Regional and Country AnalysisThe economy in China has enjoyed growth of approximately 7%and a 10% reduction within the poverty level. The middle class has increased toroughly 350 million residents.
(Brander and Spencer, 1998) With the median ageof 25, this highly educated group has a great deal of disposable income andproves to be a perfect target market for Nyetimber. A Wine and Food articlereported that the wine trend will grow by 30% in the next five years, asChina’s new middle class grows and the culture becomes more modern, religiousand social taboos regarding wine drinking have diminished. All these factorsprove to be a favourable market in which to enter for an international firm notfamiliar with local customs and culture. Strategic Planning analysisAfter completing a comprehensive environmental regional andcountry analysis, I feel very confident china would be an excellent market fornyetimber to break into. I have conducted a SWOT analysis on the Chinese winemarket. A SWOT analysis has been a useful tool for analyzing complex strategicsituations by reducing the information quantity needed to achieve a betterdecision (Helms and Nixon, 2010). SWOT analysis considers both the currentstrengths and weaknesses and the future opportunities and threats (Corsi etal.
, 2013). The SWOT analysis has been applied in many scientific fieldsincluding studies of wine industry. Strengths: Growing market in China, Expanding middle classwith disposable income Weaknesses: Nyetimber not currently a well-known brandoutside the UK. Opportunities: 7% growth in population; 1% upper classmarket, British seen a hallmark of luxury. Threats: Strict import laws and heavy fees on alcohol DirectSea import channels for port of entryAs Driscoll explains, export modes can include either adirect export from its local market to the foreign market or an indirectinvolvement through an appointed trading house. Initially I planned toestablish both direct and indirect distribution channels for entering the Chinamarket. However, after completing the SWOT I determined that a direct entrywould be most appropriate. By partnering with internal distributors, Nyetimber wouldbe able to bypass the need to establish facilities and distribution centerswithin China.
This would help the company to avoid cultural and legalrestrictions that might occur. Financially, partnering with an internaldistributor will also negate any initial startup costs normally associated withentering a new market, especially an international liaison. (Dessler, 2001) Rationale for Target MarketAs Nyetimber begins to pursue the opportunity of globalexpansion to China, a risk assessment would need to be conducted to present tothe board of directors and investors. Through this analysis nyetimber can considerthe various risks involved in this type of expansion and methods to manage theidentified risks. A SWOT analysis is used as one tool to identify and summarizethe strategic planning process. (Spence, 1999) risk assessment will bediscussed in the following below.China’s political stability reduces the risk of foreigncompanies trying to establish a business in the country.
Therefore, with suchlow political risk involved in investing in China, Nyetimber can feel confidentin continuing to pursue opportunities in China. New Marketing Initiative I have built a business plan for Nyetimber exporting tochina based on several of these research market results. The market researchtools and analysis will helpful to provide the necessary information todetermine the five W’s of marketing: Who, What, Where, Why, and How. (Montero,2002) A regional and country analysis was conducted to ensure that no viableobstacles obstructing the entry of Nyetimber into the China market exist, withemphasis upon the economical, geographical, and political environments in whichNyetimber would be encountering.Product analysis was also provided by interpreting bothinternal and external factors that exists within the company and the industry.Nyetimbers decision making process will also need to placeimportance on recognizing the SWOT analysis provided by research and managementinitiatives. By closely interpreting the anticipated results generated by theSWOT analysis, Nyetimber management would be better situated to making theinitial decisions of expansion possibilities and probabilities.
With usingdirect entry Nyetimber management would also generate a business plan thatincorporates a full operating schedule, with emphasis upon distributorlogistics and contingency plans for unaccounted obstacles.Financial risk management is another key management toolthat Nyetimber will use to determine exactly how dealing with the Chinagovernment and currency will affect the ease with which Nyetimber can enterinto the wine and financial markets. Marketing and distribution networks shouldalso be examined to identify how Nyetimber can use existing corporations anddistributors to help with the social and cultural issues that face importingcompanies. Financing sources will also be analyzed to determine howinternational lending sources can best be used for any financing needsassociated with international banking and import/export issues. Finally, anexit strategy should be generated and analyzed as part of the business plan toaccount for a proper and profitable exit if necessary.
By using all thesemanagement research tools, market research analysis, financial resourceoptions, understanding governmental controls and restrictions, andunderstanding the social and cultural conditions present in China regardingwine consumption, Nyetimber Winery will be best able to determine whether ornot the decision to import Nyetimber Wine into China should be presented andexecuted. My final Recommendations to Nyetimber Winery executives are topursue an international expansion into China. The strong economic growth ofChina coupled with the growing middle class with large disposable income is theideal market for introducing a new luxury item such as imported wine. This idealmarket of China has also experienced positive changes in both social andcultural beliefs associated with alcohol consumption, allowing for a moreflexible and cultural acceptable entry into the wine market. Without thischanging culture regarding alcoholic consumption, the leadership could notrecommend pursuing the market within China. These strong characteristics of thetargeted market make a very favorable environment for Winworld to enter China.