You are a (SME) product manufacturer (or the supplier of a service). Your marketing department has identified a potential market in another country. The decision to enter this new market simply needs to be supported by environmental analysis. This analysis will report on the operating environment in your target country - specifically in the context of your product or service and its compatibility with your strategy.
Your analysis will include a PESTEL analysis – and other external analysis supportive of your intended strategy - specifically, the “O” and “T” of a SWOT analysis. (Do not discuss factors internal to your company in this assignment – you are examining only the external environment – you will discuss internal factors in the next assignment)
In the report you must:
-Clearly identify the product/service and the (single) target country. You must cross over a national boundary – ie new rules and conditions.
-Undertake the environmental analysis in the context of your product. Therefore, your discussion should relate specifically to how environmental factors will potentially impact upon your chosen product/service.
-Identify the main external opportunity and threat for this venture – i.e. the key deal maker or reason for you to consider this product in this country (“O”). Also, discuss the key deal breaker or possible factor that will negatively impact upon this venture (“T”). This can be also interpreted as being the key external factor upon which you will build your strategy, and a key external risk that might hinder success.
Provide a recommendation in the context of your product . (The second assignment builds on this assignment so, it is assumed that you will find positively for the operating environment in this assignment.)
Noosa Chocolate Factory was first operated in 2009; they positioned one of top chocolate retailer and producer in Queensland. It is seen that the chocolate market is changing and competitors are emerging at a very fast pace. It cannot be guaranteed for leading position in the market for the future market share. The main objective is to provide high quality, fresh chocolate products in Malaysia for customers to buy for their own purpose and enjoy at home from its chocolate-covered macadamias to its own Rocky Road Recipe. All products are manufactured by the organization from its own facilities (Neilson, Pritchard, Fold & Dwiartama, 2018).
It is one of the major Small and Medium Enterprises (SME), which are mostly non-subsidiary and independent firms. The owners of Noosa Chocolate Factory enhanced the approach taken by the retailer to offer, “take home and enjoy with the family” products despite “over packaged” gifting products. The organization commonly sell out their products on a given day and time, despite manufacturing about six tonnes of chocolate every month. Their main goal is to attain the growth of the company without losing target customers and brand image (Lebailly & Ahouissou, 2015). In the following, and effort has been made to discuss the PESTEL analysis, External opportunity and threat, and recommendation for the same.
For the external environmental analysis, main target country is Malaysia, and the demographic group is 18-30 years, as healthier chocolate needs to be served. However, the Malaysian economic situation is getting very difficult as the costs of products are staying at a high level. There is a myth about chocolate that it causes a heart attack and it can be possible that customers can reduce the consumption of chocolate.
Political factors relate to any changes in the government policies and laws of Malaysia. Every company is responsible to do its operations in compliance with rules and regulations made by the administration. These rules and regulations should be acquainted in the operations achieved by the Noosa Chocolate Factory. The government of Malaysia differs concerning stability, policy, and major impact on the trade and regulations. In this respect, it is most effective for chocolate products to conduct its business operation and implement its strategic plan with respect to the political theme of the nation. Every plan must satisfy the significance of political influence so that effective policy is made to make right alignment and the risk of project failures because of political incapability, which is realized with alternatives (Khalek, 2018).
In the given scenario of chocolate products, operating in Malaysia has to assess that political stability is secured. The influences of political impacts on the acquisition of chocolate products and its procurement and manufacturing will be perceived when this company will interfere that is not supported by the government. The Government can interfere in the business operations, which are not environmentally sustainable and the issue of the effects that the procurement and manufacturer of chocolate products will have to deal with the political perspective. As a democratic political impact, the chocolate products can grab possible benefits in respect of low restrictions on the number of sales and production scale. Therefore, there are political problems that may influence the chocolate products and their effects can be reduced to handle political matters of Malaysia (Chawla & Sondhi, 2016).
The economic conditions of Malaysia are the most significant aspect of analysis in any country because it maintains the success and failure of any business productivity. Every company operates on the core concept of economies that describes the significance of the potential demand and supply. It is evident that if the potential demand is low and due to low economic growth and development, it will decide for the organization to increase capital that will finally meet the desired profit after including the cost. They should make majorities of production on just forecasting without concerning demand pattern of Malaysia, which can cause an irreversible loss to the organization no matter how effective was the planning and strategy. This is because of the point that the economic influences of Malaysia are beyond the regulation and direction of the company and it redirects back in respect with the economic situation. If the company gives maximum efforts to the economic alternatives, then it is beyond any doubt that it can make maximum incomes even in the time of the recession. On the other part, if companies keep aside these economic situations cannot face the pace of economic boom (Poelmans & Swinnen, 2016).
