MSc International Business ManagementManaging in global markets

YUFEI DONG I7265576/REF:4514291

Word count: 4929

Chobani Inc

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Executive summary

International companies are increasingly expanding to foreign

markets. As such effective management in global markets has

become vital for these companies. This report aims at analysing

the strategic management of Chobani Inc in global markets. It

sets out to undertake two distinct activities; to conduct

strategic analysis of potential international markets for Chobani

and to suggest entry and functional strategies the company can

adopt when expanding to the chosen markets. To achieve this, the

report will first explore on the internal and external factors

that determine international market selection.

The report establishes that internal factors that influence

foreign market selection include firm size and resources,

products, degree of internationalisation, overseas experience and

internationalisation goals. External factors that affect foreign

market selection include market size and growth, political,

economic and legal environment, socio-cultural gap, industry

concentration and industry growth. The report finds Chinese and

Brazilian markets as potential international markets for Chobani

to expand to. This follows the realisation that China and Brazil

scores higher than Ghana and France when certain external factors

including market size, market growth, competitive rivalry,

economic stability, political stability and internationalisation

are measured in the four countries. The report recommends that

Chobani employ direct exporting, strategic alliance, joint

ventures and M&A when entering Chinese and Brazilian markets2

because these strategies scores high when measures in terms of

degree of control, resource commitment, risks, speed, opportunity

available and expected returns than other entry-mode strategies.

Appropriate exit strategies for Chobani in these markets are

sell-offs and management buy-outs. Besides, the report recommends

that Chobani develop regional production strategy; develop other

product lines; set its product prices at low level than the

current prices; maintain effective logistic strategy among

suppliers, regional units and customers; undertake product

promotion via print and visual media, social websites, provide

free samples and price discounts to enhance its success in the

two foreign markets; and ensure it has an effective human

resource strategy. To achieve this, the report recommends Chobani

adopt a transnational organisational strategy to facilitate the

implementation of these functional strategies and an

organisational control system to manage the implementation of

these strategies.

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Table of Contents1. Introduction................................................12. Strategic analysis of potential international markets for Chobani Inc....................................................12.1 Analysis and evaluation of relevant internal and external factors.......................................................12.1.1 Internal factors.......................................32.1.2 External factors.......................................4

2.2 Selection of appropriate country markets for Chobani......93. Market entry strategies for chosen markets for Chobani Inc. 123.1 Entry-mode strategies and exit strategies for Chobani Inc in China and Brazil..........................................123.1.1 Entry-mode strategies.................................123.1.2 Exit strategies.......................................16

3.2 Functional strategies....................................173.3 Organisational structure.................................183.4 Strategic control system.................................203.4.1 The appropriate control system.........................203.4.2 Fit between strategy, structure and control............21

4. Time Frame and Sequencing of Strategy in China and Brazil. .225. Conclusion.................................................22References....................................................24

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1. Introduction

Founded in 2005, Chibani Inc. is the maker of the top selling

Greek yoghurt brand in America (Chobani, 2014a). Despite the fact

that Chobani started its operations recently (in 2005) and

releasing its first product two years later (in 2007), it has

grown to become the bestselling brand of strained yoghurt (Greek-

style yoghurt) in the United States, outperforming giants

corporations that have dominated the US yoghurt market for ages

such as Danone and General Mills. However, internationally,

Chobani has only expanded to Amsterdam, Australia and the UK.

Chobani’s strategy has always been to stick to one product and

compete on price. This report chooses to analyse China (from

Asia), France (from Europe), Ghana (from Africa), and Brazil

(from Latin America) as four potential markets for Chobani to

enter as they are considered potential markets experiencing

significant growth of yoghurt consumption.

The report aims at analysing the strategic management of Chobani

in global markets. It is presented in two parts. The first part

presents the strategic analysis of potential international

markets Chobani can venture into. The second part presents the

entry strategies Chobani can adopt in chosen markets including

the entry-mode strategies, functional strategies, organisational

structure for implementation of the strategies, a strategic

control system for managing the implementation of the strategies,

and the time frame. Key points uncovered in the report are

comprehensively summarised in the conclusion part.1

2. Strategic analysis of potential international markets for

Chobani Inc

2.1Analysis and evaluation of relevant internal and external

factors

Effective market identification and selection necessitates deeper

understanding and analysis of both external and internal factors.

