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Emerging Market Analysis: The Natural Confectionery Company Pty. Limited

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Table of Contents
Introduction...............................................................................................................................................3
Background................................................................................................................................................3
Target Foreign Market.............................................................................................................................3
Theories & Concepts in Strategy Design.................................................................................................4
Options for Market Entry.........................................................................................................................7
International Business Strategy Choice...................................................................................................9
Strategic Implications of Purchasing a Foreign Company...................................................................11
Conclusion................................................................................................................................................12
References................................................................................................................................................13
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Emerging Market Analysis: The Natural Confectionery Company Pty. Limited

Introduction
Entering a foreign market is tough despite being beneficial for business. For Natural

Confectionery Company an Australian company specializing in the manufacture of sours, chews,

soft jellies, and soft licorice sticks penetrating the Singapore market is not an easy task. The

company needs to devise an appropriate business strategy considering the Singapore business

environment. The company needs to consider several business strategies to choose the best

business strategy of the business. The essay below is about selecting the best business strategy

that the company will employ after considering several business strategies keeping in mind

business environmental considerations in Singapore to implement for a smooth entrance into the

Singapore market.

Background
The Natural Confectionery Company is an Australian company that was founded in 1941

by Walter Eager and Julius Lighton (Bloomberg, 2019). The company specializes in the

production of sours, chews, soft licorice sticks and sweet jellies. The company is headquartered

in Melbourne Australia operating in New Zealand and Australia. The company has the financial

capacity to compete for match other international competitors’ in the market and expand beyond

the Australian and New Zealand market. The company ability can venture in other international

countries like Germany, China, USA, and Singapore.

Target Foreign Market

Natural Confectionery Company has decided to the venture in Singapore in the bid to

expand its international market. The company has opted for venturing in Singapore due to the

popularity of the products that the company offers that include sours, chews, soft licorice sticks,
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and sweet jellies. Another reason why the company ventured in the Singapore market is that the

economic status of the country is stable meaning that people in the country have the financial

ability to purchase the company products. The economic stability of the country is also a

guarantee that Singapore has good regulatory policies as well as social and political policies in

place that favor business. Singapore has sound governmental policies that support a company

that is in line with the policies created by Asia-Pacific Economic Cooperation. The government

policies in Singapore that are in line with Asia Pacific Economic Cooperation allow for adequate

processing business operational licenses reduce corruption, reduce the crime rate and foster

peace. The peaceful coexistence in the country provides for smooth operations of the business.

The location of Singapore between Asia and Europe guarantees affordable are active labor for

the company in the country. The availability of labor for the company guarantees the company

ample production to cater for the Singapore market.

Theories & Concepts in Strategy Design

For the company to select the best business strategy to venture into the Singapore market,

it will have to consider theories and concepts. One of the theories that relate to business strategy

the company will have to consider is the low-cost provider strategy. Natural Confectionery

Company should keep in consideration the low-cost provider strategy that focuses on reducing

the prices of their products to increase their demand in the market. Naturally lowering the prices

of commodities in the market increases the number of consumers applying the concept of price

elasticity. By making sure that the products of the company in Singapore are lower than their

competitors in the industry many consumers will possibly opt for the company products at the

expense of the competitors. Doing so, the company can make huge sales and in the end make

huge profits enjoying the economy of scale. Despite the lowering of prices of their products than
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their competitors, the strategy has several disadvantages that should be considered. One of the

main disadvantages associated with the lowering of prices is that a product would always be

associated with a low quality perception of the product in the market (Kim, 1992). Low pricing

of the products by the company will make consumers in the Singapore market will assume that

the product is of inferior quality compared to their competitors. In such a case consumers will

prefer to pay for higher prices and get quality products and forgo the company cheap products.

The consumers in the country will also assume that the products the company offers a lack of

authenticity. Consumers will assume that the company products are substandard and opt for

similar products in the market that will come at a higher cost with the assumed guarantee of

quality (Kim, 1992).

In the event, the company will adopt the low pricing strategy in the demanding Singapore

market consumers will assume that the company offers low-quality services to the customers and

our for similar products from their competitors. Low prices are associated with low-quality

services, and customers are always striving for high-quality products in the market. Potential

clients in the Singapore industry will prefer similar products in the market by Natural

Confectionery Company competitors that are more expensive for they will be of the assumption

that they will be getting quality services. Low pricing will make customers in the country to have

less assurance about the company’s products in the market.

