Strategic Management in Global Context for Meadow Foods entering Chinese Market

This report discusses the strategic management plan for Meadow Foods to enter the Chinese market. It includes internal and external analysis, modes of market entry, standardisation or adaptation strategy, and Porter's generic strategy for gaining competitive advantage. The report also includes a strategic business plan for measuring success.

Strategic Management
in Global Context

Table of Contents
Executive summary..........................................................................................................................3
INTRODUCTION...........................................................................................................................4
Internal and external analysis.................................................................................................4
Three modes of market-entry and recommendation with justification..................................6
To what extent should the chosen business unit be standardised or adapted.........................8
Porter’s generic strategy to gain competitive advantage by adopting one of the generic
strategies.................................................................................................................................9
Strategic business plan.........................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCE.................................................................................................................................13
Executive summary
The aim of this report is to identify an organisation and plan to enter to a country which
would be suitable for the business. The organisation is Meadow Foods which is a supplier of

milk and dairy products and they are entering into Chinese markets. In this report, it includes
internal and external analysis of Chinese market. Also, different modes of market entry is also
highlighted. The organisation should select business unit as standardised or adapted for the
Chinese market with justification. Porter's generic strategy is mentioned for gaining competitive
advantage and strategic business plan is included for measuring its success.

INTRODUCTION
Strategic management is the ongoing planning, monitoring, analysis and evaluation of all
the essentials which is required by a firm to meet their goals and objectives. This needs ongoing
evaluation of procedures in a firm and external factors which create impact on functions of an
organisation. In this report, Meadow Foods is taken as base company which will enter in the
markets of China. Meadow Foods is the manufacturer and supplies dairy products and
ingredients. The organisation specialises in selling of dairy products such as sweetened
condensed milk products, chocolate crumb, milk, butter and cream. This organisation was
established by Lewis Brothers in 1992 in UK. This report highlights the internal and external
analysis of China and modes of entry method. Also, standardised or adopted strategy used by the
organisation with Porter's generic strategic is mentioned. A business plan is also included which
will measure its success in Chinese market.
Internal and external analysis
SWOT analysis
SWOT analysis is tool which is used by an organisation to analyse the competitive
position as well as for developing strategic planning.
Strength: One of the major strength is that, China has huge population and they provide
cheap labour which the selected organisation could easily hire them for setting up their business
in Chinese market. China has good dairy cows which is in large number (Alnoaimi, 2019).
Weakness: Despite China is providing cheap labour, much of the population is still
unemployed. The rural areas of China are getting fade which is creating impact on the
employability of people. Another weakness is that, people of China specially children are lactose
intolerance which means that milk product doesn't suit them.
Opportunities: One of the key opportunity for China is that, agriculture is the prime
source of income for rural China. People are migrating towards cities which results in declining
of their area.
Threats: The closed nature of Chinese government and growing economic with high
population rate has created a negative image of China across the globe (Badaoui and Chettih,
2017).
PESTLE analysis

PESTLE analysis is a framework which is used by an organisation for evaluating the
macro environmental factors which create impact on performance of an organisation.
Political factors: The political factor which affects the Chinese market is the international
trade policies of government. The trade war between China and US has create impact on the
Chinese market and American trade that operates in this sphere (Cheluget and Koech, 2018).
Economic factors: In China, the labour cost significantly low hence several organisations
prefer to hire employees from China. The selected organisation could also hire experienced
labour at less prices than other countries. Along with this, trade politics is another major factor
which could create impact on the Chinese economy as many organisation would not unable to
enter because due to high import duties.
Social factors: People of China are literate and therefore the selected organisation could
have expert labourers and employees at much lower costs. Along with this, the lifestyle of people
are changing along with their tastes and preferences, the organisation has to make sure to
develop product in such a way that it satisfies the needs and requirements of customers.
Technological factors: China is having largest population which has many big tech giant
such as Alibaba, Baidu, Tencent and so on. The domestic and international organisation in
science and technology sectors has lot of opportunities when they try to establish themselves in
Chinese markets. Another factor is that, there is large number of internet user which dictates
their purchasing pattern and on the same time there is no stability in online payment method
(Cherepovitsyn and Ilinova, 2018). There exists strong trend towards physical shopping in China
as there are numerous risks which are related with online shopping.
Legal factors: The legal concern associated with Chinese economy is development of e-
commerce laws and its peripherals such as consumer rights, intellectual rights, tax policies and
so on. For China, e-commerce is still new and development of their legality would help in the
current developmental model which is following by the economy. Another one is trade legalities
which is expected to be reduced import tax once the economy achieve its full capabilities.
Environmental factors: The quick economic development of China has create impact on
the natural environment severely. Industrial waste, deforestation, air and water pollution and so
on are some of the examples of environmental issues which China is facing. Chinese government
has taken number of initiatives in regards to environmental concerns.

