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We, the students of International Business have been assigned the task of developing an entry strategy for Britannia Industries Limited (BIL) to launch its trade in Argentina.

Extracts from this document...

Introduction

Introduction In order to expand on the understanding of the standards to be followed in order for a firm to venture into a new geographic market, we, the students of International Business have been assigned the task of developing an entry strategy for Britannia Industries Limited (BIL) to launch its trade in Argentina. Executive Summary With an auspicious target by the top management to make every third Indian a consumer (Makeover of Britannia, 2001), Britannia Industries Limited (BIL) has captured the 'sweetness' of the market, well surpassing its nearest competitors, Parley and ITC Foods by farthest margins. Considering its accomplishment in the Indian context; recent buy-out of the Strategic Food International Company LLC and Al Sallan Food Industries Company SAOG; discontinuing its tainted partnership with Groupe Danone (Das Sharama Punyabrata, Personal Communication, 2009) and the establishment of its manufacturing capacity in Sri Lanka; it is evident that Britannia is on an expansion spree. In order to capitalize on the opportunity, we propose a highly profitable Argentine market for Britannia to establish its business in the form of a Joint Venture with Arcor Group that shares a similar stature with Britannia's portfolio in terms of repute, market share, product line and policy. Argentina holds a profitable market for BIL, not only to increase revenue, but also to tap the market, otherwise unexplored by the firm. Post the severe slump in 2002, the sector is prospering at a y-o-y rate of 15.8% (Ebscohost, 2009). In 2007, the industry recorded a growth of 14.7% against 2006, thus manufacturing 3, 63, 234 tons of biscuits and cookies. In the aforementioned period, consumption rose by 116.8%. Hence, the sector is experiencing an enlargement of the pie, creating a winning situation. The report is a comprehensive study of the country's political, economical, socio-cultural, technological scenario. Besides, it also does an analysis of the market situation conducive to set up the business; the particular strategy to enter the market; the marketing strategies undertaken; human resource, financial and organizational structure. 1. ...read more.

Middle

* Reasons for Joint Venture: Britannia displays a consistent trend in undergoing a Joint Venture in all its overseas ventures, be it Strategic Food International Company LLC in Saudi Arabia, or Al Sallan Food Industries Company SAOG in Oman, or the Fonterra Group of New Zealand. Joint Venture strategy is adopted by Britannia as a Real Option in the form of Wait and See. Going by the standard norm, the Joint Venture will be in the profit sharing ratio of 60:40 (Arcor:Britannia). However, Britannia will mainly be responsible for transferring the recipe and technological expertise to Arcor. It is to be noted that all the above mentioned corporations are considered to be domestic leaders in their respective categories. Significantly, BIL has bought all of them in a short span of time (Das Sharma Punyabrata, Personal Communication, 2009.). The particular entry strategy hence exhibits BIL's strength and it is assumed that the firm will eventually follow similar path in acquiring Arcor. The Joint Venture is a specific purpose vehicle for an initial period of 2 years subject to extention post review at the end of 2 years. There is an in-built clause that Britannia can acquire the business by buying the shares of Arcor at a mutually agreed price at any time. [A probable sample copy of the Treaty is attached herewith] [Refer Appendix 14] Britannia intends to manufacture the brands Tiger, Good Day, Marie Gold, Treat Fruit and 50:50 in Argentina with Arcor Group > Segmentation: * Demographic Segmentation According to the latest report for the year 2009 by CIA, the estimated population of Argentina is around 40,913,584. The population is segmented on the basis of following variables: (CIA, 2009) Age: 0 - 14 years : 25.6% (male 5,369,477/female 5,122,260) 15 - 64 years : 63.5% (male 12,961,725/female 13,029,265) 65 years and over : 10.8% (male 1,819,057/female 2,611,800) (2009 EST.) So our major target market will be among the people between the age group of (0 - 14) ...read more.

Conclusion

ARTICLE IX: DISSOLUTION. 6.01 Events of the Joint Ventures: The Joint Venture shall be dissolved upon the happening of any of the following events: (a) The adjudication of bankruptcy, filing of a petition pursuant to a Chapter of the Federal Bankruptcy Act, withdrawal, removal or insolvency of either of the parties. (b) The sale or other disposition, not including an exchange of all, or substantially all, of the Joint Venture assets. (C) Mutual agreement of the parties. ARTICLE X: MISCELLANEOUS PROVISIONS. 7.01 Books and Records: The Joint Venture shall keep adequate books and records at its place of business, setting forth a true and accurate account of all business transactions arising out of and in connection with the conduct of the Joint Venture. 7.02 Validity: In the event that any provision of this Agreement shall be held to be invalid, the same shall not affect in any respect whatsoever the validity of the remainder of this Agreement. 7.03 Integrated Agreement: This Agreement constitutes the entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and there are no agreements, understandings, restrictions or warranties among the parties other than those set forth herein provided for. 7.04 Headings: The headings, titles and subtitles used in this Agreement are for ease of reference only and shall not control or affect the meaning or construction of any provision hereof. 7.05 Applicable Law and Venue: This Agreement shall be construed and enforced under the laws of Argentina and India. 7.06 Other Instruments: The parties hereto covenant and agree that they will execute each such other and further instruments and documents as are or may become reasonably necessary or convenient to effectuate and carry out the purposes of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Signed, sealed and delivered in the presence of: Vinita Bali Luis Pagani Managing Director President Britannia Industries LTD Arcor Group ?? ?? ?? ?? International Business - BIL's entry into Argentina ...read more.

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