The rationale of this report is to analyse the marketing information and facts of a company in UAE that is planning to enter an international market. The company chosen for this report is Anfasic Dokhoon that plans to start its operations in Tunis, Tunisia. The report contains the background of the Anfasic Dokhoon Company and the market analysis in Tunisia. The report also provides the marketing mix of the company as well as the staffing policies that would enable it to compete fairly in the international market. The potential suitability of various market entry strategies available to the company is also analysed. The report ends by choosing a strategy for international business operations that the firm should adopt.
2.0 Anfasic Dokhoon Company background
The company started in 2007 in the United Arab Emirates. It is a retail company with operations in the Gulf Corporation Council (GCC) that comprises the United Arab Emirates, KSA Yemen, Kuwait, Oman, and Qatar. It is a public retail company with its headquarters in Dubai, United Arab Emirates . The company offers products and services ranging from perfumes, Beauty, Retail and luxury. Anfasic Dokhoon Company aims at providing affordable products and luxury and provision of the best products on every occasion the company participates.
3.0 Tunis market analysis
3.10 Extended factors
3.11 Political stability
Tunisia has a relatively stable political environment to do business. The country has a constitution that guides it. The political stability would enable the company to conduct its activities with confidence. Political instability limits the level of investment of any business in the international market. An unstable government does not proof to offer security to foreign firms hence the fear of making losses or reduced profit . The suitability scale of entering the Tunis market is 6/10.
3.12 Free market system
Tunisia has relatively free market system. The presence of a free market system makes the country attractive to international firms. A free market system enables companies to enter the market without much government interferences. argue that a free market system would enable the company to compete fairly in the international market to secure customers of its products and services. However, the state-owned companies interfere with the economy. The government of Tunisia screens most of the foreign firms entering the market. The state dominates the financial sector. The suitability scale for market entry is 6/10.
3.13 Inflation
The level of inflation in Tunisia currently stands at 3.3%. However, the inflation rate is expected to increase to 4.5% by 2010 . The level of inflation in this country is therefore relatively low making the Tunisian market reasonably attractive. The relatively low levels of inflation translate to stability in the prices of commodities hence making it possible to forecast the companies earning in the future. The ability to predict the future enables strategic planning of the enterprise. The suitability scale of entering the market based on inflation rates is 7/10.
3.14 Corruption levels
According to a research conducted by the Transparency International in 2015 the country had a 38% transparency indicating a high corruption level. The high level of corruption is likely to affect the firm negatively since the officials involved in processing the paperwork may ask for bribe from the company. Failure to provide the bribe may cause delay in entering the market. The suitability index is 5/10.
3.15 Private sector debts
The private sector debt in Tunisia was $11.6 billion by 2015 translating into 26% of the country gross domestic product. The level is relatively high meaning that most financial institutions and individuals prefers to lend to the government scaring away private investors from undertaking profitable ventures. The suitability index is 5/10.
3.16 Trade barriers
The government of Tunisia has put in place both tariff and non-tariff barriers to restrict entry into their market. The country imposes custom and import duty to ensure that it reduces the number of goods and foreign companies entering the market. The restrictions will affect the company since it has to comply with all the requirements to guarantee its entry in Tunisia. The suitability index of this factor is 6/10.
3.20 Customer/competitor based factors that make the country attractive.
3.21 product availability
The products and services offered by other companies in the Tunisian market still leave a gap in meeting the needs of the customers. Entrance into the market by Anfasic Dokhoon Company would help to bridge this gap. states that the ability of the company to close the gap between the customer needs and supply in the market offers a company a ready market. The presence of a ready market assures the company of profits hence a suitable market. A market that provides a ready market for products and serves enables a company to expand within a considerably short time. The suitability of the market based on this factor is 8/10.
3.22 The level of existing competition
The levels of competition in the industry are relatively low giving the company an upper hand if it enters the market. Less competition enables a company to have a significant market in the market. The Minimal competition will enable the company to create loyalty among its customers who will play a crucial role in increasing revenues hence expansion. The company should aim at offering quality products at affordable prices to expand its customer base. A scale of 8/10 exists on the suitability of venturing into the market based on this factor .
3.23 Efficiency and value of existing competitors
The efficiency and value of the existing competitors are relatively low in the target market. The company will have a competitive advantage as it will enter the market with efficiency and offer quality products to the people of Tunisia. All rational individuals aim at purchasing quality products at affordable prices to maximize the utility. Based on this factor the market attractiveness scale is 7/10.
3.30 Industry and business related factors
3.31 Suitable labour force availability
Tunisia has labour force availability. Labour is a significant factor of production in any industry. The company after entering the target market, affordable manpower will enable it to continue with its expansion plans in the foreign market . Availability of affordable labour ensures continuous operations of the company in the international market. The scale of this factor in the target market is 8/10.
3.32 Business core competences
The company has key competencies that will enable it to enter the foreign market successfully. The company has the ability of produce quality products at affordable prices. The company also has adopted the modern technology in production methods which reduces production overheads significantly. The motivation and competence of managers and the current employees will also enable the company to expand in the Tunisian market. The suitability of the prospect market based on this factor has a scale of 8/10.
