The company producing dairy goods, Saputo Inc., is planning to expand its activity to a new market. This initiative implies the need to evaluate its current state and the circumstances of the target location in order to ensure its success in the future. The assessment should be based on the areas essential for the enterprise’s principal operations and the legal and other provisions of the foreign country different from home conditions (“Saputo in Canada,” 2017). Therefore, this paper aims to analyze the weaknesses of the business from the cultural, administrative, geographic, and economic perspectives as well as explain the requirements for market entry in Germany and propose the corresponding strategy.
Cultural Weaknesses
The first aspect of the matter is culture, and it incorporates such components as customs, traditions, values, and other differences as applied to the field. In the situation of Saputo Inc., located in Canada, the cooperation with German companies is complicated by various factors. The principal barrier to their efficient communication is language, which is one of the easiest areas to address by hiring interpreters. In turn, the factors, which present the majority of risks in the current plan, are varying degree of emotionality and openness of people, conservatism in perceptions, and the preferences of essential qualities in employees.
For example, Canadian managers are more willing to adapt to changes, flexible, and employ less traditional approaches compared to German employees (“Germany cultural insights,” 2020). Moreover, the former is valued more for their education suitable for performing specific tasks, whereas the latter’s focus is on actual professionalism instead of academic qualifications (“Germany cultural insights,” 2020). In this way, the weaknesses of Saputo Inc. can be described by the combination of the mentioned obstacles, which should be adequately addressed.
Administrative Weaknesses
The second category of factors affecting the outcome of the proposed expansion is related to the administrative distance between Canada and Germany. They cover the specificities of the countries’ legal and political systems and their characteristics. For the purposes of the paper, the most critical considerations are the compatibility of their business laws and the entities affecting the affairs of companies. The former’s mechanisms in relation to these two countries are similar due to the fact that both are primarily regulated at the state level (“Government stats: Compare key data on Canada & Germany,” 2018).
It means that there will be no misunderstanding between them and, therefore, no conflicts. In turn, the latter is expressed by the prevailing impact of business organizations on both Canada and Germany, which can be seen from the role of trade unions and employers (“Government stats: Compare key data on Canada & Germany,” 2018). The only difference in this respect is the presence of a larger number of participants in the case of Canada. Thus, the barrier to the plan implementation is the inclusion of its commercial banks and other industries in the political processes.
Geographic Weaknesses
The third area, geographic obstacles between the home and target markets, pose a moderate threat to the designed entry. Hence, the distance between Germany and Canada, which is over 4,000 mi, is the barrier implying the high costs of shipping and longer delivery time (“Government stats: Compare key data on Canada & Germany,” 2018). Nevertheless, this circumstance is not the only problem to receiving sufficient profits in the new place. It is complemented by the difference in time zones of these locations, which is six hours (“Government stats: Compare key data on Canada & Germany,” 2018).
This problem indicates the complications in communication, whereas it is directly connected to their cooperation’s success. Consequently, the weaknesses of Saputo Inc. in geography are more significant than the presented above cultural and administrative conditions.
Economic Weaknesses
The fourth side of the project is the economy, which is vital for evaluating the overall feasibility of Germany’s market entry for a Canadian enterprise. The countries participating in this initiative are characterized by the difference in their gross domestic product (GDP), reflecting their potential incapability to readjust the demand and supply for the realized goods. For instance, the latest indicator for Canada is $1.7 trillion with an annual increase of 1.8% (“Canada vs Germany: Economic indicators comparison,” 2020).
In contrast, Germany’s GDP is $3.9 trillion with a growth of 1.5% per year (“Canada vs Germany: Economic indicators comparison,” 2020). These figures mean the possibility for Canada to fail at delivering the required amounts of goods. As a result, the reputation of the company, if it is incapable of satisfying the demand, will be gradually deteriorating. In addition, the comparatively even paces of development of the economies would contribute to the inability of the participants to change an unfavorable situation with high risks of its emergence.
Opportunities for Expansion in Germany
In addition to the analysis of the cultural, administrative, geographic, and economic weaknesses of Canada in expansion, it is vital to assess the opportunities provided by the target market to contrast them with the business’ perspectives. According to the official data published by the Canadian government, the importance of the German market is conditional upon its developed economy leading to the improvements in the regions’ partnership (“Germany: Market overview,” 2021). Consequently, the increasing numbers related to merchandise export and import amounting to $6.52 billion and $16.25 billion, respectively, add to the favorable conditions of this place (“Germany: Market overview,” 2021). Thus, in general, expanding the activity to this location seems a profitable endeavor.
The Methods for the Proposed Expansion
Considering the factors presented above, the practical implementation of the project on entering the market in Germany for Saputo Inc. will be relatively slow due to the economic and geographic distance described in the corresponding sections. However, it is still possible if the revealed cultural and administrative weaknesses are appropriately managed. For this, it will be reasonable to create a competitive advantage through finding partnerships with German manufacturers (“Germany: Market overview,” 2021).
This measure will allow the company to save the costs of research on the differences in procedures and regulations in the specified areas. Moreover, it will be advantageous from the point of view of the methods suitable for the business’ promotion in the place. In the end, Saputo Inc. will efficiently manage its resources with the orientation on the new conditions and benefit from the involvement of the entrepreneurs familiar with the environment.
Conclusion
To summarize, the market expansion of the Canadian company, Saputo Inc., in Germany can be profitable, but only if it accepts the fact that the process will be slow and specific obstacles should be eliminated. These issues include the difference in communication culture and bureaucratic barriers, which will be eventually resolved, and the high expenses stemming from the geographic and economic considerations. The latter is presented by the costs and time for delivery and the varying stages of the countries’ economic development. These risks can be eliminated through the involvement of German partners from the beginning. In this way, Saputo Inc. will receive the targeted profits while saving money and using the new opportunities.
References
Canada vs Germany: Economic indicators comparison. (2020). Georank. Web.
Germany cultural insights. (2020). Government of Canada. Web.
Germany: Market overview. (2021). Government of Canada. Web.
Government stats: Compare key data on Canada & Germany. (2018). Nation Master. Web.
Saputo in Canada. (2017). Saputo. Web.