Analysis Of An SME Business Essay

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The aim of this article is to present an entrepreneurial SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of an SME, having a potential to internationalize, with respect to a prospective foreign market. The company chosen for this analysis is Hector beverages, a small enterprise in India, while United Kingdom would be evaluated as a potential foreign market for the company, using the SWOT analysis. Data for the SWOT analysis has been collected by interviewing the chief operations officer of the company, as well as, from the company's website (hectorbeverages.com) and the separate dedicated website of the company's brand Frissia (frissia.com). Apart from this, market statistics of U.K., and other supporting data from various online sources will be used to facilitate and support the analysis. Finally, the company's prospects for entering and succeeding in the U.K. market will be highlighted and presented, along with suggestions about its potential entry.

Hector Beverages is a start-up small enterprise, founded in 2009 and having its main office in Gurgaon, India, while it also has an office in Philadelphia, which is used for keeping abreast with the developments in the beverage markets of the developed countries. Currently, the company has two members in the management and eleven employees. The company offers a range of protein drinks under the brand name Frissia. Currently Frissia is being offered in two flavors: Chocolate and Vanilla. However unlike traditional protein drinks, Frissia is offered in water soluble powdered form in convenient pouches which can be used at home as well as carried to offices or at work and can be served as hot or cold drinks; and, apart from taste, they provide the additional benefits of multi-vitamins and minerals, while still being low in calorie content. The raw materials for this product are imported from U.S.A and Europe and then blended in Chennai, India. Till now, the company has been active only in the Indian beverage market; however it has plans to venture in potential foreign markets in future.

Apart from having a strong management team in terms of education and experience in beverage industry, the company has strategic relationships with Solae LLC, U.S.A (solae.com) which is one of the leading companies in developing soy based technologies and ingredients. The company uses the soy protein isolate developed by Solae and blends it with natural identical flavors from Firmenirch and Givaudan, companies based in Switzerland, which removes the characteristic bitter after taste of soy while enhancing the overall taste of the beverage, making it a superior quality vegetarian protein drink. Another advantage of the product is its convenient packaging in sachets which can be easily carried to work and require only mixing with hot, cold or lukewarm water and can therefore be prepared almost anywhere and anytime when needed. Since busy schedules have been perceived as the principle barrier for proper diet, Frissia may well become a convenient source of nutrition, owing to its protein, vitamin and mineral content. As indicated by Mintel's report on Functional foods (2008) in U.K., the major motivations for changes in diet included medical benefits like lowering of cholesterol, for elderly and reduction of weight and appetite or building up of muscles for the younger people. However functional foods and drinks are largely perceived as over priced. Frissia provides the desired additional health benefits at low cost as the cost of one sachet of Frissia would be about 45 pence in U.K.

Weaknesses

The company is funded by its founders and does not have a financial institutional support. Since the product is new and caters to a niche market, the company may require the support of above the line marketing which in turn requires certain amount of resources which the company is currently lacking. Since the company's products have only recently been introduced in Indian market, the company has yet to establish itself in the Indian market and build a brand recognition which would support its penetration into U.K. market and this may require patience over very long term. Apart from this majority of U.K.'s population is non vegetarian hence protein supplements may not be additionally required by the consumers. Additionally, food supplements have largely not been associated with great taste (Mintel, 2008) and together with the trend of preferring natural food and drinks rather than fortified or enriched foods (Mintel, 2008) may potentially weaken the stand of Frissia in the U.K. market.

Opportunities

The functional drinks market of U.K.  grew by 3.8% in 2008 reaching a value of $ 3.2 billion (Datamonitor, 2009). The synergy between rising health consciousness in U.K. and the popularity of functional drinks has created space for dedicated specialists in niche segments like soy based products (Mintel, 2008). Distribution of such products through retail channels like Sainsbury,Tesco and Morrisons or through health food chains like Holland & Barrett offer convenient environment for purchase of such products (Mintel, 2005), along with, Gyms and health clubs which also provide a conducive environment for the growth of such products. The popularity and sales of functional drinks is also expected to rise as the 2012 Olympics in London come nearer (Mintel, 2005). Owing to open, transparent and business friendly system, foreign businesses like Hector Beverages can establish their presence in U.K. in several ways including a simple branch office or a subsidiary, or direct marketing over internet (country commercial guide for U.S. companies, 2010).

Threats

The major threat for the company in U.K. is posed by GlaxoSmithkline which occupies 36.7% of the functional drink market apart from Red Bull and Weider Nutrition international which are also the leading players (Datamonitor, 2009). Protein powders like Lucozade from GlaxoSmithkline and soya protein powder from Holland and Berretta are already established in the U.K. market and may act as a potential threat to Frissia's success. However, there may be threats by the private-label versions of functional drinks from major retailers like Tesco. Additionally there may be competition from other protein supplements based on whey protein or other dairy and egg protein based products by companies like Danone. There might also be threats by contradicting claims on the efficacy and benefits of Soy based protein supplements compared to other protein supplements and the perception of the products being too niche by the consumers, who might prefer other alternatives (Euromonitor, 2009).

SWOT Analysis

Strengths

* Taste

* Convenience

* Health Benefits

* Low Cost

* Strategic relationships with some leading companies

* Experience of the management team

Weaknesses

* Limited Financial resources

* Low brand recognition

Opportunities

* Rising demand of healthy and nutritive drinks in U.K.

* Support for new businesses in U.K.

* Distribution channels in U.K.

Threats

* Competition by established brands

* Threats by alternative protein supplements

* Other convenient or natural food and drinks

Conclusion

The functional drinks market of U.K. is encouraging for the entry of Frissia, as the consumers are becoming more health conscious. However, the company needs to emphasize more on the taste and convenience of the drinks to avoid being perceived as too niche or simply another protein supplement. While there are other established brands in the targeted segments of the company, the low price and superior quality of the product can facilitate it's entry in the U.K. market. Still, considering the limited resources of the company, slow and sustained efforts by forming strategic relationships with distributors or supply channels would be required to facilitate Frissia's entry in U.K. market. Nonetheless it may demand some amount of patience on the company's part.

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