Midterm assignment group report subject international business

FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS Topic : Lafooco - Strategy to penetrate the UK's market with roasted cashew nut Ho Chi Minh City, 23" March 2022... In the cashew kernel

FOREIGN TRADE UNIVERSITY

HO CHI MINH CITY CAMPUS

Topic : Lafooco - Strategy to penetrate the

UK's market with roasted cashew nut

Ho Chi Minh City, 23" March 2022

GROUP’S MEMBER

ML221 - Group 9

TABLES OE CONTENT

Chapter 1: Analyze currenf business s1fuafion c1 1212212111221 1s HH nhe 3 1.1 Company background - c c1 2211121111111 1211 2211151112111 51 111kg 3 1.2 Lafooco’s current activities and opportumifIes 1m a foreign market - 3 1.2.1 Lafooco's CUIrenf aCfIVIEI€S Q0 2n 22 2 1211111 1111119 vn kg 3 1.2.2 Opportunities in a forelgn market 2c 2211121122111 12111 5113 111kg 3 1.3 About cashew nuts Of ÏaFOOCO: TQ nHS HS S1 1011111111111 111111111011 1H nh kh 4

Chapter 2: Market penetration øoaÌÏs§ - - 2 1 2122111121112 111 111511221111 011 181111528 ky 5 2.1 Core goals when entering the market - 2 2231212 1211511153351 1155111111111 5 2.2 Product categories for market penetTafIOT - c c2 12111211111 111111 111111111111 ke 5

Chapter 3: Market anaÏy§1s T220 2211121112121 512511 5111911101 k 1H kg key 6 EIN Đa ion nhe 6 3.1.1 PESTLE (External macro enVironimenI) - c2 2211222121221 6 3.1.2 Five Forces (External micro envIronT€T†) cà cc 12x22 ty sey 8

“` 9= 10

Chapter 4: Market penetration strategy 0 0cc ccc ccc cccceceecetecetsecesecesteseseesssieenieeeeees 14

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4.3 Distribution sfraf€ØW LH cnnnn HH HH 11111 111gr 15 4.3.1 Distribution sfraf€gy 12H S1 n2 HH2 11151 xnxx re Ha ke 15 4.4 Products promotion strategy 0c ccc cece cccsecesecesscesseceseceeestseeessetssesesecntetenaes 17 Word-of-mouth marketing (WOM markefing) -.- - 2c 201222 nh se ryu 19

Chapter 5: Evaluate market penetration sfraf€Øy .- - c2 20122211112 nh nn He Hy nườu 21

REFERENCES

Chapter 1: Analyze current business situation

1.2 Lafooco’s current activities and opportunities in a foreign market

1.2.1 Lafooco's current activities

Accumulated in 12 months of 2022, LAF's net revenue reached VND 509 billion net revenue, an increase of 22% compared to 2021 As of December 31, 2022, LAF's total assets stood at VND 403 billion, an increase of 44 % compared to the first day of the year Production capacity of 20,000 tons of raw cashew nuts/year In the year of Covid, the company still maintained good sales in both domestic and export markets In the cashew kernel processing industry for export, there are more than 60 enterprises, of which LAFOOCO is one of the four largest enterprises Lafooco was honored by Forbes Magazine as one of the 200 best small and medium enterprises in Asia As an enterprise that is always in the top 10 largest trading and exporting companies of cashew kemels (semi-finished products) in Vietnam

1.2.2 Opportunities in a foreign market

In 2009, Lafooco ranked 3rd among enterprises with the largest export turnover of cashew

in Vietnam More than 90% of the Company's revenue now comes from cashew exports The major export markets of Long An Lafooco export processing joint stock company are the US, China, the Netherlands, Australia, Japan, Israel, Canada, Russia and Taiwan Lafooco is currently one of the first Vietnamese consumer product brands to be branded

"Climate Pledge Friendly” on Amazon, helping shoppers identify and select products that meet sustainability and conservation standards natural world 3 out of 4 types of Lafooco cashew nuts entered the top 10 best-selling new cashew products on this platform Particularly, 2 product lines of Caramelized Sea Salt Roasted Cashews and Coconut Sea Salt Roasted Cashews are among the top 100 cashew products at Amazon's store in the

