Global marketing management - Essay Example

?Global Marketing Management Contents Global Marketing Management Contents 2 Introduction 3 Purpose of the Internationalization Plan 3 Market Opportunities 4 Internal Resources of the Company 5 Marketing Objective 6 Internal and External Analysis of the Company 7 Market Segmentation of the Company 10 Competitor Analysis 10 Internationalization Theory 11 Recommendation and Conclusion 13 Reference 15 Bibliography 17 Introduction In the era of globalization, a company with a good financial and non-financial base will certainly think about the expansion of the company overseas. If they can expand their customer base, it would be more profitable for them, when the long run of the business is concerned. The companies have to design efficient strategies to ensure that their new venture in overseas country is generate a good return for them in a long-term basis. Hilton food group Plc is in the retail meat packing business in Europe. They are the supplier of the major food retailers of Europe who have global presence. The group has presence in the United Kingdom, Ireland, Netherlands, Central Europe, Sweden and Denmark. The group wants to expand its business in more countries and subsequently wants to broaden their customer base. The paper is an attempt to analyze that whether or not the company should expand their operations in more countries. For preparing the report, the researcher will analyze the resources available to the company, their financial capability, no-financial condition, also the analysis of the industry and the competitors. If the researcher finds that, the company should expand their business overseas then the right place of expansion will recommended. Purpose of the Internationalization Plan Internationalization mainly occurs when a firm decides to expand its R&D, selling production and other related business activities in the international markets (Hollensen, 2009, p.44). A company expands the operation globally if the management feel it is viable for them financially or non-financially. If the management finds opportunity in a country then they opt for expanding its business there. At first, they identify the customer needs in the new country. If the company has the ability to meet the customer needs then they take the decision to expand their operations in that country. If they identify that, the labour cost is less in the new country is lower than the country where they are currently operating then they would like to expand their business in the country (Tan and Mahoney, 2002, pp.20-24). When a company is trying to moving towards to some lower development country, then there is the chance to expand the product life cycle. The company will also get the chance to expand the customer base and as a result, the economies of scale of the company will improve. The vision of Hilton food group plc is continuing their global expansion as it is their strategic goal. They have done the expansion in the recent years also. In the year 2010, they have expanded their operations in Estonia (Hilton Group Food Plc, 2010, p.5). The company has subsidiaries in Ireland, Holland (Financial Analysis Made Easy-1, 2012). The idea of international expansion is as per the vision of the company. Their purpose of going global is increasing the customer base of the company so that they can gain the economies of scale. Market Opportunities For analyzing their market opportunities, the researcher has to go through their products, which they offer. They are the suppliers of packaged foods to the retailers of Europe. The clients of Hilton food group includes Tesco Plc, Albert Hejin, Ahold etc (Hilton Food Group Plc, 2012), who are among the top players of the retail sector. They are specialist in non-vegetarian foods like meat products, fish products including the provisions of freezer (Financial Analysis Made Easy-2, 2012). They have no branded product, which means that they manufacture the products when they have not any recognition to the retail customers. It is concluded by the researcher that the clients of the company are the retail chains. Therefore, when they want to expand their business in overseas they have to target the retail chains in those countries. The company only operates in Europe. In this modern era of globalization, they can expand their business in other continents also. They can expand their business in Asia where they can get access in many developing countries as China, India, as well as they can expand their business in African countries where the countries are underdeveloped. In those countries, they can expand their product life cycle. They can also expand their operations in the United States where the demand of packaged foods are growing. The retail customers of the United States prefer the packaged foods more. Therefore, there is a wide opportunity for the company to expand their market globally, which is along with their vision of geographical expansion. Internal Resources of the Company Hilton Group Food Plc is one of the main suppliers of packaged meat to the retail chains worldwide. The resources of the company are good from the financial viewpoint or from the non-financial aspect. They have invested well in their manufacturing plants, which mean they have the potential to supply large number of customers. From their manufacturing capability, the researcher is concluding that they are ready to expand their business overseas. Their relationship with their clients is well, which means a loyal customer base. A loyal customer base will help the company management to earn revenue also in the time of financial downturn. The company has also maintained a good relationship with the employees. Motivated and dedicated employees can ensure value added product for the company, which will help to provide gain more revenue for the company. The corporate social responsibilities programs of the company are also fine which helps the company to have a good reputation in market (Hilton Group Food Plc, 2010, p.14). By analyzing the financial ratios, it is clear that the financial condition of the company is stable. Their solvency ratio has improved from the financial year 2007-09, which means the management of the company is efficient (Financial Analysis Made Easy-3, 2012). So from the analysis of the internal resources of the company the researcher is drawing the conclusion that the using the resources the company can think about expansion in overseas. Marketing