Executive Summary

The purpose of this report is to highlight the strategic importance of ‘Go-International’ decision for Ceylon Biscuits Limited to expand its operations to the Dubai market. The strategic location chosen by CBL is the ‘Jabel Free Economic Zone’ which consists of more than 100 of the fortune five hundred companies. Ceylon Biscuits Limited is one of the largest conglomerate in Sri-Lanka with four decades of extensive experience and a strategic initiative to establish a factory in Dubai requires internal and external factors to take into account.

These internal and external audit factors were identified and discussed in brief in terms of the impact it has on the business operations of Ceylon Biscuits Limited. In order to support this justification, SWOT analysis was used as an international model to identify the internal strengths and external threats for Ceylon Biscuits Limited and how the firm can effectively capitalise on these to achieve a competitive advantage.

The PESTEL Model was implemented for CBL to assess the effects of the six external factors on the firm and how critical these factors are in the context of an international expansion. The report also spreads light on the process of international Pre-launch marketing campaign and each process of it has been discussed in detail with application to Ceylon Biscuits limited with relevance to the chosen strategic location. The benefits of the IMC are vital for the firm in establishing its strong presence in the international market and how successfully contributing the IMC implementation is for the firm.

The benefits have been discussed in detail on how brand appreciation, customer perception and capitalising on market share have been critically discussed but however these are short run benefits. An effective marketing campaign isn’t sufficient enough for the long term survival of Ceylon Biscuits Limited, rather the marketing strategy needs to be matched with high quality biscuit products and confectionary for long term sustainability of the business.

Introduction

Then objective of this report is to analyse the strategic business decision of Ceylon Biscuits Limited to expand their operations to the global market of UAE, Dubai. The target location chosen for the factory operation is the Jabel Ali Free Zone. The Jabel Ali Free Zone is the free economic zone located near Abu Dhabi with 100 of the fortune 500 companies are actively operating. The free zone contributes thirty percent of Dubai’s gross domestic product. The scope of this report is to analyse the ‘Go-International’ strategic decision of Ceylon Biscuits Limited and identify if it is a feasible decision in comparison to the internal and external factors considered. (Bloomberg , Mar, 2018 )

Company Background

Ceylon Biscuits Limited has an extensive experience of four decades in the conglomerate industry and is one of the fastest growing companies in Sri-Lanka. CBL is specialised in manufacturing of leading brands such as Biscuits, Confectionary, Cereal, Organic Food products and many other. Ceylon Biscuits Limited has a reputation for its innovative led production with advanced technology integration. (Ceylon Biscuits Limited , 2018)

CBL is recognised for its corporate social responsibility initiatives and contribution to the economy in terms disaster responsiveness for the betterment of the society that they operate in.

Strategic International Market

International marketing is the ability of an organisation to take advantage of the commercial globalisation and cater to the international market effectively through quality products and services. This includes exporting of goods and services, franchising, joint venture and purchase of a foreign organisation. Ceylon Biscuits Limited is one of the leading confectionary and FMCG producer in Sri-Lanka looking to expand its operations to the Dubai market and capitalise on international market share by establishing factory in the free zone region within Dubai to enhance its profit margin.

In addition, the per capita income in Dubai is relatively higher than the home country of CBL therefore the pricing strategy of CBL can be increased to suit the Dubai customers and this enhances the profitability and competitiveness of the product. The Free zone consists of more than 200 companies operating with 144,000 employees and this is a huge potential opportunity for CBL to establish its presence in the global market.

International GO Decision – Importance of the internal and external factors

The decision of Ceylon Biscuits Limited to expand its operations to the UAE market needs to consider the external and the internal factors effectively. The factors are important for CBL to take into consideration because of the magnitude of impact it has on Ceylon Biscuits Limited’s performance and post expansion success criteria. The strategic expansion needs to assess the impact on CBL’s employees, profitability, culture, and the return on investment.

Swot Analysis

Swot Analysis is a useful technique for organisations to understand their strengths and weaknesses and capitalise on the potential opportunities and eliminate threats to the firm. The Swot is a dimensional diagram with in depth analysing of the firm’s internal advantages and vulnerabilities and take recommended actions accordingly. (QuickMBA, 1999-2010)

Strength Factors

  • Extensive Industry Experience
  • High Quality Biscuits
  • Four Decades of Successful Operation
  • Company Reputation of Largest Conglomerate in Sri-Lanka
  • Diverse Product Portfolio

Weakness Factors

  • Competition from Close Rivals
  • Duplication of Product features

Opportunity Factor

  • Corporate Social Responsibility Initiatives in UAE
  • Ethical Business Practices and Fair treatment of Foreign Employees

Threat Factors

  • International Competitors
  • Increase in cost of resources
  • Government regulations

(WordStream, Dec, 2017)

Internal Factors

Financial Risk

The strategic decision of Ceylon Biscuits Limited to ‘Go-International’ exposes the firm to different kinds of risks that can affect the business internally. The strategy to expand its business operations to the free economic zone in UAE by establishing a factory requires significant financial investment and capital expenditure. This can tighten up the cash flow of the overall firm and will require CBL to obtain loans from banks to suffice its day to day operations.

