Nestle Australia's International Business Expansion in Eritrea Project

This project report, focusing on BUS6005 International Business, analyzes the potential expansion of Nestle Australia Ltd. into Eritrea. It begins with an executive summary and includes a detailed company, product, and country profile, followed by a PESTEL analysis to identify opportunities and threats. The report examines trade agreements, market entry strategies, and a SWOT analysis of Nestle, highlighting its core competencies. It also covers SAP implementation, government policies, market segmentation, targeting, and positioning, with a focus on the Eritrean market. Furthermore, it details a marketing mix and an international business plan, culminating in a conclusion and a comprehensive reference list. The project aims to provide a strategic roadmap for Nestle's successful entry and operation in Eritrea, considering various business aspects and challenges.

BUS6005 International Business T1 2022
Assessment 3: Project Report
Title: Expansion of Nestle in Eritrea
Student Name:
Student Number:
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Executive Summary
The report states the international business development of Nestle Australia Ltd. in Eretria. It has
focused on providing a detailed discussion of company, product and country profiles referring to
the international expansion. The report has included a PESTEL analysis that has helped to
identify opportunities and threats in Eritrea. Trade and agreement for import process and other
business aspects have been addressed here. Australian trade for Eritrea has been explained in this
report. International market entry strategies have been analysed and based on that one strategy
has been chosen. A SWOT analysis has been portrayed of the brand to highlight its core
competencies. SAP has been denoted as the brand. Several studies have been portrayed regarding
the exporting policies of Australia and importing of Eretria. Market segmentation, targeting and
positioning have been done for the organisation in Eretria and the company will target young
customers. Marketing mix for the organisation to be fowled in Eretria has also been done in this
report.
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Table of Contents
Introduction......................................................................................................................................4
Main Body.......................................................................................................................................5
1. Company Profile..........................................................................................................................5
2. Product/Service Profile:...............................................................................................................6
3. Country Profiling.........................................................................................................................7
4. SWOT Analysis of the Company:.............................................................................................10
5. Government Policy Study..........................................................................................................12
6 International Market Entry Mode...............................................................................................14
7 International Marketing Plan......................................................................................................16
8 International Business Plan.........................................................................................................19
Conclusion.....................................................................................................................................21
Reference List................................................................................................................................22
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Introduction
International business can be referred to as the commerce of goods and services across national
borders and can lead to the increment of productivity of the respective organisation (Ferraro,
2021). Nestle Australia Ltd. can be referred to as the multinational manufacturer of nutrition,
health and food items and is popular in Australia (Nestle, 2022). This project will highlight the
key strategies to be adopted by the brand to gain market attraction and increment productivity in
the market of Eritrea. It will discuss the company, product and country profile of the brand and
perform a PESTLE analysis. The next part of the report will highlight SWOT, SAP, government
policies, international market mode and plan along with business planning.
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Main Body
1. Company Profile
The chosen company for the report is Nestle Australia Ltd. In the nation, Nestle Australia Ltd. is
headquartered in Building D, 1 Homebush Bay Drive, Rhodes NSW 2138 (Nestle, 2022). The
brand is recognised to be the world’s largest food and beverage brand and has provided the
consumer with diversified products. It specialised in dairy, confectionery, frozen food and
healthcare nutrition goods. The brand is operating in the food and beverage services sphere and
was founded in the year 1867 by Henri Nestle (Nestle, 2022). It has over 339,000 employees and
it has been available in the Australian market since the 1880s. In 1906, the country had become
the second-largest expert territory and the majority of operations are structured around Oceania
since 1999. During the year 1908, the brand referred to a nationwide sale and distribution
network and led to the creation of an effective market in the same. In the year 1934, the brand
catered to the invention of Milo, which led to the creation of the sale of 500 million USD
(Nestle, 2022). The organisational structure of the brand resides in the hierarchal attribution
where roles and responsibilities are delegated according to the capabilities of the staff.
Information is commuted through the top-down approach and leads to the union of distribution
centres.
