Introduction
The world is getting very competitive. Firms are struggling to manage this competition by coming up with various strategies that would make them gain competitive advantage over other market competitors.
Internalization is one of the key pillars that firms are currently keen to establish in an increasingly competitive market. This is what The United Kitchen Provider has been keen on in the last few years. This firm has managed to dominate the Italian market in its kitchen products.
The management has realized that the market is getting very competitive and relying on single products may prove futile if that line of products is attacked. The world market is increasingly getting competitive.
Different firms are coming into the market with products that are already existing, causing saturation of products in the market (Lymbersky 48).
The Italian market is a free market where foreign firms have the liberty to enter the market and leave at will. This means that The United Kitchen Provider is open to international competitors in this market.
Going global is one of the strategies that The United Kitchen Provider management has been keen especially in the European, American, and part of Asian markets. In the global market, there are a number of challenges that this firm feces, some of which it did not face in the local market.
Coming up with a proper strategy in the global market is the best way through which this firm can maintain its market share and profitability in the market (Tielmann 3).
This research focuses on evaluating the internationalization and market entry strategy of The United Kitchen Provider with the aim of coming up with recommendations to the board of directors of this firm.
Internationalization
One of the main pillars of The United Kitchen Provider is internalization and distribution. This firm has come to realize the importance of going global. Although it has managed to acquire large markets in Asia and African markets, this firm is yet to capture the Middle East and African markets (Benjamin 96).
It is important for this firm to come up with proper approaches that it plans to use in the Middle East and African markets and other markets globally.
In these new host countries, it is important that the firm devises a competitive advantage which would make it strong enough to compete against other competitors in this market.
According to Schorsch (47), this firm will be faced with new challenges both in its micro and macro environment. Operating in a new environment comes with a number of challenges. The environmental factors in the Malaysian markets are different from those in the Italian market.
When operating in the Malaysian market, United Kitchen Provider must realize that a strategy that might have been useful in the Italian market may not apply. For this reason, there would be a need to devise new strategies that are unique to the Malaysian markets.
The first approach that this firm should use in this market is awareness campaign in this new region. The products should be known in this new market.
This firm should develop an awareness campaign similar to that when it is commercializing a new product in the market. The firm should organize an awareness campaign both for its brand, and for its individual products to run hand in hand.
Market Entry Strategy
The United Kitchen Provider has increased its coverage to include several Asia nations, besides the European and American markets. According to Cherunilam (18), getting into a new market is always a very delicate mode.
To get into a new market requires a smart strategy that will be able to attract the attention of the consumers and elate, without causing an alarming the competitors. There are a number of entry strategies that this firm can use in order to avoid this commotion and ensure that it enters the market peacefully.
One of the most common market entry strategies in the current world is joint ventures or what others call partnerships. In this strategy, this firm would need to find firms in the new markets which it wishes to enter. This partner should be an established firm with a strong brand in the market.
This firm would then enter into an agreement where the two firms will not view the other as a competitor. They will work as a unit joining their investments in order to be able to face all the possible challenges as a solid team.
This firm can partner with other firms in the new markets when introducing its products. The last strategy can be direct entry by developing subsidiary branches in these new markets.
Another strategy that this firm can consider is a direct market entry. In this strategy, this firm would establish its branch in the new market, and start operating as a semi-autonomous unit.
This is always a very expensive strategy because the management would be forced to rent or buy new premises where the firm will be operating, and purchase all other equipments that might be needed in the new branch for its normal operations.
It is also challenging in that the new branch will be starting with new employees who might need to be trained for them to be efficient. However, it is beneficial in that the firm will have full control of the branch.
The third strategy can be through franchising. This is an easy and quite way through which this firm can enter new markets.
In this strategy, these firms will alliance with other firms in the new regions that would use its name in that new market. The arrangement can be made in a way that after a specific period of time, say one year, the franchised firm would become a subsidiary to this firm.
