Market Assessment in the USA and the Netherlands - Essay Example

Market Assessment Name of Student: Name of Course: Name of Instructor: Date of Submission: Market Assessment USA Political The United States of America is regarded to be the father of global democracy. The country is continuously involved in global efforts aimed at establishing and sustaining good governance, human rights and democracy around the world as evidenced by its invasions in Iraq, Libya and Afghanistan. The country is governed by a democratically elected federal government. It has 52 states and the unofficial 51st state made up of colonies and regions occupied and governed by the United States government. The United States of America enjoys a stable political environment. It has in place great legal and governance structures to address any political concerns in the country. The head of the country is the president. On the other hand, Australia too enjoys stable political environment although the prime minister has in the recent past been changed after being impeached in the legislative house. As opposed to the United States political system, Australia is has a constitutional monarch where the Queen of England acts as a symbol of unity and link to Britain in additional to giving counsel in national matters. Australia and United States share a lot in common with regard to political administration since they have borrowed their constitutional and governance structures from each other and their former colonizer Britain. Economic The United States of America has the biggest economy in the world. Latest analysis indicates that the country has a gross domestic product of $ 18.1 trillion United States dollars. This is way much too high compared to Australia’s $1453.77 billion US dollars (Trading Economies 2015, p.1). The United States has a capitalist economic system; the same case with Australia. The United States of America has a per capita income of US$ 54, 629. 5 (The World Bank 2015, p.1). As such, the country’s population has a high purchasing power. However, Australia has a higher per capita income at US$ 61, 887. 0. However, the difference can be explained by the population difference in the two countries with United States population being about 20 times that of Australia. The government uses financial and monetary policies in addition to other interventions to regulate the economy in both countries. However, the public debt in United States of America is high and poses a risk to the country’s economic sustainability with the recent fears of the economic bubble illustrating this. Social- Cultural The United States of America has a strong social and cultural environment. It’s social and cultural influence on the globe is high with its entertainment industry largely responsible for ‘Americanising’ the globe. Analyzing the country’s social cultural values from Hofstede’s dimensions gives an insight into the market’s values. The power distance in the country is 40. This means that people view each other equal members of the society although there is still an exertion of power on others by those in privileged positions (The Hofstede Center 2015, p.1). Individualism in the country stand at 91, illustrating that Americans value working alone and making individual achievements as opposed to communal/ social work and achievements (The Hofstede Center 2015, p.1). Masculinity in the country stands at 62 meaning that the American society is driven by values such as success, competition and achievement. The uncertainty avoidance in the country is 46, meaning that American society welcomes new ideas and are willing to try new ways of doing things or products (The Hofstede Center 2015, p.1). With regard to long term orientation, America has a 26 score meaning that the society values and prefers to maintain old traditions and tend to approach aspects that bring about social change suspiciously. Lastly, the indulgence score in the United States is 68 meaning that it is an indulgent society thus people are not able to control their impulses and desires (The Hofstede Center 2015, p.1). Comparing America’s cultural dimensions with Australia’s, it can be acknowledged that the two societies share a lot in common with just slight variations on the cultural dimensions with 36, 90. 61, 51, 21 and 71 scores on power distance, individualism, masculinity, uncertainty avoidance, long term orientation and indulgence respectively (The Hofstede Center 2015b, p.1). Technological The United States has a high technology environment. The country boasts of great innovative technologies in various fields including computer science, information and communication management systems, military technology, biotechnology, pharmacy and medical technology, agricultural technologies amongst others. The integration of information technology in business and everyday life is relatively high and the acceptance for the integration of technology in everyday life in the country is expected to continually increase. On the other hand, Australia still has a high technology environment although slightly lower as compared to United States. The country boasts of technology innovations in such fields as computer science in anti-malware software, bionic ear and photocopying. The acceptance for technology in business and everyday life is also relatively high as it is in the United States. Agricultural The agricultural industry in the United States is a major sector that in addition to providing substantial input to the gross domestic product provides the country with food security. Agricultural and related activities contributed $789 billion US dollars. The United States produces a large amount of milk to supply its domestic consumption and the surplus is sold to foreign markets. The country produces about 93 462.465 6 billion Liters of milk annually (Statistista 2015, p.1). Agriculture