Abstract
This report presents a sustainable plan for British bakery chain Greggs plc to enter a new international market with their existing products and services. Through an analysis of key concepts in global business, the benefits of expanding into new markets, environmental trends, and the role of ethics and culture in international operations, this report provides insights on how Greggs can successfully adapt its offerings to meet local needs while ensuring positive reception from the host market. The business plan outlines managerial challenges, operational strategies for sustainability, and ways to overcome potential obstacles when entering the selected target market.
Introduction
Greggs plc has built its reputation as a leading British bakery chain over 80 years by specializing in pastry products and sweet treats. To sustain growth further, Greggs must expand into new international markets effectively. This report recommends how they can achieve this sustainably by adapting their product range according to local preferences while considering ethical considerations specific to the chosen target market.
Key Concepts of Global Business (LO1)
Expanding into new markets brings several benefits that align with broader objectives such as revenue growth, diversification opportunities across regions/countries/time zones/socioeconomic factors/political environments/stages of development, competitive advantage through brand recognition and customer loyalty, access to new resources, opportunities for innovation and learning from different cultures/business practices.
Market entry strategy
When expanding into new markets, Greggs must carefully consider the most suitable market entry strategy. This decision will be based on various factors such as cultural preferences, consumer behaviour patterns, regulatory frameworks, and market dynamics of the target country (Postelnicu & Câlea, 2019). Franchising is an option where Greggs can partner with local franchisees who have a better understanding of the local culture and business environment. Licensing allows them to grant permission for another company to use their brand and sell their products in a specific region.
Joint ventures involve partnering with a local company or investor to launch operations and sharing risks and rewards. Acquisitions allow Greggs to purchase existing businesses in the target market that align with their strategic goals. Alternatively, setting up wholly-owned subsidiaries gives Greggs complete control over operations but requires extensive investment upfront. Before deciding on an appropriate approach from these options (or potentially others), conducting thorough market research becomes essential (Postelnicu & Câlea, 2019). Understanding factors like local needs/preferences/competitors/key stakeholders/regulatory environment provides insights necessary for success in international expansion efforts.
Product adaptation
To succeed internationally while maintaining its core offerings at home without compromising brand identity or quality standards, product adaptation plays a crucial role in Gregg’s global business growth. Adapting products involves modifying elements such as recipes, flavours, packaging, sizes, pricing, promotions, marketing messages and distribution channels to cater to the taste buds and preferences of the target audience in each country they enter. This ensures that their products align with local market demands. Recipe modification may involve altering ingredients or creating new menu items that resonate with local palates. Flavors can be adjusted based on popular regional tastes.
Packaging might need adaptation for cultural sensitivities or practical considerations (e.g., portion sizes suitable for different markets). Pricing strategies could vary depending on consumer purchasing power and the competitive landscape within each market. Promotions should consider cultural nuances, seasonal trends, and appropriate channels (such as social media platforms) favored by the target audience in specific regions (Postelnicu & Câlea, 2019). Marketing messages must also align with local customs/values/language while maintaining a consistent brand image globally. Furthermore, distribution channels may require adjustment – collaborating with established retailers/food service providers; setting up direct-to-consumer delivery options; or sourcing ingredients locally to ensure freshness/sustainability/regional authenticity/competitive cost advantage.
Benefits of Expanding into New Markets (LO1)
Expanding into new markets offers several advantages for a company like Greggs.
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Revenue growth
By entering new markets, Greggs can tap into a larger customer base and generate additional revenue streams. This allows the company to diversify its sources of income and reduce reliance on domestic operations, which may be affected by economic fluctuations or market saturation. With an expanded presence in multiple markets, Greggs can take advantage of growth opportunities that may not exist in their home country.
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Diversification
Going global enables companies like Greggs to mitigate risks associated with relying solely on one market. Economic conditions or political stability within a single country could have a significant impact on business operations. Expanding internationally allows the company to spread these risks across different countries’ economies and minimize vulnerability to any particular region’s challenges.
