MBA Assignment

“Entering a new International Market”

Lecturer : Paul Reynolds

 Student : Yong Loong Wee

Student ID : 0011TKRTKR0917

Date : 18th April 2018

Contents

Page
1.0 Executive Summary 3
2.0 Company Introduction 3
3.0 Critically evaluate how and why they should employ a 4
strategic planning approach to their Marketing campaigns in
the international market.
3.1 Decision to go global 4
3.2 Global market to enter: China 5
3.3 Mode of entry 5-6
4.0 Critically examine how and why they should strategically 6
plan and undertake Market Research in the international
market.
4.1 Importance of Market research 6
4.2 Market segmentation, targeting and positioning 7-8
4.3 Marketing mix activities in China 9 - 10
4.4 Hofstede’s 5 cultural dimensions for China 10 - 11
5.0 Conclusion 12
6.0 References/Bibliography 13 - 14

I declare that this assignment is all my own work and that I have acknowledged
all materials used from the published or unpublished works of other people. All
references have been duly cited.

Yong Loong Wee

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Entering a new International Market

1.0 Executive Summary

The main purpose of the study is to examine and assess the biggest local
biscuit’s maker, Munchy Food Industries Sdn Bhd (refer as “Munchy’s”) on
their intention and opportunity to enter their business into global platform.

The key study will be mainly focus on how Munchy’s will develop its strategy
and implementing it in the context of expanding to international market. This
study will also explore into the benefits of international strategy and how it
would benefit the organization and through which channel it should expand its
business globally. Apart of that, the market research will be able to determine
the international market segmentation and which product should be focus to
move globally.

2.0 Company Introduction

Munchy’s had been established in Malaysia for 27 years and its core business
is making different kind of biscuits for different category of consumer as well as
different lifestyle. The business has been grown to 23% market share, which is
number one local biscuit maker, however slightly fall behind the global player,
Mondelez. The local marketing branding had been successfully created the
impact to the local consumer, especially the middle and low income community.
Its healthy biscuit, Oat Krunch had been welcome by the generation who is
concern on their living lifestyle.

Even though Munchy’s had been successfully growth the business in Malaysia,
however it seems that their business is not really go internationally and globally.
Most of the countries are still not even know about Munchy’s products and its
categories. In order to breakthrough current economic status which is in the
stagnant stage for biscuits, Munchy’s need to consider to expand its business
to other country.

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3.0 Critically evaluate how and why they should employ a strategic
planning approach to their Marketing campaigns in the international
market.

3.1 Decision to go Global

According to Debra, J.and Colin, T 2003, most of the companies increase their
foreign transaction and engage in international business with the objective of
expanding the sales of organization, acquiring more resources as well as trying
to minimize the competitive risk and diversification of sources of sales and
supplies.

Even when a firm internalizes its exclusive resources, it may be able to serve
a foreign market without foreign investment for example by exporting.
Therefore, for the production to take place in the foreign country there should
be some location specific advantage. (Cherunilam 2007). Market entry is very
important for domestic organization such as Munchy’s due to the below:

1. Increase sales: If the market entry is successful, this will be an alternative

for Munchy’s to increase its international business rather than keep pressing
on domestic business.

2. Improve profit: the increase of sales will definitely increase the profit of
the business.

3. Long-term security: the long run and sustainable business in new

international market will be able to give security to the company to increase
it sales number and profit.

4. Increase innovation: increasing of consumer internationally will allow the

organization to gain more innovative idea to further improve the products.

5. Competitive strike: the organization would like to enter into international

market due to the competitor was already exist in the market. This move will
enable the strike back from organization to defense its products in the same
international market.

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3.2 Global market to enter: China

Munchy’s shall consider to venture their international market into China. the big
data in China show that the country represents 13.3% of global GDP, currently
become the world leader in export business and the top economic powerhouse.
Since after reforming its economy by focusing in foreign investment and export,
the annual growth rates had reach 10% in the past few years. The result is still
encouraging the external market to enter into China market.

