Pros and cons of exporting cosmos chocolates in India
Discuss about the International Business for Retail and Distribution Management.
The primary aim of this paper is to outline the significance of exporting process. The hypothetical company Cosmos has been taken in the task which is producing chocolate products in Australia. The company has decided to export the chocolate in India. Chocolate is one of the effective products of the firm therefore the organization wants to export this product in India for increasing and enhancing the sale volume. The paper explains that which entry mode has been chosen by the company for entering in the Indian market. Along with this, it discusses the HR approach that would be pursued by the organization while exporting the chocolates in India. Further detail of the task has been discussed below.
The company has decided to export the chocolates in India to gain competitive benefits. It has been recommended that if the company exports the chocolate products in India then Cosmos can maximize the profitability and revenue. India is a country of chocoholics and the nation has one of the growing and leading chocolate markets which posted a huge 13% sales growth last year. According to the research, India’s chocolate confectionery market had had a strong CAGR (compound annual growth rate) of 19.9 %. After the various researchers, it has been found that approx 43% of Indians consume sugar snacks and sweet such as chocolate, pastry and cake between dinner and lunch. Therefore, Cosmos can get various advantages while exporting the chocolate products in such country (Mosca, 2016).
If the company exports the chocolates in India then ample of rivalries benefits can be taken by the company. Some of the pros and cons of exporting have been detailed below (García de Soto-Camacho & Vargas-Sánchez, 2015).
- Exporting of the chocolates can permit the company to gain exposure to new ideas, marketing techniques, marketing practices and ways of competing that can help the company to get strong and effective position in the global market.
- It shall be analyzed that exporting is one of the effective and unique ways of increasing and enhancing the sales and revenue of the company. No company will export unless it intends to make revenue and profitability. By expanding and exploring the business in India, Cosmos Company has been able to reduce and eliminate the extra costs as it will also help in increasing the market share of the firm.
- It has been found that if the company exports the products the firm is no longer solely dependent on sales and revenue within the domestic market. It also increases product life cycle of the company in the host country.
- If Cosmos expand its business in India then it can attract maximum number of customers in the marketplace. All these benefits are taken by the company when exporting the chocolate products in the India.
- There is high and immense competition is faced by the company in the host country. The rivalries cannot be ignored by in exports market. To stay in the competitive market, the firm needs to understand their competitive benefits in the international market.
- To export the product in Indian market is time consuming process that can affect the business activities and operations of the firm.
- Product modification is one of the significant issues in exporting.
- Apart from this, payment and financial risks are also involved in the exporting of chocolates in India. Furthermore, transportation risks also affect the profitability and revenue of the firm negatively.
- Cultural differences also arise while exporting in India. Due to lack of information, the company has not been able to get right and appropriate information in the foreign market. All these issues could affect the sustainability of the firm adversely.
There are ample of entry modes that can be used by the company for exporting the chocolates in India. The entry modes include franchising, licensing, joint venture, outsourcing, and foreign direct investment (Grünig & Morschett, 2017). One of the significant entry modes that can be initiated by the firm is franchising. Franchising is a system in which semi independent business owners pay fees and royalty to a parent company in return for the right to be identified and analyzed by its trade mark to sell its products and services and usually to utilize its business system (Brouthers, 2013). Cosmos uses this entry mode because it is less risky and provides high motivation to the employees. The company can use high skilled and potential employees by using this entry mode. Along with this, the company rapidly expands and explores the business in India and it increases sales volume and market share (Forte & Carvalho, 2013). In addition, the company can reduce its time to complete the all activities and operations in such market. Low capital investment is done by the company if the company adopt franchising entry mode. Moreover, the organization can use recognized brand name and trade mark. The franchisor provides support by giving training and development coaching to the workers. It also helps in maintaining relationship with suppliers in the international market. In this way, franchising provides ample of benefits to the customers across the world (Parola, Satta, Persico & Bella, 2013).
Entry mode for the company
Yes, India is the right country for Cosmos to export the chocolates. If the company export chocolates in India then it can attract maximum number of customers in the international market. Along with this, the firm has been able to maximize and enhance the outputs and revenue in such market.
Cosmos adopt decentralized manufacturing strategy to expand and explore the business in India. By using this strategy, the organization has been able to make effective decision in the international market. The organization uses this strategy to evaluate and identify the needs, requirements and expectations of the consumers in the competitive market. Decentralized manufacturing strategy increases creativity and motivation among the employees. Greater flexibility can be enjoyed by the company by using decentralized manufacturing strategy. Cosmos can get up to date and important information by initiating the decentralized manufacturing strategy (Digani, Sabattini, Secchi & Fantuzzi, 2014).
If Cosmos need to choose a subsidiary location then United Kingdom would be choose by the company. The United Kingdom is top ranked in Europe in terms of doing business and trade in the world. Therefore, the company can choose United Kingdom for expanding and exploring the business. There are ample of factors that should be considered by the company while choosing location. Firstly, the firm should focus on the level of competition, business rates, tax rates, and accessibility of the market. It will help the company to predict the future risks and challenges of the market. Potential growth and skills of the employees must also be considered while initiating the business in United Kingdom (Shenkar, Luo & Chi, 2014).
Leadership is one of the significant approaches that need to be focused by the company while exporting the business in India. Leadership is essential just because it helps in assisting and controlling the workforce and further it also helps in motivating the employees within the organization (Antonakis & Day, 2017). Various advertisement and promotions have been done by the firm to appoint the candidate from the local market. In addition, leaders delegate authorities and responsibilities amongst the workers with the help of leadership. Therefore, this approach would be pursued by the company in the Indian market (Purce, 2014).
From the above mentioned limelight event, it is concluded that Cosmos can attain long term competitive advantages by exporting the chocolates in India. The above analysis shows that the company uses unique and effective franchising entry mode to enter in the Indian market. Along with this, here is the discussion about the pros and cons of exporting and HR approach that will make easy the exporting process.
Antonakis, J., & Day, D. V. (Eds.). (2017). The nature of leadership. Sage publications.
Brouthers, K. D. (2013). A retrospective on: Institutional, cultural and transaction cost influences on entry mode choice and performance. Journal of International Business Studies, 44(1), 14-22.
Digani, V., Sabattini, L., Secchi, C., & Fantuzzi, C. (2014, May). Hierarchical traffic control for partially decentralized coordination of multi agv systems in industrial environments. In Robotics and Automation (ICRA), 2014 IEEE International Conference on (pp. 6144-6149). IEEE.
Forte, R., & Carvalho, J. (2013). Internationalisation through franchising: the Parfois case study. International Journal of Retail & Distribution Management, 41(5), 380-395.
García de Soto-Camacho, E., & Vargas-Sánchez, A. (2015). Choice of entry mode, strategic flexibility and performance of international strategy in hotel chains: an approach based on real options. European Journal of Tourism Research, 9, 92-114.
Grünig, R., & Morschett, D. (2017). Determining the Market Entry Modes. In Developing International Strategies (pp. 105-123). Springer, Berlin, Heidelberg.
Mosca, F. (Ed.). (2016). Global marketing strategies for the promotion of luxury goods. IGI Global.
Parola, F., Satta, G., Persico, L., & Bella, E. D. (2013). Entry mode choices in international markets: Examining the antecedents of service firms’ strategies. International Journal of Globalisation and Small Business, 5(1-2), 34-57.
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Shenkar, O., Luo, Y., & Chi, T. (2014). International business. Routledge.
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