Introduction
The wave of globalization is allowing companies to develop and market a wide range of consumer goods to foreign customers using different strategies, such as direct exports and partnerships. Before pursuing such a business approach, investors need to conduct detailed analyses of some of these identified destinations for their products. The accuracy and effectiveness of the completed research dictates the overall performance of the organization. A Bulgarian company manufacturing white cow cheese, famously known as Madjarov, can successfully export the food product and deliver it to potential customers in the Moroccan market. The application of Porter Diamond Model reveals that the targeted business destination is competitiveness and attractive for the selected product. The completed market entry feasibility study supports the exportation approach to achieve the outlined goals of marketing Madjarov in Morocco.
Competitive Advantage Analysis: General Competitiveness
Morocco is one of the politically stable countries in North Africa due to the presence of a constitutional monarch. The present king, Mohammed IV, has been in power in the nation since in the year 1999. Its capital, Rabat, remains a region with a rich tradition and culture that has been practiced for over 8 centuries (Oulfakir, 2022). With a population of around 36.9 million citizens, it has the potential to support a foreign business entry (Oulfakir, 2022). Tourists visit the country because of its diverse flora and fauna, arts, cuisine, and entertainment.
Leading economic activities in Morocco include agriculture and industrial manufacturing. The labor force share stands at 39 percent for agriculture, 40.5 percent for services, and 20 percent for services (CEIC Data, n.d.). Other industrial practices in this nation include automobile, construction, leather goods, rock mining, and food processing (Oulfakir, 2022). The nature and competitiveness of these sectors have continued to attract local and foreign companies. For instance, the nation’s total foreign direct investment (FDI) had increased by 1.2 billion US dollars by June 2022 (see Fig. 1). This was a sharp increase from the 416 million US dollars recorded in June 2021 (see Fig. 1). Such a trend means that the country has the potential to support the performance of foreign businesses.
Morocco has a tropical climate whereby temperatures range between 5°C to 35°C. However, the coastline delivers a favorable Mediterranean climate that supports the tourism industry. The long history of the region, architecture, art, and cuisine makes it attractive to foreigner. The processes of innovation and research continue to attract more investors. Currently, analysts and geologists are searching for oil and gas in the country. With a gross domestic product (GDP) of over 1.26 trillion US dollars, it is agreeable that the economy is on the right direction (Trading Economics, 2022). These attributes explain why investors have been taking this market seriously than ever before.
Factor Conditions
Morocco has numerous factor conditions that can support economic and business performance. First, the country has numerous natural esources capable of supporting industrial activities, such as water channels, phosphates, coal, zinc, and iron ore (Oulfakir, 2022). Most of the materials are marketed to other countries to spromote economic activities. Being an agricultural country, it has a total of 8.7 million hectares of land that could be put into agricultural use (Oulfakir, 2022). However, the relevant leaders need to engage in additional strategies to improve the level of food sustainability (Oulfakir, 2022). Additionally, the latest raking has showed that Morocco’s Competiveness Index (CI) has remained around 16.7 points since the year 2007. The highest rate would be recorded at 60.01 points in the year 2019 (see Fig. 2). This revelation means that it presents an attractive destination for international business.
Purchasing power (PP) is a useful attribute for determining the overall attractiveness of a given market. For Bulgaria, the recorded PP parity stands at 0.7 LCU while that of Morocco is 3.9 LCU/dollars for 2021 (Trading Economics, 2022). While these factors might appear promising, the climatic patterns and conditions recorded in this country make production of cheese and animal products seasonal, thereby creating room for imports. With a proper marketing approach, Bulgarian Madjarov could be successfully introduced and marketed in Morocco.
Demand Conditions
Since 2020, the government of Morocco has been keen to implement several transformative measures and programs. Such efforts are supported by the lessons gained from the COVID-19 pandemic. The country has introduced additional measures to maximize international trade cooperation with the European Union (EU). Latest reports have put the country’s score at 59.2, a statistic that makes it one of the freest markets for doing business in Africa. The country was ranked at number 6 as one of the best country in North Africa and Middle East region (Trading Economics, 2022). The existence of proper laws and attractive taxation policies encourage foreigners to consider doing business in this country.
