International Marketing in the Middle East - Admission/Application Essay Example

Introduction The Middle East was once operating with a small, divided retail sector, which made experts doubtful about its potential as a trade associate. It also experienced a shortage of storage space, which only added to their doubt. However, they have progressed in both these fields to such an extent that they have actually aided the growth of foreign confectionary providers. Other factors, which are also adding to this progress, are the trade liberalization and better infrastructure, which are both responsible for the increasing ease with which product entry and brand development are also improving. This progress is apparent in the statistics today, which show the Middle East as having one of the most profitable markets for confectionary in the world (Lymbersky, p. 83). There are several demographic reasons, which add to the increasing demand, which keeps this thriving industry alive, such as the number of young inhabitants of that place, the increasing immigrants to the area as well as the large disposable income per capita. Suppliers from all over the globe rush to meet this surging increase in demand, thus leading to immense competition. A large portion of these confectionary sales are made in the super markets and hypermarkets, which operate in the smaller countries in the Middle East, like Israel. Two such supermarket chains in Israel are major stakeholders and controllers of the retail sector for this industry. As a norm, convenience stores also hold an important part in the supply of confectionary goods. Although this does not apply for the self-regulating grocer, who is no longer a major supplier in this regard due to the other suppliers available (Sekkat, p. 29). Background This report explores the opportunities and barriers to entry that exists in the Middle East confectionary industry. The main focus in this report are on for regional factors, and much of the empirical evidence derived for it are from individual markets of Egypt, Israel, Turkey and other such prominent areas. Objective This report aims to study several different market entry strategies, from which it will deduce the one that seems most appropriate for this company. There are also several strategic issues that this report outlines, which are essential for the company to address before the product launch, in order to ensure maximum effectiveness and success, as well as a guaranteed future. A few of these issues are foundation for entering that specific market, the competitive advantages of the firm as well as the ways it plans to retain these advantages and finally, the types of promotions it plans to employ. Reasons for Selecting Middle East Region The Middle East confectionary market grows year by year, as the international producers develop an increasing awareness. The sales in this region have been experiencing a large, double-digit growth annually. This is apparent in the average of 15 percent growth it experienced each year, between 2006 and 2009. There are several reasons behind this large growth. Many of these reasons root from the demography in this situation. According to the dealers in the sweets market, two demographic factors are majorly responsible for the changes that their business experiences (Fleisher & Bensoussan, pp. 39-44). One of these is the way young customers increasingly affect the market. This may be because 23 percent of the population in these areas is made of young people between the ages of 15 to 23. In addition, the oil-based financial system, which has developed by 35 percent throughout the region since 2005, has led to these young people to be more than financially equipped to afford confectionary items on a regular basis (Sekkat, p. 56). Another major factor, which caused this growth, is the decline in tariffs in this region. This has led to a radical expansion in the business and investment in this region, which has had a positive effect on the growth of especially the global confectionary companies. A few of these international players include Cadbury, which is currently the market share leader in this region. Others are Master Foods and Kraft, both of which have recently been working on their manufacturing services as well as acquiring brands in the hope of attracting even more customers. These developments have encouraged the local producers such as Gandour and IFFCO to take action as well, and employ development and innovation strategies similar to those of their international competitors (Sekkat, p. 40-58, 2009). Resultantly, one can see how the confectionary industry in the Middle East has become one of the most lucrative and active in the world. Current Situation of the Company - Why Company is Expanding The company hopes to maintain is competitiveness and financial security through this international expansion. When there is a decline of demand in the local market, this expansion will save the company from an instable income, as it will be able to take advantage of the more positive situation prevailing in the other countries at the time. Market Entry Strategies The resource-based view will be helpful to the purpose of this report, as it is often employed in the exploration of the internal and external environment of a company. Resource-Based View The Resource-based view (RBV) is a device that is often in utilization by firms to identify the strategic resources that are available to them. The RBV operated on the principle that a business can identify its competitive advantage in an industry by studying the valuable resources available to it, as the latter lead to the former. There are often competitive advantages, which exist in the short-run. In addition, to transform these into benefits, which last permanently, the firm requires resources, which are diverse and immobile in nature (Fleisher & Bensoussan, pp. 39-44). The RBV is an approach that first analyzes the company and then the approaching strategy. It deems a firm to be a compilation of resources. How the company chooses to combine and employ these resources is what distinguishes the company from all others, and enables it to distribute its product amongst the consumers (Barney & Clarke, p. 56). RBV is a point of view that differs majorly from the traditional market-based view. It highlights a few characteristics, which need to be present in t a resource to make it strategically significant. These include it being: Valuable – Unless a resource has definite value to the firm, the firm has no reason to count it as a resource. Rare – If a resource is easily available and common to the assets of every firm, it cannot possibly give any company the competitive advantage over the other firms. Matchless – A resource has strategic significance if it is such that the other firms cannot acquire it simply, or replicate it. Non-substitutable – Other than being impossible to replicate, it also should not have a purpose, which another resource can easily fulfill, as this will rob the resource of its uniqueness. One strong argument for this method is that it is not enough for the company to acquire a resource, since there is no skill involved in purchasing a resource. The company must also know how to employ the resource to derive maximum benefit from it. It is the ability to exploit this resource, which a company must develop internally, that truly distinguishes the company from others and determines its true competitive advantage. However, one should keep in mind that this internal development is a lengthy process without any clear-cut process (Barney & Clarke, p. 56). This ambiguity, however, adds to the usefulness of this method, as it increases the possibility to sustain the improvement made by and the value of the resource. The attention this device gives to the nature of the company’s operations and its resources is not to reduce the importance of the market itself in the success that the company can acquire. The challenge for the firm, which arises as far as the market, is concerned, is to locate opportunities in the market that are relevant to the purpose and aims of the company. This is because the above-mentioned resources of the company need to match the environment and the market the company operates in, in order for competitive advantage to materialize. The most important and valuable of a company is normally the human capital that it has. This can include the management, the laborers, the directors as well as the shareholders and the consumers (Barney & Clarke, p. 56-60). This company is aware of this fact, and focuses on its competencies. Conclusion If one uses current trends to predict the future for the confectionary market, it is apparent that high-end confectionary is receiving increasing attention and demand, and will soon be the dominant opportunity for suppliers in the sweets market. One danger for the firms in this market is the increasing health awareness, especially in connection with heart diseases, obesity, tooth decay, and diabetes. This is leading to a rise in the market share for confectionary that uses nutritious ingredients and sugar-free substitutes. This means that the firms, especially the international ones who employ advancement as one of their techniques, will soon have an edge over the others (Salehi-Isfahani, p. 228). Several local companies, however, have also shown an ability to achieve success in this aspect of international business, despite the strong competition they face from the foreign suppliers. Works Cited Barney, J. B. and Clark, D. N. Resource-Based Theory: Creating and Sustaining Competitive Advantage. OUP, 2007. Fleisher, C. S. and Bensoussan, B. E. Business and Competitive Analysis: Effective Application of New and Classic Methods. FT Press, 2007. Lymbersky, C. Market entry Strategies. Management Laboratory Press, 2008. Salehi-Isfahani, D. Labor, and Human Capital in the Middle East: Studies of Markets and Household Behavior. Springer, 2002. Sekkat, K. Market Dynamics, and Productivity in Developing Countries. Springer, 2009. Read More