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Emerald dairy is a Chinese based dairy company that deals with various dairy products such as powdered milk, infant formula, rice powder, and soya beans. The company was established in 1987 as a milk vending business and since then it has witnessed development that has enabled it to dominate the regional market.
Due to its success in the domestic and regional market, the company is considering to exploit the opportunities in the international market. Although the company has a good influence on the local market, it recognizes the need to offer its customers high quality products.
Therefore, it considers production of quality products as its main objective and mission all the time (Elliott, Rundle-Thiele & Waller 2010). The company has also considered strengthening its brands in order to increase the competence of its products.
Following its ability to dominate the Chinese dairy market, the company is considering venturing into the international market with the aim of success. The choice of the particular international market will depend on the company’s ability to compete with the already established businesses in the market. Competition is, therefore, a major factor that the business should consider before venturing into the international market.
As stated by Kerr (2004), international market is competitive and, therefore, any business needs to have well defined strategies to venture into the market.
The company will also choose the appropriate market based on the ability of the market to accommodate new products and this factor will depend on the customer’s choice. The company will also consider the available regulations and trade restrictions imposed by responsible trading blocks.
Five Stages of International Marketing
The first stage in international marketing is environmental analysis, which includes government policies and economic objectives. It also includes availability of resources and their distribution. Planning stage follows in order to make decisions regarding structures needed in the marketing.
These structures include exports, investments and establishments. The third stage is about the structure to bring out the transformation. The fourth stage in international marketing is operational planning and lastly the fifth stage is controlling of the market program (Bade & Parkin 2001).
Due to these conditions and restrictions, the company will consider the available options before it ventures into the international market. The company needs to evaluate the regional market that includes the neighbouring countries such as Japan and India. The new company will also explore the viability of the Middle East and the European market.
Finally, the company will consider the viability of the European market to determine its suitability as a new market. With the availability of choices on which market to choose from the company needs to make right choices in order to achieve the needed success (Ogus 1994).
The company, therefore, needs to have a well-defined marketing strategy that will enable it to market its products in the international market of choice. This essay will evaluate the marketing strategy that the company needs to apply in order to penetrate the new international market.
For the company to venture into the global market, it needs to apply essential strategies in the management of global business.
Although the company had dominated the domestic market due to its competitive management strategy, the new international market requires that the company applies strategies that are of international standards (Cockburn 1996). Considering the choice of the available markets the company should consider venturing in a market that is attractive and cost-efficient.
For the company to venture into the new market, it does not only need to sell its products in the new markets but also establish its operation centres in the new market. The company will, therefore, need employees to run several important activities within the market.
When hiring new employees, the company needs to consider Hofstede’s cultural dimension in order to determine the right employees for the available positions. The company will achieve this strategy by comparing the local community with possible staff from other countries (Elliott, Rundle-Thiele & Waller 2010).
The power of distance is the first important dimension that the company should consider. According to Hofstede (1993), the power of distance is the difference that exists between people due to their positions.
The power of distance, therefore, determines the relationship between the superiors and the subordinates in the company. Most European societies have high level of power of distance that creates a distance between superiors and subordinates in a company. Businesses set in Europe should, therefore, have Europeans as senior management staff and workers from other countries as junior staff.
The next important dimension that the company needs to consider when establishing business in the international market is individualism. High level of individualism in a society indicates that the people in that society are concerned more with personal issues than issues of the society (Campbell 2005).
The European society has moderate level of individualism and therefore the company will have little consideration when selecting its staff from the society. On the other hand, most societies in the Middle East have low level of individualism and the businesses set in these regions will do better with the local communities as the junior staff.
High level of individualism indicates that people in a particular society will work best as individuals while low level of individualism indicates that most people in the society can work as a team. The company should, therefore, consider a society with high level of individualism for its management staff and a society with low level of individualism for its junior staff (Cutler & Javalgi 1992).
The company needs to consider the dimension of masculinity before setting businesses in the foreign countries. High level of masculinity in a society indicates that people who value success and competition characterize the society.
On the other hand, a feminine society has people who value quality of life and welfare of each member of the society. Generally, the European society is more feminine than the Middle East society and the society of regional countries. The company would, therefore, do well with Europeans as management staff and people from other regions as junior staff (Chance 2008).
Although Emerald dairy is a well-established company in the Chinese dairy industry with adequate resources and well established domestic market, the international market is a competitive market.
The company, therefore, needs to analyze the susceptibility of its products in the international market before it makes a move (Greine 1972).
The porter’s five forces will be an appropriate tool that the company should apply in the analysis of the suitability of the international dairy market. Using the porters five forces, the company can evaluate the attractiveness of each market to determine the market that is more attractive for its products (Elis & Slorach 2007).
The other dimension that the society needs to consider when setting businesses in the new market is the uncertainty avoidance. According to Hofstede (2001), uncertainty avoidance is the degree of how people are able to take risks and to make new ventures. A society with a high level of uncertainty indicates that its people are optimistic and therefore willing to try new products.
Among the three possible markets, people who have low degree of uncertainty avoidance characterize the regional market and, therefore, the company will perform better with people from such societies as marketing executive.
