Mock Emerging Markets Paper - Food Company Expansion into International Emerging Markets

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<p>1</p> <p> 13</p> <p>Emerging Markets AsiaExpansion of Kraft Heinz into Asian MarketsStacey TroupInternational Business/MGT-316December 23, 2016Dr. Jacqueline Gilliard</p> <p>Emerging Markets AsiaFor this Signature Assignment in International Business, I will review specific details involved with expanding a food business into the Chinese emerging markets. Within this review, I will discuss the company, Kraft-Heinz Company, as well as their mission and social responsibility globally. In addition, the management responsibilities including their roles in a global business, managing the company and unit within a global environment and the role of a global team will be reviewed. Specific ideas into why an expansion into China should be carried out as well as what cultural issues will be specific to this expansion will be reviewed. A review of the sales figures for 2015 in other emerging markets offices as well as the sale numbers of our competitor serving in the Chinese market will also be reviewed as part of the overall decision making process of this expansion in order to provide a performance speculation to our success should we have a plant operational by 2018. These overall components will make up a management presentation as to a mock expansion into China for Kraft-Heinz Company. About UsThe Kraft-Heinz Company, currently the fifth largest food and beverage company in the world, is a trusted provider of quality foods. Providing food and beverage for both the home and restaurant consumer, we strive on quality products at affordable prices (Overview, N.D.).With offices in over 40 countries, we produce locally sourced foods specific to the markets in which we are present. In 2015, through a successful merger between Kraft and Heinz brands, we officially became Kraft-Heinz Company with Alex Behring serving as our Chairman. This merger resulted in Kraft-Heinz Company becoming the third largest producer of food and beverages in the U.S. (Kraft-Heinz Merger, 2015).</p> <p>Mission &amp; Social ResponsibilityOur Mission Statement and Social Responsibility go hand in hand. Through our partnerships with energy experts, we are always striving to bring the best quality food and beverages to consumers while not only reducing energy during production but also our greenhouse gas emission effect (Sustainability, N.D.).Through these energy efficient savings within our production model, we are able to not only source local products which adhere to our strict guidelines but we are also able to provide food to the hungry throughout the U.S via partnerships with Feeding America as well as Stop Hunger Now (Fact Sheet, N.D.).In the last decade, we have been able to provide more than 2 billion meals to the hungry (adults and children) through this commitment to our social responsibility and our communities which we serve. We believe in a lasting charitable commitment within these communities which are focused on fighting hunger while reducing our carbon footprint (Fact Sheet, N.D.). In addition to our national programs, we also work at the local level to help stomp out hunger. For children and their families, through a partnership with Boys and Girls Clubs, the Kraft Great Futures Kitchens program has been rolled out. This program has provided 10 refurbished kitchens to the Boys and Girls Club locations where facilities were in substantial need of help in order to continue their mission. This program provides cooking classes to youth and families as well as club based fruit and vegetable garden planting in order to help teach the fundamentals of cooking. Finally, this program installs local food bank partnerships with Boys and Girls Clubs to ensure that no child goes hungry (Community Involvement, N.D.).The partnership with the American Red Cross, while a Federal program, is structured more for the immediate needs of a community and not a donation on a national level. We at the Kraft-Heinz Company provide cash and food donations to emergency situations such as tornadoes, natural disasters and the like as well as provide volunteers to help not only feed those in need during these times of crisis, but to help restore hope to the communities (Community Involvement, N.D.)Finally, in our efforts to ensure everyone has access to the food they need to sustain life, we offer partnerships with local food banks. These partnerships address specific needs of the communities while providing access to fresh, affordable, healthy food regardless of financial ability (Community Involvement, N.D.).Role of the Global ManagerThe global manager in this proposed expansion will be responsible for building teams and managing them in a way that is conducive to the customs of the host country. By honoring the customs of the host country, the manager will be better able to relate to the employees in their care as well as to understand specific issues that might arise from these cultural specific issues (Dessler, N.D.).In addition to these cultural responsibilities, the global manager will also be responsible for institution and development of strategies in order to maximize the profits and brands within the host countries. Through a collaborative effort with their marketing and executive teams to identify product niches and holes in specific markets, they will be able to take a foothold on the markets while building both brand loyalty as well as brand expansions (needs) of the communities/country (Global Manager Job Description Dueies and Requirements, N.D.).Sales Performance 2015The decision to expand into the China market seems a very lucrative idea when the raw data is analyzed. When we review the sales number (in millions) for our European subsidiary, for example, we can see that in the third quarter of 2016 that amounted to $1,644 (in millions), a decrease of 11% from the year previous. This was due to divestitures and a weak market amidst environmental issues globally. Once the plants were sold off in the divestiture which were poor performing, the net result was a 7% increase in organic sales over 2015 (Kraft-Heinz Third Quarter 2016 Results, 2016). While these numbers have room for improvement, Nestle boasted a whopping $7,060 (CHF) ($6,871 million USD) of sales for 2015, more than 5 times our numbers for the entire European market alone (2015 Financial Statements, 2015).When we evaluate the numbers of our competitor, Nestle, who has had a long standing presence in China with extensive growth since the 1990s, it is easy to see why a presence in that sector is paramount to the success of our growth. Nestle established its first plant in 1908 in the city of Shanghai and other plants of both the R&amp;D as well as manufacturing which followed (Decorvet, Roland, 2012).Nestle, the number one manufacturer of these products globally, has long understood the need for a presence in this country and has reaped the benefits and rewards of product loyalty over time. They boast a massive 35 million products sold every day sales figure while selling over 90% of the locally produced goods to local neighborhoods (Decorvet, Roland, 2012). In addition to these products sold, they offer brand specific products which are geared toward different income levels to ensure all people can afford their products while standing fast in their commitment to quality products and food for all (Decorvet, Roland, 2012).If we are to grow as a company, we must embrace this emerging