Strategy to Go Global and Capture the Market by Providing Good Service and Quality Products - Case Study Example

Pie Face Executive Summary The growth rate in the food market in the global market has been very high and many companies have come up with their unique products and also selling points for attracting customers more. Pie face is one of the leader bakeries in Australia and has provided the best quality product to the customers over the years. The companies interest for exploring the global market and entering the market of Singapore is been studied using various research process which has given a clear indication about the companies process of entering the new market. This report does includes all the aspects that the company needs to do as its strategy to go global and also capture the market even in Singapore by providing good service and quality products. Various theories have been used to know the advantages and the opportunities that the company has. Going global includes a lot of risk for the company and it needs to have good strategy for creating a good market image in the new market. Certain recommendations are also been given to the company so that they can successfully open their stores in Singapore and also gain advantage over the existing competitors. Contents 2 Contents 3 Current business model 5 New business including products and services 6 Market feasibility 8 Appropriate market segments 8 Why people will buy the product 8 Potential customers, their number, their location and their buying patterns 9 How the products will be sold 10 Competitor summary 10 Competitive business advantages 11 Level of market research 12 Commercial feasibility 12 SWOT analysis. 12 Strengths 12 Weakness 13 Opportunities 13 Threats 13 Identification of startup budget 14 Overall Risks 14 Recommendation 17 References 18 Current business model Pie face was established in 2003, and now has opened around 20 stores across Australia by 2008. All the stores are been owned and operated by the company itself and they don’t look to give franchisee or shops for rent. By 2009 the company started franchise system and opened total 75 stores across the whole country in Australia. The company has also looked to expand its market share to even US which has given the brand a strong recognition along with a good visibility and brand image in both the countries. The company has captured the maximum market in Australia by adopting the global standard for the most popular food in Australia about the humble Australian meat pie. This product is been sold to an approximate of 300 million units per year. The company has excelled in the business of baker goods in Australia and is one of the most liked brands among the people of Australia (Pie face, 2014). The company has looked to provide the best quality products to its customers at the best affordable price in Australia. The company is looking to grow its channel in the global market by opening its outlets in other countries as well like it has opened a store in US to get the global market advantage. This move of the company towards globalization and moving towards the international market will give a lot of advantage to the company as it will be able to explore a huge market in the whole world. This process will make them able to generate more revenue by increasing their sales volume and also create a global brand image in the minds of the customers not only in Australia but in other countries as well. Though with a good brand image in Australia the company has to face a lot of problems while going in the global environment because of the high competition in the food market from other various other giants who have hold strong market share in different parts of the country. The market in Australia has now become saturated as they have got their stores in every part of the country so the company needs to penetrate new market in different countries and explore new opportunities to expand its business and increase its revenue and sales volume. It will also help the company to achieve economies of scale and also the productivity of the employees. The dependence of the company over the existing market can be reduced to a great extent, and also get the tax advantages available in different countries. It will increase the number of investors and also create a huge market image in the global market (Solomon and Bamossy, 2002, pp. 89-104). But for entering in the global market the company needs to go through a thorough research of the market of the country it tries to penetrate based on the various factors like consumers preferences, competitors existence, cultural differences etc. Thus through this report the marketing feasibility of the company and the process through which it tries to enter the new global market is been analyzed using various theories and techniques to understand the exact strategy for the company. New business including products and services Entering into the new market of Singapore the company needs to come up with new product line. Pie face should implement the strategy of diversification as been stated in the Ansoff’s matrix. According to this strategy the company tries to enter new market with new products. Pie face might look to diversify its business into other business as per the requirement of the customers of the particular country and the market preference. Food is one of the major aspects in Singapore; good food service is available at every hawker center and also high-end restaurants. People of Singapore highly prefer tasty food items (Aaker, 2004, pp. 45-48). People are ready to travel long distance to get the best variety of food from the specialized stores. Fast-food centers have grown at a huge way in the market because they can serve the food items at a quick rate at a low price and also maintain a standard menu for the consumers. In Singapore market the hamburger, French fries and coke is the most pre3ferd food item. Because of the fast lifestyle of the people of Singapore the fast food restaurants business never gets a loss in any part of the country. For people of Singapore more often they prefer to have food that they can eat even while working or while travelling, so they