Almarai Company’s

Expansion in Europe
Topic: Business & Economics Words: 5336 Pages: 20 Nov 28th, 2020

Introduction
In the globalized business atmospheres, players in individual industries
consider the expansion of their scope of operations in a bid to heighten
their competitiveness. Before a company enters a new market, it ought to
carry out an analysis of the internal and external factors that would affect
its functionality in the new environment (Kang & Montoya 2014).
Organizations include the expansion aspect of business growth and
development in their strategic plans for the sake of maximizing profits
besides attaining other business goals and objectives. For example,
multinational corporations such as Coca-Cola saw the essence of
expanding globally as a strategic plan over a century ago.

We will write a custom essay specifically for you for

only $16.05 $11/page
304 certified writers online
Learn More

Established in 1977 in Riyadh, Saudi Arabia, Almarai is a leading global

player in the food industry concentrating on dairy products (Sadi 2006).
The Irish and Saudi Arabian partners including two brothers, Alastair
McGuckian and Paddy McGuckian and Prince Sultan bin Mohammed bin
Saud Al-Kabeer respectively, had a long-term vision of expanding the
operations of the food industry operator to foreign markets (Woertz &
Keulertz 2015).

For this reason, Almarai focused on expanding its operations beyond the
Saudi Arabian territories as demand for dairy, bakery, and poultry
products grew globally. As part of its strategic plan, Almarai upheld the
essence of centralizing its plants in Saudi Arabia to cut its production
costs domestically (Asad & Henderson 2007). The strategy inspired the
growth of the business domestically and regionally as it secured at least
700,000 shareholders by 2005.

Almarai’s partnership with PepsiCo in 2009 leading to the establishment

of the International Dairy and Juice (IDJ) Company exposed its expansion
interests in the various global industries and markets (De Jong 2013).
Recently, the player has shown its interest in expanding its operations in
the European market as part of its internationalization strategy.
Therefore, Almarai ought to consider several aspects of the European
market including the business environment, operational similarities and
differences, available opportunities, European Union (EU) institutional
policies, and frameworks, main challenges, and the suitable business
strategy (Sadi 2014).

In this light, this paper identifies the reasons for Almarai choosing the
European region to establish its manufacturing plant before analyzing the
policy and institutional challenges and advantages that would influence
the operations of the company in the EU. Further, the paper would assess
three suitable EU countries where Almarai could erect its facilities to
operate competitively before selecting the most suitable country among
the identified. Additionally, identifying the factors for consideration in the
chosen country for the establishment of an effective production and
distribution facility would be a consideration in this paper before
recommending a strategy for the company’s prosperous operations in the
EU market.

Reasons for Choosing the EU for

Establishing Almarai’s
Manufacturing Plant
The EU presents Almarai with a strategic location for establishing its
manufacturing plant due to several factors. Selecting the region aims at
boosting the competitiveness of the player in the food industry by
expanding its operations beyond the Middle Eastern territories. In this
regard, conquering the European market would allow the player to gain a
competitive edge in other markets such as the Americas and Africa in the
long-term. Therefore, identifying the underlying factors that prompt the
company to consider establishing its production facilities in Europe is
crucial for understanding its suitability for Almarai’s international growth
and development intentions.

The strategic location of the European region presents suitable sites for
Almarai to consider for the erection of its manufacturing plant. The EU is
regarded as the world’s largest market workshop, and thus, developing a
manufacturing plant in the region would allow a player in any given
industry to blossom and flourish in the region and globally (De Jong 2013).
The Eastern, Western, and Central parts of the region present a business
environment with the potential of becoming the world’s largest economy
in the future as the EU envisions its development to a single country.

Get your 100% original paper on any topic

done in as little as 3 hours
Learn More

Europe presents itself at the heart of manufacturing and goods

exchanges. Europe attracts at least half a billion customers and clients as
well as providing a large logistics market that houses more than 6.5
million retail and wholesale businesses. Additionally, the EU hosts over
2.4 million manufacturing plants representing different and multiple
sectors (Thow, Downs, & Jan 2014). Therefore, the remarkable figures
imply that the region presents a promising atmosphere for establishing a
manufacturing and distribution plant that would foster the growth of
Almarai in the food and drink sector.

