Feasiblity report on PRIMATASTE entering the Turkey Market (2200 WORDS)

MACRO REPORT

Table of Contents

4Executive Summary

1. Introduction 5

2. Pest analysis 7

2.1 Political 7

2.2 Economic 9

2.3 Social/Cultural 12

2.4 Technological 14

3. Conclusion 16

4. References 17

Executive Summary

The main purpose of this report is to explain the different macro-environmental factors that directly impact the bringing of Prima Taste into Turkey. The report provides a PEST analysis, through the examination of trends and consumption behavior.

Singapore and Turkey has a bilateral relationship which both government signed a free trade agreement providing opportunities for businesses to import and export goods. With the current popularity of the Asian food culture as well observations on the increase of consumer confidence. Along with the lack of selectively of food and diversification of culture, Prima Taste can bring the local taste of Singapore into the Turkish market.

As a developing country, the government is promoting new technology making the people more interconnected with one another. With the growth of technology, the usage of mobile devises and social media platforms are increasing. Prima Taste can use this to their advantage to have several interactive mediums to constantly communicate with their consumers. Although the economy of Turkey is flourishing, the unemployment rate is increasing. Hence, the government encourages foreign investments to provide job opportunities for the people. Therefore, Prima Taste would be facing little difficulty in entering the market.

By conducting the PEST analysis on Turkey, we have assembled useful insights favoring Prima Taste in entering the Turkish market. We have concluded that it is ideal to venture into a foreign market as promising results are forecasted for the company.

1. Introduction

Prima Taste is a quality product managed by Prima Food Pte Ltd that was established in 1992. Prima Food Pte Ltd is wholly owned subsidiary of Prima Limited. Cheng Tsang Man founded Prima Limited in 1961; back then being established as one of Southeast Asia’s pioneer first flourmills.

Today Prima Taste is an award-winning brand synonymous with authentic and local Singaporean cuisine. With trends moving towards healthy conscious eating, Prima Taste products now are made with wholegrain and natural ingredients, “the flavor is really powerful, yet healthy” (Maureen, 2016).

Figure 1.1 Prima Taste Signature Products

In 2015, Prima Taste launched a range of products called “Prima Taste Ready Meals”. The Company aimed to provide a healthier, yet tasty, ready-made halal meals with protein and rice based on Prima Taste signature sauce kits. The product line is targeted at busy Singaporeans for whom “eating is part of enjoying life” (Seah, 2015).

Prima Taste now exports its products to almost every other country in Southeast Asia and with introductions to European and Western countries. Furthermore, they have seen significant export growth of its products, “Other big boys, including Prima Taste, have also seen export growth” (Lim, 2013). With an ever-growing expatriate population and a large percentage of the population being Muslim, Turkey would be an ideal country for Prima Taste to venture into and expand.

2. Pest analysis

2.1 Political

Singapore and Turkey’s bilateral relations have been excellent. Diplomatic relations between the two countries was established on 12 February 1969. Prime Minister Lee Hsien Loong made his first official visit to Turkey where he met with Prime Minister Ahmet Davutoglu and Deputy Prime Minister Ali Babacan to discuss on a bilateral free trade agreement alongside working to enhance air links (Hussain, 2014). The two leaders leverage each other's strengths as hubs and gateways to their respective regions.

Singapore and Turkey signed a free trade agreement (FTA) that reduces trade barriers and investment as well as boost bilateral ties and economic cooperation (Sim, 2015). Once after the FTA enters into force, Turkey will remove tariffs for Singapore exports on over 80 per cent of products immediately. This will rise to more than 95 per cent over 10 years (Sim, 2015). The enforcement of the FTA helped strengthen the positions of Singapore and Turkey as gateways to larger markets such as Europe and ASEAN countries. Furthermore, the two country’s partnership agreement will pave the way for deeper cooperation through political exchanges, defence and counter-terrorism.

Turkey has entered a high-tension period where they have endured a wave of deadly bomb and gun attacks. However, with Binali Yıldırım as the current Prime Minister, changes have been imposed as Yildirim works towards a better relationship with Syria. In order for the fight against terrorism to succeed, stability needs to return to Syria and Iraq (Pestano, 2016).

With ambitious development goals, Turkey recognizes that it needs to attract significant foreign investment (U.S. Embassies abroad, 2016). Furthermore, Turkey offers a huge range of professional opportunities across many different sectors through its emerging markets. The risk of entering Turkey market is low, as Turkey has created a stronger and more stable economy that has attracted foreign investment.

