Saudi Chocolate Company’s Entry into Singapore

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Developing a plan for a company’s expansion in the international market is not an easy task. However, with appropriate planning and careful approaches, companies may come up with successful methods that will enable them to become prosperous in other countries. To make one’s business aspirations profitable, it is necessary to develop a strategy that will help to implement the desired innovations. First of all, such planning requires the investigation of the target industry in another country. Then, the company needs to choose the most appropriate entry mode and assess its limitations and benefits. Furthermore, the organizational structure should be selected and outlined. Finally, successful international expansion is not possible without a follow-up action plan which will delineate further procedures necessary to acquire a stable place in the international market.

A Brief Description of the Company and Chocolate Industry in Singapore

Saudi Chocolate Company (SCC) is a Saudi company that was established in 1995. The first factory was built in Riyadh – the heart of the Kingdom. We aimed to provide the market with the finest chocolate, cocoa, and cocoa derivatives. Currently, the Saudi Chocolate Company is the largest chocolate producer in the Middle East. With our team of experts in chocolate production, we have managed to reach state-of-the-art chocolate production.

The confectionery industry in Singapore develops at a high rate. Over the past few years, the growth level was 20% annually (Koh). The largest importers of chocolate and sugar are the US, North Asia, the EU, and Australia. Of the entire food consumption in Singapore, confectionery has the largest percentage growth. As lifestyles in the Asia Pacific area become enhanced, people’s taste choices are altering accordingly. Growing urbanization and income levels among the citizens of Singapore are the main agents for market expansion (Acute Market Research).

The reasons for chocolate market growth in Singapore are connected with a wide spectrum of the utilization of chocolate confectionery and flavored food products. Moreover, market growth is expected to be sustainable owing to chocolate’s stress mitigating abilities and its nutritional value (Acute Market Research).

Along with other Asia Pacific regions, Singapore is assumed to be a fast-expanding market owing to high demand. Changing consumer choices lead to increased sales, which require thorough approaches to expansion strategy development. The current leading chocolate manufacturers include Ferrero Group, Mondelez International, Hershey Foods Corporation, Meiji Co Ltd, Arcor, Nestle, and others (Acute Market Research). With the current expansion of chocolate products in Singapore, the Saudi Chocolate Company could take advantage of the situation and enter the confectionery market with further development plans.

Recommended Entry Mode and Rationale in Singapore

There is a diversity of entry modes into the international market, each of them having advantages and disadvantages. Taking into consideration the aspirations of the Saudi Chocolate Company and the target market, exporting seems the most suitable solution at this point.

Exporting is the business entry strategy that allows products to be sold directly to foreign companies by the domestic company. Direct exporting is a better approach than indirect for our company as this mode presupposes that production, sales, and delivery are performed solely by the firm without any intermediaries (“Going Global”). The benefits of direct exporting are numerous, the first one being the high return of the company’s investment due to the absence of a third party. Such an approach facilitates lower prices for the products, which are therefore more competitive. Additionally, a face-to-face relationship with clients becomes possible (“Going Global”). Direct exporting requires no investment in foreign production resources, which minimizes the investment hazards and market entry delay. Employing this strategy enables the company to access data about foreign market competition and prepares it to deal with seasonal market inconstancies (“Going Global”). Finally, exporting mode decreases the company’s dependence on the already-established markets.

While bringing many advantages, the chosen strategy also has some limitations which should be taken into consideration. First of all, it may be more costly because of transport tariffs and marketing expenses. Also, there may be a restricted admission to local data as the company will be considered a stranger. There is also a necessity to cultivate customer infrastructure in a foreign country. Other challenging tasks include the necessity to source clients, the possibility of losing control over the market, and any obstacles to reducing trade barriers. However, with proper management approaches, the disadvantages of the entry mode will be eliminated, and the advantages will bring about the best solutions for the company.

The rationale for the chosen entry strategy includes a thorough consideration of the company’s possibilities, calculating the benefits and predicting possible disadvantages, and coming up with the initial suggestions of target markets.

Recommended Organizational Structure for the Operation and Rationale in Singapore

Choosing an organizational structure is a significant step in shaping out the future project. Coming up with a proper framework will provide good relationships at all levels and enable successful communication. As a result, productive and powerful work processes will be ensured. Preferences for the organizational structure are chosen by the senior leaders of the company. There are several main types of organizational structures, namely product, customer geographic, matrix, and functional (“Types of Business Organizational Structures”).