In analysing and evaluating relevant internal and external factor

to consider in the selection of potential international markets

for Chobani two models shall be employed as presented on figure 1

and figure 2 below.

Figure 1: Potential determinants of a company’s choice of

international markets

Source: Hollensen (2014)

2

Figure 2: Factors affecting the selection and decision to enter a

foreign market

Source: Hollensen (2004)

2.1.1 Internal factors

Company size and resources

International expansion demands large pool of resources because

of the large and numerous investments involved. Resources in this

context include capital, machinery, and human resources such as

management, marketing skills, research and development skills

among others (Terpstra et al, 2012). Chobani Inc has grown to

become a large company in size following the expansion of the

facilities to include other new production sites based in Idaho

(Twin Falls plant) and Australia (Australian-based Chobani

manufacturing facility). Besides, the company has numerous sales

offices in America and an international sales office in

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Amsterdam. These facilities augment the company’s size as well as

provide the company with stable financial position. In addition,

the company has sufficient and reliable resources which include

sufficient resource capital such as machinery and human resources

like management technology, management skills, production skills,

marketing skills, and R&D skills (Chobani, 2014a). These

resources provide Chobani possibilities for identifying numerous

international markets to enter.

Product

A wide range of product line or highly differentiated products

are most suited for entering potential international markets

through exports than less differentiated products, which

necessitate a company to undertake local production through

equity investment or contracting manufacturing (Hollensen, 2014).

A look at Chobani reveals that the company’s products are highly

differentiated. Irrespective of the fact that the company has

stack to one product line since it started its operations, the

products are highly differentiated something that gives the

company an advantage to compete on price. Currently, Chobani’s

Greek strained yoghurt comes in different flavours including

Blueberry, Black berry, coconut, honey, chocolate, apple

cinnamon, apricot, banana, pineapple, peach, strawberry, and

dragon fruit among others (Chobani, 2014b). With these highly

differentiated products, Chobani is most suited to enter numerous

international markets through export and still compete on price

is these markets.

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Degree of internationalisation and overseas experience

Barney et al. (2001) postulate that a firm’s degree of

internationalisation and overseas experience is a firm specific

tacit knowledge (not easy for competitors to imitate) that

enables it chose wisely potential international markets as well

as maintain its competitiveness. Chobani’s efforts to internalise

are evident. Besides, it has overseas experience. In addition to

the two production sites based in New York and Idaho, Chobani has

a manufacturing facility in Australia. This is a clear indication

of internationalisation. Chobani currently exports their products

to UK. This is also an indication of overseas experience. With

international experience, Chobani is set to explore more

international markets through a proper identification and

selection process.

Internationalisation goals

Koch (2001), postulate that a firm’s internationalisation goals

determine the selection of potential international markets to

venture into. A look at Chobani’s current business situation

indicates that its main internationalisation goals are to gain

more markets for their products and increase business performance

and profitability to maintain its competitive advantage. This can

only be achieved through identifying and venturing into other

international markets that look lucrative.

2.1.2 External factors

Macro environmental factors

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To analyse macro-environmental factors in the four countries, the

report conducts a PEST analysis on these countries. PEST stands

for political, economic, social and technological analysis (Koch,

2001).

Political factors

Evidently all the four countries, that is France, China, Brazil

and Ghana embrace democratic political system. However, according

to The Economist (2014), China has more political stability than

France, Brazil and Ghana (in ranking order) when measured in

terms of political instability index. This indicates that

political instability in Ghana may affect the operations of

Chobani. Transparency involve host country’ intervention in the

rule of law and business activities (especially private business

activities) as well as relatedness of host country to corruption

(Sauter and Walter, 2008). China scores high in terms of

transparency followed by Brazil, Ghana and France, which is

viewed as the most corrupt state among the four countries

(Transparency International, 2014). This means that China and

Brazil are potential markets for Chobani since corruption in

these markets is relatively low. Bureaucracy efficiency,

according to Farazmand (2010) refers to effective administrative

systems that govern institutions within a state. In terms of

bureaucracy efficiency, France and Ghana scores low, and thus are

not fit for Chobani.