Additionally, the European Union has created momentum to adopt European business regulations and standards in Turkey, making it easier to sell and conduct business in the market.

For foreign companies like Prima Taste, countries with which Turkey has bilateral tax treaty agreements benefits investors from a reduction in withholding taxes, making investments more attractive (Sansal, 2016).

Turkish import regime set aside the requirement that every importer needs an import license and that the importer must have an import authorization from a bank (U.S. Embassies abroad, 2016). The majority of food and non-food imports required a control certificate that is an import license indicating whether or not the product is eligible for import. Furthermore, the importance of some food packaging materials may require an import license. Turkish food imports regulations also include nine different standards for food grade packaging materials (USDA Foreign Agricultural Service, 2010). Hence, Prima Taste would have to consider the material used for their food packages.

2.2 Economic

Since 1923, Turkey experienced a profound transformation structure leading towards a more industrialized and urban social formation leading to their performance on economic growth to display periodic booms (Sadik, 2010). According to the World Trade Organization, Turkey’s GDP reaches US$799 billion in 2014. The country’s per capita income up by 484.4 percent in 30 years (Asia Pulse, 2010). Such data is proof that the economy of the country is flourishing and is way above the absolute poverty line set by the World Bank. However, other factors such as employment levels also contribute to the economic structure of a country. As stated from Trading Economics (n.d), FDI inflow dropped to 16800 USD, and unemployment rates in 2016 increased from 12.1% compared to 11.8% as shown in Figure 2.2.1. Additionally, Turkish government implemented 30% increase in minimum wage that help increase their national income (Özdemir, A., & Dayioglu, M. 2016).

Figure 2.2.1: Unemployment rates in Turkey

Unemployment is a useful tool in measuring the macroeconomic dynamics of an economy. For instance, investing in April 2016 would have called for higher wage rates owing to low unemployment rates. However, investment opportunities were most conducive in October as indicated by the high levels of unemployment. This shows that, making an impact in the market would also depend on the ability of foreign investors getting into the Turkish market.

The World Trade Organization indicates an open economy with the rest of the world, welcoming foreign investors. Turkey is a net exporter with most of its trade agreements being made with respect to EU’s position (Dömbekci, B. 2011). The most striking aspect of the country is its focus on making free trade area agreements for goods only and not services. Its production of surplus services could be the reason behind its protectionism of the service industry with the hope that its services suppliers are not kicked out of business by the existence of cheaper supply from the economies with which it signs the FTA agreements (WTO, n.d).

The ability of the nationals to afford the services comes down to the people’s standards of living and disposable income levels. USDTRY increased 0.09% to 3.69%. Additionally, food inflation has increased from 7.77% from 5.65%, causing the cost of food to increase at a fast pace. However, consumer confidence increased in 2017, which would explain healthy living standards of the Turkish consumers. Figure 2.2.2 shows the changes in consumer confidence, taken to exemplify the standards of living in this study, in the Turkish economy.

Figure 2.2.2: Consumer Confidence

According to the chart, consumer confidence varies over time and appears to have increased in January after a sump in December. Nonetheless, such optimism shows that it would not be a problem for Prima Taste to get its voice heard in the new market. The only necessity would be efficient marketing and customer related mechanisms that would ensure market orientation- performance relationshop (Kirca, A. 2011).

Given the level of GDP and per capita income discussed above, the level of inequality in Turkey is low. This implies that a foreign investor would have no problem dividing the population and possibly practicing price discrimination in the country since almost everyone would be able to afford a particular product at almost the same price.

2.3 Social/Cultural

According to global estimates, the Turkish population is made up of more than 80 million people (World Metres, n.d). The population in the country is composed of young people, which would explain the level of optimism, availability of labor, and disposable income in the country. Therefore, Prima Taste would need to tailor their advertisements according to the needs of young people since chances are the majority of the country’s population ranges between 20-40 years of age. However, the country has been a source of refuge to those fleeing the terrors of war in Syria owing to it economic success and proximity to Syria. (Krajeski, J. 2012).