prefer to take and go (Brown, 2009, pp. 89-92). People look to take sandwiches and burgers for their meal while working continuously. People being more multi task oriented and also fast working in Singapore, they don’t get time to have the benefit of enjoying a social meal with their friends or family members. Because of this people generally prefer to take fast foods which are readily available and take less time to consume without disturbing them from their work ((Handy, 1996, pp. 89-96).). Pie face can launch new products of healthy food items which can be consumed at a quick rate along with healthy drink items for the customers of Singapore. As people in Singapore have a very fast lifestyle and look to have fast foods so that they don’t spend much of their time over eating meals. Having fast foods like burgers, French fries and coke on daily basis does affects a lot to the health and causes many problems like obesity, diabetes etc., apart from this with the rate at which the physical work of the people is going down also has affected to the health of people. If people get food items which are easily consumable and also healthy they will prefer to take those food items more (Burgemeister, 2003, pp. 123-127). Pie face coming up with healthy food items like cholesterol and fat free sandwiches, fruit juices, energy drinks etc. will get a lot of preference among the people and will also help the company to enter the new market of Singapore and also create a good brand image in the new market. With the launch of new healthy fast consumable products for the customers the company will be able to set up a new name and give a new product to the market of Singapore (Wright, 2006, pp. 34-37). Market feasibility Appropriate market segments Market segmentation is a crucial factor that a company needs to look towards before entering a particular market. The segmentation is done based on the income level, age group, culture, behavioral, values, lifestyle, price sensitivity etc. Pie face needs to segment properly so that it can find the exact target customers in the new market of Singapore. The target customers for Pie face launching healthy fast consumable food items like sandwiches, fruit juices; energy drinks etc. are majorly the people who are in the age group of 18-45 yrs. This age group people are generally the students and working people. With the lifestyle of Singapore being very fast the company should look to provide the healthy food items at a fast rate so that the customers don’t find their time being wasted (Aaker and Joachimsthaler, 2000, pp. 78-82). Based on the behavior of people in Singapore who look to have their breakfast and lunch at the same time when they are even working so pie face needs to have a good packaging of the food items so that the quality of the food items remains as it is and also makes it comfortable for people to carry it to their work place and have the food item in the fresh way. Why people will buy the product Pie face launching healthy food items in the market of Singapore will definitely give a lot of profit to the company and increase it sales. People will look to buy the products of Pie Face over other fast foods as because the food items of Pie face are far healthier and also will cause health problems compared to other food items (Cheverton, 2006, pp. 234-236). These food items by Pie face do meet the requirements of the people of Singapore and mostly for its target customers. People in Singapore prefer those food items which they can get quickly and at the best price and look to spend the least time in eating, they even look to east while continuing their work. The products that can be launched by Pie Face in Singapore will take quick time for the consumers to consume them and also will be easy to carry because of good packaging which will enable the target customers to not only carry their food easily but also they can consume the food item while working. The biggest advantage that the consumers will get from these products is that these products are far healthier than the other fast foods that are present in the market. The energy drinks or the fruit juices will give lot of energy to the consumers and will help them in working with more concentration and in an efficient way. The new cholesterol and fat free sandwiches will help the consumers to stay active and not become lethargic (Pride and Ferrell, 2011, pp. 78-85). Potential customers, their number, their location and their buying patterns Pie face entering into the new market of Singapore with new product which is a complete diversification for the business, the company needs to find the potential customers that are the target customers. These target customers are the major customers towards whom the company needs to focus and give service to as they are the one from whom the maximum revenue is been earned. For Pie Face launching the healthy fast consumable products the potential or the target customer for the company are generally in the age group of 18-45 years. These age group people are the ones who are either college going students or the working people. This age group consists of around 40% of the total population of the Singapore (Singapore Government, 2013, P. 5). This is a huge market that the company can look out for. People in this age group prefer to taker food and consume them while working as they always give preference to multitasking. They look to buy food items that are readily available and can be easily carried and also consumed at the work place. These target customers are not that price sensitive and they are ready to pay more to get good food in a quick time. The company can open its stores in the major locations of Singapore which can give a good visibility to the company and is also easily approachable by consumers. Pie face must open a huge chain of its stores in Singapore in different places like in Orchard Turn, Harbour Front Walk, Raffles Boulevard, Temasek Blvd etc. which are highly been visited by working people and also tourists (Kotler and Keller, 2006, pp. 127-132). How the products will be sold Pie face needs to sell its products by showing its value in the life of the customers. The value addition that