The concept of globalization has led to expansion of world’s famous brand across globe. It has given with an opportunity to emerge as a global leader by speeding up the business. It is a significant tool for the small business to undertake the risk and to explore the prospective opportunities. Although taking a small business activity across the globe is a complex concept but this concept is gaining market. The success of business depends upon the amount of efforts laid and on the requirements related to the driving growth opportunities. It is an impressive opportunity for a business organization to go global. In order to convert a local business into a global business it is necessary to consider various factors associated with the host country macro environmental factors. A future insight is necessary to breakdown country’s local border to run a multinational organization. A thorough research regarding the international market is necessary to attain sustainable results.
The report thoroughly inspects necessity related to expansion of a local UK based food company LEON. It was the first company to display food of nutritional value on their menu. They are planning for a foreign expansion in Australia. For the purpose a thorough study related to the Australian market is done (Leon Restaurant.2017).
Leon was founded in the year 2004 by John Vincent and Henry Dimbleby and Chef Allegra McEvevy. They have a unique concept of creating natural fast food. The restaurant was named as the best new restaurant in Great Britain after its 6 months of opening. There are 41 restaurants of Leon in all over UK. Recently they have planned to expand their business across border. There is an increase in sales to 22 percent in 2014 and the operating profit amounted to 1.9m. The founders are trying to find out the best quality of food in order to create a worldwide market standing.
· The exterior of restaurant is clean and tidy
· The price offered by restaurant is lesser than others.
· New service style
· Offers product with no other similar offers.
· A good brand image.
· New and need time to establish
· Availability of limited funds.
· Customers have to travel to get to the restaurant
· Expansion opportunities.
· Health is the new trend.
· Very few competitor into similar business
· The possibility to penetrate in international market is vast.
· High level of competition from the local brand.
· The operating cost are very high
· Local competitors are selling at a low price.
Porter’s Five Forces
The Porter five forces analysis is an important tool to understand the amount of competition. This is necessary to analyze level of competition caused by the rivals in the foreign market.
The bargaining power of the Supplier is high in the Australian market. They have a concept where the focus is to procure fresh vegetables and meat. The company has a choice to opt for the suppliers.
Australia has lot of potential in term of restaurant industry. The restaurant is based on a new concept which may attract other to make an investment into the business.
In terms of the product delivered by the restaurant chain, there are very few restaurants. This depicts a low bargaining power of the consumer. But it is essential to focus that the Restaurant has to keep competitive price in order to compete against others.
There are very fewer substitutes available in the market. Hence there is no necessity to be afraid of the local or foreign competitor. They are selling a unique product which is famous in all over UK.
There is high competition in the international market from both local and international competitor. There are lot many opportunities for all in order to adopt the relative growth. There is high level of competition from the local and international restaurant chain.
Leon is targeting on overall Australian market. Their strategy is to penetrate in the Australian market and to become one of their favorite brands. This is only possible if they align all the strategies by serving as per the needs of every individual. They are primarily focusing upon the young crowd. This will help the brand to attain a significant market share. For instance the brand is effective for health cautious crowd. It is due to the fact that the brand is able to meet requirement of those who has health concern.
This is however necessary for the brand to align its mission and vision statement with the market needs. In order to acquire the Australian market the brand needs. A study shows that Australian are more concerned about their health. This will be effective for the brand to adapt the current market requirements. However it is necessary for the brand to develop products as per the local market needs. There is a huge gap in between the preferences and choices in UK and Australia.
There are numerous food chains in Australia. There are healthy food chain like Subways that can cause a threat on Leon. In the recent time, there is an increase in the health awareness among people. That can cause a huge competition on the international brand. It is suggested that the brand should focus on keeping competitive price. This will help in acquiring a significant market share.
Analysis of potential international market
Change in the social trend has led to growth in the revenue for the restaurant industry over the past five years. It is expected that there will be a growth of 5.6 percent over the five years. It is due to the busier lifestyle and need of leisure time which has led to growth in this sector. These trends will be visible in the year 2017 with a revenue forecast of 3.3 percent during the year. The ever growing consumer demand for good food has fuelled the need of new restaurant. All the state in Australia has experienced a surge in Melbourne which was up to 7.2 percent in Sydney up 6.2 percent Brisbane up 3.4 percent and Adelaide up 2.1 percent. Perth, however, was down 7.7 percent. These trends depicts that Australian are more convincingly having there meal outside(Callander,2016).
In Australia food is the new currency and plays a major role in reinforcing an effective economic structure. They are a part of greatest industry innovation and progression and helping in meeting the goals. The total turnover from the food and drink industry is believed to increase in coming years creating lot many avenues for the new business who wish to explore opportunities. There is an opportunity for Leon to operate business in Australia (Terpstra, Foley and Sarathy, 2012). Globalization has led to various opportunities in Australia where majority of restaurant chains across the globe are operating food chain. Leon can seek opportunities by opening store at the most populated cities of Australia (Dunford, Webster, Barzi and Neal,2010). Secondly the concept of restaurant chain is different from rest of the other restaurant as they are constantly focusing on improving the food habit. This will ensure an initial popularity in the country. The unique concept proposed by the company will help them to grow across Australia. The country has a healthy eating habit and Leon is based on serving healthy fast food to people. In the competitive environment it is essential to find out a unique model that helps in promoting the product and the concept (Callander, .2014).