For the selected organisation, it can be recommend that, they could hire employees for
their organisation as China is offering cheap labour and also there is huge unemployment rate.
Another factor is that, Chinese people are more inclined more towards physical shopping than
online. The organisation could emphasis on establishing their physical stores in China for
increasing their sales (Gaturu, 2017). On the other side, the selected firm could face heavy
import duties while penetrating into the Chinese markets. Another issue which could face by the
firm is about the online payment method which is still not stable. This could create impact while
penetrating into the markets. The firm has to face face issue regarding lactose intolerance in
which there is lactase deficiency in children which could be challenging for the organisation in
sales.
Three modes of market-entry and recommendation with justification
The three modes of market entry which Meadow Foods can use to enter Chinese market
are mentioned below:
Exporting: The marketing and direct selling of goods in another nation is referred to as
exporting. It is considered as traditional as well as well established approach to reach in foreign
country. Also the product does not need to be manufactured in the target country. Along with
this, most of costs which are related to exporting are in the form of market expenses. Exporters
have limited control over the marketing and circulation of their goods, which are subject to
shipping costs and potential taxes, and they must compensate distributors for a variety of
services. It is considered to be the easiest way to enter into international markets (Hawn,
Chatterji and Mitchell, 2018).
The advantage of this type of entry mode is that, the selected company could evade the
cost of establishing business in the new nation. The organisation has a manner for distributing
and markets its commodities in the new nation which do by contractual agreements with regional
organisation or distributor. When exporting, the organisation should provide though to packaging
and costing provided properly to the market. Regarding marketing and promotion, the
organisation would be required to let potential buyers know about their offers by advertising,
local sales force and shows.
The major disadvantage of exporting is that, organisation has to face high costs of
transporting goods to the Chinese market and this could create a negative impact on the
environment (Kuokkanen, Uusitalo and Koistinen, 2019). Also, if the organisation is marketing

and distributing products by contractual agreements, they will be having less control on
operations and has to pay its distribution partner a fees.
Licensing and franchising: The organisation which wanted to establish their business in
international market quickly with limited financial and legal risks may take licensing agreements
with foreign organisations. An international licensing agreements will enables the selected
organisation to sell their products to licensor or using their intellectual property such as
trademarks, copyrights and patents in exchange of royalty fees. Licensing allows the organisation
to target the nation for using property of the licensor (Moraitakis, Huo and Pfohl, 2017). These
properties are intangible and licensor pays a price in exchange for the rights for utilising
intangible property and also for technical assistance. In licensing, a little investment would be
required for providing large return on investment. As licensee produces and market the product,
potential takings from developed and promotional activities might be gone. This type of entry
mode reduces costs and includes limited risks.
Under franchising, the organisation allows foreign firm the rights to use brand name and
selling their products and services. The franchisee has the responsibility for all the operations but
also agrees for operating as per the business model established by franchiser. The franchiser
offers training, promotion and new product assistance. One of biggest benefit is that, franchisee
receive when opening a franchise is brand recognition. Franchisers are already known with the
businesses with established consumers bases build in. By this, people automatically get to know
about the business and its offerings. In franchising agreement, the franchisor grants permission to
the franchise to utilise their intellectual property such as patents and trademarks. In exchange, the
franchise pays fees to the franchisor and would be required to contribute a portion of their
earnings. On the other hand, the franchisor provides goods, services, and help to the franchise
(Mugo, 2018).
Partnerships and strategic alliances: Another strategy for entering the foreign market is
to form a strategic partnership with a local partner. Strategic alliance includes contractual
agreements among two or more organisations stipulating that the included firms would
collaborate in a specific manner for certain time to reach a common objective. To determine if
the alliance approach is appropriate, the business needs to consider what value the partner could
provide to the company in terms of both tangible and intangible elements.

