Royal Cashew Products from Sri Lanka to South Korea

1. Key factors to consider when introducing Royal Cashew Nuts to South Korea
2. Chosen Market Entry Strategies and the benefits and risks
3. Cultural and regulatory factors for Royal Cashew nuts for the new entry
4. Degree of standardization or adaptation required when entering the chosen markets
and justification to the recommendations
5. the factors that will influence to consider the adaptation of advertising campaigns
instead of global campaigns

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1. Key factors to consider when introducing Royal Cashew Nuts to South
Korea
Introducing a brand to a new market involves a great extent of strategic planning and
initiatives. When introducing a brand to a new country market there are two main dimensions
to be identified and addressed properly. In the international environment, home country
environment and host country environment can have a significant differences. The marketing
mix, internal factors of the company home country and the external factors are the key factors
to be considered in detail in order to introduce Royal Cashew nuts to new market.
1.1. The 4 p’s (Product, Price, Place, Promotion)

 Product
Cashew Nuts
The cashew nut, is one of the widely consumed edible tree nut, a single seeded fruit of a
tropical evergreen tree (Anacardium occidentale), and belonging to the family of
Anacardiaceae. This fruit develops from a sweet tasting false fruit, which is of red or yellow
colour.

 Helps to prevent Cancer cells

o Proanthocyanidins are a class of flavonols which fight against tumor cells by
stopping them to divide further. These proanthocyanidins and high copper
content in cashew nuts help fight against cancerous cells
 A healthy food for Heart
o Cashew nut intake has a cholesterol-lowering effect, in the context of healthy
diets and help to keep the heart healthy.
 Keep away from Blood diseases
o Copper deficiency can lead to iron deficiencies such as anemia.
 Protect our eyes
o Cashews contains a powerful antioxidant pigment which helps to fight against
various infections due to the exposure to the polluted environment
 Support for a healthy skin
o Cashew nut oil is rich in selenium, zinc, magnesium, iron and phosphorous
which helps to glove the skin and keep it healthy
 As a source of Dietary fibres
o cashew nuts have a great percentage of dietary fibers. Two essential dietary
fibres oleic acid and palmitic acid are not produced within human body so
need to comsume externaly

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  Price
Product Type 1

 BBQ Cashew Square Kolapath 200g Eco Friendly Pack

 Processed and packed for the order.
 Burnt Cashew
 Shipping charges are added according to the total weight of
the purchased goods at the check-out time.
 USD 7.00
 South Korean Won 7451.50

Product Type 2

 Burnt Cashew Oval Kolapath 150g Eco Friendly Pack

 Processed and packed for the order.Burnt Cashew
 Shipping charges are added according to the total
weight of the purchased goods at the check-out time.
 USD 5.00
 South Korean Won 5322.50

 Place
Country Demographics

 Population 2017 estimate 51,446,201

 Density 507/km2 (1,313.1/sq mi)
 GDP (PPP) 2018 estimate Total $2.029 trillion
 Per capita $ 41,173
 GDP (nominal) 2018 estimate Total $1.53 trillion
 Per capita $30,919
 South Korea population is equivalent to 0.68% of the total world population. It has
ranked number 27 in the list of countries (and dependencies) by population.
 The population density in South Korea is 524 per Km2 (1,358 people per mi2).
 The total land area is 97,230 Km2 (37,541 sq. miles)
 Out of the entire population 81.4 % of the population is urban (41,511,797 people in
2018)
 The median age in South Korea is 41.3 years.

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  Life expectancy at birth for Men is around 76.6 years while for women it is 83.2 years

The population by age in South Korea can be shown as below according to the United nations
department of economics and social affairs population division prospects 2010 - 2014

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  Market Potential Index (MPI)

This Index help companies compare prospect markets on eight dimensions. The dimensions
are measured and weighted in determining their contribution to the overall MPI. Based on the
statistics South Korea is ranked 10th in the market potential Index 2014 thus this is one of the
main reason for selecting South Korea.

