Introduction
The world is getting very competitive. Firms are struggling to manage this competition by coming up with various strategies that would make them gain a competitive advantage over other market competitors. Internalization is one of the key pillars that firms are currently keen to establish in an increasingly competitive market. This is what The United Kitchen Provider has been keen on in the last few years. This firm has managed to dominate the Italian market in its kitchen products.
The management has realized that the market is getting very competitive, and relying on single products may prove futile if that line of products is attacked. The world market is increasingly getting competitive. Different firms are coming into the market with products that are already existing, causing saturation of products in the market (Gerry & Scholes 2008, p. 56). The Italian market is a free market where foreign firms have the liberty to enter the market and leave at will. This means that The United Kitchen Provider is open to international competitors in this local market.
Going global is one of the strategies that The United Kitchen Provider management has been keen on, especially in the European, American, and part of Asian and African markets. In the global market, there are a number of challenges that this firm faces, some of which it did not face in the local market. Coming up with a proper strategy in the global market is the best way through which this firm can maintain its market share and profitability in the market (Gerber 2008, p. 90). This research focuses on evaluating the internationalization and market entry strategy of The United Kitchen Provider into the Kenyan market.
Reasons for Choosing the Selected Product
Kitchen products were chosen in this research because of the popularity they have gained in the market over the last decade. According to Coulter (2009, p. 41), this industry was not clearly structured as most consumers depended on the traditional way furnishing their kitchen. However, the current market is increasingly getting used to the moving kitchen that can easily be fitted within any room. This market has experienced growth in the European and United States markets. It is slowly moving to the markets in Asia and Africa, where many firms consider as having untapped markets. This product fits well in the context of this research because it enables the researcher to investigate how a new product can be introduced to a new market with a high degree of success (Hill & Jones 2010, p. 82). Conducting research in this field would be of great value not only to the players in this industry but also to other scholars who would be interested in furthering research in this field. This is because there is a limited amount of literature analyzing this industry. This research will, therefore, enrich this field besides meeting its core objective of analyzing market entry strategy.
Justification and Evaluation of Selected Target Country
One of the main pillars of The United Kitchen Provider is internalization and distribution. This firm has come to realize the importance of going global. Although it has managed to acquire large markets in Europe and American markets, this firm is yet to capture the African markets (Frynas & Mellahi 2011, p. 89). It is important for this firm to come up with proper approaches that it plans to use in the African markets and other markets globally. In these new host countries, it is important that the firm devises a competitive advantage, which would make it strong enough to compete against other competitors in this market.
According to Ferrell (2011, p. 113), this firm will be faced with new challenges both in its micro and macro environment. The analysis will be done on how this firm can enter the Kenyan market in East Africa. Operating in a new environment comes with a number of challenges. The environmental factors in the Kenyan markets are different from those in the Italian market. When operating in the Kenyan market, United Kitchen Provider must realize that a strategy that might have been useful in the Italian market may not apply. For this reason, there would be a need to devise new strategies that are unique to the Kenyan markets. The first approach that this firm should use in this market is the awareness campaign in this new region. The products should be known in this new market. This firm should develop an awareness campaign similar to that when it is commercializing a new product in the market.
The firm should organize an awareness campaign both for its brand and for its individual products to run hand in hand. The Kenyan market is very appropriate if this firm is planning to capture the larger East African market and other parts of Africa. As Cavusgil (2012, p. 82) says, South Africa, Nigeria, and Kenya are the three main markets through which European firms can use to spread to other parts of Africa. Given the rising economy of the East African countries, Kenya would be the most appropriate country where this firm can reach out to this market. The management of this firm should conduct a comprehensive scanning of this new market.
