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De Koekfabriek Paper

Words: 2455, Paragraphs: 68, Pages: 9

Paper type: Essay , Subject: Economics

Categories: Economics, Gdp

Table of Contents

TOC o “1-3” h z u Executive summary PAGEREF _Toc21986402 h 2Introduction PAGEREF _Toc21986403 h 3Background information PAGEREF _Toc21986404 h 3SWOT PAGEREF _Toc21986405 h 3Market opportunity assessment PAGEREF _Toc21986406 h 4Exploring the context: foreign market development PAGEREF _Toc21986407 h 5Hong Kong PAGEREF _Toc21986408 h 5Market attractiveness PAGEREF _Toc21986409 h 5Psychic distance PAGEREF _Toc21986410 h 5Internal factors PAGEREF _Toc21986411 h 5Taiwan PAGEREF _Toc21986412 h 6Market attractiveness PAGEREF _Toc21986413 h 6Psychic distance PAGEREF _Toc21986414 h 6Internal factors PAGEREF _Toc21986415 h 6Japan PAGEREF _Toc21986416 h 7Market attractiveness PAGEREF _Toc21986417 h 7Psychic distance PAGEREF _Toc21986418 h 7Internal factors PAGEREF _Toc21986419 h 7Entry mode model PAGEREF _Toc21986420 h 8Draft PAGEREF _Toc21986421 h 9Reference PAGEREF _Toc21986422 h 11Appendices PAGEREF _Toc21986423 h 12Figure 1: The Hierarchical Model of Entry Modes PAGEREF _Toc21986424 h 12Figure 2: SWOT Analysis PAGEREF _Toc21986425 h 12Figure 3: Conceptual model PAGEREF _Toc21986426 h 13Figure 4: Detailed conceptual model PAGEREF _Toc21986427 h 13

Executive summary

IntroductionBeing involved in foreign countries has become pivotal for the long-term success of a corporation. Taking that into consideration, international expansion is a crucial aspect in international business (Brewer, 2001).

The purpose of this project is to help De Koekfabriek to identify and select new geographical markets. In doing so, I will present a general market analysis of several potential target countries with the purpose of recognizing the two most prominent markets. Then I will present a more in-depth market analysis of these two markets with the purpose of selecting the best target market. Finally, I will present the most suitable market.

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Background informationDe Koekfabriek, founded in 2013, is a social enterprise which aims to generate suitable workplaces for individuals with poor job prospects, without the use of government. De Koekfabriek provides job opportunities for people with disabilities, economic migrants, asylum seekers, ex-homeless people, and youth that has been fallen between two stools in order to prepare them for their future career. It is also a way for individuals with mental disabilities to spend their day.

De Koekfabriek aims to open 4 new stores by 2021. Furthermore, they aim to create 300 new jobs by opening new stores. When these 10 stores are operative and lucrative De Koekfabriek aims to establish a foundation that will allocate a share of the earnings to improve the lives of their employees.

Once these objectives have been established international expansion should be executed. In this project a couple markets will be elaborated and analyzed. At the end a choice will be made to which market De Koekfabriek will expand and which entry mode should be used. (rewrite dess)

Strategic analysis tools ?SWOT, PEST, PESTEL, Value Chain analysis, Five Forces, Four Corners, Competitor Analysis, Root Cause analysis)

SWOTSWOT is an acronym for the formation of strategies by relating the internal environment, strengths and weaknesses with the external environment, represented as external opportunities and threats. It is centered on the reasoning that an efficient strategy maximizes a company’s strengths and opportunities and it minimizes its weaknesses and threats. The SWOT analysis is presented in figure 2 remake dess. This canvas is inspired from Johnson & al. (2011).

Summarizing the SWOT analysis, a few points can be examined more accurately. One of the weaknesses is long delivery times when a potential customer would like to make a purchase online. According to the website of De Koekfabriek it takes from two up to three working days to deliver the cookies, but this issue can be tackled by improving the distribution system reducing the delivery times to one working day. Furthermore, it is essential to negotiate with the supplier and decrease the costs. It the deal is not lucrative then I would suggest to look for another supplier.

Last but not least, lack of advertising. There are competitors that have a big online presence, an example is Het Bakkerscafe located in Nijmegen (close to Arnhem). In this day and age it is pivotal to have a strong online presence. By creating an integrated marketing plan this problem can be solved. Rewrite desssMarket opportunity assessment

The selection of an attractive market is a vital feature inside international business and it plays a tremendous role in persuading foreign market entry (Coe & Wringley, 2007). Williams (1992) identified five reasons for international expansion. The first reason surrounds growth, i.e. having the penchant to increase sales and profits. Secondly, as a result of limited growth opportunities in the domestic market caused by a stagnated market and increased competition. The next reason is related to international appealing and advanced retail models. The fourth reason is related to passive and subjective justification, which could be offers from competitors or foreign corporations. The last reason is the ability to transfer knowledge and techniques as well as economies of scale and management drive.

