The Globalization Initiative and Entering New Foreign Market in Phnom Penh - Report Example

The Globalization Initiative of Canned Beans and its Entering into a new Market in Phnom Penh

Introduction

Part a (1)

This particular paper will be responsible for providing a globalization initiative of canned beans due to its entering into a new market in the ancient Asian city of Phnom Penh in Cambodia. Across the world, the demand for beans has sky-rocketed. Perhaps, this may be as a result of the fact that the health benefits of beans are quite immense. Research has frequently suggested that the health benefits of beans are superb considering the fact that it is quite versatile in addition to the fact that it is affordable for many people within discrete social classes (Garden-Robinson 2013). Beans have been proven to contain higher rates of distinctive nutritional elements. For instance, they contain numerous fibre, antioxidants, vitamins B, Zinc, proteins, potassium, magnesium, zinc, and iron (Garden-Robinson 2013). Due to its exemplar nutritive values, it is instrumental in reducing the risks of contracting various life-style diseases such as diabetes, cancer, diseases of the heart, and in averting potential obesity (Wallace 2016).

Part b (1)

This section will be instrumental in providing the country of my choice through an analysis of EPRG framework which integrates four different factors. These factors include the ethnocentric, polycentric, regiocentric, and geocentric marketing factors. My place of choice is Phnom Penh. Phnom Penh is a city within Cambodia. Albeit experiencing numerous conflicts as well as political instability during past years, Cambodia has steadily grown and currently, stands as one of the major investment hubs within Asia. Due to its strategic location, it has attracted various investors from different countries such as Japan, Australia, France, and many others. Apart from its strategic location, another major factor that has placed Phnom Penh as a major destination hub for investors is its continued stability. Primarily, ethnocentric, polycentric, regiocentric, and geocentric are both forms of marketing that may be adopted by any particular business (Drachal 2014). Polycentric marketing may thus, be defined as a type of a global marketing strategy which numerous companies attempt to adopt for the purposes of diversifying the appeal of both their products or alternatively, services to integrate within contrasting cultures in varying countries (Wach 2014). As it is generally known, all countries are not similar. Conversely, the polycentric form of marketing takes a form which involves a range of discrete dimensions of a country. These dimensions may include the language spoken in that particular country, its education, the religion, and the country’s social structure.

It must be fundamentally taken into consideration that within the scope of marketing, cultural difference is of tremendous essentiality by virtue of the fact that it is perhaps, greatly influenced by both religion and a country’s traditions (Chawla 2016). Culture is a composition of a set of beliefs, values, behaviour, attributes, as well as the customs (Ekerete 2001). For me to expand and globalize my product within Phnom Penh, it would be fundamental if I made a trial test for the contrasting cultures of the people within Cambodia. Cambodia and Cambodians as a whole greatly treasure religion. The most pre-dominant religion within the scope of practice in Cambodia is that of Buddhism (Ivanescu 2004). A significant 95% of the Cambodian population practices the Thearavada Buddhism (Ivanescu 2004).

Albeit the Thearavada Buddhism is the main and official religion among the Cambodian people, there has been a slight growth in the practice of Christianity as well as in the practice of the Cham Islam. Perhaps, this greatly signifies the growth and diversification of Cambodia probably due to its status as an investment hub. The latter hence countenances our decision to introduce canned beans within the Cambodian market. As it is well-known globally, people who strongly believe in Buddhism rarely integrate meat within their diets. By virtue of this, their diets have continuously been comprised of vegetarian meals. Those who firmly believe in Buddhism hold it that the Buddha had strictly warned against the consumption of any form of flesh by any Buddhist believer – whether raw flesh or that which is cooked.

The latter has thus, been adhered to tremendously. Therefore, the majority of Cambodia’s population barely relies on flesh as a source of proteins. As it is generally known, flesh has largely been depended upon by numerous people as a source of protein. Therefore, due to their lack of consumption of flesh – which is an invaluable source of proteins, it is quite definite that Cambodians would prefer and explore other sources of immense proteins. Apparently, beans is one among the sources for immense amounts of proteins. It is for this particular reason that I strongly believe that the integration of canned beans within the Cambodian population will be greatly successful.