Table 1: Political factors

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scale China Brazil France Ghana

Transparency

(Transparency

International

(2014)

40 42 71 46

Political

stability

The Economist

(2014)

4.8 5.4 5.3 5.9

Bureaucracy

efficiency

World Bank

(2014)

-0.01 -0.01 -0.24 -0.25

Economic factors

As indicated on table 2, the high and rapid economic growth rate

of China makes the Chinese market more attractive because

international markets with high economic and market growth are

considered to present an opportunity for faster business

expansion to a firm (Xie, 2012). Ghana, when compared to Brazil

and France, also has a relatively high economic growth rate.

Thus, it can also present greater business opportunities for

Chobani.

Table 2: Economic factors

Scale China Brazi Franc Ghana7

l e

Economic growth (annual

growth, 2008-2011)

(worldbank.org)

9.9 % 3.8% 1.79% 6.0%

Currency convertibility

(weforum.org)

BBB+ BBB+ BBB+ BBB+

Labour cost/productivity

(weforum.org)

3.5 3.8 3.9 3.6

Short-term credit

(weforum.com)

A-1+ A-3 A-1 B

Long-term loans/venture

capital (weforum.com)

AAA BBB- AAA BBB

Source: Summaried by the research

Labor costs/productivity also plays a greater role in influencing

country attractiveness. (Hollensen, 2014). According to table 2,

China looks more attractive since its scores relatively lower

than the other countries in terms of labor cost/productivity.

Social factors

Luxury consumption is evident in Chinese and Brazilian markets.

Being a luxury good, Chobani’s strained youghurt would readily be

accepted in these markets. In addition, English is a second

official language in Brazil and in China English is a required

course and universal education with statistics indicating that

the number of English-speaking population in China would

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outnumber the native speaking population in the near future. This

means that communication within Chibani business units would be

easy in China and Brazil. However, this situation is not

optimistic in France and Ghana.

Technological factors

In terms of communication, table 3 reveals that China has a

higher score than the other three countries. Ghana scores the

poorest in this aspect. Innovation would lead to significant

improvement in the way Chobani operates as well as its long term-

suatainability in the four countries. This is because innovation

is associated with Chobani’s creativity and introduction of new

product line as it expands into these countries. Table 3 also

indicates that China has a higher score of innovation than the

other three countries. Although China performs better in this

aspect, there is a small gap between its performance and the

performance of Brazil. This implies Chobani’s business operations

can be facilitates in these two markets and cooperation with

domestic partners would be easy. Lastly, professional services

and contractors indicate the degree to which a host country can

supply professional services and contractors to both local and

foreign firms. China scores high on this aspect than the other

countries, thus it guarantees adequate supply of professional

services and contractors to Chobani.

Table 3: Technological factors

Scale China Brazil France Ghana

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Communications

(weforum.org)

73.3% 45.0% 42.0% 23.0%

Local management and

partner (weforum.org)

55.8 55.5 43.5 32.0

Professional services and

contractors (weforum.org)

3.9% 1.25% 0.58% 0.28%

Innovation (weforum.org) 33% 3.7% 5.0% 3.0 %

Host country characteristics

Country market size

Country market size, which can also be indicated in terms of GDP

also has a major influence on the selection of potential

international market (Sakarya et al. 2006). As table 4 reveals,

China has a larger market size and with a greater GDP index,

indicating that Chinese market guarantees high sales potential

for Chobani. However, France and Brazil scores the same in terms

of market size although DGP index in these countries differ

slightly.

Table 4: market size of the four countries

Scale China Brazil France Ghana

Market

size(weforum

.org)

7.0 5.7 5.7 4.1

GDP 51.0% 18.8% 18.4% 16.2%

Growth rate of the market and degree of internationalisation of10

the market

Hollensen (2014) points out that the degree of

internationalisation of a market and its growth rate are key

determinant factors in market selection entry mode. According to

table 5, China scores high in terms of market growth rate and

degree of internalisation than the other countries, thus

presenting a greater opportunity for Chobani’s business expansion

and growth rate. However, the difference between the scores of

Brazil and China is slightly low. France scores the least in this

aspect.

Table 5: market growth rate and degree of internationalisation of

the four countries

Scale China Brazil France Ghana

Market

growth rate

(weforum.org

)

7.7% 7.5% 4.9% 6%

Degree of

internationa

lisation

(weforum.org

)

6.2 5.9 5.1 5.2

Industry concentration

According to Xie (2012), industry concentration refers to the

degree of competition and number of competitors in an industry.11

Table 6 below reveals that yoghurt industries in the four

countries are saturated and highly competitive except for Ghana.

