Posted: June 12th, 2015
Topic: Google glass – Enter to Qatar Market
Brief description of the subjects / contents in key terms
- International business awareness
- International strategic vision development
- Business processes & change management
- Entrepreneurial management
- International marketing and sales management
- International finance and accounting
- Business Communication
- Business Research methods
- Planning & organizing
Learning objectives
- The student is able to describe and analyse simple processes in the field of business operations and human resources. (Int. business process and change management)
- The student can recognise and describe company goals, objectives and policies.
- The ability to write and defend a business plan for a (start-up) company
- The student is able to evaluate and assess the contribution of marketing to a firm in an international business environment, including the decisions on price, product, distribution and communication
- The student is able to understand and describe the various classifications of costs and revenues, to perform –mainly simple- cost (and revenue) calculations.
- The student is able to translate simple financial activities into journal entries and to prepare a balance sheet and profit & loss account for an SME (small and medium-sized enterprise).
- The student is able to determine and to work with the information needs of an SME, among which the chart of accounts.
- The student is able to translate more complex financial activities into journal entries and to prepare a balance sheet and profit & loss account. (Int. Finance and Accounting)
- The student has a generally effective command of the English language in a range of situations, e.g. can make a contribution to discussions on practical matters. (Business Communication)
- The student has the ability to make a realistic and effective planning of his own activities.(planning and organizing
But please follow the other attachment steps.
Contents page:
Executive summary…………………………………………………………………………………………3
Introduction……………………………………………………………………………………..4
Company description……………………………………………………………………………5
Objectives……………………………………………………………………………………….7
Organizational Structure…………………………………………………………………………7
SWOT Analysis…………………………………………………………………………………8
Porter’s 5 forces…………………………………………………………………………………9
Selected Country……………………………………………………………………………….11
PESTELanalysis………………………………………………………………………………..11
Hofstede’s Dimensions…………………………………………………………………………14
Target group of customers…………………..………………………………………………….15
Product Positioning………….…………………………………………………………………..16
Segmentation…………………………………………………………………………………….17
Sales Estimation……..………………………………………………………………………….19
Income Statement………….……………………………………………………………………20
Balance Sheet……………………………………………………………………………………21
Entry Strategy…………………….……………………………………………………………..22
Channel of Distribution…………………………………………………………………………22
Transportation method…………………………………………………………………………..22
Conclusion……………………………………………………………………………………….23
References……………………………………………………………………………………….24
Executive Summary
Throughout the following report, a careful study and analysis has been done about the market, the organization, and the culture of the country of entry. This report aims at providing a clear explanation as to why DANONE should enter the Qatari market. We have used many methods of analysis to prove that Fortimel Compact will be successful in Qatar.
Certain methods have been used, some of them are:
- Company description
- Product description
- SWOT analysis (DANONE)
- Porter’s five forces
- PESTEL (Qatar)
- Hofstede’s cultural dimension
- Segmentation
- Sales Estimation
- Income Statement
- Balance Sheet
Therefore, the analysis showed that the product would be a success in the Qatari market, in regards to the estimated profit and the outcome of the deep analysis that was be done.
Introduction
Throughout recent years, people in society have become more health conscious. They began to take care of the food they eat and the exercise they apply in their daily routine, and even simple things such as drinking enough water.
As consumers have begun to research about the best eating habits, they have begun to discover that they can get all the nutrients they need in certain products. However, these products are not available to all consumers, therefore they began to produce readymade protein supplements that contain all the needed nutrients.
Therefore Fortimel Compact is very suitable to be exported to Qatar due to the fact that it offers all nutrients needed for a person in a readymade fashion and is quick and easy to be consumed. The Fortimel Compact is also accessible to the majority of the population due to its low price of 5QR per bottle. The main advantage of this product is that it promotes healthy diets and a can stimulate and encourage people to maintain a healthy lifestyle.
Company Description
Mission Statement
According to DANONE’s main website, their mission is the following: “Bringing health through food to as many people as possible”
Danone Company (e.g. 2011). Danone at a glance. [ONLINE] Available at: http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/. [Last Accessed 20 January 2015].
