Description of the Core Industry
The bakery industry is an expansive business that caters to people’s daily needs. According to past statistics, bakery products account for 2.1% of the gross domestic product in the USA alone. The baking industrial sector produces an estimated $30billion in revenues annually. The sector is made up of more than 6000 wholesale bakeries and 3000 marketable bakeries. Although small bakery retailers’ marketplace is extensively disjointed and three producers can take 55% of the entire market’s bakery revenue, economists claim that bakery products have an impact on the entire economy as it accounts for $423billion of the finances. For instance, retail bakeries produce $3billion worth of goods and profitable bakery businesses sell goods worth $31billion (Blažková, & Chmelíková, 2014). Nevertheless, it is vital to note that the high profits are not influenced by increasing prices of wheat and sugar as bakeries do not transfer the costs to its clients. 6% of the bakery industry constitutes a ten-person workforce and the majority of the retailers have only a single operating facility. In spite of economic challenges, the baking industry employs more than 800,000 individuals hence producing $44billion in salaries.
Even though the bakery business is lucrative, new entrants need intensive capital for purchasing baking machinery and then facing stiff competition from all famous brands. Opening up a small-scale retail bakery is not capital intensive and it is easier to operate. Small bakeries can specialize in producing only a small range of products such as bread (Renko, Sustic, & Butigan, 2011). As time goes by factual information, small scale bakeries can allow themselves to accumulate capital and develop marketspace.
Assessment of Current Opportunities for Global Trade in the Bakery Industrial Sector
In the past five years, the bakery industry has experienced growth in terms of profitability and international expansion. The demand for bakery items rose in European markets and northern parts of America hence forcing organizations to seek out new business openings in other regions. Additionally, the climbing revenues and consumer turning to highly-priced bakery items such as gluten-free products stabilized the annual growth rate of the entire market. Experts and analysts predict that the bakery industry will grow at a 4.2% annual rate which translates to $586billion per annum. The increment is inclusive of a 2.6% 2019 growth due to the increase in demand for healthier options. In light of the recent growth, the UK provides the tenth-largest bakery market regionally and all around the world with wholesales priced at $15.1 billion. More precisely, the European Union accounts for 12.8% of the bakery market share. In Canada, the exports account for $25.7 million with a compound yearly growth rate of 9.9%. Consistent development points to increasing business openings and exportation in the bakery sector. The largest and most marketable grouping of baked items is cereals and biscuits which make up 57% of the entire sales (Litvinova, Morozova, & Yatsechko, 2015). The bakery industry explains the rapid growth and the adoption of new marketing and development strategies so that the opportunities can be exploited for profitability. The current opportunities are basic to human nutrition and sometimes deemed necessary. The suitability, availability, and nutrition outlines related to bakery products are some of the aspects sustaining the growth of the bakery industry in the present-day market. Their significance as a primary diet component is predominant among different social classes. For more than a hundred years bread has been a major component in local cuisines hence helping the baking industry to withstand an economic crisis in different parts of the world. The rising trend in the consumption of natural diet and organic foods has sharply increased the demand for research products such as wheat and other baked products. The need for packed whole wheat, gluten-free, and organic foods is an important aspect of the growth of the baking industry.
Country Recommendation and the Underlying Reasons
The country is recommended according to the Global Trade site in New Zealand. New Zealand provides essential things needed for market expansion. For instance, the nation is a politically stable and reliable economy. Globally, New Zealand has a welfare system that informs its economic development thus giving investors an easier time in terms of predicting market trends, policymaking, institutional design, and other commercial objectives. Furthermore, New Zealand has unicameral government since 1993 which facilitates stable politics, suitable for policy formulation, and permits economic and societal usage of sustainable mechanisms. All these things help in the creation of a conducive business environment. Despite its small size, its economic stability, and capability to expand, the gradual growth of its gross domestic product is 3.3% annually thus indicating that the consumer has a strong purchasing power and some obstacles might slow growth in the foreseeable future. The economic surrounding makes it's surrounding conducive for expanding a bakery business which relies on daily expenditure. Apart from each factor, the New Zealand government offers businesses grants as a way of encouraging business growth. Hence a bakery in need of expanding into its territory can receive some capital from the government of the day. As part of its diplomatic image, New Zealand has adequate frameworks that are suitable for the commencement of a business expansion venture (Skořepa, & Pícha, 2016). One key area which makes a nation conducive to accommodate foreign investment is the ability to conventionally provide infrastructural frameworks and funding for business activities. Consequently, businesses can thrive due to a robust functional system supporting their daily endeavors. Maintaining positive relationships with neighboring nations within the Asia Pacific regions led to closer economic agreements hence the creation of tax-free zones in terms of exportation and importation of goods and services to other countries. A bakery can easily blend in and tap into the financial advantages brought about by the tax cuts and economic stability. Essentially, good relations implies low tariffs on importation and exportation hence business easily boom in such conducive situations.