Furthermore, the high number of manufacturing plants in the EU

demonstrates the stability of its logistics sector, a crucial factor for
consideration when siting a manufacturing plant in any given location.
Surprisingly, the EU boats as the most profitable and largest logistics
market globally. The network of effective road freight, rail freight, marine
freight, and airfreight in the EU contributes to impressive regional
revenues, thus, streamlining the growth of the manufacturing sector.
Remarkably, in 2010, the logistics sector in the EU managed to gather
revenues in the tunes of €2,320 billion, thus, denoting the region’s
potential of generating notable revenues that boost the growth of
industrial players.

Additionally, Europe grants industrial players with a region characterized

by a skilled environment committed towards the development of high
technology besides its regard for the essence of research and
development (R&D) in the economy. Continued R&D in the health
sciences and technologies would favor the collaborative aspects of
Almarai’s plant operations by integrating new advancements in the food
production sector with its operations. Therefore, since the EU supports
extensive R&D in various domains including the food sector, developing a
plant in the region would allow the player to produce and distribute
quality food products to the customers (Collins et al. 2015).

The cost aspect of locating a manufacturing plant is a crucial

consideration for the success of a company that seeks to expand its
actions in a new environment. Importantly, when intending to expand, a
company ought to consider the plant costs such as leasing or buying land,
taxes, wages, training, communications, office equipment, and IT
infrastructure. Countries such as Britain have one of the lowest-cost
manufacturing economies in Western Europe.

The UE, led by countries like the United Kingdom (UK), is regaining its
consideration as the global manufacturing hub, and thus, emerging as
one of the cheapest facility locations for the manufacture of different
products. Over the past decade, Western European countries have
recorded an average of 10% improvement in production costs due to
improved productivity and stable wages (Thow, Downs, & Jan 2014).
Similarly, Eastern Europe has recorded low production costs over the past
few years, thus, presenting itself as an ideal location to site a
manufacturing plant. Importantly, the favorable labor costs in a
considerable number of EU states favor the admittance of the food
industry competitor in the European market. The mean hourly labor cost
in the EU stood at € 25.03 in 2015 as the highest and lowest hourly labor
costs reached €4.03 and €41.31 respectively (Baglee & Knowles 2013).
Therefore, Almarai would consider the favorable costs stipulated by
different countries in Europe for it to boost its productivity and
competitiveness in the European market.

The level of infrastructure development in the EU favors the

establishment of manufacturing plants that promote the growth of
different sectors of the economy. Importantly, the transport and
communications aspects of business operations play a crucial role in
influencing the effectiveness of a given company (Kang & Montoya 2014).
The ability of Almarai to share information flawlessly between its new
plant in the EU and its company Riyadh headquarters in the absence of
technical, language, or cultural barriers is essential.

We will write a custom essays specifically for you!

Get your first paper with 15% OFF
Learn More

In recent years, various countries in the EU have shown interest in

developing Next Generation Networks (NGNs) that would boost
communication in the region, thus, boosting industrial growth
significantly, by 2020, when All-IP architecture would characterize the
communication networks. Thus, Almarai’s plants in the EU would operate
seamlessly due to the advanced infrastructure in the different EU
countries resulting in ineffective processes that would boost its
performance in the food industry especially, in the dairy products sub-
sector.

Institutional and Policy Challenges

and Advantages within the EU
The expansion of operations of a given company into a new market is
usually subject to the institutional and policy frameworks that regulate
the processes of industry players in the economy. The institutional
structures in a given economy guide the way companies conduct their
administrative and operational procedures, thereby affecting the
corporate governance approach embraced by the company (Sleuwaegen
& Onkelinx 2014).

Similarly, an organization that seeks to widen its scope of undertakings

needs to comply with the policy provisions that regulate trading
processes in the foreign economy. Some institutional frameworks and
policy stipulations could favor an organization’s entry into a new market,
and thus, bolster its growth in the new market. However, a company
could find it difficult to operate in a new market due to the presence of
unfavorable provisions that undermine its survival in such economies
(Ahmed & Ali 2016). Therefore, analyzing the institutional advantages and
challenges that would affect the performance of Almarai in the EU is
appropriate in this context.
Institutional and Policy Challenges
The quality-labeling policy adopted by the EU could bar companies with
foreign origin from gaining competitiveness in the region’s food market
(Zander, Stolz, & Hamm 2013). In this respect, since Almarai traces its
roots from Saudi Arabia, some consumers in Europe could opt for similar
food products offered by domestic companies. Therefore, such favoritism
could undermine the profitability of the new entrant in the market, and
thus, undermine the sustainability of its operations in the EU. In this light,
the unfair competition supported by the European government policies
could undermine Almarai’s expansion prospects resulting in slow growth
in the international food markets.