Environmental scanning can be done using PESTEL Analysis. This involves the analysis of political, economic, social, technological, environmental, and legal environments. Politically, various firms in Kenya have experienced a relatively stable government. The country has experienced a long period of political stability that has made it conducive for business. It has a very stable government that is supportive of business operations. The government of this country has ensured that the political environment of the country is peaceful enough to encourage business operations. Lack of political stability would mean that various businesses are not in a position to conduct business normally. Some may even be forced out of the market with huge losses in case the instability is accompanied by looting and arson. This means that The United Kitchen Provider will enjoy this political stability when it enters this market.
Economically, various firms in this country have had difficulties. Most firms in this country were faced with an economic recession that hit various countries in the world, especially the US economy that had a direct effect on various economies in various other nations, including Kenya. This had serious negative effects on the firms’ revenues as many of the customers considered the products as non-basic. When the economy of a country is on a decline, the purchasing power is reduced, and this reduces the viability of various businesses. They will be forced to cut down their operation levels, as the market will have a reduced capacity to sustain them (Hooley 2008, p. 92). During such times, weak firms are always faced out of the market. The Kenyan economy was, however, able to recover much faster to the benefit of many firms. Currently, the economy of this country is experiencing very steady growth.
The socio-cultural environment of this country is diversified. This is because this country has people from all over the world. Most of the residents of this country are Africans. However, Asians and whites also form a good percentage of the residents of this country, especially in its main cities of Nairobi, Kisumu and Mombasa. These are the three cities of this country that will form the main markets for this firm upon its entry. The socio-cultural factors in these three cities have been influenced by western culture. This will make it easy for this firm to get integrated into this market within a short time. The technological environment that firms in this country have to operate in is very dynamic.
Technological inventions and innovations, especially in the field of communication, have been the main challenge and strength of this firm at the same time (Evans 2012, p. 78). While this firm is left with nightmares of trying to guess what their competitors in the market are going to come up with overnight, The United Kitchen Provider should use this technology to emerge as the leader in the market. Technological changes are so unpredictable, and firms are struggling to come terms with these changes. The dynamism of technology in this sector has forced some firms out of the market. As such, the management must have a clear strategy of how it is going to use this technology to manage the market competition.
Legally, The United Kitchen Provider may not face major challenges in the Kenyan market. The laws that govern trade in the Republic of Kenya and many other neighboring countries have been very favorable to this firm. However, a few firms have faced serious litigation cases for failure to follow some of the industry rules and regulations. It is important to note that although the largest market for this firm in this country is made up of Christians, portions of the market are Muslims (Gountas & Mavudo 2008, p. 74). Failure to follow the industry and national laws and regulations may not only lead to serious fines imposed by the government on the firm but even a total closure of the firm.
There are some environmental concerns that would be considered a challenge for the firm. Kenya is one of the developing nations in the world. The infrastructural development of this country is not as developed as in other European or American countries where this firm operates in. The management of The United Kitchen Provider should put this into consideration when defining the distribution strategy that should be used in this new market. Although this government has made efforts to improve its road networks, other sectors such as the rail system still need serious improvement in order to be considered as of the right standards. The facilities at various institutions of higher learning in this country also need improvement for them to be in a position to churn out fully capable employees.
The main threat that The United Kitchen Provider has had to deal with is competition. Other players in this industry have been attracted to this country due to its strategic location to firms intending to spread to the interior of Africa. The market has gotten increasingly competitive. According to Anderson (2011, p. 89), many firms have come up with products, which are close substitutes of those that are offered by other firms in the same market. This scholar notes that there is lack of creativity in various countries. Various firms that come into the market are not creative, but just copy cuts. They come to the market with similar products as those of existing companies, and this brings about serious competition in the market. The management of The United Kitchen Provider must come up with a strategy that can help it overcome this challenge.
