Rahat continental was established in 1986 to deliver complete supply chain solutions. The core activity of company is freight forwarding. Now the company is thinking to expand it’s operations in UK by setting up an e-commerce platform to sell organic cotton wear for infants (0-2 years). The company also intends to get a supplier from India who is expert in manufacturing cotton infant wear. It is likely to make use of reputation of UK as consistency and transparency.
The present business situation
Currently Rahat Continental offers air service. The company is committed to provide safe, reliable and cost effective delivery of consignments. Rahat Continental is a registered agent under IATA. It has access to all the major airlines which offers modest prices to clients. The company is expert in moving single or complex shipments by air at any time and at any destination (Boonekamp & Burghouwt, 2017).
Products
Now the company is planning set up an e-commerce platform in UK to sell organic cotton wear for babies. The company wants to establish such platform with the aim of producing quality and highly comfortable clothes for infants (Vahlne & Johanson, 2017). It is well known that quality is a key factor in selling brand. The company also expects to sell not only in UK but in other parts of world also. The products of company cover organic cotton wears for infants (0-2 years). The company keeps in mind several factors like fit, comfort, price, style, durability, softness, color, sustainability and more.
The Vision statement
The vision of the company is to establish a clothing line which will not only be accepted in UK, but in other parts of world also.
The mission statement
The mission of the company is setup a clothing line which will make available wide range of organic cotton clothes for infants (Cho & Han, 2015). A clothing line which can compete with international clothing lines like Pact, Kate Quinn Organics, Mini Mioche L’ovedbaby, Penguin Organics and Hanna Andersson.
Marketing goals
The marketing goals of Rahat Continental are closely related to it’s mission statement. It aims to establish a clothing line which is to make a clothing label that can efficiently compete with the international brands (Picciotto, 2017). The company has also set out the goals to be achieved:
The company wants to achieve from market efforts:
Marketing budget
The ultimate goal of the company is to establish a clothing line like the well established companies in UK, Under the Nile, From Babies With Love, Little Green Radicals and Penguin organics at the global level which means the company is supposed to spend more on marketing the clothing line. So, Rahat Continental has set a budget of 35,685 £ for marketing it’s products. Further the company also plans to increase budget 10-15% of the annual income towards marketing.
Core competencies
Rahat Continental can use it’s core competencies to achieve sustainable competitive advantage in which company provide different value than competitors. The company can develop core competencies in:
Offer good product quality which is easily recognizable among customers.
Create a sense of community among consumers.
Develop a reputation among retailers by delivering products on schedule.
Situation analysis
The market environment for Rahat Continental can overwhelm opportunities. It can easily face challenges as; the company has already brand identification. SWOT analysis of company in UK:
Strength: UK is the largest economy in Europe and is adaptable to a wide range of trading platforms. The country has good relations with both importers and exporters. Rahat Continental can enter as a joint venture to expand it’s business. The country receives plenty of Foreign Direct Investment (FDI) from other countries so Rahat Continental has numerous advantage of setting up business in UK. The country has also political stability as well (Bull, et.al. 2016).
Weakness: The country has high cost of labor which results in high investment to the companies. There is poor level of innovation. There is also income disparity between poor and wealthy individuals. The rate of inflation is also rising in the country which creates obstacle for setting up a new company.
Opportunities: UK has high population which encourages companies to produce more. The country also has open door policy for the foreign businesses which attracts Rahat Continental to set up business in country. The economic easing policies are helpful in doing business (Wiedersheim-Paul &Johanson, 2017).
Threats: The changes in the regulatory environment as parliament get dominance can create threat for the company. There are various competitors in the market such as Pact, Kate Quinn Organics, Penguin Organics, Hanna Andersson and more. Increase in tax rates and economic downturn are equally harmful for the company (Santos & Laczniak, 2015).
Competitors
The retail sale industries sell organic baby wear about £3 billion annually. Pact, Kate Quinn Organics, Mini Mioche L’ovedbaby, Penguin Organics and Hanna Andersson are the competitors which offer the same products. Rahat Continental can be positive for several reasons. First, the consumers are focusing on cotton wear for their babies due to comfort. Second, the cotton wears are cost effective and consumers look for such clothes without overspending. Third, the cotton wears are gaining more importance in economy and people are willing to spend more on such clothes. The clothing of Rahat Continental is tentative to be the highest quality cotton. Finally the company is also going to offer wears at moderate prices.