A society with low levels of uncertainty indicates that the members of that society are unwilling to take risks and make new ventures and, therefore, the company will find it difficult to market its products in such markets. The company should also consider this dimension when hiring staff for its new businesses in the new market (Chance 2008).
Using the porters five forces rivalry among competing firms is a major factor that the company should consider before settling on a particular market. According to Reilly & Smither (2005), competition among rival businesses is the most important factor that a company should consider before venturing into a new market.
According to Kalb (1993), the company can apply an elimination method by looking at each potential market at a time. Unlike the other options, the European market has well established companies that produce dairy products similar to those produced by emerald dairy company. Nestle is one of the European companies that will offer stiff competition to the new company.
The competing European market considers the market to be their domestic market and therefore they have an advantage over any foreign company that might be willing to establish itself in the market. Due to the availability of similar products, the European dairy industry has high level or rivalry among competing firms and therefore unattractive for new ventures.
The company should consider alternative markets for its products. Compared to the European industry, the regional market is characterized by companies that are not as established as the European market and therefore the company should consider venturing into the market (Prentice 1998).
Although the market lacks well-established companies, the available companies have a good knowledge of Emerald operation strategy and they will apply similar strategy to offer competition to the new company. This market will have a higher rivalry among competitors and the company should avoid it and seek an alternative.
Lastly, the Middle East market lacks well-established firms that deal with dairy product and, therefore, it has low rivalry among competing firms. The company should consider venturing into this market due to its attractiveness to the customers (Glazer, Hirshleifer & Hirshleifer 2005).
The company should also consider the power of buyers in the dairy industry before venturing into the market. According to Greiner (1972), the power of buyers is the ability of the consumers to control the firms operating in an industry based on the quantity they purchase.
Individual buyers characterize the three potential markets since the market lacks corporate buyers. The potential markets have buyers who have low purchase power and have equal chances of consideration by the company before it makes its final decision.
The other important factor that the company needs to consider before venturing into these markets is the power of the suppliers. The company deals with perishable commodities and, therefore, it would perform well if it establishes production facilities next to the market. Establishing production centres for its products in the foreign territory requires the company to have a reliable network of suppliers (Hirschey 2009).
This requires the need to evaluate the power of supplies before deciding on which of the possible markets to venture. The European market has a well-established dairy industry and producers of essential inputs and therefore such market will have liberal suppliers (Vygotsky 1978).
The supplier in such industry will have low power and, therefore, the company should consider the market. On the other hand, the regional and the Middle East markets have few suppliers and this makes them to have greater power due to competition factor.
Finally, the company should consider the threat of new entrants into the possible market before venturing into the market. According to Schwartz (1998), the threat of new entrants is the level at which a market is able to accommodate new products. This level is considered as a threat by other firms operating in the market and, therefore, it is a major determining factor.
In particular, the European customers are closely associated with their brands that they will be unwilling to try new products with a different brand. The market, therefore, has a high threat of new entrants and therefore it would be unattractive to the new company (Chance 2008).
On the other hand, the regional and Middle East markets have customers who are sensitive to their religion and other social values. Such customers are unlikely to try new commodities and therefore the market has a high level of threat of new entrants.
The company also needs to consider the market in order to determine its size and its possible share of the market in relation to customer’s behaviour (Post & Weber 2005). The company should, therefore, consider the three possible markets before selecting a particular market on which to market its products. The company should also consider the size of the new market and the share of the market that it is likely to control.
The size of the market will be determined by several factors that are determined by the purchasing power of the population (Bennett 2002). The size of the market will depend on the population size of the target market.
Among the three possible markets, the regional market has a higher population compared to the Middle East and the European market. The European region also has a larger population than the Middle East region and, therefore, it will provide a bigger market. Although population size is a major determinant of the market size, consumer behaviour plays an important role in determining the market size.
Consumer behaviour determines the willingness of the customer to try new products and the willingness of the customers to deviate from their usual products. The customer behaviour also determines the purchasing trends of the customers such as their ability to buy goods in large scale. Consumer behaviours are also determined by customer anticipations that determine their purchasing behaviour.
Considering the three possible markets the European market has customers with desirable behaviour unlike the other markets. Such market will be attractive to the business since customers in the region are willing and able to try new products.
On the other hand, the regional and middle east market has conservative customers who are unwilling to try new products and, therefore, it will be unattractive for the new business (Chance 2008). The company should consider marketing its product in the European market as compared to the other two markets.
International business laws and other regulations that are of international standards govern international businesses. For the new business to succeed in the new market, it has to consider the available international laws and regulations that govern businesses in the potential markets. The company should analyze the strength of the existing laws before determining on which of the three regions to market its products.
The regional market is composed of countries that neighbour China that include Japan and India (Hart 1995). Such countries have similar products from their local producers; the countries also have policies that are designed to promote local businesses. Such markets will have strict rules that are aimed at controlling or protecting the local industry from foreign invasion.
Due to the rivalry that is rooted in these countries’ history, they will be unwilling to accommodate products from neighbouring countries such as china. On the other hand, the European market has strict measures that restrict entry of products from outside the European block. Due to the low number of dairy companies serving the Middle East market, the region has loose restrictions on foreign companies.
