Report on the Almarai Expansion to India

               There are few industries, which can never be out of business, and the food & beverage industry is one of them. There can be changing trends for this industry, but its presence will always be there because food is an essential part of daily life, and beverages are also important for the modern lifestyle. Moreover, different industries are gaining good opportunities to expand their business on a global scale with the essence of globalization. It is a fact that the expansion of business from one country to another country is not an easy thing, but it can come up with great opportunities that risk is worth taking. That’s why many food & beverage companies have become international brands because they expanded their business across the globe. This expansion can provide great international brand recognition to companies, and they can become global brands covering more markets (Wilkinson, 2004). In this paper, a brief plan of expansion for Almarai Company will be presented, where Almarai will be considered to expand to India, as India is one of the largest consumer markets in the world.

A Brief Description of Almarai Expansion to India

               There are many biggest companies in Saudi Arabia, and Almarai is one of them. It is the biggest dairy firms in the country in terms of its food processing and market value. The foundation of the company was laid in 1977, and it has never looked back ever since. In the era of the 1990s, the company boosted its business in so many ways to be restructuring its various business aspects so that it can become a successful company in the Kingdom of Saudi Arabia. Currently, the company is working in different markets such as poultry, bakery, as well as dairy markets (Almarai.com, 2019). The company started to get bold fashioned in the 21st Century so that they can cover more parts of Saudi Arabia, and expand to other regions of the world. In 2009, it was announced by the company that they will expand their business to Africa and South East Asia (Arabian Business, n.d). Looking at these facts and plans from the company, it can be said that they should also consider expanding their business to the Asian market as well, and the Indian market can be a great opportunity for them in this regard. They can expand to the Indian market for one or two business units like they can expand their poultry and dairy products to India. It is assumed that they can get a considerable response from the Indian market.

Recommended Mode of Entry and Rationale of Almarai Expansion to India

        Before giving any recommendations for a suitable mode of entry for Almarai in the Indian market, it is important to have a look at some of the considerable mode of entries. The first important mode of entry is Direct Exporting. In this entry mode, the products of a company are directly exported to the foreign market, and this mode is one of the fastest to reach the foreign markets. The other considerable mode of entry is making joint ventures with the firms in the target country as those firms already know different aspects of the business. A few other modes of entry are franchising, licensing, strategic alliance, as well as online sales in the market. Looking at these modes of entries, it is important for a company to select an entry mode, which is more suitable for their business type and structure. Each mode of entry has its own advantages and disadvantages, so a mode should be selected, which has required elements for a firm to expand (Wolfe, 2018)

     Almarai has a diversified business as they are having their presence in different markets, so it is critical for them to go with an entry mode, which is suitable for their business in the Indian market. They can look for any option, but they will have to decide, what mode will be more beneficial for them. For instance, direct export of poultry and dairy products to the Indian market can be difficult as these products are manufactured in Saudi Arabia, and delivering fresh products to the Indian market will be a difficult job. Therefore, it is vital for Almarai to make a joint venture with any business firm already working in the Indian market. It will not only allow them to understand the different dynamics of the market, but it will also help them to remain safe in their expansion approach. A direct export or any other mode may be risky for them, but this option is more suitable and safe in so many ways (Osland, Taylor, & Zou, 2001). For instance, they can join hands with any food processing company to make a joint venture and start manufacturing & packaging Almarai products for the local Indian market. It is recommended that Almarai should make a joint venture with LT Foods Ltd (Daawat), which is a famous rice brand in the Indian market. If the top 10 companies in the food processing business of India are seen, LT Foods Ltd is one of them. They are also selling their products to regions such as Africa, North America, Australia, Europe, and Asia. It means that they have not entered into the Middle East market, so this joint venture will be a great opportunity for both Almarai and LT Foods Ltd (FUNDOODATA.COM, 2019)

Recommended Organizational Structure for the Operation of Almarai Expansion to India

