Strategic Analysis and Marketing Plan for Danes Coffee in China

This report provides a comprehensive strategic analysis and marketing plan for Danes Coffee's potential expansion into the Chinese market. It begins with an executive summary and introduction, followed by a detailed examination of the economic and financial environment, including regional trading groups like APEC, and market measurement. The report also assesses political and legal factors, highlighting the importance of understanding China's regulatory landscape. A significant portion is dedicated to social and cultural environment analysis, using Hofstede's cultural dimensions and Maslow's hierarchy of needs to compare Australian and Chinese consumer behavior. The report also includes a technological environment analysis, promotion strategies, and concludes with recommendations for Danes Coffee. The analysis considers the impact of various environmental variables, including economic, political, social, cultural, and technological aspects, to inform strategic decision-making and facilitate successful market entry. This report aims to help Danes Coffee understand the market opportunities and formulate effective strategies for promoting and selling its products and services in China.

Marketing
Global marketing
4/26/2019
Danes Coffee

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Executive summary
Strategic analysis is the process that majorly includes the research on the business environment
of the organisation in which the business is operated. It is essential for the company to formulate
the strategic planning for the effective and smooth decision. The strategic analysis plays a crucial
role when it comes to the strategic decision making process. In addition, it brings the essential
information related to the evaluation and development of the environment inside as well as
outside of the company. This analysis is essential for the companies so that they can make
effective strategies for the smooth operations.
Being hired as the Marketing manager of Danes Coffee and CEO has claimed in order to
investigate the market opportunities majorly for the potential information promotion and sale of
their products as well as services to china. Danes Coffee Company is willing to expand its
business operations in other markets like china in order to attain the goals related to the
organisation. The aim of the report is to analyse the opportunities and threats with the help of the
strategic analyses of the environmental variable that include economic, political, social, cultural,
technological variables. These environmental factors influence the working of Danes Coffee in
the china market. These factors majorly include the external as well as the uncontrollable factors
that can influence the decision making of the organisation and the way this factor affects its
strategies as well as performance.

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Contents
Introduction......................................................................................................................................4
Strategic analysis.............................................................................................................................5
Economic and financial environment analysis............................................................................5
Regional trading groups...........................................................................................................5
Measuring market....................................................................................................................5
APEC.......................................................................................................................................6
Barriers to entering an international market............................................................................6
Country classification..............................................................................................................7
Political and legal environment analysis.....................................................................................8
Political factors........................................................................................................................8
Legal regulations.....................................................................................................................8
Government’s desire to control trade flows tends to be motivated by....................................9
Social and cultural environment analysis....................................................................................9
Cross-cultural comparison studies...........................................................................................9
Key Cultural Differences.......................................................................................................11
Technological environment analysis.........................................................................................12
Implication for the international marketing...........................................................................12
Influences on internet use worldwide and within china........................................................13
Online consumer behaviour and spend time on internet.......................................................13

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Promotion..............................................................................................................................14
Conclusion and recommendations.................................................................................................16
References......................................................................................................................................17

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Introduction
Danes coffee is well-known company who deals in coffee beans as well as powder. The
company came into existence in the year 1944 by Paul Jackson who earlier did not like to prefer
coffee as it taste bitter and the burnt dirty. Thus, this is the reason he set himself a challenge in
order to create the coffee he loved the most (Danes Coffee, 2019). The company is currently
present in the market of Australia and now they are looking to expand their business operations
and willing to open their business in the market of China. The reason due to which china market
is selected is the revenue that is attained by coffee segment that is equal to US$2,340m in the
year 2019. According to CAGR 2019-2023, this has been found that market is expected to grow
annually by 9.6% (Statista, 2019). In addition to this, the consumption of coffee in china is
growing rapidly as it is turning the tea-drinking country into the world’s most-promising market
for coffee manufacturer as well as international coffee chains (Wang, 2018).

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Strategic analysis
Economic and financial environment analysis
Regional trading groups
Regional trading groups of the china are important with whom the company can form the tie-ups
(Tan and Carrillo, 2017). Danes coffee company has the opportunity through which they can
form the tie-ups with China. This will help them to avail the advantages for being in the regional
trade group, which include
 Expansion- Danes coffee will be having the scope to expand its business operations in
the market.
 Production- Danes coffee will produce the products in the market of china and they can
get the suppliers tie-ups easily because they are the participant of regional group. In
addition, they will get in touch with the labour market.
 Standardisation- Danes coffee has opportunity to maintain the standardisation in which
they can easily produce the same sort of goods in china (Chernev, 2018).
 Firm can lobby government to become members- Company can lobby the government
in order to become the members that helps Danes coffee in dealing.
Measuring market
The income is one of the factors, which is essential to evaluate when it comes to economic
(Grant, 2016). China is the second-largest economy that offers a compelling growth story due to
the fast expanding base of the customer as well as rise in the purchasing power of the customers.
The population of china middle class is on-going to double to 600 million by the year 2022

