The figure of the companies that are pull offing to travel internationally is raising every twenty-four hours. Organizations benefit from the globalization because now there are much more chances to spread out internationally and enter new markets. As the universe is going more and more affiliated most of the companies are acquiring excited with the thought of increasing their market portion in other states ( Root, 1994 ). There are a batch of states which are seeking to take part in the planetary industry of the olive oil and are trying to bring forth and export this aureate liquid. The chief participants in this selling field are the states which are located in the Mediterranean sea, such as Italy, Spain, Greece and Portugal ( Appendix A1 ). States with no traditional backgrounds such as America, Tunisia and Australia are acquiring besides competitory.
The competition foremost started with Spain and Italy being the leaders of the market. Globally, the olive oil industry is regulated by three chief organic structures ( Olive oil council, EU, World trade organisation ) that support and assist them commanding the trade of olive oil and guarantee the high quality. Harmonizing to internationaloliveoil 2009, Spain is the chief manufacturer of olive oil ( Appendix A ).
Due to overcapacity in the market the European Commission has increased the criterions of olive oil ‘s quality. A scheme called “ Olive Oil Quality ” was introduced in order to do possible a better differentiation of high and low quality ( Appendix A2 ). Valceschini, ( 1999 ) stated that the purposes of this scheme was to attest the quality in order to run into different client demands.
Spanish olive oil market
Harmonizing to Mintel ( 2009 ) in 2008 the gross revenues of olive oil fall 2.5 % anticipating the rates to make 1.896 million for 2009. The sector has been holding hard times because of autumn in unit monetary values caused by heavy olive crop, overstocking, falling export – diminution in demand chiefly in states where olive oil is considered a premium merchandise. As there is about no invention, the competition is concentrated largely on monetary value, which diverse the consumer pick. The economic crisis is coercing the companies to concentrate more on quality, trade names variegations, and merchandises that are more low-cost. The theoretical account of Spanish olive oil industry is based on household ain concerns and this status has small opportunities to convey any invention and publicity alterations to the olive oil sector.
Nowadays the companies have put a batch of attempts on publicity and the quality of the olive oil which must make full all the European criterion every bit far as olive oil is concerned ( Mintel 2009 )
Established in Spain in the center of nineteenth century is one of the chief dominant participants that operate successfully in the olive oil market. Initially the house was involved in purchasing and selling little sums of olive oil. Having a successful history of 70 old ages, now Petroliva, a household owned company, is one of the most celebrated companies in its industry. The merchandise list of the company includes several types of oil, such as: excess virgin olive oil and sunflower oil. Petroliva ‘s merchandises are presently used all over the universe by 1000000s of people and its merchandises are present in 12 states of Europe, Asia and America. A high per centum of its gross is derives from its export activities. Having developed efficient distribution channels worldwide the company now seeks to turn more entrance besides other states. Of high importance is the fact that company ‘s clients include large companies such as eating houses and hotels.
Its chief mark now is to come in the developed UK market. Spain and UK are members of the European Union, which makes the trade between them even easier. Having built a strong trade name image in its place market and in other states Petroliva has all the necessary qualities to spread out even more ( notes from instance survey ) ( Appendix B ).
The PEST analysis is a functional tool which helps the company in scanning the market ( either development or market lessening ), understand the market state of affairs, points the possibilities and the counsel for a concern. ( Chapman, 2006 ). In order to come in the UK market, a PEST analysis is needed for Petroliva to measure the market conditions.
The UK soon is a steady and fecund environment for doing concern. Being portion of organisations like the EU, NATO, United Nations, WTO, G8, and OECD means that its public presentation is connected with these organisations. Great Britain is a part of the universe ‘s biggest trading entity. UK is a stable state significance that the authorities is balanced and there are non political hazard.In UK there are many ordinances about the csr system, constructing many market ordinances for exporting companies.UK Torahs on retail merchants are non so rigorous if we take into consideration that there are supermarkets that operates 24 hours. Due to the fact that UK is portion of EU makes it easier for Spanish companies to come in its market and comply with the bing ordinances ( Economy ticker, 2010 ).