Michael Porter’s strategies is another business strategy that the company will have to

consider. Porter’s strategies of gaining competitive advantage include cost leadership, cost focus,

differentiation, and differentiation focus. The company can consider the business strategy of cost

leadership strategy that focuses on reducing the production cost allowing the company to afford

discounts to customers thereby enjoying the economies of scale. The company is employing the
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strategy can afford to offer customers products at a lower cost. The company can as well

consider the differentiation strategy of producing value-added premium products and charging a

premium price in the market maximizing on profits by its competitors. Employing a strategy will

require the company to focus on producing high-quality products to build a brand name. The

company can also consider cost focus as a strategy in Singapore in the industry which will focus

on reducing the cost production and the price of their commodities to specifically targeted

consumers.

Another strategy that the company can consider is differentiation segment whereby it can

focus on a specific segment of customers to provide them with premium products. The strategy is

effective in that it guarantees high profits from higher prices of commodities. Other strategies to

consider by the company include product portfolio strategies. The portfolio strategies include

product classification in terms of stars, cash cows, question marks and dogs. The company can

focus on ensuring their products star in the Singapore market to leaders in the market and enjoy

huge profits. For the products of the company to remain stars; however, they should on investing

in their products in terms of marketing and production.

The company can also consider producing cash cow products in the market that require

low investments in terms of production and marketing but generate significant profits. However,

cash cows require close monitoring to ensure they are more productive. Question marks are the

other products the company consider to provide customers in the market which are products in

the market that have the potential to grow into stars if they are properly managed but are

ambiguous. However, the products are risky as they can easily flop in the market due to their

unpredictable nature.
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Dogs is the other classification of products in the market are unprofitable and not worthy

of investing in that the company can consider even though they are far less appealing. The

company should come up with a product that is a mix of stars, cash cows and question marks to

be a success in the Singapore market. The can be can as well consider strategic management

models while venturing in the Singapore market to have a competitive advantage over their

competitors. One of the strategic management models included resource based reviews helps

companies to identify the resources it controls that can make it enjoy a competitive advantage in

the market. The company will have to identify the unique resources that will help them enjoy a

competitive advantage in the market.

Another strategic management tool that the company can employ is a stakeholder review

that analyzes stakeholders and can help the company to prioritize stakeholders that are important

to the company in terms of production. The company should also carry out a SWOT analysis that

will help in coming up with informed decision making in the market increasing their

productivity. The SWOT analysis will involve analysis on the company’s strengths to maximize,

weakness to come up with mitigate measures and identifying the opportunities that the company

can exploit in the Singapore market to maximize on profitability. The analysis will also involve

identifying the threats the company will face in Singapore and come up with solutions.

Options for Market Entry

Natural Confectionery Company has several options for market entry. One of the

possibilities of market entry that the company can employ is directly exporting that involves

selling their products directly into the chosen through sales agents. The entry method involves

setting up a sales program by companies with distributors and sales representing the companies

in terms of making sales. Agents and distributors work mutually with the company to represent
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their interests. Distributors and sales agents are the faces of the company; there is a need by the

companies to hire competent and well skilled professional. The main advantage of the entry

options is that it cuts the cost associated with warehousing and the distribution cost as it assigned

distributors. It also reduces the cost associated with hiring as the majority of sales agents are paid

on commission. The main disadvantage of the entry options is that it will hinder a business from

receiving direct feedback from consumer (Gazaniol, 2015). The entry option can be a disaster in

the event the hired salespersons and distributors are incompetent resulting in huge losses.

Partnering is another entry option that the company can employ. Partnering can be in different

forms including a simple co-marketing partnership or a complicated alliance for production.

Partnering is a crucial strategy in markets where the culture, both business and social, is

substantively different than your own as local partners bring local market knowledge, contacts

and if chosen wisely customers.

Another strategy that a company can employ is buying a company. Buying a company

involves purchasing a local company by an international market planning to venture in the

foreign market. The main strategy advantage of the entry option is that it allows foreign markets

that have a substantial market share by buying a local company with a large percentage. The

entry mode will enable companies to penetrate foreign markets that are difficult to penetrate due

to government regulations that do not favor foreign companies. Some countries have business

policies that do not support international business particularly foreign companies. Buying a local

company can help global companies to avoid such unfriendly government red tapes n setting up

shop in such countries. Purchasing a foreign company will serve as a proxy for the international

company to penetrate such rigid markets (Gazaniol, 2015). However, the main disadvantage

associated with the entry option is that it is always difficult for foreign global companies to
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determine the value of a local firm. Overestimating the benefits of a local firm by the

international company will lead to substantial losses that will be associated with buying the local

market, and the operational cost of the business in case it starts its operation. Wrong selection of

the local company to purchase could be disastrous for the foreign international company in terms

of market penetration. Other advantages associated with the market entry method is that it gives

the global overseas market of the status of the local market demographics understanding how to

maximize on the local markets. The international business will also understand and easily settle

in the foreign market by appreciating how the local government agencies relate to business

functions and consumer behavior. Buying a local company together with the existing employees

also help foreign international companies to retain the best employee who can deliver massive

output in the local market.

