Analyze the potential of the italian nation with the PESTLE model and build a three year international business strategy (2023 2025) that highland coffee should apply to successfully conquer

THE FINANCIAL MARKEING FINANCE UNIVERSITY DEPARTMENT MANAGEMENT ~Ô~Ô~Ô~ ESSAY TOPIC : Analyze the potential of the Italian nation with the PESTLE model and build a three-year international business strategy (2023 - 2025) that Highland Coffee should apply to successfully conquer Lecturer: Th Le Thanh Tiep Group members: Nguyen Thi Kim Thao - 192100586 Le Thi Hong Tham - 1921005194 Nguyen Hoang Dien - 1921005026 0 Ho Chi Minh City, April 2022 0 Instructor's comments 0 Table of contents I) Executive Summary II) Introduction a) Introduction of Highland b) Introduction to Italy .1 III) Analysis of pestle a) Political issues b) Economic issues .2 c) Social issues .3 d) Technology problem e) Legal issues .4 f) Ethical issues IV) Market audit a) Market potential b) Level of competition c) Legal and political environment d) Socio-cultural influence V) Plan .6 VI) Conclusion .11 0 I) Executive Summary International business strategy has a great role and benefits in creating business efficiency when participating in international business activities Managers of companies need to clearly see the role and benefits of international business in order to be able to build a right business strategy for their company from the very beginning, to maximize the efficiency of the use of international business use resources such as finance, human resources, reputation, as well as other international competitive advantages This report aims to determine the factors affecting the analysis of the potential development of Highland Coffee in Italy through the PESTLE model and then develop a three-year business strategy (2023-2025) for Highland to apply successfully conquer the market in Italy Specifically to expand Highland Coffee's business in Italy II) Introduce a) Company introduction Highland Highlands Coffee is a brand of Viet Thai International Joint Stock Company (VTI) founded by Mr David Thai Viet Thai International is a 100% Vietnamese joint stock company The main office is located in Hanoi and the transaction office is located in Ho Chi Minh City Established in 1998 and only focused on packaged coffee, in 2002, the first Highlands Coffee was officially launched Highland Coffee has many big competitors such as Starbucks, The Coffee House, Trung Nguyen b) About Italy Italy is a country in Southern Europe, the birthplace of Western culture Italy is known worldwide for its excellent cuisine, trendy fashion industry, luxury sports cars and motorcycles, diverse cultures and dialects with diverse regions and diverse nature .Italian culture is steeped in art, family, architecture, music and food About 96 percent of Italy's population is Italian, although there are many other ethnicities living in the country Coffee is an essential part of everyday life in Italy There are many types of coffee, but they all follow the same rules basic rules In Italy, a cafe sells snacks, cakes and even alcohol III) Analysis of Pestle a) Political issues 0 The Italian stipulates: Constitution adopted in December 1947 clearly - Parliamentary republic, separate from Christianity - The President is the head of state, elected by a conference of two houses, for a term of years In Italy, politics is hectic and noisy , with crowds gathering in the streets to protest government policies or show support for their party Vietnam and Italy officially established diplomatic relations on March 23, 1973 Political relations between the two countries since the early 1990s have been consolidated and developed clearly Italy is the first Northwestern European country to actively support the strengthening of cooperation between Vietnam and the European Union, at major international forums as well as the normalization of relations between Vietnam and financial institutions , trade, international currency in the early 90s b) Economic problems Italy is the 10th largest exporter in the world with an export value of 632 billion USD in 2019 Italy is also a market that imports a large amount of squid and octopus in the EU, most of which is consumed domestically Import prices are also quite attractive, so this is also the common goal of many leading suppliers in the world Italy has trade relations with more than 100 countries around the world The main markets of Italy are Western European countries (accounting for over 75%), the US (8%) Italy's trade relations with Asia mainly focus on China, India, and Japan Export turnover: 528,368 billion USD (2014) Import turnover: $471,659 billion (2014) Italy's main imports are: mechanical products, chemicals, transport equipment, energy products, minerals and non-ferrous metals, textiles and clothing; food, beverage, tobacco The main import markets of Italy are: Germany 15.5%, France 8.9%, China 6.7%, Netherlands 6.1%, Spain 4.7%, Belgium 4.4% ( two thousand and thirteen) Average income: Italy's GDP per capita (GDP per capita) is 