RESEARCH REPORT 9
To:Tim Barrows, Eurolactis CEO
From:Jane Forrester, Eurolactis Marketing Manager
July 25, 2014
SubjectReport: Proposal For Expanding into The United States Market
Theintention of this research analysis is proposing to the Board ofDirectors of the Europe-based dairy company, the Eurolactis, to adoptand implement my latest export strategy exploration report forentering into the United States market. The strength of this reportis that it has compiled evidence developed in collaboration with thedairy industry and health programs’ researchers. We compiled theresearch in a year’s time hence, it is safe and dependable, as thefollowing information will prove.
Theinitial part of this research features an export plan that Eurolactisdairy Company will use in venturing into the US market using the SWOTanalysis technique. The report will further analyze the strengths andweaknesses of venturing into the market using the Porter’s FiveForces.
Synopsisof the proposal
Recently,several studies have indicated that donkey milk contains valuablenutrients that can help in fixing various health issues such aslosing weight. In addition, it is an effective natural anti-ageingremedy as it helps in maintaining the skin supple, white, andwrinkle-free. The historians claim that many beautiful ancient womensuch as the Queen of Medieval Egypt (Cleopatra), Roman’s EmperorNero second wife (Poppaea Sabina) and Napoleon’s sister (PaulineBonaparte) used donkey milk to maintain their skin young and healthy(Astley, 2013). As people have begun realizing the value of donkeymilk in the US, the demand of the product is gradually increasing.This report will propose to the Board of Directors of EurolactisCompany to consider expanding its business interests into the UnitedStates considering that the country has a very big potential marketthat is underexploited (Bailey, 1997).
Donkeymilk in the US
Followingmany successful studies that have reported many health benefitsassociated with donkey milk, many US citizens are looking for theproduct. Unfortunately, the customers are forced to import the milkfrom Europe because there s no established dairy firm offering theproduct in the country. The few farmers and small-scale organizationsthat supply the products cannot satisfy the demand of the hugepopulation. Besides, many individual farmers have not invested inappropriate technology for helping them prepare adequate stock forsatisfying the requirements of everyone (Bailey, 1997).
Eurolactishas potential for succeeding in the United States market because ithas invested in research and development of the milk products thathave in turn yielded high-quality byproducts. Second, the productrarity will enable the company to profit quickly from the business asthere would be zero or limited competition from small-scale donkeymilk suppliers. Fourth, the company can establish local milkprocessing in the United States in order to gain the cost benefit ofproducing the product (Bailey, 1997). Several Native Americans rearasses that can readily provide the source of milk required formeeting the customer requirements. Fifth, Eurolactis Company is basedin Switzerland, and the country has a good relationship with theUnited States. The nations have bilateral trades that would even makeit easier for the company to acquire a license for expanding itsbusiness interests into the nation. Lastly, Eurolactis hasaccumulated detailed evidence to prove that it supplies healthydonkey milk. The extensive research will be valuable for helping thecompany in getting approval by the FDA (United States, 2004).
Thecompany will have to convince the Food and Drug Administration (FDA)that the donkey milk is fit for human consumption. Fortunately, thecompany has gathered extensive research ranging from historicalchronologies in the ancient world to the contemporary laboratorytests. Second, the company does not have an established distributionstructure in the United States. Lastly, the cost of constructing thedistribution structure is extremely high (United States, 2004).
Eurolactishas some favorable opportunities such as easy to overcome barriers.Although the FDA has not approved donkey milk sale in the UnitedStates, health researchers can approve endorse sellers if they candemonstrate adequate knowledge for preparing safe milk. For example,the FDA approved the sale of camel milk in the US after Doctor Hinklesatisfied the safety health standard. Second, Eurolactis havedeveloped new technology such as the recently launched UHT tetrapacks (United States, 2004). The new packaging and treatment of milkwill give it a long life, and maintain safety standards in themanufacturing process. Other opportunities that would make theventure profitable is that Switzerland has established free tradeagreements (FTA) with the United States camel milk is in high demand,and the company can easily acquire distribution networks throughcollaborating with local milk suppliers. Lastly, the United Stateshas abundant skilled labor, which will help in fast development ofthe business (Astley, 2013).