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Economies of scale
As Greggs expands into new markets, it increases its production volume collectively across all locations. This results in cost advantages achieved through economies of scale – lower average costs per unit due to higher output levels. Bulk purchasing power is increased when sourcing raw materials from suppliers serving multiple locations, while centralized distribution networks become more efficient with added capacity utilization.
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Brand recognition
International expansion exposes the brand name globally and enhances visibility among potential customers worldwide who might only encounter it if they venture abroad themselves or stumble upon advertising campaigns targeted towards international markets. This increased brand recognition can lead to a larger customer base and higher market value for the company domestically and internationally. It also strengthens Gregg’s competitive position in the global marketplace, as customers may recognize and prefer a familiar brand over local competitors.
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Learning opportunities
Expanding into new markets provides valuable learning experiences for businesses like Greggs. By entering different countries with diverse cultures, consumer preferences, business practices, and competitive landscapes, they gain insights that can be applied across all operations. For example, understanding consumer trends or preferences in one market might inspire innovative product offerings or marketing strategies that could benefit other locations as well. Additionally, exposure to various business practices allows companies to adopt best practices from each region visited.
Environmental Trends Significance for Greggs’ Global Business Activities (LO3)
In recent years, several environmental trends have emerged that are significant for companies conducting global business activities, such as Greggs.
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Sustainable Practices
Increased public awareness regarding sustainability has led consumers to demand products from environmentally responsible companies. To remain competitive in international markets with a sustainability focus like Western Europe or North America, Greggs must ensure sustainable sourcing of ingredients/packaging/waste management, minimizing carbon footprint throughout their supply chain.
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Health Consciousness
Growing concerns about healthy lifestyles have shifted consumer preferences towards healthier options/ingredients/reduced sugar content/ low-calorie offerings. To adapt successfully to new international markets and ensure positive reception, Greggs must offer healthy alternatives alongside traditional pastries/sweets, considering local dietary habits/nutritional guidelines/preferences while maintaining taste integrity.
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Ethical Considerations
Increasingly, consumers are prioritizing ethical considerations such as fair trade practices, animal welfare standards, and responsible sourcing. Greggs must ensure they align with these values in their international expansion plans by partnering with suppliers who uphold similar ethical standards or implementing robust auditing processes.
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Digitalization and E-commerce
Rapid advancements in technology have revolutionized consumer behaviour globally. Companies like Greggs must invest in online platforms for ordering/delivery/payment/tracking options alongside traditional brick-and-mortar stores to cater to changing customer preferences.
Viable Sustainable Business Plan for Entering the Selected International Market (LO5)
Target Market Selection
Based on market research indicating strong potential growth opportunities while aligning with Gregg’s core offerings/brand image/and values/reputation, Mexico is recommended as a target market. Mexico has a growing urban population accustomed to Western influences. Still, it retains its unique culinary culture, offering ample scope for product adaptation while maintaining an underlying familiarity with bakery items through past collaborations/international franchises. The regulatory environment supports foreign investment/fair competition/protection of intellectual property rights, providing favorable conditions
Managerial Challenges
Entering the Mexico market may present managerial challenges, including understanding local cultural nuances/consumer behaviour/purchasing habits/taste preferences, establishing relationships with local suppliers/distributors/partners, and navigating regulatory requirements/language barriers. To overcome these challenges, Greggs should invest in thorough market research and analysis and hire local talent possessing knowledge of the Mexico market. They should also forge strategic partnerships with established distributors/retailers to leverage their networks and expertise. Additionally, investing in language training for employees can facilitate smoother communication.
Market Research and Analysis
Before entering the Mexican market, Greggs needs to conduct comprehensive market research and analysis. This includes gathering data on consumer behavior, purchasing habits, and taste preferences within the bakery industry in Mexico. With this information, they can identify potential gaps in the market that align with their core offerings. Additionally, understanding local cultural nuances is crucial for success in an international market like Mexico. Customizing products or introducing new items that cater to specific tastes or traditions will be key to appealing to consumers.
