Old chang kee marketing strategy

PEST ANALYSIS On Economic And Social

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MKTG 1064 GLOBAL MARKETING

MACRO ENVIRONMENT REPORT

Lecturer: Mdm Ng Lee Cher

LF02 Group 17

CURRY TIMES

Name

Student Number

Olivia Cheng Jun Er

S3505754

Puti Ambun Suri

S3532209

Tan Chiu Yee

S3475413

Wang Jinyang

S3565852

Zou Mingzhu

S3566097

Table of Contents

4 Executive Summary

5 1. Introduction

7 2. Pest Analysis

7 2.1 Political

10 2.2 Economic

11 2.3 Social/Cultural

15 2.4 Technological

18 3. Conclusion

19 4. References

Executive Summary
This report serves to provide insights using various macro-environmental factors on the possibility of Curry Times’ entry into Germany. The different methods of analysis includes PEST analysis; examining popular trends, consumption habits, as well as the spending power of people in Germany.

On top of Singapore and Germany establishing a good relationship, the government has provided opportunities for businesses to enter its market by granting new jobs for job-seekers, loans & grants incentives. Furthermore, with the growing market of Asian food and the lack of Halal food establishments, along with the increasing number of foreigners in the country, Curry Times can bring a taste of Singapore and curry spice to the German market.

Germany is a developed country that keeps up with current trends. In this digital age and time, people are often more instantaneously interconnected, with the use of mobile devices and social media. It will be wise for Curry Times to have an interactive platform so that its consumers can share and feedback on its products and services, similar to the Facebook page that the Singapore market has. Though Germany’s economy have been growing tremendously and people’s spending power has increased, the gap between the rich and poor has also increased. Foreign investments are highly encouraged by the government to provide job opportunities for the Germans. Therefore, Curry Times would face minimal to no difficulty to enter the market.

Upon conducting the PEST analysis on German market, we have gathered better insights on the favourability of Curry Times entering the market and have found out that it is indeed an ideal venture that bears promising prospects for the company.

1. Introduction
Curry Times is a Halal dine-in restaurant by Old Chang Kee. Old Chang Kee was founded in 1956 by Chang Chuan Boo. Selling at 700 pieces a day, they are well-known for their trademark curry puffs.

In 1986, Old Chang Kee was purchased by Han Kee Juan for S$30,000 who invested a further S$40,000 as working capital. Han decided to revamp the business structure and marketing mix with a new logo and tagline “Old Chang Kee - It’s a better puff” (Old Chang Kee Ltd Group, 2012).

Old Chang Kee re-entered the Asia-Pacific market in 2005 and was listed on the Singapore Exchange’s Catalist board with an Initial Public Offering of 25 million new shares at 20 cents each. Raising approximately S$5 million, they expanded to Australia and China and increased and refurbished outlets in Singapore (Chua, 2010). Currently, there are 71 outlets in Singapore and 13 overseas.

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In 2012, Curry Times launched in Singapore with aims to return to their origins and provide healthier, yet tasty Singapore local food options for food-lovers.

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Figure 1.2 shows that Old Chang Kee is a profitable company with return on equity of 13-19% for five years. (Old Chang Kee Ltd, 2015) With a growing Asian and Muslim population in Germany, paired with strong positioning and brand image of Curry Times, Germany would be a suitable country for Curry Times to expand to.

2. Pest Analysis
2.1 Political
For the past decade, bilateral relations between Germany and Singapore have been excellent. Prime Minister Lee Hsien Loong and President Tony Tan visited Germany often in the past five years to discuss ways to strengthen the economic, political ties and cultural understanding between the two countries (Federal Foreign Office, 2015).

After the EU-Singapore Free Trade Agreement was initialled in 2013, Germany has been cooperating with Singapore in many industries, especially in R&D. With reduced trade barrier between Singapore and Germany, new market development can be achieved. Partnering with Singapore is a lucrative business tactic for Germany as Singapore is strategically located, have superior infrastructure and a huge talent-pool (Singaporean-German Chamber of Industry and Commerce (SGC), 2012/2013). Singapore is also the bridge for political relationships in Europe and Asia due to her crucial role in ASEAN with economic and political stability. (Federal Foreign Office, 2015).