Oneof the main threats of the Eurolactis Company expansion into theUnited States market is the threat of substitution. Camel milk isalso associated with providing similar benefits with the donkey milksuch as retaining youthful skin, accelerating weight loss, andsupplying human beings with various healthy nutrients associated withcombating chronic diseases such as diabetes and stomach ulcers.Second, the company will also have to meet the tough operationstandards the FDA demands of companies targeting the American publicmarket. Third, the cost of exporting processed milk from SwitzerlandI high thereby, the cost of a packet of the milk could be tooexpensive for the low-income earners in the US (United States, 2004).
Sociallife of the Americans
Donkeymilk offers a variety of benefits, including, weight loss, thepotential substitute for human breast milk, cosmetic solutions, andtreatment of diverse health issues such as edema, poisonings,infectious diseases, liver troubles, wounds, nose bleeds, and fevers.Americans, adore youthful looking skins and healthy statuses suchthat they undergo costly, and complex, surgical procedures tomaintain the beauty and healthy status (Astley, 2013). This impliesthat the donkey milk would be automatically marketable in the countrysince it offers natural treatment solutions for a variety ofconditions Americans fear. Although the FDA has not yet approvedanother company specializing in manufacturing donkey milk in the US,many people have been purchasing the milk from online websites. Inaddition, many farmers offering camel, goat, or cow milk often offerdonkey milk as well (United States, 2004).
TheUS market is promising since it is a developed market, and manypeople are financially stable. In addition, the company will beaiming to satisfy milk demand for over 250 million potentialcustomers. On the same note, Americans are well informed regardingthe health benefits of donkey milk thus, the Eurolactis Company willnot have to spend much capital sensitizing target customers on thebenefits of the milk (Food and Agriculture Organization &International Diary Federation, 2004).
Thecompany will promote the donkey milk as a human breast milksubstitute. Mothers suffering from breast cancer or other chronicconditions, such alcoholism, which would make physicians advicenursing mothers against breastfeeding their children would be amongthe target customers. Second, aged persons, teenagers, andcelebrities intending to maintain a youthful look would also find themilk valuable. However, the company will promote the milk as suitablefor everyone as it is a rich source of diverse nutrients (Food andAgriculture Organization & International Diary Federation, 2004).
Sincethe company does not have an established distribution infrastructurenow, it will seek to establish collaboration with one of theestablished dairy companies in the United States. One of theprospective companies that Eurolactis should seek affiliation with isDavisco Dairy Company as it has several subsidiaries and operatinginfrastructure almost in the entire United States. This would help inexpanding the market base of the company. On the same note,Eurolactis Dairy Company will venture into the United States marketthrough indirect approach. The method offers a high level ofdependability and safety, as well as low risk. The nerve center ofEurolactis will also be based at Le Sueur, Minnesota as Daviscoheadquarters is located there (Food and Agriculture Organization &International Diary Federation, 2004).
Fromthe preliminary study, the company will perform well in the US marketas there are many people looking for the product, and Eurolactiswould be the sole company that would be supplying the product. Thecustomer bargain will be significantly reduced since the company willbe solely in charge of supplying products in the market. Camel milkis a potential threat of substitute, but the company will focus onemphasizing on the benefits of donkey milk over camel milk. Inaddition, camel milk is rare and expensive in the US thus the companywill have an opportunity for being established before competingbusinesses emerge.
1)The company should start by importing finished products from its firmin Switzerland
2)The management should promote donkey milk products through educatingthe American public regarding the significance of the milk
3)The company should rebrand in order to make the company appearAmerican
5)The management should seek business approval by the FDA
1)The company should establish research and development firm in USA forfurther research in donkey milk
2)The organization should establish independent supply infrastructure
3)The firm should construct a local donkey milk-processing firm in theUS
Astley,M. (2013). UHTmilk will make donkey milk “more available to consumers” –Eurolactis.Dairy Reporter.
UnitedStates. (2004). Dairyindustry: Information on milk prices, factors affecting prices, anddairy policy options : report to congressional requesters.Washington, D.C: GAO.
Bailey,K. W. (1997). Marketingand pricing of milk and dairy products in the United States.Ames: Iowa State Univ. Press.
Foodand Agriculture Organization, & International Diary Federation.(2004). Guidedo good dairy farming practice.Rome: FAO [u.a..