the particular product creates in the customer’s lifestyle gives the product a lot of competitive advantage in the market. The customers can find a lot of benefits from the products and the services they are very healthy and also take less time for consumption. Pie face needs to open its stores by making franchisee so that the company can have its stores in huge numbers and also increase the visibility. The products are to be sold through the stores to people visiting the stores and also through online media. The company can also facilitate the process of online buying of the products along with delivery to their door step which will help the customers to spend even lesser time towards eating. The product being new in the market can be sold by giving lots of discounts and offers for the products and also at a low price to attract customers more (Jobber, 2012, pp. 78-84). Competitor summary Two of the leading bakery based companies in Singapore are Kraft Foods Inc. and McDonalds. The market share in the bakery industry has shown a growth rate of over 8%. The companies in Singapore in the bakery industry try to come up with good fast foods, lunch, dinner etc. The Kraft Foods Inc. provides food of huge varieties and also gives the opportunity to customers to have the choice of food item based on the budget they can afford. It only has its own products like cheese and butter but also has a variety of readymade products for dinner lunch and also breakfast. This company has a huge promotional activity and uses social media as well for the promotion of its brand. The company sells its products from its stores located at various points in the country mainly in the major cities in the major locations (Kraft Foods Inc., 2014). McDonalds is into selling of fast foods and quick service business. It has its franchisee spread in every part of the country and is one of the most liked brands in the country of Singapore among the young and working generation. It sells its products from its franchisee stores and provides food items to the customer at a low price and at a quick pace. But these products are not that healthy as a result of which excess of consumption of these products does leads to obesity and other health effects (McDonald’s, 2014). Competitive business advantages Pie face has a huge competitive advantage over the other competitors and majorly from McDonald’s and Kraft foods Inc. As Pie Face is entering in the market of Singapore with healthier food items which can be consumed at a fast rate and also help the people to keep up with their life style of doing multi tasking. These products can not only be consumed at a fast rate but also they have a huge help in having a good healthier life. Pie face products can be sold at an affordable price which will also encourage huge customers. With the facility of online ordering the company gets competitive advantage as the customers can put across their orders and keep working while they receive the healthy food items at their door step. Along with these the company also has a competitive advantage with the range of variety of products that it has in its product range which states that they have food items that can be consumed any time in the day and night. The biggest advantage of the company is the pie face of the products which attracts a huge number of customers because of the smiley faces been designed over the products (Cheverton, 2006, pp. 24-26). Level of market research The market research been used in this report to analyze the process by which the company can enter the new market of Singapore with new products is secondary research. In this report various articles, books and online platforms huge amount of data is been obtained based on which the study is been made and it’s been analyzed how the company can look toward diversification. The data available from the various sources helps to understand and analyze the situation very clearly (Kotler and Pfoertsch, 2006, pp. 89-103). Many articles, books and online platforms are been referred for understanding the condition of the company and also analyzing the correct way the company can diversify by coming up with new products and entering in the new market of Singapore (Cooper, 2003, pp. 102-105). Commercial feasibility SWOT analysis. Strengths Good quality products. Making healthy products for the customer Good brand image in Australia. Experienced employees in the production process. Financially strong Economies of scale. Weakness Lack of global market knowledge. Lack of brand image in the global market. Opportunities Huge global market. Huge range of new products for customers in food items. People shifting their preference to healthy food items. Threats Huge amount of competitors present in the same business industry globally. Customers in the global market might not like the taste of the products of Pie face. This analysis shows where the company needs to work for their plan of globalization and increasing in the global market. Identification of startup budget Price of Equipment  $5000  Expected sale of products in Year 1 100,000 Annual Growth of Sale (expected) 5% Boxes for one product 1 Average Cost per product $30.00 Boxes Required 100,000 Variable Costs (50%)   Total Costs of Purchasing raw materials (11% of Sales approx.) $3,000,000.00 Baking and cooking cost (15%) $7,50,000 Packaging Costs (15%) $ 5,50,000 Other Costs (9%) $2,70,000 Total $4,570,000.00 Fixed Costs   Salaries and Wages attributed to new product £200,000.00 Interest @ 12% £548,400.00 Insurance £30,000.00 Rent of Facility £100,000.00 Total £878,400.00 The company needs to have the required budget has been given in the above table for starting up its business in Singapore and also with new products (Sander, 2007, Pp. 78-87). Overall Risks The company while going in the new market will face many risks. The major 10 risks that the company can face are been listed below. Diversification Risk- The risk involved with the cultural difference and also the regional thinking affects a lot for a business for moving in the global market. Political- The political risk involve the country being a severing or democratic and the level of federals as the various political