Part b (2)

PESTEL ANALYSIS

PESTEL is a term derived from distinctive words that are extremely fundamental for any marketer. PESTEL primarily stands for political, economic, social, technological, environmental, and legal matters. All of the aforementioned are to be vitally considered prior to the integration of any particular product into any market. As such, this section will investigate the political, economic, social, technological, environmental, and legal factors within Cambodia and if indeed they would retrospectively deter the successful integration of canned beans within Cambodia or alternatively, facilitate the successful integration of the product in Cambodia. First, the political situation in Cambodia may be termed as slightly stable. However, questions have been raised with regards to the space of those opposed to the regime. From the 1980s, the government of Cambodia made vital changes from becoming a strictly command market into being an open, free market economy (Lucas 1993).

By the year 2011 to 2012, Cambodia had strongly integrated itself into the regional as well as the global trading scene (Chhair and Ung 2013). For instance, between the years 1999 to 2012, the nation has made trade progress incorporating itself to regional and global trade organizations such as the ASEAN, the World Trade Organization, and the World Customs Organization (The US State Department 2016). As such, all of these actions have openly expressed the willingness by Cambodia to take part in international business and additionally suggesting the integration of multinational corporations within its economy. Moreover, in the year 1994, the nation signed into law an amendment that facilitated independent and liberal investment from foreigners or alternatively, foreign entities. As a result of the amendment, foreign entities were allowed full (100%) ownership of their various entities and permits became easier to acquire for all foreign investors. Moreover, bias against foreign investments is rare regardless of the investment stage (The US State Department 2016).

Albeit a majority of the policies and regulations set about by the Cambodian government are favourable for a majority of businesses, it also exemplifies its downsides. For instance, foreign investments have largely faulted the government for its lacklustre performance with regards to formulating effective laws and the government’s institution of extremely weak regulations. This has catapulted an unprecedented rise in the levels of corruption and consequently, sustaining it. The challenge of corruption may therefore, be a significant impediment in the integration of canned beans successfully within the Cambodian market. The economic situation in Cambodia on the other hand is quite favourable. By virtue of this, the country’s gross domestic product (GDP) has been steadily growing from the year 2000 all through to 2012. What’s more, the growth rate has often been at an average 8% rate or more than that. The poverty levels in the nation have also been seen to continuously reduce drastically. Therefore, this points out towards the fact that it is prospective that a majority of the Cambodians may be in the best position of affording the canned beans considering the fact that in 2012, the levels of poverty had drastically reduced to approximately 17.7% unlike in numerous developing nations where poverty levels hit dudgeon levels.

In addition to the above, Cambodia also portrays a wide array of economic benefits with regards to foreign investments. First, as I had mentioned earlier, its market is an open one and thus, allows the integration of foreign enterprises or multinational corporations while at the same time, allowing them extreme autonomy (Hill and Menon 2013). Moreover, the policy and legal frameworks set-forth by the nation have encouraged the attraction of more foreign investments since they are pro-foreign investors. The regime has also made it its role to offer motives to foreign investors for the purposes of seeking more foreign investments. As such, foreign investors have been enticed with a variety of incentives such as the total sole ownership of their businesses, the guaranteed import of capital products that are duty-free, holidays related to corporate taxes that go up to a period of eight years, lack of any stringent regulations affiliated to capital repatriation, and finally, a meagre tax with low rates of 20% immediately after the duration regarding the incentive period comes to an end (Hill and Menon 2013). Albeit having quite a favourable economic atmosphere, the challenges that come alongside it are quite humongous. For instance, the high levels of corruption still remain a critical impediment. Moreover, the infrastructure is not complex and adequate whereas there is also an inadequacy in the skilled labour personnel. The processes of government that have been approved have often failed to be transparent too.

In addition to the above, Cambodia has also been reported to have a lacklustre technological base (Brewer et al. 2006). This has tremendously been as a result of the fact that Cambodia has remained rather poor while its governance channels have remained extremely weak. The weakness in governance has presented impediments which have prevented broad economic growth and as such, the growth of technology has been sluggish. Albeit Cambodia has made reasonable strides with regards to the spread and development of technology, its efforts have not tremendously materialized (Sotharith 2008). What’s more, their efforts of diversifying technology and communication have instrumentally been directed towards the major provinces within their country (Sok 2001). However, other minor or least-developed provinces within the same country have been largely isolated and lack an effective and reliable technology and communication base. Hence, this points out towards the fact that within Cambodia, the canned beans business would not be as effective in certain parts of the country as contrasted with other urban areas.

