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Introduction
With the increasing marketing globalization, the concept of international trade has been widely applied all over the world. This has been enhanced by the increased formulation of appropriate foreign policies by various countries and good business relations.
The countries are able to conduct businesses in other foreign countries based on foreign countrys policies. The international trade has made the world a global village where various investors can do businesses any where in the world as long as they possess the required qualifications (Branch 2006, p2).
The countries are able to interact with others and facilitate the flow of information and business ideas from one nation to the other as well as making products available to resource-deficiency nations.
The following report will try to analyze how a company dealing with cutlery can move its business activities from one country (United Kingdom) to another country (France), the strategies involved, factors to be considered and if need be the challenges that may be involved.
The Concept of International Trade
International trade is simply the process of exchanging goods between two or more countries. A company in a particular country may opt to sell its products in foreign markets for several reasons including but not limited to expansionary reasons, creation of extra markets or the desire to evade high competition from the companys home country due to numerous companies offering similar goods (Reuvid & Sherlock 2011, p.78).
Before a country begins exporting goods to a foreign country, there are number factors to consider for instance the political, economic, social and environmental factors regardless of which industry a country is involved in. Another important factor to consider is the foreign countrys exchange rate and see whether it is favorable to facilitate the desired business activities.
In this context, the product to be exported is cutlery products thus one characteristic feature of the product is, it is a non-perishable product.
Therefore, looking at the possibility of United Kingdom or the companies in the particular country that are interested in extending its business activities, is very essential before rushing into the country without a comprehensive market survey.
Analysis of Frances Business and Market Environment
France is the fifth largest economy in the world. Before any country launches its products to France, it has to be understood that this is a very competitive market and the appropriate policies have to be formulated to enable the particular market players survive in the competition.
It is advisable to look in to the economic situation of France before the interested market players sell their products to the country. The stability of the economy has to be fully understood and the possibility of fluctuations well looked into (Capela 2008, p.119).
This is due to the fact that various economic factors such as depression, recession and stagflation tend to affect business activities in that particular country and subsequent collapse of many of them. These are very crucial factors since no business can do well in an economy characterized by uncertainties.
It is believed that those countries with fluctuating economies tend to discourage investors from other countries since no investor would wish to conduct any kind of business where uncertainties prevail (Branch 2006, p10).
The market demand for goods will be affected largely by the above-mentioned economic factors. The cutlery business in France considering the products are not basic goods can be largely affected by these economic factors thus causing huge losses to the investors.
The Frenchs business policies with regard to foreign investors are other important considerations that should not be left out. Every country has its own specific policies, laws and regulations that have to be complied with by any investor willing to conduct business in that particular country.
The investors of cutlery business from UK have to determine whether the policies are favorable and promising and can permit the success of any foreign business.
In some instances, countries do impose unfriendly and harsh policies that discourage foreign investors especially if the country wants to protect its domestic producers from other foreign competitors (Albaum & Duerr 2008, p.52).
This has been the case in some developing nations that are inefficient producers and fear the competition from the advanced countries. This does not mean that the developed nations are not using the same tactics to cushion out their domestic producers from competition.
Some favorable conditions that the investors must look into are whether French offers any incentives to foreign investors and the mode of taxation for the foreigners (Daniels, Radebaugh & Sullivanm 2009, p.213). Some countries have created incentives and ensured the corporate tax for foreign investors is not oppressive (Capela 2008, p.103).
Others have imposed restrictions to their foreigners such that they find it difficult to invest in those particular countries. If the taxation policies in France do not guarantee any reasonable returns to the foreign investors, then it may be impossible for investors from UK to invest in France.
In the year 2006/07, the French government passed a legislation that allowed foreign direct investment based on national champions and unrelenting obstacles to foreign investors. In the year 2001, France removed all possible barriers that could hinder foreign takeovers that were facilitated by commercial pressures and European Union law.
The French government has also portrayed its full support for multilateral trade and liberalization that means the company will enjoy the benefits associated with multilateral trade. These are favorable conditions for the survival of Cutlery Company in the French economy.
