Final Individual Take-Home Exam
Final Individual Take-Home Exam
Nowadays, technologies have eased the way goods and services are exchanged among governments and entities between two or more countries. Despite involvements in actual purchases and sales of goods and services between one or more countries, the IB 207 class simply imparts into one skills and knowledge, beyond and above normal business expertise, for one to manage an international business. One becomes familiar with international and country specific regulations, local customs and laws and strategies of conducting business while involving multiple currencies. Specifically, successful learners in this class are capable of understanding how management of human resources, finance and investments, marketing and foreign exchanges can change when a business decides to become global. Individuals also get to understand why a large and prosperous domestic business should become international. Limited home market, adverse local politics, severe local competitions and costly domestic market are some of the factors that can indeed make the business to expand abroad. Upon international expansion, the business will experience lessened export and transportation costs, increased market share, reduced distances to raw materials and expanded production capacities (Kirpalani, Garbaski & Kaynak, 2012).
The IB 207 class has been helpful in establishing current reasons for increasing global business growths. One can appreciate that expansion in digital technologies, increased quicker means of transportation, liberalizations of cross-border movements and commercial exchanges and decreasing local government boarder controls have eased the way resources, goods and services flow from one country to the other. This has evidently increased opportunities for large and prosperous business to expand abroad. Nonetheless, the class introduces one to the likely challenges and problems that the business seeking to expand abroad may encounter: political factors, exchange instability, tariffs, quotas, corruption, stringent bureaucracy, cultural issues and technological policies. Being aware of these problems and challenges is important for a multinational company to plan for necessary strategies of entering and settling in foreign market. The expansion strategies may involve using joint ventures, license agreements, export agreements and so forth (Kirpalani, Garbaski & Kaynak, 2012).
Marketing Pizza in Mexico
Two well known marketing concepts are the Marketing Mix, also known as 4 P’s of Marketing, and the 4 A’s Framework. The marketing mix involves the marketer considering effects of price, product, promotion and place of distribution. The 4 A’s framework has the four components as acceptability, affordability, accessibility and awareness. While the marketing mix of 4 P’s is more oriented from the producer’s or the seller’s perspective, the 4 A’s framework is more oriented from the buyer’s or consumer’s perspective. However, for the marketing strategy to be successful, components of the 4 P’s framework must be balanced with those of the 4 A’s framework (Dodd, 2016).
Product features have to result in acceptability of the product by meeting or exceeding expectations and needs of customers. If the expanding company is American, it has to incorporate Mexican traditional ingredients of pizza such as chorizo, cactus and chile peppers. The pizza will also require spinach toppings on Alfaredo source bases. The price should balance well with consumer affordability of the product. The price charged by the firm should be that that the consumers in the Mexican market are willing and able to pay. Stores such as Pizza Patron have emphasized on “more pizza, less money”. The component of awareness in 4 A’s corresponds to that of promotion in 4 P’s. The expanding firm has to create both brand and product awareness for the customer to have adequate knowledge and good perceptions towards the product. The promotions should be done in Spanish, with traditional Mexican Hispanic touches. The company’s strategies can range from face-to- face customer inquiry and information-taking to more popular wide range television and internet advertising. Accessibility refers to the customers’ ability to easily acquire and use the product. Corresponding to distribution in 4P’s, the firm has to ensure that customers can access the product with a lot of convenience and availability. Despite ensuring online ordering, the company has to have physical stores with restaurant areas for individuals to take the meals. The stores can be located in affluent areas of Michoacan, Jalisco, Hidalgo, Puebla, Veracruz, Yucatan, Quintana Roo, Nuevo Leon, Sonora, Chihuahua and Tamaulipas (Assink, 2014; Silverstein, 2013).
Starbuck’s Foreign Market Entry Strategy
Starbucks employs varied entry strategies depending on the macro-environmental business features of a particular country. The company has chosen partnership strategy to increase its lines of distribution internationally. Partnerships in Asia, specifically in Japan, have seen the company teaming up with others of similar ideas and goals. Despite similar corporate goals, the partners have enough financial resources to help in local research and developments. The partners usually have experience in their own markets, and would provide rich information about retail markets. The Asian countries have enough human resources, despite saving Starbucks from dealing with the government directly. However, sometimes, choosing a partnership alliance can be problematic. There could be difficulties in integrating cultures of the two firms, and still one has to meet licensing costs (Carpenter & Dunung, 2016).
The other entry strategy has been joint ventures with some Japanese enterprises. Main benefits have included reduction in financial risks, sustained competitive advantages and gradual awareness of how the US products can perform in foreign markets. However, Starbucks has had to employ its own creativity to develop sustainable competitive advantage in foreign markets. The Company has to meet challenges in dealing with foreign customers with different coffee cultures (Carpenter & Dunung, 2016).
In the UK, the company has been acquiring other existing firms to introduce its business there. Acquisitions in such countries have been made possible because of relatively shared culture and legislations. Being already known there, the company has found acquisition to enable fast entry and benefits from the already established operations. However, acquisitions demand high costs and there could be integration problems with home offices. While moving to developing nations such as China, the company has used a great deal of licensing agreements. By licensing, it has been entering into agreements with Chinese companies to be permitted for using their processing and manufacturing trademarks, know-how and other skills to carry out businesses in their country. Such a move is advantageous in that capital is not usually tied up in foreign countries, and there can be options to buy licensee(s). There can be easy evaluations of business risks because data for existing markets can be available. However, the licensee may become a competitor. For such arrangements to remain sustainable, the foreign country has to have sound legal and regulatory environment of enforcing contracts (Carpenter & Dunung, 2016).
References
Assink, M. (2014).6 ways to market to Hispanic customers. Pizza without Borders. Retrieved on 4 May 2016 from http://pizzawithoutborders.pmq.com/2014/03/6-ways-to-market-to-hispanic-customers.html
Carpenter, M.A. & Dunung, S.P. (2016). International-expansion entry modes. International Business: Opportunities and Challenges in a Flattening World, 1.
Dlabay, L. & Scott, J.C. (2010).International Business. New York: Cengage Learning.
Dodd, G.D.(2016).Why you need the 4A's and the 4P's for effective marketing. LinkedIn.com. Retrieved on 4 May 2016 from https://www.linkedin.com/pulse/why-you-need-4as-4ps-effective-marketing-g-david-dodd
Kirpalani, V.H., Garbaski, L. & Kaynak, E. (2012).Successfully Doing Business/Marketing In Eastern Europe. New York; Routledge.
Silverstein, F. (2013).Pizza Patrón founder reveals the secret to capturing the Latino market. NBC Latino. Retrieved on 4 May 2016 from http://nbclatino.com/2013/05/08/pizza-patron-founder-reveals-the-secret-to-capturing-the-latino-market/
