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A company's growth is the result of different critical aspects of the organization, ranging from workers to the tactics pursued and executed by the company in meeting consumer demands and powers. The food industry is one of the fastest developing industries in both Asian and European developed nations (Magdenko 2017, p.33). As a result, executives at numerous food firms have devised sophisticated marketing plans to capitalize on the potentially massive fast-food demand in both Europe and Asia. Consequently, Bright Food Company is not an exception in this change to expand the market and take benefits of the economies of scale and to maximize the profits for the home country as well as the host country. Internationalization or globalization is one of the tactics that business organization have approved for successful exploitation of external markets in the overseas (Morrison 2011, p.384)
Europe is one of the largest and growing markets for the food industry that Bright Food Company can productively exploit to ensure they gain huge profits in the oversea markets (Sirakova 2016, p.531). One of the determining factors that can significantly inspire the success of any organization is the demographic structure of the market in Europe. The EU is one of the most likely destinations of the fast and street foods given it has a huge population of Y-generation who prefer fast food to preparing food in homes. Subsequently, this management report will evaluate the EU market as a destination for the products of Bright Food Company which has an interest in taking advantage of the market in the Europe (Van Vooren 2016, p.220). Additionally, the report will provide recommendation strategies that Bright Food Company can adopt to address all the challenges and obstacles faced by business organizations in the EU to their success and expansion.
EU Is an Attractive Destination for Food Industry
The EU is an attractive destination for food companies from other countries such as China (Gladie, 2014, p.31). One of the reasons behind the success of food sector in the European continent is the demographic structure of the market. The EU demography constitutes mostly of young population, commonly called the “Y-generation.” These individuals provide ready market for food organization that Bright Company can take advantage to expand their business operation. For instance, the UK is one of the attractive destination in Europe with a big population of consumers for this product (Wood, Lowe & Wrigley 2010, p.1967). Additionally, the EU has a considerably competitive tax system as well as a flexible labor market.
Tax system is one of the major challenge and obstacles that affect the incomes of companies while chasing away both local and foreign investors. Consequently, the institution of a competitive tax system in the EU will go a long way to positively influence the revenues of Bright Company in the long term. Flexible labor market and friendly tax system are some of the strategies built by the UK administration to lure foreign and local investors to the EU economy. As a result, the policy has increased the confidence of most business investors into the economy bringing with them infrastructural development into the EU (Johnson & Turner 2005, p.356). Moreover, the manufacturing streak in the EU has played a leading role in attracting foreign investment. The growth of manufacturing factories in the line of food has ensured a continued expanded supply-chain capacity to encourage investment in technology.
Accordingly, Bright Company will get already well-established food supply chain that will boost its capacity in take advantage of the ready market for fast and ready foodstuffs (Meyer et al., 2017, p.04). Business organization are likely to experience tremendous growth in regions where there is constant supply chain capacity for their products. The United Kingdom is an example of the strongest brands abroad making it an engine for growth and expansion for both businesses and labor markets for the recovery of their economy. There are some economic, social, political and infrastructural differences between the home country (China) and possible destination that makes the EU an attractive investment ground.
The favourable political, social and economic environment that supports the business in the EU is an important factor that makes the region the most attractive for Chinese food company over the last few decades. These suitable business factors in Europe has made the region the most preferred playing ground for China in the West compared to the Americas. Firstly, the financial crisis that occurred in 2008 witnessed the participation of the Chinese investors in buying of Eurobonds besides investing in companies dealing with infrastructures such as the Greek port of Piraeus Harbor. Additionally, the decentralization that has been arising in the European countries accompanied by low value of the euro have made Portugal, Italy, France and the UK the possible destination for Chinese business particularly in the food industries (Ferrara, 2017, p.06).
However, Bright Food Company success will significantly depend on the established institutional obstacles and benefits available in the Europe Union regions. The presence of institutional frameworks has a significant impact on the establishment and operation of a business organization within the region (Segura & Vaqué L 2016, p.389). One of the frameworks that will work to the advantage of Bright Food Company is relationship between Europe and China which is less competitive than the fight for political and power dominance (Aporti, & Varallo 2017, p.03). The power dominance has characterized much of the relationship between China and the US which makes the Americas to be less profitable ground for Chinese Product.
