Business diversification of a confectionary food and beverage business Essay

Business diversification of a confectionary food and beverage business of United Kingdom - Essay Example This report assesses the trends and pattern of international trade between these two countries especially trades and investment in the beverage industry. Implication of the international institutions on its initial entry into Indian market will be analysed. Finally, this report will recommend whether and how the company can diversify its business into Indian market. Introduction Globalization has stimulated many successful firms in all many countries for diversification of their business into foreign market. It allows two different ways for international business expansion for these successful companies in their domestic countries. One is trade and another foreign direct investment. These factors have influenced one UK based Food and Beverage Company named Crazy Food Private Limited to decide start its international diversification. The company has decided to diversity into a developing country i.e. India. The company has successful portfolio that consist of processed food, ready to eat food, snacks foods as confectionary items and soft and energy drinks as beverage items. It has well developed two popular brands in UK market, Crazy Bite and Crazy Cola. The company wants to launch these two popular brands in India and it has noticed this confectionary market in India to be growing more in next five years. So, this report will provide a detailed investment analysis for this company to assess the viability of its international business diversification into Indian market. Answer a) National business system India is a developing country having a growing economy that is 12th largest economy in the world by nominal value of gross domestic product. The country has approximately more than 17% of world population among which more than 200 millions can be segmented as high consumption oriented urban people. This segment of people is having above average income level and higher purchasing power. This is one of the major strengths of the country for attracting foreign busi ness institutions to enter into Indian market. According an analysis by World Bank, India is 4rth largest country in the world in terms of overall consumption and purchasing power of the total population of the country. 40 percent of this 200 million people are youth (IFC, n.d.). Therefore, growing purchasing and consumption trend of this large segment of people is the key attraction of this company in terms of potential customer base as youth are usually the most potential target customer for any confectionary food and beverage producer. Apart from the huge customer base, next important key resources of the country has is sufficient youth labour and expertise. This is one of the most important recourses of the country which has become the main attraction of the foreign companies especially companies from developed countries like Crazy Food. The company can get sufficient labour in comparatively very low wage rate as compared to UK market rate due to the higher difference of currenc ies of these two countries. As a food and beverage company, Crazy Food needs huge work force for production and packaging, bottling etc. National political environment of India is stable as current government and only one major opponent do not have many conflicts that can affect any areas of business national