Internationalisation Strategy of Slim Secrets - Case Study Example

Internationalisation strategy Report of Slim Secrets Introduction This report aims at proposing internationalisation strategy for Slim Secrets as it expands to Kenya. It will provide an analysis of the market entry, firm strategy and structure, key issues to be addressed when entering the market and practical recommendations. Overview of the company Slim Secrets was established in 2005, as a fully operated and owned Australian company providing nutritional solutions to customers. The company offers a wide variety of nutritional balanced, delicious and convenient snacks to help individuals in nourishing their lives and pursuing an active and healthy lifestyle (Slim Secrets, 2017). With statistics showing obesity on higher levels and individuals living busier lifestyles and doubling since 1980 (WHO, 2016), products that support weight and fitness goals are created by Slim Secretes. The business is expanding globally with its products being stocked across Australian health food stores, gyms and supermarkets, and in 12 countries including China. Intentions to go international Slim secrets intend to expand and grow its business beyond the borders. By searching new markets abroad and hire international employees, the company would like to diversify and expand its business. Slim secrets also seek to increase its profit by reducing its budget. This by operating in countries where employing workforce is cheaper, because of lower cost of living. Entry Strategies According to Cavusgil et al (2014), entry strategies to foreign markets differ in degree of risk presented, the commitment of resources and control required and the return on investment promised. There are two type of entry modes: entry mode including wholly owned subsidiaries and joint venture; and non-equity mode including export and contractual agreements. Slim Secretes will use both strategies: non-equity mode will be used first, then later an equity mode will be adopted. Exporting is the first international choice for Slim Secrets. It is simple as Slim Secrets will rely on production at home and will use various intermediaries and partners to assist in the process. The company will begin by exporting reactively, and after realizing the potential benefits of addressing the Market, it will then become proactive. A traditional entry strategy that work in Kenya is Slim Secrets to appoint a distributor or agent, and then sales have grown up, it enters and registers as an Australia company (Department for International Trade, 2016). Health and Fitness industry Kenya According to Mwiti (2016), Kenya is experiencing growth levels in health awareness, as many individuals try to combine good diet with fitness. There is growing demand for health and fitness. Wainaina (2013) asserts that the average waistline of many Kenyans have been increasing as they increasingly become sedentary. Nine percent of the population was reported in 2009 to be obese, and in 2013, the number had increased to 20 per cent, and the rates expected to grow to 50 and 60 percent by 2020. Obesity is considered today as a disease, World Health Organisation’s glaring statistics of at least 2.8 million adults dying, which indicates the extent to which lifespan and lifestyle are interconnected. In addition, 23 percent of those overweight or obese suffer from ischemic heart disease, 44 per cent of diabetes and 41 per cent of certain cancers related to obesity (WHO, 2016). Kenyans are increasingly awareness of health levels and are trying to incorporate good diet and exercise into their daily living, providing opportunities for companies like Slim Secrets to sell their products. The local magazines, property advertisements and local dailies have every new apartment touting featuring fitness and gym centres and swimming pools. Companies such as Google, Safaricom and BAT are equipped fully with gyms with their premises (Wainainah, 2013). There is need for nutrition services for the market as waistlines continue to expand regardless of quick fixes, weight loss centres and gyms popping up; attributed to by increased availability of fast food and reduced activity. Most people in urban areas are driving, therefor exercising or walking less. Competition Just like Slim Secrets, various companies from different countries are penetrating to the market to have a share of growing demand for slimming products, fitness centres and beauty. Below are various competitors of Slim Secretes: VLCC International- This is a franchise of VLCC India with Sameer Group of Kenya. It provides slimming, beauty and fitness centre products and services. The company operates 300 outlets comprising of nutrition institutes, and slimming centres in 16 countries (Business Line, 20140. Local gyms and fitness centres- The services provided aerobics, weight lifting weight loss dances, among others Weight Management Centre- This company deals in organic health products which deliver weight loss in individuals within eight months, and have no side effects (Olingo, 2012). Slim Tea- This company offers Kenya Oolong slim tea to help individuals to loose weight and has its origin in China. Oolong burns up to 1300% calories and has been used in china for over thousands of years as a weight loss remedy. Government Rules and Regulations The legal systems of conducting business in Kenya is based on English practice and law. Companies that need to enter agreements in Kenya are expected to undertake professional advice from the Kenya list of lawyers. The preparation, adopting and standards application for domestically manufactured and imported products is the responsibility of the Kenya Bureau of Standards (KEBS). An ISO/IEC 17025 accredited laboratory need to give a test certificate to accompany all products sold in Kenya. Patent protection is managed by the Kenya Industrial Property Institute (KIPI). Kenya has various direct and indirect taxes including personal income tax, corporate tax, value Added Tax (VAT), customs and exercise duties and income tax. To set up a company in Kenya a number of documents are needed including VAT number, company PIN number and certificate of registration. To avoid potential disputes, it is important to obtain or issue involves and receipts per every transaction. Import taxes and duties are due when importing goods into Kenya. The calculation is on the CIF value i.e. the sum of the value of the