The volatility of dairy prices besides the ineffectiveness of associated

instruments required for coping effects with the EU’s food sector
considerably. The volatility of the input and prices for dairy production in
Europe affects the production and processing of food products implying
that players in the industry could incur losses due to uncertainties
triggered by economic waves besides other policy frameworks. Therefore,
the financial aspect of Almarai’s operations in the EU would be affected
significantly by the price and input fluctuations that have characterized
the European food industry in the recent past.

Additionally, the ineffectiveness of some legislative frameworks

implemented in the EU such as the milk quotas could affect new entrants
in the region’s food industry. The policy showed its ineffectiveness and
limits in the milk crisis that created demand and supply imbalances in the
food industry due to poor timing before intervening. Therefore, not unless
the EU introduces intervention measures promptly during crises in the
food sector, new players in the sector including Almarai would operate
unsuccessfully.

Moreover, challenges such as the uneven implementation of a cost-

covering policy, lack of market transparency, and ineffectiveness of some
dairy supply chain processes in particular European countries affect the
food industry negatively (Manzini & Accorsi 2013). The issues suggest
that, as a stakeholder, Almarai ought to maintain vigilance on the aspects
that would trigger its failure in the European market. In this light, amid
the growth potential that the EU presents to Almarai, several challenges
could undermine its development if not fully addressed.

Institutional and Policy Advantages

The EU has established several institutions that seek to develop and
implement policies geared towards enhancing the growth of the region’s
food and drink industry. The notable institutions that have spearheaded
the development and execution of policies in the region include the
European Parliament, Council of the European Union, European
Commission, European Economic, and Social Committee, and the
Committee of Regions (Nestle 2013).

Need a 100% original paper written from scratch by

professional specifically for you?
304 certified writers online
Learn More
Additionally, agencies such as the European Food Security Authority,
European Environment Agency, and the Consumers, Health, Agriculture,
and Food Executive Agency (CHAFEA) have contributed largely towards
creating an enabling environment for food industry companies to conduct
their operations in the EU, successfully.

For the sake of bolstering the growth and development of the food
industry in Europe, the EU created a common agricultural policy that
serves multiple purposes and functions that also affect the food sector.
The EU agricultural and food-related institutions contributed to the
establishment of a policy that aims at assisting farmers to produce
adequate food quantities to feed the European population and beyond.

Therefore, such a policy implies that Almarai would benefit from the
abundance of inputs for its manufacturing plant in the region. For
instance, sufficient dairy inputs supplied by the EU farmers to Almarai
would ensure a streamlined flow of its production processes, and thus,
meet the demand of its customers not only in the region but also globally.

Additionally, the EU established a policy that pursues the modernization

of farming processes in various countries. For this reason, the EU has
injected huge investments in the agriculture and food sector to improve
the efficiency of agricultural production and processing endeavors.
Albania provides a good example of countries that have seen the growth
of its food sector thanks to the EU’s Modernisation of the Agricultural and
Food Sector Policy. The policy integrated technological advancements in
the agricultural and food areas, thereby encouraging the emergence of
processing plants and the growth of the food industry (Ahmed & Ali
2016).

Furthermore, the EU has put in place quality-labeling schemes that guide

the producers and consumers regarding the manufacturing components
and purchasing considerations. The schemes encourage individuals in the
EU to consider purchasing food products produced or processed in the
region for the sake of promoting economic growth (Collins et al. 2015).
Therefore, Almarai’s establishment of a plant in Europe would allow it to
penetrate the market easily given that the customers inquire about a
product’s country of origin prior to purchasing. Additionally, the quality-
labeling policy requires processors and manufacturers in the food sector
to employ traditional methods or ingredients of farming like in the case of
organic farming.

Suitable Countries in the EU for

Almarai’s Production and
Distribution Facility
The EU is comprised of several countries that have a common interest in
spearheading political, economic, and social growth and development.
The EU integrates the economies of 28 member states that contribute to
at least 26% of the global Gross Domestic Product (GDP). The EU enjoys a
significant number of consumers exceeding 500 million with a high
purchasing power, thereby making the region the largest single market
globally. Furthermore, the single currency, that is, the Euro is used in at
least 19 countries, thus, improving the efficiency of transactions by
eliminating the currency exchange barrier (Ingram et al. 2013).

