Challenges of Expansion to a Foreign Location; Keurig Green Mountain Company

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Revise your Week 3 assignment, Research Analysis for Business, using the feedback provided by your facilitator. This Week 6 report should only include one conclusion, so you will need to rewrite the conclusion you included in your Week 3 assignment, Research Analysis for Business.

Select a foreign market in which to expand your chosen product. If you wish, you may use one of the countries your team analyzed in their Week 5 Comparative and Absolute Advantage Assignment.

Prepare a minimum1,750-word report addressing the points listed below. The use of tables and/or charts to display economic data over the time period discussed is highly encouraged, you may submit any economic data in Microsoft® Excel® format in a separate file. You may use the U.S. Department of Labor's Bureau of Labor Statistics (BLS), U.S. Dept. of Commerce's Bureau of Economic Analysis (BEA), the Federal Reserve of St. Louis's FRED data, the CIA World Fact Book, World Bank data, and World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library.

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Purpose of Assignment This week students will review and revise their Week 3 Research Analysis for Business Signature Assignment based on economic analysis and the feedback provided by their facilitator. Students will also expand their Week 3 analyses to evaluate the challenges of expanding their chosen company's production to a foreign market. About Your Signature Assignment This signature assignment is designed to align with specific program student learning outcome(s) in your program. Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree. The signature assignments might be graded with an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for program improvements. Assignment Steps Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products. Revise your Week 3 assignment, Research Analysis for Business, using the feedback provided by your facilitator. This Week 6 report should only include one conclusion, so you will need to rewrite the conclusion you included in your Week 3 assignment, Research Analysis for Business. Select a foreign market in which to expand your chosen product. If you wish, you may use one of the countries your team analyzed in their Week 5 Comparative and Absolute Advantage Assignment. Prepare a minimum1,750-word report addressing the points listed below. The use of tables and/or charts to display economic data over the time period discussed is highly encouraged, you may submit any economic data in Microsoft® Excel® format in a separate file. You may use the U.S. Department of Labor's Bureau of Labor Statistics (BLS), U.S. Dept. of Commerce's Bureau of Economic Analysis (BEA), the Federal Reserve of St. Louis's FRED data, the CIA World Fact Book, World Bank data, and World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library. The new sections of your report should: • • • • • • • Evaluate current global economic conditions and their effects on macroeconomic indicators in your selected country. Provide forecasts for population growth, gross domestic product (GDP) growth, GDP per capita growth, export growth, and sales growth. Evaluate any competitors' existing production in the chosen country. Assess sales forecasts in the selected country by using the Federal Reserve of St. Louis's FRED data, the CIA World Fact Book, World Bank data, World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library. Categorize the type of economy that exists in your selected country as closed, mixed, or market. What is the difference between these types of economies and how might this affect your expansion? Assess how your chosen country's current credit market conditions, especially interest rates and the availability of financing, affect demand for your product or service and your planning or operating decision for your production in that country. Analyze the role of the selected country's central bank on that country's economy. Compare the availability, education, and job skills of the work force in the selected country. Discuss any additional challenges of international production, such as political stability, • • availability of government financing or other incentives, threat of capital controls, and exchange rate risks. Explain any additional supply chain challenges you anticipate if attempting to make your product in your chosen country and selling the product in other countries. Based on the data gathered and analysis performed for this report write a conclusion in which you: o Create business strategies, including price and non-price strategies, based on your market structure to ensure the market share and potential market expansions and explore global opportunities for your business in a dynamic business environment and provide recommendations. o Develop a recommendation for how the firm can manage its future production by synthesizing the macroeconomic and microeconomic data presented. o Propose how the firm's position within the market and among its competitors will allow it to take your recommended action. o Recommend strategies for the firm to sustain its success going forward by evaluating the findings from demand trends, price elasticity, current stage of the business cycle, and government. o Recommend any comparative advantages your company will have over competitors currently operating in that country, and defend your position, either for or against, expanding your company's production into your chosen country based on your research. Integrate with the Week 3 Individual Assignment, and incorporate corrections and suggestions from the instructor's feedback. The final report should be a minimum of 2,800 words. Cite a minimum of three peer reviewed sources not including the textbook. Include all peer-reviewed references and government economic data sources/references from Week 3. Format your assignment consistent with APA guidelines. Click the Assignment Files tab to submit your assignment. 1 Keurig Green Mountain Company Veronica L. Scott ECO/561 August 10, 2017 Darryl Baker 2 Keurig Green Mountain Company Market structure Keurig Green Mountain aims to explore international markets specifically to invest in healthy foods niche. In projection, as a heavy investment, the project has a possibility of succeeding in its infant stages although intensive capital is essential. The available capital for such an investment by Keurig Green Mountain Company is from its profits though everything cannot be used to venture into new and risky areas. In close connection, the company made $492.9 million in profit in 2015, an amount that is only 10% of the required investment amount (Brenton & Pelkmans, 2016). Consequently, even if there is a chance of widening in foreign markets, the need for external funding becomes an acute need to cover the gap. The leading primary goal will be to increase the number of outlets, customers, and revenues by at least 30% in the first operational year. Increase sales from $4.7 billion (2015 figures) to above $6.0 billion. In today’s business, success is a combination of many factors, and targets