Harmonizing to Economy ticker ( 2010 ) the British economic system is the 2nd largest in Europe and the 5th in the universe with GDP of 2,789 million US $. The UK economic system is still seeking to retrieve from one of the worst recession of all time. The higher volume gross revenues of olive oil are caused by the inclination of cooking at place due to that recession. It is positive for Petroliva the fact that the British lb now is weaker and there is non a large difference between two currencies. So the exchange rate is non traveling to hold high impact on the monetary value of the merchandise. The British lb currency is rather stable doing the export less hazardous. Comparing to other states the revenue enhancement and the entry barriers are non high for enterprisers in UK ( Economy ticker, 2010 ). Looking the nutrient market in UK we can see that the spreadable oils, the fats and the olive oil are expected to be the fastest turning sectors. Valuess gross revenues in 2009 are estimated to turn at a rate of 8 % ( Mintel 2009 )
The UK has the best international repute for being a on the job state and possesses the most adept work force in Europe. The state is the most international in Europe, with a batch of civilizations, many faiths, taking the clients to be unfastened for new merchandises ( e.g. olive oil ).The UK citizens are environmental friendly, so Petroliva must be friendly to the environment ( e.g. must make recycling and have waste coaction devices. ). British people are altering their feeding wonts because they have realised the wellness benefits that are associated with Mediterranean nutrient and the ingredients that make that nutrient ( e.g. olive oil ).
When it comes to the criterions of populating the private ingestion is about 26 million euro, intending that the market is large and the clients are rich. ( Answers, 2010 ). ( Appendix C )
The UK is ranked in the sixth topographic point in the universe for the high engineering used by makers. Improvements in new engineerings and UK online services may assist Petroliva in the selling and publicity of its merchandises. The state is technological developed significance that there are plentifulness of information for companies to work in order to do their provision channels. Profiting from the new engineering there must be an digesting development from the companies in the UK in order to be more competitory ( Innovate UK, 2010 ). Furthermore, to run into the UK quality control demands companies must multiply the demands for technological equipments.
Petroliva should take to come in the United kingdom market because:
There is a immense base of possible clients.
There is an increasing demand for olive oil.
The British are altering their eating wonts.
Within the EU there are non barriers, and the UK authorities regulations are non rigorous.
UK has one of the highest GDP in EU and the state is acquiring out of the recession which should impact the degree of ingestion disbursement.
PORTER ‘S FIVE FORCE Analysis
Harmonizing to Porter ( 2008 ) there are five forces that direct every company and impact the strength, the way of the competition and the net incomes of a company. These forces are:
The bargaining power of the purchasers. The ability that clients have to coerce down the monetary values. In trade good market clients are monetary value witting doing them able to diminish the monetary values as there are besides other picks. To hold power the company should supply to them bundles of first-class quality, logical monetary value and utilize its environmental image in order to make trueness between clients and company ( Lee, D.Y. 2000 ) ( Appendix D )
The bargaining power of the providers. The ability of the providers to increase the bringing price/time of the merchandises. Most of the jobs in this field semen from the incorrect understandings between houses and providing companies. Having a good contract with the providers and doing certain that the understanding benefits both provider and company, the competition will decelerate down. ( Jones P et Al, 2005 ) ( Appendix E )
Rivalry among bing rivals. The competition in the UK olive oil market is ferocious with chief participants companies from states such as Italy, Spain and Greece. Harmonizing to Haymarket concern ( 2003 ) the UK market leaders are Filippo Berio and Carapelli ( Appendix F, G ). Both of them have Italian backgrounds and portion a large per centum of the olive oil market in the UK ( Appendix G1 ). ( See figure 2 ).
Menace of new entrants. States with no traditional background such as America, Africa, Asia, Syria and Turkey are seeking to come in the market doing the competition even more hard. Having a strong trade name image and high quality Petroliva may avoid menaces that come from new entrants.
Menace of replacements. Nowadays more and more technologically advanced stuffs are used in order to happen which olive oil possible pick is more environmental and inexpensive. The supermarkets promote in an active mode their own-label merchandises ( Vegetable oils, Sunflower oils, Tesco oil, Asda oil ) doing it hard for the consumers to take between the low cost merchandises and quality merchandises. This assortment of oils can confound the British clients because they are non cognizant of the differences between the oils and the olive oil wellness benefits ( the Independent, 2009 ).
