Final Report - IMR

International Market Research Report

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MARKET STUDY

Flexfoods Entering the Swiss Market

Prepared for:

BICG9303 International Market Research

Professor Dawit Eshetu

Prepared by: Gwen Kitiwano, Lenora MacMaster and Ashlyn Neville

Friday, December 5th 2014


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Table of Content

Contents 1. EXECUTIVE SUMMARY ......................................................................................... 3

2. RESEARCH DEFINITION ........................................................................................ 5

3. BUSINESS DEFINITION .......................................................................................... 6

Key Partners ................................................................................................................ 6

Suppliers .................................................................................................................. 6

Business Enablers ................................................................................................... 7

Partners ................................................................................................................... 7

Key Activities ............................................................................................................... 8

Key Resources ............................................................................................................ 9

Customer segments ................................................................................................... 10

Customer Relationships ............................................................................................. 11

Revenue Streams ...................................................................................................... 13

Cost Structure ............................................................................................................ 13

Channels ................................................................................................................... 14

Value Proposition....................................................................................................... 15

4. COUNTRY SELECTION ........................................................................................ 16

Country Analysis ........................................................................................................ 16

. MARKET STUDY ................................................................................................... 18

5.1 TARGET MARKET DEFINITION .................................................................... 18

Country Overview ................................................................................................... 18

5.2 INDUSTRY CHARACTERISTICS ........................................................................ 31

5.3 MARKET POTENTIAL .................................................................................... 36

5.4 RISKS .................................................................................................................. 37

5.5 COMPANIES AND PRODUCTS IN THE MARKET ............................................. 38

6. CONCLUSION AND RECOMMENDATION ........................................................... 39

7. REFERENCES....................................................................................................... 40

8. APPENDICES ........................................................................................................ 43


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1. EXECUTIVE SUMMARY

In November 2014, our group conducted an extensive market research study to determine the potential success of Flexfoods in the Swiss market. The study was designed to address a number of key questions: What is your business? Flexfoods is a healthy fast food restaurant that offers affordable meals for consumers with a wide variety of dietary restrictions and preferences. Who is the target market? Our target market includes people from across the healthy-living spectrum. Avid gym-goers and people who are consciously trying to make healthier lifestyle choices are included in our target market. How big in terms of potential revenues is the target market? The potential revenues that our company is expected to acquire via our target market is rather large due to the reason being that our target market consists of consumers that often work and have little time to prepare themselves meals. Additionally, they possess a fairly substantial amount of disposable income therefore, our healthy fast food options will attract their business to Flexfoods. What are the major partners/ distribution channels? Our company’s primary partners are with local farms, eco-friendly manufacturers (utensils, napkins, cups, take-out containers, etc), DavidsTea, kitchen equipment manufacturers and a digital graphics company that will aid Flexfoods in the design of our logo, advertisements and menu. We will distribute our products via a physical store located in the country in which possesses the most potential. Which products/services do potential clients want? The products in which our potential clients seek to acquire is a quick, healthy and affordable alternative to fast food. Healthy meals that cater to their specific diet and lifestyle ranging from: high in protein, iron, fiber to low in sugar, calories and sodium. Additionally, vegetarian options will be available to our consumers who do not consume meat. How likely would potential clients be to buy these products/services? Potential clients are likely to purchase these meals since our prices are comparable to that of our fast food competitors however, what gives our products an edge is that they cater to those wishing or whom are already conducting a healthy lifestyle. The potential countries in which the research will be conducted on have the highest health grade out of all of the countries in Europe. Therefore, this signifies that their population is keen on maintaining good health and a healthy lifestyle.


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How much will potential clients be likely to pay for products/services? Flexfoods’ potential clients will be likely to pay around $10-$15 for our meals since their fast food competitors prices are roughly the same. In Switzerland, a common Big Mac meal from McDonald’s costs an average of $15. Thus, our company will have a comparative advantage in pricing when we establish our physical store. Who are the main competitors? Our main competitors are McDonald’s, Subway and Yum! Foods. These brands are all well-established in the Swiss market, however, Flexfoods offers all healthy food options without the temptation of fatty foods. Are there barriers to market entry? As far as the government is concerned, Switzerland is generally an “open” country, with little to no barriers to market entry. There is a zero percent average tariff rate and the government generally treats foreign and domestic investors equally. Does Flexfoods have a competitive advantage? Flexfoods has a competitive advantage because we offer healthy, filling meal choices and customer rewards and incentives year-round.


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2. RESEARCH DEFINITION

The purpose of the proposal research project is to identify 5 feasible markets in which Flexfoods. The research will entail us to answer numerous key questions that will enable Flexfoods to identify its potential market in Western Europe. Key questions are as follows:

Research Questions

• Which foreign markets have potential for development and growth for our company?

• Why do these foreign markets appeal to our company's goals and needs?

• What is the country's economic condition in regards to their markets, political infrastructures, regulations and other components?

• What kind of risks exists in these countries?

• What are the demographics of these countries? (age, literacy rate, etc).

• What are the policies in regards to importing and exporting foods to their country?

• Who are our main competitors?

To collect all necessary data, Flexfoods will be conducting an exploratory research with the use of secondary data. It consist of primarily quantitative data with the aid of reliable sources such as: relevant articles (magazines, blogs, etc), government issued articles, renown sources (World Bank, the United Nations, CIA Factbook, etc) and online databases. Afterwards, a strict analysis will be concluded and conclusions will be drawn based on all of the acquired findings. Ultimately, the research will help the company determine the Western European countries with the most potential. Specifically, the research will establish the following:

• Identify 5 countries, with promising markets, for future expansion endeavours. • Identify the potentiality of success from each country's current markets. • Identify the countries primary business components such as: chance for growth,

hindering regulations, market size, risks, political stability, etc. • Select one country to advance to a specific in-depth analysis.


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3. BUSINESS DEFINITION

Key Partners Flexfoods realizes that in order to efficiently execute our value proposition; we must partner up with various entities to guarantee its success in the European market. The following firms will aid Flexfoods’s growth and expansion:

Suppliers

LOCAL MARKETS: Our business wants to capitalize the community’s markets by purchasing fresh goods from their local farms. Some of these fresh goods would include: fruits, vegetables and meats. This will not only ensure to our consumers that our products are produced with fresh ingredients but, it would also support local farmers. CHEFSRANGE: ChefsRange would serve as our supplier of commercial kitchen and refrigeration equipment. For instance, grills, ovens, espresso coffee machines, refrigerators, freezers, etc. VEGWARE: Vegware is a company that manufactures affordable ecofriendly catering disposables and food packaging in bulk. They provide a large range of ecofriendly products that we would use in order to package the consumers meals: containers, cups, cutlery, napkins, etc. Additionally, they possess other ecofriendly products that we would be using in our facilities: toilet paper, bio bags, food prep gloves, etc. Vegware also offers a custom branding service in which we would be able to custom design our logo and print it onto the containers and cups. In sum, they will be a key supplier to our company’s endeavours while not only providing us with ecofriendly necessities but assuring that our ecological footprint is reduced. GO IN: Go In is a company that specialises in the design and manufacturing of modern furniture in the hospitality sector. They will be our main supplier for our company’s furniture: chairs, tables, sofas, stools, armchairs, etc.


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Business Enablers

HSBC HOLDINGS PLC: Currently, HSBC is Europe’s largest bank with assets of approximately US$2.7 trillion. For our consumers to make payments both in person and online we will set-up a payment system with HSBC. They will be able to conduct transactions with debit, visa or cash. Additionally, we will arrange for HSBC to be our primary banking institute where we will manage all of our financial transactions (loans, deposits, withdrawals, etc.) KDWEB: DIGITAL THINKING: KDWeb is a creative digital agency that offers services such as website design/development, for both Flexfoods and mobile platforms. They also provide graphic design services that include: logo design, business card design, brochure design, advertisement design and many more. With their expertise they will be able to aid our company in creating a visual brand for ourselves. Also, it is of crucial importance that the website is designed and developed in a clear and functional manner. We hope to provide our consumers access to our company’s information (about, menus, hours, locations, hours, etc) as well as develop a system in which they are able to order their meal online and pick it up at a designated location.

Partners

DAVIDSTEA: As of late, drinking tea has become a daily trend for consumers; ranging from students to workers. Tea has proven to be a healthier alternative to coffee, containing half the amount of caffeine that is found in coffee. DavidsTea offers a large variety of teas and is slowly gaining recognition in North America. Seeing as they have yet to penetrate the foreign market we believe that it would be in both ours and their best interests to form a partnership and begin a venture in Europe. Our company will select the teas in which are popular in North America and serve it at our cafes. We will change the flavors seasonally and conduct in-depth research in order to determine which teas are the most successful and replace the ones who lack profit. PLUSNET: PlusNet is an internet and phone company situated in the United Kingdom. We are planning on offering free Wi-Fi and are also in need of a telephone line at every one of our locations. PlusNet appears to be the ideal provider for our company due to its inclusive package deals and reputation.