With Angela Merkel as German Chancellor, there has been great political changes as she led the country in building new relationships with the United States and European Union. Merkel has been listed the most powerful woman in Forbes for five years (Forbes, 2015). With more insightful domestic and foreign policies created, Germany is top among her European neighbours (Taylor & Francis Group, 2007).

As the German government encourages foreign investments to provide new opportunities for job-seekers, the legal risk for entering their market is low. Banking and finance systems in Germany also support loans and mortgage for finance foreign investors. New foreign businesses do not have serious limitation. Process to procure licenses, permits and approvals is the same as German investors. It would be beneficial for Curry Times to expand its business in Germany as incentives such as grants, reduced-interest loans, direct subsidies, public guarantees or silent participations encourages business expansion, new investment and career opportunities (Deilotte Touche Tohmatsu Limited, 2015).

For foreign corporations like Curry Times, additional permits to establish more branches in the country are not required as long as they are not independent branches. The tax rate for foreign businesses and domestic companies in Germany is the same, making investments more attractive.

With relation to the food and beverage industry, many European countries have banned the cultivation of Genetically Modified Organisms (GMO) due to health reasons. Germany practices cooperative GMO-free zones, whereby farmers sign a contract to refrain from using genetically modified seeds (Consmuller, Beckmann and Petrick, 2011). Due to these restrictions, Curry Times would have to re-evaluate the ingredients contained in their products and where possible, use German-farmers cultivated produces. Figure 2.1 shows that 72% do not want GM products. (Kurzer and Cooper, 2007).

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Political challenge that Germany faces currently is the elevation of tension between the locals and refugees (The Economist, 2016). Many are concerned that the high influx would contribute to the rising number of crimes. In fact, 800 criminal complaints were filed on New Year’s Eve, accusing the immigrants of harassment (Bittner, 2016).

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Merkel has since made some restrictions on the open-door policy with deportation as punishment for immigrants who committed crimes. Germany is also shutting the open-door policy for refugees in 2016 (Brinded, 2015). New laws were introduced to reduce supports to refugees. (Pautz, 2015). However, 1.1 million refugees who crossed the German border in 2015 remains. With aggressive integration efforts for refugees in Germany, political stability is expected to return in 2016. This will mean that Germany experiences low political risk and provides an ideal business setting for Curry Times.

2.2 Economic
Globalization has helped Germany emerge with the largest national economy in Europe and the 4th largest by Nominal Gross Domestic Product (GDP) in the world (Statistics Times, 2016). In 2015, their GDP increased by 1.7% to 3.0 trillion Euro with imports rising from 0.15 to 1.3 trillion Euro in a year (Bloomberg Business, 2016). The consumer price index (CPI) of Germany in 2016 reached 107 points, measuring the changes in prices for goods and services. The inflation rate according to CPI in 2015 is 0.23%. (Federal Statistical Office, 2016). Hence, it can be concluded that Germany’s economy is progressing positively, increasing the feasibility for foreign investments in the market.

Germany has an open economy and a free trade policy (Horst Siebert, 2005), allowing many foreign investors to develop their businesses and bring their technology to the country. With greater international exposure that comes with foreign investments, the standard of living will increase. Curry Times would create more job opportunities for the locals upon their expansion to Germany which plays a part in reducing unemployment rate which was 4.5% in 2015 (Expansion/CountryEconomy, 2016).

Although Germany’s GDP is high, the GDP per capita is 37,200 Euros (Statista, 2015). This illustrates a wide gap between the rich and the poor. Local de news shared that the top 10% earners make 6.6 times more than the bottom 10%, widening the ratio gap from 5:1 to 6:1 (The Local, 2015).

The OECD better life index shows that the average household income per capita in 2015 is US$50,394, while the disposable income within the net wealth is US$300,000 (The Local, 2015). This indicates that Germans have high spending power and disposable income to achieve a higher living standard. Imports are rising in Germany showing that Germans’ positive attitude towards foreign products. Increased demand for foreign goods would create an opportunity for Curry Times to enter Germany.

2.3 Social/Cultural
In Germany, there has been an increasing number in the net migration with total of 391,838 people arriving in 2012. Foreign citizens are forecasted to comprise 11.6% of the population by 2030 — an increase of 9.1% in 2012. Germany is a multinational country accommodating many foreigners with the largest group being Turkish at 13.1% followed by Polish at 11.6% and Romanians at 5.5%.

