Final global business plan paper for company in Brazil - Essay Example

? Summary from Cases: The company A has a great opportunity to expand its operations in South American region and establish their brand Brazil is undoubtedly the best option to start with considering plenty of factors which not only make Brazil a very lucrative and profitable market for Company A but also it will open new gateways for the company to expand and enhance their position in the region. Whenever a company reaches out to new markets where there are always many factors that determine how well the company’s product is going to perform once it has been launched. As far as the energy drink Jackie O is concerned, factors look very favorable and suitable for a product launch in Brazil where political, economical, social and financial options are very healthy and growing (Brainard and Diaz, 2009). As already indicated by the case study, the political scenario is quite stable and favorable for a foreign investment, Brazilian government and few other countries are trying to form an alliance among Latin American countries which would significantly create a positive impact on the political stability in the region (Grewal and Levy, 2009). Furthermore, economic conditions of Brazil are likely to favor any foreign investment where economy of Brazil comes under top ten economies of the world with most gross domestic product (GDP) which is an indicator of their economic stability. Their government and policies have worked well with the macroeconomic indicators to keep the economy growing even in the times of recession when the entire world was crumpling (Baer, 2007). Also, one of the most crucial factors that influence the launch of a product in a new market is the availability of finances and financial institutions. Company A does not only have the option of taking funds from US accounts but they can also finance their projects from the funds available at fully developed financial institutions like Banks in Brazil. For a product like energy drink, social factors will play an important role in determining the sales volume of the product (Grewal and Levy, 2009). There are some areas where problems might arise which include high inequality in the region, hunger and poverty with a high rate of epidemics including life threatening HIV, along with environmental issues like pollution and deforestation brought about by the recent development in the region particularly in urban areas. Brazil has a culture which includes people from many different ethnicities which would create a diversified market demand for the Company A, here is one important factor that Company A has to decide once they execute the plan for the launch of their product that whether to go with a generic product focusing all the strata of society or would they differentiating with respect to different taste according to the preference of different classes of people (Baer, 2007). Moreover, a plus factor for Company A is the use of eco friendly raw materials in the production process since many of the energy or carbonated drinks are not healthy or recommended by health experts as they provide a temporary uplift in the energy level and when the impact starts to decrease, the energy level falls way below the level it would have fallen had there been no intake of energy drink. The use of organic raw materials by Company A would make a healthy energy drink for the consumers and hence will give more energy without the crashing feeling (Brainard and Diaz, 2009). Apart from the socio and macro economic indicators, there are many other things that Company a needs to take into account which includes competitor analysis, exchange rate depreciation, taxation and regulatory laws. Company A must investigate the market to find out how many competitors are operating with their respective prices, they have to evaluate the expected fluctuation in the exchange rate which can either increase or decrease their profits. Also, a thorough and in depth analysis of taxation and regulatory laws are imperative since they vary from country to country and high depend on the political stability so it is highly recommended to run an extensive check on all these accounts (Brainard and Diaz, 2009). For a product launch to be effective, Company A has to develop an integrated and intense marketing campaign to take the product to the masses. Product price, promotion, packaging and positioning have to be done effectively in order to penetrate and fulfill the market expected demand. They also have to work out their supply chain networks since they are moving their operations to a new country where they might face issues regarding the product distribution. Times have changed and world has become a global village where internet should be used as an effective tool for marketing the product and managing other resources while making sure that its done in a careful manner in order to avoid cyber crime or theft of confidential information to the competitors (Grewal and Levy, 2009). Mission statement of Company A focuses on being the market leader in energy drinks industry while operating in an effective and profitable manner and at the same time providing an organizational culture that supports employees input and give them their deserved recognition. Company A intends to work on SMART goals that means being Specific, measurable, achievable, realistic, time based and at the same time developing the objectives of growth, profitability, organizational environment, business development and fulfilling their obligations to society (Baer, 2007). SWOT analysis of Brazil demonstrates