Examining Market Entry by Silver Fern to Croatia

REPORT Potential market opportunity for Silver Fern Farms of New Zealand in the Republic of Croatia Silver Fern Farms is New Zealand’s leading processor, marketer and exporter of premium quality meat products such as lamb, beef, and venison to more than 60 countries around the world. With a proud history that spans over 75 years supplying the world with the best quality red meat New Zealand has to offer, today we are the New Zealand’s second largest primary sector exporter (Silver Fern Farms, 2013). “We are a proud farmer co-operative representing over 16,000 sheep, cattle and deer farmer-shareholders throughout New Zealand. Collectively we own and operate 21 processing sites throughout New Zealand and 8 sales and marketing offices around the world. We are also one of New Zealand’s largest employers with over 7,000 staff at peak season” (Silver Fern farms, 2013). As the new international business advisor I’m trying to analyze the potential market opportunity for Silver Fern Farms have in Croatia where we can give the New Zealand know-how and expertise to launch a new facility in Croatia. I’m going to find and discuss about history of Croatia and how it’s geographical and political situation from the recent times and its present economic situation. By this I’m trying to find the opportunities we can find for Silver Fern Farms. Political/Legal element of Croatia “Croatia is a unitary democratic parliamentary republic. With the collapse of the ruling communist party in SFR Yugoslavia, Croatia adopted its present constitution in 1990 and organized its first multi-party elections” (The New York Times, 1990). The political factors are basically identify to what degree the government is interested in the country’s economy. Government powers in Croatia are divided into legislative, executive and judiciary powers. Croatia legal system is civil law. The political history of Croatia has indicated trends towards socialism however their national policies increase the interest to the international trade relationships. Croatia remains the best performing country from South-Eastern Europe engaged in the EU accession process and a regional success story, playing the role of anchor for political stability in the region (Rohatinski, (2009). The risk where I can foresee with regards to this element is that since it’s a democratic parliamentary the government usually listen to the people of the country and the opposition political parties always go against the governing party specially on foreign investments where they try to highlight to the public that local investors are being not being looked after so that the opposition tries to get the political advantages in the parliament. The evidence strongly and broadly suggests that cohesive and competitive political parties and governments help reduce the risks of democratic delegation. Specifically, executive cohesion strongly and significantly reduces the risks of corruption and fiscal indiscipline. Party competition, on the other hand, reduces rent extraction and promotes general satisfaction with democracy (Goldstein, 1999). Economic element of Croatia Economy of Croatia is a service-based economy. Croatian economy was badly affected by the Global Financial Crisis in 2009 and 2010 and showed signs of recovery in 2011. The economy of Croatia is in the incline and the potential is significant. Croatia’s gross domestic product per capita is $18,100 which is 78% higher than the world average of $10,200 (Ott, 2002). With over 10 million foreign tourists annually, tourism generates revenue in excess of €7 billion. Croatia is ranked among the top 20 most popular tourist destinations in the world, and was voted world’s top tourism destination in 2005 by Lonely Planet (Ministry of Tourism, 2010). Trade plays a major role in Croatian economic output. In 2007 Croatia’s exports were valued at USD 12.84 billion (24.7 billion including service exports). According to Healy Consultants, trade in Croatia is bolstered by its low trade-weighted average tariff of just 1.2%. Croatia has a stable market economy accompanied by a strong and stable currency, the Kuna (Company Formation, 2014). Economic factors contain economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For an example, interest rates affect a firm’s cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy (PESTEL, 2014). Physical/Natural element of Croatia Croatia is surrounded by many different cultures and its geographic position represents a blend of four different cultures. The population of Croatia is 4.28million in 2011 and it is ranked 125th by population in the world. However based on the Croatian Bureau statistics there is a tendency of the population to shrink by 2051. This is forecasted to be a 1million drop from the current survey figures. There has been a positive net migration into Croatia, reaching a level of more than 7,000 net immigrants in 2006 (Croatian Bureau, 2014). Croatian traditional cuisine varies from region to region. Italian and other Mediterranean cuisines which prominently feature seafood cooked vegetables and pasta as well as condiments. The continental cuisine is heavily influenced by Hungarian, Austrian and Turkish culinary styles. In that area, meats, freshwater fish and vegetable dishes are predominant. With its multicultural population and general food and beverage consumption is much diversified. The figures show that a person will consume around 62.5kg meat per year and consumes significant percentage of beer. In other words the potential market is inherent with meat consumed population across (Rough Guide, 2014). Cultural element of Croatia As explained earlier because of its geographic position, Croatia represents a blend of four different cultural spheres. It has been influences of the western culture and the Western Roman Empire and the Byzantine Empire as well as of the Mitteleuropa and the Mediterranean culture. The UNESCO also has inscribed 7 sites in Croatia on the