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I am CEO of a German grocery chain with 12 billion in annual revenue, an EBITDA margin of 6%, the company is leveraged at 3.5 times their EBITDA and cannot exceed 4 times, and operates 2,000 stores across Germany, Austria, and the Czech Republic. The board has set a target EBITDA margin of 7% while growing revenue 20% over the next five years without becoming over-leveraged. You are considering expanding into Italy which has a highly fragmented grocery store environment. the top 5 players control 50% of the environment and discount penetration is growing 6-7% annually and average gross margin for discount stores is 2 percentage points higher in Germany because of more favorable conditions and less intense price competition. However labor costs are 20% higher in Northern Italy than in Eastern Germany, Austria, and the Czech Republic. our strategy team has identified three options to reach the board's goals in the next 5 years: 1-open 300 stores in Northern Italy. this would cost 4 million euros for each store and requires building a new Italian distribution network at a cost of 250 million euros 2-a joint venture expansion into Italy with an existing mid-sized regional supermarket (owns 150 stores and 2.1 billion euros in revenue). the plan would convert 100 stores to discount stores and would cost 1 million euros for each store. the joint venture would pay profits 50% once EBITDA exceeds 100 million 3-Germany first approach with small Italian test. focus 80% of capex on automation, online ordering infrastructure, and format optimization in existing German stores. run a limited Italian pilot with 40 leased stores over 3 years write a one page memo for the supervisory board and recommend one of the options.