Camel Cookie Company, Research Paper Example

Introduction

Camel Cookies is a brand that attempts to blend Arabian Gulf legacy and Western culture. The decision of thee company to move to the U.S.  market is a good decision, provided that taste and quality is in the focus of the average American customer. Camel Cookies they intends to get the brand known in the Western world for its quality ingredients, such as camel milk and Arabian coffee.

Company Analysis

Camel Cookies may expand to the US building on its products’ unique features, and differentiating its brand. Camel Cookie may also realize that their product is unique or superior to the competition in the US markets and seek to take advantage of this opportunity. On the other hand, Camel Cookies may choose to expand to the US because their goods are saturated in their home market, and they also believe that investments overseas will bring higher returns than additional investments at home.  The company is rapidly expanding, gaining traction on the home market continuously, with over a year of track record in the UAE. The brand’s reputation in the Arabic world is already good, and therefore, the company might decide to expand to markets where a large number of potential customers live. However, the geographical distance and cultural differences might make the expansion problematic and challenging. Entering a highly competitive market of specialty snacks, it is likely that Camel Cookies will need to focus on alternatives to direct investment, such as expanding its franchise opportunities to the United States, or offering co-branding, in order to raise funds for marketing and save money on the cost of expansion.

PESTEL Analysis of the United States of America

The PESTEL Analysis is a system used to output the association’s outer macro environment. The letters stand for Political, Economic Social, Technological, Legal and Environmental. Some methodologies will include additional variables, for example, International, or evacuate some to diminish it to PEST. There are a few convincing purposes behind global organizations like Camel Cookie to consider putting resources into the United States. Positive speculation variables can be arranged into the accompanying parts:

• Political Factors of USA that will influence the development of Camel Cookie
• Economic Factors of USA that will influence the development of Camel Cookie
• Social Factors of USA that will influence the expansion of Camel Cookie
• Technological Factors of USA that will influence the expansion of Camel Cookie
• Environmental Factors of USA that will influence the expansion of Camel Cookie
• Legal Factors of USA that will influence the expansion of Camel Cookie

Political Factors of USA that will influence the expansion of Camel Cookie

There is a good political atmosphere between the US and UAE. The general political conditions and taxation policies ride on a business’s succession. Moore (2010) states that the political partnership between the two countries have brought forward some trade agreements, which benefit both U.S. and UAE companies. While operating in the US, Camel Cookie Company may hold assets and gain liabilities as well as earn revenue and pay expenses in a variety of currencies, other than the U.S. dollars. Because their consolidated financial statements are presented in U.S. dollars, Camel Cookie will have to translate their assets, liabilities, revenue and expenses into U.S. dollars at then applicable exchange rates (Grieg-Gran, 2001). Consequently, changes in the value of the U.S. dollar may negatively affect the value of these items in their consolidated financial statements, even if the value has not changed in their original currency. The Camel Cookie Company may get exposed to instability in foreign currency cash flows related to third-party purchases, intercompany loans and product shipments. The company will also be open to fluctuations in the value of foreign currency investments in subsidiaries and cash flows related to the return of these investments. Additionally, Camel Cookie will get exposed to volatility in the translation of foreign currency earnings to U.S. dollars. Primary exposures include the U.S. dollar versus the British pound, euro, Australian dollar, Canadian dollar, and Mexican peso, and in the case of inter-subsidiary transactions, the British pound versus the euro.

Economic Factors of USA that will influence the development of Camel Cookie

Trade and economic conditions between the UAE and the USA have been described as positive, built on close collaboration by Moore (2010). The author (Moore, 2010, p. 3) states that the UAE is considered as one of the fastest growing trading partners of the USA, and a “regional leader in terms of economic reform, openness to international trade and investment, and political stability”. The author (Moore, 2010, p. 8) also states that “the average applied tariff rate for the Middle East and North African group, as defined by the World Bank, is almost 12 percent”.

According to the U.S.  Department of Commerce Industry Report (2008, p. 1), “processed food industry has experienced fairly steady growth over the 1997-2006 period but experienced a slight decline from 2005 to 2006”. This indicates, that in the light of financial recovery, demand for healthier, specialty foods is likely to rise.

If it expands to the US, Camel Cookie Company will face competition across their production lines, including ready-to-eat cereals and convenience foods, from other companies which have a variety of abilities to withstand changes in market conditions. Some of the competitors will have substantial financial, marketing and other resources, and competition with them in Camel Cookie’s various markets.