World Heritage List. The country is also rich with Intangible culture. It holds ten of UNESCO’s World’s intangible culture masterpieces, surpassing all countries in Europe except Spain which possesses an equal number of the listed items. Technological element of Croatia Croatia has shown a significant development in social and economic sector. The government has been able to close the income gap with European Union and now it is some of the best social development indicators in the region. Croatia is doing lot of innovation and research and development. There is a huge support from the government but very low interest by the public sector. This is a very important and good indication for our company to move in to Croatia since with the New Zealand technology in the meat processing industry and investment power the Croatian government will mostly welcome foreign investors since there is a poor response from the private sector towards the R&D on new innovations (Correa et al., 2010). Competitive element of Croatia Getting our hands on Croatia will be step forward towards reaching more European countries as Austria, Hungary, Serbia, Slovenia and etc. However there is a high market among Croatia for the meat associated products. Croatians are eating around 2kgs less meat than their European Union counterparts (Rough Guide, 2014). 250,000 tons of meat and meat products are being annually consumed by Croats and 62.5kgs are being consumed by per person annually. This is less than 2kgs than the EU average of 64.7kgs. Croatia’s meat consuming average is high, considering the purchasing power of Croats and the rising prices of meat. The meat consumption is expected to rise in the coming years according to The European Commission (Rough Guide, 2014). There has been a dropping more than 15% in the last two-year with high unemployment across the continent. The EU commissions report suggests that Europeans will eat around 1% more chicken and 2.8% more pork in the next 9 years. The current meat market in Croatia is indeed not as tough as one might opt. By looking at the historical data and forecasts made by surveys even though the high unemployment rates the country’s meet consumption has increased drastically. This gives us a good opportunity to start bidding on the Croatian soil (Croatian Bureau, 2014). Silver Fern being the leading largest meat processing firm in New Zealand as well as internationally its being recognized well the approach towards Croatian market won’t be a difficult one. As it was explained and listed briefly in above paragraphs it’s a large market where local firms will always do not wont an international competitor to come in therefore it will have some constrains at the beginning where we have to do lot of negotiations and discussions with the government provided that we have to emphasis not only the quality of the product which is going to be introduced but the employment opportunities that is going to create by this massive investment going to happen inside the country. This will easily help to the improvement of unemployment as well as governments will have a favorable justification to present to the people of Croatia (Silver Fern Farms, 2013). Demographic environment element of Croatia Croatia is in the fourth or fifth stage of the demographic transition. The permanent population of Croatia at the 2011 census had reached 4.28million. The population density is 75.9 inhabitants per square kilometer. The overall life expectancy in Croatia at birth is 75.7 years. The population is dominated by the 15–64year old segment. The median age is 41.4, and the gender ratio of the total population is 0.93 males per 1 female. It’s very prominent that the mobile workforce and the average age segment in Croatia are the middle aged young adults. This is exactly ideal since the potential market is fairly conscious and are literary capable of welcome new products which is useful and effective for their community (Croatian Bureau, 2014). A 2009 survey revealed that 78% of Croatians claim knowledge of at least one foreign language most often English. It’s a country which English language is being used by almost 80% of the population and communication will be not at all difficult for a company like us to go an establish our own branding the way we pleased. Literacy in Croatia stands at 98.1%. The proportion of the population aged 15 and over attaining academic degrees grew rapidly since 2001, doubling and reaching 16.7% by 2008. An estimated 4.5% of the GDP is spent for education. Net monthly income in September 2011 averaged 5,397 kuna (Croatian Bureau, 2014). Part (ii) Actions the firm could take to manage Political/Legal element However with the current international experience and exposure we have these matters can be handled with the expertise of the special strategic teams with in our company. Actions the firm could take to manage Competitive element The increasing price level of the meat within the country is more threatening than it appears to be. However the surveys indicate that people will still keep increasing the meat consumption based on current trends. However it is very important that Silver Fern keeps on monitoring the market price fluctuation as well as the competitor monitoring of what their reactions towards same. A lot of market focuses needs to be required with regards to having a high consumer rate within the country and the numbers show that people might increase other kinds of meat such as chicken or pork instead of beef. Furthermore the company needs to keep a very close watch on the level of quality of the products and how well the standards keep maintained throughout whole process. Hygiene factor also will play a vital role since these are consumed directly by the consumers so in order to take the advantage over the other competitors it is ideal for the company to maintain and standardize environmental policy according to the Silver Ferns environmental conduct (Croatia Bureau, 2014). Silver Fern Farm should action..

