QUESTION
You are the senior managers of a company based in NZ or you own country which manufactures processed foods from local ingredients, and sells them direct to local supermarket chains, as well as selling to a few independent stores. The food lines include breakfast foods, snacks, and special diet foods for people unable to eat gluten.
An opportunity has arisen for the company to start exporting to the Pacific Rim, with the principle markets being Japan, Malaysia and Singapore, Samoa, Hawaii, and the US States of California, Oregon and Washington State.
You must take responsibility for an aspect of international business, and research these countries to find out how easy or otherwise it will be to commence trading with them. The topics to cover include
- Gaining Entry – What tariffs might apply, what are the likely regulations are there any trade alliances which could affect entry?
- Currency and exchange – how stable is their currency against ours? What is the exchange rate? Should we take some sort of exchange protection – if so how, if not why not?
- What strategic approach should we use – direct, through local firms, with a partner? Franchises? Licenses? Justify your choices.
- Should we consider local manufacture (FDI) why or wYhy not?
- What modifications might we have to make to our products and advertising How will we research what is needed?
Once you have researched and come to a group decision on each of these, write a report to the Board of Directors of your company, setting out your strategy, and giving reasons why you think it will succeed. Also outline what you see as the benefits of entering into international business for the company.
SOLUTION
Abstract
Our company is mainly into food processing and offlate their has been a lot of new business opportunities that have come on our way. One such business opportunity is exporting our products to countries Asia Pacific countrieswhere there is great scope of our products. As per Daniels (2007)The countries out there are also well versed with the business topologies that we have and thus, their wont be any kind of problem for the project.
In order to get more details on it, I have developed a project on the new business opportunities and thus found out a lot about the cultural, tradition and theeconomic conditions of these countries. The main countries where we ca try our hand would mainly include Japan, Malaysia, Singapore, Hawaii, US and other small states. These states have a great scope in exportation of our productand these states would mainly fetch us a lot of good currency for our products. Lets now understand all the countries in a bit more details and try to figure out what can be done.
About the Countries
Japan
Gaining Entry
In order to gain entry in particular country, there is less taxation policy and if we have god tie up and set up with the local vendors then their wont be any kind of problem. The main thing is that our product would find major stake and partnerships in the country. Sullivan(2007) says that there are some custom rules on the perish ability of our product but still it wont be having that much impact on our product as we have a god share in making our product the best known one.
Currency
The currency of Japan is Yen which again is strong but still we can get good business deals for our product and thus it can be resolved. I would mainly suggest that we strongly go in theinitial stage with local manufacturing as we have to make our products asper their own demands. If this demand is not kept then, their would be a lot of problems for our product.
Strategic Approach
The main strategy should be in terms of the marketing and mass promotional strategies that should be used. This would enhance the production to great extents.
Local Manufacturing or FDI
Japan is mainly a capitalistic and democratic kind of country having its own elected presidents and leaders. We all know that Japan is a developed country and has god capability to make god progress in all the major areas such as technology and capital markets. Off late it was stuck up with massive Tsunami and earthquake which jolted the law and order but still the country posses to be one of the good prospects for our company. Thus in the initial stages, I would suggest to go in with FDI.
Modifications needed
Our product should be advertised in the local Language of Japan. This would make sure that our product gains maximum competitive change and we get to know the best possible out come.
Malaysia
Gaining Entry
Malaysia is mainly a small country in the outskirts of Pacific sea and gets majority of its income with the help of small industries that are being set up out their and there are other sources such as tourism which also brings in a lot of foreign currency into the country. Our product can easily fit into the country as majority of them are mainly tourist and they are in good need of processed food.
Currency
The currency of Malaysia is Ringgits and it serves it to be weaker in respect of our currency. Thus, it is one of the best known countries her we can easily spread our wings easily. This is les governmental control on entry and we can thus have a good stay and open our outlets in these country.
Strategic Approach
As there are les suppliers in the country for processed food, thus our product can be one of the best known advantage.
Local Manufacturing or FDI
FDI rules are not that strict and thus, there is no problems what so ever with the governmental laws. We can enter and the company and can set up our base and start to manufacture our product. This is the best way as there are a lot of more rules that have to be followed. Custom rules are not that strict.
Modifications needed
Some modifications would be needed, but in the initial stages we can go in with our own product. Just the advertisement part needs to be trimmed in terms of the language.
