German Market Expansion Evaluation of Dairy Farm

GLENILEN FARM

1 Introduction————————————————————————————      7     Table of content

1. Perspective———————————————————————————     7
2. Ambition————————————————————————————     8
3. Justification——————————————————————————–     8

2. Positioning————————————————————————————-     9
3. Porter’s Five Forces————————————————————————-   10
4. Cage Framework—————————————————————————-    11
5. Organizational Value chain—————————————————————    13
6. HRM plan————————————————————————————     15
7. Conclusion————————————————————————————    17
8. Bibliography———————————————————————————-   18

Appendices

1 PESTLE Analysis——————————————————————————– 21

2 Scenario Planning——————————————————————————–23

    2.1 Positive scenario—————————————————————————–23

    2.2 Negative Scenario—————————————————————————23

3 Cage Analysis————————————————————————————–24

4 Organizational Value chain———————————————————————26

5 Cultural web—————————————————————————————27

6 SWOT Analysis———————————————————————————–29

Introduction

Glenilen is a diary based Farm in Drimoleague West cork. The company was started by Valerie and Alan Kingston in the year 1997 in their own farm. Their initial products were yogurt and soft cheese sold at farmers markets. They sold cheesecake at local farmers market and rapidly proving their popularity, this led to gain development and popularity to Glenilen in local market. At present Glenilen’s products are now available throughout Ireland in over 200 independent supermarkets and specialist food shops. In addition the company employees a staff of 35 people. The main success for the Glenilen products in Irish market is the quality of record they maintain in the past years, which also created a great reputation to expand their products in global market. Glenilen farm started its export challenge to UK market in 2009. Their products have a very short shelf life so minimal distribution time is essential. Their dairy products gains one of the biggest reputation in the market because of one the key factor which helps people to be free from adulterant as the dairy products which is being made is purely natural.  So initially they targeted the high end retailers such as Selfridges, Harvey Nichols and Whole Foods and we are now in over 200 independent stores in the UK. Their success in UK market depends on this three factors Geographical location of UK, Quality of food they produced in Ireland and UK consumers like Irish products(Glenilen Farm 2016). Glenilen Farm in Cork has signed a major contract with leading UK grocery chain Sainsbury’s to supply five lines of yogurt to up to 350 stores in Britain and Northern Ireland. The contract is worth about €500,000 a year to the Irish business and will boost its annual turnover by 10 per cent(Hancock 2017). Glenilen products is also exported to UAE markets, which accounts 1 per cent of its business. They are also trying to expand their products in European markets and research works are going on globally.

Perspective:

Germany

Many Germans consume yoghurt on a daily basis during their breakfast routines. It is either consumed pure or as a dessert with cereals, cornflakes and fruits. Yoghurt and sour milk products are expected to see a relatively strong performance over the forecast period, despite the maturity of the category. Health concerns will benefit many products like sour milk, plain yoghurt, and soy-based yoghurt and lactose-free products, all of which are expected to see a considerable increase in volume sales. A stable development over the forecast period is expected for fruited yoghurt, which accounts for 43% of volume sales in yoghurt, as well as for flavoured yoghurt and drinking yoghurt, with only minimal change in either direction(EuroMonitor 2016).(Haywood 2015) As Article published on July 23, 2015 by Alison Haywood, a journalism Student who clearly mentioned the importance of dairy products in German culture. The guestbook of Glenilen contains many testimonials from German people stating how they enjoyed their yogurt and would definitely want them to export it to Germany and those customer feedbacks gives us an insight as to why we should enter German Market.(Glenilen Farm Guestbook). Germany being a part of EU, the European Economic Area (EEA) gives the right to export and import goods freely. This means that governments may not limit quantities of imports/exports nor restrict trade in any other way.

Ambition:

The ambition of Glenilen is to become a regional player and expand its current market in various other parts of Ireland and furthering its globalization scope to other European markets as well. In the light of Brexit, Mr. Kingston said it would look to continental Europe for growth opportunities, notably Germany, where Kerry gold is the leading branded butter in the market. He said, “There might be an opportunity to piggyback off the success of Kerry gold,”(Small businesss ideas – Glenilen Farm 2015). This gives us an insight on his future venturing destination and the emphasis on the significant rise of other Ireland’s manufacturing company Kerry gold.

