INTERNATIONAL MARKETING STRATEGY FOR THE BUSINESS ORGANIZATION
Most of the business firms of the world have been emphasizing towards doing global expansion of their business for generating more business profits. Before penetrating into the international market the business organisation needs to focus on getting effective knowledge about the market. This can help the business organisation to know whether their products or service will flourish in the market or not. The report is based on developing a global marketing strategy for the “Marshfield Bakery” is a small-medium scale enterprise located in the United Kingdom. The organization has been emphasising expanding their bakery business in Ethiopia for doing globalisation. For doing this PESTLE tool has been used in the report for analysing the macro environment of the country where the business has to be expanded.
2. PESTLE Analysis
The report has emphasised using the PESTLE tool for analysing the complete market environment of Ethiopia for making the international expansion of “Marshfield bakery” more easily. In the viewpoints of Rastogi and Trivedi (2016), the “PESTLE” tool helps in analysing all the “political”, “economic”, “social”, and “technological”, “legal” and “environmental” factors impacting the business.
Ethiopia is having democratic, federal and republic types of government and two levels of government are executive and judiciary. The “Abuja treaty” has been signed by Ethiopia that emphasizes establishing an “Africa economic community” among the 54 countries of different continents (Trade.gov, 2020). The selected company of the United Kingdom can be established in Ethiopia because Ethiopia and the United Kingdom are having good relations for the past years. The fear of terrorism is also at an average rate so the UK Company can establish their business here without any fear. The level of corruption is high in Ethiopia and this can be considered as a negative point for the firm to penetrate into the Ethiopian market.
The economic status of Ethiopia country is of mixed and transitional type because of its huge population sector. The Gross Domestic Product of Ethiopia is about $90 billion according to the census of 2020. The inflation rate of Ethiopia is about 15.81% in 2019 with an increase of about 1.98% from the year 2018 (Statista.com, 2020). Ethiopia has good relations with other countries and does international trade with them by importing and exporting various goods and services. The main trade partners of the country are China, Somalia, Kuwait, the United States of America, Saudi Arabia etc. The main source of economy for Ethiopia is the agriculture sector and the export business. These two sectors contribute most to the GDP of the country.
Figure 1: Inflation rate in Ethiopia
(Source: Statista.com, 2020)
Ethiopia has been considered as the second most populated country of Africa and got 12th place among the most populated countries present in the world. The total population of Ethiopia is around 114,963,588 according to the data provided by the UN (Worldometers.info, 2020). Due to its large population, the economy of Ethiopia has been growing at a steady rate but still, it is considered as one of the poorest nations having a per capita income of $850. About 45% of the Ethiopian population lies under the age of 15 and about 71 per cent of the demographics of the country is under the age of 30 and 16% are old aged people. The high percentage of young demographics can contribute a lot to the economic development of a country.
Ethiopia utilises their renewable resources for innovating new technologies for the production of electricity. The country has been emphasizing adopting relevant technology sources for generating more electricity and supplying it to every part of the country. Ethiopia is having reduced internet connection and only 15% of the total population have access to the internet (Internetsociety.org, 2020). Internet connection is very expensive in the country and due to this reason only it gets afforded by some of the people only. Social media sites like “Whatsapp” and “Telegram” have also been banned in the country so it can be considered as a negative point for foreign business firms to establish their business. This is because the country lacks technological development and advancements due to which digital marketing cannot be performed in the country. The transportation of Ethiopia is also not very well developed and it commonly consists of trains and buses.
There are two types of taxes present in the legal rules and regulations of Ethiopia and these are direct and indirect. The non-residents or the foreign business organisations coming to Ethiopia and using its resources are taxed about 10% of the “gross amount of the interest”. Capital gains and company shares are imposed taxes of about 15% and 30% in Ethiopia (Nordeatrade.com, 2020). Ethiopia is located in the “Horn of Africa” which makes it vulnerable to “Money laundering” activities. This happens because the country possesses limited integration with the global financial systems and is having undeveloped financial organisations. As stated by Teichmann (2017), “money laundering” refers to an illegal process of making money from various legitimate sources. Appropriate laws have not been developed in Ethiopia for eliminating “money laundering” from the country.
The country has been emphasising using appropriate resources for bringing sustainability to the environment by reducing environmental pollution levels. The main environmental issues observed in Ethiopia are deforestation, soil erosion, water scarcity, pollution etc (Gov.UK, 2020). The government and business organizations of Ethiopia have been focusing on taking appropriate initiatives for doing improvements in the country’s environment. The business organization that wants to establish its business in Ethiopia needs to focus on using appropriate resources that don’t pollute and harm the environment of the country. The business in Ethiopia can only flourish if the country decides to adopt appropriate measures for bringing sustainability to the environment. The country also uses renewable sources of wind and solar energy for electricity production. This helps in reducing the depletion of natural resources and saving them for the future.