Additionally, chances of a clash of culture between the refugees and residents of the country are minimal since the country is largely Muslim (Ali, M. 1997). In addition, the majority of the country’s neighbors are mainly Muslim and there have been significant intermarriages between the different ethnic cultures to the extent of creating partial cultural homogeneity in the region (Countries and their Cultures, n.d). Therefore, investment in the country would not need deep analysis of the different cultures. It makes Turkey an ideal investment for anyone whose investment could be affected by the variation in culture of the population in the area. Investment in food would be one of the lucrative investments in the country particularly due to the lack of selectivity and the ability of people to eat different cuisines with limited cultural restrictions.

According to the Turkish Cultural Foundation (n.d), restaurant food can never take precedence over home based cooking with most preferring the homemade meal. Such information is provides an opportunity for Prima Taste to enter into Turkish market to appeal to the consumers who prefer home based cooking

As stated earlier, Turkey is a country rich in diversification of culture implying that Asia food would be a welcome cuisine for many for Prima Taste to introduce Asian food meal kits, would need aggressive marketing of the product to make it popular among the nationals (Demirtas, B., Parlakay, O., & Tapki, N. 2015).

Conclusively, one ought to understand the nature of the Turks to determine the business viability of the region. Hofstede’s model of the country is an ideal place to begin the exploration of the country’s Nationals (The Hofstede Centre n.d.)

Figure 2.3.1: Turkey’s Hofstede Model Score

The score of 66 on the country’s perception of power show that people in turkey are generally accept the ruling of those in authority. However, the less than average score on individualism implies a society in which the residents are more focused on group rather than individual performance. A 45 score on masculinity means that the Turks are passionate, welcoming and friendly people, which imply femininity in the society. On the other hand, they are cautious and would rather avoid rather than face risk, courtesy of the score on uncertainty avoidance. The average score on pragmatism and indulgence implies that cultural orientation and indulgence can hardly be inferred for the Turkish populace.

2.4 Technological

Communications technology and the Internet have been used worldwide to connect different information channels. People communicate, interact and socialize using the Internet to create and consume information (Kurtulu, Özkan, Öztürk, 2015). Constant progression of technology overtime has provided firms with more opportunities while facilitating business and increasing trade volume throughout the world. (Chester, 2004). Firms are now able to change their performance of their job, conduct extinctive research, gain larger insights and information, leading to positive effects (Ronald, Francine, 2006)

Turkey is one of the fastest countries to constantly develop and improve their technological sector. In 2012, the total investments amounted to US$1.431 billion. Their government has been promoting their technological sector to increase their market size from 2.9% to 8% by 2023 as stated by Dube S, Dube M and Turan A, (2015).

With new technologies in digital applications, there has been a significant increase since 2005 of e-commerce and the digital technology (Aytaç, 2012). The main drivers of e-commerce growth have been convenience and value; with faster download speeds, easy access to websites and enhanced online payment methods and delivery. Hence, by doing e-commerce, it results in higher profit with lower costs providing Prima Taste with more online opportunities such as ordering, purchasing and delivering

There are more than 35 million users of the Internet in Turkey and a large portion of the population uses social media platforms (Internet World Stats, 2013). Social media has become an important intermediary for communication and enhancing relationships between business, consumers and government (Feroz, Swar, Kon, 2014). Social media platforms such as Facebook, Linkedin, Blogs and Twitter are heavily used in Turkey.

Figure. 2.4.1 Household Computer and Internet usage

Figure. 2.4.2 Number of Facebook users

In such emerging markets, Internet and social media platforms is increasing substantially. As seen from figure 2.4.1 and figure 2.4.1, the number of Internet usage is increasing yearly as well as a growth in the number of Facebook users. This creates more opportunities for Prima Taste to use these platforms for their marketing communications efforts of any type.

Prima Taste can use target marketing to better understand the way their consumers act and think. By tailoring their strategies towards a more customer-centric method, it will benefit the company. As stated by Vargo and Lusch (2004), it is crucial for companies to make consumers to be a part of their marketing strategies. Consumers may generate a positive word-of-mouth, purchase their products more than once and increase loyalty towards the product and brand.

Prima Taste has taken the first step of setting up an online website together with a Facebook page, Youtube and Instagram account to establish a social media presence. The company is then able to generate awareness to a larger audience and communicate to their consumers on the information and latest promotions. An online store, various cooking videos and recipes are available at the convenience of their consumers.

