Case Report of Edita Foods: Prospects for International Expansion to Jordan and

South Africa

Edita Foods is one of the renowned food and beverage companies in Egypt. They

produce a variety of food and beverage products with HACCP certification, which ensures food

safety. A well-equipped factory with the latest technology which provides healthy and nutritious

product is the primary back support of their excellent reputation. They have expanded their

business in 15 countries around the world. Aside from their international expansion in several

countries, they are interested in developing their business in some other countries where they can

enhance their success history. Jordan and South Africa are the next two countries. We know that

Egypt has some ups and downs account in the GDP growth and political platform, but nowadays

there are developing quickly which can catch the eye of the world!

Jordan is the country with the smallest economy in the middle east. The government of

Jordan influences foreign investors to invest in their country for the development of their

economic scenario. The geographical, religious, and cultural similarity makes them take into

account Jordan. Physical factors and communication infrastructure are the main factors for

choosing Jordan as a new plot for business expansion. We know that Jordan has a limited supply

of water, natural gases like resources. Lacking these types of resources hampered their

production process, which has a direct influence on their industry. After grain and oilseed, food

is the second thing they are importing from different countries. Jordan is also an important

economy of the MENA region where more than 50% of people are aged below 24. The attraction

of young people towards western foods and the employment of women increased the demand for

bakery items in Jordan. Nabil is a significant competitor in the Jordan market. They are famous

for supplying cheese around the world for some famous restaurants like Mc Donald, Burger
King, etc. The chairman of Al Nabil company for food products Nabil Rassam (2015) stated that

sustainable economic development coupled with population growth will increase the consumer

base of the frozen food industry in Jordan. A joint venture with Nabil makes Edita food business

advantageous for export purposes. For importing products concentrating on frozen meat and fish

may be beneficial by considering the regulatory factor. Though the Government of Jordan

imposes 180% tax on import product, free trade agreement reduced the tax to 20% which provide

a massive advantage by considering the regulatory factor for the business in the Jordan market.

The second target market for Edita food was South Africa. The strong trade agreement

with Egypt makes Edita food and beverage a clear cut economic advantage over other countries.

Their success in a country like Kenya and Tanzania makes it easy to decide for expansion in

South Africa. The food and beverage sectors of South Africa are desirable. They provide almost

17 percent share in the total manufacturing market of Africa. They are interested in running their

business in a joint venture to adopt newer technology from the multinational company. In South

Africa, almost 60% of potatoes used for chips and others. Muslim religious people, they want to

take halal and organic foods that have a foreign market for food and beverage. Due to the

attractive demand with massive consumption, lots of giant international competitors are staying

in the South African market. Economic consideration helps Edita food to take into account the

South African market for food and beverage because peoples are consuming food and beverage

vigorously, which can increase more shortly. Their export-import scenario, which is almost the

same. The higher amount of unemployed people makes cheap about the cost. All of them are

influencing the economic benefit to establish the business in South Africa. But the main problem

with the expansion of the industry in South Africa is that their electricity problem which is
already hampering their GDP. Edita food may export Sally Willams nougat, which is healthy and

tasty, and it has a huge demand in the western food market.

Edita food and beverage have a huge production capacity. They are producing only 15

percent of their production capacity, So, yet a huge percentage of their facility yet remains

unused which can be efficiently used for expansion towards different countries.

Factors to be considered for business expansion:

There are several factors that Edita Food needs to consider before investing in a foreign

market. These factors include demographics, government, economics, and physical and

communication infrastructure.

Demographics: The study of a population is very important before entering a new market. Heller

(2010) stated that the age structure of the population can affect the demand for a specific type of

product.

Age distribution in Jordan –

0–14 years 35.8%

15-24 years 20.4%

25–54 years 35.7%

55–64 years 4.2%

65 years and over 5.1%

Age distribution in South Africa –

0–14 years 28.3%

15-24 years 20.2%

25–54 years 38.2%

55–64 years 7.1%

65 years and over 6.1%

We found that in both markets (Jordan and South Africa), more than 50% or almost 50% of

people are aged below 25 which falls within the target market bracket of Edita Foods. This factor

will facilitate the expansion of Edita Foods.

Government: The relation between Governments and the political situation between the two

countries also facilitates foreign investment.

Jordan and Egypt have much in common as religion, language, culture, food habits. Their

governments are also friendly.

Common membership in COMESA removed the trade barrier between Egypt and South Africa.

They also have a strong trade agreement which reduced tariffs.

These factors will encourage Edita Food to expand.

Economics: Jordan was a small economy not so long ago. But recently it has been recognized as

an emerging country because of its increase in GDP from 2.8% to 3.3%.

The GDP growth rate has decreased in South Africa. But its’ unemployment rate of 24.9% can

be seen as an opportunity of getting cheap labor.

Physical Infrastructure: There are a lot of similarities between Egypt and the Jordan market. To

attract foreign investment, Jordan recently improved its physical infrastructure.

South Africa has a ton of natural resources. Its’ market has a well-established infrastructure

which will ensure the efficient distribution of goods and services. But its problem with the

electricity supply can become a nuisance.

Communication Infrastructure: Communication infrastructure is also needed because if the

country is not lacking resources to produce or manufacture the product, they will not import it

from another country. Both Jordan and South African market has potential for new investments

in the food and beverage sector.

Import and export opportunities in terms of their attractiveness:

In terms of attractiveness import and export opportunities should be ranked as follows

1- Importing Frozen meat & Fish in Jordan should be in number one because they import a

huge amount of food which value is next to the import value of whole-grain and oilseed in

Jordan.

2- Importing halal food should be in number two position because it complies with the Islamic

religion. That product that can adhere to the view of faith can be more willingly purchase

by the customer. This theory is well established in the market.

 3- Organic baby food-importing should be in third place because nowadays, people love to

take natural products more because of the safety concern. So it is also an attractive one.

4- Exporting nougat, which is gluten-free and widely accepted because health-conscious items

are more acceptable in the customer base.

5- Exporting cheese, which has been prepared from goat, sheep milk, which is a unique one,

and Mac Donald & burger king like renowned restaurants are using it. Which can be a

selling point for the product.

Possible Mode of Entry for Edita Food:

Possible Mode of entry for Edita food is a joint venture. Because though Edita has vast

technical support and huge production capacity but doing business in a joint venture with a well

know company of that country will smoothen the business operation and expansion. And also a

joint venture company can more quickly teach them or give them lots of real scenarios, which

may vary from country to country. It will help them to gain more trust from the customer of a

particular country. Also, the joint venture company will get more local support than the other

company who are willing to run a business solely.

Exporting is a safer way to invest in the business in a new country. Because business

organizations will not directly be involved in manufacturing, which will reduce their plant setup

cost, but some issues such as the trust of the customer because customers love to buy the product

from the direct manufacturer and it may consider less revenue than others.
 Direct foreign investment is too risky to start or set up a business in a newer country. So a

Joint venture is the best probable way for Edita food to run their business in a new country.

References

1. Rassam, N. (2015). Food, beverages, and tobacco increasing their share of the retail segment.

Retrieved from https://oxfordbusinessgroup.com/

2. Heller, P. (2010). People and places: Can they align to bring growth to Africa? Retrieved

from https://www.cgdev.org/publication/people-and-places-can-they-align-bring-growth-

africa