The benefit of collaborating with a local firm is that the regional company understands
the local culture, market, and business practises more than an external firm. The partners are
valuable when they are having recognised and reputed brand name in the nation or having
existing relationships with consumers that the organisation might wanted to access (Mwakio and
Awuor, 2018). Strategic alliance has become popular in recent years and this enables the
company to share the risks and resources which are needed to enter international markets.
The selected organisation could enter into Chinese market by using franchising. By
franchising the organisation, they could attract hard working individuals to grow and expand
their firm in a number of locations. The risk of business failure is reduced by franchising.
Franchise is a secure investment than new businesses as they have the support and backing of
established firm. As the organisation has proven success in UK, getting loan for doing business
would be much easier for them to start the business in China. Also, the franchising partner has
the knowledge about the local market which would help Meadow Foods in getting to know about
the culture and buying behaviour of the customers. Moreover, it would also enable to expand the
organisation in various regions with minimum investments. Franchising will also allow
businesses to expand their buying power and achieve economies of scale with suppliers and
vendors. Economies of scale might also be used to expand marketing by pooling resources and
generating common finances.
To what extent should the chosen business unit be standardised or adapted
The modern organisations are acknowledged with vast opportunities in terms of revenue
maximisation by entering into new markets. Standardised or adapted processes may be important
success elements that have a direct influence on an organization's performance in a new market.
Adaptation is changing in the features to a commodity in order to reach potential
customers. This includes manufacturing a new product with basis of customization of a product
which already exists in the market. The unique aspect of product result in different quality which
increases the production costs and lowers the economies of scale. It is an approach with detailed
the differentiation which exists among product and services (Rizan, Balfas and Purwohedi,
2019).
With standardised, the product are not modified but their market approach changed.
Standardisation is cheap and efficient but it does not have good chance of penetrating to the new

market. The similarity of product results in higher productivity owing to higher demands, there
would be impact on economies of scales that lowers the total cost.
The selected organisation could choose adaptation has their strategy for thriving into
Chinese markets. Adaptation is more applicable when the firm need to meet essential
requirements which include legal, technical and packaging issues. This would allow the chosen
business to be informed of the clients' demands and needs. Along with this, it supports the notion
that there is significant difference in customer lifestyle, political system, economic situations,
and so on around the world. It also supports the organisation in have increased competitive edge
(Schröder and et, al., 2020).
Moreover, product adaptation will help in enhancing the organisation in Chinese market
and so by highly meeting the needs and wants of the customers as well as reflecting on the
competing fir and retention if the current consumers by frequently doing modifications in
product. The organisation could also make sure that they are able to adapt the brand's message to
resonate with local customers. They would change its product pattern of advertising and portion
as per Chinese market so that they are able to understand the buying partner of consumers.
Porter’s generic strategy to gain competitive advantage by adopting one of the generic strategies
Porter's generic strategies describe how the organisation pursues competitive edge across
the chosen market scope. In context to the selected organisation, Porter's generic strategy is
mentioned below:
Cost leadership: In this approach, the chosen company would aim to become the lowest-
cost producer in the dairy sector. Cost advantages come in a variety of forms, depending on the
structure of the dairy sector. This includes exclusive technology development, preferential
access, economies of scale, and a variety of other reasons. A low-cost manufacturer must
identify and capitalise on all areas of cost advantage. If Meadow Foods can achieve and maintain
total cost leadership, it will be an above-average operator in the dairy sector and fetch a price that
is comparable to the market average (Sen, Bingol and Vayvay, 2017).
Organizations that set cost leadership provide items for less than the market average,
allowing them to have a larger proportion of consumers than their competitors, especially if their
profit margins can stay high due to low manufacturing costs. The firm exhibiting cost leadership
often exhibit a number of attributes that create them more suited for their approach.

Differentiation: The differentiation approach is suitable when the target customer
segment is not price sensitive, the market is competitive, and consumers have specific needs that
may go unfulfilled, and the company has significant capabilities, talented personnel, and
innovative technical expertise. The strategy of attaining distinctiveness may range significantly
among goods and services. This could also encompass various features, durability and
functionality as well as the product are marketed to reach an image which consumers value.
The firm will focus on several criteria valued by customers in the dairy sector and would
satisfy the requirements in a unique way. This technique is associated with charging higher
prices for goods. It represents the potentially greater manufacturing costs associated with
producing a unique product, as well as the additional characteristics and distinctiveness
displayed by the commodity (Skipton, 2017). Because high prices are frequently imposed as a
cost-cutting strategy to meet manufacturing expenses, it is critical that the commodity's
distinctiveness be enticing in order to justify pricing to buyers.
Cost focus: Cost focus businesses attempt to achieve a reduced cost advantage but only
within a narrow market segment. These items are basic and similar to ordinary market leading
commodities, and they would be suitable to a large enough number of consumers in order to be
profitable. This technique is aimed towards anyone who wants a one-of-a-kind product at a
reasonable cost. Firms that use this technique compete against the cost leader in the specialised
market where they have a cost advantage.
Differentiation focus: In a differentiation focus strategy, the firm would see to create
product differentiation, but only within one or a smaller number of market segments. As these
companies have decided to focus on a smaller number of consumers, they may be more broadly
appealing to the desires and requirements than a company seeking to distinguish for a larger
market. To be successful with this technique, the company must first identify that a customer's
group has distinct demands than the general market populace. There is no logical foundation for
distinction if there is no variety in demand.
Along with this, The company must also ensure that no other competitor already is
catering to the precise and distinct demands that they have identified. This is the most often used
specialised marketing technique (Solinas, 2017). Small firms can use this technique to drive
themselves into a niche by producing unique items that can be sold for greater prices than similar
undifferentiated products due to expert knowledge or creativity as contrasted to other enterprises.

