Ireland is one of the largest producers and marketers of dairy products. The weather conditions of this country make it favorable for dairy farming. Way back in the 17th century, a person’s wealth and worth were measured in terms of the number of cattle he had.
Penetrating the Ireland business environment will not come without some challenges for Pinkberry. The recent acquisition of Super chill by Dale Farm has increased the clientele base of Dale Farm. The super chill company was renowned for the distribution of a range of ice cream products. Among the products is Cadbury, Mars. Nestle, and Haagan-Dazs (Ice Cream Reporter, 2007, p. 8).
Two among the named products, Cadbury and Nestle are worldwide recognized and accepted products. However, besides the Dale Farm, there seems to be less competition in the field of ice cream selling. Considering the average weather of Ireland ice cream business is viable in Ireland. Due to the effect of the Atlantic Ocean, Ireland does not experience the extreme weather conditions experienced by other countries (METeireann, 2010, para.1).
Despite being endowed with a favorable climate for dairy farming, the Irish community is not keen on ice cream production. The country is renowned for the export of its high-quality cheese processed by the Kerrygold Company. In addition, the country is known too for processing and exporting butter since time immemorial (Irish Dairy Board, 2010, para 1).
Apart from the religious animosity between Muslims and Christians in Northern Ireland, the country experiences a relatively stable political environment. The political environment matters a great deal for the success of any company. Unstable political situations cause anxiety which in turn lowers productivity.
The literacy level in Ireland is also impressive. This is a positive aspect ensuring the flow of skilled manpower for the Pinkberry Company. According to research and statistics, Ireland has grown in leaps because of its high level of the skilled and flexible labor force. This in turn has seen a decrease in the rate of unemployment in Ireland.
The rate of unemployment has a direct impact on the rate of crime in society. Due to the high literacy levels in Ireland coupled with the low rate of unemployment, crime in Ireland is also on the lower side. This makes it safe for Pinkberry to invest in Ireland as the environment is conducive for business growth.
The Irish economy mainly depends on the U.K and U.S.A as their major markets for their products. With the just ended recession, Ireland suffered a major blow to its economy due to being over-dependent on the American market. In case there is a repeat of this event then Pinkberry will suffer a massive blow for investing in Ireland.
Entry Mode
Considering the dairy history of Ireland, it would be worth putting in more consideration on the scale of entry for Pinkberry. Though the level of competition for the ice cream industry is still very low, it would be advisable for Pinkberry to use the small-scale entry. This is because one should wonder why despite the high level of dairy products there is still very minimal investment in the ice cream docket. Perhaps the Irish community does not fancy ice cream.
A small-scale entry will also be beneficial to Pinkberry as they will have enough time to study the business environment of Ireland before committing more resources for the expansion of the company (Hill 1999, p.56). If perhaps expanding to Ireland is not a very brilliant idea, after all, Pinkberry will have to change cause without massive damage.
Secondly, a small-scale entry strategy will not create an obvious threat to competition for the existing companies. The Dale Farm Company which is the most dominant in the ice cream business will not feel threatened by Pinkberry. A direct attack might call for outward aggression from the local community. Cases have been documented of companies that have been forced to close down due to the hostility and aggression of the native community.
In addition, it is worth noting that in case of any eventuality especially with the current nature of the world economy Pink Berry company will not suffer massive losses as only a small amount of its resources will have been invested (Hill 1999, p.78).
Besides, there are different modes of foreign entry that are viable for pink berry companies. These modes of foreign entry have their pros and cons which must be put into serious consideration before Pinkberry moves to Ireland.
Pinkberry Company has been more of a local company over the years serving only the U.S.A. one way in which the company can enter the Irish company would be through exporting its products. However though cheap in terms of setting up the business in Ireland the cost is transferred to other aspects. Ice cream is such a delicate product that a lot of care needs to be taken. Apart from being a food product, the risk is twice considering the nature of the product. Ice cream needs to be refrigerated until the point of consumption failure to which it will meltdown. This will lead to an increase in the transportation cost of the product. Nevertheless, this strategy would allow Pinkberry
Enough time to analyze the business environment of Ireland and how conducive it is to this kind of business. This is especially so if Pinkberry employs its distribution agents to allow for full control of the business.
Pinkberry Company may as well as consider gaining entry through the turnkey project strategy. However, the cons of this strategy outweigh the pros. The major shortcoming of this strategy is the possibility of creating a competitor within you (Ireland et al., 2007, 289). This happens because the mother company gives the entire operational prerogative to another company. This is risky because Pinkberry might just trade off some of the unique qualities that make them successful in what they do. Once a competitor is armed with crucial information on your competitive strategies then it is very easy for the company to be destroyed.
Another viable option for Pinkberry would be to enter into a joint venture with a local company such as Kerryworld. This strategy is very viable as it provides a ready market for your products. The partner already knows the location well and has established networks. Also, the aggression normally faced by foreign countries will be alleviated( Ireland et al., 2007, p.285) Despite the overwhelming advantages is the risk of losing control over technology to the partner in which Pinkberry will have sold the only thing that makes them beat the competition. Worse still would be internal misunderstandings caused by the cultural diversity of the two partners, however considering the cultural background of the Irish communities and that of Americans is more or less the same, this scenario would not be an issue.
Just like the joint ventures, strategic alliances would be disadvantageous to Pinkberry as this would expose their competitive edge to their partners which they might use in the future to launch a massive competition in case of fallout.
However, considering the fatality of losing the only thing that makes Pinkberry survive in this very competitive market a wholly-owned subsidiary would be the best option. Every strategy comes with it’ pros and cons are towards a company’s survival. The major disadvantage of this strategy is the high cost of investing but this is countered by the fact that the company does not risk exposing its competitive strategies that keep them going. The operations of the company too will be under the tight scrutiny and control of Pinkberry and better still the profits accruing from the business can be used outside Ireland without any objections.
To ensure full acceptability of Pinkberry by the Irish community, then it would be advisable to recruit at least 50% of the total workforce from Ireland. This will ensure less hostility from the community as they will feel the company has a positive impact on their society.
To effectively penetrate the market and make themselves known by the community, Pinkberry will have to embark on a massive promotional campaign. Several techniques can be applied like advertising in the media which will ensure that a population receives the information about their existence in Ireland. Secondly, Pinkberry should offer free samples or sell at an extremely low price to ensure that the Irish community gets to sample their products. It is only through this method that Pinkberry will become a household name in Ireland.
Reference
Hill, C., 1999. International business: competing in the global marketplace.3rd ed. New York: McGraw-hill publishers. Web.
Ice Cream Reporter, 2007. RTE business reports that the Northern Ireland dairy business Dale Farm has expanded its business in the Republic of Ireland. Entrepreneur, Web.
Ireland, R., Hoskisson, R. & Hitt, M., 2007. Competing for advantage. California. Cengage learning. Web.
Irish Dairy Board, 2010. History of Darying in Ireland: From Green to Gold. Dublin. Web.
METeireann. 2010. Climate of Ireland. Dublin. Web.