Berri Pure Fruit Juice Case
Ágústa Hera Harðardóttir, Christian Washausen, Kerstin Fick, Michelle Won
Based on what you know from the case and given that the international expansion to Asia-Pacific is agreed upon, what decisions have to be made by the company and in what order?
After analyzing the company’s external and internal environment in Taiwan, the business and mission for the particular market have to be defined. During the process Berri has to set its objectives for the market, quantify its goals and, based on this, decide on their strategy and tactical plan. Having chosen an international expansion to Taiwan the company has to decide how it wants to position itself in the Taiwanese market. Based on this decision the target segment for the product should be chosen. The definition of the position of the product and the target segment is essential to evolve the marketing strategy for the product. This includes decisions on the product’s design, labeling and packing, its advertising and promotion.
Then Berri has to decide which strategy it wants to follow for its market entry, whether it wants to export direct or indirect from Australia to Taiwan. This is associated with the choice of their import strategy in the Taiwanese market meaning the distribution within Taiwan. Thereafter the price driving elements of the company’s market entry have to be chosen, the company finally decides on the pricing of the product.
What would be the most preferred entry mode for Berri into the region?
Berri can choose upon three entry modes: a production side in Taiwan, a direct or an indirect export strategy. Of course, each of these possibilities has advantages and disadvantages. One possibility would be to set up a local production site. This has the advantage that Berri does not have to pay high import tariffs for its products as it can use local fruits for the production. However the existing production facilities in Australia provide enough capacity to serve the Taiwan market. The indirect export strategy includes the export of the product through home-based exporters like agents and merchants. This strategy is comparably easy, without much effort and expenses and reduces Berri’s risks. The downwards are that the company gives up involvement and control in the marketing mix, exporters require a commission which would shorten Berri’s margin heavily, and Berri would miss the chance to gain more international experience. Furthermore this includes the risk that the exporter could change its source of supply and cooperate with one of Berri’s competitors. The direct entry strategy implies that the company exports the goods and services by itself. There are two possibilities: the local export sales office as a wholly owned operation o r a joint venture/alliance with a local partner. This strategy has the advantage of direct involvement which, in fact, increases the control of the company. Therefore it is necessary to have qualified management staff for the operation which increases costs. The wholly owned operation requires a lot of resources and a sound financial background. But Berri does not have the critical amount of local insight and connection to the Taiwanese market and it lacks a sufficient distribution system in Taiwan. This implies higher potential risks. The partnership with a local business would provide Berri with a distribution system which is critical as fresh juice is a time-constrained commodity product. The company could also benefit from the partner’s network which would be a great connection particularly according to the Chinese/Taiwanese business culture as business contacts are really important. It would also provide instant access to the market. Nevertheless the relationship to the partner is critical in this strategy. We recommend a direct entry strategy combined with an alliance with a strategic local partner as this will be a promising entry strategy and Berri has sufficient financial...
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