With the growing use of the Internet and several other electronic technologies, global communication is hastily escalating. The resulting impact is firms’ collaboration within the country and even venturing in international markets. This has driven stiff competition as organisations struggle to be fast movers.
Olivar Santamaria is a Spanish company that was established in 1952 and is based in Puerta de Hierro, Sevilla, in Spain. Olivar Santamaria concentrates on the manufacture and production of several types of olive oils. The company has excelled and has been awarded on several occurrences, most recent ISO 9001:2008, which portrays that the organisation stresses quality throughout its production processes and institution. It has further received an award based on the institution’s environmental conversation efforts. This signifies and implies that Olivar Santamaria has established itself as a brand of utmost quality that values the environment. It is the objective of the company to venture its products into the United Kingdom olive oil industry.
The United Kingdom olive oil industry is characterised by stiff competition. Thus, it is imperative for Olivar Santamaria to develop strategies that will successfully aid it in getting a competitive edge over other United Kingdom based companies. The United Kingdom olive oil industry is a growing one, and therefore Olivar Santamaria has the potential to gain a substantive market share. Olivar Santamaria will further utilise various monitoring and evaluation procedures in order to ensure the success of its marketing strategy. The overall aim and objective of this situation analysis is to develop a comprehensive and elaborate marketing strategy that will aid Olivar Santamaria, a Spanish organisation that specialises in the production and manufacture of olive oil, venture into the United Kingdom as its new market.
Olivar Santamaria is a Spanish organisation that specialises in the production and manufacture of Olive Oil. The organisation is based in Puerta de Hierro, Sevilla, in Spain. This section analyses the internal strengths and weaknesses of Olivar Santamaria and their implications on the performance of the institution. In addition, this section analyzes the external factors in terms of opportunities and threats that can adversely affect the performance of the Spanish producer of olive oil.
The organisation has been in operation since its establishment in 1952. This means that it has a vast and versatile experience in the specialization of olive oil production. According to the official website of Olivar Santamaria (2012), the firm has built its brand name and has been certified through the award of ISO 9001:2008, which relates to quality management. In addition, the firm has been awarded for its environmental preservation efforts. This implies and signifies that Olivar Santamaria is a brand known regionally to provide utmost quality in the products that it offers to its clientele. The brand has also a reputation of being friendly to the environment thanks to its environmental efforts, and thus has a reputation for corporate social responsibility. In addition, the firm has invested in institutional infrastructure that has greatly enhanced its production capacity and efficiency. Further, the firm owns a farm with a large variety of olive trees and thus can produce olive oil in large scale.
Olivar Santamaria has not previously had any links with the olive oil industry in the United Kingdom. This implies that the firm may face a challenge when venturing into the United Kingdom olive oil industry and market. This may pose costly implications on the institution just as it will be venturing into the new market. Lack of such experience can make the company vulnerable from an already well-developed olive oil industry that characterises the United Kingdom.
According to Weston (2010), there has been an increase in the volumes of olive oil that have been demanded in the United Kingdom. Weston (2010) illustrates this through postulating that the demand of olive oil in the United Kingdom has increased by 3% in the last decade. This implies that the olive oil industry in the United Kingdom is growing, and thus supply should increase. As a result, Olivar Santamaria has the opportunity to explore the United Kingdom’s olive oil industry as a potential market for its products.
There are a number of institutions and organisations which specialise in the production of olive oil in the United Kingdom. This means that there exists a competition in the United Kingdom olive oil industry. Competition has the effect of enhancing the quality of olive oil products and further reducing prices of olive oil. This may pose a challenge to Olivar Santamaria because it has to incur the costs of transportation from Spain to the United Kingdom. This is likely to place Olivar Santamaria at a disadvantaged position when it comes to the lowering of prices of its products. In addition, the already established olive oil suppliers in the UK may react in a way that will lock out of UK’s olive oil industry.
All institutions and organisations conduct their operations and activities within their certain environments (Oldroyd, 2007). According to Oldroyd (2007), these environments can adversely affect the institutional and organisational relations between the company and its clientele. These environments are defined as marketing environments. In this particular case, this marketing plan analyses the marketing environment within the United Kingdom with reference to the economic, legal, infrastructural, and socio-cultural environment. In addition, this marketing plan focuses on the effect of these environments on the operations of institutions and organisations. A figurative representation of a marketing environment is shown below in
The United Kingdom is a member state of the European Union. The United Kingdom has however not embraced the Euro (€) as its currency. Instead, it utilises the British Pound (£) as its currency. This implies that unlike the other European nations that have embraced the Euro, the United Kingdom controls its monetary policy through the Bank of England. The United Kingdom is still recovering from the effects of the economic recession that hit most of the world’s biggest economies in 2008 (UK economic growth revised up to 0.6% 2011). The United Kingdom is also currently hosting the Olympics 2012. This event expected to have a positive impact on the UK’s economy. According to Foley (2012), the 2012 Olympics in London will increase the gross domestic product of the United Kingdom’s economy by £16.5 billion. This implies and signifies that the United Kingdom has future economic growth and development prospects. Consequently, investors have a higher probability of getting returns on their investments.
It is imperative that a country has a stable legal system that will ensure that justice prevails to all its citizens. A stable legal and political framework is a catalyst for economic growth and development, since both domestic and foreign investors should be confident that their investments are secure and not prone to risks like political unrest and legal inadequacies. In this particular case, the United Kingdom has a stable legal and political framework that protects the rights of every citizen and domestic and foreign institutions. Thus, the United Kingdom is a favourable investment avenue because investors are guaranteed of a strong and legal framework. In addition, there are no political unrests that could result in the interruption of economic activities.