3. Conclusion

The market in Turkey has proven to be an ideal country for Prima Taste to venture into, particularly since there is an increase in consumer confidence in the market and the lack of selectivity of food. As the people in Turkey mainly prefer home-cooked food, it would be a wise choice to introduce Prima Taste into Turkey

However, it is imminent that risks will arise when venturing into a foreign market. As Turkey is currently facing a high-tension period, a concern over the political stability is faced. However, with the government implicating effective actions and measures, Turkey will continue to strive to become a fully developed country making it an ideal market to provide prospects for foreign businesses.

4. References

Al Jazeera. 2017. Turkey has identified Reina nightclub attacker: FM. [ONLINE] Available at: http://www.aljazeera.com/news/2017/01/turkey-identified-reina-nightclub-attacker-170104073000059.html.

Ali, M. (1997). Refah Foreign Affairs Expert: Turkey's Outreach to Muslim States "Realistic". The Washington Report on Middle East Affairs, Xv(8), 15.

Andrew V. Pestano. 2016. Turkish PM Yildirim is 'sure we will normalize relations with Syria'. [ONLINE] Available at: http://www.upi.com/Top_News/World-News/2016/07/13/Turkish-PM-Yildirim-is-sure-we-will-normalize-relations-with-Syria/6451468409518/ .

Anonymous. (2010, December 03). TURKEY'S NATIONAL INCOME PER CAPITA UP 458% IN 30 YEARS. Asia Pulse, p. Asia Pulse, Dec 3, 2010.

Burak Sansal. 2016. Turkish Tax System. [ONLINE] Available at: http://www.allaboutturkey.com/tax.htm.

Cagaptay, S. (2015). Turkey's Political Uncertainty: Implications of the June 2015 Parliamentary Elections (Article). Research Notes (The Washington Institute for Near East Policy), Research Notes (The Washington Institute for Near East Policy), no. 27, August 2015.

Chambers, C. (2004). Technological advancement, learning, and the adoption of new technology. European Journal of Operational Research, 152(1), 226-247.

Chusnul (2017) Turkey unemployment rate | 2005-2017 | data | chart | calendar | forecast. Available at: http://www.tradingeconomics.com/turkey/unemployment-rate (Accessed: 20 February 2017).

Constanze Letsch. 2014. Turkey's economic success threatened by political instability. [ONLINE] Available at: https://www.theguardian.com/world/2014/jan/09/turkey-instability-threatens-economic-success-erdogan.

Demirtas, B., Parlakay, O., & Tapki, N. (2015). Organic food awareness in Turkey. 27(5), 407.

Doing business in Turkey. (2014, March 07). Asia News Monitor, p. Asia News Monitor, Mar 7, 2014.

Dömbekci, B. (2011). Emission trading applications in the European Union and the case of Turkey as an emerging market. International Journal of Energy Sector Management, 5(3), 345-360.

Dube, S., Dube, M., & Turan, A. (2015). Information technology in Turkey: Creating high-skill jobs along with more unemployed highly-educated workers? Telecommunications Policy, 39(10), 811-829.

Esther Wang, 2009. Singapore National Library: Prima Limited. Viewed on 16 February 2017

http://eresources.nlb.gov.sg/infopedia/articles/SIP_1458_2009-02-11.html

Euromonitor. 2014. Trade Unions, Professional, Political Organisations in Turkey: ISIC 91. [ONLINE] Available at: http://www.euromonitor.com/trade-unions-professional-political-organisations-in-turkey-isic-91/report.

Gökmen, A. (2012). Virtual business operations, e-commerce & its significance and the case of Turkey: Current situation and its potential. Electronic Commerce Research, 12(1), 31-51.

Inc, A. (2017) Turkey. Available at: http://www.everyculture.com/To-Z/Turkey.html (Accessed: 20 February 2017).

Internet World Stats. 2013. Internet and Facebook usage in Europe, Accessed March 26, 2014 http://www.internetworldstats.com/stats4. htm#europe.

Khan, Gohar Feroz, Swar, Bobby, Lee, Sang Kon, Hoffman, Mark C, & Misztur, Tomasz. (2014). Social Media Risks and Benefits. Social Science Computer Review, 32(5), 606-627.

Kirca, A. (2011). The effects of market orientation on subsidiary performance: Empirical evidence from MNCs in Turkey. Journal of World Business, 46(4), 447-454.

Krajeski, J. (2012). Taking Refuge: The Syrian Revolution in Turkey. World Policy Journal, 29(2), 59-67.