that they the major strengths of Brazil lie in high economic growth and fully developed infra structures which are crucial for any new start up company or a product launch. Weaknesses lie in complex regulatory mechanisms, fluctuations in the business cycle and complicated foreign investment policies. On the other hand economic stability and abundance of hydro electricity are considered to be the main opportunities in Brazilian market. Lastly, two major threats include HIV which although is declining but still has a huge absolute number and high interest rates (Brainard and Diaz, 2009). Company A will be carrying out their R n D in three steps by analyzing, designing and then implementing and based on the results company followed strategies of market penetration and business development. In order to be careful, Company A has initiated strong control feedback mechanisms to make sure that resources are being used in the most efficient manner, contingency plan is in place and an exit strategy is developed in case things do not work out well for the company. Based on the analysis, Brazil appears to be a profitable market/economy for Company A to launch their energy drink (Brainard and Diaz, 2009). Rationale for Selecting the Target Country: The rationale behind going for a particular country when any company is either launching a new product or expanding its existing operations depends on a vast array of factors ranging from political to socio economic potential of that market, taste and preferences of people and an expected market demand of that particular product which is to be launched. In case of Company A trying o launch their Jackie energy drink in Brazil, the decision is sound and logical on many grounds starting with the political stability of the country which is extremely critical for a company in order to have a secure environment to operate where the rules and regulations are properly governed. Furthermore, economic stability in Brazil has been excellent in the last few years indicating a strong expected demand of the product in the future. Apart from the political and economic reasons, Brazil is one of the most populated and high income countries among Latin American region and hence presents a lucrative opportunity for Company A to expand their operations. Also, strategic alliance between US and Brazil would help company A on many matters to reduce the hassle in expansion to a foreign country. Moreover, the presence of other energy and soft drinks companies and high consumption of drinks by the masses highlights the potential market to be explored by Company A in the region. There are plenty of other factors that make Brazil a strong market for the launch of Jackie energy drink including the infra structure development which covers a wide domain of transport system, distribution network and availability of basic utilities like electricity etc. On the other hand, Company A might face some difficulties in its expansion process including cultural differences and presence of varied ethnic groups in the region who might have different preferences along with some foreign investment policies of the country but from a holistic point of view; the overall case of Brazil is comprehensively strong for an energy drink like Jackie to be launched (Brainard and Diaz, 2009). Country Risk Analysis: Before launching the product in Brazil, there are plenty of aspects that need to be covered in order make the launch profitable. Brazil is facing issues on front of terrorism though the problem is not severe but it can hamper the growth of a new product. Also, there are complex regulations regarding the foreign investment and the risk of losing profits due to exchange rate depreciation of US dollar against Brazilian real. Currently there are few other companies who are producing energy drinks so Company A has to be price their drink competitively and they will have to decide in advance which pricing strategy are they going to apply in the market in order to gain the maximum market share in the industry of energy drinks (Kennedy, 2006). An integral aspect to a successful product launch in a new market is dependent upon the supply chain and distribution network. Company A might be at disadvantaged as compared to other companies since native people are relatively hesitant towards foreign company and their product. Company A must run a thorough investigation in order to fully develop their distribution network to make sure that their product is available at the time at required outlets. Moreover, there are some risks of cultural differences present in the society which might not be very substantial but can have an effect on the growth process so Company A must prepare and execute its policies after incorporating the preferences and tastes of all the people from different ethnicities. Company A needs to be extremely cautious about the cyber crime in the region while exchanging information over the internet with clients and partners since they are a foreign company and their confidential information is crucial to their successful launch. Changing macro economic factors are also very important in influencing the demand and growth of a product, company A needs to incorporate the risk if high interest rates and corresponding inflation due to these interest rates and their impact on the sales volume of the energy drink (Brainard and Diaz, 2009). Marketing Plan For the Energy Drink: Marketing is undoubtedly the most critical aspect of a product launch. It covers a wide range of areas including how the product will be priced and what techniques will be used in determining