Quality Control

Establishing a factory in the UAE economic free zone and conducting operations in the local market as well as the UAE market requires consistent quality production in both the strategic locations. The quality control has to be on check to ensure high quality standard is maintained throughout. Due to international customer’s change in taste, CBL will have to amend its formula to suit the needs of the UAE customers but however, this does not mean the consistent quality of biscuits produced should shrink.

Motivation

International expansion of Ceylon Biscuits Limited will enhance the motivation level of the workforce and the give confidence to the stakeholders of the business success. Seizing an international business expansion will instigate anticipation for the employees and clients for better business opportunities and personal career growth off shores. This enhances the CBL’s client delight index and brand reputation.

External Factors

Political Climate

An International Go decision needs to take into account of the political stability of the international economy the firm is moving to. This is important to Ceylon Biscuits Limited to effectively operate and establish itself in the global market. The strict government regulations and political pressure can adversely affect the Ceylon biscuits Limited’s operation. For Example, political distress will affect the shareholder’s confidence of CBL and employee dissatisfaction which will in turn affect the firm’s performance. UAE market however has a high income per capita and a healthy political stability which makes this country an attractive choice for CBL to break into the market.

Excess Capacity & Emerging Demand

A depth research needs to be conducted to identify if the confectionary and biscuits of Ceylon Biscuits Limited have an emerging demand in the international economy and is it feasible enough to make a strategic decision of moving to the UAE market. Experts argue that, a firm should have excess capacity before making a move to expand its operations to the international market to ensure sufficient utilization available. (Watson, Dec, 2017)

Market Risk

Ceylon Biscuits Limited has to conduct a competitor’s analyses to identify the potential competition in the market and the likely market share that the firm is likely to capitalise on. CBL has to market map and identify a gap in the market which it can cater to and successfully break into the market. But however, Dubai market has a lot of international competition with highly premium brands competing based on quality rather than price given the due consideration of the UAE Customer’s higher purchasing power to afford products and services.

PESTEL Analysis

PESTEL Analysis is a marketing concept which is popularly used by businesses and firms to identify the external factors of the firm and how vulnerable the organisation is to these factors. The analysis helps identify the macro economic impacts on the business performance and this PESTEL analysis is usually conducted prior a product launch.

  • Political
  • Economic
  • Social
  • Technological
  • Legal
  • Environmental

Political Factor – The political factor could impose minimum CSR standards that needs to be met by the Ceylon Biscuits Limited when operating within the UAE free economic zone. Ceylon Biscuits Limited is one of the largest conglomerate in Sri-Lanka therefore the current government of UAE will impose strict regulations to protect its domestic firms specialising in confectionary.

Economic Factor – The labour costs in Sri-Lanka is relatively lower due to low income per capita but however, UAE market has a higher GDP and income per capita therefore the labour costs experienced by CBL in UAE is higher which will impact its margin of profit.

Social Factor – In today’s society, people expect the organisations to contribute to the society that they operate in such as society development initiatives, Business ethical practices and social welfare activities.

Technological Factor – Technology and innovation is becoming core part of the businesses processes today due to its cost savings and highly cutting edge innovative products. UAE Confectionary market has fierce competition from multinational companies around the globe and to effectively compete with them CBL needs to invest in R&D and new technology advancement for better quality products.

Legal Factor – Conducting operations in the international market requires acknowledgement and understanding of the labour laws and corporate requirements that is set out by the international economy.

Environmental Factor – Ceylon Biscuits Limited needs to take into account of the percentage of disposal of wastage that needs to be kept minimal when conducting operations overseas. Government of UAE has imposed strict guidelines on pollution wastage that needs to effectively disposed with minimal wastage and higher regard to recycling usage. (ProcessProlicy.com, 2018)

International Marketing Communication

“International Marketing Communication is the coordination and integration of all marketing communication tools, avenues, and sources within a company into a seamless program that maximizes the impact on consumer and other end users at a minimal cost.” (Arora, 2018)

Importance of IMC

The international prelaunch marketing communication is vital for Ceylon Biscuits Limited to create awareness amongst the UAE customers with the presence of multinational competitors in the confectionary and biscuits industry. CBL is a pioneer in the Sri-Lankan market but however is comparatively new firm in the UAE market therefore the customers are less likely to be aware of the product and its information features and it is the core responsibility of the CBL to put together an effective prelaunch marketing strategy to build awareness campaign and release sufficient information to the international customers to understand the perceived health benefits and quality CBL biscuits and confectionary provides.

