Please find the attached case study and assignment.
Course: International Business, Subject: Global Marketing Edinburgh, United Kingdom
Please find the attached case study and assignment. Course: International Business, Subject: Global Marketing Edinburgh, United Kingdom
Blue Skies Holdings Limited Blue Skies Holdings Limited is a relatively young UK company. It was set up by its founder and current chairman, Anthony Pile, in 1997. It aspires to ensure that as much of its profits as possible stay in the countries where the factories are located. Headquartered in Northamptonshire, it is classified as a manufacturing company, diversified into fruits and related products such as fresh juice and ice cream. Over the years, the company has had crucial decisions to make, just like any multinational company seeking to enter new foreign markets. The first involved which countries to invest in. The second was what entry mode to choose. Third, they had to get the business model right. Judging by the success achieved so far, it appears they got it right in making these crucial decisions. This is because many companies fail and incur huge costs in foreign markets due to various reasons. These may include selecting countries that do not offer the right business environment, not offering the right product at the right price, not understanding the cultural complexities in the new market, not understanding the level of competition in the new market and not having the appropriate human and financial resources to succeed in these markets. Having managed the above hurdles successfully, the company has achieved growth with over 5000 employees in peak season globally and a turnover of about £110 million. Due to its successes, Northamptonshire Telegraph (17th January 2020 edition) reported that Prime Minister Boris Johnson was to use the company’s factory to exemplify how UK can increase trade with African countries. The company is, however, not resting on its laurels. Their 2020 plan included ambition to protect their core business and to develop new products in new markets from new facilities in different parts of the world. For example, it has started distributing dairy-free ice cream in USA through KeHE. It is also exploring the possibility of distributing to major hotel chains in other countries, e.g., in Egypt. The cut fruits are processed in their factories located near the sources of raw materials and exported mainly to Europe. They currently supply to 15 major retailers across Europe, e.g., Netherlands, UK, Belgium, France, Italy, Switzerland and Denmark. In the UK, they supply fruits to retailers such as Waitrose, Marks & Spencer and Sainsbury’s, and they supply to Carrefour and Albert Heijn in France and the Netherlands respectively. They also supply to major regional retailers in Brazil, Egypt, South Africa and Ghana. Apart from fresh fruits, the company also produces fresh juice and ice cream for local and international markets. The products can also be purchased online in selected locations through Amazon (fresh cut fruits and ice cream) and Ocado (ice cream). There are also plans to increase the distribution of their various products in major retailers in Egypt and Brazil. This offers them flexibility to produce more juice and ice cream for the local markets if demand falls in their European markets if there are unforeseen circumstances and when it becomes less profitable to export. The founder stated in the company’s August 2020 report that they have been seriously challenged by the COVID-19 pandemic. The closure of international borders and the grounding of airlines required them to be flexible in their management of logistics. Besides, declining sales meant the company had to radically alter forecasts and quickly adjust orders for fruit and packaging, and they expect COVID-19 to continue to cause much disruption. Brexit is also anticipated to have some effect on the business in the UK. It is believed that most of the Corby employees are workers from Poland, Romania, Lithuania, and Latvia. Corby has already seen a rapid reduction in the number of people who come to the town looking for factory work from Eastern Europe. The company added its voice to calls for the UK government to recognise and support the rights of its European workers to live and work in the UK. Brexit also means the UK government need to sign new trade agreements with several countries. Blue Skies are concerned about the possibility of having to pay high tariffs on some of its products if the UK government fails to agree trade agreements in its key markets after Brexit. UK and Egypt have signed new free trade agreement, which has been welcomed by the founder of Blue Skies. Such political initiatives with other countries will potentially impact positively on the group, as they continue to explore opportunities in the global marketplace. However, there is a concern that Ghana, which hosts their biggest factory and employs more than half of its global workforce, could be less competitive, compared with Costa Rica, for example, in pineapple export if the right trade agreement with the UK is not found post-Brexit. Blue Skies entered majority of their major international markets through wholly owned subsidiary and export. In Ghana where they established their first and biggest subsidiary, they located their factory only twenty miles from the international airport to allow quick transport of their products to European markets. They are also located in the Free Zone enclave, Ghana government initiative to, among other objectives, attract foreign direct investment and support companies that export at least 70 percent of their products (Ghana Free Zones Authority, n.d). Some of the products from this country are smooth cayenne pineapple, fairtrade MD2 pineapple, fairtrade organic sugarloaf pineapple, mango, papaya, coconut, passion fruit and banana. The second subsidiary was established in Egypt in 2003 to expand their range of tropical and temperate fruits. They export products such as galia melon, orange fleshed melon, watermelon, oranges, red grapefruit, white grapefruit, red and white seedless grapes, strawberry, pomegranate, and