Market Analysis of China
In the current business scenario, it is becoming more important for the contemporary business organizations to search for the potential foreign markets to enter. This is due to the reason that with the entry in the foreign countries, the business scope and market size and revenue will get increased. In the current ear of globalization, the competition is also huge with the entry of number of global brands. Thus, the more will be the scope of potential foreign markets, the more will be the business opportunity for the organizations (Gnizy, Baker & Grinstein, 2014). However, in the order to select the potential foreign markets, it is important to determine and evaluate different parameters and aspects of the target country.
Koala cookies Australia is small and niche cookies and biscuits manufacturers. They are having small scale of operations currently but they are thinking of going global and enhance their business. Their family recipe based cookies can be competitive in the international market. Three countries, India, China and Brazil are being recommended as the potential target country due to their immense market opportunities.
This report will discuss about the external business factors that may be faced Koala cookies in doing business in these three identified countries. In addition, the competitive analysis will also be conducted for each of these countries. This report will conclude with the most potential country for Koala cookies along with the recommended market entry strategy.
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Political and regulatory environment |
· China is having communist type of government with stricter rules and regulations (Li & Qian, 2013). · It may be difficult for Koala cookies to get adjusted with communist political scenario being from market oriented home country. · It is anticipated that more harsh rules will get introduced in regards to the present tension in the international trade environment (De Villa, Rajwani & Lawton, 2015). |
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Economic environment |
· China is one of the leading countries in the world in terms of economic growth (Bashir et al., 2014). Thus, the market opportunity will be more for Koala cookies. · According to reports, the economic growth of the country will be positive in the coming years also. · Government is initiating more business friendly activities to prefer foreign investments. |
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Social and demographic environment |
· China is largest country in the world in terms of population. Thus, Koala cookies will have huge market. · According to the reports, majority of the population is on middle age. Thus, market for cookies and biscuits will be favorable. · Chinese culture is becoming more adaptive towards global culture. |
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Technological environment |
· China is the leading country in the world in initiating new technologies. · Cost of technology is also low in China compared to some other countries. · However, it may get difficult for Koala cookies to transfer technology due to regulations of China. |
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Natural environment |
· China is having diverse climatic factors. · Koala cookies will find harsh summer to chilled winter. · However, climatic factors are having less impact on their products. |
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Physical environment |
· China is having the ranking of 47 in terms of overall infrastructure in global competitiveness index (Www3.weforum.org, 2018). · Railroad infrastructure is favorable in China. · However, China is having lower ranking in terms of telecommunication facilities. |
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Political and regulatory environment |
· Brazil is having democratic type of government with having history of instability (Ireland, 2018). · Brazil is also more adhered to capitalist economy. · However, there are limitations and restrictions in terms of foreign direct investments. |
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Economic environment |
· Brazil is having the 8th ranking in terms of economic growth. · It is considered as a leading developing country. · However the fluctuations in the growth rate may have negative impact on business (Bildirici & Bakirtas, 2014). |
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Social and demographic environment |
· Brazil is fifth most populated country in the world. · One of the youngest countries with having largely young population. · Population is increasing in rapid rate and thus market opportunity is increasing rapidly. |
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Technological environment |
· According to the global competitiveness index, Brazil is having the ranking of 78 in terms of availability of latest technologies (Www3.weforum.org, 2018). Thus, Koala cookies may find it difficult in having latest technologies. · However, technology HHowever, technology transfer will be easier for Koala cookies in Brazil. · With he growth With the growth in the economy, technology is becoming more accessible in Brazil. |
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Natural environment |
· Brazil is having more favorable climatic conditions. · Less probability of extreme weather conditions. · Preferable for business organizations. |
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Physical environment |
· Brazil is ranked at 108 in terms of overall infrastructure according to global competitive index (Www3.weforum.org, 2018). · Thus, Koala cookies will find it difficult in transporting their materials. · However, Brazil is more favorable in terms of online connections. Thus, Koala cookies should use the online mediums more. |
