In the following report we will analyze and compare three Spanish companies which are involved in the production and distribution of citrus fruits, specifically oranges. These firms are amongst the largest orange exporters from Spain and are operating internationally. Therefore, it serves as perfect example to examine their internationalization strategies in the orange industry.
Tollupol: Internationalization strategy taken within the orange industry
Founded in 1927 in the the Almenara region of Valencia, Spain, Tollupol began its journey when when co-founder Pedro Perez opened a citrus fruit stand in the center of Paris, France. Meanwhile, co-founder Joaquín Llusar was responsible for the production of the citrus fruits back in Spain. It wasn’t until the end of the Spanish Civil War in 1939 that the company began to commercialize their own citrus fruit in Spain, firstly in Zaragoza then in the 1940s to the Catalonia region. In 1942 the newly-nationally commercialized citrus fruits began to be sold in Barcelona in a shop called “Born Vell.”
In the 1950s exports to Switzerland began while concurrently growing the business nationally and in France. When the third generation of family members formally took over the company at the end of the 90s, Tollupol formed a joint venture Pedro Perez SARL and other ETS Lemeunier SA. Later the Tollupol group acquired the other companies in the joint venture and it became an equity alliance. What is now known as the Tollupol Group encompasses six specific brands and has in assets four kilometers of farm land, a packing plant in Valencia, Spain, and various physical points of sales throughout Europe.
Internationalization Strategy: Tollupol follows a strict Global Internationalization Strategy for various reasons. Firstly, commodities (such as citrus fruits) target the universal needs of consumers. Secondly, this model emphasis producing the product in a high volume. Tollupol has a key advantage in that their production volume is high while their economy of scale is minimal because they already have the farmlands facilities to deal with a high production volume.
Furthermore, there is little need for differentiation or adaptation of the product as it has moved into new international markets because, again, it is a commodity. In fact, Tollupol’s “Spanish Orange” brand relies on the fact that it is a unique product to Spain and that it is not differentiated. Thusly, even though there is a high pressure for global integration because there is an ever-growing demand by consumers, there is little to no local responsiveness.
In addition, Tollupol controls every process along the production and supply chains because both the production and distribution happens in the same place; on their own farms, in their own packing plants, in the own physical locations. On the other hand, Tollupol’s internationalization strategy does show some similarities to the “International Model” when it comes to its centralized coordination methods.
Location Process: The location decision process in 1927 was complex and took into account the condition of the Spanish environment as its economic and political climates were volatile. For this reason, Tollupol decided to firstly sell their products in neighboring France, while their production remained national. There was much less risk involved in terms of politics, income inequality and competitive risk. Once the economic, political, and demographic indicators of risk were reduced in the 1940s, Tollupol began to commercialize their product nationally. Switzerland and other parts of Europe came naturally in the sequence of entry later on. By dealing only in Europe, the company’s infrastructure (production, transportation, and communication) did not become a competitive disadvantage.
Entry Modes: Tollupol’s entry mode in its internationalization process has evolved throughout the company’s one-hundred year old history. Initially it was one sole company which functioned independently, later however it became a joint venture, or a consortium involving three separate companies from the same country with the same, specific objectives. In 2011 when the Tollupol Group acquired the the other share-holder’s stake it became an Equity Alliance and functions presently as one solidified group with six brands under one entity.
AMC Group: Internationalization strategy taken within the orange industry
Founded in 1931, the AMC specializes in the production and commercialization of fruits, juices, flowers, and ice cream. The group has a total of 3,250 hectares of its own citrus production, which are divided between Spain, Israel, the United States, South Africa, and Chile. They produce a large variety of oranges, each grown in a specific location; hence the need to distribute the production throughout four continents. In addition, they also own juice squeezing and packaging factories located in Spain, Costa Rica, and Germany.
Internationalization Strategy: The AMC group follows an almost exclusive strategy of manufacturing and marketing products with the distributor’s brand. One of the company’s objectives is to be a leader in the food sector, particularly in natural fruit and juices.
AMC offers its international clients the most complete range of products during the whole year. To develop this international strategy, AMC has expanded their production of citrus fruits and grapes (which are their principal products), both in Spain and the southern hemisphere (primarily Argentina, Uruguay, Chile, Peru and South Africa.)
*AMC citrus production: www.amcgrupo.eu
The internationalization strategy used by AMC group is the “Transnational Strategy” because it involves operating (producing) in different countries and markets, adjusting to local preferences, and establishing value-added activities.