The growth of beans is also not widespread in Cambodia. Thus, a majority of the populations often rely on imported canned beans from other nations. As a result of this, major, vibrant, and gigantic retailers have taken advantage of this and hence, have widely spread all across the Cambodian market. Some of the most ardent retailers that will definitely pose great competition include the Agro-Angkor Inter-trade Co., Ltd and the PGM agency which have been widely utilized by numerous people within the country in purchasing canned beans. The two suppliers have often made their sales through online platforms such as Alibaba. Due to the popularity of Alibaba, the Agro-Angkor limited company as well as the PGM agency have managed to take quite a large share within Cambodia.

Market Entry/Penetration Strategies

There are a variety of market entry/penetration strategies that may be utilized by a business in penetrating particularly a new, probably international or global market. These market entry or penetration strategies are quite distinct from strategies utilized by businesses in gaining entry into any local market. However, choosing any single market penetration strategy has continuously proven to be quite a daunting task for numerous multinational business organizations. Significant choices are to the dispose of any particular enterprise seeking to move into a foreign market. Some of the options that may be adopted by an enterprise include licensing, sole venture, exporting, joint venture among many others (Agarwal and Ramaswami 1998). There are a variety of factors however, that are responsible for determining the form of market entry strategy to be chosen by a given company. These factors include; “ownership advantages of a firm, location advantages of a market, and internalization advantages of integrating transactions” (Agarwal and Ramaswami 1998, p.1). A certain model is often followed to reaching the appropriate market entry strategy. The figure below will describe the process which my business will be guided upon in its entry strategy:

The market penetration strategy that will be utilized for the marketing of canned beans within Cambodia will be that of a partnership. It is well-known that in numerous parts of the world, partnerships are quite a mandate if a business is to survive (Agarwal and Ramaswami 1998). Particularly, within the larger parts of the Asian continent, partnering has increasingly been preferred as a form of marketing strategy (Todeva 2005). Primarily, partnering is of significant essentiality for businesses seeking to enter markets whose cultures are not similar to where the businesses base their main headquarters. Culture in this context basically translates to both the country’s business as well as its social culture (Agarwal and Ramaswami 1998). Normally, partnering may follow or adapt distinctive forms or patterns. For instance, the partnering may range from simply being an arrangement for co-marketing to being a complex alliance that is strategically constructed for the purposes of facilitating the manufacturing of products (Todeva 2005).

Within my case, I will adapt a simple partnering strategy that will simply be an arrangement so as to facilitate co-marketing within Cambodia. The major incentive for the adaptation of this particular strategy is by virtue of the fact that I am quite unfamiliar with the social and business cultures of the Cambodian nation and thus, adopting a distinctive strategy may result to an unprecedented fall of the business. The co-marketing will be fundamental in ascertaining that my business is made familiar among the people of the Cambodian nation. In this sense, my business will seek to facilitate a partnership with the infamous gargantuan online retailer Alibaba. Through Alibaba, it will be a lot easier to gain market penetration by virtue of the fact that the online retailer is well renowned.

The advantages as well as disadvantages of the partnering form of market entry have not be conclusively made known. Perhaps, this may be as a result of the fact that the available table of research with regards to the latter is quite minute. However, once of the most tremendous advantages of partnering as a form of market penetration strategy lies within the fact that it fundamentally brings in knowledge regarding the local markets by facilitating the inclusion of local partners within our firm’s marketing activities (Todeva 2005). Apart from providing knowledge alone, this method of market penetration may be essential in aiding us to acquire more customer contacts and thus, aggravating the possibility of higher returns for our canned beans business (Twarowska 2013). However, the major disadvantage of this particular method lies within the fact that we would only have quite a little period of time for the purposes of making an exemplar evaluation on the effectiveness of the marketing techniques of our partners prior to partnering with them so as to determine whether our choices were substantial. A rush into picking a partner on such a crucial matter may result in the business’ downfall.

