Essay: Entry strategy of a Nigerian based coconut Chip Company in the European market

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  • Subject area(s): Management essays
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  • Published on: August 27, 2019
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INTRODUCTION

This report is intended on discussing the entry strategy of a local Nigerian based coconut Chip Company intended on penetrating into the European market. it would highlight and discuss the PESTEL factors of France which is the entry country. Also the report would be highlighting some issues likely to be faced by the business on entry into Europe. Also a few recommendations would be suggested to the board of directors for further review.

HISTORY OF EUROPE

Europe is the world’s 2nd smallest continent by surface area, covering about 10,180,000km² or 2% of the earth’s surface and about 6.8% of its land area. Europe is made up of a total of 51 countries with the largest countries being Russia and the smallest being the Vatican City. Europe is the third-most populous continent after Africa and Asia, with a population of 739-743 million or about 11% of the world population.

FRANCE

France, officially the French republic ( Republique Françoise) is a sovereign state comprising a territory in western Europe and several overseas regions and territories. France spans about 640,679km² and has a population of 67 million. France is also a strong and standing member of the European Union and is the largest country in the union. France is also a member of the Euro zone which automatically makes France a euro € tender country. The official language of France is French and Catalan; also a member of the Shenzhen area. As the country chosen by the board of directors for European entry, some factors have to be considered before entry into the French market, some of these factors include;

POLITICAL FACTOR

France is a developed country; the political environment is stable in the sense that there is no political trouble, no wars, low level corruption, and no conflicts; this is a good factor which can attract investors and new business entry. In another way setting up a business in France requires a lot of capital from the investors. In certain territories in France like: Mayotte, Saint Pierre and Miquelon, Wallis and Futuna, Monaco, the government has fixed an investment limit of 1,500,000 Euros for foreign enterprises. In fact the government has elucidated a precise list of tax or mandatory contributions which have to be paid by business people in France. The government of France has no control on religions or culture, there is no policy stated by the government to restrict any new entry of any business which is not matching with the ‘believes’ of the French population.

ECONOMICAL FACTOR

Economic factors such as highlight: interest rates, level of inflation and employment, gross domestic product of the country (GDP), per capita income and so on. The GDP real growth rate of France has increased from an all time low of $11154.68 in 1960 to $36075.58 in 2014 (World Bank report, 2014), this reveals a better economic situation of the pays although the phenomenon of recession came into play, France has in fact weathered the economic crisis better than the other big countries of Europe. The GDP per capita has shifted from $35216.5, $35678.63 to $35669.59 in 2010, 2012 and 2014 respectively (Gow, 2014); this shows a high standard position of GDP per capita of France which reveals a good economic situation of the country. The unemployment rate was recorded at 10.3% in the second quarter of 2015, and the population poverty line was 60.2% in 2015 (BBC News, 2015).

SOCIAL

France population in 2015 is 66,317,994. The age structures of France population are 0-4years 18.5%, 15-64 years 65% and 65 years above have 16.5%.The population growth rate of France is 0.549%.The life expectancy of France, male average age is 77.78 years and female average age is 84.34 years (diagram 2). The literacy rate of France has 99% of total population. France is highly developing country there are 75 percent of the people staying in the cities. There are two languages spoken in France one as French and another is Catalan but with the globalization of the world English has quickly squeezed itself in to serve as the third spoken language. The French people are very proud of their language which is famous worldwide and also shows their identity. There are different religions, Roman Catholics (33%), Muslim (21%), and Hindu (14%) and others which are all freely practised (diagram 1). The French people share a great passion of food. France is very famous for cuisine, wines and cheese.

DIAGRAM 1

Diagram showing religious distribution in France

DIAGRAM 2

FRANCE AGE DISTRIBUTION

WWW.INDEXMUNDI.COM

TECHNOLOGICAL

France has an excellent scientific and technological environment. As being the worlds 4Th industrial power, one of the world leader in space technology, in nuclear energy, in computer engineering, in environmental protection (Sjsu.edu, 2015). All the credit France owes to its quality education system which includes 230 engineering colleges and 87 universities which are well known for their research. Technological and industrial growth funded by the government helps in increasing the standard of living of people. France spends about 2.2% of its GDP for the development of its technology and industrial growth (on research and development). Number of patent application in a country indicates how a process or product offers a new technical solution to a problem. The amount France gets by exporting its R & D such as in computers, scientific instruments; aerospace and electrical machinery is about $93,209,237,841(2009).There is research credit tax (CIR credit import research), it Is a corporate tax relief which government forgoes the expenditure of the firm on its R & D operations. The technological index of France is 4.65.

ENVIRONMENTAL

In France, forest covers about 30.3% of land. France is the first country to have a separate ministry for environment. France is been ranked 17th for carbon dioxide emission. The EPI score for France is 78.2 and it holds 7th rank. This could be achieved as Frances 78% of energy production comes from nuclear power. France has even imposed a carbon tax. It is about 17 Euros per tonne of carbon dioxide emitted. It contributes about 4.5 billion Euros per year. France carbon emission is about 382,870kt. Being a member of G8 France has decided to cut short its carbon emission by about 20% since 2012. (Ec.europa.eu, 2015)

LEGAL

Employment laws

Hiring: Written contract are mandatory to all grades and levels. It should be in French. Firing: employees cannot be removed unless the organization specifies one of the claws mentioned in the French law. The dismissal process on disciplinary basis is very official and failing a practical step, even where the firing is clearly reasonable on the merits, May effects in the Courts overturning the firing and ordering the recall of the employee (Frenchlaw.com, 2015).

Taxation

The current standard rate is at 19.6%. The reduced rate (for food and books) is 5.5%. A specific rate of 2.1 % applies only to the drugs taken in charge by the Social Security. The net revenue of VAT in 2008 is 126 billion euro. (Icaew.com, 2015)

Subsidy policy

Are applicable to agricultural and green revolution companies (supporting ‘save earth’).

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