Why Gloria Jean Coffee Should Venture into the South American Market - Case Study Example

International Marketing Paper Name Student’s Name: Date: Executive Summary This paper presents feasibility on how to expand an existing business in a different country where the business does not exist. The aim is to conduct a feasibility study of an emerging market. This involves discussing and explaining the country’s economic conditions, legal, cultural, political conditions. It will also involving identifying the trade barriers which could be in the identified country. There will be analysis on the market mix and the entry strategy the company will undertake to penetrate the market. The country of investing is Brazil in South America. 1.0 Introduction There is also presentation of the investment environment in the chosen country. The report also involves the analysis of the fast food sector so as to identify the major competitors in the industry. This analysis will also help the company in identifying the problems that are encountered in the sector. The paper also involves identifying the most suitable market mode of entry into the international market. The mode of entry will be supported by advantages to the company so as to justify the mode and to weigh how beneficial the mode can be to the company. The investment environment in the chosen country will be analyzed so as to identify the opportunities the company can take to prosper in the country. The country analysis will also help the company in identifying the challenges and regulations in the country of the investment. The changes, which arise as, a result of these components will be analyzed in the report. It also suggests the most appropriate organisation structure that will head the company operations to the international market. It also presents a critical review on the effects of logistics and supply chains used by the company in the market to achieve success. It evaluates strategic factors that influence companies to venture in to the international market. It presents a critical analysis on regional investment in the South America region decisions and the impact it creates, once a company ventures into the expansion. Another section will dwell on the region analysis to identify the investment in the region. The analysis will research on the ways in which the regional organization shapes the environment for business in that area. The analysis will involve policy in relation to trade and investment and factors such as improvements to infrastructure, economic development, education, training and any other initiatives and policies aimed at improving trade and ease of doing business. South America is one of the best region to venture in because it is an emerging market especially in Brazil. Another section is the analysis on social, legal, economic, political and technological (SLEPT) issues in the region and the specific country. 1.1 Origin of the report The origin of report ranges from books, websites, journals and a range of written literature. The report involves reasons why GLORY JEAN COFFEE should venture into the South American market. It also involves discussing how social, legal, economic, political and technological factors contribute to companies going global. The reasons include, economies of scale, the company will enjoy large profits by producing in large scale because it will cut down its expenses (Doole and Lowe, 2008). The economies of scale are the benefits which are achieved by a company when it produces in large scale (Jeannet and Hennessey, 2004). Competition is another factor driving GLORY JEAN COFFEE into the international market. The company feels that, companies, which are in, the fast food industry in other countries, earn a lot of profit, and they give substandard services. This drives the company in the market to increase and boost the profits and offer quality services to consumers (West, Ford and Ibrahim, 2010). SLEPT is another reason why GLORY JEAN COFFEE should invest in the international market. 1.2 Objective The objective of this report is to identify the ways a company can take to expand into new territories where it has not be established before. It also aims at analysing a country that is taken to be an emerging market. 2.1 Controllable Factors: 2.1.1 Product This is a commodity to be marketed. It has to satisfy customers need. A product must add value to a customer. Products are either tangible or intangible (Cateora and Graham, 2008). Tangible products are those one can touch and feel them, for example, GLORY JEAN COFFEE goods are tangible because they are foodstuffs. Intangible goods are those one cannot touch, but derives satisfaction. An example of an intangible good is the services which GLORY JEAN COFFEE can venture into to widen the scope of its market. GLORY JEAN COFFEE has been in the market so it does not require to introduce new products but to innovate, so as to improve their products. GLORY JEAN COFFEE should take advantage of their already established brand name to exploit the emerging market (Buil, et al., 2009). The company should exploit the already experienced employees in a positive way to achieve the best results and be the market leader in the fast food industry. The company should also ensure their many products compliment each other in the market. The company’s product should be clearly labeled so that customers can easily identify them (Jeannet and Hennessey, 2004). This will enable them penetrate the emerging market with less difficulty. 2.1.3 Place This refers to where a customer can get the product, and how a product reaches the selling point. The place where the consumer gets the product should be convenient. The customer should be able to get the commodity whenever they like, therefore, the company should introduce channels by which a customer can make an order (Brassington and Pettitt, 2006). They can also introduce retail and wholesale shops to serve their customers conveniently. The company should ensure that they are covering each and every place. They should also consider their demand in relation with their production. The products at the store should be of sufficient quantities so as to satisfy customer needs. The company should also put into consideration storage, inventory and distribution which it should ensure are at an acceptable level. 2.1.4 Promotion Promotion is the art of making people aware of a company’s product and where they can get them. It is the most visible form of marketing, and it is the one most people recognize and identify (Egan, 2007). It takes different forms, which include advertising, branding, corporate identity, special offers and exhibitions among others (Lam, Lee and Mizerski, 2009). It is a form of communication by the company to its customers. Promotion entails on telling the customer about the benefits of the product rather than its features. It must attract the attention of the customer; therefore, it should be appealing and have a message which is consistent. The message in promotional materials should be easy to understand. It should strongly show and give the customer a reason for buying from Glory Jean Coffee and not competing firms (Keegan and Green, 2010). The company should also ensure there is clear communication between the management and employees. The employees should have the correct information about the products of the company. This will make employee feel recognized and will work towards success of the company; therefore, they will let the customers know about the product and buy it (Hollensen, 2010). 