To analyse the potential internationalisation of an Australian product to a foreign market
Executive Summary
The market entry analysis has been designed for the popular “Frosty Boy Australia”, a dessert based manufacturer that functions in Australia. The internal strengths and competencies of the brand have been presented in the report along with the market analysis of South Africa and Turkey. The CAGE framework has been used to select the most appropriate international market out of the two nations. The market analysis has been conducted by capturing the cultural aspects, the administrative aspects, the geographic and economic elements of the countries. Various important characteristics have been taken into consideration including the behaviour of the customers, the sustainability, the degree of competition and the growth opportunities to capture the most appropriate foreign market for the Australian business undertaking. The ethical aspects have been considered and ultimately Turkey has been selected as the foreign market setting where Frosty Boy Australia could be introduced based on the constructive market elements.
Company Background
Frosty Boy Australia was established in 1976 and over the years, it has gained the reputation of the market leader in the food and beverage market. The brand not only focuses on the taste of the food offerings but also on their quality. The main source of competitive advantage of the brand is the “natural premium offerings” that do not contain artificial colours or preservatives. Its target customers include retail business firms like cafes, quick service stations, convenience stores and quick service eatery (McDonald, 2018).
The marketing mix of the brand has been presented to understand how it creates value in the market. The products that are offered by the business include toppings, syrups, foodservice offerings like frozen yoghurt, beverages, soft serve, catering products and foodservice equipment. The brand is known to be a “low cost and high-quality product” provider that focuses on giving healthy eating options to the customers. The brand is known to have a wide range of distribution network that is present in Australia and different parts of the world. The trained network of agents and distributors ensure that the best support is offered to the target audience (Internet, 2018).
Situation Analysis
The situation analysis of Frosty Boy Australia was conducted by using the SWOT analytical model. This tool has been used as it would examine various aspects of the business that currently impacts its performance and would impact its offerings in the foreign market (Open Textbooks for Hong Kong, 2018).
SWOT Analysis
Strengths – The main strengths of Frosty Boy Australia include not just the high-quality food and beverage offerings (Brisbane Times, 2018). The brand also offers different solutions for maintaining a close association with every market by recognizing the synergies and strengthening the business strategic model with each brand. It expands its ice cream empire by establishing new factories (Frostyboy.com.au, 2018, p 4).
Weakness – The main weakness includes the need for a strong supply chain to function in the global market setting and the increasing level of redundancy of the technological capability in the digitalized era. These aspects need to be taken care of by the brand in order to have a more profitable existence in the dynamic market setting (Staff, 2018).
Opportunity – There is an opportunity for the brand to create new recipes so that the types of desserts can be expanded. The brand can introduce unique flavours of cones and soft serve so that the global market audience can relish the desserts (Frostyboy.com.au, 2018, p 6).
Threat – The brand faces competition from the other operational brands in the beverage market such as Golden North which is highly popular among Australian customers. Similarly, the changing technological setting keeps the brand on its toes so that it can make changes in its technological function to introduce better dessert options in the market (McDonald, 2018).
Market Analysis
The market analysis has been conducted by using the CAGE framework. The analysis has been conducted by comparing the cultural, administrative, geographic and economic elements in the foreign market and in the domestic market. This analysis has been made to select the most suitable market where the products of Frosty Boy Australia could be introduced.
Analysis of South Africa versus Australia – CAGE Framework
| Country | Cultural Distance | Administrative Distance | Geographic Distance | Economic Distance |
| Australia | The consumer lifestyle has been evolving which has increased the demand for desserts and beverages in the nation.
Urbanization has influenced the fresh food trends in the continent (Euromonitor.com, 2018). The colourful culture in Australia has encouraged Frosty Boy Australia to cause a stir in the market by launching creative and tasty flavours in ice creams and beverages (Harris, 2018).
|
The administrative setting in Australia is strong due to the strong political setting and the uniformity in the domestic currency. | Australia is a country, continent and island that has its own time zone and climatic elements. These aspects influence the performance of the businesses.
There is a significant geographic distance between the two nations. |
The economic setting of the nation is pretty solid and most of the people have a decent standard of living.
