Foreign venture is considered as one of the major and most effectual business strategies for the current business organizations. This is due to the fact that entering in the foreign countries will increase the global presence of the business organizations along with increase in the market share and sales revenue. Furthermore, in the present era of globalization, entering in the foreign markets is more easy and applicable (Giddens 2018). This is also motivating number of contemporary business organizations to enter the foreign markets. However, on the other hand, it is also important for the business organizations to identify and evaluate number of business factors along with the external influencing factors in the selected country. These factors may have both negative as well as positive impacts on the business operation (Boons and Ludeke-Freund 2013). In addition, it is also important for the business organizations to design their business and marketing strategies in regards to the environmental factors in the selected country.
Macoys is a leading frozen food supplier with having their product ranges from frozen cooked rice, pasta and pizza to vegetables and fries. However, though they are having huge market potential in their home country, they do not have their presence in the Asian region (Bigliardi and Galati 2013). However, it is important to have footprint in the Asian region due to the reason that countries in this region are having the major sector of population of the world. It is suggested that Macoys should consider in entering the market of India and China. This is due to the fact that these two countries are the top two countries in the world in terms of population.
This report will discuss about the external business factors that will have influence in the business operation of Macoys in both the countries. PEST analysis will be done for both the countries in order to analyze these factors. Based on the analysis, one country will be selected with more opportunities. Furthermore, marketing strategies including segmentation, targeting and positioning strategies and the marketing mix strategies will be designed for Macoys to operate in the selected country.
India is the largest democratic country in the world with having stable and favorable political environment. This is one of major advantages for the organizations operating in the Indian market due to the reason that stable government and political environment enables the business organizations to operate seamlessly without any major hiccups. According to the global competitiveness index by World Economic Forum, India is having the ranking of 13 in terms of strength of investor protection (Www3.weforum.org 2018). This denotes that risk in relation to the foreign investments in India is less. These will also one of the major advantages for Macoys in investing in India. Under the recent initiative of “Make in India” by the government of India, foreign direct investments are encouraged and are given number of benefits such as tax incentives and special economic zones (Pathak, Swami and Nigam 2016). This will also have positive impact on the business operation of Macoys if they operate in India due to the reason that, with the help of tax incentives and other benefits, the cost of operation or them will get reduced.
However, it should also be noted that there are number of negative factors also to be faced by Macoys in operating in the Indian market. According to global competitiveness index, India is having the ranking of 50 in terms of transparency in government decision making. This denotes that though the government structure is effective and stable but the decision making is inefficient and lack of transparency. According to the global competitiveness index, corruption is being identified as the major problematic factor in doing business in India. Thus, the major problem that will be faced by Macoys in operating in India is corruption. Thus, Macoys may have the challenge of increase in operating cost and facing the lag in receiving business permits due to the presence of corruption (Kandukuri 2015). In addition, corruption will also reduce the speed and efficiency of business operation of Macoys. In addition, it is also being reported that higher tax rates and stringent tax regulations are also major problematic factors in doing business in India. Thus, the more will be the tax regulations and higher rate of taxation, the more will be the cost of operation for Macoys in the Indian market.
Similar to the political environment, economical environment of India is also having both negative and positive factors for the business organizations. One of the major positive factors for Macoys in doing business in India is their recent economic growth. According to the reports, India is the leading country in the world in relation to economic growth (Binswanger-Mkhize 2013). Thus, this can be considered as one of the positive factors for the business organizations due to the reason that the more will be the growth of the economy of the country, the more will be the market and business opportunities for the organizations. It will direct to the increase in the purchasing power of the major population. It is reported that India is currently having growth rate of 7.7 percent as of 2018.
However, it is also being identified that there are some economical factors also being identified that will have adverse impact on the business operation of Macoys. It is reported in the global competiveness index, India is having the ranking of 124 in terms of trade tariffs in the country (Www3.weforum.org 2018). This denotes that Macoys will have to face huge challenge in regards to the trade tariffs in operating in India. This will increase the cost of operation for them. In the index, it is also identified that access to finance is another major problematic factor for doing business in India. Thus, Macoys may have to face the challenge of access to financial resources in their operation.
