International Marketing Strategy Laura Klinke BAMBA 2010 Assignment Table of Content I. Executive Summary3 II. List of Figures4 III. List of Appendices4 1. Introduction5 2. About Greggs 5 3. 1. The History5 3. 2. Greggs in Numbers6 3. 3. Greggs Foundation6 3. 4. SWOT-Analyse7 3. PESTEL – Analyses8 4. 5. Australia8 4. 6. Canada9 4. 7. India9 4. 8. Ireland10 4. 9. PESTEL-Evaluation11 4. Market Entrance Strategy Ireland12 5. Marketing Mix13 6. Conclusion13 7. Bibliography15 8. Appendix I. Executive Summary This report is an assignment in the course International Marketing Strategy.
It is about the British company Greggs, a well-known bakery retailer in the United Kingdom. Greggs wants to expand its business into a foreign market. The author had the choice between for countries – Ireland, Canada, Australia and India. In the report it is the task to find the best country to invest in. With the help of the SWOT analyse the author was able to find out the strength and weaknesses as well the opportunities and threats of Greggs. This will help to choose the suitable country. After this, the author was able to find the optimal country with the aid of the PESTEL framework.
After finding the right country to expand to the author will describe the ideal market entrance strategy and a optimal marketing mix to be successful. II. List of Figures Figure 1: Greggs Logo: Greggs (2010) Home [Online] www. greggs. co. uk [Accessed: 02/11/2010] Figure 2: SWOT-Analyse (own figure) Figure 3: Flag of Australia: Wikipedia (2010) Australia [Online] http://en. wikipedia. org/wiki/Australia [Accessed: 07/11/2010] Figure 4: Map of Australia: Wikipedia (2010) Australia [Online] http://en. wikipedia. rg/wiki/Australia [Accessed: 07/11/2010] Figure 5: Flag of Canada: Wikipedia (2010) Canada [Online] http://en. wikipedia. org/wiki/Canada [Accessed: 07/11/2010] Figure 6: Map of Canada: Wikipedia (2010) Canada [Online] http://en. wikipedia. org/wiki/Canada [Accessed: 07/11/2010] Figure 7: Flag of India: Wikipedia (2010) India [Online] http://en. wikipedia. org/wiki/India [Accessed: 07/11/2010] Figure 8: Map of India: Wikipedia (2010) India [Online] http://en. wikipedia. org/wiki/India [Accessed: 07/11/2010] Figure 9: Flag of Ireland: Wikipedia (2010) Ireland [Online] http://en. wikipedia. rg/wiki/Ireland [Accessed: 08/11/2010] Figure 10: Map of Ireland: Wikipedia (2010) Ireland [Online] http://en. wikipedia. org/wiki/Ireland [Accessed: 08/11/2010] III. List of Appendix 1. Introduction Greggs is a famous family bakery founded in 1951 and is nowadays the largest bakery chain in the United Kingdom. Because of its continued growing Greggs is interest to expand its business into foreign markets to increase sales and to reach new target groups. This assignment is about the strengths and weaknesses and of course the opportunities and threats of Greggs in order to evaluate them.
The results should help to decide in which of the four given countries Greggs should expand to. To find the right choice it is important to support the strengths and opportunities and to reduce the weaknesses and threats to survive in the new market against its competitors. 2. About Greggs plc. 2. 1 History Greggs is a United Kingdom based bakery products retailing company. Greggs was founded as a family bakery in the late 1930s by John Gregg. Figure 1: Greggs Logo Logo He started to deliver yeast, eggs and confectionary. In 1951 he opened his first small shops in Newcastle Upon Tyne.
After the death of John Gregg in 1964 his son Ian Gregg took the business over. Under the leadership of Ian the company grows fast and opened new shops in Yorkshire, North West and Scotland. In 1984 the business enters on the Stock Exchange while 261 shops were open at this point. Micheal Darrington is the Managing Director. After it they expanded into the Midlands, Wales and North London. Greggs produces and retails takeaway foods, e. g. sandwiches and fresh bakery food products. As well, they offer a range of healthy food with lower fat, calorie and salt quantities and a range of regional food.