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Political and regulatory environment |
· India is the largest democracy in the world with having stable government and political scenario (Singh, 2018). · Foreign direct investments are being given number of facilities. · Business friendly regulations are attracting more investments in the recent years. |
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Economic environment |
· India is the top most country in the world in terms of economic growth (Agarwal & Whalley, 2015). · Thus, market is becoming more potential for the business. · It is estimated that India will remain the top country in terms of economical growth in the next few years. |
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Social and demographic environment |
· India is the second largest country in the world in terms of population (Buhang & Urdal, 2013). Thus market size is also favorable for Koala cookies. · India is becoming more globalized culture in the recent time and thus Koala cookies will have favorable environment to sell their products. · India is having fairly large section of younger population. Thus, the demand for cookies will be more in this market. |
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Technological environment |
· India is rapidly growing in terms of technology and with the increase in foreign investment; more updated technologies are being made available in the country. · India is having the ranking of 72 in terms of availability of latest technologies according to global competitiveness index (Www3.weforum.org, 2018). Thus, having the access to the latest technologies can be an issue for Koala cookies. · India is having the ranking of 59 in terms of technology transfer and thus Koala cookies can transfer their technologies easily. |
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Natural environment |
· India is having diverse weather condition along with having some extreme climatic factors. · Summer and humid climate is the most common occurrence. · However, climatic factors are having less impact on the business potentiality in the Indian market. |
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Physical environment |
· According to the global competitiveness index, India is having the ranking of 46 in terms of overall infrastructure (Www3.weforum.org, 2018). Thus, the physical environment for Koala cookies will largely be favorable. · Railroad is extensive and vast in India and thus Koala cookies will have relatively less cost in transportation. · Investment in improving the infrastructure is also increasing in the recent time. |
According to the reports, confectionary industry of China is standing at US$ 23,591 million. It is also estimated that the revenue of the confectionary industry will touch US$ 28,000 million. Thus, the growth is favorable. However, it is also being reported that in the last few years, the growth rate of confectionary sector is fluctuating and currently it is growing at the rate of 3.5 percent (www.statista.com, 2018). Thus, in china, Koala cookies will have good market opportunities. It should also be noted that Koala cookies cannot position their products in growth stage of the product life cycle in China due to the reason that already there are number of family and niche cookie brand are available. Cookie and biscuits are much popular in China. Thus, the intensity of the competition will be high for Koala cookies in Chinese market.
It is reported that confectionary sector in Brazil is currently standing at US$ 15,819 million. It is also estimated that confectionary industry will grow at the rate of 5 percent till 2021 (www.statista.com, 2018). Thus, the Brazilian market is also potential similar to China for Koala cookies. It is also reported that the average consumption of confectionary items will get significantly increased in the next few years. In addition, it is also stated that offline is the major source of medium in this industry to generate revenue. In terms of the product life cycle, Koala cookies can position their products in the growth stage given that they will introduce distinctive products in the market. The intensity of the competition in the confectionery industry of Brazil is lower compared to that of China. Confectionary industry is Brazil is majorly organized but the scope of family recipe based niche cookies is less and thus, the intensity of the competition will be less for Koala cookies.
Market Analysis of Brazil
Currently, confectionery industry of India is standing at US$ 10,298 million. Thus, the market revenue of India is lower compared to Brazil and China. However, it is estimated that the confectionery industry will grow at 10.3 percent per annum till 2021 (www.statista.com, 2018). Thus, the growth rate is more compared to that of Brazil and China. This is denoting that the confectionery industry of India is still in the nascent stage and there is huge growth opportunity for the organizations. In the Indian market, Koala cookies can position their products in the growth stage as per the product life cycle. This is due to the reason that family recipe based cookie is a new concept in the Indian market and thus Koala cookies will have the advantage to have the availability of having the entire life cycle for their products. In addition, due to the fact that family recipe based cookies will be a new and niche concept in the Indian market, thus the intensity of the competition will also be the lowest compared to other two countries.