3. Organisation’s overview
The UK based SME organization selected for expansion of business in Ethiopia is “Marshfield Bakery”. “Marshfield Bakery is a part of the “Food wholesalers industry” of the United Kingdom and was founded in 1984 by “Lynne White” and “Paul”. The “Marshfield bakery” has been considered as the best bakery and has received many awards for providing superior quality of baked products and other food items. The “Marshfield Bakery” is a small-medium sized enterprise that is located in the “Dyrham” city of the United Kingdom. The “Marshfield Bakery” is having about 82 employees who contribute into the successful business operations of the organisation. The annual sales revenue of the organisation is about $6.59 million that is generated through the effective sales of food products and food delivery services (Marshfieldbakery.co.uk, 2020). “Marshfield bakery” manufactures food products that can be afforded by people belonging to different socio-economic statuses. The bakery manufactures snack bars, handmade cakes, seasonal goods and biscuits. The products manufactured by the “Marshfield Bakery” get supplied all over the United Kingdom and Europe. The organisation has been emphasizing globalising their business all over the world. The country selected for the international expansion of Marshfield Bakery’s business in Ethiopia. The country has been selected because the organization will require fewer investment costs for the establishment of business in the country. The huge population of the country can provide a good economy and intensive labour to this small scale company of the United Kingdom.
4. Analysing the business environment of the organisation
● Different range of baked food products
● Efficient use of machinery for reducing labour cost
● Well trained and experienced staff members
● Located far away from the city
● High competition
● Pricing of products
● Expanding the range of food products
● Focusing on penetrating into an international market
● Focusing on manufacturing healthy and customised food products
● Existing competitor bakeries
● Changes in the economic status of the country
● Limited delivery services
Table 1: SWOT Table of Marshfield Bakery
(Source: Developed by author)
Various internal and external factors impacting the business of “Marshfield Bakery” have been analysed with the help of the SWOT tool. As stated by Phadermrod et al. (2019), “SWOT” analysis helps in evaluating the “strengths”, “weaknesses”, “opportunities” and “threats” of the business organisation. After getting a complete analysis of the internal and external environment of the business organisation it can be evaluated how the company can use its strengths and opportunities for penetrating the international market. With the help of SWOT analysis, the company can identify its weaknesses and threats that can lead to a decline in the business of the organisation. The main strength that can help the business organisation to expand its business is its different range of manufactured food products. The company uses efficient machinery for manufacturing baked products and this helps in reducing labour costs for the company.
The saved cost can be invested in improving and expanding business nationally as well as internationally. Educated, well trained and experienced employees present in an organisation helps in enhancing the business productivity of the firm. The main weakness of the bakery is that it is located away from the cities and customers and retailers face difficulty in reaching there (Zinina et al. 2020). Secondly, high competition in the market and pricing competencies among different bakeries can be considered as the greatest weakness for “Marshfield Bakery”. The organisation has been emphasizing expanding their business in international markets for gaining globalisation. With the increasing health consciousness among the people, the organisation has been emphasizing healthy products for their customers. This can provide great successful opportunities to the business of the organisation on a national as well as international level. The major threats for the organization are its limited delivery services due to a lack of employees and an increase in the number of other bakeries.
5. Opportunity for SME
The organisation has been emphasizing establishing its bakery business in Ethiopia. The country can provide great opportunities to the international SME that is going to establish its business in the foreign market. The huge population of the country can provide a great customer base to the “Marshfield Bakery”. Besides this, the use of renewable resources in the country for the production of electricity can help in saving the electricity costs of the organisation. In the statement of Cui et al. (2019), manufacturing energy from renewable resources helps in saving the non-renewable resources for the future by reducing their consumption in energy manufacturing.
The “Marshfield Bakery” can emphasize customising their food products according to the taste of the Ethiopian people. A huge population of the country can help in providing intensive labour to the organisation at cheaper rates (Peterson, 2017). Ethiopia generates most of its economy from its agriculture sector. The bread and biscuits in the bakery are manufactured with the help of wheat, rice and refined flour which are obtained from the agriculture sector only. This is a positive point for the organisation as it can help the firm in getting raw materials at cheaper rates. Availability of raw materials at cheaper rates can help the organisation in manufacturing superior quality food products that are healthy and customised according to the customers’ needs. The saved costs and revenues can further be used by the organisation in expanding their bakery business all over Ethiopia.
6. Competitive landscape for the company
Before penetrating into the international market of Ethiopia the organisation needs to emphasize analysing the competitive landscape present in the country that can restrict the growth of a business. The main competitor for the “Marshfield Bakery” in Ethiopia will be “Mulmul Bakery” which is located in the Ethiopian city of Addis Ababa. The “Mulmul Bakery” of Ethiopia also provides a variety of bakery products to their customers all over the country. It can be quite difficult for the UK based SME to penetrate into the market of Ethiopia and take the place of its existing rival bakeries. There are about 550 workers present in “Mulmul” bakery among which 55% are female workers (Bakerias.com, 2020). The bakery has been gaining great success with the help of its well trained and experienced workforce. To give tough competition to the “Mulmul bakery” the “Marshfield bakery” of the United Kingdom needs to develop effective global strategic plans.