contributed $789 billion to United States gross domestic product in 2013 representing 4.7 % share of the country’s GDP (United States Department of Agriculture 2015, p.1). On the other hand, agriculture has been a major sector in Australia. Australia has been commonly been referred to as an economy that rides on the sheep’s back; a symbolism to the importance of wool farming in the country’s GDP (Australia’s Government 2015, p.1). The agriculture sector provides the country with about $48.7 billion. The dairy industry in the country is strong, producing about 9.24 billion liters of milk annually. Netherlands Political Netherlands also referred to as Dutch has a stable political environment. It has a constitutional monarch political governance system just like Australia’s. However, the monarch in Netherlands is Dutch unlike the queen of England in Australia. Netherlands has enjoys political stability and its legislations on foreign investment are very flexible. Ideally, the Dutch foreign investments policies are regarded to be some of the best in the world and are aligned to encourage international trade. Comparing these legislations with the Australian situation, it can be acknowledged that there is great similarity although the Dutch foreign investment / internationalization legal framework is better. Economic The Dutch economy is currently recovering from a recent recession. The country’ GDP in 2013was US $ 853.5 billion, representing a strong economy. The per capita income in the country is US $ 51,590 (The World Bank 2015, p.1). This represents a high purchasing power in the market. From the above data, it can be acknowledged that Australia has a stronger economy at a GDP of US $1453.77 billion as compared to Netherland’s US $ 853.5 billion. Social- Cultural Analyzing Netherlands social and culture environment from Hofstede’s cultural dimension perspectives, it can be acknowledged that the country shares a lot in common with USA and Australia. The country has a power distance score of 38; meaning that the Dutch society has a high regards for equality and low regard for power relation. The society also has a high individualism score at 80 meaning that it has a high value for individual achievements, although relatively lower that USA and Australia. The Masculinity score in the society is 14, thus a high value for achievement; competition and success although the score is relatively lower than in the other 2 countries. Uncertainty avoidance in the Netherlands is rated at 53, above than the in United States and Australia. As such, the country does not have a room for new ideas and concepts as compared to Australia. With regard to long term orientation, Netherlands has a score of 67 meaning that it is more attached to its traditions thus minimal room for change. Lastly, the indulgence score in the country is 68, meaning that the society is not able to control impulses and desires. Technological With regard to the technological environment, Netherlands has a good environment that encourages the development and use of technology (The Hofstede Center 2015 c, p. 1). The country is specifically reputable for its great technology developments in agricultural machinery. On this point, it worthy highlighting that Dutch is a world leader in dairy machinery. Agricultural The agricultural sector is a major industry in the Dutch economic system. Netherlands exports the second largest amounts of agricultural products in the world. The total value of Dutch agricultural exports is 80.7 billion Euros. The country is also the 3rd largest exporter of dairy products after New Zealand and Germany with exports worth 7.7 billion Euros (Government of the Netherlands 2015, p.1). From the above insight, it can be acknowledged that the Dutch dairy sector is healthy and highly competitive. Product Market Analysis The global ice cream market is expected to rise to about US $ 69.3 billion from the current US $ 50 billion industry by 2022 (Statista 2015b, p.1). With a wide range of unexploited markets, the ice cream industry presents a major opportunity for ice cream companies. The following section analyses the product market for ice cream in USA and Netherlands. USA The United States ice cream industry is valued at about US$ 10 billion. The ice cream market in the country is largely driven by the readily availability of dairy products, favorable climatic conditions and the large population that supports the home market. the $50,000 plus per capita income in the country in addition to the about 380 million people provides a great market for ice cream and other dairy products. The major brands in the market from the largest to the smallest in the market are private labels, blue bell, Haagen- Dazs, Breteyers, Ben and Jerry’s, Dreyer’s Eddy’s slowchurned, Dreyers / Eddy Grand, Turkey Hill, Talenti and Wells Blue Bunny (Statitsta 2015 c, p.1). Market segmentation is done with respect to family packs, multipacks and individuals. There are increased concerns about the need for healthy eating in the United States that has changed product development in the food and beverage industry. In a move to ensure that businesses sustain their profitability, food based companies have embarked on product development programs that uphold the value for healthy eating. This aspect is reflected in the ice cream industry with many customers preferring ice cream made from skimmed milk products. Additionally there is an increased focus on less high calorie additives such as chocolate. As at now, flavors are the main factors that influence purchase decisions in the United States ice cream market. The degree of competition in the market is very high thus the use of integrated marketing strategies that incorporate various marketing approaches. According to the brand ranks in the country above, it can be identified that private labels are the leading brands