United Cereals

Good Essays
Topics: Marketing
UC Standard Way
When deciding about expanding business in a new foreign market companies usually face two major strategies. They can either extend their operations via acquisition of existing local companies or through creation of completely new sites of operations via green field investment. Since 1952 the strategy United Cereal has adopted to expand its European presence was acquisition of established companies with local distribution channels. In general, every firm is confronted with some basic issues such as:
- in which markets to operate
- what products to offer and
- how to distribute these products

The “standard way” United Cereal used to enter the European market consisted of three main steps, namely acquisitions of companies in different European countries (1), introduction of products from the United Cereal US product line (2) and promoting organic growth through the adaption of these products to local market conditions by a respective country manager in charge (3).

The advantages of establishing national subsidiaries by acquiring laid primarily in an effective and fast way of gaining market share in a particular market. Thus, in 2009 the market share of UC in Europe amounted to 20%, only 6% below the market share of its main competitor Kellogg. Considerable benefits could also be achieved due to local expertise and reputation of the established companies in respective countries in terms of marketing focus, local tastes, targets, competitors, brand loyalty as well as legal framework. Other advantages were realized from already existing distribution networks, providing access to local logistics companies as well as cooperation with local retailers and wholesalers. However, there also were certain risks concerning the suitability of the distribution partner to the introduced products as the exploitation of particular sales channels varied considerably across countries (e.g. Germany with 80% vs. Italy with 17% as mentioned above). Further

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