Germany was ranked the best country (Bender, 2016), which was determined based on the citizenship, quality of life and power. (McPhillips, 2016). The most widely spoken language is German, followed by Turkish. (Euromonitor International, 2015)

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Religion wise, majority practices Christianity. Due to a large Turkish population, there is an increase in the population who practices Muslim as well. (Euromonitor International 2015) In recent years, Germany created many integration policies for its growing Muslim population to encourage better coexistence in the society. This suggest a growing market in the Halal industry. (Kakoyiannis A. 2014) As Curry Times is a halal establishment, this works as an attractive factor to reach out to muslim consumers. (Kaynak & Kara, 2002) (Think Ethnic, 2012)

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In Germany, Millennials aged 25 — 34 forms a larger population make up. These consumers spend more dining in restaurants. This suggests that the dining out scene is growing.

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Germans have been more health conscious as more are battling with the issue of rising obesity. More Millenial consumers are looking to adopt healthier lifestyles to address their weight issues. Curry Times can come up with healthier options to address this. Menus offer dishes with lower calorie intake. (Euromonitor International, 2015) Also, with several cases of products being incorrectly labeled, it is important for Curry Times to clarify nutritional/health claims about their food to their customers (Fey, 2011).

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Typically, a German’s meal staples include carbohydrates and meats. Due to time constraints, many Germans eat at fast food restaurants because it is convenient and cheap. For those who cook at home, it is common for them to cook ethnic dishes. Having been exposed to international culture, ethnicities and foods, more Germans are purchasing Asian spices and ingredients to recreate spicy and exotic tasting Chinese dishes. Popular dishes that Germans enjoy include sushi and curries. When dining out, Germans like eating at street food style restaurants and have a preference for brunch. This suggests opportunities for Curry Times which is famous for their curries. To appeal to consumers who place affordability as a factor to dining out, brunch sets at a value for money price can be introduced. (Euromonitor International, 2015)

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Under the Hofstede’s classification system, Germany scored 35 points for power distance. This suggests that Germans embraces equality amongst their people, a factor that provides them the opportunity to rise in society. This can also suggest better acceptance towards foreign ventures such as an international Singaporean food joint. (The Hofstede Centre n.d.)

Germans strongly believe in the concept of self-actualization. In a working environment, loyalty is based on preferences for people, a sense of duty and responsibility, often between an employer and an employee. Germans are honest allowing for effective communication. Hence, employees learn and understand from their mistakes better. Scoring 66 points in masculinity, individuals are observed to be more performance oriented. Many “live in order to work” and seek self-esteem from their tasks. Managerial roles require for leaders to be decisive. This suggests that Curry Times should implement good training for staff to create an environment to grow and work in. The working performance of their staff should constantly be assessed and outstanding workers should be rewarded with incentives.

2.4 Technological
The Internet has increased opportunities for low-cost, high impact marketing across industries. Increasingly, firms are being criticized more on their online presence as it can harm a business image if they are seen as out of touch with the modern technological world (Chaffey, 2009).

In developed countries like Germany, technology permeates nearly every part of the consumer’s daily lives — checking social media platforms for updates, online shopping to reading e-book on-the-go. In emerging markets, Internet and Smartphone access is growing exponentially every year along with online retail sales (Euromonitor International 2015).

The main drivers of e-commerce growth have been the search for value and convenience; increased access to websites; faster download speeds; improved online payment methods/ delivery, and the shift towards mobile devices like smartphones and tablets. Hence, online marketing opportunities are many ranging from intricate, involved, multi-layered viral campaigns, through website design and functionality to a simple social media presence.

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Figure 2.4.1: Europe’s Tech Credentials: By The Numbers

According to Forbes, Figure 4.1 shows the output of each nation’s IT services, the population online, availability of servers and R&D spending. From 2009 to 2013, social media advertising in Germany rose at a compound annual growth rate (CAGR) of 49.3%. Over the forecast period to 2018, social media advertisements will grow at a CAGR of 21.8% to reach US$2.8 billion in 2018, accounting for 20.4% of the online advertising (Vertical News, 2014). Hence, Curry Times can market rigorously on social media platforms.

