International Business - Baby Food Company - Essay Example

Table of contents Page no. Executive summary Company summary 2 Product 3 Government restrictions 5 Economics 6 Competitors 8 SWOT 9 Country statistics 11 Institutional and cultural differences 14 Strategy implementation 15 Recommendations 16 Executive Summary The baby food is an idea which revolutionized the baby care industry. It exists today as a practical solution for moms to get easy made nutritious food for their baby which they require to grow. It is a convenient and easy way, mostly helpful to the working moms. Our company is on the edge of entering into the lucrative market in the well-developed countries of Europe; United Kingdom and Spain. With nearly 9.5 million live births in 2007, Europe recorded an increase of 2.1% compared with 2006. The Company has decided to take the advantage of this growth rate and enter into the market with dedication and experiences staff, excellent procurement, effective management and marketing. Our baby foods will include fruits, vegetables, meat, chicken and rice. They would all be full of nutrition and will fulfill baby’s body growth needs. The company will have 3 main units; the baby food unit, clinical nutrition department and the research and development department. They all will work simultaneously analyzing the market needs and improving the product. European Union; which is the union comprised of 27 member states of Europe has set rules and policies for the business which have to be adhered by the company. The company has devised few strategies which would help it in the stage of final implementation of the project. Company Summary The company’s aim is to manufacture and sell the baby food for the baby’s from age 4 months to 2 years. Our intention is to produce premium quality food which fulfills the hygienic standards and is full of nutrition’s for the baby, keeping in mind his growing needs. Company ownership It will be a new experience for the company to enter into a new market, thus realizing its needs it has signed partnership agreement with local manufacturers Mr. Z and Mrs. Z who will help in implementing appropriate strategies, plans and provide necessary knowhow to the company about the local market. The profits will be shared in the ratio of 20:80, 20 % to Mr. and Mrs. Z and 80% to the company. Furthermore the company will finance the projects and Mr. and Mrs. Z will aid in selling the products to local retailers. Location The company will require setting up its factories in Europe in order to manufacture baby food, thus it has decided to enter Europe in 2 countries; United Kingdom and Spain. It has planned to establish its factories in London and Madrid respectively. As being capitals these two places are easily accessible with transport facilities and there is ease of goods availability. In addition they are busy cities and will attract many audiences. As far as languages spoken in these two countries we will have to hire salesman with power over English and French languages with which much of the population of these two countries is familiar with. Start up requirements Product Description The demand for baby food is rising and so the company will manufacture premium quality baby food including mashed vegetables, fruits, meat, and chicken, rice etc. which will contain right amount of vitamins, proteins and essential elements to suit the bowel requirement of the baby. Its main focus will be on; 1. Fruits and vegetables The baby needs tasty food which is healthy and suitable for his age, thus the company will produce variety of individual and mixed fruits and vegetables in mashed form so the child finds it tasty and easy to eat. The food will contain all necessary vitamins, calcium and roughages needed by the baby at this age. It will be a solution for mothers to prepare meals in small quantity for baby’s which mostly do not contain all the necessary elements for growth of child and the child finds it hard to absorb. 2. Meat, Chicken and rice This meal will contain all available iron, protein and other elements required by the baby between 4months to 2 years of age. The food will be in mashed form with fresh and tested raw materials used while preparation. Sales literature The company will formulate letters and banners of introduction to establish its position in the Europe market. They will be developed as part of startup expenses together with the business cards and the company profile and distributed to various big and small organizations concerned. Complementary bottles of the food will be given to mothers shopping at shopping malls and retail stores to raise awareness of the company. The literature and mailing will be an integral step taken to spread knowledge to local buyers. Technology New machines will be bought for the manufacturing process of the food items. They will be meeting all hygiene and safety requirements set up by the concerned authorities. The machines will be able to produce food and then send it to packaging machines which will insert labels on the bottle. The company will use glass bottles to fill its food items for the baby. All bottles will be labeled describing the food, allergy (if baby is allergic to any food) and the age requirement for consumption of the food. The aim would be to be aware of the implications of this new technology and utilize it to meet our requirements and initially the most important point would be to pay back the initial cost. We have developed separate departments for; 1. Baby food, 2. Clinical nutrition and, 3. Research and development. Future products Initially we have enough products to fulfill demands of our customer and clients. Although if possible in future; we will look up to manufacturing cereals, biscuits and chips for the children. But we would stress that in doing so we will strive to ensure it is compatible with the existing products and company personnel. Government restrictions To own business in Europe the company has to abide by certain government restrictions set up by the European Union (EU) and the states head. Initially the business name and license have to be registered by the state. In addition the federal tax responsibilities