Introduction
In this report, I present my plan to introduce a product manufactured by my company to a foreign market. My organization, A-Camel, based in Victoria, Australia, has decided to start selling one of its products, camel milk, in the United Kingdom. The plan contains an overview of the company, comprehensive assessment of the business environment of the UK and its market of dairy products, estimation of the risks that the company is likely to take, analysis of the feasibility of this business decision supported by theory, and the developed market entry strategy and plans for introducing camel milk to the UK.
Overview of the Company and Products
A-Camel is a firm that produces milk products founded 20 years ago in Victoria, Australia. It emerged from a single camel dairy firm and managed to become a large organization owning 33 cattle farms, with a brand well-known and popular nationwide. The mission of the company is to provide the nation with fresh and highest quality dairy products made out of camel milk. A-Camel is a leading Australian brand in the dairy product’s market known for its technological advancement and readiness for market innovations.
The company has won numerous Australian awards, including the Australian Business Award for Product Excellence and the Australian Business Award for Business Technology. It is also known that A-Camel cares a lot about the environment; for instance, recyclable packaging for all its products was introduced in 2005.
A-Camel offers a variety of dairy products. The range of its products includes plain camel milk, three types of camel milk cheese, camel milk butter, yogurt with several different flavors, various deserts, camel milk powder, and even ice-cream. The company has decided to start with camel milk alone while penetrating the UK market and, provided that the initiative is successful, introduce its other products as well.
Business Environment in the UK
Previously to developing a strategy for entering a foreign market, it is highly important to conduct an analysis of the factors that influence business in this country.
The United Kingdom is one of the most politically stable countries in the world, which makes it safe and attractive for different kinds of businesses. In addition, the country is technologically developed and wealthy. In the UK, the political authorities limit their interference in the domestic market affairs, which is suitable for business. The country has a negative inflation rate (“The United Kingdom Inflation Rate” par. 1). By contrast, the rate of unemployment is rather high, which means that a lot of free labor force is available for new businesses (“UK Labour Market” par. 4). However, it should be noted that workers are used to relatively high wages.
In the latest (2016) “Doing Business” list, a list created and updated annually by the World Bank Group that estimates the easiness of doing business in each country of the world, the UK holds an honorable 6th place. It is quite easy to start a business in the UK considering all the steps of the registration process (The World Bank 16). The government offers a convenient way of paying taxes. In the “Doing Business” list, the UK has received the 15th place for its easy mode of taxpaying (The World Bank 69).
On the same list, the country holds the 38th position for trading across borders regarding time and cost expenses and the complexity of the necessary organizational procedures (The World Bank 74). The access to electricity, which is vital for retail food selling, is quick and easy to get in the UK (the 15th place) (The World Bank 76).
In contemporary British culture, a healthy lifestyle and protecting the environment by consuming environment-friendly products are especially valued. The consumers of this country demand high-quality, diverse, and healthy dairy products. However, camel milk is not a widespread and popular item yet. In the market of dairy products, some eminent brands, such as Tesco, J Sainsbury, Asda, and Wm Morrison, are strong competitors. However, not all of the competitors produce camel milk. Regarding this particular product, the only strong rival is American Desert Farms (“Dairy in the United Kingdom” par. 2).
Overall, the business environment and the conditions of the dairy products market in the UK seem rather favorable for the new initiative of our company.
Risks of Conducting Business in the UK
As it was explained above, it is unlikely to face political or currency risk when starting a business in the UK. However, various kinds of risk are still possible. For instance, since there is no united jurisdiction in the UK, but there are three separate jurisdictions instead (England and Wales, Scotland, and Northern Ireland), it creates legal risk. The fact that the UK is a member of the EU and has signed numerous agreements regarding business and property rights contributes to the legal risk. It is necessary to perform a careful examination of the law of all the dominions of the UK, as well as the agreements of the EU members, to prevent that risk. The remote location of the UK creates a risk that the cost of the delivery, having affected the final price, will discourage customers. Along with that, customers may feel discouraged by the exoticism of the new product.
