COMPREHENSIVE BUSINESS PLAN

72009027368500FOR HAIGH'S TO ENTER INTO [COUNTRY] MARKET VIA [METHOD]

Written By

FirstName LastName

Haigh's Chocolates is a historic South Australian Business

It was 1st of may 1915 when Alfred E Haigh opened the doors of the very first Haighs Chocolates store in the Beehive Building at 34 King William Street, Adelaide South Australia.

Today Haigh's has 21 retail stores. Seven stores in Adelaide including the historic Beehive Corner, seven in Melbourne including a store within the beautiful heritage listed Block Arcade, six in Sydney including the newest store in Castle Towers and Monaro Mall, Canberra Centre in the nation's capital. Haigh's products are also available to purchase online. and they ship Australia wide.the company is considering to expand its business operations internationally.

Keeping in view the recommendations that you have made in the proposal earlier (Assignment 1), you are now required to develop a comprehensive plan for international expansion of Haigh's business in your chosen overseas market.

72009034734500TABLE OF CONTENTS

TABLE OF CONTENTS2

EXECUTIVE SUMMARY3

IDENTIFICATION AND EVALUATION4

1.The Argument for International Expansion4

2.Political Environment4

3.Non-FDI Market Entry Strategies5

4.Global Integration and Local Responsiveness6

5.Control Strategies8

CONCLUSION9

REFERENCE LIST10

APPENDIX11

71755033337500EXECUTIVE SUMMARY

The executive summary is a short section of your assignment that gives an overall description of the content that is contained within. You should describe the purpose of the report, the methods used in your research and the findings of your analysis. What markets did you assess? Which market did you choose and what are your recommendations?

72009034671000IDENTIFICATION AND EVALUATION

1.THE ARGUMENT FOR INTERNATIONAL EXPANSION Start by building up your argument for international expansion by using relevant theories of International Trade and Investment, discussed in your course content.

1.Benefits of International/Global Trade

i)How will it benefit Haigh's? - Why do Firms Internationalise

ii) How will it benefit Australia and your chosen country? - Why do Nations Trade?

2.Theories of International Trade: Take help from both:

i)Classical /Contemporary theories of international Trade

ii) Firm Level Explanations + Nation Level Explanations

3.Examples, Theory of Comparative Advantage, International Product Life Cycle Theory, Ownership specific , Location Specific advantages (Keep it brief and pick up the most relevant one(s) - be specific).

2.POLITICAL ENVIRONMENT

Analyse the political environment of your selected country and discuss its implications for the business.

1.Three Types of Political Systems: Totalitarianism , Socialism or Democracy

(Identify the type and briefly discuss its implications for the Haighs business e.g Economic

Freedom, Transparency, etc)

2.Laws, Regulations, Standards, Consistencies in Policies, Pressure Groups, Trade Unions etc.

3.Types of Risks Associated with Political Systems (Sanctions, Nationalisation, Boycott Imports, Terrorism, Wars etc)

3. NON-FDI MARKET ENTRY STRATEGIES

Suggest how Haigh's can gain and sustain competitive advantage in your chosen international market. Based on Non FDI Based strategies before providing your recommendations in this regard.

Non FDI Based Explanations =

International Collaborative Ventures: Equity based joint ventures,

Project Based Strategic Alliances: If certain resources/capabilities are unavailable in house, cover each other Strengths/Weaknesses Gaps, Synergy or restrictions from Host Country Govt etc.

Networks and Relational Assets: Existing Networks and Relationships, Linkages with local counter parts provides a good route for Non FDI based Expansion.

4.GLOBAL INTEGRATION AND LOCAL RESPONSIVENESS Assess the pressures for local responsiveness as well as global integration in the context of proposed expansion and suggest which of the four distinct strategies (I- R Framework), Haigh's should follow to

compete successfully in the chosen international market. Include justification for your

recommendation.

Two Key Determinants: Pressures for Global Integration & Pressures for Local Responsiveness.