 Cancer rate of South Korea is exponentially increasing

Cancer is one of the dangerous disease which make the victims to suffer till death. Fear of
Cancer in South Korea is significantly higher because cancer has been the leading cause of
death in Korea since 1983 and is the most burdensome disease. More than 210,000 new
cancer cases are diagnosed in Korea each year, and cancer is responsible for one in four

deaths.

 South Korea ranks 8th in Place international disposable income rankings

 Asia’s fourth largest economy – and the world’s 15th largest
 South Korea has the potential to offer significant growth opportunities
 Ease of Doing business

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  Promotion
Advertising using E channels Social media marketing for consumers geographically
dispersed.
Promotional campaigns emphasizing Corporate Social Responsibility by Healthy Products
with fights cancer and heart diseases.
Conducting sales promotions as joint promotional campaigns with the existing clients globaly
and locally namely,

 Arpico Super Centre  Mount Lavinia Hotel

 CIC Agri Busines  Nilaweli Beach Hotel
 Galadari Hotel Colombo  ODEL
 Jetwing Lagoon  Richlife Dairies
 Galle Face Hotel  TAJ SAMUDRA
 Ceylon Theatures  Sri Lankan Air line
 Helitoures  Maliban Biscuit Manufactures pvt Ltd
 Koggala Beach Hotel  The Fab
 Lakpahana  Perera & Sons
 Laksala  JetwingLighthouseHotel
 Mihin Lanka  Tangerine Beach Hote

1.2. Internal Factors ( SWOT Analysis, Home country Environment)

 SWOT Analysis
Company factors can be thoroughly identified through a SWOT analysis to the introducing
brand. This can include,

 Firm Size : Small and Medium Scale comapy

 International Experience: Exporting to over 10 plus countries
 Product complexity: Different flavored processed cashew products with less
complexity
 Product Differentiation Advantage
o BBQ Cashew
o Burnt Cashew
o Cheese and Onion
o Chilli Seasoning
o Masala Cashew
o Natural Cashew
o Sugar Coated Cashew
o Hot And Spicy

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 o Salted Cashew
o Chilli Garlic Cashew
o Dehydrated
o Garlic
o Hot Pepper
o Salt Extra Fine
o Sour Cream and Onion
o Spanish Tomato
o Honey Cashew
o Shrimp And Red Onion
o Curry Tin

Strengths

 “1st runner up-winner” product with local raw material (pro foods pro pack
2009)
 “winner” : product with best packaging (pro foods pro pack 2008), “winner” :
ecofriendly packaging of product (pro foods pro pack 2011)
 Maco intentional business excellence award-2012
 Lanka stra gold award 2014
 "asiastar award 2015", for cashew nuts with ecofriendly kolapath pack at the
asia packaging federation award ceremony held in turkey recently, over 15
countries participated for the event.

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  First company in Sri Lanka to obtain ISO standards for Cashew industry, With
Quality standards like ISO 22000:2005, HACCP, GMP, HALAAL

 Home country Environment

Trade Agreements and Tariff benefits
The APTA member countries (Bangladesh, China, India, Laos, South Korea and Sri Lanka)
cover a total population of about 2.5 billion, which is a vast potential market to increase the
level of intra-regional trade flows among the participating states.
Major export items to the member countries in APTA in 2006 include

 Natural rubber, desiccated coconut, coconut fiber, copra, coconut oil, tea, cloves
and crude glycerin.
In addition to these items Sri Lanka was able to secure tariff concessions from member
countries of APTA for products of export interest to Sri Lanka, which includes,

 Spices, (pepper, nutmeg, mace) cashew nuts, essential oils, natural graphite,
activate carbon, rubber products (tyres, gloves, mats, rings) floor tiles, ceramic
etc.

