Appendix for STEP 3 simply

copy/paste
DON: TO SAVE YOUR TIME, IVE FORMATTED EVERYTHING.
PLEASE SIMPLY REPLACE THE A3-A SECTION IN THIS FILE
WITH THE EXISTING A3-A SECTION IN YOUR DRAFT

A3-A: Initial Country Screening Methodology
I. Explanation for selected categories
A. The benefits of selected models
Indexing and Ranking model
This model offers in-depth microanalysis and best connects with Stoatss
differentiation strategy and small operation level. It breaks down market
overview into seven smaller indicators, weights them for degree of
importance before provides Stoats arguments to compute the short-list
of target countries. Seven sections are selected as shown
Oatmeal and Snack Bars market size (value): this figure
indicates how well/large the market has been established. Due to
the current limited resource, Stoats has to take its best shot on
the target yielded most meaningful return. Thus its critical role is
worth at 25/100.
Oatmeal and Snack Bars demand value growth: market
saturation is another figure that concern the effectiveness of
differentiation strategies deployed. The report valued it as
10/100
Market intensity: this indicator deals with the level of
aggressiveness that competitors might impose on Stoats.
However since the firm offers premium products and has e-
marketing orientation strategies, the importance level seems not
to be severe - 10/100 is a fair proportion.
Consumption Capacity: this analysis forecasts how positively
the markets will response to Scottish porridge products.
Packaged food belongs to functional & fast-moving goods;
therefore the consumer behaviours show astonishing impact on
Stoats success 15/100 will reflect this importance
Infrastructure: this figure consists of production, marketing and
distribution set-up in the targets. The report values them at
20/100 (in which 10 is solely for the marketing infrastructure)
Import Perception: activities related to importation/exportation
will be computed in this indicator. Stoatss international
expansion in short-term seems to rely on exporting, therefore
any cost, procedures and ease of workflow involved would be
influential 12/100 is a fair proportion
Business Risk: the long-term operations and success would
depend on stability of the targets business environment. The
targets perception on Scotlands independence is also measure
in here 8/100 is enough to reflect this importance


Portfolio Analysis
This model reduces the number of prioritised countries and can be used
as adjusted framework to the Indexing/Ranking above
By looking at similarities and clustering targets that are
approachable in equivalent methods, Stoats might have
opportunities for economies of scale in production, marketing
mix and management effort (Harrell and Kiefer, 1993).
Stoatss experience in previous exporting activities is also usable
to reduce risk exposure and expense of establishing an
international presence. The Primary Target theme therefore is
set on behalf of the American culture.

B. The categories and its weighted ratio
II. Market Size
A. Value () of market size is more convenient to interpret than volume of
market size (tonnes) for two reasons:
1. Stoats profit margin & competitive advantage comes from
branding activities, not economy of scale of production. The
theory of branding prefers value as the key figure to develop
tactic scheme.
2. Sales price per tones differ among 4 countries. For this reason,
we have used the highest price per tonne for our analysis.

The currency exchange rate used is accurate as of 29 March 2014:
1.00 Saudi riyal = 0.16 GBP
1.00 Brazilian real = 0.27 GBP
1.00 RMB or Chinese yuan = 0.097 GBP
1.00 Vietnamese dong = 0.000028 GBP

III. Demand Growth
For the Stoats analysis, we have chosen to not compare CAGR growth
rate because:
1. Interpretations can be ambiguous.
2. The market grew stably with no volatility in last 10-year data
period.
Therefore, we have chosen the 2014-2018 value growth rates, which
were easier to apply for comparisons.

IV. Market Intensity
Market intensity is the measurement of the competitive landscape in the
cereal industry most applicable to Stoats product line. Three factors
were used in our Market Intensity scores:
1. Monopoly intensity: what percentage of the market do the
leading companies occupy? (Ex: Big 3 takes 90% => high degree of
monopoly)
2. Number of direct competitors: if this figure is high, diversity
and differentiation strategies must be severely invested.
3. Differentiation effectiveness: how developed marketing
strategies must be in order to cope with the markets behaviour.

Category
Oatmeal & snack
bar market
Consumption
demand
Acceptance to New
Products
Correlation between Marketing
vs. Purchases
Huge
Well-established for
substantial timeframe
Growing, huge
size
Dynamic lifestyle; highly
acceptable attitudes
Yes. People immediately purchase porridge
bars following viral marketing
Large
New but still well-
established
Growing, medium
size
High
Buyer acceptance can be achieved with
some short-term marketing
Medium
Young and on-going
established
Stable, medium
size
It depends
Time and patience will be required to
secure customers acceptance and
migration
Figure 2. Market Intensity Metric for Analysis. Adapted from

IV. Consumer Capacity
A. Psychic distance: degree of cultural proximity to UK norms for food
consumption & breakfast etiquette.