The company also initiated and conducted survey which reveals that more than 50% consumers prefer to purchase more cotton wear for their babies. The trend towards organic cotton clothes is also growing as a result people purchase more of such clothes (Penrose, 2017.).
The target market
The target market for Rahat Continental is infants of 0-2 years. The supportive target audience will be their parents because the sales can only be increased by targeting parents. The company aims to provide comfort and stylish clothes for infants. The active consumers represent a demographic group of well-educated parents and raised families. The household income generally ranges from £60,000 to £120,000 annually. There are some customers who are status oriented despite that they are highly concerned for prices (Ryding, Vignali, Carey & Wu, 2015).
The marketing Mix
Rahat Continental can use this marketing mix:
Product Strategy: The Rahat Continental intends to offer high quality products from tee shirts to rompers. Over the next five years, the company also plans to expand it’s product line and plans to include customized clothing items. The customers will be able to choose logo and slogans by themselves. This strategy can be helpful in keeping the concept fresh. The second company can expand it’s product line is by offering light weight luggage back for mother of new born babies. It can be made available in two sizes, tote bags and daypack. These can be made available in trendy colours and in nursery prints. In addition, the company can bear the logo of company (Huang & Sarigöllü, 2014).
Distribution strategy: Rahat Continental can market through regional and local shops. The company can obtain information from different geographic areas about the overall industry. In the coming years the company can expand it’s distribution system to retail shops throughout the nation. The company can also plan to expand online sales. The company intends to monitor and maintain relationship with the members of distribution channels.
Promotional strategy: the company can communicate in a variety of ways by internet, mails and in person. The promotional efforts of company focuses on differentiate it’s products from competitors. The company can rely on personal contact with retailers for establishing products in their stores. The sale representatives can be appointed to visit store to offer training on the features of products for the retailers.
Pricing strategy: The products should be priced to keep competition in mind. Rahat Continental is not concerned about keeping high prices, nor is trying to keep low prices by selling high quantity of products. The customized clothes can help in increasing profits as the company can over charge for such clothes (Bahadir, Bharadwaj & Srivastava, 2015).
The key business drivers behind expansion of company in UK can be assumed as:
Low tax rate for foreign investors:
The taxation system is most of the complicated factors for the global expansion of companies. The taxation system of UK is pretty simple when it is compared to other foreign markets. The corporate tax in country was 50% in 1980 and is continuously decreasing from then. It reached to 28% in 2008. Currently the corporation tax is 20%. It is the lowest in G20 (the world’s largest 20 economies). Value Added Tax (VAT) is paid on the goods and services supplied in UK. So, when the products will be supplied by Rahat Continental in UK than VAT will be charged at the rate of 20%.
Infrastructure development:
UK has strong infrastructure which is helpful for Rahat Continental to grow business. The country has made investment of £120 billion to improve transportation system of country. The country has already largest air transport system, second largest ports industry and most improved rail network in Europe. The country has also initiated seven year investment programme to make improvement in road. The rail projects of country includes, cross rail and high speed 2.
Registering business in UK:
For setting up business in UK, the company is required to register with Companies House. There are regulations for the names of business. It takes £20 and about 24 hours to register with Companies House.
Skills and recruitment:
The country has workforce over 30 million people. UK expects growth of labour supply in the next 15 years. The country has flexible labour market with strong skills. It has also designed regulations to protect employees. As per the labour law, companies can hire staff according to their need. The labour cost of country is the most competitive and lower than other countries. It is helped by the contribution of low employer social security (Clougherty, Kim, Skousen & Szücs, 2017).
Entrepreneurs
UK takes initiative for the persons who want to set up business. The entrepreneurs are supported by entrepreneur programmes. These programmes are global entrepreneur programme and Sirius programme. These both programmes are helpful in start-up business or ideas (Hong, Wang & Kafouros, 2015).
The trade protectionist policies are used to limit imports and promote exports. It can be done by putting up barriers to trade.