Establishing Relationships
Building strong relationships with local suppliers and distributors is essential for entering any international marketplace. Greggs should invest time and effort into finding reliable partners who have experience working within the region’s retail landscape (Nambisan & Zahra et al., 2019). By partnering with established retailers or distributors familiar with the intricacies of doing business in Mexico, Greggs can leverage their network of connections while benefiting from their expertise in navigating regulatory requirements such as import laws or intellectual property protection.
Managing Regulatory Requirements
It is important for Greggs’ sustainable business plan to address legal frameworks governing foreign investments because these regulations may vary across different countries. Mexico has favorable conditions for supporting foreign investment; however, since all areas are prone to change due to political reasons, it removes any predictability or certainty. To navigate the regulatory requirements, Greggs should work closely with legal advisors who have expertise in international business laws and regulations. This will ensure compliance with all necessary permissions and licenses to operate in Mexico.
Language Training
To facilitate smoother communication with local suppliers, distributors, employees, and customers in Mexico, investing in language training for staff members should also be considered. By equipping employees with language skills, Greggs can enhance their ability to build relationships and conduct business effectively in the local market. This training could include basic Korean language lessons for all staff members involved in operations in Mexico or hiring bilingual professionals who are fluent in both English and Korean languages. Language competency will not only aid communication but will demonstrate respect for the local culture and increase trust among potential partners/customers.
Adapting Products
To successfully enter the Mexico market, Greggs should adapt its product offerings to cater to local preferences while maintaining its core brand image/values/reputation. Researching traditional bakery items popular among Koreans can provide insights into taste profiles, flavors preferred, and ingredients used locally, enabling them to introduce new menu items that appeal specifically to Mexican consumers.
Operational Strategies for Sustainability
Greggs must implement operational strategies that promote sustainability throughout its international expansion:
Sustainable Sourcing
Greggs should prioritize sourcing ingredients from local suppliers who adhere to ethical practices. This includes ensuring that labour rights are respected, such as fair wages and safe working conditions for farmers or workers involved in the supply chain. Additionally, suppliers should follow environmentally sound practices like sustainable farming methods avoiding the use of harmful pesticides or genetically modified organisms.
Environmental Impact Reduction
To minimize its environmental footprint, Greggs can implement energy-efficient technologies across its production facilities and stores. This may include using LED lighting systems, motion-sensor controls for lights and heating/cooling systems in stores to reduce unnecessary consumption of resources (Daniels & Radebaugh et al., 2019). Furthermore, shifting towards renewable energy sources like rooftop solar panels can help generate clean electricity for store operations. Implementing waste management systems is also crucial to promoting recycling programs within all outlets/packaging centres while reducing food waste through improved inventory management techniques. Regarding logistics operations, efficiency improvement could be achieved by transitioning delivery vehicles into electric-powered alternatives, which will not only lower carbon emissions but also significantly reduce noise pollution associated with urban deliveries.
Packaging Innovation
Introducing packaging made from biodegradable materials (like compostable paper/cardboard cups or containers) and recyclable plastics/glass bottles, along with promoting reusable options (such as encouraging customers to bring their containers/bags), can significantly reduce the environmental impact of Greggs’ packaging (Wild, 2019). Additionally, the company could provide incentives to customers who bring their containers or bags, such as loyalty points or discounts on purchases.
Community Engagement
Greggs should actively engage with the community by supporting social initiatives and causes aligned with environmental conservation and hunger relief. This proactive approach will not only create goodwill but also foster customer loyalty. For example, partnering with local food banks or donating unsold products to those in need can address hunger issues and minimize waste. Additionally, organizing local clean-up events in collaboration with customers and employees would demonstrate a commitment towards maintaining a healthy environment for communities where Gregg operates.
Management System: Implement an effective ethics and culture
Greggs can ensure that no negativity is received from the host market:
Local Adaptation
By conducting thorough research, Greggs can understand the cultural norms, values, and preferences of Mexican consumers (Ghauri & Strange et al., 2021). This will allow them to customize their marketing campaigns and advertising messages accordingly. For example, they may need to include local celebrities or influencers in their advertisements to resonate with the target audience. Additionally, respecting local customs and traditions is crucial for building trust with Mexican consumers.
