs. Collectivism: Both the US and UK have the highest score in individualism. This shows the similarities in the culture that can help Walgreens to effectively operate in the new market. Therefore, people prefer more individuality and own growth rather than focusing on the community as a whole.
• Masculinity vs. Femininity: The US and the UK both are considered to be masculine countries that value achievement, competition and assertiveness in their culture. People are success-driven and target oriented in working. This factor is helpful in understanding the culture of the UK and impacts the decision making of Walgreens to acquire the Boots. 
• Uncertainty Avoidance: The US score in Uncertainty Avoidance Index (UAI) is moderate to low. Similarly, the UK has the low UAI which shows both countries are values changes and new ideas. The countries are more accepting of the changes and show less resistance to them. This would have been a factor that led the Walgreens to make the decision to purchase the Boots.
• Long-term vs. Short-term Orientation: both counties tend to be short-term orientated as these focus on the fast results, short term gains and quick achievements. This is also focused on the fulfilment of the social obligations and value the tradition prevailing in the country (Abdeljaber et al, 2021). Walgreens based on this would have planned to invest in acquiring the Boots. 
• Indulgence vs. Restraint: Both the countries the US and the UK are more towards indulgence. This means that the nations value the human need and desire to have leisure, which sets the people free from the social norms and have liberty in doing things they like for enjoyment and fun. 

Beyond cultural considerations there are other factors such as political, economic, ethical and legal. These leads to the decision making of the internationalisation of the business given as below:

• Political: factors involve the political stability, fluctuations, government policies, foreign trade, etc. (Brunet-Jailly, 2022). These would have been helpful for the Walgreens while planning to invest in the Boots. The foreign trade in the US promotes free trade and economic growth. Similarly, the UK follows the liberal trade agreements that are effective in the smooth running of the import and export activities. The two nations have good trade relations that promote the better internationalisation of the companies. It can be a factor that would have been considered by the Walgreens while considering the purchase of the Boots. 
• Economic: Economic factors include the economic growth, inflation rates, employment level, disposable income, etc. The US has the largest economy in the world and the UK is ranked at sixth in the list (see Appendix 1). This would have been taken in the consideration by the Walgreens while strategizing to buy the Boots. Investment in the UK is beneficial for the firm due to being one of the largest in the world that can promise the better return on the investment made. It is also effective in future growth of the firm and development as planned. 
• Ethical: The ethical factors may include the ethics, values and beliefs pertaining in the community in the country (Tippmann et al, 2023). Both countries follow the ethics that values equal rights, transparency, corporate social responsibilities, sustainability, etc. This is effective in considering the decision of investment by the Walgreens in the Boots. It shows the beliefs in the country that can impact the business and its functioning in the international market. If there are any differences in these and organisation fails to fulfil it may impact the smooth working of the business as per the targets.
• Legal: The legal consideration by the organisation involves the law and regulations in the countries. There are certain laws regarding international business such as Trade Act 2021. This also involves the trade agreement, custom procedures, Brexit, etc. (Hazarika and Mousavi, 2021). It can have an impact on the organisation operations and influence the decision making on the investment. The US is the largest exporter of the UK which shows the liberal trade agreement in the countries. Both have custom charges and similar legislation that helps the Walgreens to have the knowledge of the UK and its legal environment. 

Other than the above, there are other considerations such as resources of the company that attract the firm to invest in the organisation. Ghauri et al, (2021) mentioned that through the resource-based theory the company can increase the assets and capabilities by investing in the well-recognised organisation. It presents the potential growth the new venture may bring in the new country. This is a strategic management theory which was developed by Jay B. Barney in 1991 (Jiang et al, 2023). This shows that the competitive advantage can be gained by internal factors such as value, uniqueness, organisation, etc. This would have been considered by the Walgreens while strategizing to purchase the Boots. 

TASK 2 

Challenges faced by Boots in UK and international retail sector 

The retail sector is considered to be the one of the most competitive in the UK as well as the world. Taherdoost and Madanchian (2021) mentioned that this growing sector presents various challenges in front of the companies operating in this industry. Based on Monopolistic Competition theory there is high competition in this sector where the companies are competing with each other to gain the competitive advantage. There are many firms selling similar goods, and the entry of new ventures is also not strict (Meyer et al, 2023). Boots in the UK have to face intense competition where the top players are continuously forming the strategies to gain the maximum market share (see Appendix 2). This can be an issue in the UK as well as the international retail market faced by the firm. 

