Expansion Of Haigh's Chocolates In Singapore: PESTLE Analysis

Discuss about the IBM501 International Business and PESTLE Analysis.

Microenvironmental factors

Haigh’s was founded in 1915 in South Australia. Haigh’s manufactures maximum quality as well as standard chocolates. It is extensively used in the festive season and other occasions. Haigh’s is one of the oldest family businesses and has six stores in South Australia. It is specialized in handmade chocolates. The product of the company is domestically possessed associated with retailing and manufacturing. It is a quite famous producer. The company commits to support the community by various key activities like sponsorship, donations and fundraising activities. It is famous for it’s long-term relationship with customers. The company supports environmental causes such as UTZ and Bilby. This report is going to help to deal with the expansion of the activities of Haigh’s chocolates in Singapore.

The situational analysis includes the micro and macro environmental factors. These factors here analyses the situation in Singapore which should be considered by Haigh’s chocolates before making an expansion.

The Porter’s five force analysis comes under the external environment which can influence the working of Haigh’s chocolates in Singapore. It can help the company to find out important aspects and the shortcomings. The five forces of Singapore are:

Competitive rivalry: Haigh’s chocolates can face strong competition with other chocolate companies of Singapore. There is a strong force that determines the competition worldwide. The company needs to scan the market from time to time to make changes in the need and demand of the customers consequently (Gifford & Nilsson, 2014). The competitive advantage relies on the various initiatives which are previously in the same organization. Haigh’s can have high attractiveness as it has all the mandatory potentials. The company is expected to adapt and modifies as per the demand of customers. Haigh’s chocolates can face competition from Aalst chocolate Pte Ltd, Chocz Gourmet Private Limited, and Barry Callebaut Asia Pacific. In such a scenario, Haigh’s can take all the required steps in order to increase market share in the Singapore (Kacker, Dant, Emerson &Coughlan, 2016).

Bargaining power of buyers: There are strong bargaining powers of buyers as there are various options available to them and can easily switch to other chocolate brands. It is a strong force and can be used at the company by the customers. The bargaining power depends on the number of buyers, switching costs and the possibility of options accessible to the customers (Seetharaman, Niranjan, Patwa & Kejriwal, 2017). The bargaining power of the customers is high because they have plenty of the options of chocolate companies. The customers can effortlessly shift to other companies because of the low price policy of them (Chin, Evans & Choo, 2015). The customers require changes and feel bored from the same products. So, Haigh’s is required to add and modify it’s chocolates and varieties.

Macro-environmental factors

Bargaining power of suppliers: The bargaining power of suppliers depends to the extent which they can negotiate with business. It has a great bearing on the company. Singapore has the low bargaining power of suppliers in the market whereas the volume of supply is vast. The suppliers do not have any appropriate link and lack direct delivery to the company. It deteriorates the competitive advantage and affects the bargaining power of suppliers (Faqih, 2016). The raw material can be easily available to the companies but the influence of sellers is weak in terms of the nature of the company. The sellers do not have any influence over the distribution process related to the company. It is a small concern for the Haigh’s chocolates.

The threat of substitutes: It is the strongest major among all approaches to Porter's five force analysis. The progress of Haigh’s chocolates is going to depend on the substitutes available in the market of Singapore. The availability of other substitutes causes less growth for the company. The substitutes in Singapore are either artisanal food or local bakeries. The buyers are permitted to choose products from various substitutes accessible in the market. The companies in Singapore make available the same quantity and products at same costs. It is a main risk to the company (Penrose, 2017).

The threat of new entrants: It is the other threat which can be created by the entry of new firms. The new enterprises are entering the market and causing pressure on the prevailing companies. High’s chocolate is a well-known company in Australia and has loyal customers already. It can have an adequate consequence on the company (Blonigen & Piger, 2014). This force can affect the Haigh’s chocolates in terms of the capital prerequisite to start up in Singapore.