The company has an objective to develop an efficient market place by acquiring a considerable market share. At present the brand is focusing on the market strategy which states that one should not worry about the competition because anyone can beat their opponent. It is only possible by following shortest path in order to meet the targets. The primary objective at Leon is to follow the path without picking up fight (THE LEON VISION.2017).
Foreign market entry mode is a procedure through which a company enters into the other country in order to commence trade activities. Globalization has led to integration of economy with the world’s economy. There are two major ways through which a foreign entity can enter inside international market. The given situation is the best way to enter in Australia by providing Franchising. Under this system the semi-independent business owner pay a stipulated amount of fees to the parent company (Doole and Lowe, 2008). It is one of the effective manner in which Leon can attain sustainable results in Australia. It is a wide market with ample of opportunities. This will help the organization to operate the brand at a low cost. It is one of the effective way through which a business can be operated oversee. The most important factor of franchising is that the business is being operated in the same manner as asked by the business owner(Restaurants in Australia: Market Research Report.2017). Franchising involves sharing limited trademarks and operating know-how. The various advantage of franchising is as follows:
There is lesser political risk as compared to any other form of foreign business expansion. Under franchising the business is carried by the local operator. He has technical know-how about the local business environment. This will not only help the organization to adapt the local business culture but to operate business in a cohesive environment (Carter, 2013)
The franchising process includes low cost as compared to any other method of expanding business operations. The overall cost included in doing a business activity is less than any other expansion plan. This will provide with an opportunity to grow the business within the given time period. Opening a restaurant in Australia will help them to reduce the overall cost of establishing the business (Cateora, 2008).
This help in expanding business activity to other area in Australia. The Success of one store help in increasing business at other region. This help in reducing the total cost of financing a business. The business operation is financed by the local body which is aware about the latest business trends (Aaker, Kumar and Day, 2008).
There are selected business partner who help in conducting the business activity in a smooth manner. Thus it will help in increasing the investment under the distinguished managerial capabilities (Czinkota and Ronkainen, 2013).
It is hence an easy technique through which Leon can arrange the business activity with fewer investments in Australia. The cost of operating a business in Australia is higher than opening a wholly-owned restaurant. This will help in generating business opportunity with limited cost. Leon is already a big brand name in UK with multiple stores. Australia is a huge market for the food industry (‘Restaurant Australia’ campaign hits target to increase food and wine spend, 2015). This will help in creating a valuable brand name not in UK but in Australia as well. This is however necessary for the organization to choose one of the most appropriate way to enter Australia. There are all other means that can be opted to expand business operations in Australia. The company is planning to expand its business operations in US by opening a food chain through private equity funding. The main purpose of Leon is to expand business in USA is due to a huge market. There market is very huge while comparing with the other countries (Alexander and Doherty, 2009).
Development of Marketing Plan
Effective marketing strategies are necessary for an organization to establish a business function in a country. The marketing strategies related to a business organization affect the entire manner in which an entire business is conducted. It is a wide reaching and comprehensive strategy through which a business is conducted. The strategic tools are being used by the large sized business organizations to pursue business in order to retrieve maximum benefit (Solomon, 2014).
In Australia it is necessary for the brand Leon to establish the name through describing information related to the product. At an initial stage it is advisable to provide information through promotional campaigns etc. It is however necessary for a brand to create an image in the mind of the customers (Belz and Peattie, 2009).
It is necessary to explain the position and role related to the product and service. It is advised that Leon should explain its integral features this will however help the brand in smooth functioning. Leon is already a huge success in the UK. It is necessary to create brand awareness in Australia also. Creating awareness involves early promotional activities in order to attain sustainable results (Varley and Rafiq,2014).
It is necessary to choose an appropriate location as per the business strategy of the brand. Leon need to find out its competitors involved in the business in order to attain desired outcomes. It is moreover necessary to find out the business strategies that are necessary to be implemented in Australia in order to focus on the local market needs (Jain and Haley, 2009).
Developing market strategies help in effective implementation of the plan in order to earn success in the country. The plan is necessarily to be implemented in accordance with the local market(Doyle,2009).
The marketing strategy includes overall structure related to t he business in order to realize major goals. An effective marketing strategy helps in attaining a strong market reputation. It likely helps in targeting the audience by creating an affordable idea for the brand. This helps in raising awareness about the brand (Jobber and Ellis-Chadwick, 2012).
The current situation of the brand can be understood efficiently through the Marketing mix structure in order to understand the situation of brand in UK:
The brand is known all over Australia for selling healthy food to the customers. It is highly visible in UK. The strange feature about the product is that it has achieved a significant market due to additional nutritious value. Moreover the clients are happy with the amount of services provided by the restaurant. It is necessary to notice that the restaurant is known for unique menu and interior design. It grabs attention from most of the client across UK.