India is having huge population and they are second largest just after China. Thus, the market opportunities are also more in doing business in India. In addition, it is also being reported that India is having the major portion of younger population in the country. This will help Macoys to have more target customers of them along with more sources of human resources. India is having the lower cost of human resources due to their huge population. Thus, Macoys will also have the advantage the lower cost of operation.
However, on the other hand, the major negative factor that will be faced by Macoys in terms of the social environment is higher rate of poverty in the country. According to the reports, major section of the population of India stays under the poverty line. This denotes that though India is having higher level of population, still the target customers for Macoys will be less. In addition, majority of the population of India is from agricultural sector. However, the frozen food of Macoys will be preferred by the busy professionals that are small in number in India.
Technology is also important for Macoys due to the reason that use of updated technologies will enable Macoys to reduce their operational cost and technological readiness of the country will help them to stores their products and market them more effectively. According to the global competitiveness index, India is having the ranking of 72 in terms of availability of latest technologies (Www3.weforum.org 2018). This denotes that Macoys will face the issue of accessing latest technology in operating in India. In addition, India is having 100th ranking in terms of internet users. Thus, Macoys will not have opportunity to use the online medium extensively. However, India is having the ranking of 29 in terms of innovation. This denotes that India is having the potentiality of developing technologies.
It is also reported that India is having the ranking of 35 in terms of legal efficiency in the country (Www3.weforum.org 2018). This can also be considered as a positive factor for Macoys due to the reason that capable legal framework denotes that organizations will be have legal support in case of unwarranted incidents and probability of irregular and risky legal affairs is less. India is also much liberal in comparison to the some other countries in terms of stringent business regulations. On the other hand, restrictive labor regulations in India are defined as one of the problematic factors in doing business in India.
India is having considerably lower level and intensity of rules and legislations in regards to the environmental protection. Thus, Mocays will have the advantage of adhering less legislations and thus they will have less business complexities (Greenstone and Hanna 2014). However, still they should have to adhere to the environmental protection act, 1986 of India.
China is a communist country with having one party rule. Thus, the democratic and market oriented environment of India will be missed by Macoys in operating in China. One of the major challenges that will be faced by Macoys in operating in the Chinese market is more government control in the business affairs (Teiwes and Sun 2014). However, government spending is also more and huge in China. According to the global competitiveness index, China is having the ranking of 19 in terms of government spending (Www3.weforum.org 2018). Thus, this will help Macoys to have more favorable infrastructure in the country. However, China is having the ranking of 102 in terms of investor protection. This denotes that the risk for Macoys in regards to their investments in China will be more compared to in India.
China is having the ranking of 1 in terms of domestic and foreign market size index and also in terms of GDP. Thus, Macoys will have huge market and business opportunities in doing business in China. In addition, China is witnessing growth rate of 1.6 percent as of 2018. This denotes that economic is growing in China. They are also having ranking of 26 in country credit rating. This shows that China is comparatively a safe country to invest (Www3.weforum.org 2018).
However, it is also identified in the global competiveness index that access to financing is the major problematic factor for doing business in China. Thus, Macoys will have the challenge to have the financial sources in operating in China. In addition, tax rate is also identified as another problematic factor in doing business in China. This will also pose challenge for Macoys.
China is the largest country in the world in terms of population. Thus, Macoys will have the maximum market opportunities in China. According to the report, China is also having the larger share of younger population. However, adult age groups constitute the major section of population of China. Thus, target customers will also be more for Macoys. In addition, China is having the ranking of 47 in terms of secondary education and training (Www3.weforum.org 2018). This denotes that China is having favorable social environment that will further help Macoys to have proper social state of affairs. However, on the other hand, Chinese society is more conservative compared to some other countries. Thus, Macoys should have to initiate adaptive strategy over the standardization strategy.
China is having the ranking of 73 in terms of technological readiness. This is denoting that China is also lagging in terms of availability of updated technologies. In addition, China is having the ranking of 80 in terms of internet users and penetration. Thus, this also shows that China is having lower ranking that will restrict Macoys to leverage on the online mediums. However, it is also identified that China is having the ranking of 28 in terms of innovation in the country (Www3.weforum.org 2018). This can be denoted that Macoys will have potential in leveraging the innovative approach of the country.