All the conditions mentioned above would be conducive for the ABC bakers as it has been offering bakery products for the past four years hence New Zealand is suitable for the expansion of its particular business model (Blažková, & Chmelíková, 2014). More so, the economics of scale give ABC bakers a higher chance of appealing to consumers as New Zealand has a young population who can consumer sweet bakery products such as pastries and rolls. In other words, New Zealand would be a suitable host for the startup as it provides all the frameworks needed for the progressive approach of the business.
Recommendation of a Different Country
An alternative country from the Market Research database is Somalia. Somalia is an underdeveloped country. However, it would give ABC bakers a conducive surrounding to startup and gain traction of the market due to the simple nature of the Somalian people. One of the most advantageous aspects Somalia offers is a straightforward provision of legal requirements (Blažková, & Chmelíková, 2014). Unlike other nations, getting permits and starting a business is simple and fast. Also, considering its young economy, the labor is cheap and other working conditions can be easily managed without any close supervision from other legal superiors. If ABC bakery sets up a business in Somalia, they may enjoy accessibility to its water bodies hence easy exportation to other neighboring African countries. In terms of unstable political scenery, the organization can make a pact with the government so that its assets may be protected from any harm that might occur in the near future. Even though the bakery business is likely to succeed due to a neutral surrounding, the regulation and impacting the norms of doing business would have to be upgraded so that each business actions is carried out properly.
Which of the Two Sites Provide Adequate Researching Information
Market research database provides the best researching information due to its accuracy and ability to narrow down on the research (Martínez et al., 2013). Isolating information and giving the researcher the chance to evaluate based on his or her needs is one of the most accurate ways of finding information. Besides, finding information is not enough, making the information relevant and actionable is key and the Market research database is good at achieving steady business growth within the market.
The Primary Barrier to Entry
Market size can be a challenging barrier to entry in the baking industry. The market size dictates the level of competition and amounts of profits brought in by the consumers (Kubicová, & Predanocyová, 2018). There are numerous commercial bakers and if they commit to a small market, then the competition would be stiff the ability to come up with the effective means to expand the market size only means the organization has to increase its capital range in order to penetrate new markets.
References
Blažková, I., & Chmelíková, G. (2014). Market Concentration as a Precondition for Higher Competitiveness of the Czech Food Industry. In Proceedings of the 8th International Scientific Conference INPROFORUM: Investment Decision-Making in the Period of Economic Recovery (Vol. 1, pp. 121-126).
Kubicová, Ľ., & Predanocyová, K. (2018). Situation in the market of bakery products. International Scientific Days, 391-406.
Litvinova, T., Morozova, I., & Yatsechko, S. (2015). Experiential marketing as a tool of improvement of competitiveness of enterprises in the market of bread and bakery products. Mediterranean Journal of Social Sciences, 6(3 S6), 11-11.
Martínez-Monzó, J., García-Segovia, P., & Albors-Garrigos, J. (2013). Trends and innovations in bread, bakery, and pastry. Journal of Culinary Science & Technology, 11(1), 56-65.
Renko, N., Sustic, I., & Butigan, R. (2011). Designing marketing strategy using the five competitive forces model by michael e. Porter-Case of Small Bakery in Croatia. International journal of management cases, 13(3), 376-385.Skořepa, L., & Pícha, K. (2016). Factors of purchase of bread–prospect to regain the market share?. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 64(3), 1067-1072.
