Photo AI
You have been appointed to advise Fruit First Ltd on entering international markets - Leaving Cert Business - Question C - 2008
Question C
You have been appointed to advise Fruit First Ltd on entering international markets. Outline your analysis of the opportunities and challenges facing Fruit First Lt... show full transcript
Worked Solution & Example Answer:You have been appointed to advise Fruit First Ltd on entering international markets - Leaving Cert Business - Question C - 2008
Step 1
Opportunities for Fruit First Ltd in International Markets
Answer
-
Access to Bigger Markets: Exporting to larger markets like the UK provides an opportunity to increase sales and profits significantly. By selling to the UK, Fruit First Ltd can eventually tap into the broader EU market as well.
-
Economies of Scale: Expanding into international markets can reduce costs per unit. By increasing production volume, Fruit First can decrease individual production costs associated with buying, producing, and selling larger quantities.
-
Reduced Risk: Diversifying into new markets helps mitigate risks associated with reliance on a single market. By spreading their business across multiple regions, Fruit First can reduce its vulnerability to fluctuations in the local market.
-
New Ideas: Entering new markets often brings fresh ideas, products, and technologies. Engaging with international trends can lead to innovation in product offerings and potential collaborations, such as discussions with leading food retailers.
-
Membership in International Markets: Being part of markets like the Single European Market can enhance the company’s positive image and facilitate smoother trading across borders.
Step 2
Challenges Facing Fruit First Ltd
Answer
-
Competition: The UK and EU markets have larger and more established competitors, presenting significant challenges for Fruit First. Established brands may dominate shelves and consumer preference, requiring strong branding and marketing strategies from Fruit First.
-
Currency Fluctuations: Exchange rate volatility can impact revenue and profitability, which may complicate financial management when exporting products.
-
High Costs: Costs associated with transporting goods and potential tariffs can significantly affect profit margins, especially since Ireland is an island.
-
Language Barriers: Selling in foreign languages can complicate business operations, affecting everything from documentation to marketing strategies. This will require careful planning and possibly hiring bilingual staff.
-
Perishable Nature of Products: The short shelf life of smoothies necessitates efficient logistics and distribution systems to ensure product quality upon reaching consumers.
Step 3
Recommendation
Answer
I recommend that Fruit First Ltd:
-
Start in the UK Market: Begin by focusing on the UK, where there is familiarity with culture and established trade links. This strategic choice can allow Fruit First to navigate international expansion more effectively.
-
Explore the Wider EU Market: Once a stable footing is established in the UK, consider expanding into newer EU countries where the company can leverage opportunities without excessive barriers.
-
Utilize Partnerships: Arrange for potential partnerships or contracts to facilitate entry into mainland EU markets. Collaborating with established distributors can significantly ease the transition and provide critical market insights.