Assignment Sample on Internationalization
1. Introduction
Global marketing generally refers to the process that involves producing, placing, planning as well as promoting a business product and services in the global market. It has been found that global marketing is generally crucial especially for those products as well as services that are having universal demand such as food. Along with the issues in global marketing such as lack of adaptation in marketing as well as sales channels this has some benefits. For example, global marketing can be helpful in improving the effectiveness of products as well as services. In this assignment PESTLE analysis on the country, Argentina has been provided in order to assess the opportunities to market any food product in this country. Moreover, a discussion on the market opportunities for an SME in the UK such as Oak cash and carry that generally associated with grocery stores has been provided. Generally, this assignment aims to establish an international marketing strategy by assessing key challenges as well as the competitive landscape of Argentina.
2. PESTLE analysis
Political
The government of Argentina has been found to have a strong democratic setup that is very much concerned about supporting regional trade as well as private sector investments. As per the view of Bhalla and Shotten (2019), having governmental support can be helpful in enhancing not only local trade but also helps in encouraging international trade. It has been found that the foreign policies introduced by Argentina are mainly focused on developing regional trading relations. They have also been found to have a good partnership with the UN and have the practice to improve their relationships with US in order to develop their science as well as technological sectors. However, it has also been found that the relation between Argentina with the UK is deteriorating day by day.
It can be said that in order to have practice expansion to Argentina small and medium enterprises such as Oak cash and carry from the UK can have opportunities by having support to trade by the government of Argentina. However, it has also been found that deterioration in the trade relationship with the UK can play a harmful role by creating issues to their expansion.
Economical
It can be said that taking into consideration the global economic crisis, the Argentine economy has been found to achieve a healthy recovery. In the view of Larrabure (2017), increasing trade relationships can play an important role in improving the economic condition of the country. It has been found that the Argentine government is having concern about improving their trade relationship with several countries. For example, the main reason for global crisis recovery in Argentina can be considered as the increasing trade relationship with China.
The good economic condition of any country can be helpful in enhancing business opportunities thus encouraging international trade to be expanded. In the case of Oak cash and carry they have been found to introduce products associated with groceries. It can be considered that groceries are essential products as well as having a good economic condition in the country Oak cash and carry can easily expand their business in Argentina. On the other hand, it has also been found that Argentine governments aim to attract investments into their automotive industry. Establishing relationships with the government in order to expand their grocery product can be an issue.
Social
It has been found that Argentina is a traditional urban country that can be helpful for supermarkets. Moreover, in recent days migration from rural areas to urban areas has been found to be increasing. As per the view of Jones and Comunale (2018), the density of the population in the urban area can be helpful for a supermarket industry or business. Moreover, it has been found that argentine people especially those living in urban areas enjoy a high standard of living in comparison to other Latin American countries. However, Argentina has also been found to face problems with an aging population.
It can be considered that in social aspects Oak cash and carry can gain market expansion as well as competitive advantages from the market. As Oak cash and carry have been found to have an association with groceries as well as supermarkets, providing people with quality products can play a role to expand their business in Argentina.
Technological
Technology can be considered as one of the most important factors in order to expand any business in this country. As stated by Wylde (2018), in the case of expanding business for those companies associated with supermarkets need technological advancements. It has been found that Argentina has a growing telecommunication industry as well as growing IT sectors. Moreover, it has also been found that the Argentine government is having plans for implementing Its service to the rural areas. Argentina has also been found to have practice in supporting biofuel in order to preserve energy security as well as technological development.
It can be considered that as an SME Oak cash and carry can expand their business easily in Argentina in respect of technological advancements. As Argentine people have been found to have interests in technologies, offering them online facilities for products as well as services can play a role in making their business sustainable in that country.
Legal
In order to expand any business internationally, it is important to have knowledge about the legal environment of that country. According to the view of Luque (2019), foreign direct investments or business expansion totally depends on the government regulations of any country. It has been found that Argentina has a comprehensive regulatory as well as legal structure and also has its own constitution. Along with the bureaucratic as well as complex business regulations the government and strong union ties have been found to be resulting in increased wages of the employees. On the other hand, a high rate of taxes can place a burden on any industry. Moreover, the effectiveness of judicial systems needs to be improved in order to reduce money laundering offenses to new businesses or industries in Argentina. Moreover, in order to run business with employees especially in supermarkets, they need to follow Labor Contract Law in Argentina.
Environmental
The environmental impact of the production, as well as services from any industry, can play a role in setting the future. As per the view of Giglio et al. (2018), having a low impact on the environment can enhance business opportunities especially for the supermarkets as they are having practice with the delivery process also. It has been found that in Argentina there are remarkable natural resources as well as biodiversity. Deforestation for soybean cultivation as well as air and water pollution can be considered as the major problems in industrial areas. Having an increasing concern on environmental pollution Argentinian government has been found to develop the use of renewable energy sources. It can be considered that having any practice that is harmful to the environment can create obstacles for expanding the business of Oak cash and carry.