B. Consumer trends: measurement of Stoats products value-added
features or applicability to current consumer purchasing trends of the
target country.

Stoats
focus on:
Products with healthy
& wellness offering
Flavor / tasty
Striking color
design/packaging
Convenient & easy to
pocket
Very close Yes Yes Yes Yes
Large Yes Yes Maybe Yes
Medium Yes Maybe Maybe Maybe
Low Maybe Maybe Maybe Maybe
Figure 3. Consumer Capacity Metric for Analysis. Adapted from

V. Infrastructure
Method: We measure the effectiveness of infrastructure with two
elements:
Establishment of marketing infrastructure
Establishment of reliable distribution channels

A. Marketing: focus on social media infrastructure only because:
i. Stoats is marketing-driven company => expertise in e-marketing
ii. Has limited budget => cannot access the TV, newspaper or radio
ads slot

B. Distribution channels
i. Diversification: does the country have all types of retailers
(grocery stores, convenient stores, hypermarket)
ii. Location: how importance the distance & cover rate of retailers
in specific area is transferred into actual buying


Appendix for Step 1:
John has missed the two arguments that Mr. Keith had asked us
A. Stoats Capacity the Financial Status
Although this report has no data on Stoatss Revenue/Profit and production capacity,
the published Balance sheet suggests enough arguments to justify its global expansion
strategy. From the figures on 30/4/2013, the report indicates that
Stoats has healthy current ratio (0.43) compared to typical interval of food
industry (0.5-2.0) (Sheeba, 2010) i.e. inventory converts to cash quite rapidly
even it occupies nearly 33% of current assets. Since the firm is able to repay
short-term debt (i.e. liquidity ratio is 1.18), credit lenders might be happy to
provide more cash flow for expansion plans.
Its worth to notice that 53.3% of current asset is account receivable. However
without any details, the report cannot judge whether this strategy is efficient or
not.
Shareholder fund has positively and stably covered in last 3 years, though the
current figure is minus 19,222. The two founders therefore might have
adequate motivation and support for expansion plans.
Overall, the extra investment on going global might demand a certain gearing, bank
borrowing or private equity offering. Because Stoats has no valuable tangible asset
worth gearing (i.e. lands, buildings, vehicles, or equipment); raising cash from bank or
private investors is the sole answer. Given the current asset is set at 207,315 and
Stoats is in healthy financial status, the report estimates that the firm can raise 2
million as maximum unless new shareholders are invited into the board. First year going
global is therefore extremely severe.
B. Stoats Competency the Team
Stoats seems to have efficient HR structure for a small venture. The firm assigned three
experts (i.e. Robbie, Pete and Georgie) to make daily operation going smoothly. Product
design and PR campaign also developed by the internal team. Leaving strategic planning,
accounting and networking jobs for the two founders are the smart choice in short-term,
guaranteeing that the operation is always under control.
Given the fact that this report cannot access the background and expertise of each
current member, it will suggest the firm to enrich the network into following figures:
Mentor as lawyer: international legislation guru is mandatory for dealing with
contracts, terms and conditions.
Mentor as international communication: founders and the team need effective
communication strategies to fully acquire the partners trust and capacities;
especially in such non-AngloSaxon countries like Brazil and China.
IT specialist: building the ERP system (Enterprise Resource Planning) is
considerable for any global player. This person will assist Stoats in controlling
and managing the flow of product development, product sales and risk
management.
Professional accountant: this person can help Stoats to synthesise numerous
factors derived from differentiation between Scottish accounting system and the
targets. Cost controlling and budgeting is also his/her specialty.
Reference for this step
Sheeba, K (2010), Financial Management, Pearson Education India,
Pearson Publishing Group.

APPENDIX OF STEP 6 (I keep it
unchanged from the draft) just
copy/paste

A. Prices
i. Brazil

Company
Price of
Main Products
Great Value Bob's Red Mill Quaker
600g Oatmeal
(mixed oats)
2.24 $ ------------------- ------------------
540g Oatmeal ------------------ 2.49 $ 2.50 $
Price per 1Kg 3.18 $ 3.80 $ 3.98 $

Three international brand-value brand of oats were researched. Great valuea
WalMart brandand its oats products are the cheapest in the segment at $3.18/kg. In
contrast, Quaker, a premium producer, currently costs $3.98/kg. Overall, the price
difference between all three brands is currently only $0.70 per kilogram.

ii. China
Company
Price of
Main
Products
Seamild Yashili Quaker
1500g
Oatmeal
4.7 dollars ---------------- --------------
600g
Oatmeal
-------------- 2.2 dollars --------------
540g -------------- ---------------- 4.41 dollars
Oatmeal
Price per
1000g
3.13 dollars 3.67 dollars 8.17 dollars

According to the oatmeal price of Seamild, Yashili and Quaker (another famous
oat brand in China), the average price per 1000g of oatmeal is between 3.13
dollars to 8.17 dollars, indicating that the purchasing power of Chinese
consumers varies in the different cities. City dwellers in larger cities can afford
higher prices than villages in the western provinces. Thus, Stoats' pricing
strategy should depend on regional differences.