cost of insurance and shipping and the imported goods. In addition to duty, imports are subject to Import Declaration Fee, Excise Duty, and sales Tax. Firm Strategy and Structure Strengths/Advantages of Slim Secrets Slim secrets offers unique products which are natural in nature, have high fibre and high protein, contain less than 180 calories per serve, have low fats and low GL, are wheat free and contain Gluten. The company also has a strong brand in Australia and other countries such as China and United Kingdom. This will enable it to be accepted in the foreign market quickly. While the competitors are providing slimming pills and programs, Slim Secrets provides daily nutritional snacks that can be taken daily. The online market platform provides Slim Secrets the ability to expand its business and can reach a wider audience in a relatively low cost way. New markets for its products enables the company to diversity its products and expand its business. International markets provide Slimming Secrets with new opportunities in expanding its business and increasing sales. Corporate and Business Strategies The main corporate/business strategy of Slim Secrets focuses on offering unique customers products that will help in nourishing their lives and pursue an active and healthy lifestyle. This is a product differentiation strategy. It does this by producing a range of products that taste grate, have the right balance of proteins, carbohydrates and fats, offering consumers a chance to snack without feeling guilty, while supporting their wellness goals at the same time. The company incorporates ingredients that provide many health benefits, and combat cravings, keeping individuals fuller for longer while providing them with balanced nutrition. In addition, slimming recipes and health secrets are provided to individuals. This strategy sets Slim Secrets apart from its competitors who offer only slimming pills or slimming programmes. Slim Secrets also adapts to international markets, while remaining faithful to its business concepts. It shares knowledge and manage operates operations the Slim Secrets way regardless of the retail outlet location. Organisation Structure An open flow of information and knowledge within the management team based nonhierarchical and an informal organization (no privileges and titles) is emphasized to be important in the organization (Harper, 2015). The process of managed is face paced with emphasis on attention to detail and simplicity. The organisation is viewed by the owner as a family and employees like-minded people with core values as respect for other people, modesty and humility. Key Issues to Address and Recommendations Culture-The success of the business can be determined by the cultural differences. The products will flop if they do not add meet the desires o or add value to the local markets. Therefore, Slim Secretes should first understand who lives in the region and what they value. Dietary, lifestyle and religious considerations should be considered, as well as language and cultural differences. Regulatory and legal barriers- Trademark requirements, dispute resolution, business and investment procedure, corporate organisations, employment and labour laws among other are the laws and regulation that need to be adhered to by Slim Secrets to successful enter foreign market. Therefore, the company should seek legal counsel when reviewing regulatory and legal commitments, in identifying hazards that may pause as barriers to its business. Conclusion Slim Secrets has designed its products strategically to cater for its target market. By going international, the company intends to expand and grow its business, diversify and increase its profit. With increasing demand for slimming products around the world, there is an opportunity of Slim Secrets to continue growing across the borders. The proposed initial entry strategy to the Kenyan market is exporting because of its simplicity, and later upgrade to joint ventures or whole owned subsidiary. Slim secrets faces rising competition including local gyms and fitness centres, Slim Tea Company, VLCC International, and Weight Management Centre. The rules and regulations of conducting business in Kenya include adopting and application for domestically manufactured and imported products, and paying direct and indirect taxes (customs and exercise duties and income tax). The strengths of Slim Secrets include the ability to offer unique natural products, which have fibre, high fibre and low calories. Its strategies include non-hierarchical organization structure and corporate/business strategy. There are cultural differences and legal barriers that Slim Secrets will need to deal with. Therefore, the company is recommended to consider dietary, lifestyle and religious values and language in offering its products and services to the Kenyan market. Also, the company should seek legal counsel when reviewing regulatory and legal commitments, in identifying hazards that may pause as barriers to its business. References Business Line 2014, VLCC opens first centre in Kenya. Accessed [online] on June 7, 2017 from http://www.thehindubusinessline.com/news/vlcc-opens-first-centre-in-kenya/article6379612.ece Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia. Department for International Trade 2016. Doing Business in Kenya: Kenya Export Guide. Australian Government. Accessed [online] on June 7, 2017 from https://www.gov.uk/government/publications/exporting-to-kenya/exporting-to-kenya Harper, C., 2015. Organizations: Structures, processes and outcomes. Routledge. Mwiti, L. (2016). Indian firm taps into Kenya’s fitness market. https://www.standardmedia.co.ke/business/article/2000218988/indian-firm-taps-into-kenya-s-fitness-market Olingo, A 2012, Eight kilos gone in a month. Accessed [online] on June 7, 2017 from https://www.standardmedia.co.ke/article/2000054723/eight-kilos-gone-in-a-month Slim Tea 2017. Accessed [online] on June 7, 2017 from http://www.slimtea.com/kenyan-oolong-tea/ Slim Secrets 2017, About Us. Accessed [online] on June 7, 2017 from https://slimsecrets.com.au/pages/about-us Wainaina, D. (2013). Fitness industry booms as waistlines bulge. http://www.businessdailyafrica.com/Fitness-industry-booms-as-waistlines-bulge/-/539444/1750108/-/121vostz/-/index.html WHO 2016, Obesity and Overweight. Accessed [online] on June 7, 2017 from http://www.who.int/mediacentre/factsheets/fs311/en/ Read More