market as our number one competitor has for years. We must provide in the manner they have, for the local people and economies that are belonging of the host country so that we may offer our products to a more diverse landscape of people.Business Strategy for Expansion into Asian MarketsAs we look to expand into the Asian markets to become a viable competitor to Nestle while, at the same time, expanding our brand on a more global level, it is important to consider key factors within the expansion plan. Among these considerations are identifying product holes the market, establishing locations for agricultural growth as well as plant operations in accordance with Chinese Zoning Laws, taking into consideration the local and federal government laws which must be abided by, market research, hiring, due diligence, and establishing an International Property Rights strategy to say the least.To consider the holes in the market, we can conduct market research to consider these needs and our ability to fill these holes as well as introduce new products which fit the tastes and needs (both taste and fiscal) of the consumers we serve. As China has very strict locations on establishment of agricultural locations as well as plant (canning) operations as well as considerable laws which must be understood and followed if operations are to be conducted there (Hedley, N.D.).Our competitors have found favor in the market research aspect whereby the provide the needed holes they are able to produce in the markets as well as expanding their brands within the area. We, too, will find favor through our use of locally grown products from Chinese farmers, hiring upper management teams to work with our U.S. executives in order to properly staff management and plant operations and solidify our International Property Rights (Branding) locally with the help of a legal team (Hedley, N.D.).While hiring is a major problem within the Chinese markets, we should seek employees with the skills to handle our volume as well as able to follow our corporate culture while integrating local cultures for their benefit and well-being. Through the due diligence process, we can get a better understanding of our suppliers (growers, raw material manufacturers, etc.) while implementing proper supply chain agreements for expectations and worker safety (Hedley, N.D.).Thanks to local tax incentives on a multitude of levels, we will be able to successfully gauge our building process of our facilities, taking into consideration these incentives as they impact our bottom line of business (Lin, 1998). Industry experts and competing food companies speculate that the condiment market, alone, will have substantial growth in the coming years as consumer spending on these items is on the rise. One can only speculate that all food will have a positive impact on sales and local economies as they are offered in new and innovative ways which are appealing to the markets they serve (Canadean Company Reports, 2014).Decision Making Model &amp; Negotiating MethodsWithin this division, the decision making model needs to encompass rational decision making methods. This method includes a full SWOT analysis of the situation and subsequent solutions for problems identified. Within the negotiation methods, we need to take into consideration that the hiring practices of China vary from that of the U.S. and that negotiations of our teams to both seek out and hire people to fill the needs of the foreign location (Papadakis, Lioukas, &amp; Chambers, 1998). By using standard methodology for decision making processes, inclusive of contingency planning, we will solidify plans on a more rational and viable scale prior to execution. As we head into negotiation methods for expansion, the understanding of local customs, laws and guidelines will be imperative to the success of our expansion into this emerging market (Papadakis, Lioukas, &amp; Chambers, 1998). As plant operations for canning are likely the first to be implemented in this market, the need to negotiate with local law enforcement, code enforcement and zoning officials in order to ensure our compliance to their local ordinances, customs and laws is paramount. We also need to negotiate our local supplier contracts for agricultural needs and ensure that we can adhere to our energy efficient production models while we manufacture products in this market as we do in the U.S. (Hedley, N.D.). Taking into consideration the standard model for negotiation in business, we should adapt the 1. Orientation/Fact Finding; 2. Resistance; 3. Reformulation of Strategies; 4. Hard Bargaining and Decision Making; 5. Agreement; and 6. Follow-Up models in order to ensure we have considered, negotiated and reconsidered every option prior to execution for a flawless integration into the Asian markets (Drishtikon, 2010). Performance Indicators for the Asian Market Taking cues from both our competitors who have established a presence in Asia as well as market indicators from industry experts, we are best able to see how our success will begin to blossom with the establishment of an Asian presence. As we can tell from our research, the trends for sugar related production of foods will continue to drop through 2019 which should give us a leg up on our competitor Nestle as their main products contain sugar while ours are more vegetable based. Upon review of the agricultural data for 2015, we can see that China is failing on their export of these products so it can be assumed that we could be highly responsible for the success and turnaround of this industry should we establish a presence in China (Asia Pacific Food and Drink Insight, 2016).Reviewing the numbers for our competitor, Nestle, we can see that they have found significant favor in the Asian markets as indicated previously by posting net sales of over $6 million dollars in the third quarter of 2015 alone (Nestle, 2015). If we follow in the footsteps of Nestls success, we should, too, find favor in our emerging markets plans to expand into Asia.Role of Global Management TeamThe global management team is primarily responsible for the overall success of the newly formed locations. Reporting into global managers who will help drive their education and success, they are on the front lines of our business success through production efforts.Mid-level managers may be put into place to help serve as intermediaries in between labor workers and management as well as to unburden upper management from the tedious events of the day. Mid-level managers will help with performance, performance reviews, production goals, education, and the overall success and happiness of the workers under their care. These managers will take a greater sense of care toward employees as they will be sourced locally and have a full understanding of the customs and societal norms present in the Asian markets.Cultural issues with Implementation of Expansion PlanThe Guanxi Principle dictates that a hierarchal problem with Chinese worker culture which limits individualism. The Chinese people tend to work in groups rather individually in order to reach specific goals for the team. As discussed previously, the presence of mid-level managers is a societal norm for Chinese companies and is more welcomed by Asian employees for this reason (Feldman, 2014).As our managers at any level come from these cultures, they will help to alleviate cultural problems between these employees and those of the U.S. which could help smooth th...</p>


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