Seamild
--Asset size: around 40 million USD.
--Production capability: 100 - 140 million USD.

Yashili
--Net income: 80 million USD (2012)
--Asset size: 200 million USD

B. Promotions and Market Entry
i. Brazil
Stoatss current portfolio of distinctly UK flavours could be the foundation for a
range of flavours unique to Stoats in the Brazilian market.

2013 2014 2015 2016 2017 2018
Energy and Nutrition Bars 26.7 29.19 31.75 34.45 36.37 38.23
Fruit Bars 58.37 64.59 70.74 76.85 83.38 89.81
Granola/Muesli Bars 804.35 923.08 1058.87 1200.05 1350.78 1505.3
Breakfast Bars 0 0 0 0 0 0
0
200
400
600
800
1000
1200
1400
1600
R
$

m
i
l
l
i
o
n

Forecast Sales of Snack Bars by Category: Value 2012-2017
In markets such as Brazil, sampling is a popular method of marketing to new
customers: A general push strategy is followed in these markets, whilst a pull
strategy is followed in the third stage of the PLC.
1
As noted, Brazilians possess
active lifestyles and respond very favourably to street promotions or free
samples. In partnership with our chosen distribution agents, we advise a
comprehensive marketing campaign which targets point-of-sale advertising,
online promotion, and free samples distributed at high foot-traffic points and
sporting or music events.
ii. China
Chinese retail industry experienced remarkable growth in recent decades, with
an increasing number of Chinese consumers prefer to purchase commodities via
supermarkets and online stores instead of street shopping. Therefore, it seems
that Stoats should select supermarkets as well as online markets as their
primary choices when considering distribution channel.
According to one survey, the sales of Chinese supermarkets and online retail
markets both show an upward trend in the last ten years. With its direct-to-
consumer online sales store already established in the UK, Stoats should adapt
this strategy to the Chinese marketplace.
There are plenty of trade fair such as China Import and Export Fair,
International Agriculture Fair in China, therefore, Stoats can take advantage of
them to get closer to the market and find out more potential customers by
observation and research. Moreover, Stoats can follow the initial way of opening
an oat porridge bar in some big heavily-visited shopping malls as a method of
promotion.

Market penetration timetable
Stoats managers should opt for a rapid market entry in China for the following
reasons: firstly, oats market in China has been competitive with both domestic
and foreign companies competing with each other by providing differentiate oat
porridge ; secondly, by partnering with local companies like Seamild or XXX,
Chinese marketing information is assessable which can help avoiding making a
lot mistakes when initially entering into a new market; thirdly, rapid entry aims
to acquire a significant market share and in this case the best strategy is
production differentiation so that customers are attracted by the add-value new
oat porridge. (Dunne, 2010)

Reputation
In line with the rapid entry method, Chinese customer will be exposed under
massive marketing Stoats campaign. Only by this way can Stoats succeed faster
in the market because the target consumers will be getting more and more
familiar with this brand and reputation can be built up at a fast speed.

1
Vignalio, C. Kelloggs Internationalisation versus globalisation of the marketing mix. Emerald
103, (2001)

Special links, contacts and capabilities of Stoats
Stoats products has been exported into some foreign countries like XXX and
XXX, and this links with foreign market can support Stoats entering into China
with many useful experiences to a certain degree. And in the British market,
Stoats has always been showing an approaching attitude towards and make
close contact with local customer, therefore, their serving skills can be applied
and transplanted partially in Chinese market. As an up-growing brand, Stoats
has always take the energetic, welcoming and diversified image in the market
and this image can help Stoats to acquire more young generations in China.
Other capabilities?

Customer receptivity
As foreign oat porridge, Chinese customers will have a very high expectation on
the comparatively high-priced product in terms of quality, taste and marketing
campaigns. So on-the-line marketing like advertisement and off-the-line
marketing like personal promotion in supermarkets are both needed to reach
more potential customers.

Competitive positioning of focal brand
Stoats unique selling point in Chinese market is that it is of high quality on-the-
go oat porridge with diversified flavors to diversified customer preferences
(innovative flavor like salty?), which differentiate most of competitors who sell
plain oats porridge only.

Competition
As mentioned in Step 4, the completion of oats porridge is intensified where
domestic companies and foreign companies compete with each to win more
market share, so rapid entry method should be the best option for Stoats to grab
substantial market share.

Customer characteristic
According to Sus (2013) research, there will be an increasing demand for oat
product because more and more customer pay attention to healthy eating style,
and the main oat consumer below 40 will be expanding as long as they are
educated of the benefit of oat product and the purchasing power of them will
grow as the overall economy in China expands.