Mars vs Ferrero in the International Market (Research Paper Sample)

MARS V/S FERRERO IN THE INTERNATIONAL MARKET
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Introduction
Internalisation is one development factor and strategy that is behind the growth force of many corporations. Branding and promoting corporations products and services is the basis of internalisation, hence it has become a major sales and growth driving factor that is creating a global institution of institutions. Below is an analysis of two corporations; Ferrero and Mars, as they are major participants in global trade and have adapted the internalisation perfectly.
Ferrero Company Overview
Ferrero Company was started in 1942 and is apparently a holding company located in Luxembourg. It is a family owned business (Beckett, 2008). It has at least seventy allied companies in more than one hundred countries globally. The company employs about 21,700 individuals worldwide. It has more than 6.6 billion sales. Its popular products are kinder chocolate, surprise eggs, Ferrero Rocher, and Mon Cheri.
Mars Corporation Company Overview
Mars is situated in the UK. It has many branches in different locations. These locations have more than 3,800 links. The company makes global favourites such as snickers and mars bar. It also produces confections such as Dove, Musketeers, Milky Way, Twix, and Skittles. The product collection also has Klix and Flavia beverage systems, combos and kudos snacks, seeds of change organic food, Sheba, etc.
Key success factors
Both corporations have really learned major strategies and factors of internalisation. They both offer food and beverage products hence in one way or another they come from one industry. Chocolate is one of their products. The chocolate manufacturing business remains flexible regardless of a recessive worldwide economy, changing commodity prices, decreasing disposable incomes, and rising competition from substitutes. The apparent health consciousness of the consumer requires the manufactures to be more accurate, original, and innovative with their products and be adaptive to the consumer changing tastes and preferences. Mars and Ferrero have intensified in some key factors that enable them to compete with the outside world. In order to identify their customers and their preferences, they endeavour in conducting research on what clients preferably consume. According to the two companies, consumption of their products is mostly among the youth of the ages between 16 and 29 years old, (Sullivan, 2008). Consumers also prefer products with less sugar. These products should also be wrapped individually but in one package. More so, the health changes in most nations have caused people to prefer healthy products and those containing minerals, milk, and vitamins. Therefore, the companies have reduced the sugar content in their products.
Another success factor is derived from customer relations and product quality and preference. They understand what customers need from suppliers; the two companies have been innovative to modernise its representation without alienating main loyalists to the consumers. They usually update their products and the mode of packaging. Ferrero, for instance, has been able to update Kinder which apparently beats the market in the UK. Kinder represents almost half of Ferrero’s total sales and 25% in the UK, (Presilla 2009). The company is still trying to gear up for the UK launches of other lines of market apart from its accessible range of chocolate stored in chillers. Mars, on its sides, keeps on innovating and updating its products annually. They know how to handle demands of competition. The two companies were among the first key companies to identify the new markets in China in 1990s. They were able to compete for the market in China. They contributed a lot to the transformation of the Chinese economy. Ferrero, which is Italian chocolate producer, being one of the most exclusive and exotic brands in the world, also made it in China and other parts of the world. The company used an independent distribution partner and exploited many nations’ penchants by giving them expensive imported presents. They succeeded in selling to the people its foil-wrapped, fragile hazelnut treats (Jones, 2003). The company was amid the first of the big five companies to establish a feasible foundation in China. It has kept its prices high, its quality has remained outstanding, and its image has remained special and foreign. The company has ensured th Ferrero at it maintains the quality of the product by shipping its Italian made chocolates to Hong Kong where they are packaged.
Competitiveness
Indeed in the same industry with relatively the same objectives, both corporations have proved to be competitive globally. There are various internalisation theories that will provide a proper preview of the rivalry between the two corporations. The first one is Comparative Cost theory. Mars has been able to maintain its high levels of sales through trade. This is because it purchases goods and services from sources where it costs reasonably less to manufacture them compared to Ferrero, (Allen, 2010). Limited capital tied up in the company to produce its products in the absence of trade is, therefore, liberated so that reasonably more of the other products are manufactured. Mars can acquire its raw materials internally but instead imports the commodities from Ghana, since obtaining the raw materials internally would be more costly than importing them. The second one could be the economic of scale theory. The output of Mars has increased considerably over years. This has been enhanced through technological indivisibilities in the individual plants that produce the confectionaries. Mars uses more advanced machines. The machines are a result of the cost saving technologies introduced after the company reaches a certain level of production. It has more specialised input suppliers, more skilled labour and an advanced technological know-how which assist the company in reducing costs. These when related to Ferrero brings up a huge advantage of Mars in product and service delivery which has enabled the corporation to increase its purchases and sales.
As per the absolute advantage theory, Mars has an absolute advantage compared to Ferrero in production of confectionaries. The sole reason why Mars has manoeuvred in many nations with an exceeding passion compared to Ferrero is the fact that Mars is more dynamic while Ferrero follows only one custom. Ferrero, for example, is more resistant to change and mainly focuses on pleasing the ultimate consumer. Mars steadily expands by concentrating itself in cities where the economy of the consumer is growing, (Viesti, 2013). The company constantly invests more on advertisement and public relations than Ferrero and the other competitors. This maintains its freshness and quality for a longer time. The management of Mars also has been strong. Its basic principle is mainly centred in recruiting nations’ workers with the ability to lead, (Justin, 2011). Then the management trains them in house until they become competent and fit according to their requirement. Mars has extremely stabilised through this approach in China and other nations. The approach has given Mars a distance ahead of Ferrero.
Basing on the opportunity cost theory, Ferrero sells its products at considerably high prices compared to Mars since it imports much of its raw materials. This reduces the sales volume of the product, consequently resulting to small profit margin. It mostly focuses on the sweet spots that consist of retail outlets (Allen, 2010). This is where the customers purchase chocolate. They also conduct seasonal gift giving events as the customers buy chocolate. Those who cannot afford chocolates get the pockets of chocolates. This helps in attracting more customers. Instead of importing some of the raw materials, Ferrero should device a way of getting the materials at cheaper prices. This would enable them compete with the other companies producing similar products. Mars has natural advantage of the products it manufactures due to their ease of availability and the less health impacts the products pose to the consumers. Mars Company mostly uses cocoa, rice, peanuts, palm oil, fish, mint, and coffee in producing its brands which has less health effect. On the other hand, Ferrero uses sugar, eggs, palm oil, milk, coffee, and hazelnut, (Brenner, 2008). Ferrero has the largest number of consumers of hazelnut in the world, its suppliers being mainly Italy and Turkey. This increases the prices of Ferrero’s products due to its high costs. Therefore, Ferrero is faced with more ingredients sourcing challenges, packaging materials and waste problems, nutrition and food quality (obesity issues), and the advertising to children. Consequently, Mars more specialises in confectionaries. The reduced cost of production enables the company to conduct public relations and advertising with ease.
National difference theory can be used to assess the competitiveness of these two companies. According to this theory, a company benefits more when it is able to expand to a country that has least cost factor for an activity it uses mostly. Mars is in many countries for example India where it is able to access cheap labour compared to Ferrerro (Presilla, 2009). This shows that Mars has a better competitive advantage considering the theory of national difference compared to Ferrero.
International Strategies
To achieve a greater a high profitability and stable competition a corporation needs credible and strong strategies. There are various strategies that can be used to accomplish such objectives. One of the common and successful strategies that have led to huge corporations to success is joint ventures and sometimes merg...