Nowadays Greggs will be found at the High Streets, airports, shopping centres and place with a lot of public interest. All sandwiches are hand-made and fresh and have no sell-by date. Everything Greggs sell has its own recipe and all food will be fresh making in the stores. (Greggs, 2010, [Online]) “Our values are our commitment to the way we will treat each other. We aspire to be a company that everyone is proud to shop with, work for and do business with. Our values apply to all our stakeholders, including our customers, our people, our shareholders and our suppliers. (Greggs, 2010, [Online]) 2. 2. Background Information Today Greggs operates 1,400 stores, 10 regional bakeries, the savoury production centre, 2 distribution centres and 375 delivery vehicles and serves approximately six million customers each week. Greggs employ 19,000 people and want to add another 600 shops in the near future. Therefore 6,000 new jobs will be creating. These employees include 289 Master Bakers. The total sales increase from 2009 to 2010 is 2,9 %. The Greggs Foundation raises and distributes ? 10 million since it starts. Vision: The company? s vision is to be Europe? finest bakery-retailer. Mission: The mission is to maintain its growth and have a booming business as well as to work hard and with integrity to satisfy employees, customers and shareholders. (Greggs, 2010 [Online]) 2. 3. Greggs Foundation In 1987 Ian Greggs established “The Greggs Foundation”. Ian thinks that successful business can influence people and help people who live in disadvantages regions. The foundation raise money from Greggs plc. , employees through “Give As You Earn”, donations from major shareholders, Investment income and staff fundraising activities.
They are 3 grant programmes: * Major grants: support most disadvantages people in the North East * Regional grants: provides funding across the UK * Hardship-Fund: helps families and individuals which need a “emergency” funding Furthermore Greggs provide food to local charities. (Greggs, 2010 [Online]) 2. 4 SWOT-Analyses “A SWOT analysis summaries the key issues from the business environment and strategic capability of an organisation that are most likely to impact on strategy development. ” (Johnson & Scholes, 2002, p. 34) The following SWOT analysis identifies the strengths, weaknesses, opportunities and threats Greggs has currently. Strenghts| Weaknesses| * Over 1,400 shops in UK located in the top locations * Family business * Entered stock exchange * Quality products out of own range * Wide product portfolio * Create new jobs in the future * Increasing sales * Greggs Foundation (reputation) * Customer relationship * Corporate social responsibility (staff)| * Competitors * Delivery problems (suppliers) * Only distribute in UK| Opportunities| Threats| 600 new shops * Increasing sales * Franchising in foreign markets| * Quality checks * High costs of top locations * Increasing costs e. g. for wheat * No franchising| Figure 2: SWOT-Analyse Out of the SWOT analyse it is clear to see where the strength and weaknesses and the opportunities and threats lie. Of course Greggs has a lot of strengths. The most important one is the high quality product range and the wide product portfolio which range from the popular sausage rolls, fresh sandwiches to healthy snacks.
Furthermore the charity purpose gives the company a positive reputation and a good image. Also the corporate social responsibility in conjunctions with the Greggs staff is strength of the business model. It is a very familial team work where the boss knows every employee. Furthermore Greggs uses its own staff to produce TV spots and distribute 10 % of its profits to the staff every year. A big weakness is of course the presence just in the United Kingdom and the high number of competitors. Greggs is interested to invest in foreign markets.
But it should be aware to invest in other countries because of high costs and the quality of producing its products. To invest in foreign markets Greggs could use the business model of franchising. It is a good and cheaper way to open new branches without losing the Greggs philosophy. All in all the business model of Greggs is very successful and there are fewer weaknesses than strengths. The business strategy is easy to adopt into other countries. 3. PESTEL – Analyses 3. 1 Australia Australia, officially the Commonwealth of Australia, is located in the Indian ocean in the Southern Hemisphere.