Political factors: The political factors contain government guidelines, rule, and conventions of Singapore. The political factors could affect the business operations of Haigh’s chocolates in Singapore. The internal working can get affected by the laws linked to tax, food safety, health, and workers. The government influences the political system in Singapore by it’s decisions. Such decisions are made in order to address people. The nation like Singapore is both bureaucratic and democratic. There is political and government constancy in the Singapore indicates the remarkable aggregate of profits to the food industry (Rodríguez Bolívar, 2015). The country has a foreign trade policy as an open market for free trade.

Political factors

Economic factors: Singapore has a most stable economy. The economy of Singapore is diversified which is more capable to provide facilities for multinational companies. This is the reason the local economy is charmed by the several industries of the world. The income of the government is high and there is no foreign debt. The economy was always robust even in the economic crisis. The GDP growth rate is 2%. The country has a huge dependency on the food industry for the economic progress (Aparicio, Urbano & Audretsch, 2016). There is a need for high capital investment in the Singapore to expand business and Haigh’s chocolates can contribute in the Singapore economy by making the investment. The company can open it’s outlets in shopping malls and at crowded places. The company can make proper planning before making an investment in the economy. The local economy is greatly favorable for the companies like Haigh’s.

Social factors: There is a high quality of life in Singapore which is helpful for the company to conduct activities. Singapore has people from varied culture and background. The individuals of the country have the third most strong purchasing power parity per capita. The parents are concerned for the health of children (Allen & Kern, 2017). Haigh’s has scope to manufacture chocolates which are good for the health of children and enrich with vitamins. The culture of the country is avaricious so there is burden on the population of Sinagpore. The life of the citizens is sustained by the 5C, cash, credit card, condo, car, and country club. Singapore attracts millions of tourists and such tourists lead to the expansion of the food industry.  

Technological factors: The technology is responsible for shaping the economy of Singapore. The country has world-class research facilities. The Internet has a significant role in seeking information and has an important part in the economy of Singapore as well. The technology is going to be helpful in the production, distribution, and promotions of Haigh’s chocolates. The company can establish a business by using internet facilities. The technology is also used in managing inventory, vendor management, and supply chain management. The computer technology is used in pricing and billing. The industry also promotes cashless transactions to avoid handling of cash and robbery (Nechaev & Antipina, 2016).

Legal factors: The legal factors are linked to the political factors. It includes the laws prevailing in the country. Haigh’s is going to be influenced by the laws. Singapore has several laws related to health which can distress the trade of the company. Haigh’s necessity for comply with the code of conduct and environmental health practices. As per the laws, the companies are required to make sure that the product is hygienically good and non-toxic for consumption. The government has also fixed plans for the environmental health and in the designing of food. The company is required to take approval from NEA to operate it’s activities. The labor laws affect the company concerning timing and wages of workers (Koh, 2017).

Economic factors

Environmental factors: The internal and external factors are accountable for the sustainable development. The environmental factors contain the instructions, procedures, and grants offered to industry (Sarooghi, Libaers & Burkemper, 2015). The environmental factors reveal the behavior and preference of the consumers. Haigh’s have different options of chocolates depending on the age, choice, and preference of people. The company can have the best opportunities in the environment of Singapore (Madanoglu &Castrogiovanni, 2017). The carbon emission has been decreased and the carbon dioxide discharged per dollar output. The government actively provides a healthy environment for the people.

There are various ways by which Haigh’s can take entry into the market of Singapore. There are various kinds of strategies to be used in different markets.  

Franchising:

Franchising is one of the easiest ways to break into new markets. Haigh’s can make use of it’s existing business model in the target market of Singapore. It is a rapid process for the market expansion. In this strategy, Haigh’s can grant another company the right to use trademark, process and business systems to produce chocolates. It can use the brand name, operating system, and on-going support.  It is generally onetime fee. It is an effective method because of the repetitive business model. The franchising is a strategic alliance between people with a goal to dominate the market (Perlmutter, 2017). It provides better protection on the trademarks, patents, and copyrights. This process develops a better understanding of the marketplace.