In the event that the Frances policies can guarantee promising and conducive business environment for cutlery products, the companies interested in supplying the cutleries can go ahead and look in to other factors that may hinder possible penetration in the French market.
The competitive nature of the Frances economy taking into consideration the number of companies in France offering similar types of goods, that is cutlery products has to be considered.
The competitive position of any company willing to supply cutlery products has to be determined to assess its strength in terms of competition to other French companies dealing with cutlery.
This include cost-effective and the ability to produce high quality products. The two factors will determine the pricing for cutlery in the foreign markets.
If the interested investors in UK are in a position to produce cutlery products and based on the French policies, export them to the country and realize reasonable revenues, then the interested marketers can go ahead and launch the product.
However, French customer satisfaction must be met and a strategy must be adopted to differentiate products from those of other competitors in France. The cutlery sellers have to follow the theory of comparative advantage (Capela 2008, p.98).
Under this theory, a nation can improve its living standards by focusing on the production of goods or services in which it can best produce at low cost and export those goods to other countries that cannot produce them more efficiently.
In this case, the cutlery dealers have to analyze cutlery industry in France and see how effective the industry is and upon realization that the cutlery production or selling expenses in France are higher than UK, then it should utilize the opportunity and flood the products to the French market.
The political stability and the countrys ability to maintain a peace avenue to increase investor confidence is another factor that Cutlery investors should consider before establishing their marketing activities in France.
Political instability is highly correlated to insecurity and the history holds that those countries without sound and peaceful political systems tend to drive away investors thus hindering investment in their countries (Branch 2006, p2).
The environment in which the company will be selling its products is also very crucial as well as the infrastructural situation. The infrastructure in France can be analyzed in terms of transport, telecommunication, power and the availability of labor in France to assist in the marketing and distribution of the products.
These will depend on the companies availability of resources that they are willing to invest in the French market. The countrys infrastructure is very important in determining the success of various economic and business activities.
Poor infrastructure will definitely imply higher operational costs hence reducing the companys profitability and making it difficult for the company to invest in the French market (Capela 2008, p.122). The ability of the French population to provide cheap and quality labor necessary for provision of high quality services should also be put into consideration.
Some European Organizations beneficial to the operation of Foreign Business in France
Any nation falling within European Union can benefit substantially in the event that it is willing to invest in another foreign market within the union. Some various countries within specified economic blocs have formed trading and economic organizations that have facilitated trading and business activities among the member states.
One such organization is Organization for Economic Cooperation and Development (OECD). This organization is based in France and has about 25 member countries together with other 33 countries categorized as partners in a transition programme forum warranting the industrialized states to create an avenue for conducting business (Branch 2006, p18).
Some of the achievements of OECD in the recent past include employment opportunities creation, growth of member countries economies, and improvement of peoples living standards through fiscal, monetary and other structural adjustments and proper management of competition among the member countries.
The OECD does not have supernatural legal powers or financial resources and therefore does not give any financial support to its member states.
Its principal function is direction of cooperation and creation of better trading economic zone to its member countries. The cutlery company may take advantage of this organization since the target market is one of the member countries of OECD meaning some benefits can accrue to the company.
Analysis of Market Segmentation and Distribution Channels in France
Market segmentation evaluation and analysis allows thorough examination of the target market identifying the functions of several sectors with regard to consumer groups. It helps in determination of how roles and functions need to be adjusted to achieve the desired goals (Branch 2006, p11).
Market segmentation analysis is considered important before launching a product in the target market for a number of reasons. Firstly, it helps identify different consumer groups and classes in terms of age, social status, gender, economic status among others.
In the context of the companies offering cutlery goods, this analysis will help determine the demand status of their products in France and who are the possible ultimate consumers of cutlery products.
It is a complicated analysis bearing in mind that cutleries are durable products whose demand is very different from so many consumables that are bought so often and therefore the supply ought to be constant
Market segmentation analysis helps identify the key provider groups and other relevant marketing programs of the product in question. The providers might be public, commercial or non-governmental organizations. This will help the provider of goods know the strategy to use to penetrate in to the market.
