MNG72005 International Business

Introduction

International business means the trade of technology, services, knowledge, goods, and capital at a global level. It comprises cross-border trades of services and goods between two or more nation (Cherunilam, 2010). The aim of the report is to represent the understanding of international business and expansion strategies for Haigh’s Chocolate. Belgium is selected as the host country for the expansion of Haigh’s business operations. 

Company Background

Haigh’s Chocolates is a family-owned company of bean-to-bar chocolate based in Adelaide, South Australia. Alfred E. Haigh founded the company in 1915 and today it has outlets in four states (Haigh’s chocolate, 2018). The first shop of Alfred E. Haigh opened at 34 King William Street. The interior of the shop is the same as when it initially opened. The grandson of Alfred i.e. John Haigh desired to expand the chocolate manufacturing process, hence, he visited Switzerland to learn and carry new techniques of chocolate manufacturing to Australia (Prosser, 2018). Six stores of Haigh’s Chocolates are located in South Australia; three are placed in the city center of Adelaide, comprising the Rundle Mall’s Beehive Corner store, Adelaide Central Market Arcade, and Adelaide Arcade (Haigh’s Chocolate, 2018). The store in Visitor Centre also performs viewing tours of the Parkside factory place that is positioned behind the store. Haigh’s chocolate is dedicated towards manufacturing premium chocolate by using raw cocoa bean. The company possesses the international UTZ certification for sustainable and ethical practices. Yearly turnover in the last six years has increased to around $50 million with the increasing production to around 750 tonnes (Lucio, 2017). 

Product Mix at Haigh’s Chocolate

The company generally aims to place itself as a most reliable chocolate maker in Australia, which offers products of high quality to young people and families. The chocolates at Haigh’s are handmade with attractive packaging which looks appropriate for gifting purpose. The company provides a broad range of chocolates and related items related to different occasions and celebration purposes (LinkedIn, 2018). Various high selling and standard products are packed by keeping in mind the simple themes and utilize cellophane. It is said to be a highly degradable and environmentally friendly material of packaging. This reflects that the business also takes care of the society by evolving Parkside tourist center and by utilizing eco-friendly packaging (Haigh’s Chocolate, 2018).   

Host country (Belgium) Market Attractiveness

Belgium involved accurately 200 projects of foreign investment in 2016. This data reflects that the country is attractive as well as growing and new business can invest in this (EY Building a better working world, 2017). In terms of chocolate business, it comprises the largest share in the market in Europe, Eastern, and Western Europe cover 44% of the market, whereas 20% of market share is covered by North America (Ramli, 2017). The industry of chocolate is conquered by Europe, regardless of the fact that the finest and largest productions of cacao are placed in Africa and Latin America.

Source [(Ramli, 2017)]

Pestle Analysis of Belgium (Host Country)

Political

Belgium is a statutory, popular kingdom and a governmental democracy. A Council and a Chamber of Representatives form the central bilateral parliament. The former is comprised of 40 directly nominated officials and 21 legislatures selected by the three Community parliaments, 10 designated politicians, and the king's children, as politicians by Right (Khan and Sinha, 2013). Around 150 representatives of the Chamber are nominated under a comparative system of voting from 11 democratic districts. Belgium is included in some of the nations that possess obligatory voting and hence holds the maximum voter turnout rates in the world.

The king is regarded as the state head, though with limited rights. He is responsible for hiring ministers, comprising a Prime Minister, that have the assurance of the Chamber of Representatives to make the federal government (Belgium Federal Government, 2018). The French and Dutch language-speaking ministers are treated equally as stated by the constitution. The legal system is dependent on the civil law and invented from the code of Napoleonic. Belgium government offer different opportunities to the international business to operate their activities effectively.