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Key Activities Flexfoods is an actively engaging company; we design our business based on our consumer’s demands. The following are our key activities in order to ensure customer satisfaction: ACQUIRE FRESH GOODS BOTH LOCAL AND IMPORTED While Flexfoods will prioritize in purchasing fresh foods from local farms (fruits, vegetables and meats) we are aware that sometimes we will acquire further resources from other outlets in order to keep up with consumers’ demands. DEVELOP AND PROVIDE A QUICK AND HEALTHY MENU Our goal at Flexfoods is to provide consumers with a healthy alternative to fast food. These meals will be designed to satisfy consumers’ health needs. Additionally, all of the nutritional value and information will be available to our consumers both in our stores as a form of a brochure and online. OFFER DAIRY-FREE, GLUTEN-FREE AND VEGETERIAN OPTIONS It is important to incorporate the option of both dairy-free and gluten-free meals to our consumers who are lactose intolerant or are suffering from non-celiac gluten sensitivity. Statistics have stated that nearly 70% of the world’s population is lactose intolerant; also, it has been proven that in the last year the rise of gluten-free consumption has risen and is continuing to rise. Furthermore, it is always beneficial to have a vegetarian option for the consumers who don’t consume meat. NUT FREE FACILITY Our company will not use any nut related products in order to assure that those who possess nut allergies are safe to consume all of our products. REDUCE ECOLOGICAL FOOTPRINT At Flexfoods it is important to us that not only we promote a healthy lifestyle but, as well as healthy habits for the environment. We want our consumers to be aware that it is also important to recycle and reuse as much as they can in order to reduce their ecological footprint as well. Our company makes an example by using ecofriendly containers, utensils and cups, providing them with the option to purchase reusable cups at our stores and having a designated recycling bin offering them the opportunity to recycle at our locations. MARKETING AND PROMOTION Flexfoods, with the help of our marketing team and KDWeb, will be responsible for managing, designing and executing all marketing and promotion endeavours. This includes: online promotions (website and social media) and other methods of advertising (posters, television, radio, etc.)


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Key Resources Flexfoods aims to capitalize of all of its resources in order to ensure success in its ventures. The following depicts the key resources in which our company acquires:

Physical

• Fresh food products (fruits, vegetables and meats).

• Containers and cups in which we will be using to package our meals.

• Coffee beans and tea leaves.

• Manufactured furniture and kitchen equipment.

• Materials to build our locations.

Financial• Company capital and credit to enable the purchase of

necessities (food, furniture, containers, etc) in order to ensure that our firm functions in an efficient manner.

Human

• Workforce for head office (CEO, human resources, financial advisors, marketing team, market research, nutritionists, project management, design team etc).

• Workforce for store staff (managers, training leaders, cooks and front counter).

• Workforce related to our partners, business enablers and suppliers.

Intellectual• Our company’s website and logo.

• License use of partner’s brands.

Other• Banks and payment providers.

• Resources acquired from our partners.

• Various advisors to aid in the growth of our company.


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Customer segments Flexfoods is creating value for a variety of consumers. Firstly, those with health concerns have options at Flexfoods that aren’t available in other fast food venues. For example those intolerant to gluten, dairy, etc. now have a fast food option. These would are most specific consumers given that they have little to no other options amongst most fast food restaurants. Other customer categories are:

Going organic is becoming more and more popular. More people are trying to make healthier food choices by finding ways to replace bad food with the good. This is our target market. People dedicated to a healthy way of life are most likely to be our returning customers. To these customers, a service such as ours would be incredibly beneficial. It’s not easy or cheap to eat organic, gluten free, dairy free, etc. Therefore our cafes would likely draw any and all health enthusiasts, making them our most important customers. Those with health concerns or intolerances as stated, would fall under this category as well.

Based on demographics, our target market possesses a large variety of consumers ranging from the ages of 20-40 years old, possessing low-high income and are seeking a healthy lifestyle. Our company has decided to segment our target consumers into two groups: customers who are health enthusiasts (Weightlifting Wandas) and customers who are simply trying to make healthy choices (Healthy Choice Hanks). It is important to our company to recognize these two segments and identify the reasoning behind why we have segmented them in this particular manner. The following diagram illustrates the characteristics that are attributed to each segment group:

Mass• General population looking for a good deal in a fast

food setting.

• Customers wanting a healthy option every so often.

• Parents making healthy choices for their children.

Target • Customers who are serious about their healthy lifestyle.

• Those looking for an organic menu.


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Customer Relationships One of the most important parts of creating a successful business is having strong customer relationships. We want our customers to feel that their experience in our cafes is important to us. For the customers that come to us due to food allergies, we want them to feel as though their concern is our concern. We will relate to those living a healthy lifestyle, in that this is the main premise of our company. There are many ways to build strong customer relationships, these will be the focus for our company:

•The consumers who take healthy living veryseriously. Those who often go to the gym,extremely health conscious and are willingto spend the extra money on healthy goods.For instance, body builders, athletes,marathon runners, etc. To appeal toWeightlifting Wandas, Flexfoods will providehigh protein, bulking and cutting options tosatisfy their needs.

Weightlifting Wandas

•The consumers who simply want to makehealthier lifestyle choices but, aren’t asserious about it in comparison to WeightliftingWandas. For instance, students, mothers,business workers, etc. To appeal to HealthyChoice Hanks, Flexfoods will provide themwith affordable, accessible and convenienthealthy options to fulfil their needs.

Healthy Choice Hanks


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Networking

• Create local returning customers by word of mouth and networking events.Healthy living is something people are passionate about, by creating a sense ofcommunity it is more likely people will make Flexfoods their regular fast foodplace.

Communication

• If customers have questions, comments, or concerns those can be addressed onour website. It is important for there to be open lines of communication tomake the customers feel like they have a voice. As well as employees exudingauthentic communication and character in our cafes.

Build Trust

• By being consistant in our services, customers will likely return knowing theycan trust they will enjoy our products. With each pleseant experience thecustomer relationship gets stronger.

Importance

• Making customers feel important is perhaps the most important way to buildstrong relationships. This can be done by making the customer feel as thoughthey've grown with the company, for example by putting a loyalty program inplace; i.e. loyalty card, etc.


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Revenue Streams Currently, customers pay the rising prices of fast food. For the most part what they are paying for is cheap and unhealthy. At Flexfoods, our customers will be willing to pay such prices, as they are getting more value for their money. The entire premise of our business is value; health food, food of substance.

Cost Structure The most important costs in our business are our food costs. Since food is our main product, we have to be conscious of not only the quality of our ingredients, but the price of them as well. Our most expensive Key Resources are our physical and human costs. Equipment, furniture, and food preparation sections are very costly. On top of physical costs, we also have to make sure our employees are paid. Our Key Activity that is the most expensive most consistently is our food costs. In promotional periods, marketing costs may exceed food costs, depending on what type of promotion we are offering. As we are a value-driven company, our income may fluctuate, depending on our customers’ needs.

Direct Sales: Sales through our physical locations. Customers pay via: cash, debit, or credit. Direct sales

are the main source of overall revenues.

Promotional Revenue: Sales earned through special promotions and/or events.

Affiliate Revenue: Sales earned through our partnerships. After direct sales, affiliate revenues are

the next biggest contribution to overall revenues.

Food costs/production and human capital costs

Marketing costs (promotions)

Intellectual costs


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Channels We plan on reaching our customers through social media, letter mail and placing advertisements in gyms, colleges and universities. As a new brand, it is important for brand awareness to flourish to promote sales.

After Sales

Having customer surveys that offer a free smoothie upon the completion of the survey promotes customer feedback and customer retention as we provide incentives to our customers.

Delivery

Having a Mission Statement allows us to deliver and articulate our Value Proposition to our customers in an efficient way.

Purchase

Customers can purchase our products in-store, but we also offer an app for ordering. Online ordering makes the buying experience more convenient and time-efficient for our customers

because it diminishes their waiting time when they arrive.

EvaluationBy sending a message of healthy lifestyles, we make it clear to our consumers that we are serious

about their well-being. People like to feel cared-for, and if we show our customers we care by offering discounts, fitness tips and customer appreciation days, they are likely to be returning

customers and recommend us to their friends and family, expanding our consumer base.

Awareness

We would promote brand awareness through colleges and universities, gyms and advertisements in the mail. By putting our brand out there and offering incentives to try our products, people are

more likely to visit our locations and see everything we have to offer.


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Value Proposition Our company is delivering quality, healthy food choices on-the-go to our customers. As it stands, it is very hard for people to eat healthy on-the-go. People live busy lives, but they want to be able to make healthy food choices without being limited to salads from traditional fast food restaurants. We offer a unique dining experience, in that we have plenty of options including different protein dishes, fresh vegetables and fruits, and different grain options to choose from – much different from anything currently on the market. We also offer dietary restriction-specific options such as gluten-free, vegan, and halal options.

We also offer discounts for students and for consumers who show us their gym membership card. Our company wants to promote healthy lifestyles, not just healthy eating. Having healthy food options available at affordable prices promotes everything our company stands for – that healthy living is accessible and affordable for people of all walks of life.

Our mission statement:

"To provide our customers with high-quality, healthy food options to fuel their

fitness and everyday lives."


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4. COUNTRY SELECTION

Country Analysis The way in which we came up with our five potential countries is by conducting a country matrix analysis. The way in which the five countries were initially selected was by researching which countries in Europe were ranked the healthiest amongst the continent (Table A). Afterwards, we compared the list of healthiest countries with their market potential index ranking (Table B).