The existence of powerful consumer protection laws allow business entities to engage in acceptable practices. With Madjarov being a consumer product, it becomes necessary to consider the existing guidelines and ensure that the presented cheese meets the demands of the citizens. Additional policies common in Morocco include the need for proper product identification and labeling, outline key ingredients and nutritional value, and limitation when it comes to the use of food additives (Vlados, 2019). Morocco has continued to experience the negative impacts of desertification. With most of the country’s land being unfertile and incapable of supporting agricultural activities, companies have been diversifying their business models.
When it comes to the people’s culture, a wide range of foods and drinks characterize the behaviors and cuisine of Moroccans. For instance, those living in large urban centers prefer cheese and appetizers. Such food products have become a defining attribute of the Moroccan lifestyle. The traditional white cheese sourced from Bulgaria could, therefore, become a good combination for salads or a starter (Petrova et al., 2021). The decision to market Madjarov in this market could pay off and make the foreign investor successful.
Firm Strategy, Structure, and Rivalry
In Morocco, company strategy is pursued in such a way that firms focus on high-quality services and products that can meet the demands of the customers. Efficient procedures and initiatives are common to ensure that companies engage in cost savings (CEIC Data, n.d.). The country promotes flat hierarchical systems in the field of organizational structure. Such a model creates room for communication, access to top leadership, and employment engagement in business decision-making. Management supports numerous processes to empower workers and foster growth.
In the wider food sector, competition remains a common feature with firms pursuing strategic focus and development. With the emerging power of technology, firms engage in research and development (R&D) to come up with better ways for attracting more customers and improving performance. Most of the decision-makers engage in additional analyses to learn more about the changing demands of the customers and improve the process of service delivery continuously (Oulfakir, 2022). Within the field of global competition, local companies have developed superior products capable of meeting the changing consumer trend.
From a cultural perspective, Moroccans borrow European attributes whereby courtesy, openness, and handshakes are critical indicators of successful business deals. Most of the citizens would be ready to identify respectable people with whom to do business with. Private relationships and trust become the key foundation for any successful business agreement (Oulfakir, 2022). Foreigners would need to take such cultural attributes and organizational tendencies seriously if they are to achieve the much-needed business aims.
Related and Supporting Industries
Morocco’s cheese industry has been recording divergent trends that investors need to take seriously. For instance, the country recorded cheese sales amounting to around 50.6 million US dollars in 2019 (Selina Wamucii, n.d.). This was a dramtic decrease of around 10.8 percent since the sales of 2018 stood at 56.8 million US dollars (Selina Wamucii, n.d.). Some of the leading companies in this sector include FreCheese, Eric Meignat, Oland Group, and Dun & Bradstreet (Selina Wamucii, n.d.). The leading products in the industry include grated, blue-veined, and fresh cheese. The level of exports for cheese has been declining over the years since 2014 (see Fig.3).
Morocco is experiencing a wide range of agricultural products from both local and international companies. The competitive rivalry has continued to increase while newcomers struggle to break even. New business entities entering the Moroccan cheese sector would need to consider powerful marketing strategies to convince more potential buyers (Selina Wamucii, n.d.). The declining level of profits from cheese and milk products shows conclusively that the market might be less attractive for new entrants.
The Moroccan food industry is attracting new trends that have the potential to support business performance. Some of them include R&D, use of innovative strategies, and flexible entrepreneurial processes. The adaptability of the industry means that emerging players can identify, segment, and deliver positive results. The geographical location of Morocco makes the country attractive for tourists. These visitors would be willing to try the available products and cuisine, thereby supporting the performance of the cheese sector (Haddoud et al., 2021). In terms of infrastructure, the country has good infrastructure network systems that comprise of roads, railway lines, airports, seaports, and airstrips.
Influencing Role of Government
Morocco has sustainable laws and policies that continue to influence business operations. The relevant authorities monitor such frameworks to control trade operations, imports, and exports. It has entered into international agreements to benefit from subsidies and FDIs. The government remains supportive of both local and international businesses (African Development Bank Group, 2021). The established laws promote a level ground for innovation, production, and logistical operations. The existence of research institutions and agencies contributes to technological and scientific advancement.