MODES OF ENTRY
When a company has made the determination to travel into a foreign market, there is a large inquiry of taking the best manner to come in the market. Companies can utilize exportation, licensing, joint venture or WOS ( new entirely owned subordinate ) in order to come in a new market ( Ireland et al, 2007 )
This scheme is the easiest manner to come in a new market. Harmonizing to this manner merchandises are produced in the domestic market and so are transferred to the foreign mark market. There are two phases in this class:
Direct export- The exporter trades with every facet of the process.
( agents, distributers, foreign retail merchants )
Indirect export- this method does non necessitate big sums for selling investing, but the company loses the control.
( piggyback selling, franchising, contract
( Kotler & A ; Keller, 2006, p 674 – 675 )
The licensing manner is an agreement between the importing company and the domestic company. The life-time of the contract is little and aims in the use of licensor ‘s industrial assets ( Kotler & A ; Keller, 2006, p 676 )
This mode of operation is the less hazardous manner of come ining a market because there is an agreement with the hosting company for sharing equity and the concern bid ( Kotler & A ; Keller, 2006, p 676-677 )
WOS ( new Wholly Owned Subsidiary )
Harmonizing to Ireland et Al ( 2007 ) this entry manner is mentioning to houses that want to to the full have the installations of their production. In this manner company has the overall control but it is dearly-won and besides it has higher hazards. ( Ireland et al, 2007, p. 228 ).
Harmonizing to Woodcock et Al, ( 1994 ) in the entrance procedure at a foreign market a company must place three properties:
The resort committedness that is required. ( The company is a SME, and there is no demand of hazards and large investings )
The company control sum ( Petroliva is already present in many markets, intending that company wants the entire control in UK )
Technology hazard ( Having the best quality and the right managerial control, it is non hard for petroliva to set )
( Woodcock et Al, 1994 )
PETROLIVA ‘S MODE OF ENTRY IN UK
Taking into consideration the manners of entry the less expensive and hazardous manner to come in the market is by exporting. Harmonizing to Ireland et Al ( 2007 ), exporting does non demand the merchandises to be produced in the objective-target state ( Ireland et al, 2007 ). It is better for Petroliva to utilize the direct exportation manner because there will be no investing in the UK for production installations. Petroliva is already present in many markets through exporting its merchandises. Therefore, we can pull the decision that the company has high experience and has established its channels and created distributorships to export its merchandises. In this manner Petroliva can hold control over the full export dealing. This manner of direct-exporting will besides be the best manner for Petroliva to obtain maximal net incomes and the economic growing will be long termed. Company should do contracts with distributers who will transport the merchandise and so provide them to retail merchants or traders. Furthermore, Petroliva may sell every bit good at foreign retail merchants and so the retail merchants will do the connexion with the clients. Bing a SME company, Petroliva can non utilize other manners of entry because the competition is high and the company must avoid hazardous moves in the market.
Company ‘s benefits for using the direct exporting manner of entry in UK are:
Entry really fast in the UK market.
Increase the company/product graduated table utilizing installations that already exist.
Reduce the investings in the UK.
Overall control from the company.
Minimize the hazard with rivals or authorities regulations.
The importation policies are really broad doing the transporting easier.
( Quickmba, 2010 )
Harmonizing to Ireland at Al ( 2007 ) an appropriate and interesting place for a company is the state of affairs that allows the house to keep competitory advantage over its rivals ( Ireland et al, 2007 )
There are three generic schemes for a company:
Cost leading. The company focal point on obtaining a low cost competitory place compared to equal companies.
Focus scheme. This class is a set of actions which are used to do merchandises for a peculiar mark group.
Differentiation scheme. The company focuses on the creative activity of a alone merchandise of high quality and characteristics to construct a strong trade name image. ( Ireland et al, 2007 ).