1.3. External Factors (PESTEEL Analysis, Host Country Environment)

 PESTEEL Analysis
External Factors
External factors that can affect to the introduction of brand to a new country market could be
thoroughly analyzed through a PESTEEL Analysis. This can include,

 Political impact
o This can basically impact when the government intervenes the operations of
the firm, vis Taxation and Trade restrictions
o FTA →Chile, Norway, Switzerland, European Union and USA Strengths
Centralization of power Strong foreign relationships EU relationships
strengthening Challenges Military influence in South Korean politics
 Economic environment of the Host country
o Economic growth and Interest rates can have an impact on the potential areas
where the firm can grow and expand,

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 o Mass grocery retail sector →saturated in urban cities. Royal cashew focus on
convenience retail sector namely Family Mart, GS25, Seven Eleven, Buy the
Way and Mini Stop. Successful economic reforms Challenges can be consider
as a potential strengths while Growing local hatred for foreign companies
would be a challenge
 Socio cultural difference
o Culture aspects and attitude can have a severe impact on introduction of Royal
cashew to South Korea.
o Health consciousness among people and Health conscious young professionals
and Trend of convenience is gradually growing
o “Few Cashew nuts per day keeps the doctor away.”
o High wages, Highly educated workforce and Rapid Urbanization can have
positive impact while the aging society would be a challenges
 Technological factors
o South Korea is a leading country in terms of latest technologies, Internet
retailing channels and higher usage of Information technology
o Using Hypermarkets (own internet retailing channels) or Partnership with
convenience retail channels internet retailing would be possible
o Commercialization of new ideas would be a strength in this factor while Over-
regulated governance would become as a challenge

 Environmental Factors
o Packaging and disposal of the product and its affect to the green environment
since there is a worldwide new trend to climb global competitive ladder
o South Korea is
among top 9
countries who
have increased the
environmentally
friendly behavior
and changed their
attitude towards
sustainable food
choices
o Promotion of
ECO business
would be a Strength since Royal Cashew Products are using Eco Friendly
Packaging “Kolapath Pack”.
o Apart from that Strong government intervention to protect environment is
another key,
o Evolving strict regulations for environmental protection could be a challenge
in a certain level of the business

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 Ethical Factors
o South Korea having Asian Cultural values and believes in which the home
Country Sri Lanka is also falling to the same category
o Factors related of potential harm to the consumers such as Packaging,
distribution, Advertising and Marketing of the product. These four need to be
conducted in a way which have a minimum or zero harm to the potential
customers. As examples, 1. Psychological harm Advertising: Prevent using
images and videos that harm the local population’s beliefs and values. 2.
Financial harm -Never target the vulnerable 3. Social harm -Prevent harming
the view of local population

 Legal factors
o Acts related to food and beverages in South Korea for import products
o Food Sanitation Act: Prevent danger from hygienic hazards of food products,
Improve national health through qualitative advances in food and nutrition.
This Act has various requirement for all imports such as Pre-import stage
-Request consultancy services for import procedures, Consultants: -Korea
Food & Drug Administration (KFDA) or Individuals -Prevent non-compliance
-Documents prepared are error free according to the Sanitation Act. Sanitary
certificates issued by the government agency in the country of origin for the
export, list of materials and Manufacturing and processing details.
o Plant Quarantine Act: Prevent expansion and entry of noxious insects Safety
and production of agriculture and forestry
o Livestock Epidemic Prevention and Control Act: Prevent emergence or
expansion of livestock epidemics, Development of the livestock industry,
Improvement of public health
o Foreign Trade Act: Promote overseas trade, Develop national economy
through increased trade and commerce
o Laws related to food labeling: Enabling consumers to rationally choose
products based on Information on the containers or packages. This can include
 Product name
 Food product type
 Company name and address
 Date of manufacture
 Circulation period
 Weight
 Names of raw materials and contents
 Ingredients and contents
 Nutritive elements(Calories ,Carbohydrates, sugar, Protein, Fat,
saturated fat, trans fat, Cholesterol, Sodium ,Other)
o Other laws related to imports ,Grain Management Act, Liquor Tax Act

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  Host Country Environment ( Market Analysis)
Country risk in Demand Uncertainty, Market size and Growth, Direct and indirect Trade
Barriers and Intensity of competition are some of the factors in the Host country which can
have an impact on the introduction of brand to a new market. In South Korea Food &
Beverage market has a Revenue of USD 464.8 million in 2015 and expected to growth at
2020 is USD 1006 Million with an annual growth rate (CAGR 2015-2020) =16.69%.

