Q This report on business expansion of company Red Rooster out of Australia highlights study regarding various condition Home, - Business Expansion of Red Rooster BRIEF INTRODUCTION OF THE SELECTED COMPANY – RED ROOSTER Red rooster is and Australia based fast food restaurant chain which specializes in roast chicken. Red rooster was founded in the year 1972 by Kalis family who first established the outlet in Perth located in Western Australia. It is now owned and operated by its parent company Craveable Brands. Red Rooster has its span all over Australia with over 360 Restaurants. Red Rooster started its marketing in the year 2009 with the tagline “They don’t get it in America” featuring a famous Australian comedian. From 2012 onwards they changed by promoting as healthy, fresh and quick. Now from August 2014 red rooster started marketing with the new brand positioning tagline of “Tender Loving Chiken”. From September 2014 red rooster started its trial delivery service which now delivers to over 220 restaurants across Australia. Having been so well established in Australia its now right time for Red rooster to start expanding out of Australia as well. IDENTIFICATION OF THE TWO COUNTRIES SELECTED FOR MARKET ENTRY (ONE EUROPEAN AND ONE ASIAN) For expanding Red Rooster, the two countries appropriate for such proposal is Philippines located in Asia and Iceland Located in Europe. To better understand the prospective markets for growth of Red Rooster let us now look into the macro environment and geo political forces impacting each of the above mentioned companies. THE CURRENT MACRO-ENVIRONMENTAL AND GEO-POLITICAL FORCES IMPACTING 1. Philippines • GEO-POLITICAL FORCES Philippines with regard to population count stand to be the 12th largest and with regard to economy has the 43rd largest in the world, which in turns makes it a popular destination for investors internationally. Even Goldman Sachs named Philippines as part of its Next Eleven Economies, projecting that it will rise up to become the 14th largest economy in the world by the year 2050 which is stated as nothing less than a economic miracle by many. • MACRO ECONOMIC FORCES Philippines has recently transitioned from an agricultural based economy to a service based economy from last several years which makes it a hub for service based industry. According to CIA World Factbook, as of 2011 approximately 52% of the economy was based on Service Sector, 33% on Agricultural sector and 15% on Industrial or manufacturing Sector. This shows that the major portion of the economy on date I based on service Sector. From Intel to Toyota to IBM, Many Large multinational Corporations is preferring Philippines because of advantages with regard to low domestic wages in return of highly educated English speaking workforce. 2. Iceland • GEO-POLITICAL FORCES Iceland is an island country located between Europe and North America in the Atlantic Ocean close to Arctic Circle. There are tremendous investment opportunities in sectors that cater to tourist such as restaurant sector. The number of tourist in the country exceed the total population of 3,30,000 as a result a new consumer market is emerging. The TI Corruption presumption Index as on 2016 was 14 out of 176 as a result Iceland is considered a low corruption country. And Iceland has scored 20 out of 190 in the World bank Doing Business Report “ Ease of Doing Buisness” Iceland has a stable democracy with an active consumer base. With the population of over 3.5 lakh, the domestic market is small in Iceland with a booming tourism industry growing every year in double digits from last several years which makes it a perfect market for expanding business. • MACRO ECONOMIC FORCES After suffering an economic meltdown in 2008 the government of Iceland and the central bank of Iceland put down temporary rules prohibiting all capital outflow and inflow as a measure to strengthen Icelandic currency which declined as far as 51% against dollar during the meltdown period. As on March 12th, 2017 the central bank of Iceland has announced to lift the capital controls implemented earlier during the meltdown but some protection still remains, this liberalisation move will help Iceland to attract further foreign investment. The economy of Iceland is considered to be a stable economy with low inflation rate and healthy economic growth. GDP of Iceland amounts to USD 22 Billion in the year 2016, and per capita GDP amount to USD 60 thousand approximately. DEVELOPMENT OF TRADE AND BUSINESS POLICY Philippines The last review of the Philippines trade policy was in the year 2012, the Philippines economy growth was at an annual rate of 6 percent. This growth in the economy was analysed to be governed mainly by infrastructure and Consumption investment. GDP of the country rose to US$ 2950 in the year 2016 from US$ 2580 in the year 2012. Service Sector was constituted as the most important sector with regard to contribution to the GDP. Strong inflow of foreign direct investment was recorded in Philippines over the review period. FDI reached US$7.9 billion in the year 2016 from US$ 1.9 Billion in 