Market Expansion of Lion Nathan Australia in India

This report focuses on the Indian market expansion of Lion Nathan Australia. It includes PESTLE analysis, STPD customer profile, IB expansion model, marketing mix (4ps), key success factors, risk management, and evaluation and control.

International Business
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Executive Summary
Lion Nathan Australia is one of the popular alcoholic beverage companies mainly operates the
business in Australia and New Zealand. This particular assignment generally focused on the
Indian market expansion of Lion Nathan Australia. All the organisations faced different
complexities during expanding the business in the foreign market for that reason proper market
research and identification of information regarding host market is very essential for Lion
Nathan Australia. Recognize political, economic, technological, social, environmental and legal
factors generally helps this organisation to identify the potential barriers. Information about
existing beverage companies also essential to gain more competitive advantages host’s operating
market. Analysis of current market provides the company different valuable information such as
current trends of the customer, buying pattern, feeding behaviour, culture etc. and these are the
primary factor and also can hampers the overall operation leads to substantial financial loss.
On the other hand, the organization needs to take proper strategies to grab the attention of more
customers. Implementation of product, pricing, promotional technology will also help Lion
Nathan Australia to increase its customer as well as the brand image in the Indian operating
market. Apart from that identification of potential risk will help this organization to avoid
different issues during the internationalization process.
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Table of Contents
Introduction......................................................................................................................................3
Company Background.....................................................................................................................3
Host country.....................................................................................................................................4
PESTLE Analysis............................................................................................................................5
STPD Customer profile...................................................................................................................8
Theory/Model..................................................................................................................................9
Marketing Mix (4ps)......................................................................................................................10
Key success factor.........................................................................................................................11
Risk Management..........................................................................................................................11
Evaluation and control...................................................................................................................11
Conclusion.....................................................................................................................................12
Appendix........................................................................................................................................13
Reference lists................................................................................................................................15
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Introduction
Expanding business in the current market is not simple for any organization, the level of
complexities has increased drastically and that is why the approach strategies have been
modified. The main focus of the report is going to be imposed on market expansion and in tis
regard different models and strategies will be used. The aim of the report is to provide an outline
of approach for Lion Nathan Australia, the reputed beverage company, to have a market in
Indian grounds. The flourishing economy and high demand of beverages is the main reason why
India is selected as a market for business expansion.
Company Background
Lion Nathan Australia is one of the prolific beverage companies, which mainly operates in
Australia and New Zealand. Apart from this it is operating in thirty global cities some of them
are Hong Kong, Singapore, Thailand and China (Lionco.com., 2018). It was found in October
2009 and initially it was named Lion Nathan National Foods. The company changed the name in
the year of 2011, because National Foods became a Melbourne based subsidiary company that
majorly focused on dairy goods and drinks under the name of Lion Dairy and Drinks. The
company has a diverse product line up and the prior focus has been given on beer, RTDs, juice,
wine, cider, and spirits. Apart from this, the company has a good line up of dairy products like
milks, yogurts, cheese and soy. The company has 7000 employees and the number is constantly
increasing.
The services of the company do not only include selling beverages to the potential customers.
The company provides health related knowledge to the customers who are seeking help in the
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relative field. Lion provides services to school canteens and gives children a healthy diet, which
they need to have a healthy lifestyle. Apart from this BMI calculator, Calcium calculator and
health balance checker are also incorporated in their service list. The yearly turnover of the
company in 2016 was $694.3m which signifies a strong market hold in the Australian grounds
(Lionco.com., 2018).
Host country
India is an attractive place for investment for any foreign company. There are reasons and some
of them are low labor cost, large customer base, low production cost, availability of logistics
services, high amount of FDI (foreign direct investment), acceptance of government, acceptance
of new products etc. these are the factors which helps in gripping a newly penetrated market.
Lion will have a significant development in India, because the economy supports the rate
structure they have.
The country supports globalization and in this aspect, the company will get appreciation from the
political parties. Apart from this, the company will have a skilled workforce, which is going to
minimize the cost. The recently published Ease of doing business index shows that India is in the
top 100 countries in the world (Businesstoday.in, 2018). The last year ranking was 130 and in
2018, it has become 100. It can be considered as a major improvement in every aspect. These
ratings and conditions of the market is a good sign that India can be a fruitful ground for Lion to
make business.
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PESTLE Analysis
Political
The political factors of India play a vital role in developing the business
environment. Most of the times, the political leaders are well aware of the
terms that are oriented with extending business (Charfeddine and Mrabet,
2017). To understand the factors of the country, Lion has to follow the
political environment of India. Indian political situation is showing
affirmative attitude to the businesspersons, and in this context, they have
normalized the norms related to the business establishment. They are also
promoting FDI, and this is gaining them profit from the outer countries as
well. It can be further deduced that the factors that are related to the
business establishment are flexible. The political environment also
supports globalized business, these are some very intriguing facts for
foreign investor companies and in this manner and Lion Nathan is going
to get the upper hand than others in the market.