Table A

Western Europe Countries Market Potential Index Rank (out of 87 countries)

Italy 24

Switzerland 8

Spain 31

Netherlands 17

Sweden 19

Germany 6

Cyprus 65

Austria 16

France 11

Greece 72 Table B


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After comparing both tables the top five countries that emerged were: Germany, Switzerland, Austria, the Netherlands and Sweden (*the reason why Austria was picked over France was due to the fact that France’s health grade was lower than that of Austria and its difference in rank was only 5 which wasn’t significant enough for the company to overlook Austria’s health grade as being higher). We then proceeded to use a country matrix analysis (Appendix A and Appendix B) that consisted of 7 main criterias in which we would be evaluating the five potential countries by. The criterias were assigned the following significance:

Moving on, we had identified the two most important criterias: market potential (20%) and product/service specific criterias (20%). The market potential had a large influence on our country selection since it consisted of the country’s GDP per capita, market potential score and market purchasing power. By analyzing the following factors we were able to rank the countries accordingly. To elaborate, we can interpret a country’s economic well-being by observing their GDP per capita and market purchasing power trends. In the case of all of the potential countries, they more or less depicted a positive economic trend where GDP per capita increased and market purchasing power increased as well. Additionally, the market potential was analyzed based on their market potential index ranking. Their market potential ranking was based on the following critierias: market size, market intensity, market growth rate, market consumption capacity, commercial infrastructure, market receptivity, economic freedom and country risk. Therefore, its ranking in the index was a strong indication of the country’s market potential and had a significant influence on their score.

Secondly, product/service (20%) factors had also a great impact on our country selection’s score. Factors such as agricultural land, economical footprint, healthy population and production were evaluated and compared against each other. Other criterias were also examined such as cost of doing business (15%) hence, how easy is it to conduct business in their country, the cost of labor and corporate taxes. Their risk profile (10%); what are their food inflation trends, the case when resolving insolvency and their stability. As well as their availability of labor and skill (10%) which primarily consisted of their labor force and literacy rates; thus, how literate their population is and their available labor force. Additionally, the countries’ business operating environments (15%) were also taken into consideration; we evaluate its cost of living, start-up costs and obtaining credit. Lastly, the quantity and quality of infrastructures (10%) was analyzed for each of the potential countries; we evaluated the quality of their ports, broadband and energy use.

15%

20%

10%

10%

15%

10%

20%

CriteriasCost of Doing Business

Market Potential

Risk Profile

Availability ofLabour/Skill

Business OperatingEnvironment

Quantity and Quality ofInfrastructure

Product/Service SpecificCriteria


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After attributing each criteria with appropriate scores, the country that scored the highest and which will be the primary focus of our research is: Switzerland.

5. MARKET STUDY

5.1 TARGET MARKET DEFINITION Country Overview Switzerland is a small country located in Western and Central Europe, despite is geographical size; it remains one of the leading economies that exist today. Its standards of living, worker productivity, quality of education, and health care are higher than any other European country1. It is evident that their market potential exceeds that of many other nations and thus, would prove to be an ideal location to launch our services. In the following section we will provide a brief overview and key information that will enable our success in Switzerland’s thriving market.

Brief History The Swiss Confederation was founded in 1291 as a defensive alliance amount three cantons2. In later years, other localities joined the original three. In 1499, the Swiss Confederation gained independence from the Holy Roman Empire. The confederation was replaced by a centralised federal government in 1848 but was later modified in 1874. Switzerland is a nation that is characterized as being autonomous and neutral; in fact, it is one of the few European countries who did not participate in either world wars. In 2002, Switzerland officially became a member of the United Nations; enabling them to strengthen their ties with other foreign countries. A few years later, Switzerland was accepted as being part of the Schengen area. On December 12th 2008, they implemented the Schengen Agreement which eliminated border controls to Schengen countries but in turn, reinforced border control with non-Schengen countries. In brief, the Schengen area is comprised of 26 European countries (refer to Table 1 for the list of countries) that have fully abolished passport and border control at their internal borders. Thus, the Schengen area’s functionality is comparable to that of a single country. Its main purpose is to promote the free movement of: goods, people, information and capital. In contrast to other European countries, Switzerland is not a member of NATO or the European Union. Today, Switzerland has become one of the most prominent economies, its GDP per capita ranking as one of the highest in the world. Switzerland remains active in many UN and international organizations but retains a strong commitment to neutrality3.

1 Switzerland. (2012, January 1). Retrieved from http://www.infoplease.com/encyclopedia/world/switzerland-economy.html#ixzz3I7GkFP5H 2 The World Factbook - Switzerland. (n.d.). Retrieved June 20, 2014, from https://www.cia.gov/library/publications/the-world-factbook/geos/sz.html 3 The World Factbook - Switzerland. (n.d.). Retrieved June 20, 2014, from https://www.cia.gov/library/publications/the-world-factbook/geos/sz.html


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List of Countries in Schengen Area

Austria Germany Lithuania Slovakia

Belgium Greece Luxembourg Slovenia

Czech Republic Hungary Malta Spain

Denmark Iceland Netherlands Sweden

Estonia Italy Norway Switzerland

Finland Latvia Poland

France Liechtenstein Portugal

Geography Switzerland is a country that is located in Western and Central Europe. It shares a border with its five neighboring countries: Austria, Liechtenstein, France, Italy and Germany. Switzerland is a landlocked country signifying that it does not possess a coastline or sea port. Its total land area consists of 41, 277 square kilometres. The country’s geography is divided into three primary geographical regions: the Jura, the Plateau and the Swiss Alps. Each of the areas exhibit a variation of climate conditions, which vary greatly from each other and are dependent on the time of year. The topography of Switzerland can be described as primarily mountainous alongside rolling hills and plains located in its central plateau; also, there are numerous large lakes throughout the country.

Despite its size and geographical circumstances, Switzerland fully utilizes its sources in order to assure the growth of their economy. For instance, the nation’s key natural resource is its hydropower potential. Many dams were built in order to harness the electricity that it produced for its industrial sector.

Political System Switzerland is a Confederation composed of 26 cantons, its government, parliament and court are divided into three levels: federal, cantonal and communal. It possesses one of the world’s most stable democratic systems. Their citizens are able to contribute and participate on a grand scale due to the direct democracy system that is set in place. A direct democracy is a type of democracy that allows its population to directly decide on policy initiatives (i.e. changing a policy with enough votes in favor) in contrast to representative democracy in which the population elects representatives who then decide on the policy initiatives. The citizens practise this system enthusiastically as it is heavily encouraged by Switzerland’s Constitution. Frequent referendums do have a stabilizing influence on their parliament, government, economy and society4.

Moreover, Switzerland does not have stable leader system. To elaborate, its parliamentary members take turns to act as president. While being a member of the parliament is normally a full time occupation in most countries-- that is not the case in Switzerland. Instead, the members of their parliament have to acquire regular employment in order to earn their living. This method, enables everyday citizens to become closer to the members of their parliament and vice versa.

4 Switzerland's Political System. (n.d.). Retrieved from http://www.democracy-building.info/switzerlands-political-system.html


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The government of Switzerland recognises that as the world changes, it faces new challenges in formulating its foreign policy5 and thus, they have created the following foreign policy objectives:

Peaceful coexistence of people of all nations

Respect for and promotion of human rights

Environmental sustainability

Representing the interests of Swiss business abroad

Alleviating need and poverty in the world Ultimately, Switzerland aims to create a peaceful relationships with all nations. This demeanor is inherited from their initial position as a neutral state. As such, this allows Switzerland to play an important role in international affairs and to act as a mediator between conflicting parties.

People Switzerland has a population of 8.081 million and in turn, represents 0.11 of the world’s population. Based on recent demographics, their population can be defined as the following:

Key information about population Relation to our business

As of 2014, Switzerland has acquired a population of 8.081 million; for every square mile there are approximately

508.2 inhabitants.

Ranked 65th as the most densely populated country in the world. There is an abundance of people in all areas and thus, facilitates promoting business as

opposed to if the population were widely spread.

The majority of the population (43.9%) is in between the ages of 25-54 years old

Our company’s target market age group is 18-30 years old thus, the demographics depict that nearly half of our target market

is part of the majority of the population.

38.2% of the population are Roman Catholics, 26.9% are Protestant and 4.9%

are Muslim.

Since our company is serving foods to our consumers, it’s essential to know what religion is dominant in order to

assure that the food that we serve does not interfere with their religious diets. And

if so, how to alter our menu in order to cater to the majority. In this case, the majority of the population are Roman

Catholics and do not have many dietary restrictions with the exception of their

fasting a few times per year.

73.7% of the total population reside in urban areas. The most populated urban

Over half of the population reside in urban areas therefore it demonstrates a

large potential for growth as well as

5 Switzerland and the World. (n.d.). Retrieved from http://www.swissworld.org/en/politics/foreign_policy/switzerland_and_the_world/


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areas are: Zurich (1.194 million) and Bern (353,000).

increases attractiveness for foreign firms, such as ourselves, to invest in

businesses in the country.

99% literacy rate for both male and female (extremely high).

The grand majority of their human capital is educated which depicts the potential of

future company employees.

On average, the population of Switzerland has a life expectancy at birth

of 82.39 years old.

As of 2014, Switzerland possesses one of the highest life expectancies ranking in 8th against the rest of the world. This implies that the Swiss live a very healthy lifestyle.

