QUESTION
Introduction (Clare) (300 – 350 words)
Mention how the company is forming a deliberate strategy to internationalize its Cider
Company background (Francarlo) (500 words)
Brief History
SWOT Analysis
Product looking to internationalize
Source of Opportunity (Francarlo) (500 words)
Why Netherlands (PESTLE Analysis) –
Include Opportunity evaluation Matrix
Business level Strategy (Take a Market or Resource approach)
Host Market Analysis (Ligia) (500 words)
Who are the target consumers (i.e. Beer and Wine drinkers)
Size of the Beverage Industry (Alcohol Market) in Netherlands
Incorporate Porter’s Five Forces into theory (using diagram) to discuss the competition in the market
Draft up a table highlighting the main market competitors in Spain
Market Entry Mode (Alice) (500 words)
Cider, Strongbow Cider in Fostergroup to Netherlands
Briefly, how is the company going to enter the market?
Focus on tensions
Corporate Level Strategy Tension(paradox of responsiveness and synergy) -> look in the book – Strategy process, content and context
(how you going to set the business up)- First – direct export and then , looking at subsidiaries of Foster’s group to setting up a wholly own business)
Strategic Issues the company will face when operating (Alice) (500 words)
Can be any other tensions you feel will emerge – for example:
Net Work Level Strategy (Compete or Cooperate with market players)
International Context (Converge/standardize existing product, or localize it)
-> look in the book – Strategy process, content and context
Recommendations to over overcome tensions (Clare) (500 words – possibly use a table here to reduce word count to 300)
Managing the tensions into the future
Conclusion (Clare) (300 words)
SOLUTION
Market Entry Mode (Alice)
The company is planning a phased entry into the market place. The entry being planned by the company is based on classic MNC strategy that is always followed for entering into new geographical business locations. The company is planning to initially export the two brands
through its subsidiary Bourse du Vin international .This part of the strategic road map is a deliberate attempt to make the company more acquainted with the local market. Any new local market always needs investment in terms of capital and man hours to set up the distribution channel and establish the brand. This is popularly know as Market Development Cost as incurred by the company. Thus it is always advisable to move through a export route as this makes sure that the company does not commit to capital costs immediately, however takes time to acclimatize itself with local conditions .Added to that every new geographic location has a definite set of distribution network completely specific to that business ecosystem. Thus it is prudent as well to study the market for its nuances through the export route before venturing out for operations through a wholly owned subsidiary. Moreover, every new market has also nuances regarding recruitment of sales force as well as other functions. The export route also allows the company to understand these issue before venturing out on its own.
For the next phase of it, market entry the company is planning to set up a wholly owned subsidiary for sales and distribution of its product in Netherlands. The establishment of a wholly owned subsidiary is a clear indication from the organization that it has taken up the market seriously and thus plans to expand its presence in the given market. This is also the phase in which the company invests in strengthening its distribution reach by exploring all the viable channel options possible .Objectively looking at this strategy it appears that the company initially wants to test the waters before strengthening its presence through a wholly owned subsidiary.
Corporate Level Strategy Tension:
Every Multi-Business (SBU Based) faces the duality between Responsiveness and Synergy ().To establish synergy across BU’s amounts to Leveraging Resources across stock of assets, Integrating Activities across value chain and Aligning positions across market offerings .Leveraging resources generally pertains to resource allocation and replication across SBU’s. Integrating activities pertains to linking and sharing value adding activities(BGSU College of Business), while aligning positions generally pertains to improving bargaining and competitive position. Responsiveness on the other hand pertains to responding to a business problem in a timely and adequate manner. Thus it is up to the organization to choose between which approach to adopt an approach of responsiveness or that of synergy. In the present context it would be wise if the company starts with a strategy of responsiveness and gradually mould to build synergy across units. Since synergy building is a time consuming process, it cannot be implemented on day one. However, would be built over days to grow from strength to strength.
Strategic Issues the company will face when operating (Alice)
Being a network in an entirely different ecosystem always thwarted by operating issues. The organization could face issues on the following two domains:
Net Work Level Strategy :In an new market a company is always torn apart between going for a competitive strategy or a collaborative strategy(Cengage Learnig). However, in the present context it would be advisable if the organization follows a collaborative strategy with the competitors. The collaborative strategy is based on a principle of competition of a different form where the idea is to learn from competitors in the present case local players. The form of collaboration can be based upon certain guiding principles they specifically being :i)Convergence of their strategic goals in this case learning local market conditions from the already present players for Foster group and for the local player to learn about new products and technology if any. The competitive goals of both the collaborating companies should be different. In this case both Foster Group(SW Learning) and the local player should aim at different segments of the market to make sure they do compete for the same pie slice. ii)The size and market power of both the collaborating parties should be low as compared to the leaders. Thus the Foster Group should scout for players that have a very small presence in Netherlands. Issues that the company would face will be in the areas how to decide players to collaborate with.
iii)The collaborating partners should be careful to understand what are the skills they are ready to trade and what are the proprietary skills they are willing to protect. In the present case Foster group while collaborating should make sure that proprietary skills relating to product formulation should be carefully guarded.
These are some of the issues that the company will face at the network level. In order to diffuse these situations the company should work through a principle of co-evolution. This can be implementing a strategic centre which works on the strategic outsourcing, capability, technology and competition. The strategic centers also help to evaluate the extent to which the collaboration has succeeded. This evaluation is necessary and important for the future growth of the organization.
International Context:
Looking into the international context the company also faces issues of whether it should standardize its product or localize as per the tastes of the new market.
In order to implement one of the above situation the company carefully study its external constraints as in trade restrictions ,difference in marketing infrastructure ,resource market as well as the competitive structure of the market. Some of the internal constraints to look into would include the attitude and local motivation of the local management. The given market should be carefully studied to understand and mitigate the risk that the company could face in this situation.A standardized product may give the company an additional advantage of achieving economy of scale in production and marketing. However it should be careful about price sensitivity of the consumer segments that it is dealing with.
References
BGSU College of Business [online] Available at < http://www.business.bgsu.edu/faculty_staff/senthil/text-books-strategy/Global-strategy-context-Chapter%2010.ppt > [Accessed on May 20,2012]
Cengage learning [online] Available at < http://www.cengage.co.uk/strategy4e/ > [Accessed on May 20,2012]
SW Learning available [online] Available at < http://www.swlearning.com/management/dewit/sp3e/instructor_resources.html > [Accessed on May 20,2012]
LE20
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