AMC grows and packages the fruit in its production centers in Spain. Each order is customized following the buyer’s requirements (labels, packaging), to be then exported to the main world markets through its subsidiaries abroad.
AMC is highly specialized and vertically integrated, and understands perfectly the supply chain. These are the factors that have led to the internationalization of the group in global way: its global presence in both the production and distribution of its product.
Location Process: The majority of AMC’s products originate in Spain, however in order to provide high-quality, and wide-ranging products to its customers, AMC has established strategic alliances with local producers all over the world. Currently, they have alliances with more than more than 280 companies from 19 countries. Therefore, their reach in terms of production and distribution is also global, as we have previously stated. Furthermore, its commercial offices are located in Great Britain, France, Germany, Italy, the United States, Canada, China, and Dubai.
AMC products are packed and produced in their producing countries, and then exported to the main world markets through their foreign subsidiaries: Agricommerce (for France, Italy and Benelux), MMUK (for the United Kingdom and Ireland), MM USA and MM Canada (for North America), MM Iberia (for the Spanish and Portuguese markets) and AMC Direct (for Poland, the Czech Republic, Slovakia and Hungary).
Entry Mode: AMC group has a lot of partners and subsidiaries around the world, which makes their entry mode by subsidiary, specifically from “acquisition”. The supply to large customers of the Distribution is made through the companies of the AMC Group abroad.
The AMC group has decided to be present in some of the most powerful countries of each continent. In North America, they have three subsidiaries: AMC Direct Canada, AMC Direct Inc., based in New Jersey, and MM USA Inc., headquartered in Los Angeles. The subsidiary in Asia is called MM Asia, and distributes to the markets of China, Thailand, Korea and Hong Kong. In Africa they have recently opened a subsidiary in Cape Town, AMC RSA, to distribute around the continent.
Anecoop: Internationalization strategy taken within the orange industry
Anecoop was created in 1975 and is a Spanish company which is composed of Spanish citrus cooperatives. This cooperative was created with the purpose of expanding their market nationally and finding new markets internationally. They believed that this union would improve their business possibilities.
Currently composed by 71 cooperatives, Anecoop is the leading exporter and second marketer of citrus fruits in the world. They export their products throughout Europe and China, totaling 68 countries.
Internationalization Strategy: Although Anecoop is present all over Europe, the production of oranges only takes place in Spain, specifically via 68 cooperatives and partner companies located in the 10 Spanish provinces (Valencia, Sevilla, Murcia, and Almeria) with strong agricultural industries.
The internationalization strategy used by Anecoop is “International Strategy”, in which they offer a product to a foreign market where it is not available. In this case, the specific product that Anecoops produces and distributes is the “Spanish Orange,” which is exclusive to Spain. Furthermore, because oranges are a commodity product, there is no possibility of adapting them to the culture or customs of foreign countries. In fact, the idea is not to adapt the products to foreign markets because it is branded as a Spanish product.
Location: Anecoops’ goal is to be the leader in the citrus fruit market, both nationally and internationally. To do so, the company has created a wide international network, focusing principally on European countries.
They firstly focused their attention on wealthy countries such as France, England and Russia, due to both their economy and weather. Later they moved to other former-Soviet countries such as Poland, Czech Republic, Slovakia and the Netherlands, again because of the weather but also because of the fact that these countries have no possibility of producing citrus fruits. In fact, Anecoop has avoid expanding into the South American, African, or Asian continents because of the high competition in production from countries such as Brazil, United States, India, China and Mexico.
Dissimilarly, their expansion into China was to export a different product altogether.
Entry Mode: The entry mode into foreign countries for Anecoop is a little peculiar. Even though their production only takes place in Spain, they own several
offices and facilities in foreign countries which are used for distribution, logistics and, other activities. Some of these facilities were built by the Anecoop group while others were bought or acquired.
The most adequate entry mode for Anecoop is “exportation,” because even if the company relies on cooperatives of farmers and may be considered a “consortium,” the company is solely controlled by the directors of Anecoop. Also, while the company uses foreign facilities as a means of distribution, its principal activity is exportation.
Based on this analysis we can see that in addition to each company having a different internationalization process, location process, and entry mode in order to expand globally within the orange industry, they also present a distinctive set of strategies based on their history, needs, and objectives.