1.Home Replication Strategy: PGI (Weak) + PLR: (Weak)

i)Mostly an Initial/Temporary Approach

ii) Often by smaller firms willing to expand Additional Sales

iii) Raw Materials and Basic Parts & where no major change is required

2.Multi Domestic Strategy: PGI (Weak) + PLR (Strong)

i)Largely Independent subsidiaries

ii) Delegates decision making to local managers to address local needs

iii) Variation in MGT Practices and Product Features

iv) Consumer preferences are different e.g Tastes etc Food Industry

v) Reduced economies of scale & Limited Knowledge sharing

3.Global Strategy: PGI (Strong) + PLR (Weak)

i)HQs substantial control over subsidiaries

ii) Maximise knowledge sharing, learning and integration

iii) World as one large market placeiv) Economies of scale

v) Less flexibility to customise to local needs. For example (Microsoft, Samsung, Caterpillar etc)

4. Transnational Strategy: PGI (Strong) + PLR (Strong)

i)Sufficient central control + being relatively responsive to local needs ii) Standardise where feasible, adapt where appropriate

iii) Combines benefits of both

iv) Balancing both can be a challenge

v) Generally standardising upstream activities (e.g Planning, Design etc) and localising downstream activities (Marketing, Sales etc)

vi) Centre's of Excellence / Geographical Hubs e.g China for Asia, Mexico for America, Poland for Europe. (For example Unilever, McDonald's, KFC etc)

5. CONTROL STRATEGIES

Evaluate various entry strategies (low control, moderate control and high control) and suggest an appropriate strategy for Haigh's to enter the new international market. Don't forget to provide justification.

1.Low Control Strategies: Exporting & Counter Trade (Out bound international business Sales), Importing /Global Sourcing (Inbound International Business- Purchase and Procurement) o

2.Moderate control Strategies: Licensing (relatively lesser control than franchising), Franchising

(better control on operations), Project Base Ventures

3.High control Strategies: Equity Joint Ventures, Wholly Owned Subsidiaries

71755034607500CONCLUSION

This section is a brief summary of your findings and your recommendation to enter into one of the countries mentioned above through direct export or foreign direct investment.

REFERENCE LIST (Harvard Style Reference List Please)

APPENDIX

PROPOSAL FOR HAIGHS

CHOCOLATES

TO ENTER THE RETAIL CHOCOLATE MARKET INCREASING SALES AND MARKET

SHARE THROUGH EXPORT INTO

U.S.A.

Written By

Charlotte Debenham

TABLE OF CONTENTS TOC o "1-3" h z u TABLE OF CONTENTS PAGEREF _Toc117072699 h 3EXECUTIVE SUMMARY PAGEREF _Toc117072700 h 4ANALYSIS PAGEREF _Toc117072701 h 5EVALUATION PAGEREF _Toc117072702 h 7KEY PARTICIPANTS IN INTERNATIONAL BUSINESS PAGEREF _Toc117072703 h 7Distribution Channel Intermediary PAGEREF _Toc117072704 h 7Facilitators PAGEREF _Toc117072705 h 7Government and Industry PAGEREF _Toc117072706 h 7DIFFERENT TYPES OF RISKS PAGEREF _Toc117072707 h 8USA PAGEREF _Toc117072708 h 8Japan PAGEREF _Toc117072709 h 8CROSS CULTURAL SIMILARITIES AND DIFFERENCES PAGEREF _Toc117072710 h 8USA PAGEREF _Toc117072711 h 8Japan PAGEREF _Toc117072712 h 9CONCLUSION PAGEREF _Toc117072713 h 10REFERENCE LIST PAGEREF _Toc117072714 h 11

EXECUTIVE SUMMARYHaighs Chocolate is a South Australian born chocolate store that opened its doors in 1915 and later expanded to across Australia. As the business continues to expand and evolve the potential for international expansion is considered. The following report looks at the operations and business environment in which the Chocolate company Haighs operates within. The report compares the confectionery market in Japan and the U.S.A in respect to the confectionery market in Australia. By analyzing the markets and considering the varying aspects including opportunities and risks associated with each country a proposal for an expansion of the brand to the U.S.A. has been made. The evaluation has been made using information from reliable online data bases (Haighs Chocolates, 2022).