     It is essential for both the companies that they develop an organizational structure, and agree on all terms so that things remain as clear as possible. There are a few elements that should be finalized before going into this joint venture. The first important element is who will be the major decision-makers from both the companies. It is recommended that both companies should appoint two managers to manage their terms with each other, as these managers will look at each and every aspect of this joint venture. Moreover, they will have to agree on terms for employees, who will be working in India to deal with the business of this joint venture. It is recommended that both companies should hire new employees to manage the affairs of this new joint venture. Employees working in India will report to the Indian manager, and the employees working in Saudi Arabia will report to the Saudi manager. There should be a steering committee that can make strategy and plans to keep things in the right direction for this joint venture. There will always be some limitations in this kind of organizational chart, and those limitations should always be kept in context so that any future issues can be avoided (David, 2019)

Recommended Business Functions/Operations of Almarai Expansion to India

          It was mentioned earlier that Almarai is a dairy and poultry business, which is looking to expand into the Indian Market, and LT Foods Ltd is a rice business. It means that both companies have different business segments to cover, so their joint venture can help them to start a business in each other countries. LT Foods Ltd can share its business functions, locations, stores, and supply chain and production units to produce Almarai products. In this way, Almarai will be able to enter the new market, and LT Foods Ltd will utilize its expertise in the local market to earn shares and profits from its joint venture with Almarai. It is recommended in the early stage that Almarai should use warehouses and production locations of LT Foods Ltd to store their products, and then LT Foods Ltd should help Almarai to deliver to those products to the local market like retail stores, grocery stores, and local chains. It is recommended that each business function should be developed, agreed and documented so that both companies know their responsibilities. Moreover, they should have an agreement like how any kind of disputes will be settled in the future (Bamford, Baynham, Daniel, Ernst, & Walker, 2018)

Follow up Action and Next Steps of Almarai Expansion to India

         Once all elements and functions of the joint venture are settled by both the companies, then it is important to decide about follow up action as well as the next steps. For instance, if a business goes well, and it gets a good response from the local market and demand tends to increase with the passage of time, then how things will work in this situation. They should decide that when demand will be enormous, and it will be difficult to provide ready products, then Almarai will consider establishing a new food processing and manufacturing plant in India so that products are produced in India for the fast delivery of products meeting increased demands. All of such matters and actions should also be finalized in this joint venture so that any future situation with any confusion is avoided.

Conclusion of Almarai Expansion to India

      After analyzing various elements of international expansion, Almarai business, and the Indian market, it is concluded that Almarai Company should expand its business to India by making a joint venture with a local Indian food company. It is recommended that they should make a joint venture with LT Foods Ltd, which is a leading Indian rice brand. This joint venture can allow both companies to benefit in so many ways by making its terms & conditions, functions and structure clear and efficient.

 References of Almarai Expansion to India

Almarai.com. (2019). Profile. Retrieved November 27, 2019, from https://www.almarai.com/en/corporate/almarai/profile/

Arabian Business. (n.d). Almarai Company - Saudi Arabia. Retrieved November 27, 2019, from https://www.arabianbusiness.com/companies/almarai-company-saudi-arabia-66524.html

Bamford, J., Baynham, G., Daniel, P., Ernst, D., & Walker, G. (2018). How to Manage a Joint Venture: Do You Have the Right Stuff? Retrieved November 27, 2019, from https://www.waterstreetpartners.net/water-street-classics/how-to-manage-and-run-a-joint-venture

David, B. (2019). How to Construct an Organizational Chart in a Joint Venture. Retrieved November 27, 2019, from https://smallbusiness.chron.com/construct-organizational-chart-joint-venture-42671.html

FUNDOODATA.COM. (2019). TOP 10 FOOD PROCESSING COMPANIES IN INDIA. Retrieved November 27, 2019, from https://www.fundoodata.com/learning-center/top10-food-processing-companies-india/

Osland, G. E., Taylor, C. R., & Zou, S. (2001). Selecting international modes of entry and expansion. Marketing Intelligence & Planning , 19 (3), 153-161.

Wilkinson, J. (2004). The Food Processing Industry, Globalization and Developing Countries. Journal of Development and Agricultural Economics , 1 (2), 184-201.

Wolfe, M. (2018). Five Modes of Entry Into Foreign Markets. Retrieved November 27, 2019, from https://bizfluent.com/list-6736756-five-modes-entry-foreign-markets.html