Mode of entry:
In international marketing, modes of entry indicate the risk of foreign market represents, the amount of resources required and how the company can enter the market. Political risk and financial risk are the two major factor that Tung Lok will assess to understand deeper the United Kingdom markets before investing in. The purpose of the political risk assessment is to evaluate the political stability of UK. The changes in a country’s political structure and policies can cause the loss of the investment or business.
There are 3 main types of political risks here: Ownership risk
Naturally, UK government will favor the local companies than the foreign companies in order to encourage the domestic economic development. So the foreign companies will counter many policies which can lead to the end of their business such as Expropriation and Confiscation. The company’s assets will be seized and an amount of compensation will be paid to the owners, which is a form of expropriation. Confiscation is a transfer of the ownership from the foreign company to a host company without any compensation. The foreign company cannot be operated by entirely foreigners as the foreign worker quota is limited. The government will demand a partial transfer of ownership and management to the local and implant regulations so that a large share of the product is locally produced and the main profit remains in the country.
This process is domestication. While shifting funds between countries, many companies running overseas are facing common problems, for example, shortage of foreign currency in the local bank. Government officials drag on the negotiation as foreign company requires more approval letters and documents. High tax and government price control of the import affect the competitiveness of the company as the input price increases. To deal with these problems, long term contracts should be formed with the potential and essential partner companies to ensure sustainable resources.
In order to penetrate the UK’s market, Tung Lok can approach in an direct way like franchising. A local restaurant or company will cooperate with Tung Lok and the name of the restaurant will be Tung Lok too. Facilities, decoration and operation will be in Tung Lok’s control and adjustment, however, the staffs, crew members or the food supply will be recruited locally. This method makes sure that Tung Lok holds a stable business ground even though 30% of the profit stays back in UK.
Tung Lok restaurants are famous about their Cantonese–cooking style which offers exclusive collections of refined dinners and continually attract the loyal followings. Each of the restaurants offers various courses of dining concept targeted at different market segments, from budget individuals to high-income customers. The primary market is the British who earn a middle or upper income. Chinese food can be popular and the intensity is raising but Britain is the largest market in the world and the land of opportunity. The main menu consists of many traditional Chinese dishes at an average or slightly above average price. The restaurant will be located further to the center of London to cut cost of the rental, however, near to some business and office district like Canary Wharf in Tower Hamlets, London with high concentration of shops and businesses.
Officers can prefer a quick bite at the Asian restaurant with a warm and relaxing atmosphere. The secondary target market is the British Asian in UK, which consists of 8% of the total UK population, 63 million people in 2013. The British Asian is highly brand loyalty and favorite the Chinese cuisine. Tung Lok restaurants commit to bring the finest and freshest of the food to the customers with the upmost care in the most authentic Cantonese style. The group not only brings a Asian kitchen to UK but also the entire culture and tradition to experience here in Tung Lok. Marketing positioning
As a newly launched restaurant in the region, Tung Lok aims to establish and stabilize the business in the first 4 months instead of maximize the profit generator. This period of time is crucial to Tung Lok as the initial image and reputation will position in the customers’ minds and slowly but steady build up the brand loyalty. Certainly, the prices in the menu are final and, best, kept constant throughout the business. Since the priority is quality over price for the starting period, promotion and advertisement can be published in the newspaper and around the area. The restaurant is not confident that the first month will have any profit due to the intensive investment and slow business, however, a possible goal to strive for. Deals and happy hours are common to attract new customers’ attention with family deal combo and crowded group of officers.
Saving cost does not mean treating the staffs poorly as outstanding food must come with good services. Staffs must be provided uniforms and chef must be equipped with sufficient kitchen tools and raw materials. Trainings are provided to all the crew and facilities must be maintained to the upmost level of cleanness and tidiness. Safety and standardization must be set as the foundation despite the costly price. Fierce competition from local shops will snatch the customers away and customers can unconsciously deny Chinese food. So the taste of the food will be edited slightly to suit the local’s appetite closer but not removing the authenticity of the dish. Marketing objective:
A detailed schedule shall be prepared and filed in Singapore to propose to UK authority for approval to launch our restaurant at the end of 2013. From January 2014 to June 2014, 1 team needs to research and study the local trends of food favor and appetite to create most suitable dishes in Cantonese style but suitable for the British. Another team will investigate and liaise with a Britain company to find a location for the restaurant. The restaurant will be in operation in latest October 2014 and till the end of 2014, the restaurant will set a goal to create 10% of customers’ awareness through any means like advertising and promotions.
Executive Summary Tung Lok Group is a chain of Chinese restaurants paved the modern Chinese cuisine in Singapore. The first restaurant was opened in October 1980 at Corthorne Orchid Singapore. The dishes here are served in Cantonese-cooking style and attract a lot of diners’ attention. Currently, Tung Lok Group consists of 40 restaurants in Singapore, Indonesia, and China bearing the famous hallmark reputation of high-quality food, exceptional service and outstanding design. Andrew Tjoe is the executive chairman and the very founder of Tung Lok. In 2012, due to many external factors such as economic crisis, raising completion and internal factors like closure of 6 Tung Lok restaurants, the revenue decline to S$86.6 million from 94.3 million from past years.
However, Tung Lok still has a higher gross margin of 71.6% from 69.9%, meaning Tung Lok’s business is operating profitably. The Asia market has become saturated of Chinese cuisine. A raising need for a new market to invest in is very necessary. So a faraway land decided to place the Group’s future in is London, England. Locally the Chinese cuisine restaurants have appeared for a long time but the intensiveness is low, moreover, their category and nature are totally different from Tung Lok. Cantonese-cooking style is not properly introduced in London and most of the restaurants serve non-authentic or similar recipe. A fresh and enormous market like United Kingdom is very potential and promising for Tung Lok to bloom.