Ultimately, the Swiss population has been growing at a steady and consistent rate of approximately 1% over the last few decades. The United Nations predicts that by 2020, Switzerland will reach a population of 8.6 million. The following table (Table 2) illustrates a prediction of the growth of Switzerland’s population over the next century.

Economy The economy of Switzerland is one of the most stable economies in the world. In 2014, its economic freedom score is 81.6 therefore, ranking it the 1st freest economy in Europe and the 4th in the world. On account of their small size, their economic success is primarily due to their high labor specialization, industry and trade. They specialize in micro technology, hi-tech, biotechnology and pharmaceuticals. Moreover, their service sector has become a crucial asset to their economy; providing employment to the majority of their population. However, they are also highly dependent on foreign investment. Luckily, their policy of long-term monetary security and political stability has made Switzerland a safe haven for foreign investors6 thus, enabling them to possess one of the highest GDP per capita in the world.

6 Economy of Switzerland. (n.d.). Retrieved from http://www.princeton.edu/~achaney/tmve/wiki100k/docs/Economy_of_Switzerland.html

Table 3 (source: United Nations)


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Table 4

Over the past decade, Switzerland’s GDP has been increasing at a fluctuated rate. So far in 2014, Switzerland has accumulated a total GDP of 650.78 billion dollars. Additionally, it possesses a GDP per capita of 55485.60 US dollars when adjusted by purchasing power parity.

The GDP Growth Rate in Switzerland has been growing at a slow rate and often oscillates throughout the years. In the second quarter of 2014, its growth rate stagnated at 0%. This is due to a trade imbalance in which there was a small negative contribution to growth while investment remained unchanged7. Nevertheless, it has averaged a 0.42% growth rate since 1980 and is currently sustaining a 2.1% growth rate in the third quarter of 2014.

Policies Switzerland heavily lacks in natural resources. Despite this, its economy is one of the most prosperous and stable. Switzerland’s economic success is in large part due to the policies that have been established by the government. Tobias Straumann, a Zurich University economic historian, states that “economic policies oriented towards stability and high-quality human capital are two of Switzerland’s self-made strengths.” For instance, in 1990 the government introduced policies to stabilise its economy: a debt break, measures to balance its unemployment insurance, domestic market reforms and restrictions on immigration8.

Furthermore, the Swiss government emphasizes on the importance of reducing their environmental footprint in the world. They believe that economic activity should have as

7 Switzerland GDP Growth Rate. (n.d.). Retrieved January 1, 2014, from http://www.tradingeconomics.com/switzerland/gdp-growth 8 Britt, C. (2012, September 2). How Switzerland is weathering the storm. Retrieved from http://www.swissinfo.ch/eng/how-switzerland-is-weathering-the-storm/33400022


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little as possible of an impact on the environment9. Subsequently, this lead to the realization of Switzerland’s international environment policy which entails all economic activity to render their business ventures as environmentally friendly as possible. According to a study of the effectiveness of Switzerland's environmental foreign policy commissioned by FOEN in 2007, Switzerland's strong standing in international environmental policy is remarkable for a small nation10.

Additionally, one of the major policies in which Switzerland has established is the Monetary Policy Strategy. The strategy is implemented by the Swiss National Bank and was created for the purpose of insuring the country’s economic well-being. The policy consists of the following three elements:

Elements Description

Defining price stability Inflation and deflation damages an economy’s development. On the contrary, price stability is an important aspect of economic growth. The Swiss National Bank aims to keep the prices stable, in the medium-long term, in order to create an environment in which the economy can fully realize its potential.

Bases monetary policy decisions on a medium-term inflation forecast

The inflation forecast has a dual functionality: it is the main indicator for the interest rate decision and a crucial communication tool for the Swiss National Bank.

Sets an operational target for its chosen reference interest rate: the

three-month Libor

The three month Libor is a reference interest rate in the interbank market for unsecured loans. It is a trimmed mean of the rates charged by 12 leading banks and is published daily by the British Bankers’ Association.11 One of the Swiss National Bank’s goal is to keep the Libor in the middle of the range.

9 The Swiss Economy. (n.d.). Retrieved from http://www.swissworld.org/en/economy/ 10 Prrez, F. (n.d.). Switzerland’s international environmental policy: An active, reliable and constructive partner. Retrieved April 1, 2010, from http://www.bafu.admin.ch/dokumentation/umwelt/09249/09355/index.html?lang=en&lang=en 11 Monetary Policy Strategy. (2014, January 1). Retrieved from http://www.snb.ch/en/iabout/monpol/id/monpol_strat#t14


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International Trade As previously mentioned, Switzerland is highly dependent on foreign investment on account of their lack of natural resources. International trade is essential for the success and continuous growth of their economy. There exist key factors that attracts foreign investors to the Swiss market. Firstly, the Swiss franc is one of the strongest currencies in the world and the country is known for the soundness of its banking industry12. Furthermore, Switzerland’s openness and flexibility have facilitated international trade. Their numerous policies that protect foreign investors and stable legal system have contributed to their attractiveness.

Traditionally, its merchandise trade deficit has been generously compensated by a surplus trade in services13. The following section will further explore the imports and exports between Switzerland and other foreign nations.

Exports Swiss companies are extremely competitive in world markets, nearly 90% of their goods and services are exported. In 2014, Switzerland’s export brought in 17,522.52 CHF (Swiss Franc) million to its economy-- responsible for 52% of its current GDP. Its main export trading partners are the 27 countries who are members of the European Union; 60% of their exports go to its members.

Their top 5 export destinations are: Germany (17%), India (11%), the United States (9.8%), Hong Kong (5.9%) and France (5.7%). Although, Switzerland is typically known for their exports of watches, chocolate and cheese; their top 5 export products/services are the following: gold (20%), packaged medicaments (11%), human or animal blood (6.2%), base metal watches (5%) and precious metal watches (3.3%).

12 Switzerland - International Trade. (n.d.). Retrieved from http://www.nationsencyclopedia.com/economies/Europe/Switzerland-INTERNATIONAL-TRADE.html 13 Switzerland - International Trade. (n.d.). Retrieved from http://www.nationsencyclopedia.com/economies/Europe/Switzerland-INTERNATIONAL-TRADE.html


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Table 5

By examining Switzerland’s export trends, it strengthens the evidence that they highly contingent on foreign trade. Its inconsistency illustrates that they are unable to maintain a steady growth due to their strong dependency on foreign imports for their resources. Nevertheless, in September of 2014, exports increased 4.4 percent year-on-year to CHF 17.52 billion, mainly driven by sales of aircraft and spacecraft (+55%), rail vehicles (+51%), textile machinery (+49.9%) and immunological products (+20.6%). Deliveries were also higher for electricity (+14.1%), textiles, clothing and footwear (+8.4%), cheese (+11.5%) and beverages and tobacco (+2.3%) and tobacco (+11.2%). Outward shipments shrank for pharmaceutical ingredients (-26.9%); non-electric engines (-19.8%); office machines (-13.7%); paper machine/graphic art industries (-12.6%) and jewelry (-10.6%)14.

Imports Switzerland’s access to natural resources is limited since they are a landlocked country. Thus, in order to acquire natural resources in order for their businesses to function, they just as dependent on importing goods as they are on exporting them. In 2014, its imports increased to 16505.24 CHF (Swiss Franc) million. Its import trading partners are again, the 27 countries who are members of the European Union— they are responsible for approximately 80% of Switzerland’s imports.

Their top 5 import countries are: Germany (24%), Italy (11%), United States (9.8%), France (6.1%) and China (4.1%). The majority of Switzerland’s imports are machinery and raw materials; their top 5 import products/services are the following: gold (21%), packaged medicaments (5.9%), cars (4.4%), refined petroleum (3.7%) and jewellery (3.6%).

14 Switzerland Balance of Trade. (n.d.). Retrieved January 1, 2014, from http://www.tradingeconomics.com/switzerland/balance-of-trade


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Table 6

By examining Switzerland’s import trends, it is evident that there isn’t a consistent growth of any kind and that imports are purely based on what the nation is in need of at a current point in time. Due to this, its import trends are constantly fluctuating and there is no definite means of accurately predicting trends in the long term. This trend is quite similar to that of its exports as well, where exports are also dependent on other foreign nation’s needs at a current point in time. In October of 2014, imports grew 3.2 percent year-on-year to CHF 16.50 billion. Inbound shipments increased for capital goods and consumer goods (+8 percent and 4 percent, respectively), while imports of raw materials and semi-finished products declined by 2.0 percent and purchase of energy decreased by 4 percent15. In brief, Switzerland’s trade is highly reliant on circumstances in both their country and their trading nations.

15 Switzerland Balance of Trade. (n.d.). Retrieved January 1, 2014, from http://www.tradingeconomics.com/switzerland/balance-of-trade


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Trade Balance

Table 7

Switzerland has experienced more or less a trade surplus over the last 10 years, with the exception of November 2006 where it experienced a slight deficit. Trade surplus has been on a wavered growth since 2008. Over the past year, its exports increased by 8.1% therefore, increasing their trade surplus to CHF 3.25 billion in October 2014. Sales have been increasing all around for Switzerland, primarily in the United States it has grown by 14% and Asia by 9%. Although similar to the trend of their imports and exports, their balance of trade has seen more surplus then deficit; this then indicates that Switzerland is able to maintain a trade surplus despite its dependency on imported goods.