However, despite the efforts put by the EU to create an environment /that

allows seamless economic processes, some structural and policy
differences in the individual countries could influence the decisions made
by investors who seek to establish their plants in the region. Therefore,
analyzing at least countries in the EU that would be suitable for Almarai’s
operations in the said region is essential.

Ireland
Ireland is recognized as one of the leading countries that produce the
best quality food and drink products in the international markets.
Interestingly, the food output in the country can feed its population eight
times. Therefore, the stable output of food products from the country
imply that Almarai could enjoy a stable supply of agricultural inputs
before processing and distributing to the regional and international
market. For this reason, food and drink industry players such as Coca-
Cola, Nestlé Nutrition, PepsiCo, and Abbott Nutrition have considered
Ireland as a suitable location for their operations since it is strategic for
accessing the European and global markets (Jess et al. 2014).

Ireland has an infrastructure that supports and encourages new

investment in the country. Over the last few decades, in a bid to bolster
export-focused enterprises, Ireland invested significantly in the
infrastructure aspects of IT, communications networks, efficient logistics,
and sea and air connectivity. Furthermore, Ireland has invested in R&D to
boost innovation in food production, and thus, boost the competitiveness
of food products produced and processed in the country (Grunert & Traill
2012). In this light, Almarai’s entry into Ireland would allow it to benefit
from the efficient infrastructure that supports international trade.

Ireland has a fair taxation system that inspires business and investment.
The competitiveness of the country’s corporate taxation regime has
allowed it to offer companies with R&D tax-based incentives, low
corporate taxes, and fostering operations, and intellectual property
acquisition (Mytton, Clarke, & Rayner 2012). Therefore, the taxation
structures imply the Almarai could operate smoothly in Ireland by cutting
the operational costs. The company could also benefit from the cost-
cutting aspect of operations given that the country offers a highly skilled
and competitive workforce ready to offer their services in the food
industry.

The United Kingdom (UK)

The UK claims to have one of the effective food industries in the EU. The
food and drink sector in the UK contributes a turnover of at least £96
billion annually, making it the largest manufacturing division of the UK
economy. The industry is comprised of 7,000 corporations, thereby
creating jobs for 400,000 individuals. The sector’s competitiveness has
been boosted by the government’s R&D incentives that have facilitated
the introduction of at least 16,000 new products annually (Law, Harvey, &
Reay 2013). Therefore, the entry of Almarai into the market would
anticipate stiff competition from the already established companies in the
sector.
The UK government supports the development of new products in the
food and drink industry as demonstrated by the 8,500 products
introduced to the stores annually. Furthermore, due to health concerns,
the UK has implemented policies that seek to heighten health awareness
besides improving the well-being of the general population. The
government requires industry players to consider the essence of offering
healthy products to clients by reducing the sugar levels and introducing
micronutrient additives besides lowering salts and increasing fiber
content in the food products (Nestle 2013). In this regard, the production
processes undertaken by Almarai in such a country need to consider the
health concerns for effective operations in the market.

The distribution aspect of manufacturing corporations in the UK is

fostered by the country’s effective supply chain system. The supply chain
in the country facilitates the distribution of at least 6.3 billion product
cases annually (Law, Harvey, & Reay 2013). For this reason,
manufacturers can deliver and receive returned goods within 24 hours
thanks to a wide and effective distribution network. The profound supply
chain network would allow entrants like Almarai to streamline its
distribution processes, and thus, meet the needs of its customers
promptly.

The height of innovation and technology in the UK’s food manufacturing

sector employs IT, life sciences, and engineering to realize advanced
consumer needs, foster productivity, and reduce detrimental impacts on
the environment. Additionally, increased investment in R&D aims at
enhancing the competitiveness of food and drink sector companies by
emphasizing on branded products, value addition, and skill-intensive
products (Grunert & Traill 2012). Thus, Almarai would benefit from a pool
of innovation and technological advancements available in the UK,
thereby enhancing the productivity of its production and distribution
processes.

