International Market Entry and Franchising: Heavenly Desserts Report

This report critically analyzes Heavenly Desserts' international marketing strategy, with a specific focus on the franchising model for entering the German market. The report begins with an introduction to internationalization and franchising, followed by a background on franchising, defining key terms like franchisor, franchisee, and master franchise, and outlining the responsibilities of each. It then delves into the advantages and disadvantages of franchising for both franchisors and franchisees, including what makes a business suitable for franchising and effective methods for marketing and selling franchises. A critical analysis of Heavenly Desserts, including a PESTLE analysis to assess political, economic, social, technological, environmental, and legal factors, and Porter's Five Forces analysis is included, evaluating the competitive landscape and the threats and opportunities in the German market. The report highlights the importance of adapting to Germany's economic, social, and technological environment and navigating the legal and regulatory landscape. Overall, the report provides a comprehensive overview of Heavenly Desserts' potential for international expansion through franchising.

HEAVENLY DESSERTS' INTERNATIONAL AND GLOBAL MARKETING 1
Heavenly Desserts' International and Global Marketing
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HEAVENLY DESSERTS' INTERNATIONAL AND GLOBAL MARKETING 2
Introduction
With the increased globalization and internationalization, numerous business
organizations have opted to do business in the international markets as a way of growing and
diversifying. International market entry methods such as franchising offer numerous
organizations better platforms in occupying and growing in the unknown market since they can
operate under other business concepts. Franchising emerged over the past few years as one of the
popular expansion strategies for numerous products and services companies (Djordjevic, 2015,
p.3). This paper thus is focused on critically analyzing the franchising method with a focus on
heavenly desserts' located in the UK into the German market. The paper explores the importance
of franchising, Advantages, and disadvantages of a franchise, challenges faced by franchising
companies and the marketing mix of heavenly desserts.
Background
Franchising refers to the specialized licensing forms whereby a franchisor offers both the
intangible property such as trademark and business rules and regulations to a franchise, to
conduct business under its umbrella (Jinchul &Park, 2014, p.203). Franchising business entails
business method of distributing products and services and the method evolved many past years
and have become one of the most strategic growth methods of business into other markets.
Franchisee refers to a person or business entity that seeks and gets granted a licence to
operate under the already existing business trademark, model, and trade name while a franchisor
refers to that business laid down the groundwork for establishing a successful business entity and
gives out a license to another business to operate under its trade name and trademark.

HEAVENLY DESSERTS' INTERNATIONAL AND GLOBAL MARKETING 3
Master franchise refers to the franchising contract that requires the owner of the business
or trade name to handover the business control to another person /franchising business in a
specified geographical area while sub-franchisee refers to the business entity that acquires a
license from the master franchisee.
Responsibilities
Business type Responsibilities
Franchisor Installation of proper training to the franchise
on basics trading requirements
Develop and share professional marketing and
campaigns to the franchisee
Ensure that all franchisee operates under the
laid systems
Protect the brand trademark through ensuring
there is consistency in the products and
services
franchisee Has a responsibility to follow the laid system,
procedure, and practices to maintain business
consistency
Have the responsibility in paying all the dues
that are aligned to it such as a franchise fee, the
rental fee
Has the responsibility to communicate and
cooperate with the franchisor to maintain a

HEAVENLY DESSERTS' INTERNATIONAL AND GLOBAL MARKETING 4
friendly business environment
Master franchise Responsible for recruiting franchise in the
given business location
Provide training and support to the sub-
franchisee
Controlling activities of sub-franchisees in that
given area
Sub franchise Is responsible for reporting to the master
franchisee
Operate under the and conditions laid does by
master franchisee
Advantages and disadvantages of franchising
Advantages of Franchising
For franchisor For franchisee
Allows easy expansion of the market for the
goods and services
Allows preservation of franchisees’ legal and
economic independence
The franchisor can obtain additional revenue
from the franchise(Sun & Lee, 2019,p.283)
Allows the business to use a brand name that
has already won the loyalty of customers
Increased the market control of the company as
more product enter into the market with the
trade name
Saves the organization numerous resources that
would have spent in learning the market,
advertising and many others (Pınar, McCuddy

HEAVENLY DESSERTS' INTERNATIONAL AND GLOBAL MARKETING 5
& Eser, 2014, p.7).
The company has rapid scaling of the business
without more direct investments
The business has a large base of technical
support from the franchisor who is more
experienced
Provide rapid opportunity of introducing newly
developed products into the market
Increases the competitive advantage of the
company since its more reliable than new start-
ups
Disadvantages of Franchising
For Franchisor For Franchisee
The franchisor risks losing reputation that
might be associated with failure of the
franchisees on the required standards
Has no control over its business activities since
the activities get limited by the franchisor
May face royalties refusal by the existing
customers
Might experience the high cost of services of
the franchisor such as purchasing of raw
materials and equipment maintenance.
There might be complexity in controlling
activities if the franchise and maintain
confidentiality.
Might risk policy change from the franchisor
that hinders business activities.
What makes a business to become a franchise?
The business must have a legal disclosure document called Uniform Franchise Offering
circular to be allowed in most parts of the world. Secondly, the business audited financial