In 2017, its GDP was worth USD 1323.42 billion. In fact, its GDP is 2.13 % of the global economy (Tradingeconomics.com, 2018). |
| South Africa | The cultural setting in South Africa is highly dominated by the concept of race which increases the level of disparity among the major population of the country (Convictcreations.com, 2018).
There are 11 different languages in the nation that are used by the people.
|
The political and administrative setting is highly unstable in the nation which increases the level of poverty in the nation.
The poor administrative context does not make the nation an attractive market for Frosty Boy Australia. |
South Africa is situated in located in the southern point of the African continent and it does not have many trade relations with far-off nations according to CIA-work factbook. | There is a major difference in the economic setting between Australia and South Africa. Poverty is a major concern that affects its citizens.
South Africa’s GDP was worth USD 349.42 billion in 2017. Its GDP performance represents 0.56 % of the global economy. |
Source: (Department of Foreign Affairs and Trade, 2018)
Analysis of Turkey – CAGE Framework
| Country | Cultural Distance | Administrative Distance | Geographic Distance | Economic Distance |
| Australia | The consumer lifestyle has been evolving which has increased the demand for desserts and beverages in the nation.
Urbanization has influenced the fresh food trends in the continent (Euromonitor.com, 2018). The colourful culture in Australia has encouraged Frosty Boy Australia to cause a stir in the market by launching creative and tasty flavors in ice creams and beverages (Harris, 2018).
|
The administrative setting in Australia is strong due to the strong political setting and the uniformity in the domestic currency. | Australia is a country, continent and island that has its own time zone and climatic elements. These aspects influence the performance of the businesses.
There is a significant geographic distance between the two nations. |
The economic setting of the nation is pretty solid and most of the people have a decent standard of living.
In 2017, its GDP was worth USD 1323.42 billion. In fact, its GDP is 2.13 % of the global economy (Tradingeconomics.com, 2018). |
| Turkey | In Turkey, the majority of the citizens follow the Islam religion which influences their shopping behaviour and overall attitude.
The culture of the people is influenced by both Europe and Asia. |
The nation has one of the best established political and administrative systems in the world. Human development is high in the nation and thus there could be scope for the business to grow in the market. | The nation is connected to both Europe and Asia which makes its geographic features very unique in nature. Inspire of the major difference between Turkey and Australia, the market setting is pretty strong which could open new prospects for Frosty Boy Australia (Miloloža, 2015). | The economic context of the Islamic nation is known to be an emerging market economy” which reduces the economic gap between it and Australia.
|
Consideration of other important characteristics
Based on the analysis, the environment in Turkey seems to be feasible for the Frosty Boy Australia business due to its huge population, rich culture and sustainable market environment. Turkish customers focus on quality while making their purchase decisions. In recent times, Turkish customers have been showing interest in global cuisine and world brands. Since malls have become an important element in the urban landscape, there is high scope for the Australian brand to succeed in the foreign market. The South African market seems less favourable due to the economic backwardness of the people (En.portal.santandertrade.com, 2018).
Ethical Considerations
Before thinking of extending the Frosty Boy Australia brand in the foreign market, it is necessary to assess the ethical aspects in the respective nations.
Australia versus South Africa
Ethics plays an important role in the Australian market to ensure that no stakeholders are cheated in the process. In order to create value in the continent, Frosty Boy Australia focuses on the CSR model to have the least impact on the environment. The main values that govern the brand are treating everyone with respect, valuing people, exceeding expectations, creating an understanding and sticking to what is said (Internet, 2018).
In South Africa, the firms have a code of ethics that influence their operational activities but the extent of the ethical behaviour is influenced by the corporate culture (IRWIN, 2011, p 14).
Australia versus Turkey
Business firms in Australia operate in a highly ethical setting which increases the value that is created in the market. In the emerging market setting of Turkey, a high focus is given to ethics and sustainability so that business ethics can be encouraged. The national culture of the nation is shaping the business behaviour and the CSR model. The Frost Boy Australia could continue to have a sustainable existence in the foreign market setting and create value for the new audience (Coşkun & Akdere, 2017).
