Mull Organic Foods – Outcome 1
For the purpose of this report I have chosen to look at Czech Republic as a possible international market for Mull Organic Foods.
3 Reasons why Mull Organic Foods may want to start selling to international markets
Mull Organic Foods may want to start selling to an international market for a variety of reasons such as: 1) Market saturation – the domestic market may not offer any prospects for significant growth anymore but offers significant risk. Businesses that operate in more than one market will feel any region-specific issues with less impact than a business that trades only in one market. 2) Attracts better staff – a business that trades in international markets will often develop a global presence, which is attractive to possible employees, so the business will be able to recruit better qualified and motivated staff who wish to work for a company that can help them develop globally. 3) Or maybe their competitors are entering international markets and by not doing the same they might create a disadvantage for the company in the domestic market influenced by reputation, as customers perceive exported/imported good to be better and in many foreign markets the “Made in Britain” label is considered desirable as British products are associated with quality and luxury. Etc.
Examples of 3 sources of information that would be useful in helping Mull Organic Foods enter international markets
When considering entering an international market, a business can use 2 types of sources of information, primary i.e. information which is gathered by the company for a specific purpose, and secondary i.e. information that already exists which is easily accessible and saves time. The company’s use and interpretation if this information, as well as the quality of the information will determine the effectiveness of the company’s strategy. 1) The British Chamber of Commerce (BCC) – is the UK national body of 52 accredited chambers of commerce that represents 92000 businesses and its members range from growth-oriented start-ups to subsidiaries of multinational companies. The British Chamber of Commerce has offices in London and in Coventry, and they have an online source, Export Britain, which presents opportunities in key international markets and makes the link between British exporters and the support available from British Chamber and business groups in the UK as well as around the world. In regards to Mull Organic Foods, Czech Republic is being considered one of the 41 high growth and emerging markets at the moment. 2) Scottish Enterprise – started its operations in April 1991 and is a sponsored non-departmental public body of the Scottish Government which encourages economic development, enterprise, innovation and investment in business. 3) World Trade Organization – The WTO is the only global international organization dealing with the rules of trade between nations and its main function is to ensure that trade flows as smoothly, predictably and freely as possible. At the core of this multilateral trading system are the WTO agreements, negotiated and signed by a large majority of the world’s trading nations and ratified in their parliaments, these agreement are the legal ground-rules for international commerce. The goal of the World Trade Organization is to help producers of goods and services, exporters and importers to conduct their business.

PEST analysis for Czech Republic
Political
The Czech Republic has gone through some major economic reforms privatizing a majority of its sectors such as telecommunication, banking, etc., and is a stable economy, has experienced robust growth for the last 10 years, and the country’s GDP is forecast to reach £195.6 in 2017, which makes it a favourable destination for investment. Growth has been led by exports to the European Union, especially Germany, as well as foreign investment, while domestic demand is reviving. Czech Republic is part of the Schengen Area and has completely opened its borders to all its neighbouring countries such as Germany, Poland, Slovakia and Austria, and even though it is better positioned than other EU Members to adopt the euro, the change is not expected before 2019.
Annual growth rate (Source - Oxford Economics) 2011 2012 2013-16 GDP | -0.9 | -1.1 | 2.8 | Import of good and services | 2.5 | 0.7 | 5.7 | Inflation | 3.3 | 1.4 | 1.7 | Exchange rate (per £) | 30.89 | 29.12 | 30.41 |

Economic
The Czech Republic’s economy grew by 1.6% in the fourth quarter of 2013 and the statistical office suggested that investment was the main driver of this growth. The open investment climate and huge potential in sectors such retail, energy, automotive and construction is expected to drive the economy over the forecast period. After the economic recession the economic conditions and global recovery started to revive and the country’s economy registered a 2.3% growth in 2010 and a further growth by an average of 3% during 2012-16, and is expected to witness a modest rate of 2% over the next 5 years. According to statistics, in 2014, the average salary in Czech Republic is £580, the population spends 15% of their annual income on food, and the unemployment rate was at 7.8%. The country also has a low labour cost in comparison with countries in Western Europe, which is an advantage for foreign investors.
After a period of cutbacks, Czech firms have started to raise their investment in the light of an improving external background which reflects both rising foreign demand and a weakening exchange rate. A pick-up in activity in the country’s main trading partners, such as Germany, Poland, France and the UK, should lead to a rise in exports.

Social
The Czech Republic is a politically stable environment and economically growing country with many incentives for a foreign investors. The Czech people are said to be formal people that avoid confrontation to maintain the social expectation of politeness, they are structured and tend to adhere to rules and regulations.
In today’s, what seems to be something of a world-wide movement towards a healthier eating and lifestyle which is becoming increasingly popular, Mull Organic Foods, would find in the Czech Republic and increasing number of people interested in organic, hand produced, without artificial colouring products. One evident change to support people’s perception about healthy eating is the replacement of white bread with wholegrain bread by a big proportion of the country’s population.
Technological
The Czech Republic’s infrastructure is ranked number 19 in quality in the European Union, and this is due to low quality secondary roads throughout the country, but improvements have been made. A 283 km motorway was built in the country which makes more regions easier accessible. This led to major improvements in the transportation of good across the country. Czech Republic’s capital, Prague, is home to a large international airport, and the country also has one of the densest train networks in Europe which means there is easy accessibility and transportation throughout the country. This is very important for Mull Organic Foods as its products need efficient and speedy transportation channels, due to its production processes. Opportunities | Threats | * Foreign investment incentives * Favourable labour costs and price stability | * Intense competition and changing global retail scenario * Rapidly ageing population |

The process Mull Organic Foods might go through in order to select an international market
Czech Republic offers UK businesses a sophisticated market where English is widely spoken and where British products are well received, the country is located in the heart of Europe offering very good links to neighbouring markets and it offers many business opportunities which include the food & drink sector. But in order for Mull Organic Foods to choose an international market, it has to first decide the method of exporting, direct or indirect.
As Mull Organic Foods are keen to keep some control over where the products are sold, they might consider direct exporting, which mean they will do the exporting task themselves rather them using an intermediary. In this way, sales are made directly to the overseas customer who may be a wholesaler, retailer or and end user such as an agent, distributors, company branches abroad, etc.
In deciding on the international market entry method, Mull Organic Foods must carefully consider each market entry mode in terms of numbers of dimensions such as cost, commitment, control, risks and speed.

Cost is probably one of the most important factors as poor decisions when choosing a foreign market can be very costly for the company and it can determine long-term success or withdrawal from that market. So apart from production and distribution costs in the UK, it is very important for Mull Organic to know what is the cost for shipping, import duties, overseas storage and distribution, foreign taxes such as VAT, etc. and the company should consider all of these elements and carry out a full assessment of the likely cost or risking losing money and possibly affecting its current business setup.
Speed is another aspect the company must consider and decide how quickly does it want to enter the foreign market because there might be certain rules and regulations that will require more time for obtaining the necessary permits, etc.
Risk factors are also important in the entry mode decision as they can have a direct impact on the businesses profit expectations.
Control is another factor a company will take into consideration as it will want to have some degree of control over how its products are being presented and sold on the foreign market, so for example Mull Organic will probably not choose an indirect exporting method as this is done through domestically based export intermediaries and the exporter has no control over its product in the foreign market.