Justification and Evaluation of Selected Target Market
Defining the target market is always very important in defining the products that a firm should take to the market. The Kenyan market is one of the fastest developing markets in Africa. Many European and American firms are finding their way into the Kenyan market because of this growth that has been witnessed for the past one decade. This market controls the regional market of Eastern Africa with bout ten countries. Targeting the Kenyan middle class market would main targeting the regional market of east Africa. As Davada (2008, p. 40) says, it is always advisable to introduce a product to the market that controls other regional markets. This is because it would be easier to move to other regions from this influential region. This scholar says that when a product is first introduced into a lesser influential market, it would be an uphill task moving to other markets in the region. The target market would be the rich and the middle class Kenyans.
Having The United Kitchen Provider’s products in the Kenyan market would be a challenging task both to the management and to the marketing unit of this firm. This is because the product is relatively new in this market. Although this market has attracted attention of many players, especially from the west, the market is yet to fully understand what this industry offers (Spulber, D 2007, p. 115). This is because this market is used to traditional kitchens which are fixed when building a house. They would then buy kitchenware and fit them in such a kitchen. However, this firm will be offering a new product. This firm would be offering the market a complete kitchen that comes with all the items that may be needed. Marketing this product will be a challenging task because the market would need to be convinced that they will be offered a product that offers a value higher than what they are currently getting.
The choice of this target market will make it easy for The United Kitchen Provider to target other market segments. Kenya’s economy is rising consistently, and this means that the population of the middle class is on the rise. The working class Kenyans with the capacity to buy this product lives in the above named towns (Norton 2011, p. 82). This target market has a characteristic of going for products which are considered as of world standards. As was initially stated, this market has been heavily influenced by the western culture. This is because they are exposed to the western world through the mass and social media. The target market is also known to trust European products than local or Asian products when it comes to quality. This Italian firm will therefore, have opportunity to exploit this trust by gaining a market entry at a faster rate.
Market Entry Method and Marketing Mix Recommendations
The United Kitchen Provider has increased its coverage to include several Asia nations, besides the European and American markets. According to Daft (2009, p. 19), getting into a new market is always a very delicate mode. To get into a new market requires a smart strategy that will be able to attract the attention of the consumers and elate, without causing an alarming the competitors. There are a number of entry strategies that this firm can use in order to avoid this commotion and ensure that it enters the market peacefully.
One of the most common market entry strategies in the current world is joint ventures or what others call partnerships. In this strategy, this firm would need to find firms in the new markets which it wishes to enter. This partner should be an established firm with a strong brand in the market. This firm would then enter into an agreement where the two firms will not view the other as a competitor. They will work as a unit joining their investments in order to be able to face all the possible challenges as a solid team. This firm can partner with other firms in the new markets when introducing its products. The last strategy can be direct entry by developing subsidiary branches in these new markets.
Another strategy that this firm can consider is a direct market entry. In this strategy, this firm would establish its branch in the new market, and start operating as a semi-autonomous unit. This is always a very expensive strategy because the management would be forced to rent or buy new premises where the firm will be operating, and purchase all other equipments that might be needed in the new branch for its normal operations. It is also challenging in that the new branch will be starting with new employees who might need to be trained for them to be efficient. However, it is beneficial in that the firm will have full control of the branch.
This would be the best strategy for this firm in this market because as at now, there are no established firms that this firm can enter into agreement with as a partner. The government of Kenya has made it easier for foreign firms to enter this market by shortening the licensing processes for firms. The third strategy can be through franchising. This is an easy and quite way through which this firm can enter new markets. In this strategy, these firms will alliance with other firms in the new regions that would use its name in that new market. The arrangement can be made in a way that after a specific period of time, say one year, the franchised firm would become a subsidiary to this firm.
Conclusion
The plans of The United Kitchen Provider to enter the Kenyan market would need a proper strategy that will reflect the current market situation in this country. Entering a new market requires a strategy that is sensitive of the market conditions of the host country. For this firm, it should develop its own branch in this market. This will give it full control of this new market. The management should be conscious of the socio-economic and political structure of this country as it will have direct effect on its operations. It should also understand the legal system that defines this industry to ensure that its operations are within the law.
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