dates. Just a year after establishing their subsidiary in Egypt, Blue Skies started another subsidiary in South Africa, ensuring that the company has presence in all but one of the regions of Africa. They export pineapple, kiwi, papaya, mango, grape, citrus, banana, and lychee from their South African factory. Their fourth subsidiary is in Brazil and judging by their success in Africa which resulted in establishing three subsidiaries, it will not be a surprise if the company enters more markets in the South American continent. The factory in Brazil opened in 2007. In addition to the main factories in Africa, Blue Skies has packhouses in Cote d’Ivoire and Senegal to ensure continuous supply of raw materials to the factories. They also have a new factory in Benin, which started exporting fruit to France in February 2020. The above entry modes will continue to be their preferred strategies for the foreseeable future. The main reasons given were the belief that the founder’s ideas and vision for the company, consumers and suppliers were unique. His belief was that, to get products to consumers relatively fresh, the processing factory needed to be close to the source of the raw materials rather than close to the consumer. They therefore established all their factories in the tropics where they source the raw materials. Closely related to this reason was the fact that there were no suitable partners in the host countries with similar passion to form joint ventures with, considering the unique vision of the founder. Wholly owned subsidiary enables the company to achieve the level of control needed to enforce its culture, as well as adapt products very quickly to the specifications of the retailers. This idea is consistent with the general theory regarding entry mode decision-making in developing countries. For example, Chiao, et al., (2010) hypothesised that the more firm-specific advantages a firm possesses, the more it is likely to adopt wholly owned subsidiary entry mode. This view has also been highlighted in the works of Anderson and Gatignon (1986) and Buckley and Casson (1976), who generally are of the view that firms choose high degree of involvement strategy to protect unique assets such as technology and expertise. In the case of Blue Skies, this firm-specific advantage was their business model. This strategy also enables the corporate headquarters and subsidiaries to share knowledge and expertise with relative ease (Tan, 2009). This is very crucial, especially in the early stages of the establishment of a subsidiary, as the company begins to deal with the liability of foreignness. Their entry strategies may also be explained by the transaction cost theory. This because, if it is perceived that finding, negotiating and monitoring potentially suitable partners would be much more expensive, then companies may choose wholly owned subsidiary and establish their business from scratch in order not inherit costly liabilities and avoidable costs. Research on the effect of cultural distance on the choice of entry mode is inconclusive. Strategy and Structure As typical of most multinational companies, the corporate headquarters in the UK makes strategic decisions and provides direction in terms of operations, logistics, marketing, sales, communications, research and development, finance, management training and technical compliance. The company’s business model is based on what they call Joint Effort Enterprise (JEE) (Torvikey, Yaro & Teye, 2016). The model requires global effort, and it is built on three key principles: diversity (recruiting the right calibre of staff from diverse backgrounds to generate and implement robust ideas), respect (respecting the environment and staff to ensure sustainability) and profitability (the need to be profitable to generate the required funds to survive and ultimately grow as a business). “Diversity” is the “Joint” component of JEE. “Effort” and “Enterprise” signify the commitment required from the diverse staff to ensure profitability, survival and sustainability. This model dictates that the company must work collectively with both domestic and global stakeholders to confront challenges they might face. As part of the requirements of the JEE, the management team from all their locations meet every year to discuss current and anticipated challenges and devise future strategies. JEE enables stakeholders to demonstrate a sense of ownership and responsibility in ensuring sustainability and profitability of the company and sources of raw materials. To Blue Skies, sustainability is key for their business, and this has been acknowledged by government agencies. For example, The Ghana National Chamber of Commerce and Industry (GNCCI) commended the company for its efforts to build a profitable enterprise that cared for the environment, sustainable production and inspired legacy (GNA, 2019). They are committed to the United Nations Sustainable Development Goals (SDGs) – a framework of international priority areas to tackle the biggest challenges facing the world. Their commitment to SDGs is particularly seen in SDG numbers 1 (no poverty), 3 (good health and wellbeing), 4 (quality education), 6 (clean water and sanitation), 9 (industry, innovation and infrastructure) and 12 (responsible consumption and production). For example, to support quality education, the company, in partnership with retailers such as Waitrose (UK) and Albert Heijn (Netherlands), has constructed classroom blocs for schools. Besides, their support for school farm competition with prizes, seeds, tools and educational resources provide pupils with practical knowledge, potential career pathway and ambition. Blue Skies are already looking forward to the years ahead to demonstrate their commitment to people, planet and profit. According to their December 2020 Pelican News, they have already set themselves four ambitious targets contained in the Blueprint 2021: to work towards net zero emissions of carbon dioxide, sourcing materials that do not harm the environment, working towards zero waste through combination of recycling and reuse of materials, and assisting communities in which they operate