3.33 Rate of expansion required
The strategies of the company are based on expansion and securing a significant market share. The target of the firm is to achieve growth and development in the foreign market. Market research and current innovation in the manufacture of perfumes by the company will boost its success in the prospect market. Business strategies aimed at expansion and increasing the customer base will facilitate a company’s plan to succeed in the market . The scale based on the suitability of this factor is 8/10.
3.34 Cost of establishment
The cost of establishing the company in the Tunisian market will be affordable to the business. The business has a high capital base as it is a public company in the United Arab Emirates. The current level assets enable the company to set aside money to start operations in the new market. Limited capital is a common challenge to many firms wishing to go international . Activities in a foreign country entail massive capital expenditures especially when Foreign Direct Investment is adopted. The scale of this factor is 7/10.
3.35 Transport costs
Tunisia has a well developed infrastructure that promotes transportation of goods to all markets around the country. The company will therefore incur less transportation costs since there are available means to transport goods to the markets. The suitability index is 7/10.
3.36 Level of Centralized Control Required
Most of the companies in Tunisia both public and private have a centralized system. The company needs a centralized control system. The cost of setting a centralized control system is high and, therefore, the firm will be required to set enough funds for its administration operations. The suitability index of this factor is 7/10.
The schedule of the 10 factors and their impact on business
4.1 Product
According to , the marketing mix of a company is concerned with the product features, the place, promotion and pricing strategy. The perfume products produced by the company should be of high quality. The product should also meet the expectations of the target market. Customers seek to purchase the most quality product in a market given the affordability of the product. The product produced by the company in the foreign market should offer the company a competitive advantage.
4.2 Distribution
The place or the distribution strategy is of importance. The company should be in a location close to its direct customers. If the product is far from the customers, then, the distribution channel should be efficient to reach the customers. The company should be located in the Tunisia capital, Tunis as it has many target customer and the distribution network id developed.
4.3 Promotion
The promotion strategy should aim at informing the potential customer of the existence and the quality of the product. The company should use online marketing to increase the number of clients reached in different locations. Promotion creates awareness of a product; most customers purchase products they know or those they have heard .
4.4 Pricing
The pricing strategy for the product should be right. The price of the product should match to its quality. The prices being offered by the competitors is an important consideration in setting competitive prices. The cost of production and marketing are also crucial factors to consider in ensuring that the company does not make a loss. Setting the prices right offers a competitive advantage resulting in a rapid expansion in the new market.
5.0 Standardization and localization
While formulating the marketing mix, it is important to bear in mind the need for standardization as well as the local attractiveness. Standardization helps the company to produce similar products across all the markets through an adoption of the same production methods and procedures . Standardization creates uniformity of the product helping the customers to identify the company’s product across the globe as they are similar. On the other hand, the local attractiveness may not allow standardization. Certain markets require different features in a product forcing the company to differentiate the product in various markets.
6.0 Staffing policies
The staffing policy of the company should target at recruiting the most qualified and experienced employee. The works’ competence is essential in the production of quality products. Outlines that staffing policies should focus on creating and maintaining motivation at the workplace. Motivated employees result in efficiency in production and marketing. Staffing policies that encouraging employee training and development are the best. Well-trained workers are proved to have a high learning hence reducing the time spent on a task.
7.0 Market entry strategies
7.1 Licensing
Anfasic Dokhoon Company has several options as to the market entry strategy to adopt. The company can license as a strategy to enter the foreign market. Licensing allows another company to produce its product in the new market. The method is advantageous in that the firm does not incur cost while entering the foreign market. On the other hand, the company does not leap maximum reward to the enterprise .
7.2. Indirect exporting
The company can opt to get into the market through indirect exportation. Referring to indirect exporting involves the use of already existing intermediaries to export the product. The advantage is that less cost is used to enter the foreign market. The method is disadvantageous as the products will sell at a lower price.
7.3 Direct exporting
Direct exportation is another method available for the company. It involves having sales representatives and branches in the foreign market. The method is advantageous as the firm obtains maximum revenue from the new market. The disadvantage is that setting up offices in an international market is costly.
7.4 Franchising
Franchising is also an international market entry strategy that the company can adopt. In franchising, the company will allow another company to produce its products through a restricted approach such as supply of the main raw materials. The advantage is that the business spends less on infrastructural development in the new market. The disadvantage is that the franchised company may grow to be a future competitor of the company after learning the production skills.
7.5 Joint venture
The company can enter into the foreign market in the form of a joint venture. It involves owning the firm jointly with other investors. It is advantageous as pooling of the capital requirement is possible. On the other hand, the profits acquired will be shared by the owners. The company can also choose to use Foreign Direct Investment to enter the foreign market.
7.6 Foreign Direct Investment
Use of FDI is the best entry strategy. According to FDI involves the purchase and setting up production and marketing infrastructure in the international market. It is the best approach as it reduces tariff, non-tariff, and other barriers while exporting. It is the best method to win the trust and loyalty of customers. On the other hand, it is the most expensive strategy.
8.0 Strategy for international business operations
The company can use one of the following strategies: global standardization, transnational, international or localization. For Anfasic Dokhoon Company, global standardization is the best strategy. Global standardization ensures production of similar products all over the world . It helps customers to identify the company's product quickly. The plan will assist the business to expand to other regions without much cost of differentiating the product. It also helps the company to be identified globally by its standardized products hence easing marketing process.
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