The Moroccan government remains a catalyst for various operations and initiatives. For instance, the relevant agencies ensure that infrastructure systems are favorable and capable of supporting business operations. Consumer policies, intellectual property rights, and corporate laws are intended to meet the need of all key stakeholders. The strained relationship between morocco and Algeria could affect the performance of companies operating in the two countries (Selina Wamucii, n.d.). Additional barriers linked to the government include the bureaucratic procedures involved in decision-making, delayed payments for imports, and reduced transparency in procurement processes.
Effects of Chance
Morocco records a number of aspects that make it attractive to foreigners and immigrants. According to the African Development Bank Group (2021), the government’s move to support higher remunerations attracts people from sub-Saharan Africa. Its proximity to Europe makes it a transit destination for seeking refuge internationally. The cultural dynamic characterized by people with diverse backgrounds contribute to the country’s rich society. Additionally, its geographical location makes it prone to earth tremors and earthquakes. For example, the country experienced one of the worst earthquakes in 2004 that hit the small town called Al Hoceima (Gov.UK, n.d.). In some regions, heavy downpours and flash floods tend to be common. It becomes necessary for people to follow the presented instructions from the relevant agencies. Since climate change has remained problematic, it is clear that the country could lose most of its productive land due to the current rate of desertification.
Market Entry Feasibility Study: International Readiness
Bulgaria is home to many firms operating at the small and medium-sized entities (SMEs) level. These businesses continue to support the positive performance of the local economy. The size of Bulgaria has compelled these companies to embrace the idea of doing business internationally. While at it, these firms encounter fierce competition from established organizations at the global level. The pre-export model could guide the leaders at the specific company to analyze and dictate whether it is ready for such a foreign venture or not. The export stimuli reveal that the producer of Madjarov can focus on a new market due to the small size of the Bulgarian economy. The current level of competition should compel the firm to focus on a more profitable market elsewhere (Petrova et al., 2021). Firm characteristic is an approach that guides the leaders to define Madjarov as a competitive product. By expanding globally, the risk of doing business will reduce significantly.
The decision-maker characteristic reveals that the current managers possess the relevant competencies and abilities that could guide them to succeed at the international market. The move can reduce the level of uncertainty and capitalize on emerging opportunities in Morocco. Key barriers to consider include the absence of adequate financial resources and production capacity (Petrova et al., 2021). Fortunately, the organization has been relying on agile methodology and six sigma approaches to revolutionize production.
Product Suitability
Bulgarian cheese is a favorite product due to its rich and earthy taste. Consumers find it creamier and softer than other cheese products sourced elsewhere. It is made from sheep, goat, or cow milk and delivers a fat content of around 48 percent (Aleksiev, 2019). This product is appropriate for starter, cheese pies, salads, and appetizers. Cheese is sold to many people in Bulgaria with an average of 0.54 billion US dollars annually (Aleksiev, 2019). Experts believe that the figure would increase in the coming years due to the demand of the product.
In terms of export, Bulgarian Madjarov is exported to different countries in Europe, Middle East, and Asia. Investors have been keen to identify emerging markets to maximize business operations. Additionally, some competitive products exist in the foreign markets that could hinder the exportation strategy. In the selected country, cheese is consumed by majority of the people. However, this scenario does not pose a major challenge to the company’s performance (Aleksiev, 2019). The foreign Moroccan market presents the risk of diverse culture whereby most of the people tend to have their unique preferences and tastes. A proper strategy to customize the product in accordance with consumer expectations could deliver positive results.
Industry Market Potential
In terms of size, Morocco’s cheese market delivered sales of 50.7 million US dollars in 2019. This figure shows that it remains lucrative and capable of supporting a foreign company. The target market includes all Moroccans, tourists, and immigrants who would be interested in the product. Competition remains a major challenge with local firms producing and marketing cheese (Oulfakir, 2022). The key barriers to entry could include cultural dynamics and the presence of supplementary products. Regulatory mechanisms capable of supporting the venture in Morocco include food safety, packaging, labeling, and reduced use of insecticides policies.