In most cases, when government provides products, they tend to be relatively cheaper than when provided by the private sector. This is because the government aims at providing goods or services without any profit-making motive and their principal concern is to ensure the availability of goods to the consumers (Albaum & Duerr 2008, p.55).
The state can even provide products at break-even. This can be enhanced through government parastatals or state corporations. On the other hand, private sector provides products at relatively higher costs to make profits for the owners of private organizations.
Non-governmental organizations may offer products voluntarily to support the livelihoods of particular groups in the society. Therefore, it is imperative for the UK Company to determine various providers of cutlery items in UK that will enable the company determine appropriate pricing methodology to use.
The issue of ease of substitutability of the product also needs to be taken into consideration. That is how the consumers are able to substitute cutlery products for other related products that will have an impact on the demand of the cutleries.
The distribution channels to be used need to be thoroughly analyzed to give an overview of the possible modes of transporting and distributing the product to France. United Kingdom can export cutlery products to France by use of roads or rails since the product is durable.
Besides, transportation of the cutlery from UK to France through other means for instance air transport may not be possible since these are metal products that are very heavy and bulky. It is recommendable that the once the products lands in France, an indirect means be used to penetrate the product to the French market.
This may be done through a specified agent who has some reputation and can influence the penetration of the product to the market (Griffin & Pustay, 2008, p.93). The best way to reach the customers is through wholesalers since it might be less costly and in a foreign market, reaching consumers directly may not be easy.
Possible Strategies that can be adopted to increase Market Penetration in French Market
Moving product from a particular country requires comprehensive strategies that can guarantee business success (Branch 2006, p14). The cutlery product need to focus on the best strategies that are more suitable to be adopted and used in French market to increase the chances of survival.
One strategy that the company can rely on is mergers and acquisitions. The company can seek collaboration from a company in France that deals with cutlery products since by doing so the marketability of cutlery in France will have been made easier.
Merging with an existing company in a foreign market is one of the best strategies that can help a company grow in foreign markets. This is due to the fact that the already existing company has established itself and the consumers already have confidence in its products.
Once the company has fully established itself and their unique products known by the customers, it can decide on getting to the market alone.
Product differentiation in the French market is another possible strategy. This can be enhanced as long as the company is capable of producing high quality cutlery items that can increase its competitive advantage over other cutlery dealers in the French market.
The consumers are always interested in products that are likely to yield more utility and that can be counted in terms of high quality (Albaum & Duerr 2008, p.47). Based on the analysis of the market segment, the cutlery company can incorporate differentiation by developing products that suit different social and economic classes of French civilians.
Either, the company can opt to sell the cutlery products in France at the lowest possible price, which, in this case is the break-even price to cover the production costs during its initial entrance.
This option is usually used by many marketers that are pioneers in the market industry and despite increasing market penetration, the company can easily drive away market competitors from the market (Reuvid & Sherlock 2011, p.33).
Some companies end up gaining monopoly status out of the strategy. Once the cutlery company has strengthened its roots in France, it can go ahead and raise the prices of its products considerably to cover up the costs incurred in market penetration.
Financial issues and practicalities that may be associated with moving Cutlery products from UK to France
The companys financial strength and other resources at hand are crucial in determining its capabilities of entering a new market (Albaum & Duerr 2008, p.47). This is because the initial costs of market entrance into a new territory are usually higher.
The costs of production in UK need to be appropriately analyzed to ascertain whether the company possesses any competitive advantage in relation to other companies in French. In the event that there are unavailable resources, the company should strategize on how best it can mobilize the required resources.
The reason behind extension of the product in question might be driven by two reasons. The firm might be evading the stiff competition from UK industry that it could not survive and therefore, the best option is to look for external markets.
This might be so dangerous and since France is a developed nation with stable economy, the nature of competition in the country might be very stiff. This calls for companys financial strength to apply all the possible policies and reach out French consumers.
