Business Plan Proposal
Executive Summary
Sprout Stack plans to expand its base from Australia to Pakistan. Pakistan is the right target destination due to the problem of food scarcity in this country. The target company has favorable social, economic, and political environments that will support Sprout Stack’s idea of selling fresh farm products. The company’s green farming practices experience is an added advantage that will quickly gain ground and acquire a reasonable Pakistani market. Direct marketing and partnership will allow the company to quickly establish its roots in Pakistan and promptly reduce start-up expenses. Also, the company will participate in corporate social responsibilities to get closer to the locals, win their trust, and at the same time, market its products. Sprout Stack has already put a risk assessment and management team in place that will enable it to manage both expected and unexpected risks. Sprout Stack enjoys an approximate of 18% of its local market share. Due to the increasing competition from other local companies, the need for an international market is inevitable. The choice for Pakistani as the preferred destination was inspired by the demand for farm inputs and machinery. Agriculture contributes about 18.9 percent of the country’s GDP and absorbs approximately 42.3 percent of the labor force, with a remarkable 3.81 percent annual growth. The government is committed to supporting small-scale farmers as well as promoting small-scale innovative technologies to improve output. The absence of local industries that support these services in the country places Sprout Stack better to capture a good percentage of the market.
Table of Contents
Executive Summary 2
Introduction 4
Company Background 4
Product/Service 5
Growth and Operational Strategies 6
Internalization and Operational Strategies 7
Mode of Entry into Pakistan 7
Partnerships 8
Direct Exporting 9
Marketing Strategies 9
Product 9
Price 10
Place 10
Promotion 10
Personnel 11
Risk Assessment 11
Corporate Social Responsibility 12
Conclusion 12
References 14
Introduction
Globalization has enabled businesses to expand beyond their national and regional borders to other countries with different social, political, and cultural practices. In most cases, successful companies such as Samsung, Apple, Coca-Cola, IBM, and Toyota used almost similar strategies to penetrate and succeed in international markets (Mariadoss & Babu, 2020). Thorough research of the targeted market and understanding the targeted market’s cultural, economic, and political processes allow investors to navigate the new markets (Rodrik, 2018). This is done by conducting background surveys to establish the viability and acceptability of the business culture and products of services (Mariadoss & Babu, 2020). Sprout Stack has conducted these surveys and established that Pakistan has a stable market for its products due to the large percentage of agriculture contributes to its GDP (Ainomugisha, 2020). Additionally, the Pakistanis are cooperative individuals who present the company with an ample option for collaborating with local investors. However, regardless of the international market entrance strategy used, investors should ensure they develop effective strategies that will enable them to manage competition and make profits (Kienzler & Kowalkowski, 2017).
Company Background
Sprout Stack is a unique company that blends both creativity and environmental conservation while ensuring that consumers get quality products. The company specializes in agricultural goods production through a closed-loop system that recycles water while using minimal chemicals, fertilizers, and water. Australians are very conservative on health and well-being, so Sprout Stack is becoming popular as more consumers realize its products’ health benefits (Ainomugisha, 2020). A nearly-closed loop system ensures that the company controls all the production processes and activities; hence, producing fresh produce is a popular product for customers. A useful practice that makes the company attractive is traditional fertilizers instead of agrochemicals (Jackson et al., 2020). Sprout Stack is becoming popular as more Australians realize the health benefits and safety of its products. Besides, Australian’s desire and plan to keep the environment safe enables them to support Sprout Stack as an example of their support for companies that use environment-friendly practices. Recently, the company has been planning to invest overseas with a focus on developing Asian countries. The targeted developing Asian country is Pakistan due to its food shortage crisis, an increasing population, especially in the urban centers, and high demand for fresh farm products (USAID, 2020). In the meantime, the company is exploring other possible alternatives that will promote green practices in farming. All these strategies aim to ensure that consumers get safe, healthy, and enough fresh farm products. It enjoys an approximate of 18 percent local market share.
Product/Service
Sprout Stack specializes in producing and selling fresh farm products that vary from fruits, vegetables, and cereals. All these products are sold through either direct marketing or distributors in Australia (Ainomugisha, 2020). The uniqueness of these products is based on the use of the environment and natural production practices that ensure the products are safe for human consumption. The company also saves on expenses by recycling water and using organic manure (Rajabion, 2019). The products are unique, and the company takes advantage of this aspect to freely and easily market it in Australia. The company further deals with differentiated agricultural equipment and products whose supply is far beyond the Australian market, thus creating the need for expanding its territories to market its surplus.