It is the smallest continent in the world. For at least 40,000 years before European settlement in the late 18th century, Australia was inhabited by indigenous Australians. Today more than 22 million people live in Australia. Most of the people live along the coast and in the cities Sydney, Melbourne, Brisbane, Perth and Adelaide. The capital of Australia is Canberra. Figure 4: Map of Australia Figure 3: Flag of Australia 3. 2 Canada Canada is located in the north of the North America continent. It is divided into ten provinces and three territories.
It extends from the Atlantic Ocean in the east to the Pacific Ocean in the west and northward into the Arctic Ocean. In the second largest country in the world live about 27 million inhabitants. The border to the United States of America is the longest in the world. Canada has two official languages – English and French. Figure 6: Map of Canada Figure 5: Flag of Canada 3. 3 India India, officially the Republic of India, is located in the South of Asia in the Indian Ocean. It is the second largest country by counting the inhabitants (over 1. 2 billion).
India was colonised by the British from the early 18th century before it became independent in 1947. The capital city of India is New Dehli. Figure 7: Flag of India Figure 8: Map of India 3. 4 Ireland The Republic of Ireland is located in the North-West of Europe and is the third-largest island in Europe. It is surrounded by hundreds of islands, the Atlantic Ocean, the Irish Sea and the Celtic sea. The island is separated into two parts – the Republic of Ireland and Northern Ireland which is part of the United Kingdom. In the Republic of Ireland live approximately 4. 5 million people.
The capital city is Dublin. Figure 10: Map of Ireland Figure 9: Flag of Ireland 3. 5 PESTEL-Evaluation To decide in which country Greggs should expand it is necessary to make the PESTEL-analyse. The PESTEL framework “categorises environmental influences into six main types: political, economics, social, technology, environment and legal. It provides a summary of the questions to ask about key forces at work in the macro-environment” (Johnson & Scholes, 2002, p. 102) Greggs can decide between 4 given countries – Australia, Canada, India and Ireland – to invest in.
With the help of the PESTEL-analyse Greggs can decide which of the four is the best option to expand. Now the author introduces all 4 countries. In conclusion to the done PESTEL-analyse it is time to decide which county is suitable. The first country which can be remove from the list is Australia. Of course the culture is very similar compare to the British culture because of the historical background. Furthermore is the legal system almost the same. The big problem is that Australia is far away. So there a very high start investment costs.
They have to build a distribution centre and have to look for suppliers who can deliver the right ingredients. It would be too expensive to import all these. Therefore the products would be more expensive than in the United Kingdom and as the prices from the competitors in Australia. After removing the first country it is time to decide against the next country. The second country which Greggs should not choose is India. India is political very unstable. There are a lot of disturbance within the inhabitants. Therefore it is a very high risk to open a new business in such a country.
Furthermore is the culture very different compare to the British culture. The taste of food, snacks and drinks is complete different. Because of this Greggs needs new recipes to sell their products in India. Furthermore the climate is maybe to warm to sell bakery products. India has a very high import taxes. All in all there would be a lot of costs which would increase the prices of the products. In general Indian inhabitants are poor, so there would be no high success. At last there is the choice between the Irish market and the Canadian market. After doing the PESTEL framework the author choose Ireland to expand to.
The Canadian market is overcrowded with fast food and bakery chains. Fast Food is very popular and the question is, if Canadian people would buy the new products of Greggs instead of well-known products. Like Australia, Canada is far away and the investment costs would be very high to send products and equipment. At the end the most suitable country for Greggs would be Ireland. There is no long distance and they speak the same language. It would be easy to import all necessary goods easy and cheap because between Ireland and United Kingdom is a very good infrastructure (e. . ferries). The most important point is the same culture and the same taste. They don? t need new recipes and it would be easy to sell the bakery products. You can find the full PESTEL-analyse in the Appendix 1. 4. Market Entrance Strategy Ireland When expand a business into a foreign market it is always a hard decision which kind of market entrance strategy to choose. You never will have the ideal way but there is a way which is the most optimal one. The choice depends on organisational structure and objectives, competition, costs or the product itself.