3. Justification of opportunity in the country
In order to have chances to grow in the market of any country, research needs to be done for their expansion. This research includes the market share of a particular industry that needs to be expanded in this country. As per the view of Martí (2018), without having knowledge of the industry market share a proper business planning cannot be done. In order to expand the market of small and medium enterprises such as Oak cash and carry they need to have knowledge of the market share of food and grocery businesses in Argentina.
It has been found that food, as well as the grocery retail sector in Argentina, have accounted for the highest share of the retail market. It has been found that almost 64.2% of the total retail sales are coming from the food and grocery business in this country (Store.globaldata.com, 2019). Moreover, this sector is forecasted to grow more by 13.4% by 2022 (Store.globaldata.com, 2019). This indicates a huge opportunity for the expansion of the business of SMEs such as Oak cash and carry. On the other hand, rapid urbanization, as well as changes in consumers’ purchasing habits, can play an important role in growing more this sector in this country.
This graph illustrates the share of shoppers in different retail sectors in Argentina. It has been found that most of the shoppers like to shop from supermarkets as they can get their needed items in those shops easily (Statista.com, 2017). It has been found that supermarkets are the most common as well as preferable store format in order to buy groceries in Argentina. From an interview, it has been found that 84% of the shoppers are likely to go to the supermarkets in this country (Statista.com, 2017). However, e-commerce can be considered as the less common way of shopping for groceries in this country.
As the business of Oak cash and carry is associated with groceries as well as supermarkets they can get opportunities from the market of Argentina. On the other hand, it can be argued that the supportive nature of the Argentine government more to the automotive industry can cause obstacles. Moreover, the decreasing trade relationship between Argentina and the UK can also create issues for their expansion. However, along with these major issues it can also be considered that Argentine people have been found to live a quality life as well as likely to go to supermarkets for their essentials (Haseeb et al. 2019). This indicates a growing opportunity to expand business associated with supermarkets as well as groceries in Argentina.
It can also be taken into consideration from the above data that Argentine people like to shop by going to supermarkets more than online shopping. This can be helpful for companies associated with small and medium enterprises such as Oak cash and carry in enhancing their business opportunities in this country. As per the view of Di Virgilio (2017), technological advancement is good for growth but for SMEs, it can cause more production costs leading to high prices. In that case, Oak cash and carry can also run their business without having online facilities as per the people’s preferences of shopping.
On the other hand, having only a physical store shop facility Oak cash and carry can decrease their cost for delivery purpose. This can also be helpful in making their business more improved by both having cost reduction in their operation as well as having a low environmental impact by removing delivery (Palazzo and Rapetti, 2017). As the Argentinian government, having concern for their environment’s low impact by the operation of Oak cash and carry can enhance opportunities to run their business in this country.
4. Overview of the competitive landscape
The competitive environment in any country for their business can be considered as another major thing that needs to be of concern. As per the view of Mac Donagh et al. (2017), having tough competition in the market can play a role in both lowering business opportunities as well as improving business operations. It has been found that Argentina has a major market share by their supermarkets and groceries industry. This can indicate that there are obviously some industry players which have major sales as well as a footprint in the customer’s mind. Moreover, in order to get information about the market of Argentina, it is important to know about its supermarkets. Major players of supermarkets in this country are Jumbo, Coto, Disco and many more. Among them, some supermarkets are having the practice to provide only fruits and vegetables. However, Jumbo the supermarkets in Argentina have been found to have nicknames as international supermarkets for the range as well as the variety of their imported products.
In order to expand their market in Argentina especially in supermarkets as well as the grocery industry Oak cash and carry a need to have practice on their product variety. As stated by Rubinstein et al. (2018), providing customers with a huge range of products can play a pivotal role in attracting them more especially in the supermarket business. In the case of Oak cash and carry they need to have practice in providing their customers with a huge variety and quality of products so that they can be able to at least sustain in this cutthroat competition in Argentina. However, by analyzing the competitive landscape in Argentina it can be said that Oak cash and carry can face huge competition in order to expand their business from the UK to Argentina.
5. Key challenges for global expansion
Global expansion can be considered as the process of establishing a legal presence in overseas markets by opening a foreign subsidiary. As per the view of Christel and Gutiérrez (2017), making any company especially companies that are associated with groceries as well as supermarket businesses can be beneficial for their improvement. However, there are several challenges associated with the global expansion, they are:
Organizational communication
Organizational communication can be considered as one of the most important ways of handling globalization efforts. As stated by Ruibal and Fernandez Anderson (2020), it can be difficult to handle organizational operations by having telecommunications only. There are several things that need to be monitored in order to run any business associated with retail smoothly. These include supply chain management, employee performance monitoring, and many more. Monitoring these factors can play an important role in making the business successful. Oak cash and carry can give challenges with these things as they are having limited numbers of employees in their organization leading to failure to provide some of their employees to another country. Having less monitored employee performances can have an impact on their production and services leading to creating challenges for Argentine grocery competition.
