Professional Documents
Culture Documents
Introduction:
International Trading is an exchange of goods, capitals, & services between several
nations and states, without much difficulty. International trade has a major contribution
to its economy. Additionally it is also main cause of income for an emerging country.
International trade is growing rapidly nowadays with the support of the modern
technologies, advanced transportations, outsourcing of manufacturing & services, rapid
progress, & advanced manufacturing techniques.
Expanding business internationally can be a great opportunity to grow the organization
& reach to the potential consumers that may not else discover the brand, service or a
product.
The Company
Company Analysis: Heineken has many brands under its name. Strongbow is
one amongst them. Strongbow ciders was launched by HP Bulmers in England in
the year 1962. Strongbow is manufactured by HP Bulmers located in
Herefordshire in England. HP Bulmer is a subsidiary of Heineken international.
Strongbow is the largest selling cider in Australia & second largest selling cider in
US.(theheinekencompany2015)
Despite the economic downturn Cider has achieved steady growth. In the span of
5 years the sales of cider has increased drastically at 32%. In the year 2007 the
sales of cider was 1.8 billion £ and as the time went by it increased drastically to
2.7 billion £ in the year 2012. According to the mintel reports the sales of cider
has reached around 3.7£ pounds in the year 2014.(mintelreports)
Target Market Profile: strongbow is targeting people with Excessive life style
with an annual income of $2000.The age group we are targeting is from 18-65
years of old. As cider is a low ABV drink and is made from apples it can be
consumed by both men and women. The consumer buying criteria for Strongbow
cider depends on taste, country of origin, service, quality & recommendations.
SWOT Analysis:
Strengths Weakness
-Brand already well established in western -Developing a taste in a new market takes
countries such as UK & US. Brand positioning time and is a formidable task
strategies can be replicated.
-Creating awareness about cider in a new
-Has experience in entering new markets such market is a huge task
as Australia.
-Strong backing of the parent company
Opportunities Threats
-Asian and South American markets are still -It’s hard to make a transition of consumer
untapped from their loyal brand
-Low alcohol content drinks with a sweeter -Negative image associated with drinking
taste do appeal women
Although both the market potentials are similar India has favored high in market &
company sales potential because of its high level of alcohol consumption. Ultimately
India is a market with high potential in overall GDP growth, population, rising alcohol
trends &high population of younger generations.(GMMSO4)
Demography: India is the second most populated nation in the world with more
than 1.26 billion people living in it. India has more than 50% of its population
under the age of 25 & more than 65% of the population under the age of 35.
(indexmundi)
Infrastructure: With more than 300 million internet users, India has the second
most internet users in the world. There are 13 major ports & about 200 minor
and intermediate ports in India. India has one of the biggest road networks in
the world, totaling to around 3.3 million kilometers at current. There are 329
international & domestic airports in India. However Currently, India faces a heavy
$1 trillion price tag for infrastructure expenditure.(mckinsey2015)
PESTLE Analysis:
Political Analysis
Current Strengths Current challenges
• Tough democratic setup • Violence
• Overseas policy • Absence of comprehensive deal
with Pakistan
• Charges of corruption
Future prospects Future risks
• Tough and steady government • Increasing demand for new states
• Improved relations with its smaller • Societal & communal tensions
instant neighbors
• Better responsibility of the
government
Source:marketline
Economic Analysis
Current Strengths Current challenges
• Second biggest work force in the • Persistent inflation
world • Excessive local progress and
broadening monetary differences
Future prospects Future risks
• Pro-growth guidelines of the fresh • Reduced infrastructure
government • Extremely leveraged corporate
segment postures a threat to
finance sector
Source:marketline
Social Analysis
Current Strengths Current challenges
• Increasing ratio of young people. • Healthcare remains main worry
• Employment assurance schemes • Express growth
• Less HDI rank
Future prospects Future risks
• Growing life expectancy & dropping • Governments authority challenged
infant mortality
Source:marketline
Technological Analysis
Current Strengths Current challenges
• Solid data base • Gross spending on R&D remains
• Robust English language skills and less than 1% of GDP
cost advantage • The talent pool needs additional
occupational training
Future prospects Future risks
• Significant competitive advantage • Low amount of high technology
in biotechnology research exports
Source:marketline
Legal Analysis
Current Strengths Current challenges
• Broad legal agenda for business • Obstacles to trade & investment
entities • Weak execution of intellectual
• Implementation of VAT property laws
• Judicial postponements
Future prospects Future risks
• Improvements in corporate • Inefficient implementation of
governance regulations
• Tax reforms • Lack of a single financial market
regulator
Source:marketline
Environmental Analysis
Current Strengths Current challenges
• Biodiversity • Depleted water resources
• Comprehensive environmental • Dependence on fossil fuels for
policy framework energy requirements
Future prospects Future risks
• Public private partnership & • Distortionary policies
ecotourism • Enforcement deterrents
Source:marketline
Tariff & Regulations: The Indian tax rate is 30% for the domestic companies
and 40% for the international companies. The tax rate in India varies from the
state and the type of products. The average VAT in India ranges from 12.5% to
15%. Some categories are charged for less VAT ranging from 4-5%. These
include medicines, drugs, cotton, and chemical fertilizers. (marketline2015)
Internationalization Process:
Pricing Strategy: According to our marketing objectives & aims the finest
pricing approach for this product is Penetration pricing. Our aim is to launch the
product at a low price than its subsidiary products in order to gain market share
and build customer loyalty. Once we capture a significant market share we can
rise the price later. However the selling price of the product will be lower in India
if compared to the home country.
