Market Entry Conditions of UK and Malaysia for Kirks under Coca Cola Amatil

This report compares the market entry conditions of UK and Malaysia for Kirks under Coca Cola Amatil. It provides an in-depth analysis of the macro-environmental and geo-political forces impacting each country, potential dangers, risks and opportunities in the current short-term policies of each country.

RUNNING HEAD: INTERNATIONAL AND GLOBAL BUSINESS
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Executive Summary
In the following report, the market entry conditions of the UK and Malaysia have been
compared. The major feasibilities of the both markets have been identified here. The UK
market of beverage is flourishing. However the stringency of the Brexit regulations have
made the market entry difficult for the company.Other, than that there are several advantages
of entering the UK market. The company is going to step in the international market for the
first time. In this context, the alignment to certain regulations in the UK market would
provide the market a lesser trade tariff and other advantages regarding regulations and other
economic reliefs. Nevertheless, the Malaysian market have a greater demand for foreign
beverages than the UK market. However this report makes an in depth analysis of the two
markets and provides justifications against choosing the business sector of UK against
Malaysia for the market entry of Kirks under the distributorship of Coca cola Amatil.

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Table of Contents
A brief introduction of the company..........................................................................................3
For each country provide a detailed analysis of.........................................................................3
i) United Kingdom..................................................................................................................3
Political Factors:.................................................................................................................4
Economic Factors...............................................................................................................4
Socio-Cultural factors.........................................................................................................4
Environmental Factors........................................................................................................5
Legal Factors.......................................................................................................................5
ii) Malaysia.............................................................................................................................6
Political Factors..................................................................................................................6
Economic Factors...............................................................................................................6
Socio-Cultural Factors........................................................................................................7
Environmental Factors........................................................................................................7
Legal Factors.......................................................................................................................7
• An assessment of the potential dangers, risks and opportunities in the current of short
term policies of each country.................................................................................................8
The UK market...................................................................................................................8
The Malaysian Market........................................................................................................8
Conclusion..................................................................................................................................9
Reference List..........................................................................................................................10

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A brief introduction of the company
Kirks is a manufacturer of soft drinks, headquartered in Queensland, Australia. The
company started manufacturing in 1959 with only two basic flavours. However presently the
company manufactures soft drinks of a variety of flavours including lemonade, sarsaparilla,
and creamsoda and so on. The range of products are now distributed under the banner of
Coca-Cola Amatil in 2000. The agency started operations under the unified brand of
Queensland Bottlers. The company have recently entered the market of beverages. They have
developed a genre of flavoured beverages and started sales of brewed beer of various flavours
in Australia, among which the brewed ginger beer is a market favourite. Backed by the
utilities of the Coca-Cola Amatil, the company into the direct mainstream market in the
2000s. However, the company received direct market confrontation from Coles in Australia.
Nevertheless the company have been able to attract customers and have been able to maintain
a successful market acquisition rate of more than 3% annually since 2005 (Coca-
colajourney.com.au, 2018).
At present, after attaining a market size of 86% of the Australian beverage market, the
company has started exporting their products under franchised distributorship in potential
markets outside Asia like United Kingdom and also Malaysia within Asia. The company is
going to have approximately 40%. The franchises would have market share in the
manufacturing and share their sales dividend with the international distribution partner Coca
Cola Amatil. One of themajor reasons the company have selectedto promotetheir products in
these two countries is that the distributorship of Coca Cola in these two countries comprises
of the market proportions of 85% approximately (Coca-colajourney.com.au, 2018).
For each country provide a detailed analysis of

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• The current macro-environmental and geo-political forces impacting that country.
i) United Kingdom
Political Factors:
The UK government have imposed new regulations regarding the nutritive values of
the edibles and the labelling laws. In case if there is a possibility of any negative impact that
any beverage can cause, that should be specified on the labelling of the product. The Brexit
rules are also applicable on the Kirks products in UK. This is why the Coca Cola franchise
should enter into partnership with local agencies to set up retail distribution network. Besides,
business franchise should also be given to the local manufacturing companies. The layout of
the business should be framed in such a way that the UK limited business of Kirks have a
partnership rate of over 30% from the end of the local companies of UK (Buchmann, 2016).
As such, the trade tariffs would be applicable by 2.5% less (Coca-colajourney.com.au, 2018).
Again, the market opportunities and the strategic aid that the local entrepreneur companies
get from the EU, would get the company to gain market entry easier.
Economic Factors
The distribution of the business infrastructure among the local franchises would
hamper the sales return rate. However, this would help in the alignment to the Brexit
regulations and the trade tariff and the taxation rate that the company would offer is supposed
to be less by 3% or above. However, as per Zurutuza and Marinelli(2014), in the UK market
there have been an uncertainty regarding the implication of the Brexit laws. As an impact the
prices of the Raw materials would be more and as such the production price can vary. The
reduction of the market value of Pound is the reason for this ambiguity in the market.
Socio-Cultural factors