The greatest impact social media has had on communication is that it created two-way communication between companies and consumers, enhancing relationships with the consumers (Johan, Oskar and Petter, 2012). According to Vargo and Lusch, (2004), it is important to make the consumers a part of the marketing process. This allows companies to show their human side in social media, which is in line with what (Weinberg and Pehlivan, 2011) state, that companies should tone down their self-approach and be more ‘human’.

Curry Times has taken the first step of establishing a social media presence with Facebook and their company website, allowing for promotional events and information to reach out to a wider target audience. Their Facebook page serves as an avenue for the company to interact with the consumers, and for them to share their reviews.

However, the Internet has its cons. There were occasions where displeased customers wrote negative reviews on their Facebook page which spread easily due to little information regulation. Firms can also be at the mercy of false accusations and Internet pranks. Hence, it is important to ensure that there is careful monitoring of the company’s online presence and the ability to deploy swift response to incidents in order to maintain a company’s good reputation.

3. Conclusion
Germany is a market that is proven to be ideal for Curry Times to expand into, especially since there is a growing population of foreigners, in particular Muslims. Given that the country has limited sources for halal food and that asian spices are growing to be more popular, it will be a great opportunity for Curry Times to be introduced in Germany.

However, it is inevitable that there will be risks following the business venture, especially when it concerns entering a global market in Germany. As the country now faces issues with locals and immigrants, there may be a slight concern with political stability. However with effective measures and actions taken by the government, Germany continues to prove itself as a country that is quick to resolve problems and continue to provide ideal prospects for foreign businesses.

4. References
2001/18/EC: Directive 2001/18/EC of the European Parliament and of the Council of 12 March 2001 on the deliberate release into the environment of genetically modified organisms and repealing Council Directive 90/220/EEC.

Bender, A., 2016. The World's 20 Best Nations Announced: Germany Is No. 1, U.S. No. 4. Forbes.com, 27 February.

Bittner, J., 2016. Can Germany Be Honest About Its Refugee Problems?. The New York Times, 15 January.

Bloomberg Business 2015, ‘German Economy Defied 2015 Global Slowdown as Growth Accelerated’, viewed on 25 February.

Bloomberg Business 2015, ‘German Investment Picks Up as Trade Drags on Economic Growth’, viewed on 25 February.

Brinded, L., 2015. Merkel is shutting the door on Germany’s ‘open-door’ refugee policy. Business Insider, 14 December.

Chaffey, D (2009), Internet Marketing: Strategy, Implementation and Practice, Harlow: Pearson Education

Chua, A., 2010. Singapore National Library: Old Chang Kee. Viewed 1 March 2016,

Consmuller, N, Beckmann, V & Petrick, M (2011). Towards GMO-free landscapes? identifying driving factors for the establishment of cooperative GMO-free zones in germany. St. Louis: Federal Reserve Bank of St Louis. Retrieved from http://search.proquest.com/docview/1697476750?accountid=13552

Lenkeit, D., 2015, ‘Germany Continues to Shine as a Business Location’, Germany Trade & Investment, viewed on 25 February,

Deilotte Touche Tohmatsu Limited, 2015. Taxation and Investment in Germany 2015, Berlin: Deilotte Touche Tohmatsu Limited.

Kaynak, E & Kara, A (2002) ‘Consumer perceptions of foreign products: An analysis of product‐country images and ethnocentrism’, European Journal of Marketing, vol. 36 Iss: 7/8, pp. 928 – 949, viewed 28 February 2016

Euromonitor International 2012 , Germany Home to Europe’s Largest Population of Foreign Citizens, viewed 20 February 2016, .

Euromonitor International 2014 , Germany in 2030 The Future Demographic , viewed 20 February 2016, .

Euromonitor International 2015 , Singapore: Millennials: Impact of their Behaviour on Global Consumer Markets, viewed 20 February 2016, .

Euromonitor International 2015 , Consumer Lifestyles in Germany 2015, viewed 20 February 2016, .

Euromonitor International 2015, Consumers in the Digital World: Hyperconnectivity and Technology Trends, Global Survey Report, viewed 20 February 2016, .

Expansion/Country Economy 2015, Germany Unemployment rate, viewed 25 February. .

Federal Foreign Office 2015. Singapore Bilateral Relations, viewed 20 February 2016, .