Imbalanced restrictions:
The foreign companies face imbalanced restrictions while the companies of UK are offered financial advantages. As a result the consumers end up paying higher prices for the products that do not worth their costs.
Limits consumer access:
Due to several restrictions on foreign and non-domestic companies the access of consumers towards such products become limited. However the unique products and services are provided by the foreign companies (Egan & Guimarães, 2017).
Consumers pay more with protectionism:
The protectionism leads to market distortion and loss of allocative efficiency. The tariffs increase the price for consumers and isolates unproductive sector from the genuine competition. The foreign producers are penalised and encourages an inefficient allocation of resources both domestically and globally. The trade protectionist policies affect export subsidies and damages output, investment and earnings of the foreign company which relies on exporting primary and manufactured goods for the growth. As a result, the foreign companies such as Rahat Continental are penalised and inefficient allocation of resources is encouraged.
Less protection to foreign companies:
The government provides more protection to domestic companies and builds corporate contentment which gives a business pleasant safety in the situation of strong foreign competition. However the foreign companies do not have the necessary sources to survive (Gaul, 2016).
Revenge reaction:
The protectionist policies can cause revenge reaction from UK. It ruins the vital relationship between the countries. For instance, the deteriorating relationship between two countries can put boundaries on the foreign country for exporting or doing business in the UK economy.
No subsidies and loans:
The UK government provides loan and subsidies to the domestic companies which are not able to compete against foreign companies. Such actions detain the market by giving more benefits to the domestic companies than the foreign companies. It causes penalties to foreign business. The trade protectionist policies initiate steps towards anti-globalization (Demir & Sepli, 2017).
Rahat Continental can face many issues at the time of expansion in UK market. These issues should be avoided on high priority to avoid any conflict. The use of internet material, gatherings, processing and supply are some ethical, social and legal issues which can be faced at the time of expansion. The online business of company is a reflection of how ethical standards are applied because ethics have an immense effect on the business (McGoldrick, Gruber, Schlegelmilch & Newholm, 2015). It affects the profitability of company as a result the brand image of company is affected for the long time.
The company can face issues in operations. There are some activities of business which can be considered immoral such as working conditions, environmental impacts, and wages. Sometimes it happens that the company cannot adhere to the contractual conditions. The company influences society by the way of advertising. The company can face ethical and social responsibilities to use marketing power. The major legal and ethical issues can faced with property issues. The trade secret protection method is helpful in protecting ownership of any idea and keeping ideas as secret. There is also concern of using any copyright material on website. There are many issues which can be found in ecommerce websites such as e-commerce, tariffs, privacy, international copyright and many more.
There are some cross-cultural issues which can be faced by Rahat Continental in UK.
Inadequate trust: The Rahat Continental will be new for the UK economy. In such a scenario it is not easy to develop trust for the local customers. The consumers rely more on the local companies than outside companies due to trust issues (De Mooij, 2015). It takes time to attain trust of customers. It is the quality of product, reasonable price and best service which can develop trust and can bring customers back.
Perception: UK is a developed country. The people from UK economy consider that the products of developing country like India are inferior. In such a scenario the company can face rejection from local customers. It takes time to prove product quality and change perception of consumers.
Inaccurate biases: Biases is a vital issue in business world because the international trade depends upon interaction of employees from different culture and regions (López?Duarte, Vidal?Suárez & González?Díaz, 2016). It is also assumed that Japanese make decisions in group while Indians do not deliver on time are biases of cross cultural. Such biases form cross cultural issues.
Different ethical standards: Rahat Continental can face fundamental ethical issues such as trust and integrity. It hugely contributes to the functioning and success of company. The diversity in the workplace creates difference in character, strength and efficiency. The governance and compliance also creates complexity for the success of company.
The e-commerce option versus other methods of expansion
There are various e-commerce options in UK such as
Mobile commerce:
The customers make use of mobile at every point of purchase. The mobile shopping experience has improved as searches for merchandise, price comparisons, ordering and paying to continue intensely rise. UK has the highest mobile spending and mobile penetration rate. It represents incredible opportunity for m-commerce (Turban, et. al. 2018).