Food & Beverage market in South Korea has user penetration rate in 2015 = 18.54% and it is
expected to hit 26.93% in 2020 as per the statistics.

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When considering the demand for different types of food categories Edible fruits, nuts and
peel of citrus fruit category has share of 4% at the year 2011 out of total Food and beverages
imports to South Korea from different parts of the world. Thus there Cashew category is
listed under the top 10 food products imported to South Korea.

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Task 1 (2053 words)

2. Chosen Market Entry Strategies and the benefits and risks

 The Chosen Market: South Korea

 Available options for Entry Mode

Export buying agent

Broker
Export mode
Export management company
Piggyback

Contract manufacturing
Licensing
Intermediate mode
Franchising
Joint ventures

Acquisition
Hierarchical modes
Greenfield investment

Selecting the entry mode to South Korea for Royal Cashew Brand
Above shows different modes which can use for international market entry. Entry mode
decision is basically depends on the level of internalization which the company desires for.
This decision making process is a logical five step sequence process in which the entry mode
decision is finalized after the 3rd step. This can be make convenient when the information of
the following steps are gathered and identified properly.

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 Assessing the global demand and market opportunities for
the brand and products
1.Deciding whether to internalize Management commitments for internalization
Competition from the local and international competitors
Domestic and international market opportunities

Ranking of world markets based on the market potentials of

countries or regions
2.Deciding the market to enter Local Competition
Political risks and trade barriers
Cultural distance to potential market

Nature of the product

Size of the market segment
3.Deciding the mode of entry for Behavior of potential intermediaries
foreign market Transport costs involved
Government requirements

Deciding the mode of Entry to South Korea

1. Global demand and market analysis

Figure 1 Evolution of Global cashew Kernel consumption 2001-2012

(Source of Statistics: Global Cashew Market – A snapshot overview by international trade

Centre)

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Above chart shows the evolution of global demand for cashew and this depicts the steady and
continuous demand prevailing in the world.

Figure 3 In shell cashew Production by Region in 2012 Figure 2 Raw cashew Yields in Asia

Figure 2 depicts that Asia in the potential exporter for cashew products in the global market.
Asia accounts for 48% of the global cashew production by region according to the 2012 data.
When considering the 48%, Sri Lanka hold a significant portion of the yield in Asia which is
highlighted by the statistics in figure 3.

2. Royal Cashew Export market Strategy

Currently Royal Cashew Brand is exporting its products to
more than 10 countries in the world namely Australia, New
Zealand, Japan, USA, Malaysia, Saudi Arabia, India, Germany,
Italy, Sweden, Maldives, Norway and United Kingdom

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Royal cashew export markets

Royal Cashew brand strengthen it production technology and standards to the export quality
by participating to international Programme like MIFB 2004 Malaysia, Seoul International
Consumer Fair 2005, ITC Meeting Bangkok 2006, Anuga 2007, Foodex Japans 2008, Foodex
Japan 2009, Anuga 2009, Gulf Food 2010, Roasted seed and Nuts Exhibition China 2013.
Mode of Entry to South Korea: - Direct Export Mode using a buying agent

Benefits

 Local market experience and knowledge acquired

 Shorter Distribution channel
 More control over the marketing mix

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  Potential profits are greater since eliminating intermediaries.
 Have a greater degree of control over all aspects of the transaction.
 Can get to know the customers and customers can feel more secure in doing business
directly
 Business trips are much more efficient and effective since directly meeting with the
customer responsible for selling your product.
 Ability to gain customers provide faster and more direct feedback on the product and
its performance in the marketplace.
 Better protection for the trademarks, patents, and copyrights.
 Can present as fully committed and engaged in the export process.
 Can develop a better understanding of the marketplace.
 When the business develops in the foreign market, can have a greater flexibility to
improve or redirect marketing efforts.
Risks

 Little control over market price due to lack of distribution control and tarrifs
 Investments in sales organizations
 Cultural barriers
 Possible trade restrictions
 Consume more time, energy and money
 Requires more "people power" to cultivate a customer base.
 Servicing the business will demand more responsibility from every level of
organization.
 Held accountable for all aspects and no buffer zone
 May not be able to respond to customer communications as quickly as a local agent
can.