The potential in individual markets have been identified as the key drivers in international expansion. Karande & Lombard (2005) argue that high income per capita and high population is a significant factor in international market selection (IMS). Contrary, Marino (2002) identified large population as the main potential for growth regardless of the income per capita. The process of IMS relates strongly to the motives behind internationalization. In other words, the rationale for internationalization has a tremendous impact on which market to enter. Thus it is pivotal to not only consider the potential markets available but also why the selected market is of interest for De Koekfabriek.

The conceptual framework that will be used in order to select the most suitable market is illustrated in figure 3 (see appendices). It consists of three major criteria, namely market attractiveness, psychic distance, and internal factors with the purpose to ultimately select the most suitable foreign market.

Market attractiveness correlates with the criteria used to evaluate the attractiveness of the target market. Psychic distance will explain differences between the target market and the Dutch market in regards to geography, culture, and business landscape. The last criteria, internal factors, will focus on the capabilities and the internal characteristics of De Koekfabriek.

According to Breton and Mart?n (2011) in order to extract relevant criteria, one should seek information from previous literature for guidance. In IMS literature, there are a substantial amount of criteria authors recommended to use (i.e. Brewer, 2001; Papadopoulos & Martin, 2011, Agarwal & Ramaswami, 1992). Based on the literature review, the criteria which has been recognized to be most suitable for this project has been chosen. All the criteria have been amalgamated and incorporated into the conceptual framework, as presented in figure 4 (see appendices).

The purpose of this in-depth framework is to have all the necessary variables that will facilitate the ultimate objective, which is to select the most suitable market for De Koekfabriek. As shown in the model, three main criteria, market attractiveness, psychic distance and internal factors, represent the full assessment of the potential markets. These criteria consist of various sub criteria, which have been commonly mentioned in the literature, which is shown in figure 4.

Exploring the context: foreign market development

Hong KongHong Kong, a Special Administrative Region of the People’s Republic of China, considered as the freest economy in the world with low taxation, free trade, and minimal government interference (Heritage foundation, 2019). With the US and China coming to mutual trade agreement tension between the two biggest economies declines, which might had caused trade fluctuations on Hong Kong since the US and China are the biggest trade partners of the city state (Trade department, 2017). Meanwhile, the ongoing protest in Hong Kong might be perceived as a threat however, a potential market entry will be executed after 2021. Consequently, the political environment might be stable at that time.

The city state’s social economy can be illustrated as foundations with substantial philanthropic assets as well a legacy of funding for social enterprises. Recent developments have shown continues engagement with innovative social enterprises (AVPN, 2019).

Market attractivenessMarket size

The city state has a population of 7.4 million. The cookies/biscuits market in Hong Kong is worth nearly ˆ130 million EUR, which contains savoury biscuits and crackers, plain and filled biscuits, and cookies. Supermarkets produced 58% of the sales while independent small grocers (including bakeries) generated 11%. Cookies underwent a tremendous sales boost of 10% in 2016 as locals indulged in more expensive foreign brands (British Columbia, 2017). According to Statista, the market will experience a compound annual growth of 3.3% to reach ˆ142 million EUR by 2023.

Market growth

Hong Kong’s GDP is worth ˆ330 billion EUR and the GDP per capita approximately ˆ35,000 EUR. Last year alone the city state displayed a GDP growth of 3.8% and a FDI inflow worth ˆ102 billion EUR, ranking it the 4th in the world in terms of ease of doing business.

The gross national income (GNI) per capita in 2018 increased by 8.3%, compared to the previous year, making it worth ˆ45,741 EUR. The PPP per capita ˆ52,000 EUR (Trading economics, 2019).

Level of risks

The city state is also highly vulnerable to far-reaching climate change risks, such as typhoons, aggravated by severe air pollution. Hong Kong’s ageing society and the declining work force poses tremendous challenges to economic prosperity and stability. The income gap between the rich and the poor is increasing dramatically as Hong Kong managed to reach a Gini coefficient of 0.539 in 2017, the highest in over 40 years (Yutong et al, 2019).

Consumer characteristics

In this day and age, the Hong Kong lifestyle doesn’t leave much time for preparing meals. Consequently, consumers prefer eating outside with foods that meet most of their nutritional needs.

Also, the vast majority of the young consumers have the inclination to purchase international snacks available in Hong Kong. Additionally, caf? visitors are increasing steadily over the past few years, as students and office workers are meeting clients, have a chat or get the necessary caffeine to help them to stay focused through the day.

Consumers take pleasure in purchasing European branded food, as European (food) products have an excellent reputation among the consumers. Price is not the most vital factor that plays a role in the purchase decision, they prefer quality and they appreciate innovative (food) products (British Columbia, 2017).