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The use of natural ingredients in beverage products is one of the recent trends among
the UK customers. The customers of UK are becoming health conscious and they are even
willing to pay premium prices for such authentic products. As per Srai et al. (2015), this is
why the products of Kirks like Frutia and Portello have been in vogue andthe choice of
ingredients and the naturalflavours are supposed to make the brand popular among the
customers of UK.
Environmental Factors
The company also needs to consider the commitment of UK towards sustainability of
nature. UK is one of the consignees of the Paris Agreement. This requires that the company
have to adapt proactive policies for monitoring of carbon footprint. As opined by Hollender,
Zapkau and Schwens(2017), a carbon footprint of more than 2.0 can have adverseimpact on
fruit and vegetable harvest of the country.
Legal Factors
The company have to comply by the regulatory framework of the UK. The stringent
food manufacturing laws of UK have to be abided by. The teaming up with potential
organisation like Coca Cola requires the company to abide by the UK competition laws. They
would enjoy the status of being the major market competitor in UK and requires to hold
back from adapting any kind of unethical means to prevent the smaller and indigenous
organisations from entering in to the market competition. However at present the market
condition of UK is turbulent. The abolition of the few EU regulations means that the
company have to relate and align with the employment rights of UK also. The same is with
the health and safety regulations of the country also. As opined by Eriksson et al. (2015), the
employment rights require the major market occupants of the potential industries like Food
and beverage to employ more than 25% domestic’s staff (Cain, Moore & Haran, 2015).

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Furthermore, the use of natural sugars in the products should be at par with the permissible
limit of the UK regulations. This is going to be a new challenge for the company n to keep
the taste of their products intact alongside maintaining the permissible sugar level in their
products (Coca-colajourney.com.au, 2018).
ii) Malaysia
Political Factors
The weakening of the Ringgit against the US Dollar owing to the political turbulence
and the decisions of implementation of 0.5% higher GST in the country, have led to the
weakening of the operations of the big multinational companies into the beverage sector of
the country (Broocks& Van Biesebroeck, 2017). However Coca Cola being an established
brand, they are aware of the marketing channels in Malaysia, and this is why the
distributorship of Kirks’ products under Coca Cola is safe. The Malaysian government have
decided to promote the organisations that have anindigenous workforce and supply chain.
The taxation rebates that are going to be given to such companies would be about 50% higher
than that enjoyed by foreign franchised companies (Bourreau, Sun &Verboven, 2016). The
company also needs to build consolidated infrastructure in the country including warehouse
and supply inventories, since the government has declared that with the falling value of the
Ringgit, the import of raw materials is going to be costlier for the company. This is why, it
seems that they have to bring slight deviations in the product line. The supply of products like
“Snow-Drop” and “Pasito” have to be ceased in the Malaysian market, since these products
are largely dependent on local Australian ingredients.
Economic Factors
Recent inflation and imposition of higher level of GST in Malaysia have led to a
decrement in the business growth of foreign multinational Beverage companies like Kirks.