2011. Netherlands, United states Australia, Japan and Singapore were the major contributors in this growth of FDI. Most imports are subject to value added tax which has a standard rate of 12% like in the domestically produced goods. Food Products and Agricultural inputs are exempted from levy of value added tax. A vast range of goods are although subjected to licences and permissions when imported. For some products multiple licences are required. A new Food Safety Act was established in Philippines in the year 2013 and was enforced in the year 2015 which reformed the food safety regime which was based on the “food to fork” approach to enhanced food safety. Iceland The import of dairy and meat products are fairly low due to imposition of high tariff on such products by the government of Iceland. Beef imports have increased in Iceland as a demand from tourist has outpaced the local produce. Iceland has formed two agencies to support the foreign investors in understanding the Iceland rules and regulations with regard to starting a business in Iceland. These agencies are, ? Icelandic Environmental and Food Agency (Food Division) and ? Icelandic Food and Veterinary Authority (MAST). There are specific requirement in labelling and marketing the product which are to be sold in Iceland such as, ? The labels of the product must be in any Nordic Language other than finnish. ? The package of the retail product should show the name of the manufacturer, name of the product, net weight, ingredients, last date of consumption, storage instructions etc. ? More information is easily available with the environmental agencies of Iceland. AN ASSESSMENT OF THE POTENTIAL DANGERS, RISKS AND OPPORTUNITIES IN THE CURRENT OR SHORT TERM POLICIES OF EACH COUNTRY Iceland Risk/Dangers The rules and regulations with respect to product standards are increasing day by day and are made more stringent following the adoption of European Union product standards and regulation such as product labelling etc. High tariffs are imposed on most agricultural products and there are heavy restrictions on import of certain product such as raw meat etc. There is also difficulty in amounting financing for joint ventures due to capital controls that are still in effect after the great meltdown. Opportunities The tourism industry is one of the fastest growing in Iceland, travel by air is increasing which help to attract tourist throughout all the four seasons of the year. The demand for hotels and other infrastructure is increasing day by day resulting in high demand of restaurants of international standards. Iceland is dependent on imported goods. The labour force of Iceland is highly skilled and educated. The major population of Iceland is consistent of Youth, which makes the work force more efficient. The labour force of Iceland is fluent in English which makes it easy to establish business and blend with the environment. Philippines Risk Certain economic risk is still prevalent which are linked to political and security conditions of the country. There are restrictive economic provisions on foreign ownership, high corruption and high cost of utilities. There are high regulatory burdens and tremendous rep tape in the economy of Philippines. The Philippines has been subjected to several incidences of violent crimes, majorly gun crime. British Nationals have been recent victims of these criminal attacks, though there is nothing to prove as to they being a specific target. Moreover, gun ownership is legal as well as illegal is widely spread all over the country which in turn increases the risk of violence. The Geopolitical aspect of Philippines is also prone to some risks which include Political corruption, weak Internal Security and Trouble from the South China Sea. Opportunities As high as 25% of Pilipino were eating out in the year 2014 with respect to 14% a year earlier in 2013 according to the annual report conducted by Nielsen in 54 market globally, it also provide a overview of retail environment trends and shopping behaviour understanding in which it states when and how people shop, there emotional commitment and perception, the study reveals as high as 49% of philipino shoppers will indulge in spontaneous buying if attractive promotions are given. Philippines economy has raised at a rate of 6.9% for the third consecutive quarter of this year which makes it one of the best performing economies in asia. CONCLUSION The Philippines is better because of the following reasons: 1. Fast Growing economy with greater population which provide with increased opportunity. 2. Raging fast food culture which provides our company Red Rooster with high opportunity of success. 3. Better business environment and easier regulations will make it easy and smooth to establish business was expansion. 4. Food culture is easier to understand and adapt in Philippines which is quite aligned with the goals of our company. In the end it will be appropriate with regard to the above mentioned study to state that the Philippines located in Asia will afford the best opportunities to the company for expanding its business out of Australia.