Justification:

The idea of entering the German Market should be based on the following criteria, the amount of German market which should be targeted during the first few years. As GDP per capita (2016) of Germany (41,936.06 USD) is less than Ireland’s (61,606.48 USD), there must be a significant cost cut which is to be considered while marketing and budgeting the product in low-high income group(Trading Economics 2017). This also includes the income group of young people around the age of 20-35, which by the report from Euro monitor clearly underlines the consumption of dairy products increasing in contrast to older people appetite to dairy foods. While the product is new to the foreign market, several Ad campaigns needs to be analysed and promoted 6 months before the launching the product in the form of discount coupons and tie-up with local retail shop to create an awareness and anticipation among the people regarding the range of dairy products available from our company. The company while entering Germany will have to joint venture with various other dairy giants such as Muller or Zott to open their markets or enter the frame by investing their shares in supermarket chains for the initial growth.

The value proposition in the new market should emphasize on the quality of the product as to why the customer should buy from us in opposition to other brand in the market and to focus on the set group of people with proper customer feedback to grow and understand the trend in the market. This will enable us to hold an interest among the people and gives us an opportunity to grow in the German market.

Positioning:

Initially we had a plan of entering in to four major countries in Europe to expand our global market. The countries are Germany, France, Poland and Ukraine. The Glenilen have idea of entering into German market due to three major factors
>geological location of Germany
>German people encourage more organic products than inorganic
>they are mostly health conscious in buying things
Glenilen one of the Irish dairy product which has low volatile content in it which is good for health

As direct entry into the German market is highly competitive because of availability of huge number of organic products are already available in the market as a new company it is a better decision to have a joint venture with one of the leading company in the market hence forth we have chosen LIDL and Schwarz group in Germany who would establish our product and could also give us a good reputation in the market .As people in Germany has a major focus towards brand loyalty and consumers prefer “discounters” who could give them a good and quality product in the market for competitive price.
As the point of entry into the market would not a major risk factor with us due to joint venturing with a multinational marketers in Germany. Joint venture will be the best option to enter Germans market. Since Germany is already a developed country. Join venturing will be a challenging task for us to accomplish. LIDL and Schwarz are the two companies we are targeting. We need to make sure that we maintain a good relationship with these companies by providing and maintaining good quality products and having highly professional candidates to communicate with them.

To kick-start our product in the market we are planning to provide good discount rates for all the products initially. As consumers get more used to our products, we can reduce the discount rates. The discount rates should not go below our expected profit margin and also the consumer should not feel the product is of cheap quality. We should make sure that our product should be at easy reach of consumers for example our products should be sold at local super markets, grocery stores etc. As we have huge number of competitors for milk products in the market we need to make sure our products get more focus by customers. This can be accomplished by provide better quality at a cheaper price.

PORTER’S FIVE FORCE:

>Competitive rivalry

Lidl’s competitive marketers in Germany such as Rewe group and Edeka even though they offer a good variety of organic content to the market some time it is being reported that there are certain products which had failed the quality standards test as well these competitor’s don’t offer a good discount as well not known in other markets in the European union as Lidl is being known in UK and other members of the EU. (EDEKA – Quality standards, Hobbs 2016, REWE-Zentral-Aktiengesellschaft)

>Supplier power

As joint venturing with Lidl can give us a good reputation in the market as its being a well-established supermarket (discounters) which can offer a good brand value to the product and can gain a good reputation for the product in the German market. And many of the population in the German market prefer to go for discount markets. Lidl has also established a good name in the market through providing awareness to the people of Germany to fight obesity through “hope to help fight obesity “program which informed customers regarding health awareness.(Germany: Are Rewe and Edeka better than the discounters?, How German discount supermarkets hope to help fight obesity 2017)

>Buyer power

It offers customers with good and qualitied product in the market and with the good discounts which help customer to understand and get a clear view where they could get the same product and a good price as Germans prefer loyal branding Lidl has a clear knowledge about what their requirement and procures the product as per their requirement in a good competitive price. More consciousness about organic products also gain a good market for Lidl’s market. (Two cheeses in one bite 1998, Germany loves dairy desserts 2010)

>Threat of substitution

As the taste of German people being unpredictable the company should always bring new ideas how they can market their product to the customer in order to catch the target list of customer as they are not aware of the product .If the company have done good Research and developed Good and Enrich products in Dairy which has high nutritious products can be greater substitution to the Glenilen.(Crawford 2015, Paul)

>Threat of new entry

Upcoming products such as Gluten free drinks, Sugar free products and Dairy products which could bring health benefits reducing the rate of diabetics, obesity and celiac diseases by metro group and DMK these could be the major threat which they have not taken into account while entering into Germany market.(GTAI, The Benefits of Sugar-Free Eating and Cooking)

Cage Framework:   Cultural