Recommendations
Frosty Boy Australia must select Turkey as its foreign market due to the favourable market context and the existing strengths of the brand. The young population has been focusing on international trends and thus there is scope for the firm to expand in the global market context. It must just take into consideration the religious sentiments of the people and make sure that no flavours that hurt their feelings are introduced there. In addition to that, the brand must also focus on quality as that is the major element that drives the customers to the stores and influences their purchasing decision.
References
Brisbane Times. 2018. Frosty Boy expands ice cream empire with Yatala factory. [online] Available at: https://www.brisbanetimes.com.au/national/queensland/frosty-boy-expands-ice-cream-empire-with-yatala-factory-20141205-120xme.html [Accessed 14 Aug. 2018].
Convictcreations.com. 2018. Cultural comparison between South Africa and Australia. [online] Available at: http://www.convictcreations.com/culture/southafrica.html [Accessed 14 Aug. 2018].
Coşkun, A. and Akdere, M., 2017. Exploring Leadership Development in Turkey: Implications for Technology and Innovation. In Leadership Development in Emerging Market Economies (pp. 261-280). Palgrave Macmillan, New York.
Department of Foreign Affairs and Trade. 2018. Chapter 2 – Shaping forces: complementarity and distance. [online] Available at: https://dfat.gov.au/about-us/publications/trade-investment/australia-japan-commercial-relationship/Pages/chapter-2-shaping-forces-complementarity-and-distance.aspx [Accessed 14 Aug. 2018].
En.portal.santandertrade.com. 2018. Reaching the Turkish consumer – Santandertrade.com. [online] Available at: https://en.portal.santandertrade.com/analyse-markets/turkey/reaching-the-consumers [Accessed 14 Aug. 2018].
Euromonitor.com. 2018. Fresh Food in Australia. [online] Available at: https://www.euromonitor.com/fresh-food-in-australia/report [Accessed 14 Aug. 2018].
Frostyboy.com.au.2018. Frosty News. [online] Available at: http://www.frostyboy.com.au/frosty-news/img/edition04.pdf [Accessed 14 Aug. 2018].
Harris, T. 2018. Frosty Boy Australia causes a stir in the beverage market new launch – Convenience & Impulse Retailing. [online] Convenience & Impulse Retailing. Available at: https://www.c-store.com.au/2014/09/11/frosty-boy-australia-causes-a-stir-in-the-beverage-market-new-launch/ [Accessed 14 Aug. 2018].
Internet, a. 2018. Frosty Boy – A leading manufacturer of frozen dessert bases. [online] Frostyboy.com.au. Available at: http://www.frostyboy.com.au/about-us#values [Accessed 14 Aug. 2018].
IRWIN, J., 2011. Doing business in South Africa: An overview of ethical aspects. Institute of Business Ethics, London.
Internet, a. 2018. Frosty Boy – A leading manufacturer of frozen dessert bases. [online] Frostyboy.com.au. Available at: http://www.frostyboy.com.au/distribuitor [Accessed 14 Aug. 2018].
McDonald, M. 2018. Learning export lessons from Frosty Boy Australia – Food & Beverage. [online] Food & Beverage. Available at: https://foodmag.com.au/learning-export-lessons-from-frosty-boy-australia/ [Accessed 14 Aug. 2018].
McDonald, M. 2018. Golden North judged Australia’s best ice cream – Food & Beverage. [online] Food & Beverage. Available at: https://foodmag.com.au/golden-north-judged-australias-best-ice-cream/ [Accessed 14 Aug. 2018].
Miloloža, H., 2015. Differences between Croatia and EU Candidate Countries: the CAGE Distance Framework. Business systems research journal: international journal of the Society for Advancing Business & Information Technology (BIT), 6(2), pp.52-62.
Open Textbooks for Hong Kong. 2018. Situation Analysis (SWOT). [online] Available at: http://www.opentextbooks.org.hk/ditatopic/12786 [Accessed 14 Aug. 2018].
Staff, I. 2018. SWOT Analysis. [online] Investopedia. Available at: https://www.investopedia.com/terms/s/swot.asp [Accessed 14 Aug. 2018].
Tradingeconomics.com. 2018. Australia GDP | 1960-2018 | Data | Chart | Calendar | Forecast | News. [online] Available at: https://tradingeconomics.com/australia/gdp [Accessed 14 Aug. 2018].