Language and culture barrier
Language, as well as cultural barriers, can also be considered as important things as organizational operations. In the view of Busscher et al. (2020), especially in supermarkets as well as grocery businesses communicate with customers in an effective way needs to be in concern. Language barriers can create major challenges in this context by failing to make customers understand products. In the case of cultural differences between Argentina and the UK, it has been found that foods of Argentina use lots of spices and herbs in comparison to British foods. Oak cash and carry need to have concern in providing foods as per the culture of Latin America. Without which they can face major challenges for their sale of grocery products.
Local competition
Local competition can have a major impact on the newly introduced business to any country. As per the view of Christel and Gutiérrez (2017), local competitors can have some advantages in communication with their people leading to making their product more sales in their market. On the other hand, companies that expand their business in another country failed to communicate with people effectively. It has been found that in Argentina there are some market giants in the supermarket and grocery industry. Oak cash and carry can face major challenges from competitors such as Jumbo, Disco, and many more.
Taxation
Taxation systems have been found to be different in every country and lead to face any business challenges in expanding. As per the view of Heikkila et al. (2019), it has been found that dealing with the taxation schedule of one nation is good but dealing with taxation in different countries can create some obstacles in the way of expansion. It has been found that in Argentina there are high taxes with the added corporate social security tax. These additional costs can create major issues or challenges for Oak cash and carry as they belong to SMEs in the UK.
6. International marketing strategy
Marketing strategy can be defined as long-term planning in order to achieve business objectives by optimizing business opportunities. In the view of Bocconcelli et al. (2018), it is important to select an effective as well as a good marketing strategy in order to expand business not only locally but also internationally. It has been found that Oak cash and carry are having practice in expanding their business in Argentina. In this context, they are having several challenges as well as issues not only with legal and political fields but also with their industry competitors. In order to mitigate issues with the competition, they can have a concern about their brand name. As stated by Al Badi (2018), the brand name can play an important role in making any business, as well as products, attract more customers. Oak cash and carry can have a concern about their brand name while introducing their products to Argentina that can attract more customers. However, the 4P marketing mix strategy can be recommended to Oak cash and carry in order to introduce their product to Argentina.
Product
This can be considered as one of the most important criteria in order to expand any business in another country. It has been found that in Argentina there are several markets, especially in the supermarket and grocery industry. It has also been found that they have a huge product variety as Jumbo has been given the nickname of the international market because of having a huge collection of international products. As per the view of Albassami et al. (2019), providing customers with varieties of products can play a role in making them attracted to their shop. Oak cash and carry need to make their product developed in order to expand as well as make a sustainable position in Argentina.
Price
The pricing strategy of products has also been found to be another important thing for making a business especially business associated with supermarket and grocery shops sustainable. As stated by Aksoy (2017), providing customers with the best prices can play a role in attracting them more to the shop. It has been found that urban Argentine people are having practice in living a quality life. In order to make their business sustainable in the Argentine business market Oak cash and carry a need to set their price in an innovative way so that they can be able to attract more customers to their shop. This can be helpful in leading their business to gain a competitive advantage leading to make them sustainable in the Argentine market.
Place
The place generally deals with the setting of a region to promote products or services. In the view of Albassami et al. (2019), sometimes the wrong choice of place for promotion as well as opening stores can play a harmful role in lowering sales. In order to get ideas about the right place for product promotion market research needs to be done. Selecting the correct place can enhance sales as people in that region are feeling the need for this product. It has been found that in Argentina migration of rural people to the urban area is increasing day by day. This indicates that opening stores or promoting products in urban regions can enhance the growth of grocery or supermarket sales. In order to develop their sales in Argentina Oak cash and carry a need to select the correct place in urban Argentina. This can be helpful in making their product familiar to the people leading to helping them in gaining competitive advantages.
Promotion
Product promotion is the vital process of marketing as it helps in conveying facilities as well as offers associated with the products or services. As stated by Al Badi (2018), there are several ways for product promotion such as advertising through media, as well as direct communication with people by arranging programs. It has been found that Oak cash and carry belongs to SMEs thus having a lack of money to advertise their product in another country. They need to adopt the Argentine local language to communicate effectively with the facilities of their products. This can be helpful in making their products as well as services familiar with the customers of Argentina leading to making a footprint in their mind.
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Conclusion
From the above discussion, it can be concluded that in order to internationalize any business research on the market of that country as well as an effective marketing strategy needs to be followed. Global marketing generally refers to the process that involves producing, placing, planning as well as promoting a business product and services in the global market. A discussion on the market opportunities for the selected company Oak cash and carry in Argentina has been provided in this assignment by providing PESTLE analysis. Moreover, a discussion on the competitive landscape in Argentina in order to expand the supermarket as well as grocery business of Oak cash and carry has also been provided in this assignment. Apart from this, an evaluation of key challenges of internationalization of a business has also been provided in this assignment. It has been found that there is huge competition as well as challenges in Argentina, especially for supermarket businesses. Suitable recommendations in the form of an effective marketing strategy that can be followed by Oak cash and carry in order to expand their business in Argentina have also been provided.
Reference list
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