• There is a rise in the use of the technology during the past years which is forcing the firms to constantly adapt to the new methods in the retail sector of the pharmacy in the UK. These impact the working of the organisation as it requires to stay up to date with the recent trends and invest additional amounts on the online mode. These can be a concern faced by the Boots in the local as well as the international market. It can have a great impact on the sale of the goods in the market. The venture has multiple store chains, and the high demand of the online goods can affect the visits in the stores. This evolving technology also has issues as it tends to change very drastically and needs the firm to focus on staying forward in the adoption to retain the place in the local as well as the international market. 
• Changing customer’s preference can be another issue which can be faced by the Boots in the UK as well as the international market. Dissonance-reducing buying behavior states that the consumer tends to buy the goods with the least difference and leads to doubt after the purchase is made. Goldman et al, (2021) mentioned that this is due to the firm not being able to meet the expectations of the buyers. The Boots may face these concerns if unable to provide what is expected by the buyers in the local as well as global market. The buyers in the marketplace are becoming highly aware and compare the different goods before they make any buying decision (Hu, 2021). This is a huge concern in front of Boots to keep the purchasers satisfied with its products and retain the position in the retail sector. 
• Low funding is another concern in the growing retail sector both in the UK and at the global level. There is an issue in receiving the funds and investment is low in the organisation which can be a concern in the smooth running in the local market as well as the expansion in the foreign regions. This highly impacts the investment decision in the new projects and hinders its activities as the retail sector demands high capital (Luo, 2021). It serves as a huge issue when the firm is low on the funds and unable to meet the capital requirement. The venture constantly has to make efforts to invest in the new technology, infrastructure so that it can serve as per the choice of the customers. 
• There are certain cultural differences in the different countries that can be a challenge to the organisation in reaching the various markets. The Lewis model developed by W. Arthur Lewis in 1954, is based on the categorisation of people on the basis of the communication style that prevails in the different cultures. This is a concern when the firm is unable to understand the culture of the other country and faces competition from the domestic players in the retail sector. The people are likely to prefer the international brand less if Boots is unable to create a positive perception in the minds of the people.
• The different countries have various policies regarding the trading in the international market, economic conditions, legislation, trends, etc. (Zhang, 2022). This is a challenge faced by Boots due to the indifferent condition in the politics, laws, rules, taxation, etc. The organisation needs to focus on these variations which can be difficult if unable to formulate the proper strategies or identify the factors. This can cause an issue in meeting the competition in the retail industry if the firm fails in meeting these factors and hinders the internationalisation. 

Here are the challenges that are preventing Boots in the process of international expansion which are needed to be overcome: 

• Intense competition can lead to the prevention of the internationalisation of the organisation. There are a number of firms operating globally which prevents the entry of the new company where it has the highest market share (Yang et al, 2023). This hinders the Boots decision to invest in the new places where there is high risk and uncertainty in the returns. However, the organisation needs the strategy to overcome this in order to establish itself into the new markets. It may involve careful market research, introduction of the new product to increase the demand, etc. which can make it unique among the competitors. 
• The changes in the technology are preventing Boots from investing into the new markets. There are different technologies being used by the different players in the local as well as the global retail industry (Shenkar et al, 2022). The company needs to have a proper understanding of the type of technological changes occurring in the different markets in the sector. This creates the need for the talents and skills to work on and the firm finds it as an extra cost that may increase the overall cost for the firm. 
• The customer preference keeps changing which leads to the shift in the demand of the goods in the retail sector. This prevents the Boots to expand in the international regions as it gets difficult to tap the ongoing demand and attract the consumers from the competition’s brand in the international market. There is high risk involved if the funds invested are high and the firm is unable to serve as per the choice of the people can lead to the losses. 
• Low availability of the funds is an issue that hinders the international expansion of Boots in the global market. The evolving retail sector required high investment in the technology, infrastructure, marketing, supply chain etc. (Sun et al, 2021). This has a negative impact on the company from planning to enter into the new markets due to being unable to secure the capital investment. It causes concern in the fulfilment of the various operational activities of the company in the new markets. 
• Cultural differences prevent Boots from entering into the foreign regions. The company when unable to identify and see the less benefit of the business activities in the new market often cancels the plans of expansion. There are other factors such as unstable economy, ethical issues, strict traffic prevents the firm from entering into the new marketplace.
• Cost efficiency is another challenge that is faced by the company which is needed to overcome to establish its business in the different countries. There is high cost involved in the supply chain, production, operations, meeting the staffing needs, training, technology, etc. (Zhou and Liu, 2022). This can cause additional costs and lead to lowered profits for the firms in the new market and impact the operations in the home country as well. 
• CSR and sustainability are a rising concern in the retail industry at global level. This is another challenge that the organisation needs to overcome. The business process needs to have work by considering sustainability and have minimum impact on the environment. Boots need to have better strategies that can help in resolving the concern of sustainability in the regional as well as the global market. This is how the organisation can effectively plan and work on the expansion in the new regions worldwide. 

Conclusion

The acquisition of Boots by Walgreens demonstrates how multinational corporations must navigate various global factors when expanding internationally. While the investment provided Walgreens with a strong foothold in the UK market, it also required careful consideration of ownership advantages, market conditions, and cultural differences. The Eclectic Paradigm framework helped Walgreens assess the strategic benefits of the acquisition, while Hofstede’s Cultural Dimensions Theory ensured that the cultural alignment between the U.S. and the UK facilitated a smoother transition. Additionally, economic stability, legal frameworks, and ethical considerations played essential roles in influencing the expansion decision.

However, despite the successful acquisition, Boots faces several challenges in the UK and global retail sector. Intense market competition, evolving consumer preferences, rapid technological advancements, and financial constraints pose significant hurdles to its growth. Furthermore, cultural barriers and regulatory differences continue to impact its international expansion strategies. To overcome these obstacles, Boots must focus on innovation, customer engagement, and strategic investment to maintain a competitive edge in the retail industry.

In conclusion, Walgreens’ acquisition of Boots serves as a case study of the complexities involved in global business expansion. While strategic planning and cultural understanding facilitated the investment, continuous adaptation to market changes and industry trends will determine Boots' long-term success in the international retail sector.

REFERENCES

Books and Journals

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• Browaeys, M-J and Price, R., 2019. Understanding Cross-Cultural Management, Pearson
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• Jiang, H., Luo, Y., Xia, J., Hitt, M. and Shen, J., 2023. Resource dependence theory in international business: Progress and prospects. Global strategy journal, 13(1), pp.3-57.
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