to thrive. These four areas have been selected through consultation with stakeholders. Already 11 projects under The Blue Skies Foundation programme have been approved for 2021 to assist communities. The projects include bio’ toilet block for a school in Ghana, a borehole and effluent treatment station for a children’s educational charity in Brazil, IT equipment for an adult learning initiative in South Africa, a fully equipped computer classroom in Senegal and a gym for staff at Blue Skies Egypt. As evidence of how stakeholders are involved in decision-making, Virtual Board meeting involving Waitrose Board Director was held in December 2020 to decide on the 11 projects to support in 2021. In total, over 100 projects have been completed since the start of the Blue Skies Foundation in 2009 (Blue Skies, 2019). One of the successes of the company in the relatively short period of operation is winning the Queen’s Award for Enterprise in the Sustainability Development category in 2008. The UK International Development Minister at the time, Gareth Thomas, commented on the award that it proves that developing countries can export and still be able to take care of the environment. Blue Skies won the Queen’s Award again in 2020, demonstrating consistency with their commitment to the SDGs. Besides, the chairman was awarded ‘Greatest Entrepreneur of all time’ in 2020 at Ghana’s 10th Entrepreneurs & Corporate Executive Awards. The company has also been assisting the communities in which they work with provision of compost for farmers, working with agronomists to introduce farmers to quality and variety of fruits, creation of employment and protection of the environment (Torvikey, Yaro & Teye, 2016). The assistance provided by the company’s agronomists ensures the fruits are of good quality and have uniform taste irrespective of where they are cultivated. It is evident from the above that entering international markets create value for stakeholders, but only if the crucial decisions regarding choice of entry strategies, products, markets in which to operate and sustainability are correctly made. These decisions and their potential implications are affected by the company’s internal and external environment. Blue Skies need to continuously monitor its internal and external environment and be responsive, reactive and robust (Osei, et al 2019) in order to remain relevant and competitive in the global marketplace. This case was written by Dr Collins Osei, Edinburgh Napier University. The material in the case was obtained from several sources. Assignment 1 The assignment will be in REPORT format and is worth 50% of the overall mark. The word count should be 3000 words (+/- 10%) in total, excluding references and appendices. The American Psychological Association (APA) referencing style must be used. This is an individual piece of work and late submissions will be capped at P1%. Please contact the module leader if you have extenuating circumstances. Scenario Blue Skies operate in countries including the UK, Ghana, Egypt, South Africa, Benin and Brazil. You are required to assess the current situation of Blue Skies using information in the case, secondary sources and theory to determine whether they should enter a new market of your choice or not. The report should include the following information: Introduction – background to Blue Skies and its international operations. Critical analysis of the case (internal/external) and secondary resources to assess the current situation of Blue Skies. This will help to identify strengths, weaknesses, opportunities and threats. This analysis should be supported by relevant citations, marketing theory and models. The strategic concerns faced by the company in the new market. Based on the previous discussion, what deductions and recommendations are given for the new market to take the organisation forward, taking into consideration the ambition of Blue Skies? All material such as company information, websites, books, newspaper articles, journals, theory and models MUST be referenced within the report as well as a full reference section at the end of the report. Use Appendices where possible to keep to the required word count Please note the marking criteria and weight this accordingly within your assignment. Marking Criteria The following framework is a guide to the marks available for the assignment: Report structure and process 15% Environmental (internal/external) analysis 30% Strategic concerns within the chosen market 30% Deductions, recommendations and conclusion 20% Citations/Reference list 5% Total 100% If you require further assistance or clarification, please email Dr Collins Osei at [email protected] References Anderson, E. and Gatignon, H. (1986). Mode of entry: a transaction analysis and propositions. Journal of International Business Studies, 17(3), 1-26. Blue Skies (n.d). https://www.blueskies.com/ Blue Skies (2019). Blue Skies Foundation 2019 Review, accessed from https://www.blueskies.com/2019-annual-review/ Buckley, P. J. & Casson, M. C. (1976). The Future of Multinational Enterprises, London, Macmillan. Chiao, Y-C., Lo, F-Y., Yu, C-M. (2010). Choosing between wholly owned subsidiaries and joint ventures of MNCs from an emerging market. International Marketing Review, 27(3), 338-365. Ghana Free Zones Authority (n.d), Incentives, accessed from: https://gfzb.gov.gh/index.php/incentives/ Ghana News Agency (GNA) (2019). GNCCI to help address challenges of Blue Skies, HPW Limited. 2019-10-02 Osei, C., Amankwah-Amoah, J., Khan, Z., Omar, M. and Gutu, M. (2019). Developing and deploying marketing agility in an emerging economy: the case of Blue Skies”, International Marketing Review, Vol. 36 No. 2, pp. 190-212. https://doi.org/10.1108/IMR-12-2017-0261 Tan, D. (2009). Foreign market entry strategies and post-entry growth: Acquisition vs greenfield investments. Journal of International Business Studies, 40, 1046-1063 Torvikey G. D, Yaro J. A, Teye J. K. (2016). Farm to Factory Gendered Employment: The Case of Blue Skies Outgrower Scheme in Ghana. Agrarian South: Journal of Political Economy. 5(1):77-97 9
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