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2. Product/Service Profile:
Nestle Australia Ltd. is attributed with over 2000 brands that have transferred from being global
icons to a local favourite of the target market. Nescafe, Nespresso, Nesquik, Cheerios, Maggi,
Carnation, Milo and Kitkat are some of its recognisable brands (Nestle, 2022). Moreover,
customers are engaged to enjoy the products of OptiFast, Cerelac, Purina, Felix, Nancare
Soothers and others. In the Australian sphere, the brand has gained a sales increase of 3.5% to
the CHF of 45.5 billion USD (Nestle, 2022). It has allowed the brand to make significant
development towards the attainment of goals based on the revenue inculcated and smooth cash
flow of the same. In 2018, the sales accounted for about 43 Billion USD (Nestle, 2022). The
organic growth rate of the brand has been attributed to 3.6%. Products carted by the brand have
gained recognition from the masses owing to their attractive packaging and good quality and
taste. Moreover, the nominal pricing of the products has helped it to gain a large consumer base.
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3. Country Profiling
Country Risk Analysis
Eritrea can be referred to be the world's most repressive nation due to the governmental
implementation of forced labour laws (hrw.org, 2022). This can lead to the creation of problems
in the operational sphere of Nestle due to the conflict of interest regarding the absence of
freedom of labour and the expression of opinion of the same. Nestle initiates the development of
individuals to cater to personal development which can be opposed by the governmental sphere
due to the restriction of independent scrutiny in the nation. It has been prone to face droughts and
famine and is attributed to the less purchasing power of buyers. This can lead to the reduction of
profitability of the brand in the target market due to several restrictions.
PESTEL Analysis
PESTEL analysis is defined as the framework that identifies external factors and their impact on
a particular organisation.
Political
The political stability rate of Eritrea is -0.98 based on 2020 data (The global economy, 2022).
This data can show that the country may go through violence in culture. The political stability
rate of this country is negative and based on that it can be found that Nestle can find challenges
to drive its business.
Figure 1: Political stability rate of Eritrea
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(Source: The global economy, 2022)
Economic
The GDP growth of Eritrea is lacking and it is one of the poorest countries in the world. In the
country as compared to the previous GDP rate it has been found that in 2021 its rate has been
decreased to -0.60 GDP rate (Trading economics, 2022). It can be identified that with a low GDP
rate, Eritrea may face threat investment and for lack of GDP, it may face a low revenue rate.
Figure 2: GDP rate of Eritrea
(Source: Trading economics, 2022)
Social
In Eritrea, the population is increased and as compared to other years in 2020 the country has
gained its population by 3,546,421 (Worldometers, 2022). The medium age in Eritrea is 19.2
years and through that, it has been found that Nestle can find opportunities to target young
people for their business and provide unique coffee.
Technological
In Eritrea, the use of social media rate is 8% of the total population in 2022 (KEMP, 2022). It
can be identified that people use very low social media platforms in the 2022 era. It can bring
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challenges for Nestle to drive its business in this country as they can face difficulties within a
working process for promotion, sales and communication with communities.
Environmental
The climate of Eritrea is very bad as it is a tropical desert on the coast and it brings a little bit of
rain to the central and southern parts all over the country (Climates to travel, 2022). As per the
identification of climate in Eritrea, it can be found that Nestle may face challenges for the bad
climate and it is a disadvantage for the organisation.
Legal
Occupational safety and health rules have been generated in Eritrea and it is effective for
employees in the workplace (ILO, 2022). It can be positively impacted Nestle to maintain health
and safety in the country for customers and employees. The legal law is standard in this country
and it is maintained by many organisations.
Perspective Market Analysis
The market of Eritrea is attributed to an increase in sustainable concerns regarding the operations
of the brand. This can provide Nestle with an excellent opportunity to cater for its development
via implementing sustainable measures in the operational sphere. The customer perception of the
nation is tending to gain high-quality products at lower prices. It is attributed to be changed due
to the promotional features of the brand and is highlighted dependent on its reputation of the
same. This can provide Nestle with an excellent opportunity to cater for growth due to its
reputation in the international market and meet the demands of customers. Collaboration of
nutrition and science can help the brand to promote agility in the supply chain and provide
customers with good quality food products.