Germany
Germany is another country that demonstrates an interesting food and
beverage industry environment. With at least 82 million food and
beverage products customers, the country boasts one of the largest retail
markets in the EU (Bieberstein et al. 2013). In 2013, the food retailing
revenues reached an impressive €180.4 billion (Meier et al. 2014). The
food and drink industry comprises of the fourth largest manufacturing
sector in Germany. The market segmentation entails the baked goods,
milk products, fruits and vegetables, meat and sausage products,
confectionery and snacks, and a variety of beverages. In this light, the
variety of food and drink inputs from the locally available agricultural
products would provide a steady flow for Almarai’s processing facilities
before delivering the finished products to the German customers and
beyond.

For these reasons, the German economy has attracted players in the food
and drink industry including Nestlé, Coca-Cola, Vion Food Group, and
Mondelez International. The existence of such competitors hints at the
level of competitiveness in the market dominated by multinational
corporations (MNCs). Nestlé intends to invest €220 million for the erection
of a factory-made up of 12 production lines, thus, denoting the
opportunities that the country presents in the food and beverage sector
(Bigliardi & Galati 2013). Therefore, Almeria’s entry into the German
market would prompt some creativity and innovation in its marketing
strategies to boost its product sales in the European market.

Moreover, the emphasis non-R&D in the food sector has allowed

interested parties to carry out studies that seek to bolster the productivity
of food and drink sector processes. The technological advancements
engineered by the German government also seek to spearhead efficacy
in the sector as part of the major contributors to the country’s GDP
(Lelieveld, Holah, & Napper 2014). Additionally, the government also
concentrates on the production and distribution of food and drink
products that consider the aspects of wellness, safety, and convenience.
In this light, Almarai needs to take into consideration the production and
delivery of standard products within and beyond the German market.

As seen, the UK presents a suitable site for establishing Almarai’s

production and distribution plants as part of its expansion strategy
implemented in the European market. The significant number of new and
existing customers renders the location strategic for Almarai’s growth.
Additionally, the proximity of the UK to product innovation and
development would significantly facilitate the production of quality food
products. Furthermore, the UK economic environment allows investors to
find new suppliers and partners thanks to its efficient supply chains and
availability of investors (Manzini & Accorsi 2013). Lastly, the UK is suitable
for the establishment of Almarai’s production and distribution facilities
since it houses several Enterprise Zones that offer investors reduced
taxes, financial benefits, and simple planning provisions.

Factors Almarai Should Consider in

Setting up its Production and
Distribution Facility in the UK
When setting up a business facility in a foreign environment, a company
ought to consider several factors that influence its operations, thus,
affecting its sustainability. The key factors for consideration in a new
market include the capital investment strategy, location, local knowledge
and expertise, infrastructure, policies and regulations, the supply chain
network, competition, market demand, and technology among other
factors. Therefore, Almarai ought to put into consideration these factors
for the sake of enhancing its seamless expansion in the EU market by
erecting its production and distribution facility in the country.

Location
The selection of an optimum location to site a company’s production and
distribution facility is crucial since it influences the success of the
business (Mytton, Clarke, & Rayner 2012). Therefore, Almarai needs to
consider a location that is ideal for erecting its plant by factoring issues
such as taxation, proximity to the market, availability of labor, and
government preferences. The location is also important for facilitating the
ease of acquiring farm inputs to feed the production plants before
delivering the finished food products to the customers, thereby
streamlining its supply chain and logistics aspects in the EU. The
Enterprise Zones established by the UK government would be favorable
for Almarai’s operations due to the reduced taxation among other
incentives and benefits it provides.

Laws, Rules, and Regulations

The erection of a production and distribution facility in the UK setting
would require Almarai to uphold compliance with the national and
regional laws, rules, and regulations that guide the activities of the food
industry. Failure to comply with the stipulations would welcome
considerable penalties to the company, thereby undermining its smooth
entry into the EU. In the UK, the government underlines that the food and
drink sector should engage in the production and distribution of safe,
affordable, and healthy products to consumers besides adhering to all the
regulations that govern the sector (Lelieveld, Holah, & Napper 2014). In
this case, Almarai’s compliance with the UK stipulations is crucial for
legitimizing its operations in the European market.

Market and Demand Forces

Carrying out an exploration of the market dynamics and demand for the
products or services offered by a company is a crucial consideration for
its expansion strategy. Some products and services could only satisfy the
local market while others seek to fulfill the demand of the international
market. Interestingly, UK consumers are characterized by busy lifestyles
that prompt the emergence of a convenient food market to fulfill the
dynamic needs of its customers. For this reason, the value of the food
industry is expected to reach the £46.2 billion mark by 2018 (Jess et al.
2014). In this regard, the expansion of Almarai’s operations in the
European market would allow it to benefit from the anticipated growth of
the food sector. Therefore, the available market should be considered as
essential for the successful operations of the company in the new
environment.