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where the disposable income increases by 8% in a year and in past fast years. According to the
studies by McKinsey and National Bureau of Statistics of China, it is expected to rise at a
compound annual growth rate of approx. 9.6% from the year 2018-2020. This shows that there is
presence of opportunities for the company in the China market.
APEC
APEC perform the role in facilitating regional integration has proven required in order to
promote the trade as well as economic growth in the market of Asia pacific For example-
reducing the trade barriers members between Australia as well as china while trading (Asia-
pacific economic cooperation, 2019).
Barriers to entering an international market
There are different barriers that will be faced by the company while entering into the
international market. These barriers are given below –
 High capital: - Danes coffee company need the existence of the high capital because of
high cost or other for establishing their operations of offering coffee to their customers.
 Competitive market: - In the china market, there are many leading companies who are
offering coffee in the market of China. The major competitors of the company include
Starbucks, Lisun, Ho good, Nanguo and many others (Daxue, 2019). These competitors
of the company will work as a huddle for Danes coffee due to which they will not
establish the business in china market.
 Customer response: - Danes coffee provides the different flavours in order to satisfy the
needs of the customers in the Australia market. However, the people of china might have
different preferences for the flavours, which affects the consumption of the products

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offered by the Danes coffee. Thus, this can work as the barrier for the company while
expanding the business.
 Trade tariff: - The trade tariff is one of the factors that can influence the Danes coffee,
an Australian company to conduct the business in the market of china. There are different
instruments of the trade control, which is further categorized as tariff barriers and non-
tariff barriers (Papulova & Gazova, 2016).
The tariff barriers include the tariff on import, export, and transit of tariffs. On the other hand,
the non-tariff barriers include the subsidiaries, tied aids, quotas, and many others.
Country classification
China is considered in the upper-middle income countries which shows that it is an
industrialising countries whose GNP per captia is >$4,126 but <$12,746. This is very clear with
the fact that china has per capita of 16,760 ppp dollars in the year 2017. Thus, this shows the
customers present in the market of china are making the purchase of the products in good price.
This leads to opportunity for the company, as they will be able to earn high amount of revenue.

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Political and legal environment analysis
Political factors
China is considered as one of the most powerful countries across the world. It is one of the
permanent members of the Security Council that is present in the United Nations with this it is
also 4th largest country across the world by the area of land (Gupta, 2013). This has been found
that china has stable political environment due to which the companies can easily enjoy the
benefit of establishing the business, as they do not have to deal with the frequent changes in the
policies and regulations. According to the recent research, this has been found that Australia-
china relations are majorly characterised by the strong trade bonds. This has been found that
china is considered as the Australia’s largest trading partner. Thus, this shows that there is good
trade relationship of Australia as well as china (Australian Government, 2019).
Australia-china perform the bilateral relationship that is based on strong economic as well as
trade complementarities with a comprehensive program of high-level of visit and wide-ranging
corporation (Whalley, 2014).
Legal regulations
Food and beverage laws pertains the laws that are related to the safety as well as distribution for
the food and beverage industry. China includes compliance in the food and beverage industry
which include Food Safety Modernization Act of 2010 (FSMA) and Nutrition Labeling and
Education Act of 1990 (NLEA). In addition to this, the country is equipped with the different
regulatory agencies who contribute in monitoring of the compliance that is performed by
business in the industry that includes Food and Drug Administration (FDA) and Federal Trade
Commission (FTC) (HG.org, 2019).

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Government’s desire to control trade flows tends to be motivated by
Financial issues: - The government of china control the trade flows that are motivated by the
financial issues. China is willing to increasing the foreign exchange as well as GDP within the
country due to which invites other companies for the business in the market (Indris & Primiana,
2015).
Safety issues: - Chine notified that the world trade organisation (WTO) of the regulations on the
implementation of the food safety law of the people republic of china as SPS 1055 (Foreign
Agriculture Culture, 2019). Thus, it is essential for the company to follow all the safety rules as
well as regulations.
Social and cultural environment analysis
Cross-cultural comparison studies
Hofstede’s cultural dimension theory
Hofstede’s cultural dimension theory is one of the frameworks for the cross-cultural
communication that is established by Greet Hofstede. This framework define the effect of the
society’s culture on the values of its members and the way these value related to the behaviour
with the use of structure derived from these factor analysis (Baker, 2014).

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(Source: Hofstede Insight, 2019)
The cultural difference between the Australia and china are stated with the help of entire six
dimensions of culture. The comparison of all the dimensions for Australia and china are stated
which shows that power distance, individualism, long-term orientation, indulgence show the
maximum differences in the culture of the country (Block & Walter, 2017). In addition to this,
the masculinity as well as uncertainty avoidance have almost equalled number the scoring due to
which it will not show the major difference.
The major difference in the culture will affect the organisation structure of Australia as well as
china. This affects the working of the Danes coffee in the market of china, as there are many
cultural issues (Laitinen & Suvas, 2016). Thus, the company need to learn the culture of china
that helps them in opening and maintaining the business in effective manner.
Maslow’s hierarchy of needs

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Maslow’s hierarchy of needs is the theory that is proposed by Abraham Maslow in 1943 paper.
The needs of the customers from the company are varied and they try to accomplish the same so
that they can meet the needs.
The decision making of the customer for purchasing the products varies on culture and their
values. The cultural difference leads to the impact on the way consumer behave and how they
respond to differently to the cultural stimuli. Customers in china have diverse needs than the
people in Australia due to different cultural values (David, 2011).
Key Cultural Differences
 Language: - Language of the country is considered as one of the major barrier for the
company in Australia. In china, either most of the people follow English or Chinese as
this is there regional language. This makes the Danes coffee to learn the few words in the
Chinese language that is the only way through which they can effectively deal with the
people present in China and can offer the delight experience (Yang, Burger, Peters, Cruz
& Steinberg, 2016). In Australia, most of the people make use of English as their primary