Economic
The economic factors of India make a vast contribution while a company
newly set up its roots in the grounds of India. There are many factors,
which the economy of India influences, and among them, an essential
factor is GDP(Saleem, 2017). Lion needs to focus on those specific
regions where the Indian government makes more investment to develop
its economic condition. Depending upon the economy, Lion should
introduce its products, and in this manner, they are going to get
reasonable cost management and sales rate in the current environment. At
the same time, the price of AUD also increase in compare to Indian
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rupees so that it will provide the organization with higher competitive
advantages ( Refers to Appendix 1)
Social
The population of India is increasing rapidly, and that is one of the
significant opportunities for this organization to expand their business in
this emerging market (Refers to Appendix 2). Identification of social
factor is essential for all the business organization during expand the
business in foreign countries. A social factor can hamper the overall sales
volume as well as the business of an organization so that majority of
organization research about local communities during trade before
business expansion (Kannothra, Manning and Haigh, 2018). There are
different factors requires to achieve the success for that reason it is
essential for Lion Nathan Australia to research the behavior of local
community people such as their trends, buying behaviors, feeding habits
before expanding the business in India. India is the highly religious
country for that reason the objection of local people can hamper the
overall market, and that will affect the overall financial position of this
organization (Hiremath et al., 2018). The organization needs to collect he
no objection certificates from the people of the local community as well
as the government for opening the shop's different region. After
implementation, the organization needs to communicate with all the local
people to build good relation, and it will help the organization to grab the
attention of customer as well as increase sales volume.
Identification of technological factors also important for all the business
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Technological
organization because it will provide the organization higher competitive
advantages in operating market leads to improve overall financial
position and brand image. For expanding the business in another mark, a
sizeable technological implementation is needed. If the local suppliers
have this technology in reasonable rate then it will be easier for the
organization to continue its business otherwise it will also increase the
overall cost of the organization leads to reduce profit percentage (Kew
and Stredwick, 2017). By research, it has been identified that India is an
emerging country and the overall technology of India also developed in
comparison to previous years so that Lion Nathan Australia will get all
the required materials from Indian suppliers at a reasonable price so that
it will hell the organization to maintain the business effectively. On the
other hand, the use of social networking and another technological
advantage also helps this organization to triggers its sales volume by
grabbing the attention of the public.
Legal
Lion Nathan Australia needs to follow all the rules regulation and
taxation policies of India to continue its business as well as avoid the
legal issues. Every country has their fiscal policies so that the
organization also needs to identify the fiscal policies of India before
entering this country. Based on the qualitative study, it has been
recognized that the fiscal policies and overall regulation of India are
perfect for this business and government of India also supports the
foreign investors to continue the operations smoothly (Hiremath et al.,
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2018). Apart from that the tax rate of India government generally
depends on the type of business, and it has been identified that in case of
alcoholic beverage, the tax rate is very high but is not a problem for the
organization. The organization needs to set the pricing strategy by overall
expenses.
Environmental
A good environment is needed to continue the operation perfectly. For
that reason, the organization needs to research the current environment of
the country. Different environmental factors such as lack of water
transport and other resources can increase the travel expenses of this
organization leads to hampers profitability of Lion Nathan Australia.
Understanding the current environment of India is very tough for the
organization so that company needs to enter jointly with other local
organization and that generally helps the origination to understand the
current environment and competition in India (Claybaugh, Ramamurthy
and Haseman, 2017). This company also identifies the threats of existing
company, and it is vital to implement instant policies to gain more
competitive advantages in the Indian operating market.
STPD Customer profile
Segmentation- among the marketing strategies it is important to make sure that a company is
taking the best kind of methodologies to have better customer segmentation. Companies can
never target every person as a customer and in this regard, they have to set specific people as
customers. The customers have to be targeted depending upon the products that are being
manufactured. In case of Lion, the most reliable option to go for is the adults of India, who are
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legally able to take alcohol and other beverages. Segmentation should be done on the basis of
race, age, necessity and demand of the customers.
Targeting- Proper evaluation is going to help in a proficient manner and in this process, the
company will find legible targets from the selected groups. There are different kind of groups
selected on the basis of products and depending upon the necessity the service providing
organization has to proceed. Selecting one organization or going for different variables depend
on the needs of the company. Lion should target the adults who are more enthusiastic to take on
beverages.
Differentiation- Differentiation is a process of differencing a particular product for the
customers who are targeted in the above section. The most of the times differentiation depends
on the needs of the customers and in this manner a better kind of relationship develops with the
company. The company gains a stable place in the minds of the customers.
