Project management report help: Fast food industry – Rainbow

Executive Summary

This project report is based on  Fast Food Industry called as Rainbow which is headquartered in U.S. The management of company has been decided to enter into South African market for expanding their business. Tom has been hired for the marketing department to plan and implement the global marketing strategy by accessing the market opportunities in South African Market. Tom’s Job is to conduct an analysis of overall competitiveness over there and scope of investment in food retail Industry. Michael E. Porter’s extended version of National Diamond Analysis has been used for construction of South African Country’s Analysis. The two contemporary Management Issues have been explained in this report so that Rainbow can analyze and find solutions before opening operations in South African Market.

Sum up, according to the analysis of the given case, Tom’s report provides some recommendations for Rainbow.

• The extended version of porters Diamond model showed that aspects such as internal and external market conditions depends upon factor conditions, demand conditions, strategy of a firm, structure and competitors, related and the supporting industries, Government, and chance for exploring the business opportunities in South African Market.
• The discrimination in terms of Age, sex, race, gender and language should not be there. The products should be designed on the basis of the taste and preference of the South Africans.
• The foreign Direct Investment mode of entry is considered to the best one while entering into South African Market.

Table of Contents                                                                                                  Page No

1.0. Introduction…………………………………………………………………4

2.0. Porters National Diamond Model………………………………………..5

2.1. Porters National Diamond Model Six Aspects………………………..6

3.0. Contemporary Management Issues……………………………………10

4.0. Market Entry Strategy…………………………………………………….11

5.0. Conclusion…………………………………………………………………12

5.0. References…………………………………………………………………14

1.0. Introduction

Rainbow is a food retail Industry which was founded in 2004, and is headquartered at U.S. It has been producing wide range of biscuits, muffins, cold drink shakes and chocolates. It is has explored its business in Australia, Asia Europe and right now it is planning to enter into South African market.  It is country which consists of more number of black people who have been empowered. The products range started from 10$ to 100$. It has been advertising its products by showing it in television, posting hoardings in public places such as outside the school, railway station and etc to grow the business. Rainbow has also identified the methods to reinforce the company’s brand image by offering the services to the customers in US by opening several retail outlets at prime locations. These outlets have become the choice of all age group of customers and products like drink shakes and muffins have been delivered to the customer table within few minutes. The USP of Rainbow is that they have been providing nutritious products in a reasonable price. The consumer market was being segmented before launching any new brand in U.S. It was segmented on the basic of demographic, environmental, psychological, and other aspects. Recently, Tom has been hired by Rainbow as a Senior Employee who will be involved in Planning and implementing the marketing entry strategy for South Africa. He has been hired for the marketing department and he needs to plan about the global strategies. A proper framed marketing plan will help Tom to describe the present situation of market to the management (About .com      2012). This prepared plan will include description about the competitors of food industry, consumer demand for the products and services, and the weakness and strengths of South African market. He is planning to forecast and access the opportunities in South African market. Tom’s job is to find out the competition level and market attractiveness over there (Euro Monitor    2012). The market Analysis will include the segmentation of market in a demographic manner like in terms of age, sex, income, education and lifestyle. The success and failure depends upon the effective segmentation of the consumers in the market. These factors have been affecting the food retailing industries which are already existing such as MC Donald’s, KFC, Dominos and etc over there. The reason why Rainbow wanted to enter this new market was because home cooked food was losing its importance. The few things should be also identified such as the government policy, mode of entry, labor availability, developed infrastructure, and appropriate logistics system. There is high level of unemployment and income inequality in South Africa shows that it is a developing country (John Wiley & Sons, Inc     2012).  It has been highlighted by Tom in the report that there is a wider scope for growing the food retailing business over there because the standard of living  of consumers have increased because every year the economy is growing. The number of nuclear family is growing and youths have been attracted to these types of fast foods because they find themselves as class conscious (Journalistic Inc        2012).

2.0. Porters National Diamond Model

In this project Report Tom has used the Porters National Diamond model to do the country basis analysis of South Africa. As per this model Michael E. Porter has been stating that a nation can built up with the help of certain factors like advanced technology, government support, to create a national competitive advantage over other countries. There are six factors which Tom has used to access to gain awareness and knowledge about South African Market. The country analysis will help Rainbow to focus on how to enter and position their brands in the South African Market. The analysis has been done by Tom on the country basis to understand the competitiveness at international level (A.J Smith      2010).