The selected organisation could use cost leadership strategy as this strategy. The
company will reduce the costs of the products in effort to gain large marketplace as well as
profitability. Producing quality products and selling them at lower price to large audience. By
implying cost leadership strategy, the organisation will be value to gain profit and the market
size for the product will also increase (Sultana, 2018). Also, when the costs of organisation are
low, it would reduce the financial threats for the firm. When the recognition as well as popularity
of product increase owing to its low price, the selected organisation would earn more revenue
them expected. From this manner, the cost of production of product would also decrease as the
resources would be affordable.
Strategic business plan
Executive summary: Meadow Foods was established by Lewis brothers in 1992. There
are around 450 employees in this organisation. They have produced more than 267,000,000 litres
of milk since April, 2021 (Meadow Foods, 2021). They have currently investing 3 million in
order to increase capacity and efficiency at their factory and also planning permission granted to
create 5,300 sqm of processing and storage space at factory in Chester.
Vision: The vision statement of the organisation is to focus 100% on food manufacturing
and food service to the customers.
Mission: The mission statement of the organisation is to establish its supply base and
unrivalled services so that the could ensure that customers could receive a secure supply of dairy
ingredients 365 days a year.
Strategic objectives:
 To increase their supply of products by 10%. To establish their business in new country.
Tactics: The organisation can use social media such as WeChat for promoting
themselves. Social media such as Facebook is banned in Chinese market and instead, they use
WeChat application. This application works as Facebook and also offers services such as games,
financial services and online shopping. Along with this, they could also invest in research and
development for understanding the needs and wants of Chinese people (Tetik, 2020). Moreover,
they could also use print media for creating awareness about their organisation and its offerings.
Furthermore, the organisation also make sure that they are able to penetrate into Chinese markets
and create awareness about their offerings. As people of China specially children has deficiency

of lactase in which they are not able to digest milk and dairy products. In regard to this, the
organisation could develop soy milk or almond milk so that they are also able to cater people
who are lactose intolerance.
Monitoring and controlling: It is vital for an organisation to monitor the progress of
business plan. This would enable the management to measure the effectiveness of strategies for
fulfilling the pre-determined organisational objectives and goals. The goal of developing a
monitoring and control process is to take advantage of all possibilities to modify a problem, that
is, to make changes when possibilities are accessible, as well as to prevent crisis management.
An effective monitoring system offers immediate data to decision maker (Vasile and SIMION,
2019). The chosen firm can utilise routine progress reports in order to monitor certain component
while implementing the business in China. Controlling the implementation is the aligning clear
roles and responsibilities and had a direct influence on to accountability. This will assists in
determining which indicators are at risk so that they will be able to resolve it.
CONCLUSION
From the above discussion, it can be concluded that strategic management is the
management of the firm's resource to reaching the goals and objectives. Strategic management
procedure assists firm and its leadership to think about plan of their future existence, satisfying
chief responsibilities of board of directors. This leads to more efficient organisational
performance that leads in manageable growth. Along with this, it also gives business a benefit
over rivals as its proactive nature depicts that organisation would always be aware of the
changing market. In this report, it includes SWOT analysis and PESTLE analysis for analysing
the possible opportunities as well as threat which the organisation faces while entering into
Chinese markets. Along with this, the different modes of market entry are also mentioned.
Moreover, to what extent should the selected business unit be standardised or adapted, Porter's
generic strategy and a business plan is also included for measuring its success it market and also
improve the future.

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Online
(Our Story, 2021) [Online] Available through; <https://meadowfoods.co.uk/>