Process of IMC

Identify Target Audience

The first step in the International Marketing Communication process is to identify the potential target audience of Ceylon Biscuits Limited. The target audience simply cannot be generic therefore it is important to define them according to the characteristics and segmentation breakdown. Ceylon Biscuits Limited cater confectionary and biscuit products to the age groups of eight to forty-five including chocolates, biscuits for adults and sugarless healthy biscuits for forty year olds and above. The pricing of the product is generally affordable therefore the target market in terms of income group is for everyone.

Determine Communication Objectives

The communication objective is a detailed document of the final objectives and desired outcome that is expected from this marketing strategic campaign. The objectives defined by CBL must be SMART and measurable in order to be achievable and realistic. The objectives of Ceylon Biscuits Limited could include high level of product awareness and increase in sales. In order to sustain in the industry for a longer term the strategy of CBL should be to enhance repeat purchasing of its products by the customers and increase the demand for its products.

Design the Message

The message crafted by Ceylon Biscuits Limited should be precise and convey the right message to the stakeholders that enhances the value and the perception of the brand of Ceylon Biscuits Limited. CBL has been the pioneer of innovation and high quality production of FMCG products and this has to be communicated precisely to the international market.

Establish the Promotion Budget

In order to facilitate the marketing activities and objectives it requires financial support and investment. The manager needs to set the budget for the marketing campaign by carefully taking all the cost allocations into consideration and if necessary make amendments accordingly. The importance of promotional budget is highly valued by marketing managers because it helps them control the resources and allocate excess funds where the it is critically required to completed the assigned tasks.

Decide on the Promotional Mix

Ceylon Biscuits Limited has to decide on the promotional mix and strategy that is suitable for the business to create a positive impact on the customers and in the international market. Promotional tools include direct advertising, personal selling, public relations, consumer promotions and sponsorship programs. CBL needs to specialise in direct personal selling and consumer promotions as an initial strategic phase to break into the market.

Measure promotional results

The final stage of the IMC process is to effectively measure the success against the predetermined targets set. It is mandatory to review the progress and analyse the objectives that have been achieved to highlight the level of progress of Ceylon Biscuits Limited to identify the future growth of the firm in the next five years. For Example, CBL needs to set a target of achieving 15 percent of the market share in the first three years and compare this with the actual achievement post three years. (Lumen : Boundless Marketing , 2018)

Benefits of Proposed International Pre-Launch Campaign

The International Pre-Launch Campaign is a strategy of Ceylon Biscuits Limited for global expansion by capitalising on the growing market of Dubai. This is a vital potential market with a larger customer base and therefore a well-defined pre-launched campaign will highlight the brand name and the products of Ceylon Biscuits Limited in the consumer market. The benefits have been discussed in detail below: –

Increased Network Opportunities

Through a pre-launch marketing campaign, the firm is able to develop quality networks with suppliers and customers through creating brand awareness and the how beneficial the product is for the end users. CBL specialises in confectionary and biscuits and the consumers are likely to be price elastic and health conscious therefore highlight these aspects in the initial marketing campaign will enhance the relationship of CBL with the future potential customers and the retailers present in the market.

Influence Customer Purchase Decisions

International Marketing Campaigns such as right use of media for promotion through advertisement and consumer promotions are an effective way to influence the purchase decisions of the consumers. The biscuits and confectionary can be used as a sample marketing technique before the actual release of the product to convince the customers with the quality of the product to encourage repeat purchasing which will benefit Ceylon Biscuits Limited to sustain in the long term. (TheBusinessJournals , 2017)

Influence and Credibility in the Market

An effective pre-launch marketing campaign is likely to build influence and credibility in the market place if the content of the pre-launch is well-written and is appealing to the target audience. In addition, the feedback can be received from potential target audience in regards to the pre-launch content and necessary change be made to the content prior to the release.

Increase in Sales

Creating customer awareness and product information release at the pre-launch stage is a good marketing strategy to well inform the customers about the product specifications and information and thereby create anticipation for the customers for the arrival of the final product to the market.

Conclusion

The conclusion of this report sums up the fact that it is indeed a feasible option for CBL to establish factory in the Jabel Economic free zone to capitalize on business development and market development strategy. The production of confectionary and biscuits in the UAE market is in fact a good option given the better income per capita in Dubai and political stability in the country and customer’s buying patterns and economic standard of living is higher than Sri-Lanka is indeed a good sign to establish business in the chosen market. However, it does not necessarily guarantee the successful establishment in the long run of the firm because of the presence of fierce competition from competitors and multinational corporations.

References

 

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Appendix

SWOT Analysis

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PESTEL Analysis

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IMC Process