Economic

Belgium is one of the highly developed nations of Europe. It lacks in terms of natural resources, hence, it imports different raw materials in excessive quantity and procedures them mostly for export. Exports of Belgium are comprised of around two-thirds of the nation's GDP. Highly advanced systems of transportation in Belgium are carefully connected with the systems of its neighbors. Its main port i.e., Antwerp, is the busiest port in the world. Belgium possesses highly productive and skilled staff, along with the diversified economy. The country is located in the center of the mechanized area, which helps it in making the 15^th biggest trading nation of the world. Its major imports are equipment, raw material, raw diamond metals, machinery, foodstuffs, oil products, and chemicals (Economy Watch, 2010). Its major exports comprise chemicals, metal products, and finished diamonds.

The economic freedom score of Belgium is 67.5, which makes its economy the 52^nd freest as per the index of 2018. Besides this, Belgium is ranked at the 25^th position in the list of 44 European region countries, and its total score is lower than the regional average but then again above the average of the world. Usually, Belgium offer free-market competition and its economy have been benefited from the openness to worldwide investment and trade (Lucia, 2018). The country is economically strong and can offer high profit to the new business; hence, Haigh’s Chocolate can initiate their business operations in Belgium.

Social

In the 19th century, it was very essential to interact in the French language in order to belong to the leading upper class, and people who can only interact in Dutch were efficiently second-class citizens (Commisceo Global, 2018). In the 20^th century’s initial stages, Flemish movement occurred to counter this condition. Though the Brussels and Walloons accepted French as the main language, the people who belong to Flemings rejected to do so and prospered gradually in imposing Dutch as the official language of Flanders. After World War II, the politics of Belgium became progressively dominated by the sovereignty of its two key language groups.

Technology

Industrial warfare is said to be the time period in the warfare history ranging unevenly from the initial phase of 19^th Century and starting of the Industrial Revolution to the commencement of the Atomic Age (European Route of Industrial Heritage, 2018). It observed the growth of nation-states, accomplished of making and preparing big armies and navies by the industrialization procedure. The period presented enrolled armies, quick transportation (initially on railroads, formerly by sea and air), wireless and telegraph communications, and the conception of entire war. In relation to technology, this period observed the growth of rifled breech-loading infantry weapons accomplished in the massive fire, submarines, armored warfare, and aircraft.

Belgium possesses a lively ICT market. As per DESI (Digital Economy and Society Index), that ranks member states of European Union in terms of competitiveness and digital performance, in 2016, it ranked Belgium on the sixth position out of 28 nations in the digital development of the economy (Export.gov, 2017). This reflects that the Belgium possess various advanced technologies to manufacture products, hence, will definitely help Haigh's to manufacture chocolates at a low price.

Environment

Belgium is between the Central European and Atlantic European outlying areas of the Circumboreal Area in the Boreal Kingdom (Strat For, 2018). As per the Global Fund for Nature, the region of Belgium is from the Eco region of Atlantic diverse forests. Due to the high-density population, its position is in the heart of Western Europe and insufficient political exertion, Belgium faces severe problems related to the environment.

Legal

Customs duties are charged for the importation and are normally ad valorem (Satander, 2018). Belgium charges the European general external tariff on the products imported from outside the boundaries of Europe. The country has a system of single duty (the CET) used by all the European members for goods from the members that are not included in the European member's list. Academically, no customs duties are charged for the products imported to Belgium from countries of Europe. Value-added taxes in Belgium are charged on the foodstuffs, alcohol, mineral water, fuel oils, beer, and tobacco importation.

Customer Profile

The customer profile is a method of explaining the category of the customer so that they could be gathered for advertising and marketing purposes. By target advertising to a precise segment of the market, marketers and businesses can attain more success in vending a specific product and grow profitability (Gunter and Furnham, 2014). The customer profile of Haigh’s Chocolate in the Belgium market will be based on two segments i.e. Demographic and Psychographic segment. The segment of the chocolate business is not limited to any group, therefore; the company will target majorly kids and adults. In the secondary segment, it will target old people. In terms of the Psychographic segment, the company will target the middle class and upper class in the Belgium market.