Positioning- Positioning the products is related to having a good kind of idea of what to be
enlisted in the selling outlets. In this manner, Lion can have better place in the customer minds
and the company will gain more profit than other companies will. In this manner, the company
will get a proper place in the mind of the customers and they will gain more revenue from it.
Theory/Model
IB Expansion Model
The International Baccalaureate expansion model generally based on the growth of business and
it generally provides detail information with a view to the current condition of economic
globalization and other important factors of market expansion. This model also shows the
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different stages of organizational growth such as the traditional society, preliminary conditions
for takeoff, organizational take off, drive to product maturity, and high mass consumption. This
model also indicates the market entry modes such as joint venture mode, exporting, licensing,
etc. this particular model also helps management to identify the best opportunities of the foreign
market. The launch of Own subsidiary is the best option for this organization to enter in India.
This process is also known as Greenfield ventures (Oh and Oetzel, 2017). The major advantages
of this entry modes are to gain better knowledge with a view to local markets ad it provides the
organization maximum control leads to increase sales volume as well as financial profitability.
The investment cost is very high and needs time to complete the overall setup, but wholly own
subsidiaries in India will provide the organization with different competitive advantages lead to
improving brand value as well as brand recognition. At the same time, the risk of this market
entry is also high for that reason organization needs to implement strategic planning during the
internationalization process.
Marketing Mix (4ps)
In order to have better idea on how to approach for a particular kind of market it is essential for
Lion to have an analytical detail of the market. In this aspect, the 4ps marketing mix can be taken
under consideration.
Product
In case of Lion, their product is the beverages
they are planning to serve in the Indian market.
In this context, the product can be anything and
the services offered by Lion can be considered
Place
Selling place of the product plays an important
role in gathering revenue from the market.
Distribution system has to be very accurate and
in this context, the management of Lion has to
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as their products. The life cycle of their
product has to be capitalized well in order to
have better kind of market grip in a
competitive market like India.
analyze the market well in order to have idea
of their product-selling place. According to the
cost structure and income of people, Lion
should place the products in different parts of
the market.
Promotion
Promotion plays a vital role in gaining market
revenue and in this aspect; Lion has to make
sure that they are promoting their products
well. In this case, advertising, exhibition and
other aspects has to be considered properly.
Promoting properly is going to help in finding
a proper kind of growth in sales rate in the
Indian market.
Price
A Company must consider the GDP of the
country where it is planning to make business.
In this regard, it is essential to have better
knowledge of the cost structure of them. If the
beverages are rated higher than the current
market standings then it is impossible for the
company to have better kind of revenue
generation.
Key success factor
In the sustainability report of Lion Nathan Australia it is seen that the management is focusing on
spreading the boarders. Apart from that, the Balanced Business Strategy of Lion is a big factor,
which is contributing to its success (Lionco.com, 2018). The company uses different types of
Alignment Models that provide a strong hold on the market. The company promotes healthy
living and drinking culture which is often absent in other companies’ approach strategies. The
sustainability report provides proof that the company has a strong economic background, which
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is necessary to attract potential investors. These facts are capable enough to attract more
customers and investors in a highly competitive market.
Risk Management
Indian market is a risk prone flourishing market, which can provide a reasonable amount of ROI
(Return on Investment) if invested carefully, Risks like strike, government change, legislation,
taxation system turn over are also a part of the country (Cole et al., 2017). Apart from this,
sudden ban on alcohol is also a big risk for the company. In this regard, Lion has to understand
the need of the people and the reasons why they are facing these issues. The company has to take
rational approach in order to mitigate the risks to gain profit from Indian market. Providing
adequate services will definitely minimize the chances of being eradicated from the market.
Evaluation and control
In order to minimize the risks the company has to think according to the market risks.
Understanding the needs of the employees will help in minimizing the possibility of employee
dissatisfaction oriented risks. The company has to build a good political relationship with the
leaders so that they can have some relaxation during their business. Lion has to use necessary
machines to avoid accidents in the working place. Providing employee satisfaction will increase
the market capitalization rate and in this manner, Lion will be customer satisfying employee
friendly work place (Kristina and Wijaya, 2017). However, sudden political change cannot be
overlooked and in these cases, the company has to take the most authentic step to nullify the
unconstructive effects.
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Conclusion
From the above analysis, it can be assured that the company Lion can have a better market
capitalization in India. It can be concluded that the management needs to focus more on the
aspects that are related with market analysis. The market analysis is going to provide a better and
proficient knowledge of what to be done and what not. It can be further deduced that the
company has a possibility of gaining profit if they have a good focus on the aims and objectives
of them.
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Appendix
1.0)
Figure: 1. Australian Dollar to Indian Rupee
(Source: FX Exchange Rates, 2018)
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2.0)
Figure: 2. Population increase of India
(Source: Statista, 2018)
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