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 South American Community of Nations (CSN) is another important region to target for SCJ. Currently SCJ operates in Brazil, Argentina, and Venezuela. But SCJ’s market share in those and other South American countries is low and the opportunities are endless. Since SCJ has operations already in the region, incremental growth is a cost effective way to grow profits. New products and new channels of distribution need to be developed building off of current product lines and trends. This can lead to large incremental growth in the region at little cost to the company. Perusing other regions where SCJ is not currently present could be more costly than building brands already in the marketplace.
...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).
Enter Australia, India, Indonesia, Philippines, Singapore, Thailand, Taiwan, Malaysia, India, and Indonesia; Further develop Hong Kong market; Enter Korea whenever regulations allow it.
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Of course, this can’t be the only factor to enter in these countries, it has to be joined by a complete analysis of the market and economic potential, risks, political and social stability, purchase power, and today’s one of the most important, the image of United States in these countries, which may affect the development of Krispy Kreme.
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