Driving and Restraining Forces Analysis
Driving Forces
Driving forces means which factors are influencing a company to go into another country and start doing business there. Here are some important driving forces that interests Fonterra to expand business to South Korea: technology, government appreciation for foreign direct investment, communication and logistic support. South Korea is already advanced in technology sectors and they have the availability of modern equipment for establishing a new factory. Also, Korean government appreciates the foreign direct investment and provide good incentives for their investors. As the country has a large number of population, it is also a positive site on getting opportunity for doing vast marketing. Since South Korea is a developed country and its technology is already developed, hence they have good communications and logistic support indicating that smooth business functions can proceed on.
Restraining Forces
The current situation of South Korea is favorable for doing foreign direct investment however, restraining factors such as bargaining with local supplier, inflexible labor markets, customer bargaining were the factors that needs attention also.
5. Marketing approaches and justification
There are several marketing approaches available for doing international marketing, but for Fonterra’s expansion in South Korea, foreign direct investment is favourable because of the country’s facilities and future expansion. In South Korea, many organizations enter because of the facilities being offered by the government and the market is quite big and people have high levels of income.
It’s easier for Fonterra to establish the factory over there and go for huge mark...
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...esearch suggests that Foreign Direct Investment in South Korea will be a great opportunity for Fonterra because of the facilities, technical advancements and the vast market environment that the selected country has to offer.
7. Conclusion
Based on the above analysis with the use of various tools, it is then concluded that Foreign Direct Investment marketing approach is the easiest way to enter in country. It will be easy to first let the brand well known to South Korea through one product line or brand and then go for bigger expansion because South Korea have available resources for production. But doing business by producing one product makes it easier to introduce it and run the company under minimizing cost. But then again, it is totally positive and feasible for the Fonterra – Fresh ‘n Fruity yoghurt to expand its business to South Korea.
The rise in globalization over the last few decades has helped facilitate and encourage corporations to expand into international markets. This paper will review the five common international expansion entry modes, and the pros and cons of each method. Finally, my employer is in the technology industry and I will breakdown and recommend which entry mode would work best for international expansion.
...irect control of foreign interests, absolute and comparative advantages and sometimes the strength of ties with major foreign markets. The problem of geographic and economic distance is one that is not solved easily. There must be a cross-border trade in goods and services and this could be done with little direct involvement abroad. Businesses may also be able to systematically work local markets abroad by establishing branch offices in the given country. There is also the option of investing in an existing firm abroad, which minimises the risk involved. Ideally, investor motives will broadly match the requirements of target countries or firms, with the interests of the latter focusing on expanding production capacities, enhancing productivity growth, benefiting from employment opportunities and getting access to technological know-how (A. Breitenfellner, 2008).
Adding to overseas sourcing so that lead time could be faster for design and production they could also divide the business up and have different locations for orders and new products to make business faster and
Other factors include communication infrastructure and availability of skilled workers. Most of the Asian countries are embracing new technologies that grow much knowledge of the diverse beverage drinks. Secondly, the demand conditions play a significant role in enhancing competitiveness for the firms. Both Coca cola and Pepsi are an Coca cola has always dominated the markets outside United States unlike Pepsi’s internationalization strategy that took too long.
ice would seem to be a good company to use as an example of the appropriate way to approach marketing in foreign countries. Gallo Rice has been aided in their international expansion by the fact that they have kept an eye on consumer interests in the respective countries they have chosen to operate in. Rather then releasing a single homogeneous product line throughout the world, they have done a good job of adapting to the wants of needs of local consumers. Gallo has also done a good job of keeping track of the individual actions of their major competitors in the respective markets in which they operate.
Political and legal considerations were given first priority in this analysis with primary emphasis given to whether a country's legal or political system prohibits or impedes foreign investment. If a country's political or legal system discouraged or prevented foreign investment, that country was disqualified from further consideration. Factors considered when assessing the political and legal environment:
...ries around its headquarters in Spain. This can be one of the reason that Zara is not that popular in USA as in European countries (Zara, 2013). The company should focus on opening more factories around the world which will help in reducing the cost of products and making the products available to the consumer in lesser time. As a result it may lead to gaining a competitive advantage over the other.
...ries such as Spain, Belgium, UK, Japan, and China. Future growth can be obtained through positioning current brands in those emerging markets.
Case Study Question 1: Explain how the rise in the value of the Korean currency, the won, against the dollar impacts upon the competitiveness of Hyundai and Kia’s exports to the United States?
The force of globalization sped up by highly technological advancement rapidly increases the uncertainty and complexity of the international business environment. To prosper, organizations must adapt to the changing environment (Waddell, Creed, Cummings & Worely, 2014). On a global stage of competition, Fonterra Co-operative Group Limited (Fonterra) has maintained its momentum of growth and reserved its renowned place among the top five world’s dairy giants in 2013.
The average driver doesn’t think about what keeps their car moving or what keeps them on the road, but that’s because they don’t have to. The average driver doesn’t have to worry about having enough downforce to keep them on the road or if they will reach the adhesive limit of their car’s tires around a turn. These are the things are the car designers, professional drivers, racing pit crews, serious sports car owners, and physicist think about. Physics are an important part of every sports and racing car design. The stylish curves and ground effects on sports cars are usually there not just for form but function as well allowing you to go speeds over 140 mph in most serious sports cars and remain on the road and in reasonable control.
Sakarya, S., Eckman, M. & Hyllegard, K. H. (2007). Market Selection for International Expansion - Assessing Opportunities in Emerging Markets. International Marketing Review, 24(2), 208-238.
In conclusion, it can be said that global marketing has been emerged very rapidly in recent years. It has provided various opportunities for the companies to expand their business to the other regions of the word. However, there remain certain environmental issues that need to be considered before entering in to the desired region. These issues can be resolved with designing the strong global marketing plans and strategies, the data for which can be gathered through conducting global market research. Despite numerous issues, one can easily say that globalisation has reduced the global reach of the organizations as well as customers. It would not be wrong to conclude that
Plant/R&D locations: To keep costs low, the company operated in different geographical locations like China (manufacturing) and India (R&D).
The marketing campaigns must be tailored to meet the foreign markets’ demands, by respecting the consumers’ culture and flavor preferences. Furthermore, in the foreign markets the local brands must not be underestimated as these present high competition for Coke and Pepsi, therefore in order for the kings of the soft drink industry to expand their reign globally they must partner with the local soft drink firms and customize soft drinks with local tastes.