US

The United Kingdom 1s a unitary state with devolution that is maintaining within the framework of a democracy under a constitutional monarchy The United Kingdom's economic freedom score is 72.7, making its economy the 24th freest in the 2022 Index The United Kingdom is ranked 17th among 45 countries in the Europe region, and its overall score is above the regional and world averages

With a clear source of cashew raw materials, grown on the red land of Long An, carefully monitored and selected, Lafooco is always committed to bringing the best quality cashew products to customers

Up to now, the company has successfully built an organic cashew growing area in Binh Phuoe province and has been certified organic by the US and Europe Lafooco's organic cashew products also successfully passed the strict censorship round of FDA, Control Union and received positive feedback from international customers, expanding the way to reach the big sea for domestic agricultural products

Chapter 2: Market penetration goals 2.1 Core goals when entering the market

Two core goals Lafooco sets we want to focus Firstly, Lafocoo will increase the revenue

of roasted cashew's Lafooco The UK is a potential market for salted roasted cashews for many reasons that we will analyze in Consumer Analysis Secondly, increasing brand awareness of lafooco in the UK market is also a significant condition Lafooco has never entered the UK market, but this entry may make UK consumers that have a better impression of Vietnamese products

Lafooco's first priority is to cooperate with major supermarkets in the UK, exporting products to supermarkets with large market shares such as: Tesco, Sainsbury's, Asda, and Morrisons Besides, selling via e-commerce like Tesco can also be an option and Lafooco will probably expand to take care of this channel after stabilizing In addition, Lafooco can also apply some products promotion strategies when launching products such as: Create an image and seek out customers and trade partners in the UK, Develop media promotion channels, Word-of-mouth marketing (WOM marketing)

2.2, Product categories for market penetration

Lafooco’s products have specific important characteristics that differentiate them from the competitors in the foreign market First of all, cashew nuts and other types of nuts include various amounts of nutritious ingredients that are natural and good for health Besides, not only the price of these products is reasonable but also the categories of cashews nuts of Lafooco are really varied The cashew nuts of this brand are processed according to different flavors, so people can experience all of them without getting bored This point is also relatively new for UK consumers because mainly the nuts here are only roasted or processed into butter or milk

We also aim to focus on all ages of consumers to attract sales and regard them as our target customers because these nuts are good for health, and children to older can use them Also, UK people usually have grain cereals for breakfast so the consumption of nuts

here is enormous, and Lafooco's cashews products can be used as a cereal for people's mornings

Chapter 3: Market analysis 3.1 Environment analysis

3.1.1 PESTLE (External macro environment)

e Political

- The Brexit event had a profound effect on the country's socio-politics The most obvious

is the internal divisions of the people

- The duty-free trade deal Johnson signed with EU leaders two years ago has caused a significant increase in customs paperwork, leading to difficulties for businesses in importing and exporting

- Brexit has negatively impacted UK socio-economic and public support for this option has diminished Several agreements signed with other countries have hardly brought significant change Although additional trade with other countries could partially offset the decline in trade with the EU

- Brexit has led to a procedural split between Northern Ireland and the rest of the UK

- Explaining the cause of the UK's economic decline, analysts say that the UK 1s still paying the price for Brexit (UK leaves the EU)

- At the moment, the British pound also depreciates more than the euro against the dollar

in the money market

- The United Kingdom (UK) is a net importer of cashew nuts

® Social

- The latest figures show there are over 3 million vegetarian and vegans (adults and children over the age of 18 months) in the UK-> Eating nuts regularly can help vegetarians to meet requirements for all of these important nutrients

- UK people like convenience food -> Cashews mix milk or yogurt as a cereal bowl is a good choice for a fast breakfast

e Technological

- In the context of the global economy, Vietnam has developed in terms of technology companies have applied technology in the production, promotion and introduction of products More and more people are using social media

- Instead of the old technology that used a lot of labor and the processing capacity was low, cashew processing enterprises and establishments boldly invested and replaced it with new technology

- Factories use technology in the production and processing of cashews with HACCP standards

- Developing high-tech agricultural enterprises (NNNCs) is a new development trend of world agriculture due to its advantages compared to traditional production methods

e Legal

- The UK has a general tariff on imported goods of 17.5% that applies to all business transactions that include imports UK import duties are calculated based on a percentage

of the value of goods except for some special items that are subject to detailed tariffs

- Some specific provisions on import tax rates for some items are as follows:

+ Semi-finished products: from 2% to 14%

+ Finished product: 3% to 20%

- The UK adopts a GSP preferential tax system that allows goods imported from developing countries to receive tax breaks or be subject to a zero tax rate."