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4. SWOT Analysis of the Company:
SWOT Analysis
The SWOT Analysis is effective to understand the current growth status of an organisation and
can help to cater effective strategies to mitigate issues and utilise opportunities (Benzaghta et al.,
2021). SWOT Analysis of Nestle Australia Ltd is formatted below.
Strengths Weaknesses
 Nestle has been present in the
Australian market since 1908 (Nestle,
2022). Their products have fostered to
target the local environment and led to
the creation of a long-lasting impact on
the minds of the same.
 The supply chain of the brand has led
to the encouragement of locals to
incorporate technology and resources to
help in promoting agility in the same. It
helps the brand to gain efficiency in the
substantial operational sphere.
 The brand is highly dependent on the
advertising sphere to promote its
products and services. It leads to the
increment of marketing costs and can
result to the creation of risk within the
return sphere.
 The organisational structure of the
brand is based on the products catered
by the same and is inconsiderate of
geographical locations. It leads to the
creation of hurdles due to abrupt
decision-making and stagnant agility.
Opportunities Threats
 Eritrea is the major host of Bun coffee
ceremonies that can provide the brand
with an excellent opportunity for
displaying its high-quality products
(Hailemichael, 2018). Nestle can try to
portray the coffee specialities to locals
in the nation and gain huge attention
from the target market.
 It can indulge in diversifying the
product portfolio according to the taste
 The outburst of the Covid 19 pandemic
can be signified as a major threat to the
operation of the brand and can decrease
its growth percentage in the
international market. The lockdown
situations can hinder the establishment
of the agile supply chain of the brand,
which in turn can hinder its market
entry.
 Red Sea Trading Corporation can be
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palate of locals. This can help the brand
to significantly increase its target
market and gain the attention of the
same.
identified as the major food and
beverage brand in Eritrea (dnb, 2022).
This can pose a significant threat to the
operations of Nestle and hinder its
entry into the competitive market.
Table 1: SWOT Analysis of Nestle
SAP of the company
The inculcation of the SAP analysis helps organisations to run their business in profitable
attributes and adapt continuously to survive in the competitive sphere. Nestle looks forward to
expanding its business in the international market of Eritrea. In the system sphere, the brand has
been implementing several training and development systems for employees that have helped to
promote their productivity of the same. The marketing and sales system of the brand is dedicated
to enhancing its recognition in the target market and caters growth. Application of the brand has
been engaged to instil productivity through the operational sphere. It has helped the brand to
promote agility in the operational sphere and refer to its effective functionality in form of
website and productivity tools. The product of the brand is engaged to cater to good quality and
is attributed with nominal prices for the customers. Over 2000 brands are culminated in the
operations of the company and provide customers with different choices of goods (Nestle, 2022)
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5. Government Policy Study
Australian Government policy for exporting
The export laws of the nation look to develop and provide assistance to the business to protect
them from being disrupted in the overseas sphere (austrade.gov.au, 2022). It has around six free
trade agreements with other countries to bind commitment and invest in the foreign sphere
effectively. The nation has been committed to Word Trade Organisation to gain tariff quotas and
export subsidies to implement effective business among variable nations. Australian government
is engaged to provide export permission for prohibited goods via written permissions. The laws
of the nation are dedicated to establishing the engagement of several nations and cater to future
negotiation spheres.
Importing Country policy
In Eritrea, licensed businesses are given the opportunity to import goods. The customs and excise
division of the nation is responsible for getting the taxes on goods. Custom policies are engaged
in facilitating legitimate trade and protecting society from illegal economic activities
(howtoexportimport, 2022). Several businesses may require providing documentation of
imported materials depending on the nature and country of origin and cater smooth processes.
Enrolment methods are felicitated through importing and clearance procedures of the nation.
Licensing is strictly necessary along with the proper justification of products addressed via the
custom spheres in the nation.
Norms and standards for the product import
The import process is one of the important facts that Australia's government authority has given
importance. According to norms and standard, it has been found that, people or legal entities that
has an interest in involvement in international trade conduct import process in Australia
(Trade.gov, 2022). Imported customer goods and services including food products need to be
complied with by the state government as per packaging regulations. Duty taxes and permission
of the government are required to meet the requirements of the Australian Department of
Immigration and Border Protection. FTA or Free Trade Agreement is involved in Australian
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