Trade Ties Switzerland has created numerous free trade agreements with various foreign nations in order to reduce trade barriers to international markets. This is crucial for Switzerland’s economic growth since it is highly dependent on trade with other countries. By reducing the red tape on vital trade partners; it enables the free movement of goods and services therefore, contributing to its economic growth and enhances their competitiveness in the foreign market. Additionally, Free trade agreements have reduced the price of products for Swiss consumers and have increased the range of products available. At the same time, Swiss producers benefit from more advantageous prices for semi-finished goods and raw materials16.

Despite Switzerland not being a member of the European Union, it still maintains a close relationship with the organization. This liaison consists of a structure of bilateral agreements that have been formed throughout the years between Switzerland and the EU. In 1972, Switzerland signed a free trade agreement with the EU. The agreement created a free trade zone for industrial products between the Switzerland and all members

16 Free Trade Agreements. (n.d.). Retrieved in 2014, from http://www.s-ge.com/switzerland/export/en/content/static/Free-Trade-Agreements


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of the European Union17. A few years later, in 1989, they formed another agreement which would grant access to certain areas of the insurance markets between the two parties. Finally, by 2004 Switzerland and the EU had concluded a total of 16 bilateral agreements, seven of them with the purpose of regulating market liberalisations and the other nine aimed at strengthening economic cooperation18.

Moreover, Switzerland has also established free trade agreements with Asian countries such as Japan, India and most recently China. On July 1st 2014, Switzerland and China signed a free trade agreement that consisted of eliminating 84.2% of tariffs on Swiss imports and 99.7% on Chinese imports. This will allow Chinese consumers to have access to more affordable Swiss products such as cheese, luxury watches and machinery. In 2013 alone, bilateral trade between both countries equalled up to US$22.5 billion. Therefore, this new free trade agreement between both countries will serve to help Switzerland in their economic growth and development.

Target Market Flexfood’s target market are characterized by the following attributes: between the ages of 18-35, both male and female, possessing an income between CHF 25,000 and CHF 50, 000 who seek to maintain a healthy lifestyle or are already living as such. Switzerland is the 4th healthiest country out of 145 countries thus, making it an ideal location to establish our first physical store. Our demographic will be primarily focused on Zurich, the largest city in Switzerland.

17 Britt, C. (2012, September 2). How Switzerland is weathering the storm. Retrieved from http://www.swissinfo.ch/eng/how-switzerland-is-weathering-the-storm/33400022 18 Britt, C. (2012, September 2). How Switzerland is weathering the storm. Retrieved from http://www.swissinfo.ch/eng/how-switzerland-is-weathering-the-storm/33400022

Table 8

http://www.swissinfo.ch/eng/how-switzerland-is-weathering-the-storm/33400022


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Zurich and Switzerland demographics Zürich is one of Europe's most important financial centres. The finance sector generates around a third of the wealth and a quarter of the jobs in the city19. It possesses a population of approximately 398,575 and has been steadily increasing over the past few years; also, 68.5% of its population are between the ages of 20-64 years old. The city is able to attract foreign business due to its high quality of life, its education and employment opportunities. Nearly 300,000 citizens are employed, in which 90% are in the service sector. Additionally, Zurich possesses the highest level of consumer spending in comparison to other cities in Switzerland.

Table 9

In terms of employment, 79% of people aged 15 to 64 in Switzerland have a paid job20. The population of Switzerland has an average net-adjusted disposable income per capita of CHF 29, 654 a year. Conversely, the population earns an average household income of CHF 9,000. In 2012, the average disposable income per month was of CHF 7112, while the majority of the disposable income is spent on consumption, nearly CHF 1500 was spent on housing and energy. Consumer spending has been steadily rising since 2011, where most of the spending went towards housing.

19 Economy and Employment. (n.d.). Retrieved in 2014, from https://www.stadt-zuerich.ch/portal/en/index/portraet_der_stadt_zuerich/wirtschaftsraum_u_-foerderung.html 20 Switzerland. (n.d.). Retrieved in 2014, from http://www.oecdbetterlifeindex.org/countries/switzerland/


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Moving on, Switzerland’s population has one of the highest savings rate in comparison to the rest of the world. In 2013, the Swiss put aside an average of 17.5% of their gross income into savings21; higher than that of its neighbors Germany (16.5%) and France (15.5%). As previously mentioned, Swiss consumers spend the most on living costs and energy expenses however, besides that they are seen to spend the rest of their disposable income on food and non-alcoholic beverages, transportation, restaurants and lodging as well as entertainment, recreation and culture.

In 2014, consumer expenditure on food was approximately US$29,794; this is crucial for our company’s economic success since, this depicts that Swiss consumers are spending a large number of their income on food. Moreover, the high quality of life has had an influence on the population of Switzerland; their consumers are able to spend more not only because they have the privilege to but also, because they live in a happy induced environment. According to statistics, 84% of Swiss’ reported having more positive experiences in an average day22.

21 Curtis, M. (2013, July 13). Swiss top the tables for household savings. Retrieved from http://www.thelocal.ch/20130717/swiss-top-the-tables-for-household-savings-report 22 Switzerland. (n.d.). Retrieved in 2014, from http://www.oecdbetterlifeindex.org/countries/switzerland/

Consumer Spending

Living costs and energy

Transportation

Food and non-alcoholic beverage

Entertainment

Restaurants and lodging

Table 10


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5.2 INDUSTRY CHARACTERISTICS The primary factors that affect the demand of our company’s products/services are: religion, lifestyle and language. In the following section, an in-depth research will be conducted on these factors, as well as other minor ones, their influence on our company and how Flexfoods will go about modifying our products/services in order to cater to the Swiss population.

While being a healthy fast food service business, it is crucial to identify specifications and restrictions that a population in regards to food. To begin, Switzerland’s population is not dominantly religious but, its population is composed of the following religions: Roman Catholic, Protestant and Muslim. Since, the Roman Catholic and Protestant religions are the most prevalent, the dietary studies will be mainly focused on the two religions. Firstly, the Roman Catholic dietary restrictions consists of fasting and eliminating the

consumption of meat during periods of fasting and on holidays. In contrast, Protestants have few dietary restrictions on what they are able to consume however, they eat and drink in moderation; as well as encourage exercise in their daily lives in order to stay healthy. Based on this knowledge, we should provide a vegetarian menu for those who are unable to consume meat whether the reason being religion or lifestyle. This vegetarian menu would consist of foods that provide essential proteins, vitamins and calories that would bestow the vital nutrients to consumers who do not consume meat. The vegetarian menu will be designed to cater to these individuals and assure that they get the equal amount of nutrients as a meal filled with meat. Additionally, each meal, both vegetarian and non-vegetarian, will provide specific supplements in order for the consumers to choose meals that appeal to their diet. For instance, meals that are high in: protein, fiber, iron, etc. The following tables will illustrate the main ingredients in which we will be using to cater both vegetarian and non-vegetarian consumers.

Roman Catholic

38%

Protestant 27%

Muslim5%

Other9%

None21%

Religions in Switzerland

Table 11


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High in protein

•Soybeans, beans, broccoli, spinach, corn, artichoke, cheese, tofu, eggs and seeds

High in iron

•Mushrooms, dried fruits, dark green vegetables, olives, beans, peas, asparagus, mulberries coconut, leeks, scallions and arugula

High in fibre

•Corn, cauliflower, broccoli, cabbage, raspberries, romaine lettuce, celery, squash, beans, mushrooms and oranges

Low-cholesterol

•Olive oil, canola oil, olives, avocadoes, oat, rice, flax seeds, garlic, almonds, walnuts, pistachios, whole barley, dark chocolate and green tea

Low sugar

•Berries, broccoli, cauliflower, bok choy, cabbage, brussel sprouts, mushroom, tomatoes and radishes

Vegetarian Ingredients


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Additionally, based on previous analysis; the Swiss has a high average of disposable income however, they are keen on saving their money. Thus to cater to this, Flexfoods will keep our price range between $10-$15 which will include both a meal and a drink. Additionally, our company is aware of common allergies such as that of peanuts and gluten therefore, our facilities will be nut-free and offer gluten-free alternatives.

Language will play a large role in the labelling and menu design of our company. The primary languages in Switzerland are: German (64.9%) and French (22.6%); based on this we will translate the menu in German, French and English. English, since we are looking to open up our first store in Zurich, we are aware that it attracts numerous tourists from all over the world, having an English menu would be ideal in these circumstances. With a language barrier our company would have to hire an English-German translator in order to aid us with the promotions, menu, employee training and communication to our suppliers.

In 2014, Switzerland was one of the leading countries in regards addressing environmental issues and strongly imposing their environmental policy throughout their nation. Switzerland’s international environmental policy can be characterised as a pro-active, ambitious but solution-oriented engagement. Strengthening international environmental governance, climate change, biodiversity, and chemicals and waste management are the main priorities23. Therefore, in order to satisfy the environmental policy that Switzerland has imposed; our company will be working with suppliers that provide environmentally friendly products. For instance, our bags, cups, plates, utensils and take-out boxes will all be recyclable or biodegradable. Additionally, we will put in

23 Prrez, F. (n.d.). Switzerland’s international environmental policy: An active, reliable and constructive partner. Retrieved April 1, 2010, from http://www.bafu.admin.ch/dokumentation/umwelt/09249/09355/index.html?lang=en&lang=en

High in protein

•Turkey breast, chicken breast, salmon, tuna and lean beef

High in iron

•Beef

Low-cholesterol

•Chicken breast, salmon and tuna

Non-Vegetarian Ingredients


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place recycling bins alongside our garbage bins in order to encourage our consumers to recycle.