Task 2 (538 words)

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 3. Cultural and regulatory factors for Royal Cashew nuts for the new
entry
Cultural Factors
Culture of a country or a region is a broad and complex concept which is difficult to define as
an exact definition. It is important to identify the cultural variation between the two countries
in order to incorporate the cross cultural diversity favors in the marketing planning process.
Culture consist with elements of

 Language
 Education
 Values
 Attitudes
 Aesthetics
 Social Institutions
 Religions

Since these elements are key pillars of any market space the success of the international
marketing have a significant impact on how well products are adopted to the cultural
variations in each region or country. In some Countries cultural variables can act as barriers
to entry. In some cases products or services can be even banned due to various cultural
reasons.

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According to the Hofstede six dimension comparison between Sri Lanka and South Korea
based on Hofstede insights following facts can be consider as cultural factors which can
affect for the introduction of Royal cashew to South Korea.
I. Power Distance
A slightly hierarchical society where people accept a hierarchical order in which everybody
has a place and which needs no further justification. In an Organization this reflects inherent
inequalities, centralization, subordinates expect to be told what to do.
II. Individualism
A close long-term commitment to the member ‘group’ in a extended relationships. A
collectivist culture with Loyality and this can over ride most other societal rules and
regulations. Strong relationships are valued and everyone takes responsibility for fellow
members of their group.

III. Masculinit
y
South Korea can considered as a feminine society focusing on working for living. Conflicts
can be resolved by compromise and negotiation of the partners.
IV. Uncertainty avoidance
With a Score of 85 South Korea is one of the most uncertainty avoiding countries in the
world. This types of countries intolerant of unorthodox behavior and ideas where they
consider time is money and always try to be busy and work
V. Long Term Orientation
One of the most pragmatic, long-term oriented societies. This is clearly depicted in higher
own capital rate, priority to steady growth of market share rather than to a quarterly profit,
and so on.
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VI. Indulgence
South Korea shown to be restrained societies where they do not put much emphasis on leisure
time and control the gratification of their desires.

Regulatory Factors
Apart from the cultural concerns there are some regulatory concerns imposed by law
pertaining to import of Food products to the country. Such lawsvare passed through an act
where all exporters to South Korea need to adhere to the given regulatory restrictions.

 Acts related to food and beverages in South Korea for import products
 Food Sanitation Act:
 Korea Food & Drug Administration (KFDA).
 Plant Quarantine Act: Prevent expansion and entry of noxious insects Safety and
production of agriculture and forestry
 Livestock Epidemic Prevention and Control Act: Prevent emergence or expansion of
livestock epidemics, Development of the livestock industry, Improvement of public
health
 Foreign Trade Act: Promote overseas trade, Develop national economy through
increased trade and commerce
 Laws related to food labeling: Enabling consumers to rationally choose products
based on Information on the containers or packages.
 Other laws related to imports, Grain Management Act, Liquor Tax Act

Task 3 (541 words)

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 4. Degree of standardization or adaptation required when entering the
chosen markets and justification to the recommendations
Standardization is a company or business using the same marketing strategy from one
country to the next, and across various cultures. In this scenario introducing Royal cashew to
South Korea with the same marketing strategy used in Sri Lanka
Adaptation means the process of modifying an existing product so it is suitable for different
customers or markets. This strategy is particularly important for companies that export their
products since it ensures that the product meets local cultural and regulatory requirements. In
this scenario introducing Royal cashew products with a customized marketing strategy
specifically designed for South Korea based on the country dimensions and favors
These are two ends of a strategy, where sometimes the decision on standardization is not a
dichotomous one between complete standardization and adaptation, rather there can be
degrees of standardization.