Business Type
DANONE is a partnership that started in Spain and then went on to join France to become DANONE Spain-France. They have 4 business lines, fresh dairy products, waters, early life nutrition, and medical nutrition which is the category that Fortimel Compact is under. DANONE follows a very simple yet innovative strategy. They aim for global presence, 100% health driven products, a sustainable food chain, and having products available for all types of consumers.
Danone Company (e.g. 2011). Danone at a glance. [ONLINE] Available at: http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/. [Last Accessed 20 January 2015].
Business Location
France and Spain
Number of Employees
DANONE has approximately 100,000 employees of which 40,000 of them are provided with DANONE insurance.
Danone Company (e.g. 2011). Danone at a glance. [ONLINE] Available at: http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/. [Last Accessed 20 January 2015].
Product Description
According to “Nutritional Clinical” Fortimel Compact is a ready to drink, high protein, oral nutritional supplement that contains 200kcal and 20g of protein per each 200ml bottle. Fortimel compact can both be used for medical and pleasurable reasons. It is very beneficial for patients who need an extra amount of protein in their system for whatever reason. However, at the same time it has a great taste and is full of energy and protein.
PHARMAC FUNDED (). Fortimel Regular. [ONLINE] Available at: http://www.nutriciaclinical.co.nz/admin/documentlibrary/fortimelregularnz.pdf. [Last Accessed 20 January 2015].
Nutritional Information:
PHARMAC FUNDED (). Fortimel Regular. [ONLINE] Available at: http://www.nutriciaclinical.co.nz/admin/documentlibrary/fortimelregularnz.pdf. [Last Accessed 20 January 2015].
Company’s Core Competencies
DANONE has a long list of strengths; one of their largest competencies is “entrepreneurial spirit”. DANONE has constantly tried to find new and different ways to adapt to the constant and shifting change in their market. They never rest and settle for what they have, instead they always search for better ways to give their consumers what they want, demand, and need in a new, innovative way. That is how they have 900 million consumers operating in 140 countries.
Danone Company (e.g. 2011). Danone at a glance. [ONLINE] Available at: http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/. [Last Accessed 20 January 2015].
Objectives- SMART
DANONE has easily expanded to many markets prior to Qatar. Even though many of DANONE’s products are sold in Qatar, this specific product (Fortimel Compact) has not been introduced. Therefore, by expanding this product in Qatar, DANONE intends on increasing their sales by offering consumers a new product that they may not have ever heard of. They also intend on increasing their market share. Even though they already hold a very high position in the Dairy Products market, they can still increase their shares if they introduce a new product in the Middle East, especially because this product is only sold in European countries. DANONE also intends on expanding internationally. They will do that by introducing some of the products they only sell in Europe to the Middle East. Therefore, introducing Fortimel Compact will only be the beginning. The fresh dairy products sector of DANONE holds the 2nd place for the largest milk producers and 56% of the group’s business. Waters account for 18% of the group’s sales, and a +11,2% growth rate during the year of 2013.
Danone Company (e.g. 2011). Danone at a glance. [ONLINE] Available at: http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/. [Last Accessed 20 January 2015].
Organizational Structure
| General Manager
GM |
| Finance |
| Cargo Personnel
2
|
| Sales representative |
SWOT Analysis (DANONE)
Strengths:
DANONE’s list of strengths is endless. This is because they have always evaluated their methods, and strategies to constantly improve them. Some of their strengths are their ability to adapt to local realities, meaning they always adapt to their current state. This is dependent on their market. They are also having high flexibility and agility of a small business. This means that they are very flexible to change, and have the ability to add, remove or improve things very easily as though they are a small business, even though they are the complete opposite. Innovation is also a large advantage in DANONE. They have both Social and Product innovation. Meaning they are very unique in the way they produce and market their products. They manage to reach the highest number of consumers by providing them with products that are available for everyone everywhere. The final and most important strength is their sustainable relationship with the environment. They produce their products in the most healthy and sustainable way they could, and therefore they have saved 100 million trees so far.