The total population of 1.41 billion is a huge opportunity for foreign partner to
grow their business in China. the shopper behavior is changing tremendously
as the population in China today is very much focus on oversea products,
looking for better quality products and changing their lifestyle according to the
products available. With the increase of their income level, Chinese shoppers
today is preferring to have international brands, which carry a certain identity
as a status symbol.

The writer strongly believe that Munchy’s will be able to increase its sales if
venture into China market.

3.3 Mode of Entry

In order to enter into China market, the writer is suggesting that Munchy’s
should go on joint ventures with the strong domestic player in China to bring in
the products. Basically joint ventures are an enterprise in which two or more
investors share ownership and control over property rights and operation.
Compare to direct exporting business, joint ventures are a more extensive form
of business participation.

Joint ventures basically have more advantages which shown as below:

1. Both partners will shall the financial result, risk in the business, knowledge
for both countries as well as the technology used in both countries.

2. both parties will have more resources to share and to prepare for the new
entry. This will increase the capital of the business and the counterpart from
China will able to share more insights about the market, the trends of
consumers, as well as what would be the priority area to conduct market
research.

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3. engaging with foreign collaboration will allow the products to be marketed in
the new country in a shortest time. With their existing distribution channel and
network, the products can reach the target market more effectively.

4. With joint ventures in place, both parties will have an opportunity to exchange
the products. Either party can offer their existing product to sell through the
partners’ network and share the profit. This will definitely increase the sales and
profit for both.

However, joint ventures may have its disadvantages as well especially when
both parties are unable to align on the same direction. The party with bigger
investment share will only have full control of management. The small investor
may not want to invest more into the business.

Even though there are some disadvantages, the writer is strongly encouraging
Munchy’s to entry the China market on joint ventures basis since the market is
new to Munchy’s.

4.0 Critically examine how and why they should strategically plan and
undertake Market Research in the international market.

4.1 Importance of Market Research

In order to enter into China’s market, it is very crucial to get valuable insights in
order to understand the various Chinese market, the available opportunities, as
well as the issues that may arise in the country. Identifying the opportunities
and challenges ahead the business will always allow the organization to solve
the issue before the China market entry.

The fastest and easiest way to get the information is through China’s open big
data. For example, China’s market size in 2016 was amounted to
approximately 16.8 billion yuan, however the number is projected to grow to
around 57.8 billion yuan by year 2020. However, different type of business will
always conduct the research based on their needs.

A detail market research also able to provide domestic and international

knowledge, local experiences and network etc. with this information, Munchy’s
will be able to conduct a comprehensive market analysis, meanwhile also able
to develop appropriate entry strategies into China. the research data also can
use to establish distribution channels and expand ing the operations.

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4.2 Market Segmentation, targeting and positioning

Market segmentation, targeting and positioning (STP) is one of the approaches

to determine the strategy in marketing management. This approach is also very
useful for an organization to determine their correct market segment for their
product and services, and then decide on their target market in order for them
to position their product and services to achieve the highest profit.

To explore the entrance to China market, the organization can use the new
product’s markets segmentation to differentiate their market segmentation and
market target.

Demographic segmentation is market segmentation according to age, race,

religion, gender, family size, ethnicity, income and education. Demographics
can be segmented into several markets to help an organization target its
consumers more accurately. In this segment, the key area that Munchy’s
segment its product in China based on below:

1. Age – China is facing demographic changes whereby increasingly

dispersed and ageing demographic population. This will become a
potential customer for Munchy’s especially on its crackers products.
2. Income – most of the China’s population had increase their income
from tier 3 to tier 2 and tier 1, which mean they are having higher income.
This movement had caused the population focus on luxury brand and
imported products. Therefore, that will be a huge opportunity for
Munchy’s to import their product into China.

For geographic segmentation, Munchy’s is able to segment it’s products based

on below:

1. Regions – China have total of 1.41 billion populations across 33

provinces. Munchy’s able to create the product differentiation amongst
all the 33 provinces to promote its products and brand.