Furthermore, Switzerland has also put in place food related policies, the Swiss Food Act, that companies must follow in order to properly import and export goods into and out of their country. The following section will elucidate the key policies in which Flexfoods will adhere to. To begin, Switzerland’s food law has adapted the European Union’s policy of “risk-based inspection”. This signifies that food inspection is based on risk evaluation. The companies that are to be inspected are divided into 4 risk categories. This division results from the inspection results regarding self-regulation, food quality, hygienic processes and activities, as well as spatial-operational conditions. Considering further parameters such as production volume, consumers and the type of food produced, the enterprises are graded into risk categories, which serve as a basis for the order of the inspection24. If the firm doesn’t succeed in meeting the adequate requirements to pass the inspection (i.e. food control violation, hygiene problems, etc); the firm must then explain the reasoning behind this shortcoming and how they will implement appropriate solutions in order to solve the issue. If the firm fails to improve its circumstances, they are at risk at paying a fine and suffer a heavy penalty.

Moreover, businesses that produce, process, treat, store, transport, distribute import or export food must be legally registered underneath the Swiss government. They must also adhere to the policy of “self-control”. This policy had been created in 1995 and was incorporated into the Swiss Food Act in 1995. What the “self-control” policy advocates is the following: “the responsible person ensures within the businesses under their control that all stages of production, processing, and distribution of foods and commodities satisfy the legal requirements, in particular regarding to health protection, the protection against fraud, and the hygienic handling of food and commodities”25. The purpose of this policy is to ascertain the proper handling and production of food, application of quality management, traceability and the mandatory withdrawal of unsafe foods.

Lastly, the Swiss Food Act also explain in detail the food labelling obligations that must be followed in order to legally and properly distribute foodstuffs in Switzerland. The following table will clarify the food labelling requirements in Switzerland:

24 Food Control. (n.d.). Retrieved August 11, 2013, from http://www.industriallaw.ch/en/food-law-switzerland/food-control-166.htm 25 Obligation for self-regulation as principle of Swiss Food Law. (n.d.). Retrieved August 11, 2013, from ttp://www.industriallaw.ch/en/food-law-switzerland/self-control-food-law-164.htm


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Packaging The Customs authorities are very particular about the quality of packaging and labeling, especially in case of food products. False descriptions are strictly prohibited.

Languages Permitted on Packaging and Labelling

French, German or Italian

Unit of Measurement Metric units of measurement and weight.

Mark of Origin “Made In” Not mandatory, except in the case of foodstuffs and drinks.

Labelling Requirements As a rule, the label or packaging for consumer goods must indicate the specific name of the product (in French, German or Italian), metric measure, sales price, unit price, weight of each component in the case of mixed products, and ingredients and additives in decreasing order of weight. Consumer goods must be marked with the country of manufacture prior to sale. Packaged goods must also indicate the quality of purity, the ingredients and the net weight of measure of the contents. All particulars of weight and measurements must comply with the regulations of the Federal Measurement Office.

Specific Regulations As per the Foodstuffs Ordinance, additional labelling information needs to be provided in the case of certain products, which includes the name of the manufacturer or distributor, country of origin of the product, and 'use by' date. Many distributors provide additional information on their labels, such as the 'EAN code' for computerized data retrieval, and/or the nutritional or energy value of the product. In addition, certain products like medicines, cosmetics, cleaning agents, electrical appliances,


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measuring and weighing devices, heating systems, pressure vessels and motorcycles are subjected to additional labelling and packaging regulations related to safety, environment and consumer protection.

Table 12 source: Packaging and labelling regulation in Switzerland. (2014, October 1). Retrieved from https://en.santandertrade.com/international-shipments/switzerland/packaging-and-standards

Ultimately, companies are 100% responsible for the proper food handling and production process. They must ensure that they obey all of the policies that they have agreed to upon their registration. Also, we will label our foods accordingly and provide an informative pamphlet to our consumers that will grant them access to all of our foodstuff’s nutritional information (i.e. ingredients, calories, possible allergy warnings, etc). Flexfoods acknowledges these policies and will strictly comply to the Swiss Food Act in order to assure the correct handling and production of our food products.

5.3 MARKET POTENTIAL

One of the main reasons we chose Switzerland as an optimal country for Flexfoods is due to the high level of importance healthy eating is to the Swiss. Apart from Danes, Switzerland buys the highest amount of organic food in Europe. Organic/extremely healthy eating used to exclusive to one group of people. Now however, the customer base has become quite broad. As far as future trends are concerned: “Health and wellness is expected to continue to see a positive performance during the forecast period. Swiss consumers are ready to spend money on healthier products, despite their premium price positioning. New product launches with a strong health and wellness positioning are most likely to be the winners over the forecast period.” (Euromonitor, n.d.). Additionally, the future trend is projected to increase as times goes on as the Swiss have begun to enforce the importance of healthy eating to the youth. Given Switzerland’s openness for new businesses, we would be able to gain a sizeable piece of the market: “The Swiss Import Promotion Programme implemented by Osec is active in 14 countries and supports small and medium sized companies from emerging markets to gain improved access to the Swiss and European market through trade fair participation and other tailor-made matchmaking activities.” (Rita Stupf, n.d. fibl.org).


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Our target customers are both male and female between the ages of 18 and 35, looking to maintain a healthy lifestyle. There are other sources that carry products similar to ours, such as organic markets, and healthier options at establishments like McDonalds. However, our segmentation strategy that separates us from the others is the “on the go” structure. Unlike an organic market, Flexfoods appeals to those who want to eat healthy in a fast food environment. When buying food at markets, it’s generally for the purpose of preparing yourself at home. Furthermore the “healthy” options at McDonalds and otherwise, are filled with unhealthy ingredients. Flexfoods is the best of both worlds, combining speed with healthy ingredients, and separating us in the market.

5.4 RISKS Switzerland’s democratic constitution dates back to 1848. The Swiss government is organized on three levels: federal, cantonal (based on 26 cantonal constitutions), and communal. Switzerland has a federal two-chamber parliament consisting of the National Council, and the Council of States. The national council consists of 200 members elected every four years. The Council of States represents the cantons (similar to the US Senate). There is no full-time president, all duties are handled by one or all government members.

The Swiss economic policy has always been based on free trade, there are low import duties and essentially no import quotas (with the exception of agricultural produce.) Switzerland is known as an open market, as it has a zero percent average tariff rate. As mentioned, some non-tariff barriers hinder imports concerning agriculture. The government generally treats foreign and domestic investors equally; foreign investment is not screened.

Switzerland currently has 30 free trade agreements in place, Canada being one of them. Meaning the countries have made commitments to ease access to each other’s markets for goods, services, and investment. In terms of customs, the Swiss customs administration regulates all goods that are imported. Tax rates however, depend on the type of goods and services and the country of origin. All goods and services that are imported must be cleared with customs. Switzerland’s public income from taxation is very low, companies in the country are subject to a low tax rate. The Swiss value added tax (VAT) rate depends on the nature of the product and the country of origin, the three rates

Table 13


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are 8%, 3.8%, and 2.5%. More specific to our venture when dealing with food and drink, the taxation rate is 2.5%. All businesses have to be registered at one of the commercial registries in Switzerland.

The Swiss government welcomes foreign direct investment, and is not hindered by barriers of any kind. Several Cantons offer foreign investors tax exemptions and tax incentives. For example, some cantons may offer as many as ten years of tax exemptions to new firms. With the exception of certain sectors (telecommunications, etc.), there is no surveillance or screening done on foreign investment.

5.5 COMPANIES AND PRODUCTS IN THE MARKET

Some major competitors in the Swiss fast food service market are McDonalds (45% market share in Swizterland), Burger King (2% market share in Switzerland), and Subway. The Swiss fast food market is quite competitive, but dominated by the aforementioned franchises. However, these franchises do not offer much in terms of healthy eating options. Having a healthy menu gives our company comparative advantage.

Our biggest product competition would include Subway sandwiches, and McDonalds’ wraps and salads. While on the surface, these food items sound like healthy alternatives to traditional fast food, they are packed with salt, fat and sugars which, as we all know, are not healthy in the quantities we currently eat them in.

McDonalds and Subway are our main competitors. McDonalds alone has the largest fast food market share and one of the largest brand awareness’s in the world (refer to Table 14). McDonalds’ marketing strategy has, especially in the past year, taken a major turn and has proved very advantageous for the brand. McDonald’s has been constantly de-bunking rumors, bringing cameras into their manufacturing facilities so that the public can really see what goes on behind the scenes.

Table 14


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On the other hand, Subway already has a reputation for being a healthier alternative to traditional fast food. Subway also has a large brand awareness, and consumers trust what they know, so Subway could impede our company’s success as a result of the current brand awareness.

Our differentiation strategy would include commercials and billboards explaining our different types of menus; gluten-free, vegan, high-protein options are all available and these are things that are becoming popular, especially in the health and fitness industry.

