MBA611: Global Scan and Market Entry Audit for A2 Milk Company

This report presents a global scanning and market entry audit for The a2 Milk Company, focusing on potential expansion into India and Thailand. It analyzes political, economic, socio-cultural, and environmental factors in both countries, along with market trends and competition. The report justifies the choice of these markets, assesses the firm's strategic capabilities and associated risks, and ultimately recommends India as the more favorable destination due to its economic conditions, milk production capacity, and large farming population. The analysis considers factors like government support, consumer spending, and competition from existing players, concluding that India offers a more promising environment for The a2 Milk Company's business expansion. This report is available on Desklib, where students can find a wealth of study resources including past papers and solved assignments.

Running Head: INTERNATIONAL MARKETING STRATEGY 1
International Marketing Strategy

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Table of Contents
Introduction.................................................................................................................................................3
Global Scanning of potential Destinations...................................................................................................3
India.........................................................................................................................................................3
Political/Legal Factors..........................................................................................................................3
Economic Factors.................................................................................................................................3
Socio-Cultural Factors..........................................................................................................................4
Environmental Factors.........................................................................................................................4
Market Trends and Competition..........................................................................................................4
Thailand...................................................................................................................................................4
Political/Legal Factors..........................................................................................................................4
Economic Factors.................................................................................................................................5
Socio-Cultural Factors..........................................................................................................................5
Environmental Factors.........................................................................................................................5
Market Trends and Competition..........................................................................................................5
Justification.................................................................................................................................................6
Firm’s strategic capability analysis and risks................................................................................................6
Recommendations.......................................................................................................................................7
Conclusion...................................................................................................................................................7

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Introduction
From the first assessment, it is identified that The a2 Milk Company is successfully operating its
milk products business in New Zealand and serving other countries like Australia, United States,
Singapore, China, Hong Kong and United Kingdom. Now, company is planning to expand its
business in other international markets. This report is focused to conduct global scanning and
marketing audit of the chosen destinations i.e. India and Thailand. These are the two destinations
where this company can expand its business in the future. The appropriateness of market is
analyzed by evaluating different factors of the nations. Furthermore, strategic capabilities and
other related factors are also assessed. At the end, recommendations are provided regarding the
best destination for the operations of The a2 Milk Company.
Global Scanning of potential Destinations
Before expanding its business in global market, it is very important for an organization to scan
the external factors which can have both positive and negative impact on the growth of its
business (Solberg, 2017). The a2 Milk Company will also conduct a market audit of chosen
destinations. Both of the destinations are analyzed below:
India
Political/Legal Factors
In India, government has taken various initiatives to change the face of dairy products
manufacturing. There is no excise duty on most of the milk and other dairy products (The a2
Milk Company, 2018). Additionally, there is no requirement of license for operating business in
this industry. Thus, it will be very easy for The a2 Milk Company to expand its operations in
Indian market. Moreover, Indian government has allowed 100 percent FDI on dairy products.
This company is offering A1 protein free and nutritious milk. So, it will get government’s
support to strengthen the village infrastructure for better milk procurement.
Economic Factors
As per a survey study, people’s spending on dairy products as a percent of food consumption is
15.47% in rural areas and 18.85% in the urban areas. The economy of India is growing that can
facilitate the business operations of The a2 Milk Company (Saudi Gazzate, 2016). It has become

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the fastest growing economy in the world with GDP growth rate of 7.1%. In India, most of the
population is covered by middle class income and their disposable income is growing. It can be
profitable for increasing the sales of The a2 Milk Company (Kumar and Prabhakar, 2014).
Figure 1: Indian Economy Forecast
(Saudi Gazette, 2016)
Socio-Cultural Factors
There are various social and cultural factors which can assist the business expansion of this
company. Milk has a vital role in Indian society that is largely vegetarian. In this nation, 21% of
population is covered by farmers that can support a2 Milk Company to get raw materials on
appropriate costs. Due to changes in the customers’ lifestyle and consciousness towards health,
government has established various norms that every milk product providers need to maintain
some specific food standards (Huber and Suryanarayan, 2016).
Environmental Factors
Indian government has imposed various environmental standards on manufacturing industries so
a2 Milk Company needs to comply with them. Nowadays, people are very conscious about the
protection of environment and natural resources so this company needs to engage in corporate
social responsibility and sustainability. Milk packaging can increase the pollution level in the
country (The a2 Milk Company, 2018).
Market Trends and Competition
The milk and dairy market in India is experiencing a strong growth and development. This
industry remains highly uneven with the players having presence in some specific states and