Objective If the company extend their presence in different countries, increase the number of clients, then the bargaining power of the company will increase. If the company is able to make more customer base and can provide quality products then their bargaining power will automatically be higher. The company can earn more revenue and can expand their company. Also in certain countries they can do forward integration. Forward integration means the company can provide their manufactured goods to the retail customers directly, not through the retailers (Krajewski, 2007, p.406). Doing forward integration in foreign countries with their unique brand name will increase reputation of the company globally. It would also open up a new opportunity for the company. Therefore, there is a good opportunity for the company to expand more in the other continents like Asia, Africa and the United States. By expanding their presence in different countries, they would be able to extend their customer base, which would help them to achieve good economies of scale. If they can expand their presence in countries like China and India, they have a large customer base that will attract to the product as well as the company will get the labours and raw materials in a lower cost than Europe. Providing the products in a lower cost will increase the revenue of the company, as a result the profit of the company will also increase. Internal and External Analysis of the Company The internal and the external analysis of the company are a vital to the organisation. The best known and the most widely approaches id the SWOT analysis to analysis the internal factors. SWOT framework classifies the various influences of the strategy of the firm into four broad categories, which includes the strengths, weaknesses, opportunity, and threat (Grant, 2005, p.13). SWOT Analysis Strength: Hilton Food Group Plc is one of the leading specialists in the retail meat packing business and supplies to major international retailers of food in Europe. The company strength lies on its geographically diversified business where nearly about 74% of the group revenue is earned from regions outside UK. The Group had a tremendous performance despite of the fact of consumer spending less but it did contribute to a strong turnover growth. A strong balance adds on to the strength of the Group (Hilton Food Group Plc, 2011, p. 1). Weakness: The bargaining power of customers are high as it deals with only a few customers, if the customers move away the company would face a loss and since it suppliers the major retailers might not take its product if the demand goes down. People are becoming more health conscious and so meats are not preferred much, as a result the supply of its product might slow down resulting in loss for the company. Opportunities: A wide opportunity for Hilton Food Group lies with its international expansion and as well as of new product development. Hilton remains ahead of its competitors such as Beckett’s food limited, Spar food and so on. The turnover of the company which stood at 864223 in 2010 was the highest as compared to its competitors and ranked at the top position beating its competitors with a high margin (Fame, n.d). The Group is also geographically diverse in all the major regions. Hilton’s newest facility in Denmark which started its production from 2011 gives the company a huge opportunity to build a mark in Denmark and then expand into the neighbouring state. Therefore with its forte of international expansion the company can grow and become even a better and financially strong group in future and catering to the requirements of the people. Threats: Hilton Food Group being a strong and competitive brand has the capacity to overcome the threats over the opportunities. But with some of the strong competitor competing with Hilton Food Group on international basis a major threat comes from the companies which have expanded globally across the world. Hilton has expanded only in Europe whereas its competitors have been expanding across the globe. Hilton is a supplier when the bargaining power gets less due to any reason due to recession or any economic threat which might pose a threat for the company. External Analysis The external analysis would concentrate on the PESTEL analysis. PESTEL takes into consideration the political, economical, social, technological, environmental and legal factors (Lynch, 2007, p.145). Since Hilton has been in the business of supplying meat packaging, the demand for its lies not only in Europe but entire world. With changing habits the demand for packaged food has grown incredibly and this change has been experienced in the US market. Thus the PESTEL analysis is performed upon US. Political: The political conditions of US seem to be stable and does not pose any strict restriction on export and import facilities. There are fewer barriers to entry and exit the market. And more over the food retail market is performing extremely well. Therefore Hilton Food Group can successfully expand in the US. Economical: The US has the strongest economy in the world with a GDP rate of $48100. The US enjoys a greater flexibility than the other western part of Europe and other states (CIA, n.d). The meat packaging industry has experienced a growth in the US and is set for a steady market growth. Social: With changing habits of the consumer the packaged meat industry is experiencing a growth in the US. People usually prefer purchasing packaged food due to lack of time the demand has increased drastically. Consumer worry about the hygiene of the food so according to them packaged foods are highly processed and are safe for consumption (Euro monitor, 2011). Technological: US is one of the most hi tech countries and it ranks at a top position in terms of technology. The supply chain system of the retail food sector in US is very much advanced and thus Hilton would sound profitable in expanding into US. Environmental: US follow an effective packaging for its packaged food product so to secure the environment from the waste materials. Advances in packaging and also in food processing have been a primary motive in keeping the food supply of US one of the safest in the world. The main motive of food packaging in US is to protect the food from influences from outside and also distribution damage, and to provide the consumers with healthy and safety packaging (IFT, 2007). Legal: The legal condition for packaged food and packaged meat products