Summaries from Assignment
Lion Pty Limited is known for producing and distributing food and beverages across the Australian states from last decades but after reviewing the demand of their branded beverages, organization is planning to focus on the producing beverage products more in comparison to the food products. For achieving higher growth, Lion Pty Limited has decided to expand their business in the international market. While conducting the market research, organization analysed that the demand of beverages products are high South African public. And it has been analysed that the demand of the beverages is expected to rise with a rapid growth by the year of 2020. The Lion National Foods Company is recently known as the Lion Pty Limited and its headquarters is situated in Australia whereas they are planning to expand their business in South African market after reviewing the demand of beverages in South Africa. To develop a sufficient and effective international marketing plan, various analyses will be performed in order to obtain the goals and the objectives for the Lion Pty Limited.
As per the part one of this international marketing plan, Lion Pty Limited in involved in the production and distribution of branded food and beverages products. For emerging companies, beverage industry has always been a great choice. In South Africa, there is an area called Sub-Saharan Africa. It is an area whose beverage consumption is quite high in relevance with the other parts of the world. Reviewing these factors, many Australian countries have shown their interest in expanding their beverages business in Saharan Africa. Most of the soft-drinks companies have invested huge amounts in the sub Saharan African market by expecting the huge market growth over there. After determining these factors, Lion Pty Limited can take the advantage for this market growth and can utilise their available resources in order to expand their business in South African markets. Prior to this, Lion Pty Limited is present in Australia and in New Zealand and they have more than 6700 employees across these two countries. The chances for Lion Pty Limited in achieving the adequate growth and the objectives are high enough because they have acquired a great position in the Australian states and in New Zealand states as well and in a short period of time. Reviewing this, it has been assumed that the chances of growth and enhancing profitability are quite high in South African market using the available resources (Akaka, Vargo & Lusch, 2013).
Market Selection Screening
Market selection process is quite difficult but it could be converted into an easier process through situational analysis and the market research activities (Andersson & Xiao, 2016). For evaluating the best market for performing the expansion activities, following functionalities will be conducted in order to attain the suitable one for Lion Pty Limited:
- Objectives of global marketing: Global marketing objectives are achieving adequate place in the global market, setting up effective goodwill and additionally increasing the portability in terms of attaining he desired goals and the targets set up by the management of the organization.
- Market selection factors: In terms of selecting the appropriate place for Lion Pty Limited, various factors of South Africa will be evaluated. Such factors are tax system of the South Africa, political factors, rules and regulations, etc.
- Original Screening: This step is performed in order to evaluate the best and most effective market in relation with the soft drink industry company i.e. for Lion Pty Limited. All the available options which could be adopted as the market entry option for achieving the adequate objectives for the organization (Ang, Benischke & Doh, 2015).
- Market shortlisting process: Under this stage, all those markets of South Africa which were selected on the basis of expansion of the business will be evaluated through advanced objectives. Those markets which will not be able to match up the requirements of the organization will be retrenched and only adequate markets will be screened in order with the expansion of the organization.
- Selection & Assessment: This process includes the advanced objectives in terms of the Lion Pty Limited and on those objectives, appropriate markets will be assessed and then it will be selected as the final market in relation with the expansion in South Africa (Angeloska-Dichovska & Mirchevska, 2017).
Lion Pty Limited is known for manufacturing branded food and beverages products in Australia and New Zealand and it has acquired more than 90% market share in both these countries through serving soft drinks in those markets. Under this process, various analyses and the strategies will also be conducted in order to evaluate the market for the expansion of the organization in new marketing conditions. The major objective of the Lion Pty Limited to expand their business in international market with the objective of enhancing profitability as well as setting up effective market place in the global market (Armstrong, et. al., 2015).
In determining and evaluating the objectives from the perceptive of the organization, SMART objective tool has been developed for acquiring the best place in the global market. Main motive in terms of Lion Pty Limited has been assessed as the expansion of the organization and to enhance the profitability of the organization. Below are the objectives of Lion Pty Limited in the form of SMART tool:
- S: Objectives developed by the management of the Lion Pty Limited will be developed on the basis of organizational capability (Atzori, Iera & Morabito, 2014).
- M: The objectives developed by the Lion Pty Limited should be measurable enough so that organization could be able to determine the core value of those objectives. For instance, Lion Pty Ltd. is looking for the hike in the profit will be 15% from now after the expanding the business in South African market.
- A: Targets of the organization could be easily attainable if those should be developed as per the proficiency of the organizational members.
- R: Objectives are mode on the assumption basis but those assumptions should be done on the realistic situations.
- T: The objectives set up by the organizational management needs to be developed on the realistic assumptions i.e. those objectives should be given adequate time so that those could be attained within the proper time.
Alternative market entry strategy includes all those options which could be used for entering into the selected market for the expansion of the organization. The basic motive of developing an alternative market entry strategy is to save the failure of the selected market entry option which was selected at the first time (Bond & Saggi, 2014).