Psychic distance

Cultural proximity

Geographical proximity

Business proximity

Internal factorsFit with organizational objectives

Fit with resources

Potential to establish relationships

Opportunity for substantial differential advantages

TaiwanMarket attractivenessMarket size

Market growth

Level of risks

Consumer characteristics


Population density

Unsatisfied need for product

Efforts involved in accessing the market

Weak competition

Psychic distance

Cultural proximity

Geographical proximity

Business proximity

Internal factorsFit with organizational objectives

Fit with resources

Potential to establish relationships

Opportunity for substantial differential advantages

JapanMarket attractivenessMarket size

Market growth

Level of risks

Consumer characteristics


Population density

Unsatisfied need for product

Efforts involved in accessing the market

Weak competition

Psychic distance

Cultural proximity

Geographical proximity

Business proximity

Internal factorsFit with organizational objectives

Fit with resources

Potential to establish relationships

Opportunity for substantial differential advantages

Entry mode model

According to existing literature, the initial overseas experience of a retailer plays a tremendous role in understanding the future capability of the retailer. According to Chan (2011) the first market entry forms the future performance. Furthermore, based on the budget of a company, it has to decide which kind of entry mode they want to adopt among equity and non-equity modes. Equity modes include joint ventures and wholly owned subsidiaries, i.e. Greenfield or an acquisition. Non-equity modes include export and contractual agreements, i.e. licensing or franchising.

The framework used in this paper is based on the hierarchical model introduced by Kumar & Subramaniam (1997: 53-72) and later adopted by Pan & Tse (2000) in a research namely “The hierarchical model of market entry modes”. The framework will subsequently be expanded with the BCG portfolio analysis and finally with the market entry mode selection model, MEMS Model, introduced by Koch in 2001.

This meticulous framework will use a clear path. It will introduce the most pivotal entry mode illustrated in figure 1. Furthermore, it considers the hierarchical model and the needs to identify the vital factors during the selection process of the most apt entry mode.

The reason why this framework fits De Koekfabriek is because this will be the first time that the company will go abroad and they have no clue which factors they should take into consideration. If differently, De Koekfabriek would have been aware of specific features of retailing in a specific country, it would have been more suitable to choose another framework based on factors that would facilitate that choice.

353758513525500DraftCorporate goals are an indication of what the company as a whole is trying to achieve and to become. Both parts—the achieving and the becoming—are important for a full understanding of what a company hopes to attain.

(1) the decision about international market expansion, (2) market selection, (3) selection of entry mode, (4) the marketing plan,

Strengths (Resource, skill, advantage):

Examples, financial resources, image, market leader, buyer/supplier relations

Brand recognition and image

Social responsibility

Many returning customers

Strong geographical locations with high traffic input

Unique products

Customer satisfaction

Business reputation of being innovative

Weakness ?limitation in resource, skill?:

Examples, facilities, financial resources, management capabilities, marketing skills, brand image

Long delivery time (3 days)

Lack of (digital) advertising


Opportunities (major favourable situation):

Examples, identification of a previously overlooked market segment, changes in competitive or regulatory circumstances, technological changes, improver buyer supplier relationship

Maximise partnerships with foundations

Reduce costs by negotiating with supplier



New markets

Advantageous interest rates

Seasonal festivals

Enter new markets

Threats ?major unfavourable situation?:

Examples, entrance of a new competitor, slow market growth, increased bargaining power of key supplier, major technologies changes, change in regulations

Open hiring

COGS increase

Competitor with strong advertisements


Healthcare organisations discontinues financial support

Monetary funds derived from the healthcare institution goes to the healthcare partner which uses it to finance activities. Healthcare partners are responsible for recruiting and providing healthcare guidance.

Revenue comes from the sale of cookies and coffee. A big portion of the revenue comes from corporate customers (small business to large businesses). The reason that business buy from a social enterprise such as DK is that the buying decision is part of their social responsibility.

Some orders come from the bakery, some through the HQ, and some are online. There are six different types of cookies which have been the same over the years. Rarely are there new recipes introduced.

DK demonstrates its belief in social enterprise through all purchasing/supplier decisions, from packaging to furniture.

(one supplier long time can change 2 safe money, bigger is not always better)

Johansson (1997) and Root (1998) have developed two of the most eminent models (see figure 3). The main difference is that Johansson’s model consists of four steps and Root’s of three. Additionally, Johansson’s model, unlike Root’s model, allows examination of variables, i.e. the geographic distance that presents the effects of the psychic and cultural differences in the decision-making process. For this reason Johansson’s model will be used which consists of identifying a country, preliminary screening, in-depth screening, final selection, and finally the decision to choose the most suitable market.


G., Whittington R., Scholes K., Fr?ry F. (2011). Strategic, 9th edition, New York: Pearson

Foundation, 2019, 2019 Index of Economic Freedom: Country Rankings

World Bank, 2018, Doing Business

Trade and Industry Department, 2019, Hong Kong’s Principal Trading Partners in 2017

Social Investment Landscape in Hong Kong (AVPN)

(Giving index dessjoh)

AppendicesFigure 1: The Hierarchical Model of Entry Modes-711203873500

Figure 2: SWOT Analysis

Figure 3: Conceptual model

Figure 4: Detailed conceptual model


About the author

This sample is done by Scarlett with a major in Economics at Northwestern University. All the content of this paper reflects her knowledge and her perspective on De Koekfabriek and should not be considered as the only possible point of view or way of presenting the arguments.

Check out more papers by Scarlett:

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