Growth and Operational Strategies
Sprout Stack will use the Greenfield investment project as a growth and expansion strategy to enter Pakistan’s market. In this strategy, the Sprout Stack will construct facilities that will focus mainly on environmental conservation. After establishing itself in Pakistan, Sprout Stack will promote environmental conservation activities using technology and environment-friendly approaches. At the same time, Sprout Stack’s major production activities will involve the use of near closed-loop farming practices that are currently being used in Australia. Pakistani’s government focuses a lot on foreign companies’ environmental impacts (Aslam & Hong, 2018). Sprout Stack will prioritize using green production practices. In this case, the company will get easy access to strategic locations such as busy cities and lobby for tax reduction and exemption from some taxation (Rodrik, 2018). However, the company will have to adjust and comply with other government regulations, including the need to employ at least 60 percent of locals in either skilled or unskilled sectors (Outa & Waweru, 2016). The company will also partner with global organizations such as the United Nations Environmental Program (UNEP) and Pakistan’s Ministry of Environment and Natural Resources to promote environmental conservation. As a result, Sprout Stack’s presence will be felt in Pakistan and the neighboring regions. Sprout Stack hopes that using environment-friendly farming approaches will be a significant selling point that will attract consumers and enable the company to win public trust and support from Pakistani’s government (Akram et al., 2019). However, the company expects and is ready for challenges such as resistance from the locals during Pakistan’s initial operation stages. The company further aims to conduct rigorous marketing to ensure the locals know the products and services offered.
Internalization and Operational Strategies
Sprout Stack uses a unique production strategy whose primary focus is on green farming practices. Most of the technology, whether assets or processes, are not commonly available, meaning that the company will have to rely heavily on internalizing resources and strategies. The company intends to hire and train Pakistan locals who will make up 60 percent of the total employees to meet the government requirements. The locals will be hired using the company’s recruitment procedures to ensure it gets qualified employees who can steer the organization’s agenda forward (Chung & Enderwick, 2001). All these employees will be trained before the company’s initial opening to avoid importation of human resources, which may cost a fortune or give the company a negative image to the local community. The company will also export some of its assets, including machines, from Australia to Pakistan. However, it will promote the local industries to enhance positive business cooperation. Although the company will incur costs in importing some of the equipment and training employees, it has budgeted enough to meet the costs. The company also intends to link its information technology system with the Australian company. This strategy will ensure the centralized management of the company from the headquarters. In this case, the headquarter company will have the opportunity to closely monitor the new company’s operations. Knowledge and skills transfer between the Australian and Pakistani companies will ensure Australia’s practices are appropriately integrated into the new company’s operations.
Mode of Entry into Pakistan
While there are many strategies that companies may use to enter international markets, Sprout Stack will use direct entry and partnerships as the best strategies to penetrate the Pakistani market. A general examination of these strategies reveals the need for Sprout Stack to invest more resources in ensuring that the new company succeeds. These strategies also aim to address the cultural and taxation issues that have become an impediment to most international companies’ success in Pakistan. These two strategies are ideal for Sprout Stack to enter Pakistani’s market because they are easy to implement, affordable, take a short time to produce results, and are suitable for this new market’s cultural and economic environment.
Partnerships
Partnerships refer to associations between two or more individuals or businesses to manage and operate a business and share profits and losses. Companies and individuals have to agree on the terms of engagement before entering into partnerships (Lymbersky, 2008). In most cases, simple partnerships involve sharing expenses, profits, and losses equally. Various reasons encourage Sprout Stack to collaborate with local investors. One the company wants to use the partnership to enter the Pakistan market is to take advantage of the other company’s experiences and knowledge already operating in Pakistan (Arora et al., 2016). This partner may be a Pakistani company or an international one working in Pakistan for more than a decade. The partner company will already be required to understand Pakistan’s social, economic, and political environment. The strategy will help Sprout Stack quickly and easily get acquainted with Pakistani’s environment (Lymbersky, 2008). Second, Sprout Stack will be more comfortable establishing its roots in Pakistani through partnerships due to reduced start-up costs. The cost of establishing an independent company overseas is enormous due to expenses such as taxation, infrastructure, human resource, and other assets (Hill, 2008). Sprout Stack will need more capital, especially for documentation, to obtain a business permit and license. However, a partnership between Sprout Stack and an existing company in Pakistan will enable this company to avoid expenses.
Sprout Stack will incur fewer operational costs because the partner company will have already covered most of the expenses. Besides, Sprout Stack will have easy access to credit facilities in case it needs them. Moreover, the partnership is an ideal entry strategy for Sprout Stack because it can change its legal structure anytime it wishes. Partnerships can be dissolved easily when and if the owners want to do so. In this case, Sprout Stack can decide to keep the partnership or wind it up anything based on a cost-benefit analysis conducted to establish the usefulness and benefits of the association. Since the Australian and Pakistani economies, politics, and cultures are different, the company needs to consider these issues. Before changing its legal structure from the partnership, Sprout Stack will have known and understood the Pakistani market correctly.