31,676 USD/person in 2020 Italy's GDP per capita growth rate will reach -8.60% in 2020, down -1,891 USD/ person compared to the figure of 0 33,567 USD/person in 2019 Italy's GDP per capita in 2021 is expected to reach 29,892 USD/person if the Italian economy maintains the same GDP growth rate and population level as last year already Italy's GDP per capita in 2021 is expected to reach $29,892 per capita if the Italian economy maintains the same GDP growth rate and population level as last year In terms of economy, trade, Vietnam - Italy trade relations have developed positively in recent times Vietnam is one of 10 emerging markets in the Italian Government's priority to develop trade and investment relations Currently, Vietnam is Italy's largest trading partner in the Association of Southeast Asian Nations (ASEAN) The two sides always create favorable conditions for businesses of the two countries to strengthen cooperation in fields where Italy has strengths and Vietnam has needs, such as: mechanical engineering, infrastructure, textiles, footwear, leather and footwear , wood processing, supporting industries, construction materials, oil and gas, renewable energy, food processing The main export items of Vietnam to Italy are phones and components, shoes and coffee c) Social issues The current population of Italy is 60,287,405 as of April 6, 2022 according to the latest figures from the United Nations Italy's population currently accounts for 0.76% of the world's population Italy is ranked 23rd in the world in the ranking of the population of countries and territories The population density of Italy is 205 people/km2 With a total land area of 294,152 km2 71.35% of the population lives in urban areas (43,103,159 people in 2019) The median age in Italy is 48.1 years old People's attitudes towards products depend on their prices and preferences, they will be willing to pay a high price for good quality products 0 Figure 1: Percentage of some sectors where people are willing to pay for a product d) Technology problem From 2015-2016 in Italy, the market value is estimated at 21 billion Euro This market is also predicted by Worldpay to grow 14% annually and reach 36 billion euros by 2021 Mobile commerce here increased from 12% to 17% of the total ecommerce market last year, with a quarter of this market imports from other countries Internet penetration in Italy has grown by 14% over the past five years and is still likely to grow further This will also be an opportunity for the people of this country to have stronger access to e-commerce Italy's domestic trademark system grants trademark owners exclusive rights to use new, legal and distinguishable trademarks by means of their own graphic sign This includes the right to request the seizure of any infringing goods, as in the TRIPS Agreement According to Italian law, three-dimensional signs, expressed sounds, combinations of colors and original colors are also signs for enforcement Foreign companies investing in the Italian market can rely on it the same law that protects the intellectual property rights (IPR) given to Italian companies These rights extend to all the major areas – patents, trademarks, copyrights, and designs – that companies still use in their home countries Italy respects all international agreements on IPR.As a founding member of the European Union, Italy is at the forefront of European IPR development and has a resource of the most modern intellectual property practices and the most updated in the world e) Legal issues The Italian legal system is that of a civil law State, governed by law The Italian system of government is the government system of a parliamentary republic While the power of the State is centralized to a great extent, Article 131 of the Italian Constitution divides the State into 20 regions, each of which is vested with limited administrative power Article 87 of the Constitution provides that the President, among other duties, enacts laws, issues legally binding decrees, calls for elections of two Parliaments, permits the submission of bills by the Government government proposes to Parliament and calls for a referendum Italy and Vietnam are bound by a sincere and lasting friendship Since the signature of the "Strategic Partnership" in 2013, our 0 relationship has grown significantly in many areas of common interest such as trade and investment, energy and climate, defence and security, education, creative industries, science and technology, culture and people Linking people f) Ethical issues Since the 1990s, Italy has been aware of the deep-seated nature of political corruption and its costs, and its organizations have struggled to eliminate the problem In Transparency International's annual surveys, Italy is consistently ranked as one of the most corrupt countries in the Eurozone Transparency International's 2019 Corruption Perceptions Index ranks the country 51st out of 180 countries, on par with Malta, Saudi Arabia and Grenada Furthermore, 64% of surveyed households believe that the level of