The economic situation of Malaysia develops an opportunity as well as a threat, which rely upon the strategic planning of the organization. If they give, a high amount of consideration to the economic situations in the depressed economy can enhance its survival. It is evident with the certified justification of Malaysian Government imitates that Malaysian chocolate company is most competitive and developed the sophisticated market in the world. The greatest share of the developed market is fascinated by international chocolate companies, which include Cadbury, Nestle, and Mars. In the accordance of such worldwide giants, it is very hard for new players to make their position in the market. It is seen that the economic success of the international market of the chocolate product is such that the new entrants can induce the customers with good productivity and profitability (Afzal, Lawrey, Anaholy & Gope, 2018)
The Socio-cultural environment of Malaysia has a substantial influence on the potential demand of the chocolate product. This is the reason that companies mainly produce according to the taste and demand pattern in Malaysia. It is seen that industries where the variety and taste of the chocolate product differ from country to country as per the socio-cultural environment. The user behaviour has progressively influence on the trades of the chocolate product and in consideration to this; companies have to deliberate demographics changes of the consumer. Companies have to choose the particular demographic part as for the chocolate product they should target 18-30 age groups and manufacture such goods, which comply with socio-economic norms and regulations of that specific part (Cullen?Knox, Eccleston, Haward, Lester & Vince, 2017).
Chocolate is a product, which has a close relationship with health with the point that they have to enter the market, with considering all factors including health issues. In Malaysia, it is seen that customers are more health conscious and offers an opportunity for the chocolate producers to expand the product with healthy ingredients and variety of flavours. The chocolate consumption is seen in the children group, young age, and teenagers. They should keep its focus on the taste and variety of the young group customers. They should provide modification in the chocolate product that motivates the customers to taste the product at least once a year. For example, chocolate in the form of the bar has achieved much more attractiveness in Malaysian market (Al-shami, Masijan & Rashid, 2018).
An organization can attain maximum success, growth, and competitive benefits in the prospective market by highlighting the points of technological factors as a major concern. The enhanced point of technology has reformed the scope of the markets. The developing technologies are creating new opportunities for the market growing the aspect to reimburse with the new technology. In this organization, technology can be the most productive and efficient tool in manufacturing, procuring, product development, marketing, and promotion of the chocolate product. It can change the procedure of production and can produce a higher quality product at a very feasible cost. It can also help in maintaining a strong brand image and recognition by implementing digital media to encourage chocolate products. It is a luxury product and a mass promotional effort to induce the consumers to purchase the chocolate product. Therefore, the current accessible technology in Malaysia has much substantial significance on the chocolate product and they have to implement the technology in order to generate larger market share (Lim, Amat-Senin & Low, 2016).
It is seen that every company works according to society and it has responsibilities with respect to its prosperity. The overall environment is a combination of various elements which industry has to satisfy before initiating its business operations. In the case of the chocolate product working in Malaysia, has to evaluate the climate factor of the environment as the biggest concern. The climate of Malaysia is very hot so it is quite evident that it provides significance to products, which have cold effects on the health of individual and the chocolate is the product, which is more valuable in a hot climate. In addition, there are other factors as well which they have to consider in its decision-making. The Corporate Social Responsibility is very effective to recognize in the sense that manufacturing, production process, and their business operations have the least influence on the community and on the overall environment (Gutiérrez, 2017).
It is a popular aspect that every company has to conduct its business operations, compliance with the rules and policies of Malaysia. The trade rules and regulations motivate all the organizations to set their strategic policies, pricing policies, and manufacturing policy according to the Malaysian mercantile regulations. The chocolate product in Malaysia has to forecast the effects of their business operations in such a way that is in acceptance with the laws and regulations made by the administration of Malaysia. It is seen in Malaysia that there are set of generally accepted standard and rules for the healthier products, which must be met in chocolate products of the company. It is stated that if the legal consideration is ignored, it can cause severe harm and that should not be practiced (Iranmanesh, Fayezi, Hanim & Hyun, 2018).
