This paper is a case study, aiming to describe how Atlantic Fisheries Marketing Board might successfully enter various European markets. It covers problems of corruption, market diversity and entry methods which are most likely to bring success.
Interactions with Corrupt European Markets
Interactions with corrupt governments can be detrimental to the companies in various ways. Aside from hampering operations through extortions and legal hurdles, corruption also makes the markets more secretive and unpredictable disrupting the efforts to analyze and control them (Galang, 2012, p. 429). These complications make operation in the corrupt markets highly undesirable, especially for a foreign company unfamiliar with all of the intricacies and interconnections built upon the corruption. However, some researchers argue, that working in such markets can help the company attain invaluable experience which will help it build more effective ties with governments and other organizations in the future. However to attain such experience the company must approach the corrupt market with caution and preparation, ensuring that their efforts would not be sabotaged at the very start. The research separates two major modes of corruption related to international business. Pervasive corruption means that bribery is certain and commonplace, becoming an element of the business process. Arbitrary corruption, on the other hand, means that there is no certain way to attain special treatment through bribery and, at the same time, that there is no guaranty that it will be required to run the business normally (Galang, 2012, p. 438). Understanding which type of corruption the company faces is crucial for establishing the strong market presence. Most companies, given the choice, prefer the markets affected by arbitrary corruption which is less predictable but also less likely to affect the business at all. Another important area to analyze is the response of other companies in the market to corruption. There might be businesses and conglomerates both fighting it and using it to their own ends. Atlantic Fisheries as a new player in the market would be wise to ally with the stronger and more prevalent group until it is clearer which course of action benefits the company most. It is also important to understand whether the company can have enough political power to influence the situation. The business of fish import doesn’t have a lot of political weight, but making allies among the politicians is always a good way to safeguard your stake in the market. Most research suggests that finding allies is by far the most important step in entering a corrupt country, as allies offer insight into the market no research from the outside could give you.
According to Transparency International, the most corrupt European region is the Eastern Europe. Most of the countries there like Ukraine, Moldova, Belarus, and Russia are in the bottom half of the Perceived Corruption Index. Those countries constitute a significant portion of the market and cannot be ignored. However with the Russian fish import ban, the significant portion of that market is currently unavailable for Atlantic Fisheries. Considering that, the wisest course of action might be simply ignoring the corrupt countries until the situation changes and focusing on the rest of Europe in the meantime.
Different markets of Europe
The differences between fast-paced market-centric economics and consolidated and closed relationship-based ones are extremely important to understand before the company tries to enter the market.
In relationship-based markets, corporations are in close contact with banks and governments working together to ensure mutual support. Such markets are characterized by a closed structure and are difficult to enter efficiently without allying with one of the big players. Centralized and transitional economies are relationship-based, since most of the businesses are government-owned. Out of all the potential markets in Europe, France and Germany’s markets are full of big corporations, working closely with banks and governments. They can be considered relationship-based (Bhasa, 2004, p. 11). Italy can also be considered a relationship-based market, since lately increasing attention has been paid by the government to the corporate governance (Gandini et al., 2009, p.441).
Fast-paced markets are more open and oriented towards immediate profits more than long term goals, as the corporations and big companies are governed by the interests of a large number of smaller shareholders. In these countries the ties between companies, banks, and governments are less close. That makes such markets more volatile but also easier to enter. UK focuses on avoiding strict business regulations, instead focusing on principles of governing (Financial Reporting Council, 2010, p.1). Nordic markets like Sweden or Finland are also mostly occupied by the companies prioritizing dispersed ownership structures (The working group of the self-regulatory corporate governance bodies of the five Nordic countries, 2009, p.11).
The preferable markets for the Canadian lobster are relationship-based economies. As the case indicates, France and Italy are primary markets for it, resenting a lot of opportunity. On the other hand, UK is a perspective fast-paced market, with supermarkets offering a venue for development. Sweden and Finland do not offer as many opportunities as their fish markets are saturated with local produce. They do not offer lobster, but it is also not a traditional food. Germany is a consolidated market which is hard to enter and which has only limited interest in fish.
Preferred market-entry method
Cunnigham gives four strategies the firms can use to enter foreign markets based on: technical innovation, product adaptation, availability and security, total adaptation and conformity (Cunningham, 1986, p.9). The best course of action for the Atlantic Fisheries is to combine technical innovation with availability and security. This means entering the new markets by providing new technical solutions while at the same time making sure that your product is easily available, and shipments are secure. For a luxury commodity, such as lobsters, the focus should fall on security as every lost unit represents a more significant financial loss. The technological means for that already exist. Using innovations provided by Maersk can make live lobsters available for any company, anywhere in Europe. The key problem then becomes finding an appropriate market. As mentioned before, UK, France, and Italy seem to be the best markets for the product. However, just focusing on separate countries seems to be unwise. As the case suggests the supermarkets are a potential market for live lobsters. It opens a great possibility for market entry, as many supermarkets operate across many countries in the EU. For example, Auchan network operates in France, San Marino, Italy, Poland, Spain, and Russia, covering many perspective markets just on its own. Allying with several of such chains can offer a great opportunity for Atlantic Fisheries to start selling their product in almost every country in Europe. And not only that, as with the help of such partners it will be easier for the Atlantic Fisheries to assess local markets and understand the realities of European trade. Plus, the initial assessment by the supermarket company will help determine the most perspective countries, and optimize the land shipping routes. After a period of time sales analysis will show which countries have the most active markets at which point the Fisheries can move on to make contracts with more local dealers. Restaurants and other purely local establishments which also might be interested in live lobsters should not be ignored. Two approaches can be used to cover this market. First is following the general plan proposed previously, i.e. making contact with such establishments after the analysis has shown that the product has future in the country’s supermarkets. This variant runs a risk of missing some possibilities, due to the limited market research. The second option is researching the restaurant industry independently and approaching local establishments individually. This approach is more thorough, but also more time-consuming and expensive, considering every local business will only order a very limited number of lobsters.
References
Bhasa, M.P. (2004). Understanding the corporate governance quadrilateral. Corporate Governance, 4(4), 7-15.
Cunningham, M.T. (1986). Strategies for International Industrial Marketing. London, UK: Croom Helm.
Financial Reporting Council. (2010). The UK Approach to Corporate Governance. London, UK: Financial Reporting Council.
Galang, R. (2012). Victim or Victimizer: Firm Responses to Government Corruption. Journal Of Management Studies, 49(2), 429-462.
Gandini, G., Astori, R., & Cassano, R. (2009). Structures of Corporate Governance in Italy and Comparison at European Level. International Review of Business Research Papers 4(1), 441-453.
The Working Group of the Self-regulatory Corporate Governance Bodies of the Five Nordic Countries. (2009). Corporate Governance in the Nordic Countries. Web.