2.2 Uncontrollable Factors 2.2.1 Economic Environment Economic factors are factors that directly affect investment and the company’s profits. They are to be considered before any international venture. They include interest rates, which is the cost of borrowing money. A company should invest when investment rates are low to avoid making losses when it comes to the time of payment (Hill, 2010). A boom is a time when company or a business is earning high profits. It is not advisable to invest during such a time because; it does not reveal the real image of the market (Ghauri and Cateora, 2010). A slump is a kind of economy fluctuations when most businesses make huge losses and close down. The company should not, therefore, invest in such a time but should wait when the conditions are favorable (Hill, 2010). Levels of demand at this time, is the consumers’ willingness and ability to buy. It should be highly considered during investment. 2.2.3 Competitive structure There is a lot of competition in the coffee industry especially in Brazil because it is one of the leading coffee producers in the world. This has attracted the major coffee companies in the world. Therefore, Glory Jean Cofee will have to devise a strategy that will win the market share among the best companies in the world. 3.0 The Foreign Environment 3.1 Uncontrollable Factors 3.1.1 Political Forces Political factors are the changes that arise as a result of government influence. These include policies passed by the regional organizations. The company needs to consider such factors such as freedom of movement. The company should invest in a country where there is freedom of movement (Brouthers and Nakos, et al., 2009). This will enable the company to use their resources freely including human capital to strengthen the new ventures. Freedom of movement and other favorable factors increase competition, which will, help Glory Jean Coffee, penetrate the market freely without any discrimination from international governments (Lee and Carter, 2010). 3.1.2 Legal Forces The legal factors should also be considered. These are the laid down rules and policies that companies should follow. Glory Jean Coffee has to identify such policies in their areas of investment. The legal frameworks include consumer protection, environmental legislations, health and safety and employment law (Blithe, 2009). Glory Jean Coffee should work to understand the policies in time of their investment. The company should take proactive measures to ahead of such changes in case they occur. The company should, therefore, follow the laid down policies to the letter to avoid disturbances in the market. The company should ensure that they follow the set labor policies in South America. 3.1.3 Cultural Forces These relate to behaviour, lifestyles and tastes of consumers. The company should consider the consumer behavior because, their changes in cultural practices will lead to changes in their fashions and styles (Thomas, 2008). They should also consider the population structure, that is, the age structure. This will help plan effectively on current market situation and to predict the future (Hill and Hill, 2011). Glory Jean Coffee should invest where there are a lot of young people because they form a large base of their customers. The company should work towards identifying the social changes that might occur in future (Thomas, 2008). This will help them plan for the future market situation. 3.1.4 Geography and Infrastructure Brazil is a very large country and being an emerging market the government has worked to develop the most crucial infrastructures. This has helped in developing the business ventures and even attracting international companies. 3.1.5 Level of Technology Technological factors are the changes that arise from advances in communication (Egan, 2007). Glory Jean Coffee should be aware of technology used in the coffee and tea industry. This will enable the company to be in competition with rival companies in the market and industry. They should invest in technology which will make the company outstanding and favorable to consumers. They should also use modern forms of technology to do marketing. This can be done through the social networks and other types of media. The modern technology enables companies to share information. Glory Jean Coffee should also invest in technology to cut down costs and improve in service delivery (Baines, Fill and Page, 2010). The company should highly invest in research and expansion in order not to remain behind its competitors. 3.1.6 Competitive Forces Mode of entry Ownership This is a form of market entry where the organization that intends to do international business participates 100% in the operations of the company (West, Ford and Ibrahim, 2010). It is a form where the company owns 100% all the assets in the new venture. It involves high commitment from the company in terms of capital and management of the venture. This will be a good strategy for Glory Jean Coffee where the company will invest parts of the profits earned locally to expand a business internationally (Bradley, 2004). 3.1.7 Economic Forces The company should invest in a market where there is a rising demand. This is because; the company will be assured of a ready market which can be exploited. The rate of inflation, which is, a general hike in commodity prices, should be considered during investment. This is because; it could lead to collapse of the market when it causes the prices to rise beyond affordability of consumers (Hollensen, 2010). It will also make it expensive for the companies to do business leading them to losses. Wage rate is the pay that is going to the companies employees. The company should consider a venture where wage is low (Keegan and Green, 2010). The reason behind this is that, low wage rates means cost of production is low, and the company will make large profits while selling at a low price. 4.0 Marketing Strategy 4.1 Product 4.2 Price The company should works towards making their prices similar to other companies in the industry because this will attract increased customers and sales. This will help the company market itself through its unique brand name which is its competitive advantage (Bradley 2004). 4.3 Place The company should work towards turning its weakness of high pricing into strength through offering high quality services at the most frequent times for the customers at all their destinations. This will be through increased distribution through opening of other branches and selling outlets (Blithe 2009). 4.4 Promotion The company should engage in promotional activities in the sports sector especially in football because in Brazil there are a lot of football fans. The company should also invest in the social media and paper advertisements. The company will work towards eliminating its threats and weaknesses to help in realizing its full potential in the international business market. Conclusion Glory Jean Coffee fast company requires a lot of research to be successful in the emerging market. It requires implementing ownership as the best market entry strategy because, it outweighs all the rest. It should also consider an analysis of social, legal, economic, political and technological factors that might affect its operation in the international market. The company should also consider the components of market by analysing each one of them and weighing their applicability in their favour. Reference Baines, P., Fill, C., and Page, K., 2010. Marketing. 2nd ed. New York: Oxford University Press. Blithe, J., 2009. Principles and practice of marketing. 2nd ed. London: Thomson Learning. Bradley, F., 2004. International Marketing. 5th ed. Essex: Pearson Education ltd. Brassington, F. and Pettitt, S., 2006. Principles of marketing. 4th ed. Essex: Pearson Education Ltd. Brouthers, L. E., Nakos, G., Hadjimarcou, J. and Brouthers, K. D., 2009. Key Factors for Successful Export Performance for Small Firms. Journal of International Marketing, 17(3), pp.1-20. 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