Below are some of the market entry options available for Lion Pty Limited in order to attain the success and achievement of goals in relevance with South African market:
- Direct Exporting: For conducting this type of business, contacts are very crucial in the particular country in which organization is planning to operate its business activities. Lion Pty Ltd. needs to deliver the goods in South African market on the demand basis.
- Licensing: Under this type of market entry mode, Lion Pty Ltd. needs to submit all the relevant documents i.e. registration certificate, certificate of trading, etc. to the host country in which organization is planning to operate its trading activities. Apart from this, capital introduced in the organization for the purpose of expansion and number of workers exported, etc. needs to be submitted to the reporting authority of South Africa in terms of setting up their outlet for performing their trading activities (Burton & Cross, 2015).
- Joint Venture or partnership: This type of market entry involves contribution from the local brand or firm in relation to operate the functionalities. For instance, Lion Pty Ltd. needs to form a partnership firm with a local brand of soft-drinks manufacturing company in South Africa, this will reduce the risk factor as well as understanding of macro and micro environmental factors will be high with local brand of South African market.
Under this process, amongst the best markets available for the business expansion, one of the suitable markets is being selected on the basis of high chances of enhancing the profitability as well as to enhance the growth opportunities for the organization. In the above process, South African markets are selected and amongst the South Africa, Sub-Saharan Market will be the priority in terms of expansion of the Lion Pty Ltd.’s soft-drinks (Greckhamer & Gur, 2015).
In the scenario of Lion Pty Ltd. the best option will be licensing form of market entry option in order to attain the organizational objectives in South African market. This is because it is an official market entry option and the government approves the application for performing the trading activities. But with the view to change in the market conditions, every organization needs to be ready with an alternative market entry option with a view of dynamic business environment. Hence, the best alternative market entry option for Lion Pty Ltd. will be direct exporting because it is less expensive as well as effective tool to set up market position in the global market (Cavusgil, et. al., 2014).
Market Selection Stages
Positioning strategy is used to develop or setting up the effective place in the global market or in domestic market. Under this procedure, various approaches are available and through those approaches, organization can set up its effective place in the competitive business environment of global market. Following are some positioning approaches:
- Product’s quality approach; (Choi & Yeniyurt, 2015).
- Price-quality approach;
- Application approach;
- Product-user;
- Product-class;
- Cultural symbol; and (Czinkota & Ronkainen, 2013).
- Competitive approach.
These approaches could be used as per the market conditions of the host country in relevance with the expansion of the business in international market. Along with the positioning strategy, organization could also use the promotional and the advertisement strategies in order to enhance the demand of the products manufactured by Lion Pty Ltd. (D. Banker, Mashruwala & Tripathy, 2014).
Amongst the seven approaches of positioning strategy, price quality and the products’ characteristics approach could be used with the combination of adequate set of promotional and the advertisement strategies.
Alternative generic strategy is used to gain the competitive advantage in the dynamic environment of business in the global market. In terms of the South African beverage industry, Lion Pty Ltd. needs to adopt the generic strategies in order to increase the demand of the organizational products (Tanwar, 2013).
Cost leadership, focus and the differentiation strategies are the part of alternative generic strategies which will help the Lion Pty Ltd. to gain some competitive advantage in the South African soft-drink market.
Focus: This stage includes that organization needs to focus on the product’s quality and on the special features of the product which helps the organization to gain the competitive advantage in the dynamic business environment (Demangeot, Broderick & Craig, 2015).
Differentiation: Making the organizational products unique from its competitors is included in the differentiation process of generic strategy. This also helps the organization to gain some competitive advantage (Eteokleous, Leonidou & Katsikeas, 2016).
Cost Leadership: Under this step, organization could gain the competitive advantage through decreasing the cost of the production and through decreasing the profit margins. This will led to the decrease in the selling price of the organizational products and this will lead to the increase in demand of the products (Fletcher & Crawford, 2013).
Conclusion and Recommendations
As Lion Pty Limited is expanding its business operations in South Africa, so it has to adopt effective ways and modes for enhancing its growth opportunities and revenues. For this business expansion, first the company should conduct market research to know about the existing beverages players in the country. It should adopt and implement effective strategies and market tactics, so it can attract a maximum customer base. In order to choose market entry mode, Lion should analyse and evaluate the market and leading players, so that it can select the most appropriate trade partners in South Africa. It should enter in the market by adopting some official entry strategies. It will assist the organization in establishing its brand image and reputation in new and emerging market, i.e. South Africa.
Thus, the above analysis concludes the organization needs to adopt and implement some effective market entry options to expand the business in South Africa. By using effective segmentation and positioning, the company can cover an effective market share in South African beverage industry.
References
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Greckhamer, T., & Gur, F. A. (2015). A Set Theoretic Study of Generic Strategies and Firm Performance Differences. In Academy of Management Proceedings (Vol. 2015, No. 1, p. 15849). Academy of Management.
Tanwar, R., 2013, “Porter’s Generic Competitive Strategies”, Journal of Business and Management, vol. 15 (1), pp. 11-17.
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