However, with a rapid market growth rate and high industry growth

in China and Brazil makes these markets attractive to Chobani.

Table 6: industry concentration

Scale China Brazil France Ghana

Industry

concentratio

n

(euromonitor

.com)

saturated saturated saturated growing

Competition

(euromonitor

.com)

Highly

competitive

Highly

competitive

Highly

competitive

moderate

Industry growth

A company’s growth, as Xie (2012) points out, is determined by

whether it is entering a mature, growing or emerging

market/industry. A growing industry presents more opportunities

for a firm to grow and this includes presenting a potential and

larger market and competitive advantage for quality and newly

introduced products (Hollensen, 2014). According to table 7, the

yoghurt industry in all the four countries is at its growing

stage. However, the growth of strained yoghurt is much higher in

Chinese and Brazilian yoghurt industries than in French and

Ghanaian yoghurt industries.

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Table 7: industry growth for the four countries

Scale China Brazil France Ghana

Industry

growth

(euromonitor

.com)

growing growing growing growing

2.2Selection of appropriate country markets for Chobani

The market/country attractiveness and competitive strength matrix

is closely associated with market/country selection process for a

firm that wants to venture into other international markets.

Employing this matrix, this section propose the evaluation of

market size, market growth, buying power of customers, industry

competitive intensity, economic stability, political stability,

and degree of internationalisation in determining appropriate

country markets for Chobani.

This report chooses to analyse China (from Asia), France (from

Europe), Ghana (from Africa), and Brazil (from Latin America) as

four potential markets for Chobani to enter as they are

considered potential markets experiencing significant growth of

yoghurt consumption.

Table 8: Market/country attractiveness matrix for China

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Table 9: Country/market attractiveness matrix for France

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Table 10: Country/market attractiveness matrix for Ghana

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Table 11: Country/market attractiveness matrix of Brazil

According to table 8, 9, 10, and 11, the total evaluation of

country/market attractiveness suggest that China and Brazil are

the most attractive potential international country market for

Chobani Inc since they have comparatively higher scores. In

particular, China and Brazil have a better score in market size

than France and Ghana and a better score in economic and

political stability and internationalisation than Ghana.

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3. Market entry strategies for chosen markets for Chobani Inc

3.1Entry-mode strategies and exit strategies for Chobani Inc in

China and Brazil

3.1.1 Entry-mode strategies

Wall and Rees (2004) identifies various entry-mode strategies,

which multinational firms can use to enter and expand into

foreign markets and groups them into three categories; export

based, non-equity based and equity based. Entry-mode strategies

under export based category include indirect exporting, direct

exporting and co-operative exporting. Non-equity based category

include licensing, franchising, contract manufacturing,

management contracts and non-equity based strategic alliances.

Equity based category include joint ventures, portfolio

investment, mergers or acquisitions, greenfield strategy, and

equity based strategic alliances. All these strategies have their

own advantages and disadvantages, something that a company’s top

management must put into consideration when selecting the

appropriate entry-mode strategy to adopt. In order to choose the

appropriate entry mode strategies for Chobani, various

operational elements employed in choosing effective entry mode

shall be utilised. They include degree of control, resources

commitment, risk, speed, opportunity available and returns

expected (Ellis and Williams, 1995). Table 12, 13 and 14 outlines

these elements vis-a-vis the various entry mode strategies.

Table 12: selection of appropriate entry-mode strategies for

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Chobani under equity based category

Table 13: selection of entry-mode strategy for Chibani under non-

equity based category

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Table 14: selection of entry-mode strategy for Chibani under

export based category

Looking at tables 12, 13 and 14, this report suggests that

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Chobani adopt direct exporting, joint venture, strategic

alliance, and mergers and acquisitions (M&A) entry-mode

strategies when entering China and Brazil markets since these

strategies score high.

