HEB in Canada
1.3 INTRODUCTION AND BACKGROUND OF CANADA Canada is one of the countries that shares more than just a border with America. United States is Canada’s primary trading partner. Canada is the largest foreign energy supplier to the U.S. Canada and America has similar western values. Most Canadians are urbanized. Per land mass, Canada is the second largest country in the world. Canada has two official languages; English and French.
1.4. INTRODUCTION AND BACKGROUND OF HEB
HEB was founded in 1905. The first store was located in Kerrville TX. Although HEB has been around for over 100 years, they are still going strong in the state where it originated. Other than Texas, HEB also has store locations in Mexico. HEB has a combined total of over 340 stores in Texas and Mexico. HEB also employs about 76,000 people in the communities that it serves.

2.0 CANADIAN MACRO ENVIRONMENT ANALYSIS: PEST ANALYSIS
Just like any other country, completing an analysis of Canada’s macro environment will be inadequate without making use of a PEST analysis. With the use of PEST analysis, HEB will better understand four important aspects of Canada economy. The term PEST analysis is an acronym that stands for four major four macro-economic factors. They are Political, Economic, social, and technological factors. The analysis will help in understanding Canada’s current market situation. Specifically, PEST analysis will help HEB in strategic and business planning, entry strategy methods, marketing mix, and marketing planning.
2.1 CANADIAN POLITICS, RULES, AND REGULATIONS
The first economic factor of the PEST analysis is the Political factor. This factor deals with how the government intrudes in business within its borders. The Canadian government may intrude through several methods. Examples of ways that the Canadian government can intervene are by imposing taxes, laws, regulations, deregulation, and political stability/instability. Canada is a constitutional monarchy nation. Canada runs on parliament style of government which is similar to the United Kingdom. Canada’s head of state is Queen Elizabeth II. She is regarded as the sovereign head of state. She is also represented by the Governor General at provincial and territorial levels of the state. Canada’s monarchy system can be seen as more of a practical system.
2.2 CANADIAN ECONOMY
Understanding the current economic conditions in Canada will help to determine HEB’s potential success or failure. In order to accomplish this, HEB would have to understand factors like interest rates, inflation rates, unemployment rate, income rate and tariff rates. Canada operates an open market system. Canada has a very strong economic freedom and it is a member of the North American Free Trade Agreement –NAFTA. Canada is a one of the world’s major exporter of automobiles, forest products, oil, minerals, and manufactured goods. Its low tariff and non-tariff barriers help to promote free trade. Canada also embraces ownership of private property. This encourages private industry growth and helps to promote competition. Although Canada’s banking system has been through its share of the global financial crisis, the World Economic Forum considers it as the soundest banking system. HEB should have no problem in getting set up because Canada is considered to be very conductive to new business formation and operation. Canada does not have a minimum capital required for company startup. Therefore, it will be up to HEB on whether to enter into the Canadian market in a big way or just gradually.
2.3 CANADIAN SOCIETY AND CULTURE
The United Nations classifies Canada one of the best country in the world in which to live. Canada is globally recognized for its outstanding quality of life, stable, progressive political environment and one of the healthiest economies in the world. There is no wonder why human migration has a major impact in Canada’s population growth. Just like America, the Canadian society is open to immigrating individuals from every part of the world. Despite this recognized openness, Canada still manages to remain very ethnic. Canada has a 5.9 percent growth rate and its current population is about 33.5 million people. Of this population, just about 16 percent falls between the ages of birth to 14 years. Canada happens to have the lowest of the age group compared to other nations. On the other hand, Canada has the population share for people between ages 15 to 64 years which happens to be about 68 percent of its population. Lastly, Canada has one of the highest populations for citizens aged 65years and older. This age group accounts for about 15 percent of Canada’s population.
2.4 CANADIAN TECHNOLOGY
The Webster dictionary defines technology as the application of scientific knowledge for practical purposes. Canada’s mining industry is one of the noticeable sectors in which technology has really impacted. Today’s scientific knowledge has been significantly applied to the mining industry. Again, just like most western nations, today’s technology influences the way Canadians live their everyday life. For example, the idea of the virtual workplace is very common in Canada. There are Canadians living outside Canada but remotely work in Canada. There are also several Canadians that live at home (Canada) but work in other parts of the world. In a more simple form, there are lots of Canadians that work in Canada but visit the office building once a month. They simply work from the convenience of their home. This is all thanks to the today’s technology.
2.5 OPPORTUNITIES AND THREATS IN THE CANADIAN MARKET
The Canadian market definably has numerous opportunities to offer HEB. Just as opportunities exist, threats also exist in this market. Using Porter’s five force model should be sufficient in analyzing potential threats and opportunities for HEB in the Canadian market. The models are grouped into competitive forces and bargaining power forces. Under the competitive forces are: Competition from vendors of substitute products, Competition from new competitors, and Competition from existing rivals. Under the bargaining power forces group are: Bargaining power of suppliers and bargaining power of customers. Understanding and applying Porter’s Five-force analysis would help HEB combat threats and take advantage of the opportunities. Firstly, the competition from vendors’ substitute’s products should be considered as a threat. HEB sells grocery items which can be easily substituted by cheaper/expensive, better/worse items. Therefore, it is safe to assume that HEB would be facing lots of big/small grocery stores that carry product substitute. HEB’s currently claims to have cheaper products. They go as far as using ad campaigns of price comparisons.
3.0 CANADIAN COMPETITION ANALYSIS
Moving into unfamiliar territory should always be carefully analyzed. In order to succeed, HEB would need to recognized and focus on its Canadian competition. The first step is to recognize what its competition is doing and then go a step further. Basically, HEB should learn from the competition’s mistakes. Secondly, differentiate primary competitor from secondary ones.