have to be fulfilled. For the ease of its people the EU has permitted free trade of people within its member states to work in another EU Member State under the same conditions as that Member State’s own citizens, this is only restricted to work permit. Thus work force when needed could be transferred from UK to Spain. According to the EU there are strict policies regarding food hygiene, therefore the company needs to catch up with the set high standards related to hygiene and health of the baby. Science is the essential foundation on which the EU bases decisions on food. An independent agency based in Parma in Italy, the European Food Safety Agency (EFSA), provides advice when legislation is being drafted and when policymakers are dealing with a food safety scare. In deciding what to do, the Commission applies the precautionary principle and will act without waiting for scientific certainty if the scientists say there is at least a potential danger Health is a priority for Europeans and the EU, Environmental factors, largely pollution, cause between one quarter and one third of illness and disease in industrial countries. Children are particularly vulnerable. The EU have devised strategy for environment and health action plans to tackle the links between environmental factors and conditions such as asthma, allergies, respiratory diseases, cancer, and neuro-developmental disorders, such as autism and speech problems. The EU makes sure that the internal market is working. The internal market, particularly the free movement of goods across frontiers, means all businesses have access to more potential customers, while facing greater competition. Lower prices and greater choice for consumers’ leads to additional economic growth. Single market legislation is constantly fine-tuned to keep up with technological progress. Member countries of the EU are tempted to backslide into protecting their domestic industries by staying up to the mark. There are strict rules against employment discrimination, protecting fundamental social rights and promoting relation with civil society. Equal opportunities for all are a basic tenet of EU policy. Across the EU, common legislation outlaws discrimination on the basis of gender, racial or ethnic origin, disability, sexual orientation, age, religion or belief. The EU has specific strategies for combating discrimination and xenophobia and for promoting social inclusion. Economics The following are the procedure undertaken to start new business in Europe; OECD United Kingdom Spain Starting new business Procedures (numbers) 5.7 6 10 Time (days) 13 13 47 Cost (% of income/capital) 4.7 0.7 15 Minimum capital required 15.5 0 12.8 Employing new workers Difficulty of hiring index (1-100) 26.5 11 78 Rigidity of hours (0-100) 30.1 20 40 Redundancy cost( week salary) 26.6 22 56 Registering property Procedures (numbers) 4.7 2 4 Time (days) 25 8 18 Cost (% of property value) 4.6 4 7.2 Getting credit value Strength of legal rights (0-10) 6.8 9 6 Depth of credit information (0-6) 4.9 6 5 Public registry coverage (% of adults) 8.8 0 45.3 Private bureau coverage (% of adults) 59.6 100 7.6 Protecting investors Extent of disclosure index (0-10) 5.9 10 5 Ease of shareholders (0-10) 6.6 7 4 Paying taxes Payment (number of years) 12.8 8 8 Time (hours/year) 194.1 110 213 Profit tax (%) 16.8 21.9 21.2 Labor tax and contribution (%) 24.4 11 35.1 Other tax (%) 3.3 3.1 0.5 Total tax rate (%) 44.5 35.9 56.9 (http://www.doingbusiness.org/) Competitors Our major competitors would include 1. Numico Numico are specialist in baby food, their product ranges from infant milk formula to specialized nutrition for babies with specific needs and for breast-feeding mothers. It also produces and markets special clinical nutrition, diet products and disease-specific nutrition. Its main brands are Nutricia, Milupa, Mellin, Cow & Gate, and Dumex. Its head quarters are in Netherland, Amsterdam. 2. Beech-nut Beech-nut is the baby food company owned by Swiss branded consumer goods firm Hero group. Its products include cereals, stages 1, 2, 3 diets for babies from beginners to 8 months; let’s grow varieties and beverages for babies. 3. Gerber It is in the field of producing baby food and baby toys. Its items are distributed worldwide; it offers more than 190 products to 80 countries, with labeling in 16 languages. It controls 83% of the food market in USA. 4. Nestle It is a multinational food packaging company with headquarters in Switzerland. It produces a number of products amongst which one is baby food. The brands of nestle baby food include Alete, Alfare, Beba, Bona (Finland), Cerelac, Farinha Láctea (Brazil), FM 85, good start, Guigoz, Lactogen, Nan, Neslac, Nestogen, Nido, and others. Gerber has also merged with nestle and is its subsidiary. Amongst them the main competition would be from Nestle which serves its baby food worldwide and has headquarters in Switzerland, another Europe Union country. SWOT Strengths We produce the right product with quality and assure reliability to our customer. Our products have shown superior product performance versus our competitors Few staff members have experience of end-use sector Direct delivery capability The product innovation is ongoing in our research and development department. Management is committed and confident Weaknesses We are a new company in the Europe with less experience over the local issues No direct marketing experience in UK and Paris. Need for more sales people No pilot or trial done yet Customer service staff need training Management cover is insufficient. Opportunities The company could develop new products Profit margins will be good End-user respond to new ideas Could extend business to other countries of Europe Can surprise competitors Support core business economics Could gain better supplier deals Threats Strict laws of UN to follow, the legislation could impact Existing core business has business distribution risk Possible negative publicity Vulnerable to reactive attack by major competitors. Country statistics The firm has decided to penetrate market of UK and Paris. The statistical data of these two countries is as follows; United Kingdom The United