Danone Company (e.g. 2011). Danone at a glance. [ONLINE] Available at: http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/. [Last Accessed 20 January 2015]
Weaknesses:
DANONE is a very successful group in Europe, however, the brand is not recognized very well in the Middle East, therefore, low and inefficient brand recognition is a large weakness. Consumers in the Middle East do not usually consume DANONE products. Therefore, the expansion of their market internationally is very much needed.
Opportunities:
DANONE has a large amount of opportunities that they can easily grab. Expanding internationally is the largest one that will be very beneficial. Since they are not very popular in the Middle East, for them to expand internationally by introducing new products to the Arabic consumers would help them increase their sales percentage, which is another great opportunity. When they introduce new products that have not been sold in the Middle East before, then they will definitely increase their sales. However, these products need to be marketed properly in order to grab an increasing amount of consumers. Expansion of the market is also very advantageous. When they begin to enter new markets, they will benefit within all the stated factors.
Threats:
Like any Dairy Producing Company, DANONE’s largest threat is competition. There are many leading dairy producing companies all around the world, like Al Marrai, and Danet. These 2 competitors are DANONE’s increasing competition especially in the Middle East. As stated earlier, DANONE is not a brand consumers in the Middle East are familiar with. In the Middle East, Al Marrai is the leading Dairy Producing Company, therefore, when DANONE enters the Middle Eastern market, this could be a an enormous threat to them.
Porter’s 5 forces
Threat of new entrants:
DANONE is one of the leading dairy producing companies in the world; therefore, they hold both a stable and strong position in the market. Meaning, they have a low threat of new entrants. Many dairy companies have entered the market and did not succeed in threatening DANONE; this is because DANONE constantly offers its consumers unique and different products. As stated earlier, they always strive to innovation; they try to always differentiate between their competitors in order to maintain their solid position in the market.
Danone Company (e.g. 2011). Danone at a glance. [ONLINE] Available at: http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/. [Last Accessed 20 January 2015].
Bargaining Power of Buyers
The buyers have a very strong impact on the product. If they do not purchase the product, then DANONE will never be the successful dairy company it is today. Therefore, the bargaining power of buyers is relatively high. DANONE states that they always strive to innovate new products that would suit their consumers’ interests or even their taste. Their sales are constantly increasing, meaning that the consumers are purchasing their products at great amounts, which shows that they impact the company greatly, and are probably one of the main reasons to how DANONE has achieved its place in the market.
Danone Company (e.g. 2011). Danone at a glance. [ONLINE] Available at: http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/. [Last Accessed 20 January 2015].
Threat of Substitute Products
DANONE has a low threat of substitute products. This is a result of their successful market share, and position. They sell their products at a reasonable price that suits all types of consumers with different incomes. They also offer their consumers unique and different products that no other dairy company has the ability to offer. This does not even give any other company the chance to create substitutes to their products. Resulting in low threat of substitute products.
Danone Company (e.g. 2011). Danone at a glance. [ONLINE] Available at: http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/. [Last Accessed 20 January 2015].
Bargaining Power of Suppliers
DANONE has suppliers that supply them with milk. These suppliers are usually family farms that have agreements with DANONE to supply them with the dairy supply on a daily basis. Therefore, without these suppliers, there would be no production of the products. This results in a relatively high bargaining power of suppliers. Without the suppliers, DANONE will not be able to produce their products. It is a dairy producing company, meaning that they must have fresh dairy every day, they rely heavily on their daily supply of milk from many farms around the factory. They then produce the products and offer them to retailers or ship them around the world.
Rivalry
Rivalry amongst existing firms is not very common in DANONE’s case. There is of course a large volume of competition; however, rivalry is very uncommon. DANONE is very innovative in the products they sell, therefore, there is a very low chance that they can be accused of copying another companies product or even using the same strategy. They offer new strategies and products. This however, does not mean that there is no competition, since it is the leading dairy producing company; most companies are striving to gain the same reputation, position, and even sales.