parties and conditions causes a lot of changes in the mind of the customers and affects their buying powers. Regulatory Risk- The rules and regulations related to trading and business in a particular country varies from country to country. Company needs to follow these regulations strictly so that they can run their business without any problems from the government. Economic Risk- The economic condition of the countries keeps changing with the fluctuations in the currency rate from time to time. Apart from this there is high risk related to the physical operations with regards to importing material from other countries. Credit Risk- Suppliers are very important for a company and also customers, when the suppliers and customers look to supply materials and take products on credit system, it was a big risk for the company to get the mon3ey back from them. Interest Rate Risk- The interest rates keeps changes based on which the company sets the price for its products and it affects a lot on the sales volume. Commodity Pricing Risk- With the changing prices of the commodities at a quick rate does affects the Company to maintain a constant price range over the global market in different countries. Foreign Exchange Risk- With the fluctuations in the currency rates at a fast rate does affect the company to export and import materials and also sale its products in the other countries as they need to continuously keep changing the price with the fluctuations. Failure to innovate- The Company fails to innovate and move into new markets as a result these companies’ face a lot of risk of failure while going into the global market. Increasing Competition- Growing in the global market for any company in any industry the amount of competition increases to a great extent. The business is highly sensitive to all these risk and the growth of the company or its success in the global market depends in a huge way how they adapt to the changes. The business can fail in huge way by going global and loose its existing brand image even in the existing market in case of a failure. It does affects in the organizational culture and the work environment because of the cultural diversity by going in the other countries (Stiasny, and Gore, 2013, pp. 89-96). These risks of going in the global environment do affect the profit margin of the business in a huge way. With the continuous fluctuations in the currency and exchange rates and also the variations in the interest rates the company’s profit margin is never constant and keeps changing. If the company makes any mistakes in following the regulations and rules set by a particular country then it needs to pay penalties which is a huge loss for the company and reduces the profit margin a huge way. With the increasing competitors in the global market the company can get loss in its revenues because of the high market share by the existing in competitors in the market of the new country. In this case Pie Face might get loss or fewer profit margins because of the presence of huge competitors and there huge market presence and huge brand liking that they have owned by providing service over the years (Mueller, 2011, pp. 65-72). The company needs to implement strategy of proper market research and also the strategy of diversification to go with new products into new market and take care of the value addition to the customers so as to get the competitive advantage over the competitors. Recommendation Looking at this study about the company Pie face having its huge market share in the market of Australia and also has its one store in US. The company is trying to move and spread its market in Singapore. The market of Singapore is very huge for food items and the lifestyle of people here is very fast and they look to have food items along with their work. Certain recommendation can be made to the company so that it can grow and create a good position in the market of Singapore even with the existing competitors. The company should launch new products which are highly healthy and will help the customers get health benefits apart from the easy accessibility to the product. The company needs to have a good packaging technique so that the products can b carried easily and also must be made at a quick rate so that much time is not wasted for the customers. Pie face need to have a good understanding of the preference and taste that are been preferred by people in Singapore based on which it must prepare food items that also have an added value of being healthy. Pie face needs to also start online buying option for the customers so that customers can buy the products while working and get the products been delivered at their door step. The promotional activities by the company should be at a huge range so that customers get to know about the existence of the brand and also communicate the value that the products create for the customers even after consuming them in long run. Thus the customer’s needs to look seriously towards coming up with new products moving into Singapore market and also create huge value for the customers so that the customers start prefer taking products from Pie Face instead of other competitors. References Aaker, D. A. 2004. Brand Portfolio Strategy. New York: Free Press. Aaker, D. and Joachimsthaler, E. 2000. Brand Leadership. New York: Free Press. Brown, L. 2009. Marketing and Distribution Research. New York: Ronald Press Company. Burgemeister, S. 2003. Market analysis. Berlin: GRIN Verlag. Cheverton, P. 2006. Understanding Brand. London: Kogan Page. Cooper, R. 2003. Business Research Methods. New York: McGraw-Hill. Handy, C. 1996. Gods of Management. Oxford: Oxford University Press. Jobber, D. 2012. Principles and Practice of Marketing. New York: McGraw-Hill Education. Kotler, P. and Keller, K. L. 2006. Marketing Management. London: Prentice Hall. Kotler, P. and Pfoertsch, W. 2006. B2B Brand Management. Berlin: Springer. 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London: Sage Publications Stiasny, M and Gore, T. 2013. Going Global: Identifying Trends and Drivers of International Education. London: Emerald Group Publishing. Wright, R., 2006. Consumer Behaviour. Stamford: Cengage Learning. Read More