Considering the three possible markets the company would find the Middle East market to be more attractive in terms of its restrictions on foreign companies. Although the European markets have customers who are more optimistic and willing to try new products, the region has strict restrictions on foreign companies and firms.
In addition, the European market is also conscious of the current development in Asia especially in china and India. Currently, European countries are considering the Chinese as a threat and this has made these countries to tighten their restrictions on foreign companies especially those from china and India.
Being a Chinese company Emerald would find the European market to be very difficult to venture and therefore the other markets will be better opportunities. Although the Middle East region is not concerned with the threat of Chinese company, the countries in the region are conservative with strict religious values.
Such countries would not readily welcome products especially consumable products from countries that do not share similar values. The countries will, therefore, have customers who are unwilling to try the new products provided by the new Chinese company (Cateora & Graham 2004).
The company also needs to consider the existing business laws in these countries in order to determine their suitability. Business ownership is an important factor in the process of running and planning of a business and therefore the system of a business ownership forms the basis of most business laws (Bond 1995). European businesses have several forms of ownership that include sole proprietorship, partnerships, and companies.
Partnership and companies can also be classified as limited or unlimited liability according to the degree at which the owners can take risk from the business. The three forms of business ownership require that the countries have all-inclusive laws that govern the running of each form of business. Sharing of loses, profits and risks is the main issue behind the ownership of a business (Triandis 1995).
This statement implies that appropriate business laws should specify the method or procedure through which these factors should be divided among the legal owners of the business. The European laws are designed to incorporate these important issues. Secondly, the business laws are constructed in such a way that they define the legal status of business owners in their business.
This implies that the laws give the boundaries within which a business owner is protected under the laws of the country. Emerald should, therefore, consider suitability of international business laws that exist in a country before floating its products in the markets (Trachsel 1995).
Operating in the new foreign market requires new methods of operation or operation procedures that require that the company adopt international system of doing business. The company has to market its products through strong and competitive brands that are appealing to the customers. The brands of the company’s products, however, can fit in some markets depending on the competitiveness of the available products.
Considering the three possible markets the company will find marketing its products in the Middle East market to be more attractive due to the lack of strong brands. Foreign companies that are not well rooted in the market produce most of the dairy products sold in this market. These companies lack well-established brands and, therefore, such markets would be attractive to the new company.
On the other hand, the European market has well established brands that offer a variety to the potential customers (Rokeach 1973). The European communities are also closely associated with their brands and this makes them unwilling to venture into new territories. Such markets would be unattractive to the new company.
Although the European market has people who are willing to try new products, the customers in such markets have a variety of products to choose from requiring them to make choices. Although the company has strong brands that have been able to influence the local market, the brands have little capacity in the international market.
The company should consider the competitive power of its brands before venturing into the new markets (Shaw 1990). The ability or the competitive power of a brand determines the ability of a product to compete in the international market with the already established products and brands. At the local Chinese market, the company has well established brands that the customers identify it with or associate with the company.
However, it lacks brands that can compete favourably in some foreign markets. For the new company to influence the available customers, it has to apply alternative measures such as sales promotion in order to attract or influence the customers. Such measures will have an additional cost to the operation and production of the company.
The company will find the extra cost to be inappropriate and, therefore, the European market will be unattractive for its brands. Marketing its products in the European market will have an additional operation cost to the company and, therefore, the company should consider other alternatives.
Although the Middle East market lacks well established brands and a variety of the dairy products, the market has customers who are closely associated with their brands. Such customers are also loyal to their brands and to the supplier of the commodities. The company would find it to be moderately difficult to enter into such markets. Finally, the regional market has a variety of competing brands that are new in the market (Hart 1995).
Such markets lack powerful brands and the company would find it attractive to market its products. The company should, therefore, consider marketing its product in the regional market before venturing into the European and Middle East market (Pistone 2010).
Conclusion
Emerald is a well-established Chinese company that deals with dairy products; it operates in the local market due to its competitive abilities. The company has strong brands that the customer uses to identify the company or associate themselves with the company. The company is, therefore, willing to venture into the international market anticipating for similar success.
Before this venture, the company has to analyze the foreign market in order to determine its competitive abilities. As a company that deals with perishable commodities, it will consider establishing production centres in the foreign countries. The company also needs to establish marketing channels in the foreign countries from where it can market its products (Pistone 2010).
The Hofstede cultural dimensions are appropriate strategic management tools that the company should use to evaluate the new market and to determine the appropriate combination of its staff. Using the Hofstede dimension, the company can consider venturing into the European market due to the availability open-minded staff.
Using the porters five forces, the company can determine the appropriate market for its products. The European market has well established brands and therefore unattractive to the new company who view it as its rival. Although the Middle East region lacks dairy product with strong brands, the customers in the market are closely associated with their brands and therefore they are unwilling to try new products (Bade & Parkin 2001).
Finally, the company should consider the available government restrictions in these countries before introducing its products. In particular, the European market has tight restrictions and, therefore, unattractive for the company to invest in. On the other hand, the regional market lacks strict restrictions and this makes it attractive for the new company.
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