The other reason might be desire to expand business activities outside the country and try financial prospects of the company elsewhere outside the company (Branch 2006, p4).
The company can too look into financial situation in France and the countrys monetary system to assess whether it is in a position to provide business loans to foreign investors.
This should take into consideration the countrys banking rates and the basic requirements. Having established the necessary requisites and the ability to operate in the French economy the company can go ahead and supply the cutlery products to the French market.
There are various financial issues that need to be considered before a company or a country sells its products to a foreign country (Czinkota & Ronkainen 2007, p.117).
The investors from UK ought to consider the appropriate mode of payment to use and how risky it can be or time consuming before the money leaves the ultimate consumers and finally reaches the company. The mode of payment also incorporates the currency and the exchange rate system that seems to be more favorable.
The investors may either choose to receive their payments using their own or French currency. However, it is advisable if it is possible that they use their own currency to improve their countrys balance of payments. The product needs to be promoted in the French market taking into consideration the French peoples culture and their interests.
The promotion campaigns need to match the investors goals. Great care has to be taken so as to avoid any risks that may be involved in the supplying the product. One way of doing this is supplying small amounts of the product to the France and see whether the marketability is good (Wild, Wild &Han 2008, p.178).
Recommendation
Based on the analysis already done about the French market, it is possible for the investors from UK to supply their goods to the French market. The nature of the marketing environment is conducive for any foreigner to conduct the business in the country (Hill 2009, p.77).
The transport and distribution channels are appropriate to facilitate the convenient movement of goods between the two countries. However, there are challenges involved that for instance the initial entrance into a new market where the consumers have become used to products from other suppliers.
The opportunities available for the UK cutlery dealers are for example stable economy in France and large population that may provide he market for the suppliers of products. The opportunities available for the country outweigh the risks involved and therefore any interested investor can supply the products to the France.
Conclusion
The concept of international trade has greatly helped business investors in establishing business activities in other foreign countries. However, this depends on the other countrys foreign policies where the country desires to invest.
This is due to the fact that some countries may formulate policies that may completely hinder any person or business entity willing to invest in that particular country (Albaum & Duerr 2008, p.67).
But the business relations has been made easier by increasing global economic liberalization that has seen the formation of various economic blocs that provide conducive business environment through setting up common economic policies and removal of any restrictions that may interfere with good trading relations.
Crucial factors have to be considered in establishing business activities in a foreign country for instance political, economic and social factor (Capela 2008, p.112).
The above analyzed report has looked in to the possibilities and strategies of shifting a product from United Kingdom to France, the two developed nations and at the same time belonging to some common economic blocs.
Though there is a possibility of moving cutlery products from UK, there are associated difficulties in terms of the companys strengths to penetrate French market.
References
Albaum, G & Duerr, E 2008, International Marketing and Export Management, Financial Times Prentice Hall, New Jersey.
Branch, A 2006, Export Practice and Management, Cengage Learning, Thomson
Capela, J 2008, Import/Export for Dummies, Wiley, Washington.
Czinkota, M & Ronkainen, I. A 2007, International marketing, 7th ed., Thompson, South Western, 2007.
Daniels, J. D, Radebaugh, L. H & Sullivan, D. P 2009, International business, 12th ed., Pearson Education, New Jersey.
Griffin, R & Pustay, M 2008, International business: a managerial perspective, 5th edn, Pearson/Prentice Hall, Upper Saddle River, New Jersey.
Hill, C. W. L 2009, International business: competing in the global marketplace. McGraw-Hill Irwin, New York, NY.
Hitt, M. A 2009, Strategic management: competitiveness and globalization: concepts and cases. Cengage Learning, South-Western.
Reuvid, J & Sherlock, J 2011, International Trade-an Essential Guide to the Principles and Practice of Export, Kogan Page, New York.
Wild, J. J, Wild, K. L & Han, J. C 2008, International business: the challenges of globalization, 4th ed., Prentice Hall, Upper Saddle River, New Jersey.
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