The production lines in competitive companies could cause Camel Cookie to reduce prices, increase capital, marketing or other expenditures, or lose category share, any of which could have a materialistic harmful effect on their business and financial results. Category share and growth could also be adversely impacted if Camel Cookie will not be successful in introducing new products. The company uses grains, such as  corn and wheat, as well as sugar and camel milk. Packaging of the product is mainly cardboard, and recycling is a great issue on the United States. Further, the cost of such products may fluctuate widely due to government policy and regulation, weather conditions, climate change or other unforeseen circumstances. The results of Camel Cookie operations could be materially and adversely affected. In addition, Camel Cookie might use derivatives to guard themselves against price risk associated with forecasted purchases of raw materials. The cost of fuel may fluctuate widely due to economic and political conditions, government policy and regulation, war, or other unforeseen circumstances which could have a material adverse effect on their consolidated operating results or financial condition. Cereal processing ovens at major domestic and international facilities are regularly fueled by natural gas or propane, which are obtained through local utilities or other local suppliers (Cooper & Taylor, 2007). Oil may also be used to fuel certain operations at various plants. In addition, considerable amounts of diesel fuel are used in connection with the distribution of Camel Cookie products. A shortage in the labor pool or other general inflationary pressures or changes in applicable laws and regulations could increase labor cost, which could have a material adverse effect on the company’s consolidated operating results or financial conditions. In the US, Camel Cookie largest customer will be Wal-Mart Stores and it associates. As the retail grocery trade carry on to strengthen and mass marketers become larger, Camel Cookie large retail customers will have to seek to use their position to improve their profitability through improved efficiency, lower pricing and increased promotional programs. If the Camel Cookie Company is unable to use their scale, marketing expertise, product innovation and category leadership positions to respond, their productivity or volume growth could be negatively affected. The loss of any large procurer for an extended length of time could negatively impact our sales and profits.

Social Factors of USA that will influence the expansion of Camel Cookie

The expansion of Camel Cookie to the US should be built on the reputation of the country, culture, and target customers who are already familiar with Arabic products. There are a number of trends in consumer preferences which may impact the business and the industry as a whole. These include changing consumer dietary trends and the availability of substitute products. Camel Cookie success will depend on anticipating changes in consumer preferences and on successful new product and process development and product re-launches in response to such changes. One of the main obstacles that the company is likely to face when marketing the product to mass market is that U.S. customers are generally not familiar with camel milk, and might hold an aversion to the ingredients.

At the same time, like most developed countries, the US faces the problem of an aging population, which can lead to a serious labor shortage and rising tax rates in the future. This will discourage the expansion of Camel Cookie to the US. However, the majority of the U.S. population has a liberal mindset, but rising racial intolerance is a serious concern. After the 9/11 disaster, the reputation of the Arabic world has declined. The increasing illegal immigration is another concern, as there are currently more than 11.7 million people living illegally in the US, further increasing the risk of racial discrimination (Cooper & Taylor, 2007). However, according to the Arab American Institute, “At least 1.9 million* Americans are of Arab descent”. This creates a motivated market for Camel Cookies: people of Arabic heritage, who would like to reconnect with their culture through food and traditions.

According to a recent report by Hale Group (2010, 1), the specialty food market has five consumer-driven categories: wellness, indulgence, ethnicity, value, and convenience. Provided that Camel Cookies expands into the American market, it needs to categorize its products as one providing indulgence, and is relevant to consumers’ ethnicity.

Technological Factors of USA that will influence the expansion of Camel Cookie

Research and technology professionals play a critical role in developing new product ideas and making them a reality. Examples of positions include: food technologist, product development scientist, and food chemist and product and consumer scientist. Bakery companies like Camel Cookie increasingly rely on information technology systems to process, transmit, and store electronic information. For example, their production, distribution facilities and inventory management utilize information technology to increase efficiencies and limit costs. Furthermore, a significant portion of the communications between their personnel department, customers/consumers, and suppliers depends on information technology.

Research and Development initiatives should be considered in order to keep the cost of production and delivery low. An integrated system that tracks inventory and orders, partner accounts, and market trends is likely to be needed. While in the US, Camel Cookie may heavily rely on information technology systems to process, transmit, and store electronic information. For example, their production and distribution facilities and inventory management utilize information technology to increase efficiencies and limit costs, making the company more competitive on the marketplace.. In addition, a significant portion of the communications between their personnel, customers, and suppliers depends on information technology (Cooper & Taylor, 2007).

Online grocery shopping is growing in the United States, according to the Statista website has been growing at a fast speed. It accounted for 6 billion dollars in 2012, rising to 6.5 billion dollars in 2013. Some of the main motivations of buying groceries online were: promotions, reviews, and mobile communication. Therefore, it is likely that Camel Cookies needs to develop an online store, logistic center, and distribution facility, as well, if it would like to make the most out of its presence in the United States’ specialty snack market.

Environmental Factors Influencing the Expansion Strategy

The Camel Cookie Company could become negatively affected if consumers lose confidence in the safety and quality of certain food products or ingredients, or the food safety system generally. Adverse publicity about these types of concerns, whether or not valid, may discourage consumers from buying Camel Cookie products or cause production and delivery disruptions. Most states in the US have good environments for business growth Environmental factors includes a nation’s weather and climate changes, the level of contamination, reusing contemplations, authoritative changes both present and future. Climatic changes can influence organizations in the nation. With the progressions of worldwide atmospheric experienced today because of an unnatural weather change, firms make this outside component a huge issue of contemplations when extending their organizations universally (Cooper & Taylor, 2007).