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regions. India is the largest milk producer in the world and it has increased this production by
20% from 137.7 million tonnes to 165.4 million tonnes between the year 2014 and 2017. It can
assist a2 Milk Company to improve its business and revenues.
There are various companies which can pose competition on a2 Milk Company like Nestle,
Amul, Mother Dairy, Saras Milk etc. There is no company that offers a2 protein milk products
and infant formula so this firm can take benefits in India (The a2 Milk Company, 2018).
Thailand
Political/Legal Factors
About Thailand dairy industry, it is stated that it is shaped by the support of its government. In
this country, The Department of Livestock Department has introduced various projects and
programs to promote dairy production and farming. In this market, The a2 Milk Company can
have the benefits of mobile training units of government which give the information about
different techniques and technology of milk production and dairy farming like feed management,
disease control and artificial insemination (Chungsiriwat and Panpol, 2011).
Economic Factors
Thailand is an industrialized country which economy is totally dependent on the export, with the
export amounting for approximately 2/3 of its GDP. In this country, agribusiness is one of the
major contributors to its economy. Current GDP growth rate of this country is 3.9% that
indicates that it is a developing nation. There are various economic factors in this market like

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unemployment rate, investment risk and inflation rate which can affect the business of a2 milk
Company adversely. However, now there is improvement in the economic conditions in Thailand
that can assist this milk company to establish business successfully (Lees-Marshment, 2018).
Figure 2: Economic Trends in Thailand
(Phi, 2017)
Socio-Cultural Factors
In Thailand, a larger population is engaged in the subsistence agriculture so it is among the
countries with lowest unemployment rate. Recently, Thailand is importing its dairy products
from New Zealand, Germany, Australia, USA, France etc. The people are becoming conscious
towards health so they prefer to intake low fat milk. This fact can help a2 Milk Company to set
up its business in Thailand (Lees-Marshment, 2018).
Environmental Factors
In order to resolve the issues of environment and wastage, the dairy and milk companies are
using manure from the farms to manufacture fertilizer and biogas to reduce the waste water and
smell. The a2 Milk Company needs to develop effective environmental protection practices so
that it can operate its business smoothly.
Market Trends and Competition
Earlier, milk was never a significant product in this country. Later during previous 15 years, the
milk animals in Thailand have been increased 15 times. Today, the country has the capacity of
milk capacity of 2800 tonnes in a day and more than 1 million tonnes every year. In indicates
that there is an increase in the consumption of milk and dairy products. The major players in this

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industry are such as Fonterra, The Thai Dairy Industry Limited, Friesland etc. These
organizations can pose competition on a2 Milk in the country. Among them, Fonterra is the
biggest competitor as it also offers nutritious milk and dairy products in the country (Adeola,
Boso and Adeniji, 2018).
Figure 3: Milk Production and Trade in Thailand
(Source: Phi, 2017)
Justification
From the above analysis, it can be justified that above two markets can provide various business
opportunities to a2 Milk Company of New Zealand. Currently, this company is operating its
business in New Zealand and serving various areas. It has well-established business in these
areas. Now, company is planning to expand its business as it wants to enhance its brand presence
in different markets. The company has enough capabilities and resources to spread its activities
in international markets. It has launched various products in this country like infant formula,
milk, milk powder etc. and it has an established position in New Zealand and Australia. This is
the right time for a2 Milk Company to make investment in foreign markets (Zeriti, et al, 2014).
Above global scanning showcases that Thailand and India are appropriate markets for any dairy
and milk company.