My business’ partnership with the Alibaba may however, be quite costly. This may be as a result of the fact that Alibaba already has a number of partnerships with other distinctive suppliers of canned beans. Thus, my initial investment capital for successfully integrating canned beans within Cambodia may stand at US $60,000. However, the return on investment is also expected to be quite lucrative on its part. As it may be generally known, the Alibaba Company enjoys a tremendous market share in Asia. Therefore, using the company as our marketer and the major platform for distributing our canned beans will also ensure that our products significantly acquire a larger market share.

Marketing Mix for Cambodia

Before the initiation of any particular product into a certain market, it is quite vital if that particular market is thoroughly evaluated and its mix comprehensively understood. In order to comprehend the marketing mix of any given country, it is essential that the four Ps be evaluated. The four marketing p’s are product, price, place, and promotion (Ehmke 2005). Basically, in the marketing of a product, its success will majorly depend on the product’s pricing, the place of marketing, the promotion of the product and finally, the product itself in general (Ehmke 2005). Utilizing the marketing mix is essential since it ensures that a marketer places the right products at the very right places where those particular products belong to. The product is basically the most fundamental part among the four P’s within a marketing mix. It may primarily be defined as either an intangible service or alternatively, any tangible goods that are provided and appear to meet the needs of any particular customers they are intended for (Goi 2009). In this case, canned beans is the product and acts as an instrumental source of proteins in an area where the consumption of meat is quite rare.

Price, on the other hand, is the amount of cash which a consumer would be expected to pay for the products being sold unto them (Ehmke 2005). Beans are affordable all over the world. As such, it would not be appropriate if we priced it highly within this particular case. Moreover, a majority of Cambodia’s population are middle-income earners. As such, it would be appropriate if the canned beans were priced in a manner that would meet the expectations of each and every member of the discrete social classes. The promotion part among the four P’s involves all of the business’ marketing techniques as well as its communication strategies (Goi 2009). The promotional techniques that our business will utilize in a bid to gain a reasonable market share will include special offers, advertising, as well as sales promotions. Place concerns itself with the location where a certain product will be distributed to its intended target market. In the case of canned beans, I am of the opinion that shopping stores would be the best access point for all customers.

Conclusion

In conclusion, the new market in Phnom Penh, Cambodia, portrays great potential for the marketing and distribution of canned beans. First, beans themselves possess great benefits towards the health of anyone due to the significant amount of proteins they yield. Considering the fact that a tremendous 95% of Cambodia’s population practices Buddhism and are thus, restricted from consuming animal flesh, the introduction of canned beans into this particular market was an extremely great idea with prospects of extremely dudgeon profits in return. Moreover, through a concise review of the ethnocentric, polycentric, and geocentric factors within Cambodia, I was capable to evaluate and come up with appropriate strategies for communication and marketing within Cambodia.

Furthermore, as a result of the fact that the social as well as business cultures within Cambodia are quite distinctive as contrasted with the business and social cultures within other regions, it was vital that I choose an appropriate market entry strategy that would well serve the purpose and meet the expectations of the canned beans’ business. As such, I chose the partnership form of market entry strategy. The partnership market entry strategy has been greatly accredited as being quite effective and thus, provides significant returns to any business and additionally, acts as the best solution for a business seeking to go into a foreign market. The two major competitors that are pointed out within my initiative include the Agro-Angkor Inter-trade Co. Ltd as well as the PMG agency. The duo have diverse roots within Cambodia and have been depended upon by numerous Cambodians for the purchase of canned beans. However, the Alibaba group has been a popular platform where numerous businesses market their services.

Thus, for the purposes of gaining a huge market share within Cambodia, I saw it fundamental to create an instrumental partnership together with the Alibaba Group so as to effectively market and make the penetration of my products within Cambodia hugely diverse. Our business will also integrate several promotional strategies such as special offers, advertising, as well as sales promotions. On the other hand, the pricing of our canned beans will be with conformity or lower that what our competitors normally charge by virtue of the fact that it is known widely that beans have often been affordable. Moreover, a majority of the Cambodian are middle-income earners and as such, I would be necessitated to institute lenient pricing for the purposes of them affording the product.