2.1. Porters National Diamond Model Six Aspects

The six aspects are known as factor conditions, demand conditions, strategy of a firm, structure and competitors, related and the supporting industries, Government, and chance. Each of them is explained on the point basis.

a).Factor Conditions

It explains about the resources in terms of human, physical, skill and financial should be available to manage the competitiveness. It has been further divided into two parts such as advanced and the basic factors. In South African market the basic factors included about the unskilled labor over there, raw materials such as agricultural products, the hot weather over there, and the availability of the water resources. Rainbow requires basic factors because it will help to minimize the investment level required for the production of products and services over there. Tom has explained about the advance factors which are being developed with the help of innovation process. It requires reinvestment approach and can become the part of the sustainability for creating a competitive edge. Since it is a developing country focus has been given to educate the citizens over there, basic infrastructures such as electricity, roads, transportations and hospitals have been set up for the  upgrading the living standard of the Black people at South Africa. Since the weather is hot over there, the launching of the cold drink shakes will help rainbow to grow the business in a new market. Day by day the literacy rate is growing over there so much availability of the human resource will be there and company can save their cost by hiring and employing the people of South Africa. It will also help to develop the economy over there.

b).Demand Conditions

The demand condition of any country will state the preference for the particular or the substitute products. It stated the ability that consumers that they can pay the price for the particular products. Tom presented that South African’s per capita income will state the spending patterns of the individuals for the particular product or services. It states the polycentric and geocentric mindsets of the consumers at South Africa. It will explain the consumer’s attitudes, perception and feedback while purchasing the products. Tom states that the demand for the products is based on certain attributes that is being measured by the consumers such as quality, product, features, design, logo, color, price and etc. On the basis of the home made demand for products and the other countries manufactured products the economies of scale for the business can be determined. Tom has also analyzed the area wise demand for the food products and services because it is feasible for Rainbow to fulfill the demands of consumer’s traffic based locations. It will differentiate the resources between the home country and the host country’s success. The demand will also differ as per the consumer’s location.

c). Strategy of a Firm, Structure and its Competitors

This aspect will help Tom to find out who are the major players Food Players in South African Market. The brands that exist in South African market are KFC, MC Donald’s, Mugg & Bean, Ocean Basket, Panarottis Pizza Pasta, Subway and many more are there (The Franchise Association of South Africa    n.d). Some are homemade brands and some has been operating in African market with the help of franchise mode. The crucial driver to run the business is the competitors who are well established in the market. Tom has been analyzing that the domestic competition is more because it attaches with the emotions of the African’s that they are eating the home made products. Rainbow can create new strategies for coping up with the competition and improving its quality to maintain its USP. It will help the management of Rainbow to set up their goals for handling the pressures while they actually entered into the African Market.  It needs to do the analysis of the competitors suppliers, customers, analyze the brand and the product differentiation. The presence of the rivals in the South African market will reinforce of Rainbow to create something new for their customers.

d). Related and the Supporting industries

According to Tom, he explains that it is an important aspect and Rainbow need to analyze it because it is related with the vendors or the business partners of Rainbow. It should be located near to Rainbow so that resources can be supplied as and when required for manufacturing the products and services. The staff Augmented companies for supplying the labor, transportation companies, technology and software designers, advertisement companies, real estate companies, and etc should be there for supporting Rainbow to grow the business at South African Market. These supporting industries will help to provide the cost effective inputs as compared to their competitors and business can be explored in South African Market. The support of the other industries will not only help Rainbow but also other companies will be correspondingly gaining the advantage at South Africa. It will be a mutual process between Industries to share and grow their business for developing the economy over there.

e).Government

The consent of host country’s government plays an important role whenever the companies try to enter into it. It can interrupt at local and the national level. Certain entry strategies could be made mandatory such as in form of Foreign Direct Investment, Collaboration, Franchise mode, mergers and Acquisitions. Permits need to be taken before entering into the African market to do the business, it is the duty of the management to assure the investors located over there, and tax should be paid on timely basis. Rainbow should follow the terms and conditions of certain legal bodies over there and code of ethics should be maintained. If the standards & Acts are not followed in such case the license of Company can be cancelled by the Government of South Africa. The resources available at Africa should not be exploited by the host Company. The environment should not be polluted by producing the several types of pollution. The fair and transparent competition level of business should be managed by Rainbow at South African Market and unfair activities such as bribery and mismanagement should be avoided.

f).Chance

It is defined as the early opportunity being used by the Companies. Sometimes there are certain situations which becomes out of control and the business gets affected. It can be related with the fluctuations in the financial markets. Tom states that planning at early level will help to innovate on timely basis before the competitors which will generate lots of opportunities for Rainbow. The late planning process will incur cost and the business will be taken way by the competitors. Since it is a developing country  after analyzing the market Rainbow should decide and implement the appropriate mode of entry strategy at South African Market. It will also help to choose the best options for managing the business over there and eliminate the loopholes (The World Bank      2012).

