Analysis of Market Expansion Feasibility

Market Growth Feasibility Analysis

Three key components of the country-specific characteristics of the anticipated operating environment will be examined as part of the market growth feasibility analysis. It also looks at the products’ competitive environment and the company’s capacity to continue operating internationally. This article will investigate the mentioned aspects, with a major focus on China, given that peanut butter was chosen as the product to be introduced to the market.

Characteristics of China

China is in East Asia and has a border with the Pacific Ocean. Mandarin-speaking Han Chinese make up the majority of the population. However, there are other minority groups and nationalities as well as several local dialects. The inhabitants have diverse customs and cultural practices which are based on the existing religions such as Taoist, Buddhists, Islamic, and Christianity among others. China is also renowned for its vast population of over a billion spread across the 402 cities and native areas (Keightley et al., 2017). China’s economy continues to flourish due to readily available cheap labor, urban growth rate, and the vast market opportunity. Moreover, the existing administrative units under the central government in China have ensured stable governance which also serves as the foundation of the favorable legal environment in the country. As a result, policies are regulating the foreign investment process and other statutes that provide for the rights of independent operations with investors (Keightley et al., 2017). The government continues to amend the legal frameworks by the World Trade Organization with the aim of encouraging foreign investments.

Social and Cultural Aspects in China

Given the selected product that is Peanut butter, China has significant similarities and differences with the United States on the basis of social, legal, and political structures. The trade policy frameworks are favorable in both countries since they both aim at attracting foreign investments. Additionally, the political structures are desirable due to adequate stability which is helpful for economic growth. Unlike Americans, the majority of the mainland Chinese does not eat Peanut butter. According to Guilford and Rovnick (2013), Chinese diet mainly comprises hot and straightforward foods for breakfast. They also exercise traditional eating styles during lunchtime and supper in which meat buns and pasta. As a result of these customary trends among the mainland Chinese, there will be a little stretch in establishing a sound peanut butter business. However, Peanut is a common ingredient in Chinese buns, cakes, and noodles. Therefore, peanut butter occupies a mostly undiscovered place in the Chinese diet.

Competitive Product Analysis

The Peanut butter market in China is characterized by several players including Hormel Foods and Shandong Guanghua Agricultural Product Company among others. In as much as there are several producers, the consumption trends limit the willingness to invest. Most of the peanut butter producers have their market share below 6%, a trend that can be attributed to socio-cultural factors and unexplored opportunity in the mainland China (Guilford & Rovnick, 2013). For example, Hormel foods have its market share slightly above 3% (Guilford & Rovnick, 2013). The deduction is that the market is not saturated with competitors. Meanwhile, the relatively minimal success among producers in the industry is attributable to inefficient market strategies. Due to economic growth, consumers purchasing power increases which will be vital to the success of the new product. Moreover, there is readily available cheap and skilled labor that can efficiently drive sales to desirable levels. However, the existence of social barriers such as traditional diets and obsolete policies may compromise the ease of entry.

Company Analysis

In order to establish a successful business in China, a company should have the desired technical capability and distinct resilience since the market is highly susceptible to competition and likely new entrants (Keightley et al., 2017). The peanut butter production will require adequate resources that are financial, technological, and human. Due to the readily available and relatively cheap workforce, manufacturing operations will be established in China. Notably, the fiscal features are comparatively feasible for the launching of the new product. For instance, the current economic stability is an assurance of profitable foreign exchange system. It also points to acceptable currency fluctuations that will not adversely affect the market conditions. The prevailing political, social, and economic condition is an indication that the peanut butter business is a profitable venture (Suttle, 2017). The existing barriers are temporary and can be overcome through relevant strategic approaches.

Market Expansion Strategies

The management of the market expansion will involve the decentralization of functional areas to create demand among the various consumer categories (Suttle, 2017). In this case, the central operation unit will have limited managerial roles. For instance, market research analysts will be based in China to aid the product development process that will be popular depending on the prevailing socio-cultural aspects. Notably, the peanut butter market is widely unexplored which provide an opportunity for the new venture to reach potential customers in cities especially in the low-income estates. The policy and consumption trends are part of the risks that mostly seasonal. Launching a market expansion is a feasible venture in China (Suttle, 2017). However, there is need to adopt relevant marketing strategies, organizational structure especially geographical approaches, and exploit the available market by creating demand for peanut butter.

Conclusion

Apparently, the market expansion feasibility analysis reveals the existing opportunities in the peanut butter market. The social, political, and economic conditions are relatively favorable for the expansion of the business. As pointed out, the competitive product analysis outlines seasonal barriers that can be overcome through effective strategies. The company requires adequate resources and relevant managerial structure in order succeed.

References

Guiford, G. and Rovnick, N. (2013). Can hormel foods get China hooked on peanut butter? Retrieved on 11th November, 2017 https://qz.com/40442/can-hormel-foods-get-china-hooked-on-peanut-butter/

Keightley, D., Chan, H., Zurcher, E., Mcknight, B., Hucker, C., and Twitchett, D. (2017). China. Retrieved on 11th November, 2017 https://www.britannica.com/place/China

Suttle, R. (2017). Types of organizational structure in management. Retrieved on 11th November, 2017 http://smallbusiness.chron.com/types-organizational-structure-management-2790.html