International business theory

Differentiation theory

Product differentiation theory is the main element for enhancing organizational performance and in relation to this theory; the organization could easily set up its effective and different image in the target market (Doubet and Hockett, 2015). This theory helps the organization to gain competitive advantage along with enhancing its market share in the marketplace. Diversification strategy is used by the business organization to enter into a new industry or market in which it presently does not operate its activities (Williams and Williams, 2017).   

Haigh’s Chocolate could adopt differentiation strategy in order to increase its market share and target segment. Haigh's Chocolate could offer chocolate syrups along with different flavors. Along with this, it can involve manufacturing bakery products, ice creams, etc.

Mode of Entry

Joint Venture is said to be a contractual contract between the international organization and foreign enterprise to initiate a specific business (Shishido and Fukuda, 2015). A joint venture is a wide strategy of entering an international market to start manufacturing and marketing services. In the joint venture, the worldwide company has an equity place and an administration voice in the foreign organization (Yan and YLuo, 2016). Thus, international companies have superior control over the activities and entree to domestic market knowledge. Haigh’s Chocolate can adopt joint venture strategy to enter in the Belgium market because there are various businesses available that offer premium chocolates with high quality.

Haigh’s could initiate its joint venture with Chocolissimo and Zaabar, which is one of the well-known chocolate brands of Belgium. Chocolissimo and Zaabar possess good knowledge as well as advanced technologies for manufacturing tasty chocolates and can support Haigh’s to manufacture the same.   

Marketing Mix

Product

The Haigh's chocolates only offer a single flavor that helps it in attracting various consumers and it enhances high quality and flavor of the goods (Haighs Chocolate, 2018). However, in order to survive in the Belgium market and compete with the key players who have already covered the market, Haigh's need to adopt the diversification strategy. Through this strategy, it can be able to offer a different type of products such as chocolates, chocolate syrups, bakery products, and ice creams. Moreover, a business can use high technologies from Swiss along with the technologies used in Belgium for manufacturing chocolates.

Place

Haigh’s Chocolates could offer its products in the malls of Belgium. Besides this, it could place its stores in the center of the market where people could visit and enjoy the delicious chocolates.   

Promotion

The product could validate a continuing and unceasing communication with the consumers by packaging and sustainability with the help of social media, advertisements, and promotions. The packaging of the Haigh's chocolate will help in promoting the product successfully. This will be the most essential factors that will have a huge influence on the organization's revenue and sales (Acevedo, 2017).

Price

The chocolates of the Haigh's are of premium class with high quality. However, the company will make use of advanced technologies present in Belgium to decrease the operating cost, which will result in reduced cost of the chocolates and other products that will be offered by the company. Godiva chocolate is one of the brands of Belgium, which used to offer premium chocolates but to compete with the competitors in the market it has reduced the prices (Godiva, 2018). This shows that Haigh's strategy to reduce the prices will help in competing with the existing players in the market.    

Key Success factor

Technology

Technology is the key success factor for Haigh’s chocolate that helped it in surviving so long in the Australian competitive market. Moreover, to survive in the Belgium market Haigh’s will also use advanced technologies which will support it in reducing the cost of its products and eventually, it will be able to offer products at low price with premium quality (Advergize, 2018).

Risk Management

Haigh's chocolate has to analyze the strategies of the existing players in the market in order to successfully manage the risk of high competition within the Belgium market. For this, it needs to follow the procedure of risk management i.e.

• Recognize the risk
• Analysing the risk
• Evaluating the risk
• Treat the risk
• Monitor the risk  (Sutton, 2014)

Conclusion

From the above analysis, it could be said that Belgium is one of the flourishing markets for the chocolate business, as it possesses advanced technologies as well as raw material for manufacturing chocolates. Haigh's Chocolate could initiate its business operations in the Belgium market to increase its market share as well as product line. The joint venture could be used as the mode of entry in the Belgium market. 

References

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