Kuang Keng Kuek Ser. 2017. These three charts will help you understand Turkey's recent terrorist attacks. [ONLINE] Available at: https://www.pri.org/stories/2016-06-30/these-three-charts-will-help-you-understand-turkeys-recent-terrorist-attacks.

Kurtulus, S., Özkan, E., & Öztürk, S. (2015). How Do Social Media Users in Turkey Differ in Terms of Their Use Habits and Preferences? International Journal of Business and Information, 10(3), 337-364.

Maureen, 2016. Food and Travel: Prima Taste introduces Healthier, yet Gourmet Wholegrain Lamian and Ready Meals. Viewed on 17 February 2017

https://www.misstamchiak.com/prima-taste-wholegrain-lamian/

Özdemir, A., & Dayioglu, M. (2016). Türkiye'nin Asgari Ücret Orani 'Seçimi': Nedenleri ve Olasi Sonuçlari/The Choice of Minimum Wage Rate in Turkey: Causes and Potential Impacts. Sosyoekonomi, 24(27), 225-241.

Prima Taste 2010. About Us-The Best of Singapore’s Favourite in Ready-To-Cook Meal Sauce Kits and Cooking Sauces. Viewed on 16 February 2017

http://www.primataste.com.sg/about.aspx

Rust, & Espinoza. (2006). How technology advances influence business research and marketing strategy. Journal of Business Research, 59(10), 1072-1078.

Swaha Pattanaik. 2017. Turkey will pay high price for political stability. [ONLINE] Available at: http://blogs.reuters.com/breakingviews/2016/07/18/turkey-will-pay-high-price-for-political-stability/. [Accessed 17 February 2017].

The Hofstede Centre n.d., What About Turkey? iTIM International, viewed 16 February 2017 http://geert-hofstede.com/turkey.html

Today Online 2015, Prima Taste’s ready-meals meant to change perceptions on convenience food. Viewed on 16 February 2017

http://www.todayonline.com/lifestyle/prima-tastes-ready-meals-meant-change-perceptions-convenience-food?singlepage=true

The Straits Times Online 2013, Asiaone-Singapore food in favor overseas. Viewed on 17 February 2017

http://www.asiaone.com/print/News/Latest%2BNews/Singapore/Story/A1Story20130204-400047.html

TRADING (2017) Turkey consumer confidence | 2004-2017 | data | chart | calendar

forecast. Available at: http://www.tradingeconomics.com/turkey/consumer-confidence (Accessed: 20 February 2017).

Ugurlu, & Ozutku. (2014). An Evaluation on the Use of Social Media in Turkey. Procedia - Social and Behavioral Sciences, 147, 4

Ünay, S. (2010). Economic Diplomacy for Competitiveness: Globalization and Turkey's New Foreign Policy. Perceptions, 15(3/4), 21-47.

USDA Foreign Agricultural Service. 2010. Food and Agricultural Import Regulations and Standards - Narrative. [ONLINE] Available at: https://webcache.googleusercontent.com/search?q=cache:a0OWR39LyZ4J:https://www.spring.gov.sg/archives/ETAC/Documents/TURKEY.pdf+&cd=1&hl=en&ct=clnk&gl=sg.

U.S. Embassies abroad. 2016. Turkey - Import Requirements and Documentation. [ONLINE] Available at: https://www.export.gov/article?id=Turkey-Import-Requirements-and-Documentation.

U.S. Embassies abroad. 2016. Turkey - Openness to and Restriction on Foreign Investment. [ONLINE] Available at: https://www.export.gov/article?id=Turkey-Openness-to-Investment.

Vargo, S., & Lusch, R. (2004). Evolving to a new dominant logic for marketing. Journal Of Marketing, 68(1), 1-17.

Walter Sim. 2015. Singapore and Turkey sign free trade pact that will boost bilateral, business ties. [ONLINE] Available at: http://www.straitstimes.com/world/singapore-and-turkey-sign-free-trade-pact-that-will-boost-bilateral-business-ties. [Accessed 17 February 2017].

World Trade Organization (no date) Available at: https://www.wto.org/english/tratop_e/tpr_e/s331_sum_e.pdf (Accessed: 20 February 2017).

Zakir Hussain. 2014. PM Lee to visit Turkey and attend Asia-Europe meet in Italy. [ONLINE] Available at: http://www.straitstimes.com/singapore/pm-lee-to-visit-turkey-and-attend-asia-europe-meet-in-italy.