corruption has increased, and 61% of surveyed households perceive the government's efforts to combat corruption as ineffective IV) Market audit a) Market potential Economic environment The Italian coffee market is volatile but also full of potential, promising to bring leaps and bounds in development from the initial stage and in the coming time Italy is known for its stable politics, along with an ever-expanding economic and investment environment Since then, it is easy for foreign countries to build investment and develop business in our country The social environment Italy's population is currently 60,287,405 people, with a dense population The culture is rich and diverse, especially the culinary culture as well as the diverse artistic activities This is also a large coffee shop business market for many investors & business people because the number of people who like to drink coffee in Italy is very large And Italy is considered the cradle of coffee Natural environment With a favorable geographical position, tropical monsoon climate, less affected by natural disasters and floods This environment and market is very suitable for business and trade The environment in 0 Vietnam has not been heavily polluted: water, air, noise, etc People here are very fond of a quiet, comfortable and relaxing space Technological environment Technology is always changing very quickly, the emergence of new technology creates new products that threaten old products As a result, old technology companies become obsolete in front of their competitors Italy is a country that applies leading advanced technologies in many fields such as Italy is the birthplace of the first coffee machine Legal politics Political stability is an opportunity, a potential market of many product industries entering Italy However, it is also a barrier limiting the ability to import and export when political conditions are unstable Thus, the political legal factor is important If you not know the regulations on the importing country, the exporting business unit will face many difficulties Customer With both classic and westernized style, Highlands Coffee's customers are the middle-income class or above, have a stable job and have a habit of drinking coffee Drinking coffee at a branded coffee shop helps them assert their social status Competitors Italy is the cradle of coffee, so there are many famous coffee brands Musetti, Lavazza, Illy with quality, price, experience, understanding of the cultural market and customer satisfaction of these firms This advance coffee will be a direct competitor of Higland Coffee when entering its coffee shop in Italy This makes Higland Coffee have to pay a lot of money to overcome barriers to compete with these predecessors Alternative products In addition to the drinks and cakes served, highland also has a number of other drinks such as chocolate, crushed lemon These are quite easy to drink and quick to prepare Or you like to enjoy famous cups of coffee such as Espresso, Macchiato, Capuchino But if you want to try something new, you can try coffee, filter coffee is the No drink in Highland that restaurants you should not ignore In addition to making traditional filter coffee, Highland also combines 0 with other ingredients such as milk cream, almonds, chocolate many different types for customers to choose freely b) The level of competition Italy is the cradle of coffee with many famous brands, each with many different recipes and processing methods At the same time, drinking coffee in Italy is an art, people in Italy mainly drink Espresso, depending on each person's taste, this coffee is made into Cappuccino, Latte Macchiato and Caffe Latte In general, coffee in Italy varied in quality, taste and unique combinations Italy is a market of coffee production and export - import is quite active, so the level of competition for a new coffee company to import into Italy is quite large c) Legal and political environment Subject to European Union legal requirements applicable to coffee These rules mainly deal with food safety, where traceability and hygiene are the most important topics Green coffee labels exported to Italy should comply with the common food labeling requirements of the European Union The Italian legal system is based on Roman law, especially civil and temporal law Legality in Italy is quite strict with many laws and constitutions clearly defined, updated and added regularly to ensure the rights of the people Political relations between Italy, Vietnam and the European Union have been clearly consolidated and developed d) Social and cultural influence Italy is a country that is boldly lyrical and romantic, a place known as a vanity paradise of art, history, time, cuisine and especially culture Italians are famous for being the people are generous and extremely friendly, besides, there are also very simple and sweet features Those beauties are formed from deep core elements Being born and raised in a land that is considered a museum of human history with many famous cultural and artistic