Direct Exporting
Direct exporting refers to exporting products to the client or customers’ country directly or through their partners in foreign countries. The advantage of direct exporting includes eliminating start-up expenses that may cost the company a lot (Kamali, 2019). Besides, direct exporting involves the use of intermediaries. These intermediaries already understand the Pakistani market. They can advise Sprout Stack on navigating through the social, economic, and political aspects critical in ensuring the new company succeeds.
Marketing Strategies
The company will use the 4Ps of the marketing mix to ensure the company reaps optimally from the Pakistan market (Duan & Agalakova, 2019).
Product
The company will offer modern and state of the art environmentally friendly agricultural equipment that meet global standards (Duan & Agalakova, 2019). It will also produce and sell quality farm inputs that improve the production of quality farm products. The company will target products that promote rice production, which is the country’s major agricultural export.
Price
The company will charge prices that meet the organization’s production, packaging, and supply costs. However, new products will cost lower prices to enable customers to try them before the prices are adjusted to generate profit (Duan & Agalakova, 2019). However, the cost of goods will match the competitors’ prices. Further, the customer will give discounts to returning customers (Wu & Li, 2018). The company will moderate these discounts such that they do not give customers the impression that the products are of lesser quality (Zhang et al., 2019). Finally, Sprout Stack will adjust the product prices depending on the demand, which varies depending on the planting seasons.
Place
The company will open outlets in rural areas where agriculture is highly practiced. Sprout Stack will also prefer to sell its products directly to agricultural input suppliers to minimize transport and distribution costs (Wu & Li, 2018). Finally, the organization plans to have different stores distributed strategically to enable the customers to achieve the products conveniently.
Promotion
The company intends to use paid media advertising as its core promotional strategy because of its wide coverage. It also intends to use direct selling to sell its products to wholesalers and other distributors (Schellenberg et al., 2018). Using these intermediaries in Pakistan will enable the company to penetrate the market because they already have a stable market. The company further intends to use social media marketing by operating an official Facebook page where it can freely interact with potential customers and post new products. Finally, Sprout Stack will use email marketing to inform its existing customers of new products and deals.
Personnel
In Pakistan, international and foreign companies must employ at least 60 percent of locals in their companies. These employees range from top to subordinate employees. In this case, the Sprout Stack will be required to develop an employment strategy that will consider Pakistan’s employment laws and requirements. There will also be the need for training to enable these new local employees to get acquitted with its objectives, mission, business model, and operation strategies (Salgado & De Fruyt, 2017). Since the training will take some time, Sprout Stack will be required to export its employees from Australia to Pakistan to work while the Pakistani ones undergo training. The employees’ compensation will be based purely on merit and experience (Ginn et al., 2019). A comprehensive recruitment and hiring process will be used to ensure that the company hires the best talents.
Risk Assessment
Since Pakistan is a new market and different social, economic, and political structures, Sprout Stack will conduct a feasibility study to identify the significant risks that may affect its success and operations. In the meantime, the company is ready and prepared to engage the Pakistani government in ensuring that risks that may be associated with taxation, employment laws, or other legal requirements (Zio, 2018). Simultaneously, the company has already established a risk assessment plan and management team responsible for ensuring that the expected and unexpected challenges do not adversely affect its operations (Zio, 2018). Besides, partnerships and direct marketing will allow Sprout Stack enough time to study the market, assess the risk, and identify how to manage them before fully entering the Pakistani market.
Corporate Social Responsibility
Every organization has a corporate responsibility to protect the environment and improve the people’s livelihoods within its market. Some of the strategies used are to use the best practices that conform to international and local standards in their business dealings (Keenan et al., 2019). Some organizations also engage themselves in cleaning the mess created by other organizations to give back to society. A key strength that will give Sprout Stack an upper hand when entering the Pakistani market is to use green production processes that address the need to conserve the environment. In this case, the company will invest heavily in green production processes such as drilling solar-powered boreholes and constructing schools and other public amenities that use solar energy instead of electricity. The company also intends to promote society by offering environmental conservation training and best farming practices that minimize pollution.
Conclusion
Sprout Stack specializes in the production of natural, healthy, and organic farm products. These products are produced using organic and natural fertilizers, while water used is recycled in a closed-loop process. Pakistan is an excellent foreign destination for Sprout Stack due to food scarcity, increasing population, and demand for fresh farm products. Direct marketing and partnerships will enable the company to easily and quickly gain ground in the Pakistan market. Marketing strategies, including paid media advertisements, email, internet marketing, and intermediaries, will enable the company to understand the local market before investing in it quickly. Participating in corporate social responsibilities will allow the company to win locals’ trust and loyalty while also using the green processes strategy to market its products. The establishment of a risk management team will enable the company to navigate through the social, economic, and political issues that may affect its operations. Sprout Stack’s decision to invest in Pakistan’s market will guarantee the company easy expansion, higher sales, and presence in the international market.
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