In the above sections, the market and business factors and opportunities are being discussed of India, China and Brazil. All these countries are having immense market size and opportunities. China is having the advantage of huge market size and positive economic growth but the intensity of the competition will be more. In addition, Brazil is having the advantages of market size, favorable climatic conditions and social structure but they are trailing in terms of their economic growth. On the other hand, India is having huge market size and positive economic growth along with huge growth opportunities in confectionery sector (Narlikar, 2013). Thus, it is recommended that India will be the most potential country for Koala cookies. This is due to the reason that entering in the Indian market will help Koala cookies to have the hugely untapped market for business. In addition, the rapid growth of the economy of India will also enable Koala cookies to increase their business potentiality in the next few years.
Conclusion and recommendation
Thus, it is concluded that India will be the most potential and ideal country of operation for Koala cookies. This report discussed about the different external business factors and market elements of China, Brazil and India. All the countries are having business potentiality for Koala cookies but compared to others, India poses more opportunities for them. It is also recommended that Koala cookies should opt for joint venture market entry strategy in operating in India. This is due to the reason that opting for the foreign direct investment will have more cost and risk involvement for them. On the other hand, initiating of direct exporting strategy will increase the cost of their products that will in turn reduce the market opportunity. Thus, it is recommended that joint venture strategy should be initiated in partnering with a local brand in India. This will enable Koala cookies to have less amount of capital investment along with the having the expertise of the local firm in managing the Indian market effectively. Initiation of the joint venture strategy will also enable Koala cookies to effectively determine the taste and preference pattern of the local market.
Reference
Agarwal, M., & Whalley, J. (2015). The 1991 reforms, Indian economic growth, and social progress. In WORLD SCIENTIFIC REFERENCE ON ASIA AND THE WORLD ECONOMY (pp. 3-22).
Bashir, T., Mansha, A., Zulfiqar, R., & Riaz, R. (2014). Impact of FDI on economy growth: a comparison of South Asian States & China. European Scientific Journal, ESJ, 10(1).
Bildirici, M. E., & Bakirtas, T. (2014). The relationship among oil, natural gas and coal consumption and economic growth in BRICTS (Brazil, Russian, India, China, Turkey and South Africa) countries. Energy, 65, 134-144.
Buhaug, H., & Urdal, H. (2013). An urbanization bomb? Population growth and social disorder in cities. Global Environmental Change, 23(1), 1-10.
De Villa, M. A., Rajwani, T., & Lawton, T. (2015). Market entry modes in a multipolar world: Untangling the moderating effect of the political environment. International Business Review, 24(3), 419-429.
Gnizy, I., E. Baker, W., & Grinstein, A. (2014). Proactive learning culture: A dynamic capability and key success factor for SMEs entering foreign markets. International Marketing Review, 31(5), 477-505.
Ireland, R. (2018). Pentecostalism, conversions, and politics in Brazil. In Power, Politics, and Pentecostals in Latin America (pp. 123-137). Routledge.
Li, J., & Qian, C. (2013). Principal?principal conflicts under weak institutions: A study of corporate takeovers in China. Strategic Management Journal, 34(4), 498-508.
Narlikar, A. (2013). India rising: responsible to whom?. International Affairs, 89(3), 595-614.
Singh, M. P. (2018). Federalism: Constitution and Dynamics. Indian Political System, 145.
www.statista.com. (2018). Confectionery – India | Statista Market Forecast. Retrieved from https://www.statista.com/outlook/40100000/119/confectionery/india#market-arpu
Www3.weforum.org. (2018). Retrieved from https://www3.weforum.org/docs/GCR2017-2018/05FullReport/TheGlobalCompetitivenessReport2017%E2%80%932018.pdf
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