works, that may be the reason why every Italian has a very unique artistic character private V)  Plan Strategy development 0 Market Market penetration Market strategy (2023) development development strategy strategy (2025) (2024) Goal Looking for -Improve Rise to Settin opportunities to Highland become the develop Highland Coffee's number g market in Italy competitive coffee chain in in the (Opening the first store advantage Italian the market for market in Roma and Milan) - Compete with local competitive Strongly competitors such as products such develop the Musetti, Lavazza, Illy ) as Latte, Moca, market in the -Increase efficiency Culi following and productivity of - Continue to years product lines in increase - Bringing the production Highland in Italy best coffee - Reduce costs and scale in the experience enable growth highland with luxurious in contemporary maintaining quality market and space, products in the Italian general the coffee attentive market market in service style particular in and of course IDEA (Adding new premium 300 stores in drinks the area) Attracting new customers for the purpose of expanding the Highland market Asses - Business environment assessment sing With a vibrant growing economy, Italy has many the opportunities to develop into the coffee market situati + Politics in Italy is relatively stable, there are many on supportive policies for foreign businesses, this is an opportunity for Highland Coffee + Italy is a technology pioneer in the coffee market, this is an opportunity and also a challenge for Highland for the first year of accessing the Italian market with a market penetration strategy + Great market pressure when there are too many competitors in the coffee industry in Italy will be a risk 0 for Highland, the business may be kicked out of this market + Vietnam and Italy have a close relationship for many years, this is a beneficial cooperation for foreign businesses + Italy is the cradle of coffee, so the demand for coffee here is quite high, this is an opportunity when Highland chooses Italy as the first place to expand the coffee market to foreign countries - Internal assessment: + Highland's marketing process has had certain successes in the Vietnamese market Therefore, when promoting coffee brands in Italy is not too strange for Highland, this is a strong point for businesses However, there are too many coffee brands in Italy, each with different marketing methods, so the marketing in a new market like Italy is a challenge for Highland + Highland's financial management will be a strong point for businesses to thrive in Italy because Highland is a large coffee chain developing in the Vietnamese market, so Highland certainly has a solid financial management system when join Italy Table : Highlan d' s three-year strategy (2023 – 2025) in Italy  Determine market entry First, to penetrate new markets, good market research helps Higland Coffee to better approach the needs and tastes of customers, thereby meeting the strict needs of quality and helping to solve the raw material stage input, find solutions to adapt products to the culture - society in the Italian market With available materials from Vietnam, Highland penetrates into the Italian market by exporting coffee from Vietnam to Italy and consuming it through retail stores, hand-mixing delicious drinks to hand Diners Highland Coffee invests in modern technology system and know-how to get the best products  Identify product lines to sell: Regarding the product development strategy of Highlands, it can be clearly seen that this brand divides the menu into two distinct parts: Drinks and food First of all, drinks, it can be seen that Highlands' drink line is divided into main groups: 0 Group 1: Café (Café, Phindeli, Cafe Espresso) with Phin Sua Ice as the main product Group 2: Tea (Lotus tea, fruit tea & green tea) with Golden Lotus Tea as the main product Group 3: Freeze with Freeze Green Tea as the main product In addition to these groups, the company also serves a number of other drinks, Figure 2: Drink menu of Higland Coffee in Vietnam Highland Coffee still serves the same drinks and food as the Vietnamese market in Italy, this creates a uniformity in the menu so that diners can order whatever they want from anywhere favorite  Determine the price line competitors in Italy are Lavazza and Illy with prices for a cup of coffee ranging from 5.31 to 5.63 Euros As a new brand entering the Italian market, Highland will have a strategy of adjusting prices 3.34 – 5.69 euros lower than competitors to attract potential customers who prefer good quality products but affordability And this price is suitable for middle-class diners and above to enjoy the best services and space at Highland Coffee The prices of products at Highland Coffee are divided into main groups: Group Café Phindeli Coffee Espresso Phindi … Group Size WILL 3.34 Euros 4.03 Euros US size 4.03 Euros 4.48 Euros Size LOTS 4.48 Euros 5.19 Euros 3.34 Euros 4.19 Euros 5.38 Euros Size WILL US size Size LOTS 10 0 Lotus tea 4.18 Euros … Group