For our purpose, the functional structure is the most suitable. It focuses on assigning all employees various functions. By successfully coping with these functions at all levels, the employees provide the most advantageous outcomes for the enterprise.

To reach the international market, the Saudi Chocolate Company needs to have several departments in its organizational structure. There should be such sections as human resources, sales, accounting, transporting, logistics, and design. Each department will have its workload and will report its activity to senior management. Thus, a hierarchy of managerial staff is also needed. The president of the company will accept the reports from the vice-president. All the managers will be accountable to the vice-president. The leadership board will regulate the division of the responsibilities between the departments.

One of the advantages of the functional organizational structure is the possibility of exchanging ideas and experience among employees of any given department. Another benefit of this arrangement is high productivity and efficacy due to the workers’ defined tasks. Still, this structure has some limitations. For instance, there is a limited possibility for teamwork and poor coordination among the departments (“Types of Business Organizational Structures”). However, with proper approaches, the company will make use of the functional structure’s advantages and will limit the constraints.

Recommended Business Functions and Rationale

Success in business depends on many factors. Choosing proper business functions enables one of the most beneficial components. Business functions are chosen according to the specifications of concrete enterprises, and they are different for each company. Being aware of the functional areas is a core requirement for the company’s progress.

The Saudi Chocolate Company needs to include the following sectors: production, marketing, human resources, sales, finance, management, distribution, customer support, research and development, operations, and legal department (Sevilla). All of these functions should be combined to achieve the most successful results. The areas of human resource, production, management, and operations are the most important for the company’s stability. They are accountable for the proper organization of the enterprise. For the company to progress, the functions of finance and research and development are needed. Finally, to conquer the international market, it is necessary to have solid marketing, sales, distribution, and customer support areas, which will provide outreach to the target market (Sevilla). The legal department is responsible for taking care of any legal issues.

Follow-up Action Plan

After choosing an entry mode, organizational structure, and business operations needed for the Saudi Chocolate Company’s expansion into the Singapore market, it is necessary to make a follow-up action plan which will enhance the success and eliminate the risks of the project.

First of all, it is necessary to evaluate the level of the company’s readiness to appear on the international market. We should consider the financial abilities to start a long-term engagement connected with the exporting project. Also, it is necessary to check the team members’ preparation and the engagement of all the necessary personnel. Most importantly, the product has to be assessed for its competitiveness and readiness to enter the international market (“3 Essential Steps”). It should be ensured that the company is capable of adapting its goods to suit the needs of the Singapore market and its customers to eliminate the risk of failure.

The next step is reaching the chosen market. At this stage, it is essential to consider the local environment and customs. Also, it will be helpful to visit the potential market and organize meetings with some contacts to become acquainted with the local regulations, distribution, and competition (“3 Essential Steps”). Another productive approach is to attend events connected with the confectionery industry in Singapore. Such actions will aid the assessment of the target market peculiarities and make sure that the company strategy does not have any flaws.

The final step is implementing the chosen market entry strategy. At this point, the senior management of the company needs to outline the budget, consider competitor companies, and thoroughly evaluate the possible risks and benefits. Also, at this stage, it is necessary to set out a time frame in which the expected aims can be achieved.

Conclusion

Conquering the international market may seem a challenging task. However, the Saudi Chocolate Company has a long history of successful operation, and with proper approaches, it can enter the Singapore market. Having chosen to export for an entry strategy, we hope to eliminate the risks and gain the biggest benefits. Employing the functional organizational structure will enable the company to sustain success at all levels. The follow-up action plan is developed for the Saudi Chocolate Company’s next steps in the international market. Thorough consideration and implementation of the suggested steps will enable the company’s success in the Singapore confectionery industry.

Works Cited

“3 Essential Steps for Entering a Foreign Market.” BDC. Web.

Acute Market Research. “Chocolate Market Analysis, Market Size, Application Analysis, Regional Outlook, Competitive Strategies and Forecasts, 2015 to 2022.” Grand View Research. Web.

“Going Global with Your Business: Modes of Entry.” Vistage. Web.

Koh, Jeremy. “Sweet Deal for Chocolate Makers Here.” The Straits Times. Web.

Sevilla, Charisma Mae. “Functional Areas of a Business.” Founder’s Guide. Web.

“Types of Business Organizational Structures.” PingBoard. Web.

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