Singapore
Gaining Entry
Singapore is another small country in the outskirts of Asia and it brings into light how a small city can be developed into big one. The best way of coming and entering into this segment I through the way of FDI
Currency
The currency of Singapore is mainly Singapore Dollars and it also terms out to be a weaker currency as compared to our NEW Zealand Dollars.Thus, their wont be any kind of trading problems with this country.
Strategic Approach
Another man thing that should be kept in mind is the internal policies of the country. The internal policy of the country is sound and there is more exposure to small Economic Zones that are being set up. We can set up our base in the economic zones and bring out something good for our company.
Local Manufacturing or FDI
FDI rules are not that strict and the government wants to bring in more of FDI revenues and capital in the country. Thus, FI and setting up our own manufacturing base would mainly be the best example and we should make sure that there is god quality of products that are being produce d and that is mainly been liked by the local people.
Modifications needed
The only modification here as well would be in terms of the advertisement part. Rest all components can be the same.
Hawaii
Gaining Entry
Hawaii is mainly small chain of Islands that is mainly situated in the north West of Asia. It is mainly famous because of its natural beauty and flora. Our product would mainly gain competitive advantage out their because there is good scope of growth. The country is mainly developing in nature and their are good chances that our product would get the attention of the target audiences.
Currency
The currency is also not that strong as compared with that of ours and thus, it would be easy to locate it and find good busies in the country.
Strategic Approach
The only strategic approach should be in terms of marketing our product. We have to choose some segments and market our products accordingly in those segments.
Local Manufacturing or FDI
The FDI rules are not that huge and thus any company can enter. The goverenmt would mainly levy some taxes and apart from it there are no more taxation that is to be paid. We need to set up our own base or we can also go in for direct export in this countrystheir would be les distances that needs to be covered. Also the taxation rules on food processed food is not that much and hence, their can be more emphasis on our products which are being imported.
Modifications needed
No modification needs to be done out here. The product that we have would be capable to sell itself in the global market.
United States and Samoa
Gaining Entry
Gaining Entry in US would mainly involve clearing some custom rules and then it would be easy. In terms of Samoa, their wont be much problem as the custom rules here are a bit easy. The only thing that we have to keep in mind is the quality which is important in both the countries.
Currency
The currency of US is strong enough and our currency would be weak, but still this kind of deal would be strategically be one of the best deals. Keeping in mind the US laws and other kinds of custom laws, their can be easy entry procedures in the US market. Same would be the case with Samoa. Here the currency is not that equivalent but is still strong.
Strategic Approach
United States is one of the best countries in the world which enjoys good brand and reputation as the worlds most talked about country. As per Wiley Sons (2008), they produce well in terms of goods and services and has one of the worlds most resources for all kinds of commodities. The main thing is that our product would be very beneficial for them and so would be a god market for all of us. We have one of the best known brands and we cannot forget the thing that our brand would mainly help a lot of US companies to grow.
Local Manufacturing or FDI
We need to set up our direct base in the market and thus a strategically location needs to be decided upon. Thus, united states and other neighboring states would be one of the best markets for our company and this could be one of the strategically best known areas for our manufacturing base. In terms of Samoa, we can set up our base in that particular country provided we get some authorization from the FDI officials which is sort of easy.
Modifications needed
The same product can be used in this country as the population would be some kind of same. The only thing that we would be requiring would be the mass marketing that would be beneficial in both of these countries. Hence, we can say that their is less modifications that would be needed in our product in both the countries.
.Conclusion
Our company which is mainly into food processing would make a global presence in these countries which would increase our tie ups and market share in the market. This would mainly mean that we would be one of the best known brands in the marketandtheir would be very less competitors for us. Also our product would mainly cater to the local needs and wants and this would mainly involve a lot of costing which would be done in accordance with the local costing rules.
I feel that this strategy would mainly be successful in long run and short run and their can be a lot more factors that could be added at a later stage of the productdevelopment. What more is involved and needed is that their can be more development in the product range which would be more into processingand their can be a lot more diversification which can be involved. In short, a very good project and needs to be developed more so that there is good growth scope.
References.
Daniels, J., Radebaugh, L., Sullivan, D. (2007).
International Business: environment and operations, 11th edition
Travis, T. (2007).Doing Business Anywhere: The Essential Guide to Going Global.
Hoboken: John Wiley&Sons.(2008)
GH66
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