Describe Michel And Augustine - A French Food Brand (Research Paper Sample)

Michel and Augustin
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Michel and Augustin
Executive Summary
Michal et Augustin a French food brand has been able to achieve great success since its inception in 2005. It has been able to establish strong presence in the French market. However, it is still struggling to improve its presence in the global market. The Chinese market is one of the markets the company needs to consider expanding to. This can be attributed to its good political, economic, social, and technological environments. The demand for products such as cookies and yoghurt has been increasing in the Chinese market. On the other hand, the supply is still growing. The company needs to enter the market before it becomes saturated. Michel and Augustin has numerous strengths it can capitalize on when entering the Chinese market. However, it must handle weaknesses and threats. This can be achieved through the use of its strengths and different opportunities available in the market. The company has established a strong marketing mix that contributes to its continued success in the market. Michel and Augustin needs to enter the Chinese market through FDI. It must also embrace a localization strategy. The management may also be forced to alter its marketing mix to enter and survive the Chinese market.
Introduction
Michal et Augustine is a French food brand. It offers high quality cookies, biscuits, yoghurt, ice creams, mixed fruits, and crackers. Basically, its produces and sell more than 50 different products. The company was established in 2005 and has ever since been able to achieve great success in the industry. Its success can be attributed to the provision of high quality products and services. The company has also shown great commitment to continuous improvement. This enables it to improve on the quality of its products and services. Michal et Augustine is yet to establish a strong international presence CITATION Mic146 \l 1033 (INSEAD, 2014). However, the management has been searching for potential markets that the company can enter to expand its market share as well as customer base. One of the markets the company needs to consider expanding to is the Chinese market.
The paper intends to examine the viability of the Chinese market. It will also examine the company’s strengths, weaknesses, reputation, marketing mix, its implantation, and markets. Ultimately, it will provide recommendations on how the company can enter the Chinese market and the new marketing mix it ought to embrace.
Description of the Chinese Market
PEST Analysis
Political Environment
The political environment of the country is a factor the company needs to consider when entering the Chinese market. There are a number of political factors that will affect the company as it enters the market. This includes, among others, tax policy, environmental laws, labor laws, trade restrictions, and tariffs CITATION Che07 \l 1033 (Chee & West, 2007). The Chinese government has been able to come up with rules and regulations favorable for business operations. The country also enjoys some level of political stability. However, there are times when it experiences political unrest as result of riots. China is considered a dictatorship. There are many citizens who are opposed to the same and the way the government is run. This often leads to riots and demonstration. All in all, increased globalization has led to the country opening its borders for international business. Michal et Augustine can capitalize on the same to enter the market with ease CITATION Geo143 \l 1033 (Murray, 2014).
Economic Environment
China has shown great economic performances in the recent past. The International Monetary Fund (IMF) ranks China second among countries with largest economies in the world. Its Gross Domestic Product (GDP) growth was reported at 10 percent in the last quarter of 2014. The government has also ensured low interest rates. In the same regard, it has maintained low levels of inflation CITATION Geo143 \l 1033 (Murray, 2014). Inflation normally affects the price of products and services rendered by businesses. Specifically, high levels inflation normally results into high prices and vice versa. The inflation rate in the country was reported at 1.50 percent in the first quarter of 2015 CITATION Tra153 \l 1033 (Trading Economies, 2015). This means that Michal et Augustine should not be worried about this affecting the price of its commodities The official currency in Chine is the Chinese Yuan. Currently, one Chinese Yuan equals 0.16 dollars. This can affect the company negatively especially if it chooses to enter the country through exporting. Essentially, its products will be rendered expensive as compared to those offered locally. Particularly, The Chinese economy is also expected to perform even better in the future. Economists have been of the view that it may be soon be ranked among first world countries CITATION Geo143 \l 1033 (Murray, 2014).
Social Environment
China has a large population. In fact, it is ranked first among the most populous countries in the world. This implies that Michal et Augustine stands to enjoy a large consumer market by entering the Chinese market. Income levels have been increasing considering the increasing economic performance. This has also improved the level of consumption among individuals. Chinese people have been embracing western cultures, for example, eating styles. This is also an advantage to the company. Specifically, the demand for western foods has been increasing in the recent past. Another social factor the company needs to consider when entering the Chinese market is age distribution, population growth rate, and health consciousness. For example, health consciousness has been improving in the country. The company must ensure that its products are healthy failure to which it may find it problematic to attract and retain customers in the market CITATION Che07 \l 1033 (Chee & West, 2007).
Technological Factors
The world has been experiencing tremendous technological advancements. This has affected the way businesses are conducted. For instance, businesses have been embracing new technologies to improve their efficiency and effectiveness. China has been in forefront in developing new technologies. Michal et Augustine can also enter the country to capitalize on its technological knowhow. For example, it can use the technologies to improve on its ability to serve its customers at their convenience. In the same regard, the company can use the same to deal with some of its weaknesses that place it at a disadvantage in terms of competition (Harvard Graduate School of Business, 2012).
Supply and Demand
Research has shown that the Chinese yogurt and cookies market has been improving in the recent past. This can be attributed to Chinese people embracing western cultures and foods. Essentially, the demand for such products has been improving. The digestibility of yoghurt has led to increased demand for the product. The demand for cookies and biscuits has also been increasing, especially among the youth. This is a trend that is expected to continue in the future. Michal et Augustine needs to enter the market as the demand is still growing to benefit from being a first mover. Fundamentally, more and more Chinese people are getting attracted to most of the products offered by the company CITATION Dav108 \l 1033 (Stokes, Wilson, & Mador, 2010).
The supply for the products has also been increasing. For example, major companies offering cookies in the Chinese market include Oreos, Pepperidge Farms, and Campbell among others. Increasing supply for the products means that the level of competition is increasing. The Michal et Augustine needs to enter the market before it matures or becomes saturated. Entering the market at a later stage can be hard for the company as a result if high levels of competition.
Brand Analysis
SWOT Analysis
Strengths
Michal et Augustine enjoys a number of strengths. For one, the company has been able to establish a strong brand name especially on the home market. This is a clear indication that it is providing high quality products and services that meet consumer’s needs and preferences in the desired manner. The company can capitalize on the same to enter the Chinese market with ease. Equally, it has shown great financial performances. With this being the case, it has the capital required to enter the target market. Correspondingly, the company has a strong management team with the ability to develop strong competitive strategies that enable Michal et Augustine to stay ahead of its competitors despite the fact that it was only established a few years ago. This is also a company that is known for its innovative culture. Particularly, it is always committed to continuous improvement. As such, it invests in research and development (R&D) to better the quality of its products. Ultimately, the company has also made a name for providing high quality products CITATION Mic146 \l 1033 (INSEAD, 2014).
Weaknesses
The company also has some weaknesses that have impacted on its ability to succeed in the market. Most of its products are highly priced. This has affected its capability to attract and retain a high number of customers. Michal et Augustine is also yet to expand its product portfolio to compete effectively with other companies in the industry. The company relies more on its cookies and yoghurt to achieve profitability. This is dangerous considering the fact that any change in the demand for these products can impact its profits. Likewise, the company is yet to establish a strong global presence. There is the need for it to enter other markets to reduce its reliance on the French market for profits CITATION Mic146 \l 1033 (INSEAD, 2014).
Opportunities
Michal et Augustine can ...