The next segment is psychographic segmentation. The key focus for this
segment is very much emphasizing on different values, attitudes, personality
traits, interests and lifestyles. In this segment, the key area that Munchy’s
segment its products based on below:

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 1. Lifestyle – China’s population is having a different lifestyle amongst
their own group. There are 2 major lifestyles in China that believe will
create huge opportunities for Munchy’s. the first lifestyle is changing
towards health and wellness awareness. This is also follow by the
change of mindset to have the importance place on value for money.

2. Knowledge of product – the consumer in China today had been

exposed to the products knowledge through internet and social media.
The consumer may already aware about Munchy’s products and is much
easy for Munchy’s to introduce its products in the new market.

Once the market segmentation in China had been identified, the next action is
to identify the right target market specifically in China. the right implementation
will definitely drive higher sales turnover and profitability for Munchy’s. Below
is some target market that could analyze for China market:

1. Mass Market: children, youngster and adults

Munchy’s products are suit for mass market whether for children, youngster
or even adults. The 1.41 billion of population in China is really giving a huge
business opportunity for Munchy’s.

2. Gender: male and female

Munchy’s product did not created based on gender classification.
Therefore, Munchy’s have a huge target market for both gender as the
products basically fit for all genders.

3. Income: increasing of income level for China’s population

The increasing of income level had created an opportunity for Munchy’s
due to most of the population in China is start focusing on more quality
products, especially products from oversea.

4. Region: 33 provinces in China

China is known as big mainland with its 33 provinces focus in different living
lifestyle. This is a great opportunity for Munchy’s to work with the strong
partners to identified the right products for each of the rovince in China. that
will be an unlimited market targets for Munchy’s.

5. Lifestyle: transformation towards healthy lifestyle

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 As the population in China is aware about healthy lifestyle, Munchy’s will
be able to entry China with its healthy based products such as vegetable
crackers, oat krunch products etc to run the health awareness campaign.

4.3 Marketing Mix Activities in China

Refer to Gronholm (2012), marketing mix activities which is also known as “4P”
marketing mix; basically comprise a few combination of different marketing
decision variables that is related to product, price, place and promotion.
Understanding the marketing mix activities in China will able to help Munchy’s
to expand its product line to China more effective.

Product

In China, the biscuit makers are very much focus in milk based cookies rather
than focus in multiple range of cookies such as oat based, vegetable based
and so on. This will create a new opportunity for Munchy’s to easily expand its
products and will able to get acceptance from the big population of consumers
in China.

Price

Price will be giving a big challenge for Munchy’s since the product may have
different tariff implied by the government. Due to the usage of high quality raw
material, it will be quite difficult for Munchy’s to play the price strategy in China.
The only possibility for Munchy’s is to differentiate it’s pricing according to the
different type of biscuit by different target consumer, such as healthy biscuit is
recommended for healthy lifestyle consumer.

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Place

Biscuit consumption had been well accepted by the Chinese community in

every of their reason. Different region has their symbolic biscuit, for example in
north-east region, the consumers always demand for milk-based crackers. With
more than 100 skus produce by Munchy’s, this will allow Munchy’s to easily
distribute the products according to the different needs of different regions in
China.

Promotion

There were plenty of promotion channel that can use in China to promote the
new imported products. The most common promotion channel is through E-
commerce. China had been evolving from their E-commerce business
especially Alibaba, through this channel, the product can be list easily online at
any time. Munchy’s can leverage the local apps such as we-chat, QQ,
Facebook and others online apps for their promotion.

By implementing the right marketing mix activities in China, the writer believes
that penetration of Munchy’s into China market will definitely bring a great
success.

. 4.4 Hofstede’s 5 Cultural Dimensions for China

A significant study about how the culture will influence the workplace had been
conducted by Professor Geert Hofstede. The studied had covered and
emphasize on 5 key dimensions of culture. Each of this dimension is showing
a clear understanding and explanation on each country’s culture. Since the
writer had been selected China as a market for Munchy’s to enter, the writer
had analyzed the differences between this 5 dimensions of culture:

1. Power of distance basically showing that how a community look at the

authority level, whether to accept the fact that the power should distributed
unequally or the other way round.