The prices of product are kept according to the menu they are serving. They are selling fresh product at a competitive price. Moreover the customers are ready to pay the amount due to appreciable services provided by the brand. The products are however famous among the kids and their parents due to the amount of nutritional value. The added nutritional value is taken as an effective parameter to earn effective value.
The brand has a unique selling preposition where the brand is paying most of its efforts in creating the value of the brand through various promotional schemes. There promotional schemes includes competition for the kids to grab their attention to produce healthy meal. The brand already has a competitive advantage over the other brands due to its outreach and strategy. The design of store thereby grabs attention of many people across the store.
The store is situated at all the major location in UK which see maximum crowd. At present there are 41 stores in UK. They are planning to expand the number of stores in UK and oversea as well due to the amount of response they are receiving from their clients.
The packaging and design of the food product is been given more preference by the company. Food packaging is take care where designed are in scripted on the food packages to attract the attention of the customers. This not only help in creating a distinguished brand name but also help in grabbing customer attention.
The brand has effectively positioned itself in the mind of the people through unique products. It is there brand strategy that has helped in seeking a major amount of market share. It is necessary to position a brand strategically in the mind of the customers so that they didn’t switch over to other brands. They are following a personal strategy where each of the walls at Restaurant is covered with family pictures. This has helped them to acquire a special place in the lives of the customers. Within a very short time period they have managed to grab a market place (Perrey and Spillecke,2011).
The people of an organization are equally important. The employees of the organization are equally adding value to Leon. Moreover the customers of the organization are constantly adding value to the organization. In order to attain desired results the company has implemented the essential features in their structure in order to attain effective market place. The people of the organization are responsible to manage the sales and marketing part.
The overall process related to implementation of current marketing strategy is a matter of great concern. It is essential to focus specifically on a particular market. this will enable Leon to understand the local market. The trends can be effectively be used as a parameter to attain effective growth. It is suggested that the brand need to develop efficient strategies in order to attain market goals.
There are two major ways through which a foreign entity can enter inside international market. The given situation is the best way to enter in Australia by providing Franchising. Looking onto the current situation it is suggested that Leon should opt for franchising system. This will help in reducing the overall operation cost. Cross-border negotiation is important to attain a visible market share.
The marketing budget needs to be made in congruence with the marketing objective. It is suggested that the brand should rationally invest in promoting their brand. This will help in attaining significant recognition. Soon after the brand earns a reputation in the market, Leon can reduce the overall marketing budget.
The brand is currently follows a strategy to pay more attention to the menu. The founders of Leon are particular about every minute detail regarding the brand. There is elasticity in overall structure of the company and more focus is bringing given on delivering efficient quality goods. The personification of the brand is one of the major strategies crafted by Vincent and his co-founders. They are following a personal strategy where each of the walls at Restaurant is covered with family pictures. Leon knows the manner in which it can form a reputed brand image in UK. It is only possible by developing better long term relationship with the customers. This will help them to grab a significant market share in coming years. One of the strengths of Leon is its convincing brand story (Bárta, Pátík and Postler,2009).
Leon purposefully is hoping to reach out to the younger generation through healthy food options. There menu is inspired by the flavors and variety and natural healthiness of Mediterranean cooking. The uniqueness in the taste and flavor has distinguished them from the other brands in the locality. It is there vision to serve to everyone good food in the form of fast food. For attaining the goal Leon has established Leon Foundation whose aim is to make good food available easily(Goodman, Lockshin and Cohen,2007). The core purpose of Leon is to manage the social and environmental impacts of the local business in order to create a sustainable business environment. It has become important to implement the strategy in accordance with the environment as this will help the brand in achieving sustainable objectives. There around 41 stores in UK and are planning to expand the business in other countries as well through formation of partnership (Retail & consumer goods industry.2016).
Challenges and recommendations
It is very difficult for Leon to establish the similar type of brand image in Australia. There is excessive competition from the local brands. Under such a situation it is recommended to establish an effective brand name. It is necessary to adopt the brand strategies as per the taste and preference of Australia. It will b difficult for Leon to work as per the strategies as per the preference of the local customers. Attaining investments from the investors is a difficult task to be initiated. It is therefore necessary to find on potential investors in order to run business operation. Lastly promotion activity is necessary for Leon as majority of population is not aware about the brand. It is therefore necessary to create brand awareness in order to seek a sustainable market position.
The report is related to the marketing strategies of Leon in Australia. . Leon knows the manner in which it can form a reputed brand image in UK. It is only possible by developing better long term relationship with the customers. The report directs the strategy of expansion Leon can adapt in order to exist in the international market. A comparison in between the standardized and adapted 7P’s is given in order to provide a brief description about the brand strategies. Hence it is necessary explain the position and role related to the product and service. It is advised that Leon should explain its integral features this will however help the brand in smooth functioning.
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