International Business

Delia School of Canada

Hayley WhiteGrade 12

Executive Summary

McGain food production is recognized as specializing in frozen food which are sold all around the world. Our goal in business is to “make people smile”. McGain has a long-standing tradition of helping to improve the quality of living of the communities we serve. McCain also believes in corporate society responsibilities by contributing to the societies that are in need of new investment. McGain makes sure that our commitment to give back to the communities and currently we would honored to expand that commitment in our Corporate Expansion Strategy.

In order to commit to our Corporate Expansion Strategy, our team continues to look for new marketing opportunities, decentralized strategy to achieve a low cost-high yield strategy. Following our team's intense research and market development studies, three countries were chosen to be our new targeted market for expansion; Australia, Netherlands and Argentina. At the same time, our team had also researched on a few countries to source materials at the lowest possible cost. We feel that Kenya is the country that we could best practice our tradition of 'helping to improve the quality of life of the communities we work with'. Kenya offers low costs in labour, lease and transportation etc. We should therefore consider Kenya as our best sourcing country to serve the three new potential markets.

Description of Countries to Expand to

Australia

Australia is a unique and diverse country in every way - in culture, population, climate, geography, and history. The majority of Australians experience mild weather for most of the year. For their political system, they have two main political parties and a number of minor parties, which make up the Commonwealth Parliament. Additionally, each territory also has its own government. Australians' multicultural lifestyle is reflected in the country's food consumption.

The reason why McGain should expand to Australia is because we believe we can offer more novelty food. Australia offers sufficient produce, meat and poultry for their market, however McGain wants to provide Australia with more choices such as McGain Cheese Sticks and “Beer Battered Onion Rings”. It would provide diversity from their culinary wants.

Argentina

Argentina’s population comprises mostly of European immigrants and their

descendants and is estimated at just below two per cent of the total population.

They follow an open economy; an economy in which their economic activities

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happen between domestic community and outside. In Argentina, people love

squash, melons, nuts and sweet potatoes. It is recommended that McGain produces

'noisettes' to the Argentina market. This type of food contains a small piece of meat

rolled up into a ball of dough with nuts inside. The dough can also be replaced by

sweet potatoes. Therefore, McGain would be combining two types of food that the

Argentine society loves into one dish. Also, McGain would be recognised for having

a moderate collectivism cultural dimension. McGain would be valuing Argentina’s

culture by integrating a small percentage of Canada's culture.

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Netherlands

The Netherlands ranks among the best places in the world to live and work in. Out

of a population of almost 16.8 million people, more than three and a half million

have a foreign background (statline.cbs.nl) and food is the largest industry. The

Netherlands have the 17th-largest economy in the world, and ranks 10th in GDP

(nominal) per capita; the country possesses strong buying power.

Dutch likes to eat patat (also known as chips or french fries) as well as mashed

potatoes and mashed vegetables. Since Netherlands diet is based on relatively high

carbohydrates, McGain believes significant profit can be generated producing

different varieties of french fries or potato products. We also believe we would be

able to meet the Dutch's needs.

Trade Agreements and Trade Organizations

Trade Agreements

For the Netherlands, McGain could use the European Union (EU) as one of their trade agreements. The EU contributes to twenty-seven countries in Europe, including Netherlands. It has its own flag, anthem, currency as well as financial security and foreign policies. The EU’s purpose is to “promote peace, economic growth, government co-operation, strong bonds between people, political integration, and to ensure that the population can prosper in a safe society.” This particular market allows labour, goods, services, and investments to go through boarders safely and freely.

Trade Organizations

World Trade Organization (WTO) promotes easy trade restrictions throughout the

world. Economic prosperity and social development is one of the missions at WTO.

This trade organization has three main purposes, which are to provide:

1) A form of negotiations

2) A set of rules

3) Dispute settlement.

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WTO provides intellectual property protection as well as copyrights, trademarks,

geographical names and trade secrets.1 Overall this will promote the exportation

from Kenya to Australia, Netherlands, and Argentina. It will benefit Kenya by

ensuring all nations can trade fairly, and disputes are settled by consensus. It

encourages governments to act civilized and fairly over protectionist policies.

1Guest, Lorie. "Chapter 5: International Trade Agreements and Organizations."Fundamentals of International Business: A Canadian Perspective. Toronto: Thompson Educational Pub, 2010. 137. Print.