Social commerce:
A huge number of people use social networks like Facebook and Instagram. The popularity has also increased due to bloggers and YouTube personalities, who help to promote products of company. Facebook is continue to upgrade it’s shopping tab and has designed service exclusively for small business enterprises. It promotes easy to buy functionality. The brands can insert external links in the posts put by them on Instagram.
Omni channel retailing:
Omni channel retailing is a multichannel approach which seeks to provide customers a seamless shopping experience (Ailawadi & Farris, 2017). The customer can shop from any shopping channel whether it is in-store, in app or online. According to the report of Centre for Retail Search, the online sales accounted for 10.7% of total retail sales in 2014 (Ecommerce News Europe, 2017).
Location for business:
Rahat Continental can easily get a commercial premise on rent in most of the areas of country. Some business activities are restricted for the allocation of areas and require special approval. It is also easy to build premise. According to the report of World Bank, it is easy to obtain construction permits and planning permission in UK.
Other methods of expansion
Joint venture:
Rahat continental can acquire or invest in an existing business in UK which operates in the target market. Joint venture can be helpful for Rahat Continental as existing company can provide information about culture, language and legislation of the country (Monios & Bergqvist, 2015).
Exporting:
Rahat Continental can take direct order from the customers of UK and can ship them to the destination. The company can expanse it’s business from the home country without setting up in UK (Love, Roper & Zhou, 2016).
Franchise:
Rahat Continental can make expansion in UK by making use of franchise. The company can sale it’s franchise to any dealer of UK. That dealer get the right of using brand, it’s process, techniques and right to sell products and services (Dada, Watson & Kirby, 2015).
Selling via overseas agents:
A contract can be made with agency or distributors. They can buy stock from the company and meet local demand. The customers are owned by the agencies (Love & Roper, 2015). The distributors keep a margin.
The suitable options of expansion for Rahat Continental are other methods that are joint venture, exporting, franchise or selling via agents. The e-commerce options can be risky for the company because it is already not established in the home country as it carries on the air freight service in the home country. So, the manufacturing of organic cotton wear is comparatively new for the company. Other methods of expansion can provide better results to company. The established companies can better guide to the company about the economy and trends of UK.
There are various aspects which should be considered before entering in the international market:
Research:
The research should be made before planning to launch product in the international market. There are various details which should be properly investigated such as cost and labelling of product. In the case of Rahat Continental it can consider various aspects like trend of baby cotton wear, range and the competitors leading in the market (Samiee, Chabowski & Hult, 2015).
Product localisation:
The information should be collected on the packaging of products such as label language, type of packing are sold in the targeted market. An appropriate choice should be made for the colour and output size (Brito, et. al. 2015).
Communication:
The communication is required to be made to produce according to the need of local market. The marketing communication should be tailored time on time.
Inbound marketing:
The inbound marketing considers that when the buyers need information they can get it by using internet. They do not need to visit online brochures or websites. The company can make use of Google as it keeps the fresh and high quality content (Royo-Vela & Hünermund, 2016). The regular additions are made on it.
Outbound marketing:
The outbound marketing is a set of various tools such as emails and messages. It can be used to broadcast message in the target market. The internationalisation of business can provide higher return on investments by making use of outbound marketing (Bleoju, Capatina, Rancati & Lesca, 2016).
UK is considered as one of the best countries to start up a business. But the effects of Brexit could bring change in this consideration. The campaigners of Brexit have optimistic predictions for Britain but there is no trade prevailing between UK and EU. The organisations were affected which used to import raw material from Germany. Since, there is no trade between UK and EU the local manufactures were affected. If we talk about Rahat Continental, the company intends to set up business in UK. There will be no impact of Brexit because the company will either import raw material from home country or it will direct sell products manufactured and produced in India.
Conclusion
In the above report, the strategy proposal for Rahat Continental is prepared by undertaking extensive and relevant market research. The report has defined the business drivers which can be held responsible for the expansion of company in UK. The barriers to trade and protectionist policies are also discussed which can obstruct the company. Various issues have been taken into account such as ethical, social, legal and cross cultural issues. Finally the feasibility of company of the company is judged by taking into account methods of expansion, aspects of international marketing and potential impact of Brexit. The company can freely and smoothly conduct it’s business of organic cotton wear in UK as there will be no impact of Brexit on company
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