  • New employment opportunities with the government and parliament leaders.
  • Conduct workshops and awareness programs throughout the regions.
  • Discuss strategic regional action plans with existing suppliers and give them brief induction.
  • Launch public awareness with the level of quality and product safety.

Actions the firm could take to manage Demographic environment element The population is dominated by the 15–64year old segment. Croatia is young active middle aged and the risk of having high percentage of active workforce is that their demands and requirements will be very high. Keeping the active community is a really strong key for survival for any firm or an organization so that it needs a very powerful catering power for a high demand. Always the organization must keep a close watch in the community and should listen to what their desires and preferences. To introduce our products to the existing community will be fairly a challenge as Croats will not look at a foreign signs without a significant message. The messages and the advertisements have to be eye catching and very detail oriented so that with a set of people who are having high literacy rate things won’t be easy as it seems because the customer always expect the best for him and his community. However with the type of international exposure our company does have being in the industry for several years it will be not tough as one might say but the organization needs to put on a lot of initial investment until the product and the company gets stabilize (Croatia Bureau, 2014). Conclusion and recommendations By looking at the above listed facts and details explanations Croatia is a country which I feel that a perfect country with a high market potential for the Silver Fern product range. Given the facts that it is recommended that we launch this program with the best location and with its growth it is going to be a huge potential target market for the some of the big European countries who are surrounded. Therefore I conclude this report with a positive note with a high indication giving to the board of directors in order to act on this new project where it will only help for the betterment of the Silver Ferns future as a multinational company. References for part (i) and (ii) Silver Fern Farms. (2013). Our Co-operative. Retrieved from: https://www.silverfernfarms.com/our-co-operative ; (16 June 2014) Silver Fern Farms. (2013). Annual Report 2013. Retrieved from: https://www.silverfernfarms.com/assets/investors/Silver-Fern-Farms-annual-report-2013.pdf; (15 June 2014) Rohatinski, Ž . (2009). Economic Crisis and Monetary Policy. Croatian National Bank 2009. Retrieved from: www.hnb.hr/govori-intervjui/govori/egovor-rohatinski-7-7-2009.pdf ; (15 June 2014) The New York Times. (1990). Evolution in Europe; Conservative win in Croatia. Retrieved from: https://www.nytimes.com/1990/05/09/world/evolution-in-europe-conservatives-win-in-croatia.html?ref=croatia ; (15 June 2014) Correa, P., Tarade, L., & Borowik, I. M.(2010). The World Bank. Croatia’s Science and Technology Project Unleashes Innovation. Retrieved from: https://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/0,,contentMDK:22617141~pagePK:146736~piPK:146830~theSitePK:258599,00.html. (15 June 2014) Goldstein, I. (1999). Croatia a history. The First Centuries of Croatian History and the Establishment of the Croatian State. London, united Kingdom: Hurst & Co. Ott, K. (2002). The Underground Economy in Croatia 1990-2000. Institute of Public Finance Occasional Paper, (12). Ministry of Tourism. (2010). Lonely Planet: Croatia, the best destination in year 2005. Retrieved from: https://www.mint.hr/default.aspx?id=784; (15 June 2014) Company Formation Croatia. (2014). Company registration in Croatia. Retrieved from: https://www.companyformationcroatia.com/; (15 June 2014) PESTEL Analysis. (2014). What is PESTEL analysis? Retrieved from: https://pestleanalysis.com/ ; (15 June 2014) Croatian Bureau of Statistics. (2014). Census 2011. Census of Population, Households and Dwellings 2011. Retrieved from: https://www.dzs.hr/default_e.htm ; (15 June 2014) Rough Guide. (2014). Croatia // Food and drink. Retrieved from: https://www.roughguides.com/destinations/europe/croatia/food-drink/#; (15 June 2014)

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