Direct marketing:

In this process, Haigh’s can products directly to the market where it is trying to break into. For instance, Haigh’s can sell products to the appropriate stores in Singapore. The agents and the distributors lead the functions of direct exporting. They become the face of the company so; the selection of agents and distributors should be made wisely like hiring a key staff person.  In this process, Haigh’s can produce chocolates In Australia and can send to the customers overseas (Wiedersheim-Paul & Johanson, 2017).

Partnering:

Partnering is an effective strategy at the time of entering foreign markets. It is a useful strategy when the culture, business is quite different than the home country. It brings local market knowledge and contacts if chosen wisely. A potential partner makes sure how successful business is going to lead.  It helps to grab market share, as the partners are already aware of the local economy. This process makes easy to break the ground in the foreign market (Eriksson, 2015).

Social factors

Joint ventures:

A joint venture is a method of partnership which includes the formation of the 3 independent company. The 2 companies form up a new company. The two companies can agree to work together to establish Haigh’s in the market of Singapore. The risks and profits are shared equally by both the companies. It is an inducing strategy in which companies share knowledge and expertise and it assists in the development of the company (Lee, Chung & Beamish, 2015). The profit is shared equally between both the companies. Usually, the two companies working for the same project stay separate from each other.

Product: Initially Haigh’s chocolates had only a solitary flavor which attracted customers and it develops the superiority and essence of the product. The company acquired practices from Swiss and local chocolate manufacturers. The base for the international brand has been produced for the Haigh’s chocolates. It has designed diverse stores in Adelaide. Haigh’s chocolate has a tourist center in it’s Parkside which familiarizes the brand to tourist with reverence to pictures and words. It specifies the opportunity to taste vigorous and fresh chocolates to the tourists. They can obtain finest and high chocolate from the stores. The company functions under the high vertical supply chain model in order to promote excellent products (Fan, Lau & Zhao, 2015). The products are packaged with the minimalist theme. The cellophane was used for the packaging as higher biodegradability.

Place: The products of Haigh’s operate under the extremely vertical cohesive model of the supply chain. The products are sold over the number of stores. The small number of chocolates which is less than 5% is retailed by wholesale and dealers that control in niche locations to promote and increase the sale of the store network. Haigh’s is located at Adelaide with the factory. It is accessible to the tourists for six days from Monday to Saturday. The tourists can purchase fresh quality and finest chocolates after paying a visit to the factory. There are specific places where this chocolate is not advertised. The places are designated for the promotion of the products of the company to maximize the production capacity (Siah, et. al. 2016). The products are distributed by using various distribution strategies such as intensive distribution, exclusive and selective distribution.

Promotion: Haigh’s exhibits an on-going and constant communication with the customers on the packing and sustainability by social media and commercials. The company can connect to the concepts and products with the help of print media. The packaging stimulates the initiatives effectively (Hanssens, et. al. 2014). The promotion of the products of Haigh’s is done by the retail stores and the wholesale assistances which makes the distribution process in the potential mode.

Technological factors

Price: The price of the products is stable with the classification of the products and where the goods are creating utilization. The prices are fixed as per the preference of customers and the law of supply and demand is made appropriate. There are various pricing strategies which are used by the company such as neutral, marginal cost, psychological, key-stone and cost-plus pricing (Huang & Sarigöllü, 2014).

Conclusion

Haigh’s chocolate is a leading industry in Australia. The assignment covered the analysis of Haigh’s chocolates for the international expansion. The analysis followed with situational analysis which covers the micro and macro environmental factors. Further, these factors include Porter’s five forces and PESTLE analysis of Singapore. The situational analysis of Singapore represents the positive opportunities for Haigh’s chocolates. It has been considered that Haigh’s manufactures maximum quality along with the premium and standard chocolates. The market entry strategies discussed above helps to choose the best option for the market entry. These strategies are the most important aspect. The report also covered the marketing mix such as product, price, place, and promotion. The superiority and the premium chocolates are significance for Haigh’s. The packaging has a significant role in the promotions. It is also a main strength for the company.

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