RESEARCH INTERNATIONAL BUSINESS OPPORTUNITIES

ASSESSMENT #2

 

NATURAL EXPERIENCE FEASIBILITY STUDY

NORWAY – NEW ZEALAND

(SAMPLE REPORT)

 

 

 

 

Table of Contents

Introduction	3
SWOT Analysis	4
Competitor Analysis	6
PESTEL	8
Five Risks	13
Five Advantages	15
Conclusion	17
References	18

 

 

Introduction

Natural Experience is a café/restaurant specialising in organic, natural and whole foods. The restaurant was started by husband and wife Steven and Eva Gerber in 2010. The first restaurant was opened in Oslo, Norway and within three years the business had expanded to four restaurants. The restaurant was first called Organic Experience but after a year a name change was required because of the strict legislation surrounding the use of the word “organic.”

Norway is located in Northern Europe, the population of Norway is just over 5 million people. The country has the fourth highest GDP per capita in the world. Norway’s culinary traditions show the influence of fishing and farming with salmon, trout, herring, cheeses, diary products and bread dominating the diet (Everyculture, 2013).

Because of their rapid growth over the past three years, the company plans on expanded outside of Norway, one of the locations the business would like to expand to is New Zealand, another country with similar landscape and cuisine preferences. This report will investigate whether or not this proposed expansion plan is feasible.

 

SWOT

Strengths

The business is very popular, during their lunch time trade their capacity is on average 95% and during dinner its 85%. This means that most of the time their tables are full and the business is gaining maximum profit available.

 

The business sells healthy and nutritious food, this is a strength as more and more people are becoming educated and concerned about what food they consume.

 

Weaknesses

The business has experienced some problems with their growth, when the business expanded the owners Steven and Eva Gerber were not able to maintain quality control over the stores where they had hired other managers, customers began to complain that the food was not up to the standard of the first restaurant and that the meals served were not fully organic.

 

The business is very strict about how their franchises should operate, guidelines are very specific down to what kinds of cleaning equipment should be used and tablecloths. These strict policys and procedures may make it more difficult for the business to expand to other locations where they are less likely to follow all the policies.

 

Opportunities

The business has opportunities to expand their products, to include ready made meals for sale in supermarkets and to also develop a meal delivery program for individuals who want to eat natural all the time and also need to save time because of their busy lifestyles.

 

Another opportunity that the company is currently investigating is growth, as well as investigating New Zealand as a possible growth market the company can investigate other regions as well where there may be demand for a business like this.

 

Threats

There is threat of competition, where the business is based in Norway there exists a strong competitor called Natural Dining, this company is also experiencing fast growth and could take the customers from Natural Experience.

 

When expanding the business faces a number of risks, high costs, uncertainty of demand, uncertainty of resources, uncertainty of supply, transportation risks and so on, these risks and uncertainties are a potential threat to the company if they decide to expand to any markets where they don’t have knowledge or experience.

 

 

 

Competitor Analysis

There are two competitors that Natural Experience need to consider in New Zealand if they plan on locating their business there.

Green House Organic Restaurant, Claudelands New Zealand

This restaurant is quite small and provides organic but mostly vegetarian foods, the restaurant has become popular with the student population attending the local university.

Strength: The business is located within walking distance from the university, this gives them access to a large segment of the target market

Weakness: The restaurant is small and can only seat 20 people at a time

 

So Natural Organic Restaurant and Market, Karangahape Rd – Auckland

This business has a combination of a restaurant and a market selling organic produce and baked goods.

Strengths: Has both a market and a restaurant

Weaknesses: The prices are high, this may be due to the high rent prices being in the centre of the city

 

 

 

PESTEL

This PESTEL research was conducted using secondary research, the information collected was qualitative meaning that there is detailed information collected, Internet search for websites, newspapers and magazines were the types of secondary sources. The research was conducted during class time in the computer lab at ACK and also at home, the research was collected from 25^th November to the 1^st December 2013. The search tools used to find this information were google search, Wikipedia search, and CIA Gov website search. Some of the keywords that I used in my search where: New Zealand, Economy, interest rates, attitudes towards health, politics. The Boolean operator that is used the most was ‘and’ an example of how I used this Boolean operator is: New Zealand and politics.

 

Political

The current political party in power in New Zealand is the national party, the national party is known as a left wing party meaning that most of their policies support social equality (Simpson, 2012).

New Zealand is part of the British Commonwealth and has strong ties with Australia and the United Kingdom as well as other commonwealth nations (Easton, 2010).

This political environment is positive for businesses, and the ties with the commonwealth mean that businesses based in New Zealand can more easily pursue investment opportunities with other commonwealth nations

 

Economic

New Zealand has a modern, prosperous and developed market economy where the GDP is $28,000 (Tamiti, 2012).

New Zealand is ranked fourth in world on an Economic Freedoms index (Smith, 2009.)

The GDP being $28,000 is average, however compared to Norway where Natural Experience is currently based this GDP is much lower, it means that people are not able to spend as much money in New Zealand as they are able to in Norway, there is then a risk that the business will not be as busy or as successful in New Zealand.

New Zealand is also ranked high for economic freedoms, this means that a business has few restrictions if they want to set up there.

 

Social

New Zealand is very multicultural, the indigenous people of New Zealand (Maori) make up around 15% of the total population, the rest of the population are European, Pacific Islander and Asian migrants (CIA, 2013).