are stable and according to the laws of the US government. Thus it is essential for Hilton Food Group to comply with the legal laws and regulation before and after entering the US market. Market Segmentation of the Company Hilton Food Group deals in packaged meat product and it is segmented into meat of various animals, which ranges from red meat to pork, lamb and others. The company has segmented its product into meat and meat products and supplies the packaged meat to big food retailers like Tesco, Albert Heijn, ICA and Ahold in UK. Competitor Analysis Hilton Food Group has been facing competition from many different brands in both the UK and also when it expands it in US. Some of the major competitors are such as Beckett’s food limited, Spar food distribution limited and other (Fame-a, n.d). To analysis the competition between the firms an in depth analysis is made on Beckett’s food limited because it ranks second next only to Hilton food group. Becketts are the largest and independent manufacturer and supplier of bacon products to the food market and supplies it to the retail sector. The company is dedicated to provide bacon at its best (Becketts, 2011). Porter’s five forces Bargaining power of supplier: The bargaining power of supplier is high as the company itself supplies the product to the major retailers and also to other food services. The retailers would depend on the suppliers for its product. Bargaining power of customers: The bargaining power of customers is high because it is the customers who decide on the brand and brand value. Threat of new entrant: The threat of new entrant is high because any firms might start supplying products to the retailers and at a low cost than the existing retailers. Threat of substitute: The threat of substitute is low to moderate because a retailer does not want to lose a supplier, which is well established, and containing many different brands of meat and meat products. When the brand name is high the retailers are left with no option but to buy from the suppliers. Rivalry among firms: The rivalry among firms are high because there are many well known suppliers who suppliers packaged meat to the retailers. One of the competitors is the Hilton Food Group. The competition in the packaged meat product and other packaged food is high. Internationalization Theory The internationalization theory is concerned about the firm, which has been dealing with the question as to the reasons for the firm to enter the international market. Another important question arise is the type of operation that the firm should choose while making the entry and developing the foreign operations. And the third issue is the geographical spread and the development of the international business activities (Hollensen, 2009, p. 73). Some of the theories which related to the theory of internationalisation include classical theories growth, and also the Hymer model which is concern about the economic reason for the firms which aims to enter the international market and internationalise gain and also maximise the profit opportunities. The growth opportunity of the firm economic logic, according to the theory of classical growth should be the guiding lines and should explain why the firms should internationalise their operation. The Uppsala international theory postulates that the firm enter the foreign market through learning and commitment process. Apart from these other theories includes transaction cost approach, dunning eclectic approach and network approach (Tornroos, n.d, p.8). The theory, which would be further discussed in relation to expansion of Hilton food groups, is Uppsala internationalization model. This model decides on the choice of the market and the mode of entry. According to this theory the companies entered only the nearby markets and that also through exports. There are four stages of entering a market according to this theory; stage 1 talks about sporadic export stage 2 talks about the modes, through independent representatives. Stage 3 attempts to develop a foreign subsidiary and last stage talks about the production and the manufacturing units. The international activities require general knowledge and also market specific knowledge (Carrigan, Marinova & Szmigin, 2005, p.548). Hilton has decided to go for international expansion in US and would export its products to the retail outlets. Recommendation and Conclusion It can be concluded that Hilton Food Group would expand in the international market, which is in the US market because the packaged food market has been growing and especially the packaged meat has also increased over the years. The retailers are selling the packaged food and according to analysts the retail food market for packaged food is likely to increase more in the near future. Thus the Hilton food group can enter the international market and it can export the items to the retail giants in US such as Wal-Mart and other retailers. The company while entering the US market should take into consideration the taste and preference of the market and keep a track of all the retailers. It is necessary to export products through well-known retailers to ensure the brand value of the company. Hilton one of the biggest brands in UK has expanded in the states of UK and has succeeded fairly. It supplies to major retail outlets and similarly it should exports its product through major retailers. Internationalisation is a concept that is used by many big brands and is expanding globally. But it is important to realise the facts that whether the company is a ready to go international and by which mode it should enter the foreign market. After analysing the US market, it has been decided that Hilton Food services would enter the US market as the demand for the packaged meat is increasing and thus to enter the market would prove to be profitable for the company. The Hilton Food Group has already marked its importance in UK so it is recommended to go international staring with the nearby countries and gradually expanding to other countries. Also the competitors of Hilton Food Group have diversified globally so in order to remain competitive in the global market it needs to expand globally and in the markets where the demand for its product are high. Therefore, it is recommended to Hilton Food Group to expand into the international market particularly in the US market. Reference Becketts, 2011, who we supply. [Online]. 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