A Report on The Globalization Challenges of Reid Fruits’ Supply of Cherry Jam to European Market

Executive Summary

Using the experience gained from the Asian market, Reid Fruits can expand to the European market with cherry jam. The challenges the company expects from this market and the recommendations are provided in this report. The company should expect diverse challenges in several areas, including political, legal, technology, and supply chain management. These challenges can impact the business in various ways mentioned in the report. The European market is complex to define for multinationals, so it requires extensive research by the company. Thus, the managers should research and rank the countries in terms of market viability and focus on the most viable in the first phase of globalization. It should incorporate technology, such as the Internet of Things, in the research to understand crucial consumer data and develop strategies that can earn it a competitive edge over the other producers. With appropriate investment in technology and research, the market offers massive potential for Reid Fruits.

Table of Contents

Introduction

Findings and Discussion

Recommendations

Conclusion

A Report on the Globalization Challenges of Reid Fruits’ Supply of Cherry Jam to European Market

Introduction

As companies in various sectors experience an increasing competition level, the idea of globalization has become more significant. Globalization is the process of social, political, economic, cultural, and technological integration among countries globally (Lane & Maznevski, 2019). Globalization results in several benefits for a firm. For instance, it results in new markets that increase sales and revenue. But, the process is complex and requires carefully-drawn strategies. Several challenges could hinder a company from a successful globalization strategy. Without proper planning to deal with such challenges, the company could incur grave consequences. This report relies on the experience of Reid Fruits’ deployment of Laava digital fingerprints to expound on its globalization to the European market. The succeeding sections of this report describe the challenges the company might experience and potential recommendations.

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Findings and Discussion

Global Supply Chain Management

For Reid Fruits to be competitive, the supply chain should be cost-efficient, responsive, flexible, and agile. It must allow customers to get the right products in the correct quantity, at the right time and right place. However, it is hard to have a supply chain with all these characteristics (Milovanovic et al., 2017). Europe is a large market, with different languages, cultures, currency, regulations, taxes, infrastructure, business practices, and organizational forms. The level of economic development in those countries also differs. As a result, it is in vain to develop a supply chain that can address these unique challenges concomitantly. In some European countries, infrastructure presents critical challenges to multinationals. For instance, in Serbia, there is a record of underdeveloped logistics infrastructure, a lack of information and experts in the logistics field, and inadequate modern transport (Milovanovic et al., 2017). Cherry jam is likely to require a fast delivery process which might get impacted by cross-border regulations. The COVID-19 outbreak made supply chains more vulnerable than ever (Fonseca & Azevedo, 2020). Companies have had to develop better strategies to ensure consistent supplies with maximal immunity to economic disruptions.

Technology

The potential of counterfeit products in the European market is substantial. Despite having regulations against counterfeiting, previous experience shows that countries cannot eradicate counterfeits. It calls for massive investment in technology by firms. However, not all consumers are accommodative of technology today. Gathering market data today employs mainly the Internet of Things (IoT). However, it is not a simple process and requires massive resources structurally. It is the only way the company can identify open markets, segment its marketing, niches, and appropriate channels to use. For IoT to be effective, data must be gathered from suppliers and their suppliers, from customers and their customers, from the manufacturer, and so on (Pearsall, 2016). The firm must decide what data to collect in the new market, its implications, and its application.

Variations in Legal Responsibilities across Countries

Some various specific laws and situations can directly impact international business. Among those mentioned by Lane and Maznevski (2019) include financial services regulation and bureaucratization. Individual countries use their legal and regulatory policies to affect the international management environment. WTO regulations require multinationals to provide “national treatment,” which means they will not discriminate against others in their trade relations (Will et al., 2020). Many countries in the European market also engage in government support in form of subsidies and other practices that may distort trade to some extent. If Reid Fruits distributes its cherry jam to a country that heavily subsidizes its local manufacturers of the same product, it could face an unfair disadvantage. Several European countries use product standards, “buy local” regulations, and other policies to protect domestic industries and restrict trade. In most areas, the European Union, which controls a substantial percentage of business deals in the continent fosters the most stringent food laws and regulations (Wahidin & Purnhagen, 2018). These laws fall under the categories of non-tariff barriers, particularly for raw or lightly processed goods. Getting the cherry jam to Europe will meet this regulatory challenge and call for the company to dig into these regulations and the better solutions to each of them.