Technology and Innovation

An organization that seeks to expand its operations in a new market
ought to consider the integration of innovation and technology in its
operations to allow it to perform efficiently, and thus, boost its
competitiveness. The technology would entail plant machinery and office
equipment. In the UK food and drink industry, the quality of products is
emphasized especially, regarding hygiene and safety aspects.
Furthermore, an emerging trend of product innovations and advances are
changing the way the UK population drink and eat. The UK is the first EU
member state to familiarise ready coffee, instant meals, and frozen food
(Bigliardi & Galati 2013). Therefore, Almarai should know that it is
entering a market that upholds the essence of innovation and technology
in fostering the quality of food and drink products.

Labour Force Availability

Companies that intend to expand their undertakings in new territories by
establishing new facilities need to understand the available labor force
comprehensively. Currently, the UK recorded an impressive employment
rate of 73.7%, thus, denoting the stability of its labor market (Baglee &
Knowles 2013). The availability of a skilled and experienced workforce in
the UK’s food and drinks sector makes it easy for new entrants to acquire
and develop talented professionals that would eventually boost their
productivity. In this respect, given that labor is a key aspect of production,
Almarai ought to take advantage of the stable employment policies that
also ensure that new entrants in the economy employ the skills of the
local population in facilitating the productivity of their production and
distribution endeavors.

Competition
The level of rivalry in a particular industry welcomes consideration among
the different players in a bid to gain a competitive edge in the market.
Similarly, a corporation that seeks to broaden its operations in foreign
markets including the largest market globally, in the EU, should consider
the level of competition critically (Lang & Heasman 2015). Therefore,
Almarai needs to evaluate the institutional and policy provisions that
regulate competition in the food and drink sector (Lang & Heasman
2015). Importantly the quality and origin labeling provisions that require
companies to indicate the origin of a product implies that Almarai would
also benefit since it would produce and distribute the food products
competitively.

Recommendation
For a successful entry into the European market, Almarai ought to
consider the integration of a functional plan that would enhance its
accomplishment in the highly competitive food and drinks industry.
Importantly, before entering a new market, a company should engage in
feasibility studies that facilitate the analysis of factors that influence the
operations of the competitor. In this case, Almarai needs to engage in a
practical action plan that would facilitate a smooth entry into the EU food
and drink industry.

Thus, Almarai could contemplate the integration of a market entry

strategy the focuses on several key steps. The steps include the definition
of the market, performance of market analysis, assessment of the
internal capabilities, entry into the market or seeking another target
market, and developing a market entry plan and options. In doing so, the
company would apply a systematic action plan that would minimize its
chances of failure in the European market.

Definition of the New Target Market

The initial step that a company should consider in its expansion efforts
entails the definition of the market by factoring the geographic location
and demographic aspects of the new target market (Sleuwaegen &
Onkelinx 2014). In this regard, Almarai would define its new market niche
by maintaining the same target group in a new geographic area. Thus,
since Almarai intends to sell to a similar target group compared to the
one in the Middle East, it should have a detailed profile of the EU
consumers. As such, defining the target market based on consumer
profiling would allow the player to prioritize fulfilling the needs of the
customers in a way that also observes UK’s institutional and policy
frameworks that govern the food and drinks sector.
Performance of a Market Analysis
After defining the target market, a company intending to expand its
operations in a new market should endeavor in a market analysis to
understand the dynamics and needs of the new market (Grant 2016). The
market analysis allows the company to determine the customers’ interest
in its products or services. Market research ensures that a company like
Almarai understands the trends that influence customer behavior.
Furthermore, the analysis would foster an understanding of the
weaknesses and strengths of its rivals, thereby influencing decision-
making processes.

An Assessment of Internal
Capabilities
Assessing the internal environment besides the external forces is crucial
for gauging the capacity of the company to perform successfully in a new
market (Sleuwaegen & Onkelinx 2014). In this regard, Almarai could
evaluate the extent to which its competencies could apply as an
advantage to bolster its competitiveness. As such, the company could
assess its financial health, sales channels, relationships, and available
infrastructure. In doing so, the company would enhance its strengths
besides addressing its weaknesses.