Danone Company (e.g. 2011). Danone at a glance. [ONLINE] Available at: http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/. [Last Accessed 20 January 2015].
Selected Country for Entrance:
Qatar
PESTEL Analysis for Qatar:
Political:
Qatar is monarchy who is ruled by the Emir Tamim Bin Hamad Al Khalifa Al Thani. It has recently stated that it is transferring into a constitutional monarchy. However, it does not allow any political party to interfere nor does it regular elections.
Qatar is divided into different areas, regions, or cities.
- Ad Dawhah is the capital city
- Al Wakkra
- Al Shamal
- Al Rayyan
- Mesaieed
- Umm Salal
- Al Khawr
- Al Jumaliyah
- Al Ghuwariyah
UK Essays (e.g. 2011). PESTEL Analysis of Qatar. [ONLINE] Available at: http://www.ukessays.com/essays/economics/pestle-analysis-of-qatar-economics-essay.php. [Last Accessed 17 February 2015].
Economic
- GDP: US$71.2 billion
- GDP per capita: US$74,000
- Inflation: 13.73%
- Annual Growth: 14.2%
- Exchange rate: £1=QR 5.97
Qatar’s largest economy is oil production. Qatar is known for being one of the most consistent oil producing countries. Many countries around the world invest a lot in Qatar in order to grab oil in return.
Qatar’s GDP is also expected to increase by 18% yearly which would result in an increase in the GDP per capita as well. As stated by WorldAtlas.com, Qatar is ranked in number 1 as the richest country in the world; this is a large invitation for investments and exportation to and in Qatar.
UK Essays (e.g. 2011). PESTEL Analysis of Qatar. [ONLINE] Available at: http://www.ukessays.com/essays/economics/pestle-analysis-of-qatar-economics-essay.php. [Last Accessed 17 February 2015].
Social
- Population: 2.169 (2013)
- Religion: Islam
- Languages: Arabic is the official language. English is spoken by almost the entire population
- Nationality: Qararis
- Ethnic groups: 20% Qataris, 20% other Arabic nationalities, 20% Indian, 10% Filipino, 13% Nepali, 7% Pakistani, 5% Sri Lankan, others 5%.
- Life expectancy: 74 years
- Infant mortality: 17.46 of 1,000 live births
The state provides its entire population with free health care, no taxes, and public services. Any resident in Qatar, no matter what their Nationality is, is offered free medical care by Hammad Medical Cooperation. Shari’a law is the main source of law in Qatar. Therefore, they follow the Islamic law. For example, women are not allowed to publish a driving license unless they have a signed document by their husbands or guardian (usually a male).
UK Essays (e.g. 2011). PESTEL Analysis of Qatar. [ONLINE] Available at: http://www.ukessays.com/essays/economics/pestle-analysis-of-qatar-economics-essay.php. [Last Accessed 17 February 2015].
Technology
Qatar’s core competencies all arrive from the revenue it holds from oil and gas. Qatar’s magnificent technology has successfully impressed the world resulting it to win the 2022 FIFA bid. Although it may not be the strongest feature it has, it is the still the strongest in the current market. It’s IT services are estimated to increase to US$151m in the upcoming years and may be the leading country in this sector.
UK Essays (e.g. 2011). PESTEL Analysis of Qatar. [ONLINE] Available at: http://www.ukessays.com/essays/economics/pestle-analysis-of-qatar-economics-essay.php. [Last Accessed 17 February 2015].
Environmental
The ministry of Industry and Agriculture holds the largest responsibility regarding Qatar’s environment. During the recent years Qatar has prioritized the increase of water supply, the conservation of oil supplies, and the consistency of obtaining wildlife. Like most countries in the world, Qatar has been a victim of air pollution caused by the Gulf War. Its oil economy can also increase pollution.
UK Essays (e.g. 2011). PESTEL Analysis of Qatar. [ONLINE] Available at: http://www.ukessays.com/essays/economics/pestle-analysis-of-qatar-economics-essay.php. [Last Accessed 17 February 2015].