The analysis will be done of identifying external opportunity and threat for the launch of the chocolate product in Malaysia, which gives an organization advantages and disadvantages in fulfilling necessities of target customers. It helps an organization to gain vision and think of efficient solutions. It assesses not only its potential opportunity and threat but also, what can an organization can and cannot do.
It provides the ability to reach new international markets and in particular new consumer markets. It focuses on retail fresh had craft chocolate and diversify the variety of chocolate products in Malaysia. They should cover the areas where chocolate demand is high and as the harbour is near, they can export the chocolate products by enhancing range and quality in Malaysia (Kiumarsi, Jayaraman, Isa & Varastegani, 2014). The customer is nowadays more conscious towards health and this is generating a need for sugar-free chocolates and low calories chocolate products. They can look at chocolate flavoured products such as cream biscuits, milk powder, chocolate cookies etc., as it is a hot favourite between kids. The external opportunities lead to expanding business operations of chocolate products in Malaysia. They should also make effort to improve the cost efficiency by the implementation of advanced technology and technological support. Reduction of internal costs in procurement, supply chain management, and outsourcing to business partners make a wise opportunity to chocolate products in Malaysia. The lower fat and lower calories products will hit the market and make a strong brand image in the market (Beg, Ahmad, Jan & Bashir, 2017).
The close-set retail store can be self-competition to the chocolate products in Malaysia. There are many other major competitors in the market such as Cadbury, Nestle, KitKat, etc. It is to be seen that customers are generally purchasing branded chocolates and small-medium manufacturers are ignored, as there are highly personified and qualified employees (Tan, Ali, Makhbul & Ismail, 2017). The confectionery market has low barriers to take entry in the market with the result that many new entrants are entering into the market, which are providing huge investments on advertisement and marketing. There is also an enormous market for homemade chocolates nowadays, which are going to be a threat for chocolate products in Malaysia. It is seen that aggressive promotion from price wars and competitors are highly affected by chocolate products in Malaysia in emerging markets. In addition, implementation of new laws and regulations makes the organization to cancel proposed to launch chocolate products in Malaysia (Jaques, 2015).
Noosa Chocolate Factory vision and mission will be a leader in the Malaysian chocolate market. To accomplish this, their mission should be expanding their factory to other countries. Their fresh handcraft chocolate can distribute not only in Penang but also in other states in Malaysia. They should make the maximum effort in attaining profit through advertising and promotion (Torres-Moreno, Torrescasana, Salas-Salvadó & Blanch, 2015). It is seen that many customers think that their chocolate is costly so promotions and marketing could induce customers to buy the products. In addition, many of the customers do not identify that chocolate of Noosa Chocolate Factory does not cover palm oil until they access to their website. Therefore, advertising on T. V channel, a local newspaper, and radio can be helpful. Their main goal is to achieve the growth of the company from $5 million to $20 million turnovers without losing concentration on target customers and brand objective (Afrasiabi, Honarvar & Mizani, 2016).
This concentration on the Noosa Chocolate Factory brand appears to be holding the organization at a good pace, as competitive supermarket chocolate pricing is generating a progressively difficult environment for other manufacturers. They should aim to produce high-quality chocolate products and develop a brand image which is eco-friendly and healthy (Albak & Tekin, 2016). As they should build their chocolate research center, they need to research not only new recipe of the chocolate product but also the means to stay freshness longer, which helps the retail stores can be expanded to a wide range of area. It is to be evident that there are many chocolate organizations but customers think that best is which is known for their variety of taste and services is all appreciated. The premium and high-quality chocolates have been the highest priority for the organization. Therefore, customers need is better quality, best service, and packaging which is the main strength for the organization (Soon, 2018).
To conclude, Noosa Chocolate Factory has been attaining greater success since they estimated in 2009, as to attain fast success, they need to reduce the limited distance that their product can be delivered. The chocolate product in Malaysia has also achieved higher success by launched in Malaysia. This can attainable by managing the means to expand the factories in other areas and keep the freshness of the product. They should consider not only stores in Penang but also expand their stores to another state near Penang. The PESTEL analysis has been done to examine the new product i.e. chocolate products launched in Malaysia to satisfy customers on a greater scale. The distribution and packaging of chocolate products is another factor where the utilization of technology can minimize many harmful wastes. The modern trend of technology has presented many ways that can increase the sales of chocolate in Malaysia where the exposure to technology and media is valuable.
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