International market advantages and risks

Kinder is an international brand which is recognised almost all over the world. There are 49 countries worldwide where the company Ferrero has its sales facilities and/or factories, manufacturing facilities. This countries include 27 countries in the European zone, 9 countries in America, 9 in Asia and 2 in the area of Oceania. The most recent establishments took place in Turkey, Mexico and China. Kinder Eggs are sold all over the world, including the United States, where they are sold in European Markets and Russian Deli stores, despite being illegal. Going against the ban, suppliers began to put them in a secured box and deliver it via shipping cargo (as a safer way to import Kinder Surprise in the United States) and put it in one vehicle. The importance of Kinder products is such that without them, Ferrero’s international market share would fall to 14% from 38%. Comparing between product orientation strategy and market orientation strategy, Ferrero follows product orientation, with some products, like Kinder Joy, Kinder Surprise and some multipackages being market oriented. This is because the company tries to meet needs of children to have a suitable and trendy toy inside. Since an establishment of a factory in Vladimir in 2009, Ferrero employs 1,500 of groups total payroll of 22,000. Sales in year 2011 in August were €6,6 billion with profit before tax of €900m.

Sales in a company can be affected by legal forces, tax  regulations, political factor due to relationship between countries. This was the case in Russian market when the west started to restrict import into Russia. On average Russian buys 8 Kinder Surprise items per year. This number was at high risk of change because of the fact that countries were imposing sanctions on Russia over the crisis in Ukraine.

The examples of government policies and their affects on international companies could be the United States and Chile. It’s been more than 30 years already since the US government keeps an embargo on Kinder Surprise eggs. The 1938 Food, Drug and Cosmetic Act bans non-nutritive objects, such as toys claiming that the surprise toy could be a choking hazard for kids and therefore are too dangerous for children. There has been a nutritional food labelling law introduced in Chile in 2013, which says that companies cannot use ‘commercial hooks’ to attract children under 14 years of age. This policy is concerned with obesity problems. Kinder Surprise eggs accused of featuring a ‘commercial hook’ as well as McDonald’s. These companies will be affected by law.