ANALYSISHaighs Chocolate is the oldest family-owned specialty chocolate retailer in Australia. Haighs currently has 18.5% of the industrys market share and employs over 650 people across 22 retail stores and 2 factories. The chocolate making side of the business remains very much with its traditions, using unique cooking processes with meticulous and high-level trained staff. The company also places significant importance on customer experience and aims to create a personalized service for all visiting customers. The companys values include collaboration, clarity, respect, responsibility, recognition, passion and pride, all values which are carried through among employees, customers, suppliers, shareholder, the community, and the environment (Haighs Chocolates, 2022). In 2018 Haighs invested $15 million into a new factory which tripled its production capacity. The equipment for the factory was specifically designed for Haighs in Europe. This large investment was a strategic business decision made by the company to allow for potential growth to international markets (Just Food, 2018).

Haighs operates among 363 other companies within in the Chocolate and Confectionery Manufacturing industry in Australia. The industry has seen steady growth over the past 5 years and is expected to continue to see growth in the years to come (IBIS World, 2022). Within the industry Haighs also falls under a more specialized sector which is the Specialty Chocolate Stores in Australia. There are 5 industry leaders within the specialized industry who obtain 55% of the market share, Venga Pty Limited being the leader with 20.2% and Haighs following closely with a 18.5% market share. Other Major Players in the industry include Koko Black, Lindt & Sprungli and Max Brenner (Burgio-Ficca, 2022). Haighs distinguishing factor within the industry is that it 100% Australian owned and operated, with its factories still operating out of South Australia where the company was founded.

The factor input conditions for a company such as Haighs include their employees. The skilled workers within the factories and stores such as the artisan that make the, the confectioners that create and analysis of the recipes and the retail workers that create the customer experience. Haighs success within the industry has a lot to do with maintaining a high level of skilled employees, this is ensured through adequate training and education within the company. The main ingredient in Haighs Chocolate is cocoa beans. Being a natural resource increases the threat that climate change can have an impact on the company, to minimize this risk Haighs has multiple suppliers in different countries. Haighs currently source 80% of their cocoa from UTZ Certified farms and expect to source 100% UTZ Certified beans within the next two years (Haighs Chocolate, 2022). The UTZ label stands for more sustainable farming and better opportunities for farmers, their families, and our planet (Rainforest Alliance, 2022).

Product innovation and variety in products is extremely important in the specialty chocolate industry as it drives industry growth and expands the customer demographic (Burgio-Ficca, 2022). Haighs continue to create new recipes and fine tune old recipes to ensure that they remain competitive within the industry and are continuing to meet the demands and needs of their clients. Today Haighs offers over 250 varieties of chocolates to meet a wide variety of the market preferences. The benefit of making all their own chocolate in Adelaide means that they can respond to trends and market behaviors very easily and efficiently. Being the oldest specialty chocolate store in Australia also means the company has a firm idea of the domestic market behavior being very familiar with the market which it operates within (Haighs, 2022).

EVALUATIONKEY PARTICIPANTS IN INTERNATIONAL BUSINESSDistribution Channel IntermediaryTo distribute Haighs from Australia to international markets the company must consider the distribution channel through which the final buyer will purchase the goods in both the U.S.A. and Japan. Distribution channels include wholesalers, retailers, distributors, and the Internet, and in some cases, they can sell directly to the consumer. On January 1, 2005, Australia and the U.S. entered into the Australia-United States Free Trade Agreement(AUSFTA). AUSFTA promotes innovation and makes distribution easier between the two countries. The agreement also protects the intellectual property of companies such as Haighs, minimizing the risk for the company as they enter the foreign market (Embassy of Australia, 2022). Distributing to Japan comes with more difficulties as Australian companies require an agent or distributors to represent their company to sell to the Japanese market (Asialink Business, 2022).