pricing, position of the product where the product will be placed in the market. Third domain is the promotion covering what would be the methods and sources used to promote the product so that the masses are made familiar with the new product and the last one is product itself which includes the type of variants to be introduced in the market depending upon the prevalent taste and preferences of people. Pricing the product requires investigation of the market to figure out what are the existing prices charged by the competitors. Best policy for Company A would be to avoid price skimming that is to charge higher prices and instead it should charge competitive prices slightly lower than the competitors in order to attract the customers. Positioning of the energy drink must be done in a manner so that it is visible at outlets and stores to customers in an attractive manner preferably in a corner or an area which gets customer’s attention in any way (Kennedy, 2006). In case if promotion, company A should use above the line and below the line techniques for promotion so that general population is made aware of this new energy drink in the market. Later on, company A can also incorporate athletes and sportsmen in their promotional campaign since general public is highly influenced by the attributes of sportsmen. Lastly, as far as the product is concerned, it should be made available in different variants with the use of national Brazilian raw materials and it must cater to the taste preferences of varied social classes present in the society. Company A can either launch a single variant or then diversify later on or they can initially launch with couple of variants to give their customers a variety to choose from (Kennedy, 2006). Financial Overview For the Global Venture: In order for Company A to make profits out of this launch, it is imperative that they undertake extensive financial overview of the launch and project based on financial indicators how the company is going to make profits. Important things to be looked into include NPV (Net present Value) which discounts all the future profits and deduct initial investment from it; it gives an overall profitability of the venture. Apart from NPV, payback period and calculation of initial investment is very critical since it explains the duration in which company would be able to retrieve and cover their investment at the beginning. Company A must also prepare in advance to avoid the risk of foreign exchange depreciation in which they might lose on profits if value of US dollar goes down against Brazilian Real. They must either invest Brazilian real in proper ways or accumulate those investments in areas like purchase of Gold which would not be affected by exchange rate fluctuation. Another way to reduce the risk of exchange rate fluctuation is to diversify the investment portfolio in different channels that would mitigate the detrimental impact of global macro economic crisis (Keegan and Green, 2010). As far as the initial financing resources are concerned, there are various ways in which it can be done effectively. Company A can either move some of its resources from home to the location of operations, or they can take out a loan either from US or Brazil. It would be better to if they take out a loan from Brazil as it would be aligned with the rules and regulations of that country and company would not have to face any substantial complications in the process considering the strategic alliance between US and Brazil and the fact that US has been the biggest foreign investor in the region. Also, company A on a later stage can sell bonds and stocks of their company in Brazil to increase the entitlement of ownership among Brazilian people that would also help them in building their brand loyalty after their launch. Financial institutions like Banks can be used in taking out loans. In some cases, state or government also loan out money to foreign investors in order to attract investment and considering the booming economy of Brazil Company A would not be facing issues regarding the financing of the project from financial institutions of the country (Keegan and Green, 2010). Investment funds are also among the possible financial intermediaries from whom funds can be borrowed. Last thing that Company A must keep in mind while selecting their mode of financing is the prevalence of high interest rates in the Brazilian economy that means that higher would be the interest payments and eventually high cost to the company of loans. All these factors must be incorporated before the launch in order to make the product successful and profitable for the company in this new market. Talking about financial figures in Millions of USD, the company can take loan from bank. The start up totally required around 2000 million USD loan. Looking at the following chart it is clear that the company will break even in 2 years of operation. In less than 24 months, the product will become profitable after returning all the investments. References: Baer, W. (2007) Brazilian Economy: Growth and Development. Lynne Reinner Publishers. Brainard, L. and Diaz, L. (2009) Brazil as an economic super power: Understanding Brazil’s changing role in the global economy. Brookings Institution Press. Grewal, D. and Levy, M. (2009) Marketing. McGraw-Hill/Irwin. Chicago IL USA. Pp. 321-323 Keegan, W. J. and Green, M. (2010) Global Marketing. Prentice Hall. Upper Saddle River, NJ, USA. Pp.211-216 Kennedy, D.S. (2006) The Ultimate Marketing Plan: Find Your Hook. Communicate Your Message. Make Your Mark. Adams Media; 4 edition. Avon MA, USA. Pp. 79-83 Read More