International Business Strategy Choice

Employing the option of purchasing a company is the best market entry option the

company will apply. For the company to implement the market option, the company will first

have to determine the value of existing companies in Singapore that ventures in production of

sours, chews, soft licorice sticks and sweet jellies to select the company with the highest value in

the market to purchase.

Upon purchasing the company with the best value in the market, the company will move

forward and start their operations in the country. The business entry model in Singapore by the

company will be useful in that the Australian company will instantly claim the market share the

local company will already have. The company will not have started from scratch in terms of

heavily investing in marketing to solicit customer base (Kim, 1992). The company will have a

large number of customers in the country immediately if they purchase the company with the
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highest number of customer values in the country. The company will save high cost that could be

associated with the marketing of the company products which will be new in the market. Selling

their products under an umbrella of the previous company will make it easy for Singapore

customers to accept their products for they are loyal to the local company.

Through the purchase, the Natural Confectionery Company will mostly like retain the

majority of the local company’s employees allowing for a smooth transition and consistency

performance. The company will also highly benefit in terms of getting readily available labor

enabling the company to fit in the Singapore market smoothly. The company might employ a

managing director to monitor the existing employees of the local company to make sure that

their production in line with company mission and vision. The company can as well hire other

department employees to help the managing director who will be working closely with existing

managers of the local company to help in a smooth transition in terms of a slight shift in

production to deliver products of similar quality like the Australian company.

Purchase of a local company in Singapore will also mean that Natural Confectionary will

set up initiatives targeting to maintain its existing customer base through employ marketing and

advertising strategies targeting to maintain the existing customers’ base. The company will also

focus on producing products that meet the current customer's demands and attract more

customers to purchase their products. The advertisement employed by the company in this sense

should relate to the local customers and should have a local appeal. The company will have to

produce quality goods in the market to maintain the existing brand name that the local company

has established. The practice will allow the company to come up with the right pricing strategies

in the market to keep the brand name the local company has created in the market. Therefore, the

company will easily fit in the Singapore market in that, it will not have to deal with regulations
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in the market that will make it difficult for newcomers in the business (Kim, 1992). The

company will be readily accepted by the Singapore government making it have the favor of the

government in terms of policies. Having a sound business policy will guarantee them definite

business success in the market. The entry option will make the company to be readily accepted

in Singapore by the locals and government in general.

Strategic Implications of Purchasing a Foreign Company

Entering the Singapore market by Natural Confectionery Company through buying a

local company will involve assembling various resources to implement the strategy. The

company will come up with a sound organizational structure to put together a that is led by a

human resource department focusing on employee develop to cultivate leaders through employee

training with the help of financial resources. The company will send a human resource team from

the headquarters who will help in the training of the local company employees on production and

leadership skill to deliver quality products and to cultivate future leaders.

Natural Confectionary Company will also send a managing director to guide a similar

organizational structure as the mother company and to monitor its implementation for higher

productivity keeping in mind the environmental consideration such as technology and

government policies. The company pump in financial resources in terms of wages, production,

marketing, employee training, supply and distribution of their products. The main risk associated

with implementing the strategy is that integrating the new employees from the company and

local company might prove difficult in terms of unity and working in harmony to deliver quality

services and products. Another issue associated with the strategy is wrong valuation of the local

company to buy might result in high losses in term of purchasing cost and inheriting the actual

losses of the local company.

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Conclusion
In conclusion, for the company to smoothly penetrate the local Singapore market, it will

have to consider several strategic business strategies. The company should consider crucial

concept such as the SWOT analysis of the company to determine their possible success in the

local market. The company should evaluate several strategic business entry options to determine

the best business option to use penetrating the local marketing Singapore. It also crucial for the

company to keep in mind the resources need for perfect penetration of the local market not

forgetting the risk associated with applying the entry option. In the case of Singapore, a local

business will be the best entry option.

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References
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