FacilitatorsWhen entering a foreign market, it is important to consider the facilitators that will be required to enable the transition. Facilitators such as marketing specialists, accountants, lawyers, customs brokers etc. An obvious difference in facilitators in Japan and the US would be the cultural and language barrier. Speaking the same language as US facilitators is automatically going to making negotiation and trade easier and more efficient. As well as this, the two countries have had an existing trade facilitation agreement since February 2017. This agreement simplifies procedures such as customs and border regulations, licensing and transit formalities, administrative processes, and documentation requirements. This will make connecting with facilitators easier and less costly for Haighs as there are existing precedents (Department of Foreign Affairs and Trade, 2022). Australia and Japan have a Mutual Recognition Arrangement (MRA) which has been implemented to create smoother trade between the two countries, this agreement means that each countries customs formally recognize each other as Authorized Economic Operator (AEO) programs (Australian Government, 2022).

Government and IndustryPrior to entering any international market, it is essential to be aware of the government and industry policies in that country. As forementioned, Australian and the U.S. have the AUSFTA which clearly outlines trading laws to the U.S. Once in the U.S. Haighs Chocolate will need to comply with the Food and Drug Administration (FDA) policies, more specifically 21 C.F.R. 163 which outlines the legislation for cacao products (U.S. Food and Drug Administration, 2022). Similarly in Japan Haighs will need to comply with both the trading legislation and the market laws specific to the products which are outlined on the Austrade website (Austrade, 2022).

DIFFERENT TYPES OF RISKSThere are four major risks in international business: cross cultural, country, commercial and currency. It is important to thoroughly assess these risks before entering the market to understand how the company will be received in the respective country.

USAMajor cultural difference between USA and Australia are their sense of humor and concept of time. A cultures sense of humor is important to consider in marketing plans, humor is often used in Australian marketing and may not be as well received in a U.S. market. The concept of time in relation to ideas such as modernism, technology, impersonalism and violence is embraced more so in the American culture, hence, a beneficial market to enter for international trade. Other risks when entering the U.S. market include a lower labour market participation, lower average income, and a higher debt than Australians this means that the markets disposable income in the U.S. will be less than Australia. An important risk for Haighs to consider given the high comparative price of their products in the market (Jiang, 2019).

JapanThe Japanese yen currently poses a threat to foreign investors due to its uncertain fluctuation in value. The Plaza Accord heavily impacted this fluctuation where Japan as a trading market experienced a massive shift from a focus on domestic production and exports into a more international based economy (Segal, 2021).

CROSS CULTURAL SIMILARITIES AND DIFFERENCESUSACulturally, the USA and Australia are very similar in terms of values, attitude, education, social structure and communication with foreign businesses. Obvious cultural similarities between the USA and Australia are the native language. Both countries also have a high rate of multi culturalism which generally makes them more open and accepting of foreign products. The two countries are also said to conduct business in similar ways, straight forward and to the point (Kwintessential, n.d.). In terms of food culturally, both countries have high cultural interest in the chocolate industry, with the U.S. having the largest confectionary market in the world (IBISWorld, 2022).

JapanJapan has a traditional society and political systems, with high social standards in comparisons to Australias more relaxed culture. Some legislations show a reluctance toward immigration, unlike Australias inclusive attitude. Culturally Japanese are more conservative than Australians. The work life balance is also very different between the two countries with Japanese average working week being 60hrs per week. The average diet in Japan and Australia is also very different, with a lower consumption of Chocolate in Japan (Asian Century Institute, 2014).

CONCLUSIONThe following reporting indicates that Haighs should chose to expand to the U.S. market over the Japanese market. This conclusion has been made due to the vast differences in culture between Japan and Australia and the pre-existing trade agreements between the U.S. and Australia streamlining the process. The language barrier discussed within the report is another factor to be considered in the recommendation. Compared to Japan, the relatively stable US dollar will make pricing more consistent and comparable in both countries. Culturally, America and Australia have more common ground, and are in general, more accepting of new entries in the market. As well as this the market for cacao based confectionary products in the U.S. is much larger and more profitable than that of Japan. Expansion to the U.S. will therefor increase sales, revenue, and profitability due to the large potential for the market.

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