Legal Factors of USA that will influence the expansion of Camel Cookie

When selling food products, several legal and regulatory risks are present, such as  contamination, packaging information-related claims, and quality issues.  Apart from reputational damage, the company would face legal action, product recalls, and financial loss as well.  Therefore, prior FDA authorization needs to be obtained by the company to sell the product in U.S. stores and online.

The FDA’s guidelines clearly describe the rules surrounding the import of food products into the United States. A prior notice and authorization is needed, in order to obtain the rights to sell Camel Cookies in the United States. This also means that the company would need to seek guidance and work with the FDA before manufacturing and marketing the cookies in America. As the guidelines (FDA, 2009) state: “Both imported and domestically-produced foods must meet the same legal requirements in the United States.”.

Camel Cookie may also be at risk of product liability issues. A significant product recall or product liability case could also result in adverse publicity, damage to its reputation, and a loss of consumer confidence in their food products, which could have a material adverse effect on the business results and the value of the brands. Customer allegations and lawsuits against Camel Cookie Company could adversely affect the brand’s reputation. Camel Cookie’s activities, both in and outside of the US, will be subject to regulation by various federal, state, provincial and local laws, regulations and government agencies, including the U.S. Food and Drug Administration, U.S. Federal Trade Commission, the U.S. Departments of Agriculture, Commerce and Labor, as well as similar and other authorities of the European Union, International Accords and Treaties and others, including voluntary regulation by other bodies.

What Are The Resources Needed To Manage The New Initiatives?

Other than getting hardware, Camel Cookie would be obliged to experience the Department of State’s Authentications Office, which is in charge of marking and issuing authentications under the Seal of the U.S. Division of State (Gentry, 1999). The Authentications Office likewise checks business records that will be utilized abroad, including organization ordinances, forces of lawyer, trademarks, certificates, transcripts, distributorship understandings, and articles of consolidation, great standing endorsements, home studies and letters of reference (Grieg-Gran, 2001). The Office likewise guarantees that the asked for data will serve in light of a legitimate concern for equity and is not as opposed to U.S. approach.

Approximate Idea of the Cost of Investment Required

Camel Cookie would oblige a substantial plan for them grow to the United States. Basing on the measurements of the nearby nibble creating organizations, for example, Kellogg, Camel Cookie would require about $300 million for commercial, workers, rent and apparatus.

Conclusion

A generally solid economy makes the United States a good market for Camel Cookies to enter. The political stability, economic, and social conditions, as well as the positive relationships and existing trade agreements between the two countries make the move advisable. However, the UAE company needs to consider the country’s complex guidelines and regulations (Gentry, 1999). As the U.S. economy enhances, the expense of working together in the United States may rise. This would oblige a relating more elevated amount of interest keeping in mind the end goal to contend with secured residential organizations. Government, state, and nearby regulations oblige an intensive learning of expense, business, and work laws (Grieg-Gran, 2001).

References

Arab American Institute. (n.d.) Demographics.Retrieved from http://www.aaiusa.org/pages/demographics/

Cooper, C L and Taylor, H (2007) Organizational change- threat or challenge? Journal of Organizational Change Management, 1(1), 68-80, Emerald Group Publishing Limited.

Doing Business (2011) the International Bank for Reconstruction and Development / the World Bank.

El Gawady, Zeinab Mohamed. “The impact of e-commerce on developed and developing countries case study: egypt and united states.” International conference of Globalization.                     Technology and Sustainable Development. 2005.

FDA (2009) Importing Food Products into the United States. Retrieved from http://www.fda.gov/Food/GuidanceRegulation/ImportsExports/Importing/

Grieg-Gran, M. (2001) “Investment for Sustainable Development: The Public Private Interface”. In “The Future Is Now”, Volume 2, IIED: http://www.econlib.org/library/Enc1/ForeignInvestmentintheUnitedStates.html

Gentry B. (1999), “Foreign Direct Investment and the Environment: Boon or Bane”, Foreign Direct Investment and the Environment, OECD: http://www.ofii.org/sites/default/files/FDIUS_2013_Report.pdf

Hale Group Ltd. (2010) Business Opportunities in Specialty Food Products. Retrieved from http://productcenter.msu.edu/uploads/files/Specialty%20Food%20Products%20Report.pdf

Kellogs Inc. (2009) Corporate Responsibility. http://www.kelloggs.co.uk/company/corporateresponsibility/theworkplace.aspx Accessed 20th April 2010

Moore, M. (2010) The U.S.-U.A.E. Trade and Investment Relationship. Retrieved from http://usuaebusiness.org/wp-content/uploads/2012/06/USUAEBC_Moore_Proof_5.19.2010.pdf

Statista. (2014) Grocery Shopping. Retrieved from http://www.statista.com/statistics/284056/us-shoppers–reasons-for-buying-groceries-online/

“U.S. Department of Commerce Industry Report”  2008. Retrieved from http://trade.gov/td/ocg/report08_processedfoods.pdf