Ethical Standards
Aligning with internationally recognized ethical standards related to responsible sourcing/production practices highlights Gregg’s commitment towards sustainability. Implementing fair trade policies ensures that workers involved in the production process are treated fairly and receive adequate compensation for their work (Shenkar & Luo et al., 2021). Adhering to principles of corporate social responsibility shows a company’s dedication towards giving back to society through initiatives such as supporting community projects or investing in eco-friendly practices.
Employee Training
Providing training on cultural sensitivity and cross-cultural communication helps employees avoid unintentional misunderstandings or offenses when interacting with customers from different backgrounds. Understanding culturally appropriate behavior enables employees at all levels within Greggs’ organization – from front-line staff members handling customer interactions directly at stores to management professionals making strategic decisions- to enhance positive experiences for customers while avoiding any negative outcomes due to a lack of understanding of diverse cultures.
Overall these strategies demonstrate that by taking into account cultural nuances and demonstrating ethical practices, Greggs can minimize the potential for negativity from the host market (Doole & Lowe et al., 2019). This approach ensures that their marketing campaigns and messaging align with local preferences, creating a positive brand image in Mexico. Moreover, by adhering to internationally recognized ethical standards related to responsible sourcing and production practices like fair trade policies, Greggs shows its dedication towards sustainable business operations. Such commitments resonate well with consumers increasingly concerned about the environmental and social impact of the companies they support.
Additionally, content errors or lack of cultural sensitivity could harm employee relationships, ultimately leading to negative consumer sentiment. Understanding diverse cultures through employee training helps ensure smooth communication channels between customers, lessening the likelihood of misunderstandings resulting in critical feedback backlash and fostering an inclusive work environment where everyone feels valued and respected regardless of their background.
By employing these strategies, Greggs can establish itself as a socially responsible company exhibiting respect for local customs, avoiding any controversy or criticism-related differences that would arise due to inappropriate actions or ignorance, Thus enhancing chances of long-term success presence within Korean market in the Korean market and cultivating positive relationships with consumers. This proactive approach will help Greggs gain a competitive edge by showing that they value and respect their customers, as well as local customs and traditions.
Conclusion
Expanding into a new international market requires careful planning and adaptation strategies for sustainable growth. Greggs should consider key concepts in global business, such as market entry strategy and product adaptation while valuing environmental trends like sustainability practices/health consciousness/digitalization and adherence to ethical considerations specific to each target market they enter. By implementing operational strategies promoting sustainability and engaging ethically culturally sensitive approaches, Greggs can successfully navigate managerial challenges, positively influencing their reception within new markets, capturing opportunities for revenue diversification/enhanced brand recognition/customer loyalty, and opening doors towards further expansion globally.
References
Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2019). International business: Environments and operations. Pearson. https://thuvienso.hoasen.edu.vn/handle/123456789/10494
Doole, I., Lowe, R., & Kenyon, A. (2019). International marketing strategy: analysis, development and implementation. Cengage Learning. https://thuvienso.hoasen.edu.vn/handle/123456789/12742
Ghauri, P., Strange, R., & Cooke, F. L. (2021). Research on international business: The new realities. International Business Review, 30(2), 101794. https://www.sciencedirect.com/science/article/pii/S0969593121000019
Nambisan, S., Zahra, S. A., & Luo, Y. (2019). Global platforms and ecosystems: Implications for international business theories. Journal of International Business Studies, 50, 1464-1486. https://link.springer.com/article/10.1057/s41267-019-00262-4
Postelnicu, C., & Câlea, S. (2019). The fourth industrial revolution. Global risks, local challenges for employment. Montenegrin Journal of Economics, 15(2), 195-206. https://mnje.com/sites/mnje.com/files/195-206-_postelnicu_and__calea.pdf
Shenkar, O., Luo, Y., & Chi, T. (2021). International business. Routledge. https://www.taylorfrancis.com/books/mono/10.4324/9781003034315/international-business-oded-shenkar-yadong-luo-tailan-chi
Wild, J. J., & Wild, K. L. (2019). International business: The challenges of globalization. Pearson. https://thuvienso.hoasen.edu.vn/handle/123456789/13226
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