Legal
The Shari’a is the main source of law in the State of Qatar. However, the law is completely controlled by the Emir. He makes the rules and regulations and decides what the consequences should be for anyone who breaks them. Its neighboring countries are very liberal, and although Qatar follows liberal law, it is not its main reference. It always refers back to the Islamic law (Sunnah, Quran)
UK Essays (e.g. 2011). PESTEL Analysis of Qatar. [ONLINE] Available at: http://www.ukessays.com/essays/economics/pestle-analysis-of-qatar-economics-essay.php. [Last Accessed 17 February 2015].
Hofstede’s Cultural Dimensions (Qatar)
Power Distance:
Qatar has an exceptionally high power distance with about 90. This therefore means that most people in society expect and accept order in the hierarchy of status and position. They also accept inequality, meaning that they expect to have superiors, and that members in society do not receive the same opportunities. They follow the autocratic leadership style, which states that they like to be told what to do.
Individualism & Collectivism
Qatar has an approximate score of 25 in individualism, this shows that it is a collectivist society. All members in this society rely on one another and have mutual accountability for everything that happens. A collectivist society focuses more on relationships and the formation of relationships rather than the material they are studying or working on. Most employees are rewarded and assessed based on the group performance. Therefore performance is a group work result.
Masculinity & Femininity
Qatar has a score of 50 on masculinity which means that it is both a feminine and masculine culture. This means that this culture focuses competition, striving for achievement, constant success in the working environment, relationships, quality of life, and caring about other members of society.
Uncertainty Avoidance
Qatar has scored approximately an 80 on uncertainty avoidance; this means that people in this culture do not tolerate behavior that may go against their norms and values. They do not like not having a prediction of the future thus not knowing what may happen later on. They also have a constant need for rules to regulate society in the correct way, and do not like it when something does not operate the way they expect it to.
Target Group of Customers
Target Group Customers for Fortimel Compact will be health oriented customers. Since it is a protein shake that offers many nutrients, then it will be purchased by customers who value their health more. These customers are expected to live a healthy lifestyle and a balanced diet.
Customers will be ranging from the ages of 16-35. This is because younger age groups tend to be more health conscious and add an increasing amount of attention to maintaining their health in the correct way. Our products will then allow them to get all the nutrients they need and a delicious taste all in one small bottle which is sold at a very reasonable price.
Product Positioning
High Quality
Low Price High Price
Low Quality
As stated earlier, Fortimel Compact is a healthy product who will be targeted towards health oriented customers. The product is not at a high price, as mentioned in the sales estimation, one bottle of Fortimel Compact will be sold for 5,00QR. Therefore, in the chart, it will be positioned in the low price sector. As it is a French product, it will be of high quality. This is because DANONE creates all their products with the best dairy products that are supplied by French farmers. DANONE is therefore offering their consumers products at a low price and of high quality.
Segmentation
Demographic:
We are targeting both males and females from the ages of 16-35. Since our product will be sold for only 5,00QR, then our target group will have average income. Our consumers can range from small or large families, and even single individuals. Fortimel Compact is a product that can be used by all types of consumers.
The reason why we chose this particular age group is because young people tend to be more conscious about their health and maintaining it. Therefore, we have targeted our product towards them in order to get better results.
Geographic
DANONE will be targeting Doha, Qatar. It is the most populated city in Qatar, therefore it has been concluded that it will be the best city for the entrance of Fortimel Compact. It will be increasingly easy for customers to transport themselves in the Doha to purchase the product. Our product will be sold in MegaMart, which is the best retailer for European products. It owns about 4 branches situated in different areas in Doha. Customers know about its reputation and therefore constantly go there to purchase European products that are not available in any other retail stores.
Psychographic
Our target group will be a health oriented group. Meaning, they live a healthy life style and follow a balanced diet. Fortimel Compact offers them all these factors and more. We have chosen this group because with their mentality they will be the best group to convince and grab. By appealing to their self interests, consumers will be tempted to purchase our product because it delivers all their needs, wants, and expectations.