Export Strategy
Direct exports appear to be the best strategy for marketing cheese in Morocco. With the presence of flexible regulations, the approach is plausible and capable of delivering positive results. The initiative has the potential to reduce risks, thereby maximizing the recorded gains (Huo et al., 2020). When it comes to implementation, the wholly-owned subsidiary model would be appropriate to deliver desirable results. Key issues to consider will include a physical store, a website, and marketing strategies. The involved team will identify possible business entities to partner with, such as food outlets, supermarkets, hotels, and specialized shops.
Business Model
The involved company will need to produce Madjarov in Bulgaria and export it to Moroccans. The consideration of quality, health, and timely delivery will be part of the business model. The company will capitalize o the current market situation to improve the cheese by making it crunchier and tastier. The organization will need to keep production costs as low as possible (Haddoud et al., 2021). The consideration of renting office space and cold storage warehouses could make it possible to increase the lifespan of the imported products. Proper marketing approaches characterized by the 4Ps would be essential to support performance.
Scenario Analysis
Based on the trends experienced in Morocco, a slight increase of around 5 percent of the price could improve performance. Continuous analysis is necessary to identify the strategies primary competitors apply in the market. The use of direct importation will reduce the demand for local raw materials. Fixed cost optimization could be necessary to ensure that the pricing strategy resonates with the recorded demand. Projections reveal that more customers might not be interested in Madjarov during the first few years after entry (Haddoud et al., 2021). However, sustained strategies, marketing, and timely analyses would be necessary to introduce new improvements and make the business model practical.
Conclusion
The application of Porter’s Diamond reveals that Morocco presents unique opportunities that foreign companies could consider if they are to engage in successful business investment. The food sector enjoys proper policies that support a healthy competition. The existence of proper infrastructure and supportive natural resources make the market lucrative. The quality and competitiveness of Bulgarian cheese could explain why it would be demanded in this country characterized by more people with diverse backgrounds. Through the power of direct exports, the company under investigation could be able to launch its foreign operations in Morocco successfully. A proper business model, continued analysis of the recorded dynamics, and the concept of improvement could help attract more potential customers. Continuous product improvement and customization, based on changing consumer preferences, will increase chances of Madjarov’s success in Morocco.
References
African Development Bank Group. (2021). Analysis of Morocco’s trade policy: Impact of Morocco’s tariff policy on its competitiveness. ADBG.
Aleksiev, G. (2019). Competitiveness of Bulgarian organic products. Trakia Journal of Sciences, 17(1), 455-458. Web.
CEIC Data. (n.d.). Morocco foreign direct investment. Web.
Gov.UK. (n.d.). Foreign travel advice: Morocco. Web.
Haddoud, M. Y., Onjewu, A. K. E., Nowiński, W., & Jones, P. (2021). The determinants of SMEs’ export entry: A systematic review of the literature. Journal of Business Research, 125, 262-278. Web.
Huo, D., Chen, Y., Hung, K., Song, Z., Guan, J., & Ji, A. (2020). Diamond model and the export competitiveness of the agriculture industry from emerging markets: An exploratory vision based on a spatial effect study using a genetic algorithm. Economic Research, 33(1), 2427-2443. Web.
Oulfakir, S. (2022). In Morocco: Fruitful land for large-scale farms and erratic rainfall for small farmers. As-Safir Al-Arabi. Web.
Petrova, P., Ivanov, I., Tsigoriyna, L., Valcheva, N., Vasileva, E., Parvanova-Mancheva, T., Arsov, A., & Petrov, K. (2021). Traditional Bulgarian dairy products: Ethnic foods with health benefits. Microorganisms, 9(3), 480-499. Web.
Selina Wamucii. (n.d.). Morocco cheese market insights. Web.
Trading Economics. (2022). Morocco competitiveness rank: Summary. Web.
Vlados, C. M. (2019). Porter’s Diamond approaches and the competitiveness of the Web. International Journal of Business Administration 10(5), 33-52. Web.