Direct exporting is an appropriate entry mode strategy for

Chobani in Brazil and China. Firstly, China and Brazil have in

the recent past made considerable efforts in minimising

political, legal and economic policies and restrictions including

trade restrictions and barriers such as import licensing and

tariffs. Secondly, direct exporting does not need to invest in

Braizil and China since its products are not required to be

produced in the countries. In addition, direct exporting can also

realise easy and quick customer reach, and Chobani has complete

control over its production processes and products, high expected

returns and it is less risky (Hoskisson et al. 2012)..

Strategic alliance is deemed an appropriate entry-mode strategy

for Chobani in both Chinese and Brazilian yoghurt markets.

Establishing strategic alliances with one or more yoghurt

producing companies in Chinese and Brazilian markets will be easy

for Chobani because of favourable economic and legal policies in

both countries. Besides, entering into strategic alliances would

enable Chobani deal with potential competitive pressures present

in the yoghurt industries of these two markets (Hoskisson et al.

2012). In addition, by entering into strategic alliances, Chobani

would be able to share costs and risks associated with venturing

into these countries, gain access to new markets in these

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countries, gain knowledge and skills of operating in these

markets, and achieve a competitive advantage in the industry

(Isoraite, 2009).

Joint venture is a third entry-mode strategy suggested for

Chobani to adopt in entering Chinese and Brazilian markets. Joint

ventures are fit for Chobani in both Chinese and Brazilian

markets because of various reasons. Joint ventures will allow

Chobani to share risks and costs with other foreign companies

based in the two markets. Besides, joint ventures will enable

Chobani gain access to expertise and distribution network in the

two foreign markets (Zekiri and Angelova, 2011). This will

include gaining access to the skills and knowledge needed to

manage a business in the two foreign markets. Furthermore, joint

ventures will allow Chobani exercise control over the operations

in both markets (Hoskisson et al. 2012).

Finally, it is suggested that Chobani adopt M&A when entering

Chinese and Brazilian markets. Various reasons underpin the

selection of M&A as an appropriate entry-mode strategy for

Chobani in the two countries. Political and legal policies in

Chinese and Brazilian markets are good, thus undertaking M&A

would be easy for Chobani. By acquiring existing firms in Chinese

and Brazilian yoghurt markets, Chobani will gain control over the

acquired firm’s brand names, management experience, assets,

qualified labour force, technology, and distributions. This will

make its entry into these markets much faster and easier. M&A

will also provide quick access to new markets in both China and

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Brazil. However, Chobani must be prepared to face various

challenges that come along with these entry mode strategies. They

include high costs since acquiring existing firms is expensive

and complex negotiations that may take long time (Goldman and

Nieuwenhuizen, 2006).

3.1.2 Exit strategies

It is also important to identify appropriate exit strategies for

Chobani if it wishes to exit from the partnerships it has entered

into or even exit completely from the Chinese and Brazilian

markets. Informed by previous literatures on global management,

this report recommends two exit strategies for Chobani; sell-offs

and management buy-outs.

According to Kotabe and Helsen (2009), sell-off is the sale of

part of a business entity say subsidiary in a domestic or foreign

country to a third party. The advantage with this strategy is

that it involves no negotiations with buyers. What a company

needs to do is to just list all its assets and sell them off to

potential customers or competitors. It is considered a quick way

a business can quit from a market. However, with this strategy, a

company cannot get the full value of the business. Besides, a

company’s physical assets cannot be sold at full value (Ogilvie,

2009).

Management buy-out is another exit strategy Chobani can adopt.

According to Ogilvie (2009), management buy-out is the scenario

in which a business is purchased from its existing owners by

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members of the management team in support of a financing

institution. The advantage of this strategy is that it guarantees

business continuity (Kotabe and Helsen, 2009). However, financing

employees to buy a business means that a financer (which can be

one of the business partners) needs to have huge amounts of money

and may even be forced to take a loan.

3.2Functional strategies

Functional strategies for Chobani in the four countries would be

identified in the following categories;

Global production strategy

A production strategy concerns the course of actions or patterns

of decision that a firms takes in to produce products. A global

production strategy is important for Chobani since it would show

the direction the operations and production function of the

company need to take in both Chinese and Brazilian markets. A

regional production strategy is appropriate for Chobani in both

Chinese and Brazilian markets. With regional production strategy,

Chobani will manufacture products in accordance with the size of

the production system, which will be related to the size of the

market. However, these regional production systems would be

highly coordinated with the parent plant to ensure compliance.