Differences in Political Environment

A significant percentage of Europe exhibits a democratic type of system in which governments are under the control of citizens either directly or through elections. Whenever governments change, multinationals must adjust their strategies and practices to accommodate the new perspectives and actual requirements of the new regime. Politics influence a company’s success in a particular country. For instance, Europe added complexity to the political environment with the unification of the EU (Bulmer et al., 2020). Consequently, multinationals need to be responsive to the political environment of individual countries. Some countries like Russia, are post-communist, but still, exhibit aspects of an authoritarian government. Operating in such a country requires extensive research by managers to ensure a single mistake by the leader does not impact the company’s profitability massively. For example, with the ongoing invasion of Russia on Ukraine, many companies have suspended operations in the two countries. Those operating in Ukraine cannot distribute products in major cities, and those in Russia had to stop some operations by external influence. The managers at Reid Fruits must be responsive to such events as they could cause a severe impact on the market.

Recommendations

To address the challenge of managing a global supply chain, Reid Fruits should first categorize the countries according to market viability. Those countries that have better infrastructure and are more likely to have third parties that can distribute the products cheaply should be at the top of the list. After expansion in these countries, Reid Fruits could consider the other batch of countries.

With the investment made towards the fingerprint technology by Laava, Reid Fruits could use it for better engagement with the consumers. The company can achieve this by ensuring managers gather data from the ground to promote the technology and address any concerns. If there are countries that have poor internet or regulations that impact the effectiveness of this technology, the company should weigh the benefits and potential costs. Although business research does not guarantee success, it is likely to increase the possibility that a new product is successful (Hoyer et al., 2010). Reid Fruits need to increase its focus on data analytics through the Internet of Things. It could also be the key to the company’s competitiveness.

To address legal challenges, Reid Fruits should have a dedicated team of legal experts to dig deeper into the various regulations of target countries and make decisions on the viability of such markets before entry. Exporting to the region without first understanding the legal consequences of the company’s processes and decisions could be dangerous. Such a mistake could lead to massive losses when dealing with penalties and lawsuits from consumers and trade partners.

For the differences in the political environment, Reid Fruits should establish a working relationship with authorities of different countries in trade. It is necessary to do this while avoiding corruption tendency because it could massively impact the brand. Additionally, the managers should remain vigilant to respond to any political happenings.

Reid Fruits should invest extensively in marketing to compete with other brands in the region and popularize its product in the new market. It is not enough to just respond to external factors without ensuring consumers feel the match between their needs and the product.

Conclusion

With the company’s massive progress in the Asian market, expanding to the European market seems just the right decision. However, it must approach this step with maximum caution due to the large number of factors limiting the viability of the new product in the continent. The company must continue to seek new ways to validate its cherry jam product for the European market if the fingerprint technology does not result in the required results. Meanwhile, using its competitive edge in the Asian market to promote and market the new product in Europe could bring massive profits and gain significant bargaining power with government leaders and stakeholders.

References

Bulmer, S. et al., 2020. Politics in the European Union.

Fonseca, L.M. & Azevedo, A.L., 2020. Covid- 19: Outcomes for Global Supply Chains. Management & Marketing. Challenges for the Knowledge Society, 15(s1), pp.424–438.

Hoyer, W.D. et al., 2010. Consumer cocreation in new product development. Journal of Service Research, 13(3), pp.283–296.

Lane, H.W. & Maznevski, M.L., 2019. International Management Behavior: Global and Sustainable Leadership, Cambridge, United Kingdom: Cambridge University Press.

Milovanovic, G., Milovanovic, S. & Radisavljevic, G., 2017. Globalization: The key challenge of modern supply chains. Ekonomika, 63(1), pp.31–40.

Milovanovic, G., Milovanovic, S. & Radisavljevic, G., 2017. Globalization: The key challenge of modern supply chains. Ekonomika, 63(1), pp.31–40.

Pearsall, K., 2016. Manufacturing Supply Chain Challenges – globalization and IOT. 2016 6th Electronic System-Integration Technology Conference (ESTC).

Wahidin, D. & Purnhagen, K., 2018. Improving the level of food safety and market access in developing countries. Heliyon, 4(7).

Will, E., Pettersson, M. & Stage, J., 2020. Trade in fisheries services under the WTO and GATS framework. Natural Resources Forum, 44(2), pp.161–175.