The decision to Enter the Identified

Market or Not
After conducting the external and internal analyses, a company that has
put expansion efforts will understand whether the new market has growth
potential for its products or services (Grant 2016). Thus, if Almarai’s entry
into the European market is a financially sound decision, it should not
hesitate to implement it. In case its entry into the EU would trigger
financial losses, then it should pursue an alternative market.

Entry to the Market

After deciding to enter a particular market, an enterprise needs to
establish an effective strategic plan (Kang & Montoya 2014). In this
respect, Almarai’s decision to enter the EU market by setting its
production and distribution facility in the UK could concentrate on the
promotion of its food products for it to realize desirable sales in the
European region. Then, the food industry competitor could utilize the
advanced infrastructure to foster the effectiveness of its logistics and
supply chain management by acquiring inputs promptly before delivering
the finished products to the customers. Moreover, entering a new market
requires the player to create a considerable market share besides the
sustenance of current operations through customer satisfaction.

Conclusion
The entrance of Almarai to the EU market requires the consideration of
several factors that would influence its expansion efforts. The erection of
its manufacturing plant in the EU depends on aspects such as its strategic
location, the growth of the food production sector in the region,
infrastructure development, and the market’s potential. Additionally, the
EU’s institutional and policy aspects have a considerable impact on the
operations of Almarai in the region since some provisions could not favor
its entry.

Besides Ireland and Germany, the UK presents Almarai with a suitable

environment to facilitate its expansion efforts due to advantages such as
favorable taxation, availability of Enterprise Zones, heightened
innovation, technology, and investment in R&D among other benefits.
Therefore, before establishing its facility in the UK, Almarai ought to
consider issues such as the location, technology, laws and regulations,
labor force availability, competition, and infrastructure. However,
Almarai’s entrance to the EU requires the consideration of a step-by-step
action plan that concentrates on defining the market, assessing the
environment, evaluating its internal capabilities, deciding whether to
enter or not and entering the market through a strategic plan to boost its
sustainability.

Reference List
Ahmed, F & Ali, R 2016, ‘The factors that affect consumers’ decision
making of repeated milk purchasing’, The Business & Management
Review, vol. 7, no.2, pp.68-76.

Asad, M & Henderson, J 2007, ‘In search of greener pastures: Almarai and
dairy food business in Saudi Arabia’, British Food Journal, vol.109, no.8,
pp. 637-647.
Baglee, D & Knowles, M 2013, ‘Maintenance strategy development in the
UK food and drink industry’, International Journal of Strategic Engineering
Asset Management, vol.1, no.3, pp.289-300.

Bieberstein, A, Roosen, J, Marette, S, Blanchemanche, S & Vandermoere,

F 2013, ‘Consumer choices for nano-food and nano-packaging in France
and Germany’, European Review of Agricultural Economics, vol. 40, no.1,
pp.73-94.

Bigliardi, B & Galati, F 2013, ‘Innovation trends in the food industry: the
case of functional foods’, Trends in Food Science & Technology, vol.31,
no.2, pp.118-129.

Collins, B, Capewell, S, O’Flaherty, M, Timpson, H, Razzaq, A, Cheater, S,

Ireland, R & Bromley, H 2015, ‘Modelling the health impact of an English
sugary drinks duty at national and local levels’, PloS One, vol.10, no.6, pp.
1-13.

De Jong, H 2013, The structure of European industry, Springer, Berlin.

Grant, R 2016, Contemporary strategy analysis: Text and cases edition,

Wiley, New York.

Grunert, G & Traill, B 2012, Products and process innovation in the food
industry, Springer, Berlin.

Ingram, J, Wright, L, Foster, L, Aldred, T, Barling, D, Benton, T, Berryman,

P, Bestwick, S, Bows-Larkin, A, Brocklehurst, T & Buttriss, J 2013, ‘Priority
research questions for the UK food system’, Food Security, vol. 5, no. 5,
pp. 617-636.

Jess, S, Kildea, S, Moody, A, Rennick, G, Murchie, A & Cooke, L 2014’,

‘European Union policy on pesticides: implications for agriculture in
Ireland’, Pest Management Science, vol. 70, no.11, pp.1646-1654.

Kang, W & Montoya, M 2014, ‘The impact of product portfolio strategy on

financial performance: The roles of product development and market
entry decisions’, Journal of Product Innovation Management, vol.31, no.3,
pp. 516-534.

Lang, T & Heasman, M 2015, Food wars: The global battle for mouths,
minds, and markets, Routledge, London.