Global marketing strategy

Existing dominant brands in both Chinese and Brazilian markets

may exhibit market dominance and power, inhibiting Chobani from

obtaining a competitive advantage. This creates the need for

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Chobani to identify and implement an appropriate global marketing

strategy in Chinese and Brazilian markets. Chobani should make

its product prices lower than the prices existing yoghurt

companies charge for their yoghurt products and related products.

Besides, Chobani should consider offering pricing discounts for

customers that buy in bulk. Furthermore, the company should carry

out intensive promotions in retail stores, supermarkets, shops,

restaurants, hotels and fitness centres to generate excitement

among consumers. The company can also utilise print and digital

media such as TV, radio, newspapers, magazines, and billboards to

create awareness among consumers. It can also utilise social

media websites such as Facebook, Twitter, and Youtube to create

awareness and promote the sale of its products. Chobani can also

consider sponsoring sports events such as marathon and golf where

it can give free samples of its products and price discounts on

product sold to promote awareness and the sale of their products

in these markets.

Global logistics strategy

Logistic control is key to achieving competitive advantage for a

firm. Thus, Chobani needs to have an effective global logistics

strategy. To achieve an effective global logistics strategy, it

is recommended that Chobani ensure there is effective

coordination among suppliers, the plants, and customers. This

would mean that effective communication needs to be supported

among these individuals to ensure smooth delivery of resources

and products. Therefore company would need to have a reliable

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information and communication network to guarantee effective

communication among suppliers, customers and itself.

3.3Organisational structure

The organisational structure at present and suggested in futureCurrently, the organizational structure utilized by Chobani Inc.

is the international division structure. This can be attributed

by the firm’s operations in the US, Australia and the UK from its

central operational point of US. Further evidence of this

international division structure can be evidenced by its

placement of two production sites in New York and Idaho and the

placement of a manufacturing facility in Australia. On this

evidence, it can be argued that Chobani Inc. has acquired an

international experience through the running of the two

production facilities and the manufacturing facility placement.

However, in its aim to venture into new markets of Brazil and

China, Chobani Inc. should change its organizational structure.

Chobani Inc. should enhance its international division structure

by allowing greater autonomy of individual divisions.Through the

appointment of an individual who is solely responsible for

strategy formulation in the Chinese and Brazilian target markets,

Chobai Inc. would manage to improve its responsiveness towards

the market specific needs of Yoghurt. Clearly, whilst the current

structure is the international division structure, there remains

a greater influence from the central management entity in US.

Therefore, the new change structure would focus on allowing for

greater freedom and autonomy of the individual divisions so as to

25

increase responsiveness towards the Yoghurt needs of the market

(Peng, 2008). Evidently, a balance would be stricken in terms of

centralisation and decentralization of power and management for

the international divisions of Chobani Inc. The implication would

be the Chinese and Brazilian divisions to be self-managing and

regulating whilst also drawing corporate strategy and other vital

information from the headquarters in Greece.

The fit between organisational structure and strategyThe need to develop autonomy and freedom for the individual

markets of Brazil and China necessitates the use of the

transnational strategy. Clearly, the empowerment of the

international division structure implies that each structure

would require gain in autonomy in terms of management and

strategy formulation.

Figure 3: Global strategy-structure relationships

26

Source: Deresky (2003)

As presented on figure 3 above, there are four organisational

strategies from which to select an appropriate one for Chobani to

adopt. They include multidomestic strategy, international

strategy, globalisation strategy and transnational strategy

(Ghemawat, 2003). Looking at these four strategies, this report

recommends that Chobani adopt transnational strategy for it to

effectively implement the various strategies identified in

previous sections. With this strategy, Chobani would be able to

combine the best elements of globalisation strategy such as

centralisation of authority and organisational culture with the

best elements of multidomestic strategy such as less bureaucracy

and low coordination to achieve efficiency and local

responsiveness in both Chinese and Brazilian markets. Employing

this strategy would mean that Chobani stand a chance to address

or make concessions to local needs, wants and demands, hence

effectively fulfil the desires of customers in the two markets.

This means that the company would not be required to sell the

same products in the same manner in both the two markets. The

type and nature of products and the manner in which they would be

sold will depend on local market conditions in each of the two

markets. This would enable the company achieve competitive

advantage in both markets and even outperform existing

competitors who employ multidomestic or globalisation strategies.