The Product
As it was mentioned above, A-Camel is planning to introduce a single product, plain camel milk, to the UK market. To the opinion of our company, it is a wise business decision for the following reason. First, as it was said, exotic products can discourage customers; plain milk is the least exotic of our products, so if we introduce them gradually, starting from plain milk, they will surely gain popularity. Second, camel milk is becoming more and more popular worldwide, which makes it more likely to be appreciated in the UK. Third, the consumers of the UK value healthy products, especially dairy ones; it is known that camel milk is healthier than cow milk and that the former is more nutritious than the latter. Finally, only one strong competitor exists in the field of camel milk.
Theoretical Background
To demonstrate the feasibility of this business initiative, several theories can be mentioned as a supporting background.
The theory of 4 market P’s claims that, given a clear understanding of the categories of the product, price, place, and promotion, a business initiative will most likely succeed (Kar par. 1-2). The argument above allows understanding that A-Camel has selected product (variety, quality, packaging) wisely, as well as it has decided on the right place (considering the advantages of the UK market and this country’s long-time trade relations with Australia). An effective pricing strategy and advertising campaign will soon contribute to the success of the initiative.
The theory of the five forces competition can also be used to prove the feasibility of the initiative. According to the theory, the conditions of the competition in a particular market should be analyzed through the assessment of the five forces: the power of suppliers, the consumer power, competitive rivalry, possibility of substitution, and opportunities for new entrants (Scarborough 124-125). Even though buyers can take prices down and new entrants are likely to appear, the competition in the market of camel milk is not ardent yet; therefore, substitution is unlikely in the present situation. In addition, suppliers do not have much power over A-Camel.
As for the theories regarding international business, the eclectic theory can serve as the theoretical framework for this argument. According to the theory, the factors of ownership, location, and internalization define the success of a firm in a foreign market. Ownership refers to the advantages of the firm in this particular market, which, as was already discussed, are present in this case. The location and internalization factors are on the side of A-Camel as well, as it will be demonstrated in the marketing strategy plan below.
Market Entry Strategy
It has been resolved that A-Camel will import its product to the UK. Even though the market conditions in the UK allowed to produce it on the territory of the country, founding a sufficient number of cattle farms requires a substantial expense of cost and time, which the company cannot undertake until it is sure that the product is appreciated by the consumers. Therefore, it is wise to start with importing and, provided that the product is popular, start local production. Several modes of market entry exist in international business: distribution, licensing, franchising, joint venture, wholly-owned subsidiaries, and strategic alliance.
Distribution requires selling the product to a distributor, who sells it to the customers. Since it is commonly used by other firms for packed food products and offers less risk than other modes, distribution is the most convenient mode for A-Camel. A-Camel does not plan to acquire a competitor (American Desert Farms) unless this entirely American-based firm decides to start producing camel milk on the UK soil.
The following plan was developed for market entry. The plan is based on the theory of the 4 market Ps and the premise that, while responding to the global quality standards, the product and promotion have to apply to the local customs and tastes.
- Product. A-Camel would introduce only plain camel milk at the beginning bit will involve other dairy products in case if milk succeeds.
- Place. A-Camel will select distributors in such a way as to make the product rich not only to large supermarkets but also to convenience stores, which are becoming more popular nowadays.
- Price. The company will strive to maintain prices as low as possible to prevent the initial discouragement of the buyers.
- Promotion. A-Camel will rely mostly on internet advertising since it is currently the most effective engine. During the advertising campaign, the developers will emphasize the healthiness of camel milk, its nutritional qualities, and suitability for lactose intolerant individuals.
The company believes that this plan contains the most beneficial options and will help the product to enter the UK market successfully.
Conclusion
Having analyzed the features and products of the company, the conditions of the UK market in general and its market on dairy products in particular, weighed the legal and economic risks, and provided a theoretical background, I have worked out an outline for the market entry strategy of A-Camel. This plan contains the most advantageous options and will most likely make this business initiative successful.
Works Cited
Dairy in the United Kingdom 2014. Web.
Kar, Soummya. “The 4 P’s of Marketing – The Marketing Mix Strategies.” Business Fundas. 2011. Business Fundas. Web.
Scarborough, Norman M. Essentials of Entrepreneurship and Small Business Management. Upper Saddle River, New Jersey: Prentice-Hall, 2014. Print.
The World Bank 2016, Economy Profile 2016: United Kingdom. Web.
UK Labour Market 2015. Web.