Cafe Bateel's Readiness to Internationalize - Essay Sample

Introduction

A national or regional company may decide to internationalise for various reasons. Going international under the right terms shows a company is growing, ensures a long-term survival of the company in case some markets fail, provides the company continues to experience profitability if done well and also for business risk diversification (Knight & Liesch, 2016). Bateel is a Saudi Arabian company with a speciality in dates and date-related products, pastries and other food components. Bateel has been in existence since 1936. Furthermore, Bateel has a line, Cafe Bateel, which has 26 locations in Saudi Arabia. According to Bateel, "Our cafes blend centuries-old Arabian hospitality with the elegance of modern European bistros to create a uniquely inviting setting." Bateel exudes elegance and culinary delight by incorporating an Arabian Experience with Mediterranean diversity. Bateel already ships their products in numerous countries and regions. However, their cafe services are still limited to Saudi Arabia which is the division we shall explore in this paper.

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Determining Benefits and Trade-Offs of an International Expansion

The first step for Bateel is assessing the benefits and trade-offs of international Market Expansion (Rosnan et al., 2018). For their Cafes, a significant advantage will be to reduce their dependence on domestic markets. Bateel is a classic company, and their cafes are even more traditional than many European food service institutions. The world has been leaning towards understanding the middle east and also going to the extent of copying their culture (Rosnan et al., 2018). People now vacation in the UAE, Dubai and Saudi Arabia and enjoy their time there. Therefore, the reasoning is that Bateel through their ability to blend while still offering an exclusive experience will do well in international markets starting with the closer European countries such as France and Italy. A trade-off for Bateel is that to internationalise, they will need significant additional financing or that they must use short term profits to set up their operations effectively (Knight & Liesch, 2016).

Conducting a Business Analysis

The second step for Bateel would be to perform a business or company analysis (Bell, Bryman & Harley, 2018). The first step is to do a financial analysis to determine whether they would be capable of developing their company abroad. The second type of study would be to perform a SWOT analysis. Their strengths are that their products are unique and nobody is offering the same in the potential markets. A potential threat is that the reception may not be so good in the new countries. An opportunity is a growing need for Arabian products and services while a weakness is that this is their first time undertaking such a significant project. Performance analysis is also crucial which will determine how well Bateel is using its assets, shareholder equity and liability. Another critical analysis is its profitability. Cafe Bateel should have an assessment of their liquidity position, asset management position, profitability and Market Value (Bell, Bryman & Harley, 2018).

Conducting an Industry Analysis

The third step is an industry analysis. Cafe Bateel has to compete with other international food service companies. Moreover, there are other local companies in the places Bateel will choose to set up their business. These local companies are even a more significant threat than other international companies. Therefore, Cafe Bateel must, through its current service and product offers, analyse how it is currently involved in the global marketplace. Critical questions that Bateel must answer include what products and services the competition offers? Are they going to target the same markets and audiences as their competitors? Is the competition profitable, and how fast the sport is growing? (Sjoblom, 2015). Bateel must also do a SWOT analysis for their competitors and critically analyse the competitive data to effectively evaluate their potential international position.

Identifying Products With Export Potential

For the fourth step, Cafe Bateel needs to distinguish their products with Export Potential. According to Pinho, Martins, & Soares, Cafe Bateel should first list the products and services they seek to provide in the new markets. Against each product, they must then register the strengths and weaknesses of the products with export potential (Pinho, Martins, & Soares, 2018). For Cafe Bateel, they have to assess both their products and services. Their primary function is in the food service sector while for the products, they have to determine what food and beverage products would do well in the foreign markets. They can have a survey taken by the current foreign consumers who visit their 26 cafes in Saudi Arabia. The key to a successful analysis in this step is to determine how much the international markets will like their product (Pinho, Martins, & Soares, 2018). They can also use surveys of their gourmet websites where international clients list the products; they would like best in the cafes near them. Bateel should then contain the strengths and weaknesses of their products and use the ones with the most advantages and least detrimental weaknesses (Pinho, Martins, & Soares, 2018).

Estimating Market Potential

The fifth step is determining marketability which is to match their products and service with a global trend or need AA. Cafe Bateel should then narrow their choices to the final three which must be the most receptive market. For Cafe Bateel, we already established that France and Italy should be at the top of their list since they already produce gourmet Arabian products which have French and Italian food styles. A third market would be that which enjoys all three cultural products. To thoroughly analyse market potential, Bateel must accomplish the following: top-down estimation of market potential size, elaboration of market types, analysis of market segments and Integration and Interpretation (Curtis, & Bradshaw, 2017). The top-down model begins with the assumption that the products and services that are offered by a company should be close to that country's economy and profitable industry which contributes to the country's wealth. (Curtis, & Bradshaw, 2017).

Elaboration of market types determines whether the potential markets are lead markets, break out markets or big emerging Markets (Curtis, & Bradshaw, 2017). Cafe Bateel falls between lead and big emerging markets. The next step is an analysis of the market segments. According to Curtis & Bradshaw, Cafe Bateel must ensure that the resources will be available to their target customers. Whatever the target market, it is necessary to consider that cognitive resources are available to potential customers. They must have the ability to spend on their products. Their products must also be of value to potential customers. Bateel must ensure their services and products are unique. Cafe Bateel must also be able to create the infrastructure necessary for the provision of their products in a manner which communicated their Arabian uniqueness (Curtis, & Bradshaw, 2017). The last step in estimating market potential is understanding the qualitative factors that must be considered and interpreted. These include language, culture, religion, business practices and business networks. Bateel must remember that especially their culture which also influences the way they do business is different in other countries.

Defining Which Market to Pursue

All the steps mentioned above if done appropriately should help determine which is the best market to pursue first. It should be the largest, fastest-growing and purest markets to penetrate (Knight & Liesch). Cafe Bateel and the Bateel corporation has no experience in establishing international facilities. Therefore, they should try and get the best experts to help them through this process. According to Rosnan et al., it is best to test their viability in one market and then move on to secondary markets (Rosnan et al., 2018). A regional approach would be best for Cafe Bateel.

References

Bell, E., Bryman, A., & Harley, B. (2018). Business research methods. Oxford university press.

Curtis, K., & Bradshaw, M. (2017). Conducting a Market Assessment: Estimating Market Size and Price for Small-Scale Food Tourism Enterprises.

Knight, G. A., & Liesch, P. W. (2016). Internationalization: From incremental to born global. Journal of World Business, 51(1), 93-102.

Pinho, J. C. M., Martins, L., & Soares, A. M. (2018). Small businesses' internationalization: International readiness in the context of Asian countries. Asia-Pacific Journal of Business Administration, 10(1), 50-63.

Rosnan, H., Abdullah, N. C., Yusof, N., & Abdullah, M. S. (2018). Firm's Readiness for Internationalization. Management & Accounting Review, 17(3).

Sjoblom, S. (2015). Competitive Intelligence-Conducting an Analysis of a Business Environment.