7. International marketing strategy
The “Marshfield bakery” has been emphasizing expanding their business on a global level and they have been starting from Ethiopia country. The organisation needs to develop various international marketing strategies before penetrating the international market. According to Paul and Mas (2020), international marketing refers to extending the local market of the organisation globally with the help of various strategies. Before penetrating into Ethiopia the organisation needs to learn about the licensing policies of the country. The government of Ethiopia is very supportive of international firms if they follow all their rules and regulations. The organization can adopt the global marketing strategy of campaigns. Through their campaigns, they can make aware people of their superior quality products at affordable prices. The 4P’s of the marketing mix needs to consider for the effective business establishment of “Marshfield Bakery” in Ethiopia. The four P’s of the marketing mix are the product, price, promotion and place (Ikechi et al. 2017). These all four criteria help in establishing an appropriate platform for the business expansion in other countries.
The “Marshfield Bakery” manufactures cakes, bread, biscuits and snack bars in their bakery. As stated by He et al. (2019), product refers to the final product that is manufactured by the business organisation for selling into the market. If the firm wants to establish its business in Ethiopia then the bakery needs to emphasize identifying the taste of the Ethiopian population so that they can easily attract them towards their innovative bakery products.
The organization has been focusing on doing international expansion of their business. The place selected for their expansion is most reliable as it can help the business organization in getting a good customer base because of the presence of a large number of people in the country. The company can 1provide them with delivery services effectively at various places.
Most of the time “Marshfield” used digital marketing techniques and social media for promoting their bakery products but in Ethiopia, the internet is used by fewer people. This has been analyzed with the help of the PESTLE tool. For promoting their products in Ethiopia the “Marshfield Bakery ” can adopt various printing media, FM radio or television for advertising their products. This can help them in attracting more customers to their products and services.
The price of bakery products should be organised low as compared to other bakeries present in the countries. This can help the organization in gaining a good competitive advantage with the help of appropriate setting of prices for the bakery products. After penetrating into the Ethiopian market the “Marshfield Bakery” needs to focus on manufacturing superior quality healthy food products according to the customer’s needs at relatively low prices than other competitors. This can help in enhancing the economic value of the country as well as for the organization.
Recommendation 1: Manufacture innovative and customized food items
The “Marshfield Bakery” can be recommended to manufacture innovative and customized food items that can attract the customers of Ethiopia effectively. They can manufacture cakes according to the customer’s needs, demands and taste. Several other bakery products can also be customised for fulfilling the customer’s demands. The SME can also be suggested to introduce new flavours and innovating delicious bakery products for the customers of the organisation. Innovation and customisation in food items or bakery products can help the business organization in gaining great success in future.
Recommendation 2: Create appropriate relations with suppliers and buyers
The organization can be recommended to create effective and good relations with the suppliers and buyers of Ethiopia. They can make effective relations with them by providing adequate prices to the suppliers and purchasing good quality raw material. The organisation can be suggested to make good relations with the buyers and these can be made by providing them the superior quality of healthy food products at affordable prices. The customers can be attracted through various campaigns, digital media and print media.
Recommendation 3: Use efficient machinery for manufacturing superior quality products
The “Marshfield Bakery;’ can be recommended to use efficient machinery for decreasing the workload of the labourers. Efficient machinery can help in manufacturing bread and biscuits at a steady rate. Appropriate machinery can also help in reducing the labour cost of the organisation. This saved cost can be further used for expanding the business in other parts of Ethiopia and again a good competitive advantage in the market. Dough divider, dough mixer, bread slicer etc. are the necessary equipment that needs to be present in the bakery.
Recommendation 4: Create effective relations with local business firms
The “Marshfield Bakery” can be recommended to develop effective relationships with the other business forms present in the Ethiopian market. This can help in reducing the conflicts that can prevail with other firms present in the market. The organization can also purchase raw materials effectively from the local business firms at fair prices if they are having good relations with the newly established business of “Marshfield Bakery”.
At last, it can be concluded that before penetrating into the market of Ethiopia the “Marshfield Bakery” of the United Kingdom needs to analyze the microenvironment through the PESTLE tool. This can help the firm to get effective knowledge about the market of Ethiopia. For expanding the business into the international market the business organisation needs to develop an international or global marketing strategy. The SME can get benefits in the country because it can provide a good customer base to the company. Various marketing mix and international strategies can be helpful in making penetration of the related organization easy in Ethiopia. There are many areas that needed to be focused on by the organisation before penetrating into the market of Ethiopia. The business of bakeries can only flourish in Ethiopia if they provide quality products to their customers at fair prices.
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