Sales Estimation:
1 bottle= 5,00QR
1 Packet= 6 bottles
Estimation: 10 Packets sold per day
Per Year= 10×365= 3,650
Total Cost of Packets= 6×5=30
=30×10= 300
Total revenue = 300×3, 650
= 1,095,000
Gross Profit= Total Revenue-Cost of Sales
Cost of Sales= 3×6= 18×10= 180×365= 65,700
Gross Profit = 1,095,000- 65,700
= 1,029,300
Income statement
2015
Sales revenue 1,095,000
Cost of sales 65,700
Gross profit 1,029,300
Operating Expenses:
Distribution cost 35,000
Salaries 78,000
Operating Profit 994,300
Interest 2% 19,886
Net Profit (Profit for the year) 974,414
Balance Sheet
| Assets 2015 € |
Current Assets
Cash 4,073,000
Accounts Receivable 604,000
Inventory 800,678
Total Current Assets 5,477,678
Fixed Assets
Machinery 412,098
Property 867,091
Total Fixed Assets 1,279,189
Total Assets 6,756,867
| Liabilities and Owners Equity
2015 |
Current Liabilities
Accounts payable 405,000
Taxes Payable 66,000
Salaries 1,298,999
Total current liabilities 1,769,999
Owners Equity 4,986,868
Entry Strategy & Channel of Distribution
Exporting:
Since DANONE will be bringing its products from France, then it will export it. Therefore, our entry strategy is Exporting. Fortimel Compact will be exported from the production headquarters in France and imported into Qatar to the agents or broker, it will then be delivered to the wholesaler then to the retailer which is Megamart. Megamart will then sell it to the consumers in Qatar.
Channel of Distribution
Producer Agents/ Broker Wholesalers Retailers Consumers
We have chosen this strategy because we wanted to send the Fortimel Compact from the main producers which are in France. Megamart is one of Qatar’s largest retailers of European food products in Qatar. Therefore it is the best option.
Transportation Method
Plane
The best method for transformation of Fortimel Compact is by plane. Since it is a dairy product, it must be transported using the fastest method. This is to avoid it from getting expired or damaged on its way to Qatar. In Qatar, all food products are imported using planes. This is concluded to be the safest and fastest method especially for time sensitive products such as Fortimel Compact.
This method is proven to be the least expensive one, with the lowest amount of insurance, and more control on the inventory that is being transported.
World Industrial Reporter (e.g. 2011). Global Shipping: Choosing the Best Method of Transport . [ONLINE] Available at: http://www.worldindustrialreporter.com/wp-content/uploads/2012/09/Global-Shipping-Methods1.pdf. [Last Accessed 18 February 2015].
Conclusion
A precise description about DANONE was explained in the beginning of the report stating what the chosen product is and what company it came from. Nutritional information was provided about the product, followed by the company’s Core Competencies and Objectives.
After careful analysis, Qatar has proven to be the most suitable country to enter. It has a constant gradual increase in its economy. As stated earlier in the PESTEL analysis, Qatar has recently prioritized obtaining an environmental society.
A careful financial overview was conducted to show the financial position of DANONE, regarding its consumers and employees. The financial overview showed that they have a strong financial position. DANONE is estimated to bring in a gross profit of 1,029,300QR.
DANONE’s chosen method of entry in the market is indirect exporting. Fortimel Compact will be exported from France and imported into Qatar. Therefore, the channel of distribution will be passing the product through different intermediaries.
DANONE is hoping to produce the estimated profit and benefit the consumers successfully by delivering what they need, want, demand, and expect.
References
http://www.danone.com/en/for-all/our-4-business-lines/fresh-dairy-products/
http://www.nutricia.com/our-products/nutrition-for-elderly/fortimel/products
http://www.danone.com/en/for-all/mission-strategy/danone-at-a-glance/
http://www.nutriciaclinical.co.nz/admin/documentlibrary/fortimelregularnz.pdf
http://www.ukessays.com/essays/economics/pestle-analysis-of-qatar-economics-essay.php
http://www.worldindustrialreporter.com/wp-content/uploads/2012/09/Global-Shipping-Methods1.pdf
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