New Zealand is a very environmentally aware country, known for their clean green reputation natural and whole food products are valued because they don’t contain harmful chemicals (Anderson, 1999).

New Zealand being environmentally aware means that people in that country are more likely to support a business that has similar values.

 

 

Technological

74% of New Zealand’s population has their own internet account, and 92% are able to access the internet (CIA, 2013).

72% of New Zealanders own a mobile phone (Telecom, 2013).

Both of these technological trends mean that the majority of New Zealanders have access to the internet and many through a mobile device, this means that companies that do business in New Zealand are able to use social media and other electronic forms of promotion in order to engage their target market, this is important as this type of advertising is much more affordable than traditional methods of advertising like television or radio.

 

Environmental

New Zealand is made up of two separate islands. The North Island and the South Island, this means that transportation throughout the country will sometimes have to be over land and sea, this will increase the transportation costs (Trent, 1982).

 

New Zealand has a very clean environment, clean water, air and many other natural resources. This means that businesses requiring the use of natural resources will have a good supply of these and the cost will not be too high, and they can be sourced locally rather than imported (Watene, 1999).

 

 

Legal

New Zealand has strong health and safety laws, these laws guide what the workplace environment should be like and how risks to safety should be managed by the company (Trent, 2012).

New Zealand has strong biosecurity regulations, these are managed by the Ministry for Primary Industries. Biosecurity safeguards protect the health and safety of New Zealand’s natural environment, any goods that are deemed a biosecurity hazard should receive legal permission first before importing (Business Govt NZ, 2013).

Businesses that set up in New Zealand will need to make themselves aware of the local health and safety laws so they can be compliant. Produce imported into New Zealand will need to be approved first to make sure it is not carrying harmful pests or plant diseases.

 

PESTEL Conclusion

Overall all the environment in New Zealand is good for businesses, the Economy could be stronger but it is still recovering, but the other analysis of the PESTEL environment show many advantages for a company thinking of establishing a business there.

 

 

Risks

1. One of the risks of moving the business to New Zealand has to do with the weak economy, the GDP level although average is below Norway’s so it is uncertain whether the business will experience the same profit levels that they do in Norway. One of the ways the business can overcome this risk is to make sure that they aggressively market the business on its arrival, using both above the line and below the line methods of promotion to engage with potential customers.
2. Another risk of moving the business to New Zealand is the exchange rate, at the moment the New Zealand dollar is valued low and so when profits are sent back to the head office the exchange rate will not be favourable. There is little that the business can do about this problem as the exchange rate is outside of their control, the only short term solution may be to keep the profits in a New Zealand bank until the exchange rate is more favourable.
3. The third risk of moving the business to New Zealand is that the company could choose a weak franchise partner, someone who does not have the skills, knowledge, expertise, influence or financing to execute the opening and promotion of the new business. To avoid this risk the company needs to carefully screen their potential franchise partners.
4. The fourth risk of moving the business to New Zealand is that there are some language and cultural differences between Norway and New Zealand, this could cause some confusion or disagreements in training or communicating important information. To avoid this risk the company needs to make sure that for the first six months they have a manager from Norway in New Zealand to oversee the opening of the restaurant and the training of staff, to make sure the standards are the same. After the six months regular checks and visits can make sure the standards are maintained.
5. The final risk to mention is that as well as the two mentioned in this report there exist a number of restaurants in New Zealand that have the same natural and organic focus in their menu. And even restaurants that don’t market themselves this way are often organic and natural anyway, because the food that is produced in New Zealand is grown naturally. This high level of competition may make it difficult for the business to successful. Natural Experience should do further research on all of the competitors in the area and identify their strengths and weaknesses, and then the company can decide how they will be able to develop their own competitive advantage.

 

Advantages

1. The first advantage to opening the business in New Zealand is the social attitude towards health, natural and organic foods. This is very popular at the moment within New Zealand’s society, particularly the 20-40 year old market segment. The business can take advantage of this social trend by targeting this group in their promotions.
2. The second advantage to opening the business in New Zealand is that the country is rich in natural resources, fruit, vegetables, dairy products and meat are all produced locally and are of the highest quality. The business can take advantage of this trend by sourcing from local suppliers at a much lower cost than sourcing from international suppliers.
3. The third advantage is also a social one, many people in New Zealand enjoy socialising and eating out, this is a rising trend so restaurants and cafes are becoming increasingly popular. By establishing themselves in New Zealand the business can take advantage of this trend.
4. The fourth advantage is that customers in New Zealand will like the environmental focus of this business. Natural Experience uses solar energy for their businesses and also environmentally friendly products and recycling. This focus will make the business popular with people in New Zealand who share the same values about the environment.
5. The fifth advantage is that New Zealand banks have a good reputation for being safe and secure, and also having competitive interest rates for loans. This means that accessing finance to fund the establishment and growth of the business in New Zealand will be easy and at a low cost compared to Norway.

 

 

Conclusion

It is my recommendation as a consultant to Natural Experience that they continue with their plans to establish a business in New Zealand. There are a number of strong advantages in support of this recommendation. The countries are very similar in geography and climate meaning that it will be easy to source the same high quality food. Also the country has a strong focus of caring for the environment and caring for health, and both of these are consistent with the focus of the business. The country has a strong labor force, meaning that it will be easy to find the skilled workers needed to manage and work in the business. New Zealand has a similar government style to Norway so it is likely that business laws will encourage foreign investment. There are some risks of course but as I have shown those can be managed with careful planning, research and implementation.

 

Reference List