• Threat of substitute:
Very heavy because of the established markets of other alcoholic beverages
such as beer and wine.
Segmentation: 6 metro cities in India for the first phase launch and expand to
other cities in the expansionary phase.
Targeting: The target customers for strongbow cider are from the age 18-65 both
men and women. Most importantly people who consume alcoholic drinks
regularly while socializing or while celebrating with family and friends and also
who would want to try new alcoholic beverages.
Marketing Cost Assumptions: Below are the marketing cost assumptions for a
strongbow cider entering into Indian market. As we can see in the below table the
marketing cost are high during the launch of the product. However once the
product grows and captures a significant market share the advertising costs will
be reduced.
Exporting is a process of manufacturing products & services in one nation & marketing
and distributing it to the other nations throughout the world. It is the traditional and most
efficient form of operating business internationally. Basically exporting requires for key
players to coordinate that is importer, exporter, government & transportation provider.
In order to expand its market potential a company must enter into a global trade. By
entering into a global trade a company can expand its sales and increase brand recall
globally. Firms entering into the international market for the first time chose export
strategy as it is reliable and flexible when compared to other strategies. A business can
enter into a international market for a less risk & expenses. Moreover exporting is
adapted by the small business organizations.
Our idea is to joint venture with the UB group in order to carry on the manufacturing
operations in India. At present Heineken carries out the same process, the Heineken
beers in India are manufactured by UB group. The reason for carrying out the
manufacturing operations in India is low because of the low manufacturing cost.
However UB group should Import raw materials such as the Apple cider vinegar from
the Heineken in order to develop the quality & taste of cider. There are certain
procedures to be carried out during the export import process .
Heineken sets up new breweries in the overseas markets, through the assistance from
local government and monetary institutions. Heineken company has set up various
breweries in different countries in order to achieve location benefits (production
capicity,qualified wage rates, R&D services, market potential). Heineken also purchases
over the local surviving breweries overseas , thus by growing contacts to new markets,
skilled & trained work force,latest technology & product supply systems.
Mode of payments: The payment mode chosen for our entry strategy is Letter of
credit. LOC is often used in international transactions in order to manage the
payments efficiently and safely. Due to the environment of international dealings
including factors such as different laws, distance & trouble of knowing each other
personally letter of credit plays a very prominent role in international trades.
Below is the step by step process to carry out LOC
Initially, the importer & exporter enter into an agreement to conduct a business.
Here the exporter desires a letter of credit to guarantee payment.
Then the importer applies for a letter of credit in his bank for a courtesy of the
exporter.
Importers bank then favors the credit risk of the importer, subjects & passes the
credit to its correspondent bank (directing or sanctioning). The correspondent
financial institution is typically situated in the same geographical location as the
exporter.
Exporters bank validates the credit & passes it to the original credit to the
exporter.
Exporter then transports the goods, validates & prepares the documented
necessities to provision the LOC. Documented necessities may differ significantly
provisional on the apparent risk involved in dealing with a specific organization.
The exporter then forwards the necessary documents to his bank in intimating
them to process the payment done by the importer.
The institution then inspects the papers for obedience with the terms & conditions
of the LOC.
Once the bank found out the documents to be correct then it will claim the
amount by:
Importers bank will inspect the forms for obedience. If they are correct, the
importers bank will deduct the buyer's account.
References:
[Online]. [25 July 2015]. Available from: http://www.mintel.com/press-centre/food-
and-drink/cider-is-the-apple-of-the-alcoholic-drink-sectors-eye-but-can-move-
beyond-its-core-market-reports-mintel
http://ourairports.com/countries/IN/airports.html