Malaysia people fully accept the organization with proper hierarchical in order.
Once the hierarchy had been fix, everyone will have just follow and the lower
ranking people is expected to do whatever been told by the senior people. No
question or challenges that can raise up to their bosses if they are not agree
with it.

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China people believes that the formal authority shall be follow exact and
subordinate and superior relationship tends to be polarized. Usually there is no
defense against the power abuse by superiors or supervisor.

2. Individualism is referring to the degree of interdependence of a society

maintains among its members, whether is an individual to look after their family
only or it should be a group of society that will look after everyone together.

Basically the Malaysia society always show its loyalty in a collectivist culture.
The relationship based of a society is always been taking care off. The group
society will always look after each other’s and will not act independently.
Everyone will treat each other as a family member.

China also having a similar situation with Malaysia whereby the society is very
much focus in relationship based when everyone work in a group.

3. Masculinity basically bring out the fundamental question such as what is

actually motivating people, is the peoples would like to be the best or just live
in what they do.

Malaysia society is always driven by competitiveness. Everyone is looking for

result oriented and always strive for success.

China society is having a similar culture with Malaysia as well. The society is
clear on what to achieve and always works towards delivering best results and
compete with each other’s.

4. Long term orientation emphasize on how the society will have to maintain
some past tradition way while dealing with the challenges of the present and
future, and how the societies priorities the two existential goals differently.

Malaysia society is a bit conservative when come to long term orientation. They
are more comfortable to remain their tradition way to achieve the result in the
near future.

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China society is acting in a pragmatic way to achieve their goal and result. They
are more flexible to change according to the situation whenever they see a
needs to change.

5. Uncertainty Avoidance basically showing that some of the way which society
is dealing with but not knowing the fact in the future: the question is shall we
controlling what intend to happened in the future or just let it happen. Everyone
is free to take risk and whether the person may take higher or lower risk which
is not even able to predict the future.

Malaysia’s culture is very much on low preference for avoiding uncertainty. The
people here is taking lower risk, or may not even take risk, what they seek for
is to enjoy their leisure and also more tolerated compare to others.

China also maintain a culture with low preference for avoiding uncertainty
amongst the country. The people is open to accept any ambiguity and flexible
towards law and rules that had been set. They are looking for more relax
lifestyle compare to others, and enjoying to mix around with people.

5.0 Conclusion

Munchy’s is having a great opportunity if the organization entry its market into
China. From the basic research and big data review, this market entry is
definitely will gain more sales and profits for the organization, By implementing
the above recommended strategy and options, the writer strongly believe that
the organization will be able to manage its business well in China,

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6.0 References/Bibliography

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Colin Gilligan, Richard M. S. Wilson, Strategic Marketing Planning,

Routledge, 2009 (2nd edition)

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Fatt Sian, Lai, Shyue Chuan, Chong, Bik Kai, Sia and Bee Chen, Ooi, Culture
and Consumer Behaviour: Comparisons between Malays and Chinese in
Malaysia, International Journal of Innovation, Management and Technology,
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Huang Lin, Choice of Market Entry Mode in Emerging Markets, Influences on

Entry Strategy in China, 11 Oct 2008

Jan Selmer, International Management in China: Cross-Cultural Issues,

Routledge, 1998

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Corporation, Canadian Social Science, July 1, 2013

Kipley, Dan; Lewis, Alfred, The Scalability of H. Igor Ansoff's Strategic

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Yadong Luo, Entry and Cooperative Strategies in International Business

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Mishra, Kaushlendra Vikram, Marketing Strategies of Small-Scale Milk

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Sankrusme, Sinee, Marketing Strategy of Imported Beers before Liquor
Liberalization, International Journal of Marketing Studies, June 2012

Subhasis, Sen; Kannan, Rajagopal, Penetration into New Market Segment -

A Review, Advances in Management, September 2015

Yi-Zheng Shi, Po-Yuk Ho & Wai-Sum Siu, Market Entry Mode Selection: The
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