Kingdom consists of England, Wales, Scotland and Northern Ireland. Wales and Scotland together make Great Britain. UK is a constitutional monarchy and has parliament democracy. The main chamber of parliament is the lower house, the House of Commons, which has 646 members elected by universal suffrage. About 700 people are eligible to sit in the upper house, the House of Lords, including life peers, hereditary peers, and bishops. There is a Scottish parliament in Edinburgh with wide-ranging local powers and a Welsh Assembly in Cardiff with more limited authority for Welsh affairs. The UK is also home to diverse immigrant communities, mainly from its former colonies in the West Indies, India, Pakistan, Bangladesh and Africa. The population distribution is as follows; (eubusiness.com) The economy of UK is one of the largest in EU; the city of London is a world centre for financial services. The country demographics are as follows; Area: 243 000 km2 Population: 59.8 million Capital city: London Currency: 1 pound sterling = 100 pence, 1 euro = 0.68 pounds sterling (GBP) (Dec. 2006) EU-membership: 1 January 1973 (EC) Head of State: Queen Elizabeth II Head of Government: Prime Minister Gordon Brown Foreign Minister: David Miliband GDP: € 1 636.6 billion (2005) GDP per capita in PPS: € 27 352 (2005) Economic growth in real terms: + 1.9% (2005) The income distribution is as follows; Spain Spain is also a constitutional monarchy, with a hereditary monarch and bicameral parliament. The country is divided into 17 autonomous communities which all have their separate directly elected authorities. Its main economic sectors include agriculture (especially fruit and vegetables, olive oil and wine), fish, textiles, automobiles and tourism. Its demographics are as follows; Area: 505 990 km2 Population: 44.39 million Capital city: Madrid Currency: 1 euro = 100 cent EU-membership: 1 January 1986 (EC) Head of State: King Juan Carlos I Head of Government: Prime Minister José Luis Rodríguez Zapatero Foreign Minister: Miguel Angel Moratinos GDP: € 976 billion (2006) GDP per capita in PPS: € 22 152 (2006) Economic growth in real terms: + 3.9% (2006). The Income distribution of the people is as follows; Institutional and cultural differences There are a few institutional and cultural differences which prevail in Europe; the European people integrate diversity without stifling it, it is the way they manage their markets, social responsibility is an integral part of the society, negotiations with internal stake holders are a mixture of top-down and bottom-up approaches, and there is an orientation towards people, quality of life and tolerance for individual workers. In addition Britain’s styles of living and doing business are closely related to that of US, Britain’s CEOs do not doubt that they belong to the EU, but shared history and culture binds Europeans together. One difference is if the Frenchman receives a letter and he is not in agreement he does not respond which means he does not agree, but if the German writes a letter and you do not respond you are sending the message that you agree. Europeans have good knowhow of managing diversity and they do it under same standards. The European people are also very cumbersome and ponderous and are always ready to learn from others. They open their eyes and ears and learn. As far as religion is concerned, Europe comprises mainly of Christians. Minor religions are Buddhism, Sikhism, Islam and Hinduism. In Spain there are 59% who believe in God, 21% who believe in a spirit or life force and 18% who believe neither in God, spirit or life force. In the United Kingdom there are 38% who believe in God, 40% who believe in a spirit or life force and 20 % who believe neither in God, spirit or life force. Strategy implementation The company has devised 6 factors to implement its strategies; Strategy 1 2 3 4 5 1. Action plan 2. Organization Structure 3. Human Resources 4. The Annual Business Plan 5. Monitoring and Control 6. Linkage Thus after considering the six factors the company has planned out its implementation of baby food product in UK and Spain. Recommendations Every child when born in this world is delicate and open to all diseases and viruses, thus it is essential to take care of him more than anything else. Breast feeding is the most complete nutrition for baby until he reaches between 4 to 6 months and his appetite increases; this is the time he starts needing outside food. The food given to baby should be clean hygienic and easy for baby to absorb. All the baby utensils should be washed thoroughly and sterilized so that there are no chances for any harmful substance to enter babies’ stomach. It is always suitable to give fresh food to the baby; this would maintain his health and keep him active for longer period of time. Avoid giving the baby refrigerated food or the one prepared before 24 hours. Use foil, plastic wrap, plastic bags or airtight containers to store any food in the fridge in order to maintain its freshness. Use foods quickly. Dont depend on maximum storage time. In case you are storing the food in the cupboard store in cool cabinets and away from appliances which produce heat. Many staples and canned foods have a relatively long shelf life, but buy only what you can expect to use within the time recommended in the chart. Date food packages and use the oldest first. Foods stored for longer than recommended times or beyond date on the package may change quality, color and flavor. Buy fresh-looking packages. Dusty cans or torn labels can indicate old stock. Do not purchase dented or bulging cans. Work cited D Johnson and C Turner (2003) International Business, Routledge, London. EU Business – www.eubusiness.com Europa web portal (2006).Cultural heritage as a vehicle of cultural identity, http://ec.europa.eu/culture/portal/activities/heritage/cultural_heritage_vehic_en.htm. Retrieved 4 March 2008. Europa: gateway to the European union, http://europa.eu/index_en.htm Gerber baby story http://www.gerber.com/About/Default.aspx HealthCanada,http://www.hc-sc.gc.ca/fn-an/pubs/infant-nourrisson/nut_infant_nourrisson_term_6-eng.php Rankings of doing business www.doingbusiness.org Read More