Based on the choice of the transnational strategy, it is evident

that the organisational structure will be very important. In this

27

regard, the effectiveness of the international division structure

can be evidenced in the context of the centralisation of the

authority. It has been determined that the transnational strategy

is more effective if there is a simultaneous centralisation and

decentralisation of authority (Verbeke and Merchant, 2012).

Clearly, the effective implementation of the international

division structure is characterised by a corporate strategy

communication from the headquarters and the business level

strategy formulation from the division itself (Ireland et al,

2008). It can be argued that there is a fit in terms of the

autonomy and control of the headquarters and the individual

division. Evidently, there is a high level of fit between the

international division structure and the transnational strategy.

3.4Strategic control system

3.4.1 The appropriate control systemA control system is vital for multinational companies entering

foreign countries. It helps in the planning, implementing,

evaluating and correcting the performance of an organisation to

aid in the realisation of set goals and objectives. There are

four elements of control system in multinational structures. They

include output control, bureaucratic control, decision-making

control and organisational control (see the figure below). These

elements differ depending on whether a multinational company

adopts an international division structure, global geographic

structure, global product structure or transnational network

structure.28

As aforementioned, this report recommends Chobani chose a

transnational network structure as a strategic control system.

With this strategy, Chobani will need to focus on international

division structures. This will allow the company to let each

division to manage their profits with lesser control centralised

at the parent plant. This means that major decisions would be

centralised at each division. Besides, organisational culture at

each division in China and Brazil would transcend national

culture implying that emphasis would not be placed on bureaucracy

rather knowledge, skills and information sharing and learning

would be regarded as the most control system.

3.4.2 Fit between strategy, structure and controlThe transnational strategy is characterised by independency. This

means that Chobani would be required to appoint a functional

staff at Chinese business unit and Brazilian business unit and

give them the freedom to operate independently at regional level.

29

This will allow them to make more centralised decisions that are

appropriate for their divisions. The decision made must often

support the realisation of greater profits at each division.

Overall, each regional management unit must work towards

promoting the realisation of parent plant business objectives.

However, while transnational allows regional units to operate

independently, some few decisions are centralised at

headquarters. This implies that Chobani’s headquarters based in

America can be responsible for the communication of overall

business objectives while allow the independent regional

divisions (in China and Brazil) to make their own decisions on

how to support the realisation of set business objectives.

4. Time Frame and Sequencing of Strategy in China and Brazil

It is expected that the various strategic plans outlined herein

would cover Chobani’s business operations in the two markets

within the period of 2015-2020. It is further expected that

within this period, Chobani establish regional divisions in

Chinese and Brazilian markets by 2015 and ensure the necessary

resource framework is instituted at each division. By end 2015,

it is expected that each operational division is accorded the

right to operate as an independent subsidiary. Furthermore, once

each division starts full operations, the organisational control

system should be operational throughout the whole period of the

regional division of 2015-2020. These factors are comprehensively

outlined in table 15 below.

30

Table 15: Time frame and event sequencing of strategy in China

and Brazil

Event sequencing Time frame

Functional strategy: Global

strategy

2015-2020

Entry mode: direct exporting,

joint ventures, M&A, and

strategic alliances

2015

Organisational structure:

Transnational network

structures

2015-2020

Control system: Organisational

control

2015-2020

5. Conclusion

This report has first examined internal and external factors that

influence foreign market selection. It has been established that

internal factors that influence foreign market selection include

firm size and resources, products, degree of

internationalisation, overseas experience and

internationalisation goals. External factors that affect foreign

market selection include market size and growth, political,

economic and legal environment, socio-cultural gap, industry

concentration and industry growth. Putting into consideration

31

external factors, the report finds Chinese and Brazilian markets

as potential international markets for Chobani to expand to. The

report recommends that Chobani employ direct exporting, strategic

alliance, joint ventures and M&A when entering Chinese and

Brazilian markets. Appropriate exit strategies for Chobani in

these markets are sell-offs and management buy-outs. Besides, the

report recommends that Chobani develop global production,

logistic and marketing strategy. To achieve this, the report

recommends Chobani adopt a transnational organisational strategy

to facilitate the implementation of these functional strategies

and an organisational control system to manage the implementation

of these strategies.

32

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