HEAVENLY DESSERTS' INTERNATIONAL AND GLOBAL MARKETING 6
statement to show the capability. For a business to become a franchise, there must be enough
capital that will prove to the franchisor their capability of operating the trademark and
maintaining the consistency(Halim & Hartono, 2015, p.591). General skills and exercise is also a
condition for a business to become a franchise to show some capabilities such as leadership
skills, business experience, and management style. Lastly, the business must have strong
trademark that can be easily operated by other franchisees.
Methods of Marketing & selling a franchise
To sell a franchise, it is significant to have an extensive marketing plan and strategy to
enable a business to success as a franchisor. Before any action is undertaken, a budget should be
set to enable the business balance between the goals and the available resources. Franchise
marketing is improved by narrowing the prospect profile so that it can effectively convey
through various marketing media (Halim & Hartono, 2015, p.593). The common marketing
media include internet marketing that utilizes online marketing tactics such as advertising in
social media and email campaigns to attract the attention of potential buyers. Another method is
the use of trade shows that brings together all the potential franchisors to have insights on the
potential franchise as well as an opportunity to promote current products and services.
Critical Analysis Heavenly Desserts
Heavenly desserts are the UK dissolved incorporated company on 15 September 2008
via voluntary strike-off and currently has 2 active directors and ten secretaries (Bruzzone, Ares
& Giménez, 2011, p.214). The company focused on the production and distribution of cakes and
desserts in the United Kingdom.
PESTLE Analysis

HEAVENLY DESSERTS' INTERNATIONAL AND GLOBAL MARKETING 7
Pestle analysis is a framework used to analyze and monitor the macro-environmental
factors that affect business operations. The framework is significant for new entrants into foreign
markets alongside with other analytical tools such as Porter’s Five and SWOT to give clear
information about the status of the projected market (Yüksel, 2012, p.34). PESTEL is an
acronym of Political, Economic, Social, Technological, Environmental and Legal factors. The
following Heavenly Desserts PESTLE analysis
Political factors
Political factors entail the government's control and regulations, government stability,
trade policy, environmental law and trade restrictions that affect the operations of a business. The
regulation that affects Heavenly desserts thus entail Food Safety Act of 1990 that require every
organization dealing with food to treat foods that are intended for human consumption in a
standardized ways from the production, processing storage, distribution, and sale.
Therefore, Heavenly desserts have different responsibilities such as ensuring that the
produced cakes are not harmful to the human health, the sold desserts are of high quality as per
the consumers’ expectations, and the desserts are well labeled, advertised and presented in a way
that does not mislead the consumers. Therefore, the UK has opted to leave the European Union;
the regulations still exist and have a significant effect in the German market too.
The bread and Flour Regulations of 1998 require that require mandatory fortification of
the floured with calcium, thiamine, iron, and niacin in England. The regulations do not apply to
foods imported from the UK the regulations thus has a significant effect on Heavenly dessert as
most of the raw material for the cakes and dessert are obtained from flour thus the requirement
will raise the production costs..

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Economic forces
Economic forces are determinants of the economy’s performance and entail aspects such
as economic growth, inflation rates, disposable income, and unemployment rate. Germany has
posed the largest national economy in Europe making it bet the fourth largest by the nominal
GDP in the globe. This allows a better opportunity for the growth of Heavenly Desserts in
German since the purchasing power of the consumers tends to be strong.
Social factors
Social factors entail the demographic characteristics, norms customers and values of the
entire population. It also covers the population growth as well as the distribution of income,
lifestyle and cultural barriers. The social demographic factors have a strong significant effect on
business operations since they impact the purchasing behavior of consumers. Both countries
have close similarities in the social factors thus will seamlessly pave the way for the Heavenly
dessert franchise into the German market.
Technological factors
Technological factors entail the innovativeness that drives the technical advancement in
an economy and organizations leading to change in the operations of the business. The
technological factors dictate the decision to enter into a new market or not, depending on the
difference of the technical level between the home country and the foreign country. Both the UK
and Germany are almost the same level of technological development; thus; it will be easy for
the heavenly desserts to adapt to the Germany technological business orientation.
Environmental factors