- The UK currently has three tariffs: a standard tax rate of 17.5%, a 5% exemption and a 0% tax rate The UK's common VAT rate is 17.5%

- Anti-dumping duties are taxes imposed on imports to combat the dumping of goods in Europe Each anti-dumping duty may apply to certain goods originating in certain countries or exported by certain exporters

- All goods imported into the UK must be in the name of the country of origin (country of manufacture) as required by customs The UK requires goods to have labels showing the origin, weight, size and composition of products to protect the interests of consumers

- Products that do not onginate in Europe and are not freely circulated in Europe must comply with standards for packaging and labeling Food products intended for human and animal consumption that contain GM (genetically modified) substances must be appropriately labeled

e Environmental

- Population: is the 22nd most populous country in the world, with an estimated population of more than 68 million people (2022)

- Natural benefits: Tourism development, high-level demand

3.1.2 Five Forces (External micro environment)

e Bargaining power of suppliers

- Raw materials for cashews come from domestic suppliers, using 100% of Vietnamese cashew nuts to make processed products for export to other countries

- Up to now, the company has successfully built an organic cashew growing area in Binh Phuoc province The rationalization of the production process, product path, renewal of equipment and machinery, etc., so that the labor productivity of workers is improved, the quality of goods is kept stable and production costs are maintained also significantly reduced

- In addition, the central delegates promulgated a number of new mechanisms and policies such as support for replanting, renovation, restoration and new planting and intercropping

of cocoa in the cashew planning area; promulgating the annual price floor for purchasing cashew nuts as a basis for purchasing enterprises; establish the Cashew Industry Risk Insurance Fund, have a policy of reducing Value Added Tax on cashew products for domestic consumption Therefore, the cost of supplying raw materials for cashew nuts will not be affected and will be stable

=> Suppliers have little impact on businesses

e Bargaining power of customers

- The UK 1s a big market but has high requirements for quality agricultural products and

is very competitive Many people, mostly children, in the UK eat only one bowl of cereal for breakfast (which includes a variety of cereals, including cashews) Customers will be more concerned about product quality, which comes with a reasonable price, buyers can have medium power in this aspect

=> Medium power of buyers

e New entrants threat in industry

- Cashew nut importers to the UK have to face high standards of technical requirements, food hygiene and safety, etc This requires businesses to have a thorough preparation in terms of business plans and construction and develop products and brands methodically

In addition, businesses also need to pay attention to some regulations on sustainable development such as labor, environment because the UK 1s a country that 1s very interested in these issues

- The UK is the third largest cashew nut importer and the second largest cashew nut consumption market in Europe, But this is a dynamic and open environment for the cashew industry to develop, so the possibility of being threatened by new entrants is quite large

=> High threat

e Threat of exiting substitutes

- Every week, the average UK household consumes 128 grams of breakfast cereals Breakfast cereals are still eaten once or more times a day by close to 14 million Brits But during the past decade, consumption had overall been slowly declining

- Cereals include many types of seeds, so the appearance of substitutes such as green beans, chestnuts, etc has great competition to gain a foothold in the market Buyers’ substitution trends may change, as they always appreciate the taste, quality and nutritional value of the product

- As per the Volza's United Kingdom Cashew nut Buyers & importers directory, there are

125 active Cashew nut Importers in the United Kingdom Importing from 111 Suppliers

- R § FOODS LTD accounted for maximum import market share with 99 shipments followed by KHANJRA AND CO with 64 and FREEWORLD TRADING LTD was at the 3rd spot with 31 shipments

product distribution processes

Weakness The company's recognition abroad is not high

LAfooco Food may have difficulty finding new partners and customers in the UK market

Price competition with other cashew nut producers is also increasing

LAfooco Food may have difficulty meeting UK food safety standards and import regulations

Opportunity The cashew nut market in the UK is very potential for Vietnamese

companies More than 50% of Britons are interested in healthy products Eating nuts regularly can help over 3 million vegetarians and vegans to meet requirements for all of these important nutrients Cashews can become a side dish in British meals

The United Kingdom's economic freedom score is 72.7, making its economy the 24th freest in the 2022 Index