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However market analysis shows that the products of the local brands have received the
backup of the government. Compared to local retail market of Malaysia, the business of the
organised sectors that includes the 155 biggest shopping malls of the country (Ang,
Benischke&Doh, 2015). Information gathered from the Managing director of the Savills Mall
of Malaysia reveals that the corporate tax imposed on the products sold through the shopping
malls incur lesser corporate tax and the accumulative GST returns. This is why the company
have decided that local sub brands would be created for the sales purpose in the Malaysian
market. Like other major brands like PepsiCo, the company is also planning to launch the
products in the malls and bigger departmental shopping complexes only.
Socio-Cultural Factors
The statistics of the Malaysian market of Food and beverage shows that the
purchasing rate of beverages by the Malaysian women is more than that of the women. That
is why, Coca Cola, the distributing partner of the company would adapt a gender biased
marketing policy for the occupation of the Malaysian market, in favour of the Kirks products.
Hence products like brewed Ginger beer or The Kole beer of Kirks would be projected as
essentially masculine products in Malaysia. On the contrary, the women are more conscious
about health and proper lifestyle. They generally prefer to keep the children under 12 years of
age away from the beverages (Laufs&Schwens, 2014). This is why the company have to
adapt an alternative sales strategy for selling the Kirks drinks in Malaysia. They have to
project the products in such a way so that it reflects that can be helpful in providing energy to
the children. Such advertisements would be helpful inenticing the customer to buy the
products of Kirks.
Environmental Factors

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The turbulence in the weather conditions would hamper the harvest of various
ingredients that are required for the finished products of Kirks. As an outcome, the company
is planning to release seasonal flavours of the products in the country.
Legal Factors
The consumer law in Malaysia is very strict. The ingredients that have been used in
the products in original needs clear specification on the labels and the covers. Other facts like
Drug Laws are also applicable (Lojacono,Misani& Tallman, 2017). This requires that any
product that any product that is consumable by people of all age groups, and is containing
any chemical that are above Schedule B level drugs, should have proper mention on the label
graphics. This means the labelling and printing costs are going to be higher for the company.
• An assessment of the potential dangers, risks and opportunities in the current of short
term policies of each country
The UK market
The beverages that are being sold by the company are listed among the premium
range of products. In this context, it requires mention that the consumer spending strength of
the UK market is 110 billion GBP (Crowley, Song &Meng, 2018). This statistics are
certainly attractive for any international organisation who are trying to enter the UK market
afresh. However, in the UK market, approximately 8500 new products pertaining to the
FMCG industry are added. This would make the market competition of the new entrants
tougher. About 80% of the foreign products entering the market are coming from the Asia-
Oceania sector (Zhao &Priporas, 2017). This makes the competition tougher for the
company. The most feasible as well as challenging aspect of operating in the UK market is
that the strength of the customer market in UK is almost 743 million which is almost one
third of the whole of Europe (Åslund, Forslund&Liljeberg, 2017). Therefore any new brand

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gets a big market exposure after entering the new market of UK. However, on the contrary,
the demographic trends and the demands of such a big customer base is ambiguous and at
times confronting. This would make it difficult for the company to frame a comprehensive
marketing and sales strategy. This is why the company have to carry on repeated market
survey for understanding the marketing trends and the consumption demands of the various
demographic groups.
The Malaysian Market
The mass forecast of grocery retail shows that the market of soft beverage in the
Malaysian market is going to be high by the end of 2019. The market demographics would
favour the products like carbonated and non-carbonated beverages along with bottled and
packaged milk and beer. This means that almost all genres of products that the company
manufactures are estimated to receive hike in sales in the market. However, as per
Pallis,Notteboom and de Langen,(2015), the infrastructure of the sales structure shows that
the products that would be featured more in the supermarkets and the hypermarkets would
receive 25% more customer acquisition rate that those products that circulates in the
convenience stores and the other unorganised physical retail stores.
Conclusion
After analysing the market entry conditions of both markets, it seems that the UK
market is going to offer better market opportunities for the Kirks Company. The major
factors that outsteps the market possibilities of Malaysia are the large size of the customer
market of UK. The knack and propensity of the UK customers towards buying premium
products is high. The marketing and sales channels of the country are easy to access. The
marketing and distribution channels of the Coca Cola Company in UK are much more
proficient than that in Malaysia. Again, the number of local manufacturing company that

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have a premium presence in the indigenous market is higher than that of Malaysia. This is
why local franchising is going to be easier in UK than in Malaysia. The market size of
Malaysia is smaller and the demographic complications of the Malaysian market are also
much more. In this context, even if the initial entry barriers of the UK market like the Brexit
regulation are high, the post entry phase of the market operations are going to be smoother in
UK. Finally, it can be said that being a high GDP country, the market possibilities in UK are
greater in general than Malaysia, particularly with some of the EU regulations still existing
in the UK market.

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