6. CONCLUSION AND RECOMMENDATION

As a result of our research findings, we have determined that Flexfoods would be most successful in Switzerland because of ease of market entry, a stable government, and a strong economy. Flexfoods offers healthy alternatives to traditional fast food franchises, and encompasses foods from local markets and suppliers, which will, in turn, support the economy and food industry. With a growing healthy living phenomenon, Flexfoods will be a successful, sustainable option for a large number of people living in Switzerland. While lifestyle is a huge factor of Flexfoods’ success, religion and language will also prove to be quite influential in our success. Having high-protein food options that don’t always include meat products will allow persons following religious practices to eat at our franchises while maintaining dietary restrictions. Further, having vegetarian, vegan, and gluten-free food options will also allow us to cater to a greater number of people. To conclude, Flexfoods will be successful in the Swiss market because we have competitive advantage through our dedication and sensitivity to all of our client’s dietary restrictions.


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7. REFERENCES

Political System and Government. (n.d.). Retrieved December 2, 2014, from http://swiss-government-politics.all-about-switzerland.info/ Swissworld.org - Switzerland's official information portal. (n.d.). Retrieved December 5, 2014, from http://www.swissworld.org/en/economy/international_context/trade/ Switzerland. (n.d.). Retrieved December 4, 2014, from http://www.heritage.org/index/country/switzerland (n.d.). Retrieved December 5, 2014, from https://www.gov.uk/government/publications/exporting-to-switzerland/exporting-to-switzerland http://www.justlanded.com/english/Switzerland/Switzerland-Guide/Business/Summary-Opening-a-business-in-Switzerland Switzerland: Foreign investment. (n.d.). Retrieved December 2, 2014, from https://en.santandertrade.com/establish-overseas/switzerland/foreign-investment Health and Wellness in Switzerland. (n.d.). Retrieved December 5, 2014, from http://www.euromonitor.com/health-and-wellness-in-switzerland/report Rich or poor, Swiss are big fans of organic food - SWI swissinfo.ch. (n.d.). Retrieved December 5, 2014, from http://www.swissinfo.ch/eng/rich-or-poor--swiss-are-big-fans-of-organic-food-/32793282 (n.d.). Retrieved December 5, 2014, from https://www.fibl.org/fileadmin/documents/shop/1558-organic-market.pdf Switzerland. (2012, January 1). Retrieved from http://www.infoplease.com/encyclopedia/world/switzerland-economy.html#ixzz3I7GkFP5H

The World Factbook - Switzerland. (n.d.). Retrieved June 20, 2014, from https://www.cia.gov/library/publications/the-world-factbook/geos/sz.html

Switzerland's Political System. (n.d.). Retrieved from http://www.democracy-building.info/switzerlands-political-system.html

Switzerland and the World. (n.d.). Retrieved from http://www.swissworld.org/en/politics/foreign_policy/switzerland_and_the_world/

Economy of Switzerland. (n.d.). Retrieved from http://www.princeton.edu/~achaney/tmve/wiki100k/docs/Economy_of_Switzerland.html

Switzerland GDP Growth Rate. (n.d.). Retrieved January 1, 2014, from http://www.tradingeconomics.com/switzerland/gdp-growth

http://swiss-government-politics.all-about-switzerland.info/

http://www.swissworld.org/en/economy/international_context/trade/

http://www.heritage.org/index/country/switzerland

http://www.justlanded.com/english/Switzerland/Switzerland-Guide/Business/Summary-Opening-a-business-in-Switzerland

http://www.justlanded.com/english/Switzerland/Switzerland-Guide/Business/Summary-Opening-a-business-in-Switzerland

https://en.santandertrade.com/establish-overseas/switzerland/foreign-investment

http://www.euromonitor.com/health-and-wellness-in-switzerland/report

http://www.swissinfo.ch/eng/rich-or-poor--swiss-are-big-fans-of-organic-food-/32793282

http://www.swissinfo.ch/eng/rich-or-poor--swiss-are-big-fans-of-organic-food-/32793282

https://www.fibl.org/fileadmin/documents/shop/1558-organic-market.pdf

http://www.infoplease.com/encyclopedia/world/switzerland-economy.html#ixzz3I7GkFP5H

http://www.infoplease.com/encyclopedia/world/switzerland-economy.html#ixzz3I7GkFP5H

https://www.cia.gov/library/publications/the-world-factbook/geos/sz.html

http://www.democracy-building.info/switzerlands-political-system.html

http://www.democracy-building.info/switzerlands-political-system.html

http://www.swissworld.org/en/politics/foreign_policy/switzerland_and_the_world/

http://www.princeton.edu/~achaney/tmve/wiki100k/docs/Economy_of_Switzerland.html

http://www.tradingeconomics.com/switzerland/gdp-growth


41 | P a g e

Britt, C. (2012, September 2). How Switzerland is weathering the storm. Retrieved from http://www.swissinfo.ch/eng/how-switzerland-is-weathering-the-storm/33400022

The Swiss Economy. (n.d.). Retrieved from http://www.swissworld.org/en/economy/

Prrez, F. (n.d.). Switzerland’s international environmental policy: An active, reliable and constructive partner. Retrieved April 1, 2010, from http://www.bafu.admin.ch/dokumentation/umwelt/09249/09355/index.html?lang=en&lang=en

Monetary Policy Strategy. (2014, January 1). Retrieved from http://www.snb.ch/en/iabout/monpol/id/monpol_strat#t14

Switzerland - International Trade. (n.d.). Retrieved from http://www.nationsencyclopedia.com/economies/Europe/Switzerland-INTERNATIONAL-TRADE.html

Switzerland Balance of Trade. (n.d.). Retrieved in 2014, from http://www.tradingeconomics.com/switzerland/balance-of-trade

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Curtis, M. (2013, July 13). Swiss top the tables for household savings. Retrieved from http://www.thelocal.ch/20130717/swiss-top-the-tables-for-household-savings-report

Food Control. (n.d.). Retrieved August 11, 2013, from http://www.industriallaw.ch/en/food-law-switzerland/food-control-166.htm

Obligation for self-regulation as principle of Swiss Food Law. (n.d.). Retrieved August 11, 2013, from ttp://www.industriallaw.ch/en/food-law-switzerland/self-control-food-law-164.htm

Essential Zurich 2013. (n.d.). Retrieved September 19, 2013, from https://www.stadt-zuerich.ch/prd/de/index/statistik/publikationsdatenbank/Taschenstatistik/TAS_2013en.html

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Food Regulations. (n.d.). Retrieved in 2014, from http://www.ezv.admin.ch/zollinfo_privat/04342/04359/04361/index.html?lang=en

http://www.swissinfo.ch/eng/how-switzerland-is-weathering-the-storm/33400022

http://www.swissworld.org/en/economy/

http://www.bafu.admin.ch/dokumentation/umwelt/09249/09355/index.html?lang=en&lang=en

http://www.bafu.admin.ch/dokumentation/umwelt/09249/09355/index.html?lang=en&lang=en

http://www.snb.ch/en/iabout/monpol/id/monpol_strat#t14

http://www.nationsencyclopedia.com/economies/Europe/Switzerland-INTERNATIONAL-TRADE.html

http://www.nationsencyclopedia.com/economies/Europe/Switzerland-INTERNATIONAL-TRADE.html

http://www.tradingeconomics.com/switzerland/balance-of-trade

http://www.s-ge.com/switzerland/export/en/content/static/Free-Trade-Agreements

http://www.s-ge.com/switzerland/export/en/content/static/Free-Trade-Agreements

https://www.stadt-zuerich.ch/portal/en/index/portraet_der_stadt_zuerich/wirtschaftsraum_u_-foerderung.html



http://www.oecdbetterlifeindex.org/countries/switzerland/

http://www.thelocal.ch/20130717/swiss-top-the-tables-for-household-savings-report

http://www.industriallaw.ch/en/food-law-switzerland/food-control-166.htm

https://www.stadt-zuerich.ch/prd/de/index/statistik/publikationsdatenbank/Taschenstatistik/TAS_2013en.html



http://www.bfs.admin.ch/bfs/portal/en/index/themen/00/09/blank/ind42.indicator.420004.420001.html

http://www.bfs.admin.ch/bfs/portal/en/index/themen/00/09/blank/ind42.indicator.420004.420001.html

http://www.ezv.admin.ch/zollinfo_privat/04342/04359/04361/index.html?lang=en


42 | P a g e

Market Potential Index (MPI) 2014. (n.d.). Retrieved from http://globaledge.msu.edu/mpi

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Jarrett, P. and C. Moeser (2013), “The Agri-food Situation and Policies in Switzerland”, OECD Economics Department Working Papers, No. 1086, OECD Publishing. http://dx.doi.org/10.1787/5k40d6ccd1jg-en

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http://globaledge.msu.edu/mpi

https://en.santandertrade.com/international-shipments/switzerland/packaging-and-standards

https://en.santandertrade.com/international-shipments/switzerland/packaging-and-standards

https://www.ch.ch/en/swiss-customs/

http://www.ezv.admin.ch/zollinfo_privat/04342/04359/04361/index.html?lang=en

http://www.industriallaw.ch/en/food-law-switzerland/overview-food-law-202.htm

http://www.ifpri.org/sites/default/files/publications/brochure_switzerland.pdf

http://www.cbi.eu/system/files/marketintel/2012_swiss_food_labelling.pdf


43 | P a g e

8. APPENDICES

Appendix A

Dec

isio

n C

rite

ria

Impo

rtan

ce

Wei

ght

Rat

ing

(1-

5)A

sses

smen

t

Rat

ing

(1-

5)A

sses

smen

t

Rat

ing

(1-

5)A

sses

smen

t

Rat

ing

(1-

5)A

sses

smen

t

Rat

ing

(1-

5)A

sses

smen

t

Cri

teri

a 1

Cos

t of D

oing

Bus

ines

s15

%

Ease

of d

oing

bus

ines

s5%

40.