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New Country of Sourcing - Kenya

Location

After thorough research and consideration regarding cost evaluation, labour training and logistics in shipping, our team decided that Kenya would be the most suitable country for McGain as part of its global sourcing. Farming is the most important economic sector in Kenya, although less than 8 percent of the land is used for crop and feed production, and less than 20 percent is suitable for cultivation. “15–17 percent of Kenya's total land area has sufficient fertility and rainfall to be farmed, and 7–8 percent can be classified as first-class land.” Kenya is the leading producer in exporting fresh produce, such as cabbages, corn, and onions. Small farms grow most of the corn and also produce potatoes, sweet potatoes, beans and peas.

Not only is Kenya suitable for McGain’s agricultural needs, it would cost the company a lot less to grow, produce, and ship the finished goods to our three proposed new markets: Australia, Netherlands, and Argentina as compared to manufacturing these goods in our plants in Canada.

Human Rights Issues

The most serious human rights problems in Kenya were abuses by the security forces, including unlawful killings, torture, rape, and use of excessive force and mob violence. Other human rights problems include “infringement on citizens’ privacy; restrictions on freedom of speech, press, and assembly; violence and discrimination against women; violence against children, including female genital mutilation (FGM); enforcement of workers’ rights etc. (Human Rights Practices Report, 2011 United States Department of State) 2

Two NGO

McGain will work with two NGO’s that could help the company abolish some of the

human rights violations. Kenyan Women Association (KWA) is an NGO which

prevents gender inequality. It provides women with different programs and

services, such as: Entrepreneurship Program, Transitional Program, Women and

Health Program, and Credentialing and Workforce program. Their mission

statement is “The Kenyan Women’s Association fosters a thriving African

community in the Pacific Northwest through support programs and advocacy for

women and their families so that they will lead connected, empowered lives and in

turn support others.” McGain believes the Kenyan Women Association could be the

solution towards human rights against torture and rape. The KWA will provide

2 "Country Reports on Human Rights Practices for 2011 United States Department of State."Bureau of Democracy, Human Rights and Labor: 49. Web. <http://www.state.gov/documents/organization/186418.pdf>.

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women a safe working environment. Kenyan Women Association will also tackle

the restrictions on freedom of speech, press, and assembly. Women will be able to

express their minds freely without the worry of abuse. The second NGO McGain is

planning to work with “One Acre Fund”. This foundation’s function is to “put farmers first”.

Their service bundle includes: Finance farmers, Distribution of seed and fertilizer, Training

on agricultural techniques, and Market facilitation to maximize profits from harvest sales.

One Acre Fund will ensure the fair treatment for McGain’s farmers as well as help Kenyan

farmers to have a brighter future.

Marketing

Pricing

When introducing McGain products in Australia, Netherlands, and Argentina, McGain plans

on offering the products at a special promotional price. This means customers will be

allowed to buy samples at price before buying the product. This will allow the customers to

try the product. McGain would make extra profit off of the sample goods raising McGain’s

revenue. Also, according to Times 100, McGain had ‘extra-fill’ packs which they gave to

customers for up to 30% extra free. Furthermore, McGain foods “offer their products at a

special promotional pricing using the price-marked packs by allowing customers to try

their product.”3

Product and Promotion

By following the multi-domestic strategy, each country will have their own appetizer to

reflect their own culture.

For promotion, we plan to create three advertisements, each containing a picture of a

different dish. This will demonstrate the cultural difference of each countries' food as well

as what products we will produce and distribute.

For Australia:

3 "The Marketing Mix in the Food IndustryA McCain Foods Case Study." Introduction. Time 100. Web. 13 Jan. 2015. <http://businesscasestudies.co.uk/mccain-foods/the-marketing-mix-in-the-food-industry/introduction.html#axzz3OhtD9xeg>.

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According to language requirements, there is no official language in Australia, therefore no

language regulations are required to appear. McGain will chose the most appropriate and

most common language spoken to get the message across on the advertisement.

For Netherlands:

The national language used in Netherland is Dutch. Therefore, the slogan “All is Good”

must be translated into the appropriate language.

For Argentina:

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The most common language used in Argentina is Spanish. Even though the people

understand English, McGain needs to get the slogan across all people, not just some. That

is why the slogan “All is Good” should be translated into Spanish.