Law, R, Harvey, A & Reay, D 2013, ‘Opportunities for low-grade heat

recovery in the UK food processing industry’, Applied Thermal
Engineering, vol.53, no.2, pp.188-196.

Lelieveld, H, Holah, J & Napper, D 2014, Hygiene in food processing:

principles and practice, Elsevier, Amsterdam.

Manzini, R & Accorsi, R 2013, ‘The new conceptual framework for food
supply chain assessment’, Journal of Food Engineering, vol.115, no.2,
pp.251-263.

Meier, T, Christen, O, Semler, E, Jahreis, G, Voget-Kleschin, L, Schrode, A

& Artmann, M 2014, ‘Balancing virtual land imports by a shift in the diet.
Using a land balance approach to assess the sustainability of food
consumption. Germany as an example’, Appetite, vol.74, no.1, pp. 20-34.

Mytton, T, Clarke, D & Rayner, M 2012, ‘Taxing unhealthy food and drinks
to improve health’, British Medical Journal, vol.344, no. 7857, pp. 1-7.

Nestle, M 2013, Food politics: How the food industry influences nutrition
and health, University of California Press, Berkeley.

Sadi, M 2006, ‘Case study: marketing perspective of Almarai dairy food

company’, International Journal of Management Cases, vol.9, no.1, pp.42-
50.

Sadi, M 2014, ‘Marketing trends and future challenges: A review of dairy

industry in Saudi Arabia’, International Journal of Dairy Technology, vol.
67, no.4, pp.459-466.

Sleuwaegen, L & Onkelinx, J 2014, ‘International commitment, post-entry

growth and survival of international new ventures’, Journal of Business
Venturing, vol.29, no.1, pp.106-120.

Thow, A, Downs, S & Jan, S 2014, ‘A systematic review of the

effectiveness of food taxes and subsidies to improve diets: understanding
the recent evidence’, Nutrition reviews, vol.72, no.9, pp.551-565.

Woertz, E & Keulertz, M 2015, ‘Food trade relations of the Middle East and
North Africa with tropical countries’, Food Security, vol.7, no.6, pp.1101-
1111.
Zander, K, Stolz, H & Hamm, U 2013, ‘Promising ethical arguments for
product differentiation in the organic food sector: A mixed methods
research approach’, Appetite, vol.62, no.1, pp.133-142.

Starbucks and McDonald’s Employee Empowerment

Marx's Labor Theory in Garnham's and Fuchs's Views

Cite this paper

Select style

 APA-6
 APA-7
 MLA-8
 Chicago (N-B)
 Chicago (A-D)
 Harvard
Reference
StudyCorgi. (2020, November 28). Almarai Company’s Expansion in
Europe. Retrieved from https://studycorgi.com/almarai-companys-
expansion-in-europe/
Powered by CiteChimp - the best automatic reference generator
Copy to clipboard

This paper was written and submitted to our database by a student to

assist your with your own studies. You are free to use it to write your own
assignment, however you must reference it properly.

If you are the original creator of this paper and no longer wish to have it
published on StudyCorgi, request the removal.

3 hours!
Clock image
We'll deliver a
100% original paperthis fast
Learn More

Related Free Essays

Market-Based Compensation Program Effectiveness

Updated: Feb 15th, 2021

Market Failures and Public Response Relationship

Updated: Feb 15th, 2021

Brazilian Real and British Pounds Exchange Rate

Nov 28th, 2020

Apple Inc.’s Corporate Strategy and Global Ethics

Nov 28th, 2020

Dutch-Lebanese Cross-Cultural Management

Updated: Jun 8th, 2021

Agricultural Role in African Development

Nov 28th, 2020

British Petroleum Company’s SWOT and PESTLE Analysis

Updated: Jun 7th, 2021

Employee Training Using Simulation Game

Nov 28th, 2020

Check the price of your paper

 About
 FAQ
 Study Blog
 Essay Topics

 Careers
 Donate a Paper
 Content Removal

 Free Writing Tools

 Conclusion Generator
 Thesis Maker
 Essay Reworder
 Online Plagiarism Checker
 Essay Rephraser
 Summary Generator
 Read My Paper
 Research Title Generator

 +1-888-881-3158
 [email protected]

 Facebook
 Twitter
 Pinterest
 Youtube

© 2021 StudyCorgi.com

 Privacy & Cookies Policy