22

0.1

10.

053

0.15

50.

25

Labo

r cos

ts5%

40.

25

0.25

10.

053

0.15

20.

1

Cor

pora

te T

axes

5%1

0.05

50.

253

0.15

20.

14

0.2

Cri

teri

a 2

Mar

ket

Pot

enti

al20

%

GD

P pe

r cap

ita5%

10.

055

0.25

30.

152

0.1

40.

2

Mar

ket P

oten

tial

10%

50.

54

0.4

30.

32

0.2

10.

1

Mar

ket p

urch

asin

g po

wer

5%5

0.25

20.

11

0.05

40.

23

0.15

Cri

teri

a 3

Ris

k P

rofi

le10

%

Stab

ility

3%3

0.09

50.

152

0.06

10.

034

0.12

Food

infla

tion

5%3

0.15

20.

11

0.05

40.

25

0.25

Res

olvi

ng In

solv

ency

2%4

0.08

10.

023

0.06

50.

12

0.04

Cri

teri

a 4

Ava

ilab

ilit

y of

Lab

our/

Sk

ills

10%

Labo

r for

ce3%

50.

152

0.06

10.

034

0.12

30.

09

Labo

ur fo

rce

part

icip

atio

n5%

10.

055

0.25

20.

14

0.2

30.

15

Lite

racy

rate

2%5

0.1

40.

081

0.02

30.

062

0.04

Cri

teri

a 5

Bus

ines

s O

pera

ting

Env

iron

men

t15

%

Star

t-up

cos

ts7%

30.

214

0.28

20.

141

0.07

50.

35

Cos

t of l

ivin

g4%

20.

085

0.2

10.

043

0.12

40.

16

Get

ting

Cre

dit

4%3

0.12

50.

22

0.08

10.

044

0.16

Cri

teri

a 6

Qua

ntit

y an

d Q

uali

ty o

f Inf

rast

ruct

ure

10%

Qua

lity

of p

orts

6%4

0.24

20.

121

0.06

50.

33

0.18

Bro

adba

nd2%

50.

12

0.04

10.

024

0.08

30.

06

Ener

gy2%

20.

041

0.02

30.

064

0.08

50.

1

Cri

teri

a 7

Pro

duct

/Ser

vice

Spe

cifc

Cri

etri

a20

%

Agr

icul

ture

land

5%4

0.2

30.

152

0.1

50.

251

0.05

Ecol

ogic

al fo

otpr

int

5%4

0.2

50.

253

0.15

10.

052

0.1

Hea

lthy

5%2

0.1

50.

251

0.05

40.

23

0.15

Food

pro

duct

ion

5%4

0.2

30.

152

0.1

50.

251

0.05

TO

TA

L10

0%3.

363.

671.

873.

053.

05

1 le

ast a

ttra

ctiv

e, 5

mos

t att

ract

ive

Cou

ntry

Att

ract

iven

ess

Ana

lysi

s

Ger

man

yA

ustr

iaN

ethe

rland

sSw

eden

Switz

erla

nd

You

r pr

oduc

t/se

rvic

e: H

ealt

hy F

ast F

ood

Y

our

sour

ce c

ount

ry: S

wit

zerl

and


44 | P a g e

Appendix B

Germ

an

yS

wit

zerl

an

dA

ustr

iaN

eth

erl

an

ds

Sw

ed

en

Decis

ion

Crit

eria

So

urc

e o

f d

ata

Measu

rem

en

t o

f th

e

data

Data

Data

Data

Data

Data

Crit

eria

1 C

ost

of

Doin

g B

usin

ess

Ease o

f d

oin

g b

usin

ess

Wo

rld

Ban

k G

rou

p: D

oin

g B

usin

ess

Ran

kin

g o

ut

of

189

co

un

trie

s (

2013)

21

29

30

28

14

Lab

or

co

sts

Tra

din

g E

co

no

mic

sIn

dex

po

ints

110.0

9109.0

4149.1

111.5

9116.9

Co

rpo

rate

Taxe

sT

rad

ing

Eco

no

mic

sP

erc

en

tag

e29.6

17.9

225

25

22

Crit

eria

2 M

ark

et

Pote

nti

al

GD

P p

er

cap

ita

Th

e W

orl

d B

an

kC

urr

en

t $U

S45,0

85

80,4

77

49,0

54

47,6

17

58,2

69

Mark

et

Po

ten

tial

Glo

bal E

dg

e

Ran

kin

g o

ut

of

87

co

un

trie

s (

2014)

68

16

17

19

Mark

et

pu

rch

asin

g p

ow

er

Cen

tral In

tellig

en

ce A

gen

cy

: T

he

Wo

rld

Factb

oo

kC

urr

en

t $U

S3.2

77 t

rillio

n371.2

billio

n361 b

illio

n699.7

billio

n393.8

billio

n

Crit

eria

3 R

isk

Profi

le

Sta

bilit

yG

lob

al E

dg

eP

erc

en

tag

e (

%)

83

90

83

75

90

Fo

od

in

flati

on

Tra

din

g E

co

no

mic

sP

erc

en

tag

e (

%)

11.2

61.8

90.1

1-0

.09

Reso

lvin

g I

nso

lven

cy

Wo

rld

Ban

k G

rou

p: D

oin

g B

usin

ess

Reco

very

rate

(cen

t

on

th

e d

ollar)

82.9

47.6

82.4

89.2

75.5

Crit

eria

4 A

vail

abil

ity o

f L

abou

r/S

kil

ls

Lab

or

forc

e

Cen

tral In

tellig

en

ce A

gen

cy

: T

he

Wo

rld

Factb

oo

k

Po

pu

lati

on

th

at

is

cap

ab

le o

f w

ork

(millio

ns)

44.2

4.9

76

3.7

37

7.9

39

5.1

07

Lab

ou

r fo

rce p

art

icip

ati

on

Th

e W

orl

d B

an

kP

erc

en

tag

e (

%)

60

68

61

65

64

Lit

era

cy

rate

Cen

tral In

tellig

en

ce A

gen

cy

: T

he

Wo

rld

Factb

oo

k

Perc

en

tag

e (

%)

of

tota

l p

op

ula

tio

n99

99

98

99

99

Crit

eria

5 B

usin

ess O

perati

ng

En

viron

men

t

Sta

rt-u

p c

osts

Wo

rld

Ban

k G

rou

p: D

oin

g B

usin

ess

Perc

en

tag

e (

%)

of

inco

me p

er

cap

ita

4.7

24.8

5.2

0.5

Co

st

of

liv

ing

Nati

on

Maste

rC

urr

en

t $U

S2,8

51.8

56,3

01.7

32,4

57.3

32,9

37.5

83,1

81.1

1

Gett

ing

cre

dit

Wo

rld

Ban

k G

rou

p: D

oin

g B

usin

ess

Leg

al ri

gh

ts in

dex

of

1

(hard

to

len

d)

to 1

0

(easy

to

len

d)

78

75

8

Crit

eria

6 Q

uan

tity

an

d Q

uali

ty o

f In

frastr

uctu

re

Qu

ality

of

po

rts

Nati

on

Maste

r

Scale

of

1 (

ext

rem

ely

un

derd

ev

elo

ped

) to

7

(well-d

ev

elo

ped

)6

5.2

4.9

6.8

5.9

Bro

ad

ban

d

Cen

tral In

tellig

en

ce A

gen

cy

: T

he

Wo

rld

Factb

oo

k

Nu

mb

er

of

peo

ple

that

are

in

tern

et

users

(millio

ns)

65.1

25

6.1

52

6.1

43

14.8

72

8.3

98

Po

wer

Th

e W

orl

d B

an

k

En

erg

y u

se (

kg

of

oil

eq

uiv

ale

nt

per

cap

ita)

3,8

22

3,1

89

3,9

02

4,6

68

5,1

34

Crit

eria

7 P

rodu

ct/

Servi

ce S

pecif

c C

rit

eria

Ag

ricu

ltu

re lan

dT

he W

orl

d B

an

k

Perc

en

tag

e (

%)

of

lan

d a

rea

47.8

38.7

38.3

54.6

7.5

Eco

log

ical fo

otp

rin

tE

nv

iro

nm

en

tal P

erf

orm

an

ce I

nd

ex

Ran

kin

g o

ut

of

178

co

un

trie

s (

2014)

61

811

9

Healt

hy

B

loo

mb

erg

Ran

kin

gs

Perc

en

tag

e (

%)

of

lan

d a

rea

83.5

888.2

983.1

84.0

983.9

Fo

od

pro

du

cti

on

Th

e W

orl

d B

an

k

Fo

od

pro

du

cti

on

ind

ex

106

104.7

104.4

112.6

94.2

Data

Coll

ecti

on

Tool

Cou

ntr

y M

atr

ix A

naly

sis

Documents

Final Report - IMR