Size WILL Freeze Green 4.68 Euros Tea … Group Price Cake 3.34 Euros 4.86 Euros 5.20 Euros US size 5.43 Euros Size LOTS 5.69 Euros Table 2: Product price of Highland in Italy a How to determine this price line is converted in currency between Euro and VND  Determine distribution channel Highland Coffee distributes products directly at coffee shops, combining intermediary distribution through online ordering applications and retailers In the Italian market, Higland Coffee is located in high-class and luxurious buildings and residential areas and in prime locations, especially in commercial centers, buildings with many employees and objects mid-range and above customers  Identify promotional activities Promotional activities - Highland's marketing strategy for products Highland is constantly innovating its products to better suit the needs and tastes of customers Initially, the brand was just a store that provided coffee beans Therefore, the company has divided its coffee shops into different criteria, including: Based on the type of coffee bean: whole bean and ground coffee Based on roast level: medium roast (medium), blonde, dark (dark) Based on caffeine: regular coffee (contains caffeine), and decaf coffee (without or without caffeine) Based on taste: tasteless coffee and flavored coffee - Highland's Marketing Strategy on Price (Price) For this second P (Price), the Highland brand has priced the product with a premium product pricing campaign, focusing on exploiting the mid-range and above customer base At the same time, hitting the customer psychology expensive products will come with high value 11 0 This has helped the brand maintain the image of a premium and quality beverage brand in the minds of customers To this, the company has always focused on product quality as well as conveying product messages before reaching customers From the careful and meticulous selection of coffee beans to the rigorous processing, to the professional training of the staff - Highland's marketing strategy on distribution system (Place) Highland follows a broad distribution strategy Accordingly, after learning about the coffee usage habits of office workers, the company quickly cooperated with corporate offices to set up shops right under their working buildings Places with luxurious design and prime location will fall into Highland's first sights, namely in malls, convenience stores, high-end hotels and airports Highland's marketing strategy on promotion mix (Promotion) + Word of mouth marketing Highland uses word of mouth marketing strategy to create a community of Highland addicts on social networking sites - + Advertising through social networks Highland takes full advantage of social media to become one of the most mentioned coffee brands Turn the activities of sharing moments with friends, relatives, while drinking coffee on popular social platforms such as Facebook, Instagram, Pinterest, become a hobby of customers Images of customers enjoying life beside cups of coffee, chatting together in a quiet and gentle space have attracted strong attention on social networks + Implement promotional programs Highlands Coffee is one of the brands that regularly launches many attractive promotions, such as buy get free, combos, free upsize, etc  Determine the required budget: Expense Items Export of raw materials 100,000 won Euros / year Office 200,000 Euro/year Advertising activities 50,000 Euro /year 12 0 Staff Staff training 1,000 Euro/person/month (10 people, year) = 120,000 Euro/year 500 Euro /year total 290,500 Euro /year Table 3: Budget needed for Higland Coffee to operate in Italy VI) Conclude When entering a new market like Italy, Higland Coffee has many advantages and potential for development in this market, however, Higland Coffee has to face the following disadvantages and risks: Advantage Potential Defect Diversifying the market helps Highland not be 100% dependent on the Vietnamese market Expand the developed market Create a certain position in a new market Shipping costs are high, making it uneconomical to export, especially for coffee in bulk Increase experience Brand Enhancement Risk Comply with foreign regulations such as taxes, import procedures, currency transactions Greater access and distribution to resources Tariff barriers can make arrangements and talent coffee exports uneconomical Table 4: Advantages, potential, disadvantages, risks when Higland Coffee participates in the Italian market 13 0 ... of the potential development of Highland Coffee in Italy through the PESTLE model and then develop a three- year business strategy (2023- 2025) for Highland to apply successfully conquer the market... in Italy Specifically to expand Highland Coffee' s business in Italy II) Introduce a) Company introduction Highland Highlands Coffee is a brand of Viet Thai International Joint Stock Company (VTI)... competitors in Italy are Lavazza and Illy with prices for a cup of coffee ranging from 5.31 to 5.63 Euros As a new brand entering the Italian market, Highland will have a strategy of adjusting