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In order to determine the Degree of standardization or adaptation required when entering
South Korea with Royal Cashew Brand, there are several factors to be considered. These
factors can have influence on the required degree of standardization:
I. The elements of the marketing mix.
Product needs greater adaptation which is necessary for consumer goods than for
industrial goods. Since food is the product category most likely to exhibit cultural sensitivity
the product need to be adapted based on the taste, Color, Smell, nutrition value, packaging
and labeling valued and accepted by South Korean consumer to meet his or her standards.
Price need to be adapted based on the purchasing power of South Korean People Since
country is having 3 times higher per capita income than Sri Lanka Consumers are mostly rich
or very rich.
Distribution and Place need to have some level of adaption, in terms of areas of potential
customer base and the time value of customers in terms accessing the product and
availability.
Promotion can be used standardization approach in Sri Lanka which is E marketing.
Apart from that based on the level of growth in the market after implementation strategic
approach could be taken to highly adaptation if the demand and potential customer base is
expanding.
II. Market similarities.
Consumer segments the existence of homogeneous customer segments is one of the
foundations for standardised advertising.
Korean consumer
In Postmodern society,
 Very sensitive to the healthy aspect of a product Ready to pay for the Quality
 Like to be guided and well informed when purchasing
 Less Nationalist in their purchasing preference
 Majority of households are rich or very rich.
III. The type of product (consumer or industrial goods).
If it is a consumer product there is a requirement for adaptation specifically when the
consumer brand or product is a food item.
IV. The entry mode
If entry mode is targeting for higher degree of internalization the high degree of
standardization would take place where as if it is lower can have high degree of Adaptation.
Since the entry mode in this context is Direct Export Agent Buying this would have some
degree of standardization.
Task 4 ( 494 words)

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 5. The factors that will influence to consider the adaptation of
advertising campaigns instead of global campaigns
Royal Cashew is a Local Brand of Sri Lanka which has currently conquered the Sri Lankan
market in cashew products with over 15 plus outlets around Sri Lanka and moreover aiming
at developing overseas markets with finest ranges of cashew products.
When Entering to South Korea as a new market for Royal Cashew Brand the approach
planning to use in advertising is crucial since it composed the marketing mix of the Brand.
Two Approaches available as

 Global advertising campaigns

 Adaptation advertising Campaigns

To go on with Global advertising Campaigns Company should have,

I. Economies of Scale in its production: Royal cashew is a Local a Sole Proprietorship
Company to Supply Value added Cashew products to local market under the Brand
Name of “ROYAL” which is in the early stage of its growth as a Small and Medium
Scale enterprise. Thus there is still higher potential and time horizon to achieve
economies of scale in its production
II. Consistent Image: Since a local sole Proprietorship company mostly popular in its
home country and some of the exporting countries and might not specifically
differentiate as a brand rather the product
III. Globalization of media: Currently use internet to market its products no any other
global media channels used
IV. Cross Fertilization: Cannot happen since Brand is not significantly recognized around
the world other than to a some extent in the exporting countries. Global awareness

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 and international information exchange can happen in a world recognized brands with
a vast spread of its products around the world.
V. Global Consumer Segments
To go on with adaptation advertising campaign host country and home country should have,
I. Language differences: In Sri Lanka first Language is Sinhala. Primary language in
South Korea is Korean.
II. Cultural Differences: According to Geert Hofstede six cultural dimensions, following
comparison can be considered between Sri Lanka and South Korea to depicts
prevailing the differences in the two cultures

III. Economic Differences: In terms of Economy there is a significant difference between

South Korea and Sri Lanka which clearly depicts by the following figures. In simple
terms GDP Per capita of Sri Lanka is USD 3,012 where as in South Korea it is USD
10,232.

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IV. Advertising Regulation: As discussed in the ethical factors under PESTEEL analysis
South Korea is having strict advertising regulations. , Advertising is one factor
identified by South Korea which can have potential harm to the consumers of the
product which can trigger Psychological harm.
V. Competitive Differences: There is a higher competitive difference between the two
countries and Korea is way beyond from Sri Lanka out of numerous Parameters like
Technology, Education, Quality of Life, Ease of Doing Business etc.

Based on the above comparison of factors affecting to the two approaches of advertising it is
evident that going on with adaptation of advertising campaigns instead of global campaigns is
more preferable in Royal Cashew Brand introduction to South Korea.

Task 5 ( 501 Words)

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