External Analysis of the Host Countries
In Europe, Britain and France form the main markets for this firm. It is important to analyze the external environment of these markets. Politically, this firm has experienced relatively stable governments (Doole 40). The two countries have experienced a long period of political stability that has made it conducive for business.
Lack of political stability would mean that various businesses are not in a position to conduct business normally. Economically, this firm has some difficulties.
The firm has been faced with economic recession that hit various countries in the world, especially the European economies that had direct effect on various economies in various other nations (Klug 18). This had serious negative effects on the firms’ revenues as many of the customers considered the products as non-basic.
The socio-cultural environments of the two countries are diversified. This is because this country has people from all over the world. These two countries cherish equality, and women have equal economic strength just as men. In these countries, the firm does not segment the market based on sex, but age (Root 29).
The technological environment that firms in this country have to operate in is very dynamic. Technology inventions and innovations, especially in the field of communication have been the main challenge and strength of this firm at the same time (Bach 72). Legally, this firm has not faced major challenges.
The laws that govern trade in Italy and many other countries in the world have been very favorable to this firm. It has not faced serious litigation cases for failure to follow some of the industry rules and regulations.
It is important to note that although the largest market for this firm is made up of Christians, portions of the market are Muslims (Andexer 27). Failure to follow the industry and national laws and regulation may not only lead to serious fines imposed by the government on the firm, but even a total closure of the firm.
The firm should also be ready to both the mass media and the social media for marketing its products. Another approach that can help this firm is to develop a special niche for its products in this market.
This firm should ensure that it creates a strategy that will make its products be considered as substitutes to other existing products other than direct competitors (Cherunilam 73). This will reduce the level of competition that may come against its products in this market.
In the new Host countries, the management should appreciate the fact that there is a massive difference between the local market and the new markets. For instance, the Middle East markets and the market is Africa is very different from the markets where this firm currently operates.
The macro and micro analysis of these new markets should take into consideration the living standards, the political stability, and the development of the infrastructure. These are factors that will affect this firm directly (Cherunilam 37).
The national competitive advantage that this firm enjoys in the local market in Italy by virtue of being an Italian firm may not be applicable in the new international markets.
Analyzing the Capacity of the Firm in the New Markets Using SWOT Analysis
SWOT analysis is one of the important tools that are very popular in analyzing a company. It helps in analyzing firms based on the existing internal and external factors. SWOT analysis would be very valuable in analyzing United Kitchen Provider.
In order to bring more understanding of the firm in this competitive market, a SWOT analysis would be appropriate (Klug 28). It would help bring more insight to the opportunities and threats that this firm would face in the external environment. It would also help in understanding the strengths and weaknesses that the firm has.
Strength of this firm that would translate to increased profitability is a positive image in the market due to its environmental friendly projects. The main strength of this firm is laid on four pillars (Schorsch 67). The first pillar is product design.
This firm has collaborated with well known designers when coming up with products. This has enabled it maintain customer satisfaction in the market.
The second pillar is on alliance. The United Kitchen Provider has been keen on formation of alliances will various firms and professionals with the aim of providing value to its customers in various regions where it operates. Another pillar for this firm is diversification of the products.
This firm does not rely on just one product. There are various kitchen products that this firm is specialized in producing. The fourth pillar for this firm is on internationalization and distribution. This firm has managed to acquire a large international in the United Arab Emirates, Africa and parts of Asia.
Despite the above strengths, this firm has some weakness. The first weakness that this firm has is the discontent employees in some region such as the United Arab Emirates.
The fact that some of the employees are not satisfied with the way they are managed makes it very difficult for this firm to increase its profitability in these markets. The initiative of managing the environment is very challenging financially.
It would cost this firm, large sum of money if it would sustain such projects over the years it expects to operate in this market (Lymbersky 21). The members of this firm expect to work in collaboration with other firms in order to clean the environment.