The nature of the relationship between the EU and China has improved the business and investment prospect which will considerably influence the success of Bright Food Company in the long-term. In addition, the policy of “going out’ adopted by the Chinese government has established the legal and stable framework for the Chinese investors to look for oversea markets especially in the EU. The policy embraces and supports the transferring of capital from the Chinese economy and investing them in other nations with more lucrative opportunities particularly in the Europe. The government approach of “going out” plus the business partnership between Europe and the People’s Republic of China will provide a good background for the management of Bright Food Company to discover.
Moreover, the EU has few restrictive government policies and regulations that can extensively affect the success of the company in establishing its operations in the EU (Ingulli & Halbert 2014, p.289). The role of these institutional framework from both the Chinese and EU government is to ensure all the foreign investors get suitable atmosphere to conduct their business operations and increase productivity (Somers 2015, p.356). Furthermore, to build on the relationship between the two countries involved in the partnership. Even though the institutional framework proven within the host country and China have significant advantages on the operations of Bright, they are likely to influence the level of returns in the long-term. Given the EU have an open market for foreign investment, there is a high coincidental that the economy will soon be flooded with foreign corporations thus touching on the profitability of Bright Food Company.
Despite the successful formation and identification of the business opportunities in the oversea markets the realization of the organization goals depends on the entry strategy identified by the management of Bright Food Company. The challenges experienced by the company in implementing the strategy will considerably have a negative consequence on the operations of the business. One of the challenges the business strategy developed is likely to encounter in exploiting the oversea market include restrictive and cumbersome government policies for new business entering the EU market. The bureaucracy established by the government especially in the EU such as Italy has a negative effect on the entry process in the food industry (Tamburrini, & Zhang 2014, p.228).
The dynamic nature of the food industry in the EU is a challenge that will greatly affect the entry strategy of the company in the EU market for the Chinese company.
I will recommend the following strategies that will ensure it achieves success in the operations within the EU market in the long term. Since Bright Company is a food company entering a new market overseas these are the recommendations that are important to its growth;
Develop a market strategy that will support acquisition since they have no necessary assets within the EU regions (Kim & Zheng 2014, p.94)
After acquisition of small business organization within the industry the company can get involved in joint ventures to allow them acquire most assets and expand their operations and returns. Negotiations with already established food companies within the sector can bring huge investment opportunities within the EU region.
Leasing is also another market entry strategy that can also help the company to acquire complementary assets and properties it does not have.
Finally, Bright Company should focus on the expansion of their sales channel within the UK to ensure they remain competitive within the region.
In a summary, the growth of the EU economies over the last few decades will provide a good playing ground for the Chinese food company that is seeking for new oversea markets. Even though challenges form part of every business strategy, organizations should work to take advantages and opportunities rather than the shortcomings of the market. The food industry is one of the most developing and expanding sectors in European continent making it the possible destination for the Bright Food Company. Appropriate business strategies developed by the company can greatly influence the success of the organization in the long-term. However, the institutional framework established between both countries involved has played a great role in making the EU a potential destination for the food company.
The good business relationship between Europe and China is less competitive than the fight for political and power dominance thus luring foreign investment from both states. Open market in the UK also attracts the number of foreign investors from outside especially from China and other countries such as Japan. Also, the policy of “going out’ implemented by the Chinese administration has proven to be an important legal and stable framework for the Chinese investors to look for oversea markets especially in the EU. The policy embraces and supports the transferring of capital from the Chinese economy and investing them in other nations with more lucrative opportunities particularly in the Europe. The role of these institutional framework from both the Chinese and EU government perspective is to ensure all the foreign investors get suitable atmosphere to conduct their business operations and increase output. Additionally, improve on the relationship between the two countries involved in the business partnership.
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