China is also having the ranking of 104 in terms of number of procedures to start a business. This is a major challenge for Macoys in starting their business in China. In addition, the restrictive policies of the government will also be major challenge for Macoys in operating in China. In addition, China is having the ranking of 45 in terms of legal efficiency and it denotes that legal affairs in China are not much efficient. In addition, China is also having the ranking of 118 in terms of trade tariffs for the business organizations (Www3.weforum.org 2018). Thus, Macoys will have to face more tariff barriers in operating in the Chinese market.
China is having stricter level of regulations in relation to the environmental protection. This is mainly due to the reason that China is having some of the world’s most polluted cities. Thus, in doing business in China, Macoys will have to adhere with number of regulations and standards in relation to the environmental protection.
The above sections discussed about number of factors of both India and China that will have influence on the business operation of Macoys. From the above analysis, it is recommended that India will be more viable country over China (Cooke, Saini and Wang 2014). There are number of factors being identified I selecting India over China. One of the major factors is economic growth. Currently, India is witnessing growth rate of over 7 percent while China is having growth rate of nearly 2 percent. Thus, Macoys will have more favorable market situation in India compare to China. Another factor is government regulations. India being a free and market dominated country will be beneficial for Macoys in doing business over the restrictive policies in China. India is also well ahead of China in terms of legal efficiency and availability of latest technologies (Kothari, Kotabe and Murphy 2013). Thus, Macoys will have more favorable legal environment as well as technological environment in doing business in India over China. Furthermore, technology plays an important role in business operation of Macoys due to the reason that their frozen food business will only get succeeded in the host country if the country is having proper technological infrastructure.
It is recommended that the target segments of Macoys should get divided in number of further sub-segments. In terms of geographical segmentation, the target segment for Macoys will be the metro cities of India in the first phase. This is due to the reason that customers from the metro cities will be more accustomed with the concept of frozen foods (Khan 2013). In addition, metro cities will have more professionals those will need frozen foods for their lack of time. In terms of demographic segmentation, young professionals’ age between 24 and 40 will be targeted due to the reason that they are having of time and are having the need of readymade foods. In terms of psychographic segmentation, customers with having active personalities and lifestyles will be targeted (Venter, Wright and Dibb 2015). This segment will be more attracted to a new concept such as frozen food.
It is recommended that Macoys should initiate cost leadership and product differentiation strategies to target the customers. Initiation of cost leadership strategies by means of reducing the cost of production will help Macoys to cover more customer segments. In addition, cost leadership strategies will also help Macoy to market it as a necessity items rather than a luxury item (Schlegelmilch 2016). Thus, the sales volumes for Macoys will get increased with the initiation of cost leadership. On the other hand, product differentiation strategy will help Macoys to face less intensity of competition in the Indian market. Currently, there are number of competitors in the same sector operating in the Indian market but they are not the close competitors of Macoys. Thus it is recommended that Macoys should initiate product differentiation strategy in order to reduce the competition and engage the customers by offering unique and distinctive.
It is recommended that Macoys should position their frozen products more as a necessity item than a luxury item. This will ensure that Macoys will have more market coverage and more sales volume. In addition, the concept of frozen foods is new in the Indian market. Thus offering newer products along with affordable price points will help Macoys to attract more customers (Tyagi and Raju 2018). The more will be the products positioned as affordable, the more will be the probability of using the products of Macoys by the customers as the replacement of the traditional items.