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Firm’s strategic capability analysis and risks
As mentioned above, a2 Milk Company is operating its business in New Zealand successfully.
The company has sufficient capabilities to expand business in foreign market. One of the major
capabilities of this company is innovation and uniqueness. The a2 Milk is using innovative
techniques to produce milk and other related products. The products of this company are very
unique than other players as its cows are producing milk free from A1 protein and marketing a2
milk. Additionally, branding is another capability that can support this organization in new
market. It has developed an effective brand portfolio that includes innovative products like milk
powder and infant formula (Papadopoulos and Heslop, 2014).
In international markets, the company may face different risks like legal risks, market risks and
financial risks. The laws and regulations in international dairy market can resist a2 Milk
Company to grow and enhance its business. There are frequent changes in the needs and
demands of customers towards dairy products like people do not want to intake milk with fat. It
can affect the business operations of a2 Milk Company. Moreover, a2 Milk Company may
confront the risks related to funds and costs as it is offering its products on premium prices. This
factor can affect the sales of a2 Milk’s products (The a2 Milk Company, 2018).
Recommendations
It is hereby recommended that a2 Milk Company should expand its business operations in Indian
market as it can provide more favorable environment and more business opportunities than
Thailand. It can be seen that economic conditions in this country are better than other nation. Its
economic environment will help the company to increase its overall sales and revenues. The
market trends and conditions indicate that India is the largest producer of milk so this firm can
enhance its business activities. In India, most of the population is covered by farmers that can be
a positive factor for the growth of a2 Milk Company. Thus, it can be stated that India is the most
appropriate international market for a2 Milk Company.
Conclusion
Thus, it is hereby concluded that a2 Milk Company is a well-recognized company in New
Zealand dairy industry. It is found that India is more appropriate market for business expansion
of a2 Milk Company. This country provides various opportunities and advantages to dairy

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business. The people are very much concerned about health issues and medical conditions so
they will prefer to use milk products of this firm. In this way, the company should spread its
business in Indian market.

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References
Adeola, O., Boso, N. and Adeniji, J., (2018) Bridging Institutional Distance: An Emerging
Market Entry Strategy for Multinational Enterprises. In Emerging Issues in Global
Marketing (pp. 205-230). Springer, Cham.
Chungsiriwat, P. and Panpol, V. (2011) Thailand: An industry shaped by government support,
Available from http://www.fao.org/docrep/011/i0588e/I0588E10.htm [Accesed on 30 August
2018].
Huber, J.D. and Suryanarayan, P., (2016) Ethnic inequality and the ethnification of political
parties: Evidence from India. World Politics, 68(1), pp.149-188.
Kumar, R. and Prabhakar, D.R.K., (2014) Opportunities and challenges in Indian dairy industry
supply chain: A literature review. International Journal of Logistics & Supply Chain
Management Perspectives, 2(4), pp.791-800.
Lees-Marshment, J. (2018) Introduction: Political Marketing and Management in New Zealand,
In Political Marketing and Management in the 2017 New Zealand Election (pp. 1-5). Palgrave
Pivot, Cham.
Papadopoulos, N. and Heslop, L.A., (2014) Product-country images: Impact and role in
international marketing. UK: Routledge.
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http://ap.fftc.agnet.org/ap_db.php?id=730 [Accesed on 30 August 2018].
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industry. Food Policy, 31(3), pp.216-227.
Saudi Gazzate. (2016) India economic growth slips to 5.7% in Q1, Available from
http://saudigazette.com.sa/article/516352/BUSINESS/India [Accesed on 30 August 2018].

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Solberg, C. A. (2017) International Marketing: Strategy development and implementation.
Routledge.
The a2 Milk Company. (2018) About Our Products, Available from
<https://thea2milkcompany.com/about-us/about-our-products/> [Accessed on 30 August 2018].
The a2 Milk Company. (2018) Supporting Our Community, Available from <
https://thea2milkcompany.com/about-us/our-community/> [Accesed on 30 August 2018].
Zeriti, A., Robson, M.J., Spyropoulou, S. and Leonidou, C.N., (2014) Sustainable export
marketing strategy fit and performance. Journal of International Marketing, 22(4), pp.44-66.

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