3.0. Contemporary Management Issues

In this paragraph Tom will be explaining the issues related to the present food retailing industries. It will be related with cultural issues that needs to be managed in a strategic manner.  The first point is related to find out the difference in culture of Africans. The issues related to culture are language, food, race, customs and traditions. The black people hold the maximum position in South African market. The official languages spoke over there are Afrikaans and English (SA-Venues.com         2012). Christianity is followed as the main religion over there. As fooding habits the local citizens of Africa prefer to eat meat, mutton, chicken, and beef. They feel that serving the vegetarian food in dinner is an in insult for them. Eating meat is a ritual that signifies the culture of South Africans. The Racism is followed at South Africa because during employment of government related work or during submission of any work the Black are given more preference as compared to the white people. Still at some parts of South Africa there is discrimination on the basis of age, sex, gender, race and etc. There is discrimination between males and females because most of the organizations are male centered. Even Hofstedes has explained the cultural dimensions so that issues related culture can be clarified.  It has been explained that Individual versus Collectivist where individual becomes more independent and collectivist focus more on the cooperation. The uncertainty avoidance will be related to the risks based on certain behaviors. Power distance will be explaining difference based on superiority. The other factor is related to the masculinity versus feminity where the discrimination can be balanced by nurturing both the genders. The final point was related to short term versus long term objective which will highlight the goals of the individuals and organizations. The second point is related to management of these issues by Rainbow while entering into South African Market. Second point is related to Rainbow’s management which needs to resolve these issues by respecting the culture and designing the workplace policies where balance can be maintained while managing the diversities. Talent should be invited by Rainbow without discriminating on the basis of age, race, gender and language. The product should be designed and launched in the market by understanding the customs, traditions and rituals of the South Africans. Even the advertisement for creating awareness by Rainbow regarding their brands should be made by respecting the culture of South Africans (Hearst Communication Inc   2012). It has been also observed that the white people have been hating the Black raced people since the historical times. It never signifies that African should also do the same with the white raced people. Rainbow should frame a proper work place policy were all the diversities of people are invited to work. These issues should not hamper the productivity of the contemporary organizations.

4.0 Market Entry Strategy

After analyzing the country’s competitiveness regarding the food retailing business Rainbow can follow the mode of Foreign Direct Investment where the Branch office will be set up and greater control is being maintained while exploring and distributing the business. It will allow Rainbow to directly contact with the African Citizens. It will allow Rainbow to enjoy the credibility and returns will be secured after the investment process. The 7 P’s of marketing mix such as product, price, place, promotion, people, physical evidence and process can be used while entering into African Market. Since other multinationals are there operating on the basis of joint venture, franchise mode and licensing mode therefore it will be beneficial in terms of cost to enter with Foreign Direct Investment mode. As per Tom analysis it will provide the benefits to the developing countries like South Africa by increasing the investment over there, using the latest technology, the competition in terms of export will increase, employment can be provided to the local African Citizens, and consumer’s demands can be fulfilled with higher level of satisfaction. Rainbow will also help in developing the economy of South Africa by contributing in its growth. The permission for entering by the help of FDI mode should be taken from the government of South Africa. Mostly the multinational operate in form of FDI to enter into any country. The government gives permission to operate in such mode because the management of parent company creates an asset in the host country and they cannot wind up the business easily. It assures confidence among the citizens and Government of South Africa. The resources which are available at South Africa can also be used by Rainbow and recycled to prevent the environment by the way of corporate social responsibility.

5.0.Conclusions

Tom has been concluding his research by analyzing the social, political, economical and legal environment for entering into South African Market. It is well known that South Africa consist of Black raced people and it holds lot’s of natural resources. It is a developing country and people have been getting awareness regarding the changing patterns of the lifestyles. The customers in South Australia have been showing their demands to these types of Fast food Industries. The well known Brands such as MC Donald’s KFC and many more have been operating on several modes. The extended version of porters Diamond model showed that aspects such as internal and the external market conditions depends upon factor conditions, demand conditions, strategy of a firm, structure and competitors, related and the supporting industries, Government, and chance for exploring the business opportunities in South African Market. The cultural issues can be resolved by the management by respecting the culture of Africans and viewing the business with cross cultural aspects. The discrimination in terms of Age sex, race, gender and language should not be there. Appropriate workplace policies should be there and also the products should be designed on the basis of the taste and preference of the South Africans. Talent should be invited from several diversities to increase the productivity of the business before operating into new market like South Africa. The foreign Direct Investment mode of entry is considered to the best one while entering into South African Market. It will allow Rainbow’s management to operate in similar manner as they have been operating in U.S.  Rainbow will exercise the liberty to operate and also will be contributing the economy of South Africa. It will be beneficial because employment will be provided to the local citizens of South Africa.  Tom has also identified that to operate business in South African market was competitive but it would provide ample of opportunities to grow because it is a developing country and people are increasing their standard of living and are shifting to the fast food trends. Tom has been stating that investment in South African market for operating the business of food retailing Business by Rainbow will grow their global presence and business immensely. Therefore the analysis and research of Tom shows that business opportunity for Rainbow is there in food retailing business. The investment done by the management can be easily returned because the demand for such food is there among the consumers. Though the market is competitive but it will motivate Rainbow to add new variants in its products and services to grow the business in a developing country like South Africa.

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