The firm may not have the capacity to rid the environment of all the plastic wastes, unless it is supported by other agencies within the local society. The local government must be convinced to participate in such projects actively.
Other environmental agencies would also be invited to take part in the elimination of such wastes as plastic materials.
The fact such the projects would involve partnership with other firms; success of the entire process may be jeopardized (Doole 83). Success would be pegged on how determined the other partners are in fulfilling their duties.
The firm has a number of opportunities in the external environment. In the local market in Italy and other European countries, this firm has managed to build a large base of loyal customers.
The governments of Italy and other European countries have strongly appreciated the move of this firm to help improve the environment of these countries, a fact that has earned it a large base of customers (Lymbersky 52).
The Italian government, and other governments where this firm operates, has maintained a very stable political environment. This means that the business environment is free from any political unrest that may disrupt normal business operations within the market.
This has created a business environment that is very peaceful to various firms in the country. The firm also enjoys an economic growth in this region that has increased the purchasing power of the consumers. This increased purchasing power has helped the firm to increase its operations to regions beyond its borders.
The emerging technologies have also helped The United Kitchen Provider in its operational strategies. The firm has adopted the emerging technologies in its operations, a fact that has helped it increase its efficiency (Root 101).
This firm faces a number of threats in its operations. Threats may not be predictable in this industry, though the firm may try to reduce the possibility of occurrence. The first threat that this firm faces is price wars in the market.
The local firms may notice the strategy of the firm to charge lesser prices for its products, especially to those consumers who have shown resolve to combat environmental degradation. There is a possibility that the competitors may consider this move as a strategy that this firm uses to charge cheap prices for their products.
The impact of this is that the competitors may respond by equally lowering their prices in the market. Such price wars are always dangerous to the prosperity of a business. The initiative may fail to make any serious sense (Schorsch 118).
The emerging technologies are beneficial to the firm. However, they can pose serious challenge to the firm if it fails to select the appropriate technology to apply.
Applying a wrong technology may cause serious negative consequences to the firm. Late application of the emerging technologies may also render such a firm less competitive in the market.
The infrastructural Developments of the Market
Infrastructure is always very important in commerce. The United Arab Emirates and Malaysia are developing economies with some of the best infrastructures in the region. Just like the home country in Italy, the two markets have well developed road and rail systems.
Their ports and air transport is also well established. However, it is worth noting that the human capital in the two countries is relatively more expensive as compared to the labor cost in the home country.
Conclusions and Recommendations
The United Kitchen Provider has been successful in the current markets where it operates. Although it had some challenges in the United Arab Emirates and Malaysian markets, the management has managed to mitigate the challenges, and the benefits of this have been obviously seen.
The trends shown above are a clear indication that The United Kitchen Provider should consider adjusting its strategy in the market in order to be able to survive the new market competition (Cherunilam 37).
If the current trend continues, chances are high that it may be forced out of the market. The management should consider implementing the following recommendations.
- The management should consider moving most of its operational activities online. It should consider making the process of booking the products, and payments of the services online. This will reduce operational activities within the firm.
- The management should consider improving the value they offer customers. This may include offering additional benefits to the customers such as free transportation within its major markets. This will increase levels of satisfaction of customers.
- The management should embrace the emerging trends in the market. It should use the emerging technologies such as social media marketing to reach out for the customers.
- The management should increase the number of young innovative employees who can help the firm manage the emerging technologies.
- The management should increase its corporate social responsibility, especially on environment, to improve its public image.
- The firm should consider increasing its partnership with suppliers to ensure that they constantly have the stock.
- The management should ensure that employees are constantly motivated in their various duties in the firm.
- The management should address all the needs of the employees to the best of its capacity. It should address all the complaints that are put forth by the employees of this firm.
Implementing the above recommendations will have a number of advantages to the firm. However, it also comes with a number of challenges that this firm must be ready to face. The firm must be ready to face these challenges, especially the cost of implementing the strategies, when it decides to implement these strategies.
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