|
Product |
· Macoys should first introduce frozen fruits and vegetables in the Indian market. This is due to the reason that fruits and vegetables will have more acceptability in the market. · These should be followed by more up market products that will meet the changing market trend and demand. · It is also recommended that initial products should be adaptive due to the reason that vegetables and fruits in western countries will be different as that in the Indian market (Zhao, Park and Zhou 2014). |
|
Price |
· It is recommended that market penetration pricing strategy should be initiated that will be help to cover more market share (Spann, Fischer and Tellis 2014). · This will also help in increasing the sales volume along with increasing the brand exposure. · Price should be standardized due to the reason that standardized pricing will help Macoys to maintain the existing positioning in the Indian market also (Tan and Sousa 2013). |
|
Promotion |
· It is recommended that Macoys should initiate Omni channel promotional strategy in order to reach out to maximum customers. · However, the focus should be more on traditional medium as India is having less penetration on online medium. · Promotional strategies should be localized in order to cater to local culture and tradition. |
|
Place |
· Omni channel distribution strategy should be initiated (verhoef, Kannan and Inman 2015). · It is also recommended that extensive distribution strategy should be initiated in order to have product availability in each and every corner of the market. · In this case also, offline mediums should be focused more over the online mediums. |
Conclusion
Thus it can be concluded that India is the most viable country for Macoys in doing business in the foreign country. This report discussed about number of external factors of both the countries in order to identify the challenges and opportunities to be faced by Macoys. It is concluded that India will offer more opportunities over China for Macoys. In addition, this report has also discussed about marketing strategies that should be initiated by Macoys in effectively operating in India. This includes the segmentation, targeting, positioning and marketing mix strategies. It is expected that effective implementation of these strategies will help Macoys in having ideal business operation in the Indian market.
Reference
Bigliardi, B. and Galati, F., 2013. Innovation trends in the food industry: the case of functional foods. Trends in Food Science & Technology, 31(2), pp.118-129.
Binswanger-Mkhize, H.P., 2013. The stunted structural transformation of the Indian economy. Economic and Political weekly, 48(26-27), pp.5-13.
Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-the-art and steps towards a research agenda. Journal of Cleaner production, 45, pp.9-19.
Cooke, F.L., Saini, D.S. and Wang, J., 2014. Talent management in China and India: A comparison of management perceptions and human resource practices. Journal of World Business, 49(2), pp.225-235.
Giddens, A., 2018. Globalization. In Sociology of Globalization (pp. 19-26). Routledge.
Greenstone, M. and Hanna, R., 2014. Environmental regulations, air and water pollution, and infant mortality in India. American Economic Review, 104(10), pp.3038-72.
Kandukuri, U., 2015. Corruption in India. Epitome Journals International Journal of Multidisciplinary Research, 1(5).
Khan, T., 2013. STP strategy for New Product Launch-a Work in Progress. International Journal of Business and Management Invention, 2(3), pp.56-65.
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Pathak, S., Swami, S. and Nigam, S., 2016. Make in India campaign’for manufacturing sector: A strategic analysis. IJAR, 2(5), pp.481-486.
Schlegelmilch, B.B., 2016. Segmenting Targeting and Positioning in Global Markets. In Global Marketing Strategy(pp. 63-82). Springer, Cham.
Spann, M., Fischer, M. and Tellis, G.J., 2014. Skimming or penetration? Strategic dynamic pricing for new products. Marketing Science, 34(2), pp.235-249.
Tan, Q. and Sousa, C.M., 2013. International marketing standardization. Management international review, 53(5), pp.711-739.
Teiwes, F.C. and Sun, W., 2014. The End of the Maoist Era: Chinese Politics During the Twilight of the Cultural Revolution, 1972-1976: Chinese Politics During the Twilight of the Cultural Revolution, 1972-1976. Routledge.
Tradingeconomics.com (2018). TRADING ECONOMICS | 20 million INDICATORS FROM 196 COUNTRIES. [online] Tradingeconomics.com. Available at: https://tradingeconomics.com/ [Accessed 16 Jul. 2018].
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Venter, P., Wright, A. and Dibb, S., 2015. Performing market segmentation: a performative perspective. Journal of Marketing Management, 31(1-2), pp.62-83.
Verhoef, P.C., Kannan, P.K. and Inman, J.J., 2015. From multi-channel retailing to omni-channel retailing: introduction to the special issue on multi-channel retailing. Journal of retailing, 91(2), pp.174-181.
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Zhao, M., Park, S.H. and Zhou, N., 2014. MNC strategy and social adaptation in emerging markets. Journal of International Business Studies, 45(7), pp.842-861.
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