PETROLIVA ‘S STRATEGY ( Differentiation )
Entering the UK market with a cost leading scheme may be a error because Petroliva ‘s oil quality is first-class and there is no demand to drop off the quality in order to offer lower monetary values. The focal point scheme is non appropriate for Petroliva because olive oil can be used by all the societal ranks and ages. Petroliva targets about all the groups of clients and parts in UK that seek for a merchandise of high quality so concentrating on specific groups is non necessary. Implementing a distinction scheme is the most suited for Petroliva because the company has an first-class quality of oil. A different merchandise of high quality with a alone design-image will profit the company when come ining UK. To calculate out why a company will stand out from its rivals in Uk market it should be answered the inquiry why clients will take to purchase its merchandises? The ground that client will take to purchase Petroliva ‘s merchandise is because it is traveling to offer them olive oil of high quality at sensible monetary value.
This scheme ‘s purposes are to offer to the clients a alone merchandise with first-class characteristics. Petroliva should stress on its alone merchandise characteristics ( size, design, quality, bundle and wellness benefits ) in order to increase gross revenues and addition market portion. By prosecuting this scheme the company will hold as a chief end to run into client ‘s specific demands. Entering the UK for the first clip, it will be hard for the company to concentrate merely on providing companies. Therefore, Petroliva should see both B2B ( concern to concern ) and B2C ( concern to consumer ) ways. Company can implement the distinction scheme by using the Marketing Mix construct which is normally used by International Businesses which are implementing an International Marketing Strategy ( Bennett, A. 1997 ). Harmonizing to Armstrong & A ; Kotler ( 2003 ) the cardinal factors of the selling mix are: monetary value, merchandise, topographic point and publicity. These cardinal factors have a mark of act uponing the purchaser ‘s determination ( Armstrong & A ; Kotler, 2003 p. 17 ). To distinguish its merchandises I suggest the below features that Petroliva ‘s merchandises should hold.
Bottle size: To distinguish from bing companies in UK an accent in the bottle should be given because it is an of import component that influences the gross revenues. Petroliva should concentrate in the class of 125ml and 250ml because these sizes offer to clients two benefits: foremost to present Petroliva ‘s merchandises to them and secondly to animate them to seek and see its olive oil. ( Appendix H1 )
Package: PET bottle is the best solution for the company. Being inexpensive and environmental friendly this sort of bottle will profit company in its costs and besides will pull clients ( envis-icpe.com, 2010 ). ( Appendix H2 )
Harmonizing to Griffin and Pustay ( 2007 ) pricing policies are really of import because they affect the success of the house. Petroliva should seek to happen the best possible monetary value after doing a research in UK monetary values and besides ciphering the costs that the olive oil has from its production until presenting to the client. In this manner company can happen a monetary value that attracts clients and besides offers good borders to the company.
The best combination of communicating channels, retail merchants and the perfect distributers it is needed in this class ( Griffin and Pustay, 2007 ). The merchandise will be distributed at the most profitable supermarkets, little and large retail stores, and gift stores. The retail merchants below are the best pick to sell its merchandises.
For the publicity phase Petroliva should utilize three selling attacks.
The best publicity ways to make faster market response are:
Billboard advertisement of Petroliva ‘s merchandise in UK ( creates wonder to the clients )
Cooking magazines- Cooking life style magazines
Sponsoring ( Food Television, Jamie Oliver, Nigella Lawson )
Cooking & A ; Lifestyle Television plans.
Offer gifts ( cups, cooking accoutrements ).
( Appendix H3 ) Cavusgil et Al ( 2008 )
CONCLUSION ( Appendix I )
Taking into consideration the above analysis from my point of position the best manner for Petroliva to come in the UK market is by exporting ( direct ) and by utilizing a distinction scheme. Petroliva is a little company and there are a batch of hazards if the company chooses other options in order to come in the market. The benefits of direct exporting for Petroliva will be to minimise the needful investing in UK, to come in the market fast and to minimise government/rival hazards. Furthermore, cognizing that the competition in UK market is fierce in this industry, it is better for the company to take a distinction scheme in order to pull clients by offering them a merchandise of better quality. Following the schemes, patterns and processes that I suggested supra in this paper the company will hold the most possible success come ining this market. A new different merchandise of high quality at a sensible monetary value has all the possible to hold great success in a new market where clients are monetary value witting and besides want the best possible quality ( Appendix I ).