Of course one of the most important influence factors is the costs. Expanding always includes a high amount of costs and you have to be aware if it is worth to invest a high amount of money. The best way for Greggs would be a joint venture with a local partner who brings knowledge and experience within this alliance. “Joint venture involves an undertaking or the wirde range of related arrangements in which two or more persons or companies combine their funds, labor, services or property for the purpose of making a profit” (Taliashvili, 2009, p. 14).
All rights and obligations are written down in a contract. Greggs can choose an already existing company to become a partner. This partner company knows already things about legal formalities and the customers which will help to start the new business. This alliance makes it easier to open new business relationships with local suppliers. Furthermore Greggs can win the trust of Irish people faster because of the good reputation of the joint venture partner. Greggs can learn a lot of things from its partner like mistakes in the past or how to gain with local suppliers.
This contract is based on equality. That means that all profits and all losses will be shared. When the business runs well Greggs has to share its profit, but this should be fine. Therefore if the business not runs Greggs is not alone and can share its losses. Furthermore both can share the investment costs and other costs like marketing costs. Before contract a joint venture, of course, you have to find the right partner which you can trust. It is important those both have the same values and goals and are in the same economical sector.
Furthermore Greggs has not the full control about its business and can lose its reputation as a family bakery. 5. Marketing Mix For every business it is important to find the right marketing mix for the company itself as well as Greggs. The marketing mix includes the four main instruments price, place, product and promotion. But there are more instruments to add like people, physical evidence, packages or process. The most important point of course is the product. The bakery products have a high quality and have its secret recipe.
The people can be sure that they will get the same products like in the United Kingdom because it is very easy to import the goods into Ireland. It is not a large distance and the infrastructure between the two islands is very good (ferries, railways). Greggs should not change the recipes of its products. Maybe they can add some local snacks to increase the sales. Greggs should start big marketing campaigns some month before they open its first shop. It is always hard to open a new business –of course- but a good marketing plan can help. Greggs hould start TV and radio spots to introduce their products. Furthermore Greggs could invite local people to the first shop openings and could distribute free snacks. The price is of course an important point, too. Try to keep the prices like your competitors during research in their prices. Because of the import costs it is not possible to have the same prices like in the United Kingdom. Greggs should try to keep the top locations in the high streets, airport and railway stations because there are a lot of people who see the shop, go in and buy something.
And of course Greggs should keep the social responsibility to its staff in Ireland, too. 6. Conclusion After doing special analyses the “winner” was clear – Ireland. There are several reasons why the author choose Ireland and several factors why not choosing Canada, India or Australia. Ireland has good basic requirements like the culture or the legal system. It is a lot cheaper to import into Ireland than the other countries. To start well Greggs should decide for a joint venture. The local partner will help to start the business easier and faster because of the experience and the knowledge of the domestic market.
But after working together with the partner, increasing sales and collect experience, Greggs is able to open their own shops and to increase the number of shops. Words: 2718 (include point 1. Until 6. )
6. Bibliography Literature * Dare, A. , Stott, D. (2009) India Handbook 2009. 16th ed. , Bath: Footprint * Duncan Baird Publishers (2002) Australia: Eyewitness Travel Guides London: Duncan Baird Publishers * Duncan Baird Publishers (2004) Canada: Eyewitness Travel Guides London: Duncan Baird Publishers * Duncan Baird Publishers (2004) Ireland: Eyewitness Travel Guides London: Duncan Baird Publishers * Durmmond, G. Ensor, J. (1999) Strategic Marketing: Planning and Control Oxford: Butterworth-Heinemann * Johnson, G. , Scholes, K. and Whittington, R. (2002) Exploring Corporate Strategy. 6th ed. , Edinburgh: Pearson Education Limited * Taliashvili, G. , (2009) Joint Venture Company – JVC under German and UK jurisdictions, 1st ed. , Norderstedt: GRIN Verlag Web Page * Wikipedia (2010) “Home” [Online] www. wikipedia. com * Greggs (2010) “Home” [Online] www. greggs. uk. ac