in the market; a factor that can be associated with the ability of private labels to personalize their products to meet specific needs in the market. As such key in the United States market is the rising need for product diversification and innovation so as to take care of the diverse tastes and preferences of the American market. Although the market has stagnated in the recent past, it is expected that the reforming economy will push the sales up. Netherlands As pointed out earlier, Netherlands has a thriving dairy industry. As pointed out earlier, Netherlands is the 3 rd largest exporter of dairy products in the world. Additionally, it is the 2nd largest exporter of agricultural products in the world. Therefore, it can be acknowledged that the country is a large producer of agricultural and dairy products; and ice cream is part of such products. The country’s ice cream industry had revenues of US $ 578.6 million in 2013. These figures are appealing for a company that aims at entering the Dutch ice cream market. The consumption in the market also increased to about 116.4 million liters of ice cream in the same year. It is expected that the market will grow to a US $ 628.5 million industry by 2018 (Data Monitor 2014, p.1). The increase in the market consumption of ice cream is also an inviting statistic to companies planning on entering the Dutch market. Market segmentation in the market is done with respect to family packs, multipacks and individual wrappings. The major competitors in the market are Nestle, Unilever and Mars Incorporated. Marketing strategies used in the market includes integrated structures that incorporate a wide range of marketing and sale approaches. The need to sell surplus products to the external market has compelled Dutch ice cream companies and other companies dealing with other agricultural products to engage in rigorous marketing campaigns that place their brands in the international market. As pointed above, Nestle, Unilever and Mars Incorporated; that are reputable international markets use their global presence to position themselves as leading brands in the domestic and international market. As at now, it can be acknowledged that the Dutch market is a highly competitive market that will present Bulla with a lot of entry challenges. Market Selection From the market analysis above, it is recommended that Bulla Company enters the United States Company. The United States provides an opportunity for ice cream companies that bring with them innovation and product diversification that provides utility to the diverse tastes and preferences of the American market. Additionally, the American dairy industry is still growing unlike Dutch’s that exports the 2nd highest amount of dairy products in the global market. As such, Bulla Company stands to benefit from the expected growth and actualization of the American market. Additionally, a move to Netherlands would subject the company to intense competition from the best of best in the industry. USA also provides the company with an opportunity to reach out to a staggering 380 million people as compared to 17 million in Netherlands. With the political, economic, socio-cultural and technology environments in USA and Australia closely related, Bulla company will not have major diversity issues venturing into the market. The availability of milk in surplus also provides the company with a sustainable source of raw materials. References Australian Government, 2015. Australian Farming and Agriculture – Grazing And Cropping, Australian Government, Retrieved on 6th October 2015 from http://www.australia.gov.au/about-australia/australian-story/austn-farming-and-agriculture Bergmann, A., 2015.World’s Largest Economies, CNN Money, Retrieved on 6th October 2015 from http://money.cnn.com/news/economy/world_economies_gdp/ Data Monitor, 2014. Netherlands Ice Cream, Retrieved on 6th October 2015 from http://www.datamonitor.com/store/Product/netherlands_ice_cream?productid=MLIP1423-0011 Government of the Netherlands, 2015. Dutch Agricultural Exports Top 80 Billion Euros, Government of the Netherlands, Retrieved on 6th October 2015 from https://www.government.nl/latest/news/2015/01/16/dutch-agricultural-exports-top-80-billion-euros Statistista, 2015. Total Milk Production in the United States from 1999 to 2014 (in million Pounds), Retrieved on 6th October 2015 from http://www.statista.com/statistics/194937/total-us-milk-production-since-1999/ Statista 2015 b. Size of the global ice cream market from 2013 to 2022 (in billion U.S. dollars), Retrieved on 6th October 2015 from http://www.statista.com/statistics/326315/global-ice-cream-market-size/ Statitsta, 2015 c. The leading 10 ice cream brands of the United States in 2015, based on sales (in million U.S. dollars), Retrieved on 6th October 2015 from http://www.statista.com/statistics/190426/top-ice-cream-brands-in-the-united-states/ Trading Economies, 2015. Australia GDP, Trading Economies, Retrieved on 6th October 2015 from http://www.tradingeconomics.com/australia/gdp The World Bank, 2015. GDP Per Capita (Current US $), The World Bank, Retrieved on 6th October 2015 from http://data.worldbank.org/indicator/NY.GDP.PCAP.CD The Hofstede Center, 2015. United States, The Hofstede Center , Retrieved on 6th October 2015 from http://geert-hofstede.com/united-states.html The Hofstede Center, 2015 b. Australia, The Hofstede Center, Retrieved on 6th October 2015 from http://geert-hofstede.com/australia.html The Hofstede Center, 2015 c. Netherlands, The Hofstede Center, Retrieved on 6th October 2015 from http://geert-hofstede.com/netherlands.html United States Department of Agriculture, 2015.What Is Agriculture’s Share Of The Overall U.S. Economy?, United States Department of Agriculture, Retrieved on 6th October 2015 from http://www.ers.usda.gov/data-products/chart-gallery/detail.aspx?chartId=40037 Read More