Place

McGain products need to be available everywhere! In all of the three new markets,

customers must be able to buy McGains frozen foods in local grocery stores, retail chains,

and wholesalers. The reason why McGain’s products are located in wholesalers is because

they do not use its own vehicles to distribute their products to their customers. According

to a business case study, “McGain foods does not sell directly to its consumers but

faithfully strategize itself as a true business-to-business organization.”

Consumer

McGain mainly wants to target towards families. McGain is strongly committed in “not

advertising to children under 12 years old.” We produce smiley fries for the children as

well as regular fries for adults. We also target those who want to still enjoy good food while

eating healthy.

McGain also is very careful to avoid ethnocentrism, which is why McGain will off their

products on the Internet in the language that their targeted market is located at as well as

provide an integration of the countries local foods within McGains food.

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Competition

McGain’s top direct competitors are Conagra Foods. Inc, J.R. Simplot Company and Blaine

Larsen Farms, Inc. Unlike the three direct competition, McGain is known to be the #1

french fries maker around the world. McGain supports McDonalds and owns 50 plants.

Conagra Foods Inc also sells frozen foods, however there isn’t as much variety compared to

McGains. Furthermore, McGain takes part in different types of sponsorships allowing

McGain to gain more promotion from its other competitors.

Globalization Strategy

McGain will use the multi-domestic strategy as their Globalization Strategy. This strategy

tries to customize products, services, and marketing according to the local culture, and is

effective when there are cultural differences. This strategy best suits our company's needs

because this type of strategy reduces political and exchange-rate risks.4 It also increases

production differentiation and greater responsiveness to local needs. In another word,

McGain would still maintain its Canadian culture while contributing to the three different

countries' wants and needs.

World Map

4 Guest, Lorie. "Chapter 7: Marketing Strategy."Fundamentals of International Business: A Canadian Perspective. Toronto: Thompson Educational Pub, 2010. 137. Print.

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Logistics

McGain offers freight, warehousing, and distribution services for fresh produce. Ocean

freight is the most suitable type of transportation to ship the goods from Kenya to

Australia, Netherlands, and Argentina. The advantage to ocean freight is that it is

inexpensive. This will save McGain cost as well as keep the pricing of goods low. It will also

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save oil prices which affect domestic and foreign shipments. Also, compared to rail or

motorized carriers, the transit time is considered to be short.

One supply chain issue McGain could face is piracy. Due to recent pirate activity, insurance

companies have increased the cost of insurance for maritime shipping in areas patrolled by

pirates. By observing the routes the ships will have to pass, the ships will pass through

pirated areas.

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Bibliography

"The Marketing Mix in the Food IndustryA McCain Foods Case Study." Introduction. Time 100. Web.

13 Jan. 2015. <http://businesscasestudies.co.uk/mccain-foods/the-marketing-mix-in-the-food-

industry/introduction.html#axzz3OhtD9xeg>.

"McCain Foods Limited Names of Competitors." McCain Foods Limited Names of Competitors.

Hoovers a D&BCompany. Web. 13 Jan. 2015.

<http://www.hoovers.com/company-information/cs/competition.McCain_Foods_Limited.5cf1bee4ad9

774fd.html>.

"Food in Every Country." Food in Argentina. Web. 13 Jan. 2015.

<http://www.foodbycountry.com/Algeria-to-France/Argentina.html>.

"Distances and Time." Transit Time, Distance Calculator & Port to Port Distances. Web. 13 Jan.

2015. <http://www.searates.com/reference/portdistance/>.

"Country Reports on Human Rights Practices for 2011 United States Department of State."Bureau of

Democracy, Human Rights and Labor: 49. Web.

<http://www.state.gov/documents/organization/186418.pdf>.

"Documenting Human Rights Violations of Sex Workers in Kenya." (2008): 38. Open Society

Foundation. FIDA Kenya. Web.

<http://www.opensocietyfoundations.org/sites/default/files/fida_20081201.pdf>.

"International Relations Online." International Relations Online. Web. 13 Jan. 2015.

<http://internationalrelationsonline.com/>.

"One Acre Fund." One Acre Fund. Web. 13 Jan. 2015. <http://www.oneacrefund.org/>.

Guest, Lorie. "Chapter 5: International Trade Agreements and Organizations."Fundamentals of

International Business: A Canadian Perspective. Toronto: Thompson Educational Pub, 2010. 137.

Print.

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