3.1 HEB’S PRIMARY COMPETITION IN CANADA
Loblaw Companies Ltd. is currently the largest food retailer in Canada. It was founded by Theodore Loblaw in 1919, in Brampton, Ontario. About fifty years later, most of the Loblaw locations were rebranded as SuperValue stores. Soon after that, it became Real Canadian Superstore – RCSS. Despite the fact that Loblaw and RCSS are considered separate grocery chains, newer stores in certain locations are opened under a mutual banner; commonly called the ‘The Loblaw Superstore”. Loblaw companies have been around for almost 100 years. This is particularly interesting because this is almost as long as HEB who has been around for about 107 years. Unlike HEB, Loblaw comprises of about 1,000 corporate and franchised stores. It also has about 400 associate stores and almost 5,000 independent stores. Loblaw successfully expands beyond its Canadian borders to several states on the east coast of the United Sates. Loblaw carries a wide range of groceries items.

3.2 HEB’S SECONDARY COMPETITION IN CANADA

Other than the primary competition, HEB will be facing a lot of competition in Canada. One of HEB’s potential competitors in Canada will be Wal-Mart. Wal-Mart is originally an American company that broke into the Canadian market. It is very successful in the Canadian market and presently has 333 stores in this market. In an effort to further strengthen its Canadian market position, Wal-Mart has allocated about $750 million to renovate its existing stores. It has plans to complete at least 73 projects on existing stores which includes new buildings, expansion, remodeling, and relocating. It also plans to add 4.6 million square feet of retail space to its operations. HEB should have no problem dealing with Wal-Mart Canada because HEB is used to dealing with Wal-Mart in the state of Texas. Another secondary competitor for HEB is Safeway Canada. Just like HEB, Safeway also has its origins in the United States. It was founded in 1915 by M.B. Skaggs. Like HEB and Loblaw, Safeway has been already for about 100 years. Safeway currently has almost 2000 stores across the United States and Canada. Safeway’s is headquartered in Pleasanton, California. Safeway’s original process was strictly on a ‘cash and carry” basis. Credit transactions were not offered. This ideology fostered Safeway’s name which translates that the cash and carry method was a safe way of doing business.

4.0 ENTRY STRATEGIES DISCUSION AND EVALUATION Every nation always welcomes new businesses within its borders. Therefore, we can assume that both the government and citizens of Canada will be excited about HEB’s potential business. Although HEB might be a foreign name to Canadians (most Americans in other states have never heard of HEB), this might give HEB an edge of being the new ‘thing’ in town. Canadians who are bored of the same store might just want to visit a new place. HEB succeeds in marketing its store as where everything is better and cheaper. HEB will just need to make sure that Canadian market recognizes this value as well.
4.1 ENTRY STRATEGY SELECTION AND DISCUSION
The mode of entry will vary depending on the type of product. Also, store size has to be suitable and large enough to accommodate products and customers. HEB can either chose to build or lease sites that already meet its required accommodations.

5.0 CANADIAN TARGET MARKET ANALYSIS AND SEGMENTATION
With extensive evaluation, HEB will focus on the appropriate market segments. The Canadian market can be divided into Geographic, demographic, or Psychographic segments. Amongst other things, it is necessary to focus on segments of the market that is measurable, stable, and large enough to generate profit.
6.0 MARKETING MIX STRATEGIES IN CANADA
Marketing mix strategies is useful in carrying out a successful marking plan. The main concepts of a marketing mix consist of four essential strategies: the Product, Price, Place and Promotion.
6.1 PRODUCT STRATEGY

The decision has to be made on whether to keep the same product lines that already exist or to simply create a completely different product line based on the chosen segments. HEB currently deals with the general grocery items, health and beauty products, basic stationaries etc. HEB might need to alter some of its products or simply discontinue certain items in the Canadian market. Certain Canadian segments might be okay with certain products in its American and Mexican form while other Canadian segments might require product alteration or simply discontinued. For example, certain segments may not be willing to try some Mexican specific food items. Therefore, HEB should simply not carry such specific items into the Canadian market. Again, HEB’s consideration should be based on each Canadian segment.
6.2 PRICE STRATEGY
There are several types of pricing strategies. HEB should be very familiar with Canadian laws in order to abide within the law while setting its pricing strategy. For example, predatory pricing is illegal in some countries. As HEB moves into the Canadian market, a Penetration pricing strategy should be thoroughly considered. This will enable HEB to gain market share in this new Canadian market environment. Like HEB’s slogan says “Here Everything is Better”, HEB pricing should sincerely reflect better compared to other competitors.
6.3 PROMOTION STRATEGY
Prior to opening, HEB has to set promotion strategies that abide with Canadian laws. Strategies that worked in the United States and Mexico might not work in Canada. Also, HEB needs to choose between a Standardized or adaptation promotion strategy. Each has its’ advantage and disadvantage. If HEB chooses an adaptation strategy, it will help HEB to set personalized touches in securing market shares. Choosing a standardized promotion strategy is more cost effective and would also help to avoid potential confusion among customers to travel from Canada to America or Mexico.
6.4 Place Strategy HEB needs to understand the best avenue in getting its product to its chosen segment. The right product has to be delivered to the right segment at the right time. HEB should try to make the distribution chain as short as possible. This would help HEB in saving transportation cost and being time efficient. HEB should evaluate who its best suppliers are. It also has to evaluate the cost of delivery to each store.