According to Vickerman, Spiekermann, and Wegener (1999), presence of infrastructure that will enable efficient communication and transportation is a key factor of comprehensive economic growth and development in a particular region. The United Kingdom government has taken note of this and has invested billions of pounds sterling into improving its infrastructural network. This has significantly contributed to the efficiency of economic activities and thus UK economy has grown to become one of the largest in the world.
Social and Cultural Environment
The social and cultural orientations of a country can adversely their consumption and spending patterns of a particular country (Kowalska and Funck 2000). The United Kingdom has a diverse social and cultural setting and therefore institutions and organisations have to develop a socio-cultural strategy that cuts across the cultures that are in the United Kingdom. By doing so, an institution and organisation can effectively increase its market share in the United Kingdom.
Olive oil is a regional product. Almost all the global production is produced and consumed in the countries within the Mediterranean. EU is the chief supplier of olive oil to the United Kingdom with Spain producing about 48.4%, Italy 31.5% and Greece 18.2%. Tunisia, Turkey, Morocco and Syria are other main olive producers exporting approximately 16% of the world’s production.
The 5 Forces Theory
The Porters 5 forces theory (1979) is used in demonstrating a competitive edge and aiding in the formulation of organisational strategic plans. The forces includes, threat of new entrants, rivalry amongst existing firms, barriers to entry, threats of substitutes and bargaining power of suppliers and buyers. The stronger these forces are the harder it becomes for an organisation to remain profitable.
Threat of New Entrants
New entrance in an industry or market effect existing organisations as their influence fades with entrance of new players leading to increased competition as existing firms fight to retain their market share (Hill & Jones 2010). The implacation of this on Olivar Santamaria is that strategic managers in the company will have to be on the look out and must understand the monitor entrance into the olive oil industry by new firms and adopt strategies to ensure that the company does not loose market share to new entrants. The company must be aware of any barriers of entry to the UK market such as high initial capital investmnent which may make the company in-penetratabl
Rivarly amongst Exisiting Firms
Competition affects the market share and profitability. Organisations are therefore required to monitor the activities and strategies of competitor corporations and develop strategies to counter these activities. This implies that managers at Olivar Santamaria will have be on the watch and develop strategies that will put the organisation ahead of other olive oil suppliers in the UK such as Fresh Olive, Hojiblanca, Caramba Olive Oil and Hubert Grove Olive Oil, some of whom have been in the UK market for a long period of time. As Oliva Santamaria is a new entrant, priority should be given to strategies that will pitch the company ahead of other players in the industry before even thinking about countering competitor activity.
Bargaining Power of Suppliers
Suppliers influence the competitiveness of a company through their ability to supply low quality inputs and ask for higher prices for their supplies (Hill & Jones 2010). Consequently, the quality of inputs directly affects the quality of finished products, as such; use of poor quality inputs in the production process would lead to poor products further resulting into loss of customers and market share. Olivar Santamaria, though may not source its raw materials from the UK have to understand that suupliers can hold the comapny hostage, resulting into negative effects.
Bargaining Power of Buyers
Buyers influence firms by bargaining for higher quality goods or low prices for firm’s goods (Hill & Jones 2010). Companies must develop a competitive pricing strategy to ensure that their products are positioned strategically in the market. Oliver Santamaria will tthus have to adopt prices which are not too high such that consumers would perceive the products as not affordable and not too low as compared to those of competitors as consumers may perceive the goods as of low quality.
Threat of Substitutes
Substitutes are products that can be used interchangebly to satisfy the same utility. Substitutes put a ceiling on the prices that orgaisations can profitably charge on their products. The threat of substitutes is high especially when substitute products are many, are offered at cheaper prices, low cost of switching cost from one product to the other and buyers are willing to switch to substitutes (Hill & Jones, 2010). Managers at Olivera Santamaria have to ensure that their products are fairy but competitively priced and are of a higher quality than the available substitutes in order for consumers to associate quality with the firm as this would prevent consumers from shifting to substitutes provided by competitors.
Monitoring and Evaluation
Blythe and Zimmerman (2005) describe monitoring as a continuous process of analysing the progress and achievements of institutional and organisational plans. In its turn, evaluation is a periodic analysis of levels of achievement of set institutional goals and objectives. Monitoring and evaluation in this particular case will play a critical role in helping Olivar Santamaria determine whether the marketing strategy they employ is viable or not. Feedback is extremely important because it will assist the managers of Olivar Santamaria in the development of marketing strategies that are effective for the olive oil industry in the United Kingdom.
Olivar Santamaria will also utilise the financial results before and after the venture into the United Kingdom. This will assist the institution in determining whether it has become more profitable after the UK venture or not. Periodical results of the UK venture should also be analysed, so that industrial comparative analysis will aid the institutional managers at Olivar Santamaria in development and adoption of marketing strategies that are favourable to the UK market. Periodical analysis of the final results can be done after every 3 months.
The United Kingdom olive oil industry is characterised by many industrial players. This implies and signifies the fact that there is fierce competition. Competition has the effect of enhancing the quality of products offered to consumers by institutions and organisations. In addition, competition leads to a decline in prices of commodities and products. This means that a new market entrant must be strategic in order to win a proportion of the olive industry in the United Kingdom. In this light, Olivar Santamaria has developed a marketing development strategy. The marketing development strategy employed by Olivar Santamaria encompasses partnerships with the major retail outlets in the UK, partnerships with distribution chains, engagement in promotion and advertisement campaigns, and price reduction strategies. Although Olivar Santamaria will reduce its prices, customers and clients are assured and guaranteed that they will receive the product of high quality. Also, cooperation will be maintained between the marketing and research and development departments at Olivar Santamaria. This will be done to aid in the firm’s efforts to develop a product that is suitable to the needs of clients in the United Kingdom.