HEAVENLY DESSERTS' INTERNATIONAL AND GLOBAL MARKETING 9
Environmental factors entail factors such as raw material, pollution, weather, and climate.
These factors have a direct impact on business operations. Both the UK and Germany have the
same pollution regulations and controls; thus Heavenly Desserts will not be surprised with the
Germans environmental rules. Secondly, Germany has two major flours that are required to be
used in making products; wheat flour and rye flour. Rye flour contains enough gluten, intensely
fruity thus is suitable in making cakes and desserts, and this will positively impact the operations
of Heavenly desserts in German.
Legal factors
Legal factors are more specific laws that tend to protect both consumers and business
entities. These include copyright and patent laws, health and safety laws, and employment laws
discrimination laws among many others. These laws differ in each country for example; the UK
might be restricting the rate of immigrants, Germany has eased the restrictions to increase the
number of the labor force that has dropped of the past years (Peichl & Pestel, 2012, p.7). The
difference in the legal factors thus requires organizations entering into other markets thus are
required to conduct extensive research or hire attorney general to guide and shade more ides;
however, through franchising, Heavenly will have an easy time since the franchisor will provide
all the required information concerning the legal factors.
Porters’ Five Forces
Porters’ five forces is a competitive position analysis of an organization that was developed in
1979 by Michael E Porter (Alrawashdeh, 2012, p.11). The model aims at evaluating the
competitive strength and weakness of an organization to determine its competitive position in the

HEAVENLY DESSERTS' INTERNATIONAL AND GLOBAL MARKETING 10
market with a focus on five forces: Threats of entrants, bargaining power of buyers, bargaining
power of suppliers and the threat of substitute’s products and services.
The threat of new entrants
The threat of new entrants in Germany tends to be very high since the bakery industry
continues to grow and mature every day across the world thus characterized by numerous
entrants (Dobbs, 2014, p.34). One of the major contributors to large entry is the good economic
growth and the large population of Germans that love eating out thus providing a ready market.
Bargaining power of buyers
Bargaining power of buyers from Germany tends to be very high since most of them tend
to be price sensitive (Asad, 2012). Additionally, users have high power since they have
numerous switching lines. This business has to retain them through any means.
Bargaining power of suppliers
The bargaining power of suppliers is critical in the business, since, heavenly Dessert will
depend on the flours to make products. Most of the supplier has Rye flour that is significant to
the production.
Threats from substitute products
Threats from substitute products such as bread tend to reduce the purchasing and to
repurchase trend of consumers since most of them tend to go for cheaper alternatives. This
ultimately affects the revenue collection of Heavenly Desserts.
Intense Rivalry from competitors

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Intense Rivalry from competitors reduces the revenue collection. The existing competitor
tends to have a better business environment than the entering business, thus might be forced to
shift out of the way due to low return (Aydin, 2017, p.378).
Market entry mode
Entry modes refer to the channel in which an international company decides to operate in
the foreign market, and may choose from varied methods such as joint venture, acquisition,
exporting and direct investments(Chen, Kor, Mahoney, & Tan, 2017,p.442). Each mode entails
varied resource deployment pattern, level of control and risk, political and cultural awareness.
Thus organizations need to choose wisely before and after extensive market research, to avoid
failure.
Franchise market entry
I will choose the Franchise as the entry method. Franchising is the best method of
introducing and selling Heavenly Desserts into Germany. According to Baena, (2012,p.4)
franchising refers to intellectual property to mean a property that is developed by inventive to
which rights are excluded to unauthorized use is granted by law. The choice of the franchising is
based on the numerous benefits accrued over adopting other entry methods. Some of the benefits
include a large pool of stakeholders such as suppliers, consumers, employees and board of
directors, reduced political and cultural interference since the franchisor will have taken care of
them and a large poll of information concerning the market and operational.
I would also choose a joint venture entry method. According to Haghpanah and Siegel,
(2019, p.67) joint venture entry method forms the best method from small business organizations
to enter into foreign international markets. Joint venture refers to a corporation that is formed

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after an agreement of two or more companies, organizations or individual with at least an already
existing company. In such an agreement, ownership is always shared by the partners. Joint
venture desire is driven by the goal to expand into a difficult market and always takes different
forms such as spider ‘web and split strategy (Kamoto & Okawa, 2013, p.509). My choice of this
type of market entry is based on the numerous benefits accrued from it regarding the market
targeted. Through the joint venture with an already existing company in Germany such as
Coppenrath & Wiese, Heavenly Desserts will have the following benefits?
a. Large access to the market's technology that already has been built by the existing
company,
b. reduced political implications since the existing company will have created a good
political environment,
c. the large customer base that will have been created by the existing company,
d. higher control of resources than franchising since each partner has equal rights, high
e. Speedy contact creation with other stakeholders such as suppliers and local governments.
Challenges facing companies entering into the international market for the first time
Going global is not always an easy task even to big organizations since there are challenges
faced that when not well-addressed results into the failure of the business. Some of the
challenges include language and cultural barriers, stiff local competition, high tax codes, and
compliance requirements, poor supply chain, and high employee recruitment.
a. Language and cultural barriers affect the communication channel between the business
and the potential customers, thus reducing the marketability rate. The difference in terms