play an essential role. If it will be possible to achieve this goal within the target period, it will be a big step in meeting scope-time-cost objectives since there will be a convergence of time and intent at the expected instance. It will also prevent budgetary inflations which as well will save on cost. 3 Trends in current macroeconomic indicators for last three years The company made $492.9 million in profit in 2015, an amount that is only 10% of the required investment amount. Therefore, even if there is a chance of widening in foreign markets, the need for external funding becomes a serious need to cover the gap. As a result, one of the possible risks is lacking enough funding which may lead to breakdowns or unnecessary delays at crucial stages. There is also the issue of acceptance in the foreign market. Just as a note, there lacks reliable research about the particulars of the target market, which can make it easier to customize the products according to the specific needs of the new ventures. The Real gross domestic product (GDP) first quarter revenue was $ 1,258.42 million and $ 1,386.36 million in the first quarter of 2015.The CPI of the company has been increasing from 8-12% across the channels of its products. Keurig Green Mountain laid off more than 330 workers in 2015 which is a 5% of its workforce. The company has intended buying $1 billion in stock from its shareholders in an effort of increasing its dividend. The company paid $11.62 billion in $11.62 billion and a 25-cent dividend per share. It has been planning to increase its 4 dividends 28.75 cents per share. The company is competing with well-established beverage stores like Maxwell House, Starbucks, Eight O'Clock Coffee, Dunkin' Donuts, and Folgers. Keurig could only do around $12,540 million about its revenue in 2014. This figure was just a 3% increase from what it obtained in the previous year although it was a decline of 5.3% compared to what the company recorded in 2011 (Bierman & Smidt, 2012). In fact, this inconsistency in performance was one of the defining factors that made the company seek to partner with others in 2015 in order to do business together. In 2015, however, the company sales declined further to $13,506 million and it was no doubt that systems change was vital to prevent such a trend. In response, due to the introduction of organic coffee, the sales recorded a new and encouraging figure of $14,221 million in the following year, and there is a high expectation that with going global things will be different about the revenue and profits. Trends in demand for last three years and impact on the industry and the firm Keurig Green Mountain Company made $492.9 million in profit in 2015. This amount is only 10% of the required investment amount of $5 billion. As a result, even if there is a chance 5 of widening in foreign markets, the need for external funding becomes an acute need to cover the gap. If this is achieved, it is also projected that the sales and profits will rise with a similar figure in that, overall, the company made over $ 40 billion in the last 3 years. However, there will be a little different since the profit margins will be affected due to increased expenditure in foreign market as opposed to local business. On the same case, if it happens that sales fall short 20% of the estimates, there will be a high possibility that the business hasn’t explored the entire market and more needs to be done. Similarly, it can be a reflection that Keurig Green Mountain is unable to resist competition and its products are not yet convincing as expected. Most importantly, it can be an indication that the population is lower than estimated or there are some aspects of culture that might be affecting sales patterns hence the need to re-strategize and make adjustments. On the other hand, if sales change 20% higher than the estimates, it is an accurate indication of a receptive market since sales are directly proportional to market’s responsiveness (Hull, 2014). It will just be another way to identify the company’s strengths and use them as key areas to develop the business around. About time value for money, it is fortunate that investments in real time have a chance to make up to 150% of their seed capital if wisely invested ((Kerzner, 2013). Another motivation in countries like Canada is that the US dollar is the best performing currency in the region and foreign exchange returns seem to favor its productivity all through. Regarding that, there is confidence for payback in the expected time which as well gives a promise that Keurig Green Mountain investments are not misplaced. It will also be able to meet any recovery in case of loan repayments and have the required strength to maintain business at sustainable and stable levels. In conclusion, there is more promise to succeed due to many opportunities available as well as 6 the identification of effective measures as a contingency to risk. Regarding that, the call for Keurig Green Mountain to go international via health foods line is at the perfect time. FY2016 FY2015 FY2014 FY2013 4th quarter September 1036.96 11995.57 1047.18 3rd quarter June 969.53 2nd quarter March 1127.18 1103.07 1004.79 1st quarter December 1258.42 1386.36 1386.67 1339.06 1258.42 4520.03 4707.68 4558.10 FY 1022.37 967.07 Current data and information, such as pricing and the availability of substitutes A small change in price affects the demand with a more than proportionate change in price. For example; the company strives to ensure that their coffee products in both are sold at the competitive price. Due to the many competitors in the industry, pricing decisions are made after an intensive market survey. The company risks losing their customers and chasing 7 away potential ones if prices are increased. Due to the availability of other retailers that sell similar products, the customers tend to be more sensitive to prices, and a small change in can have a greater impact on the company's sales. However, the company invests in predicting new trends in advance which helps in ensuring that it has unique products before their competitors could start stocking them. Output decisions Keurig Green Mountain Company competes with many others which adopt a similar line of merchandise in the beverage market. It operates within the specialty beverage market where other direct retailers have contained the posing threat to its sales thereby affecting profits. Although it struggles at times from economic windfalls, it has been able to cope with threats from its competitors by taking advantage of its strengths. A key area has been the production of quality coffee. Similarly, the company’s global presence and product portfolio increase its chances of future existence as a world beater with an advantage to preserve its strong market presence. Conclusion Business strategies In order to improve the company’s ability to endure the pressures from within and outside its production sphere, it can adopt strategies such as aggressive pursuant of its franchising line, developing customer retention measures through promotion as well as determining its international feasibility in global markets through frequent research. On customer winning and retention mechanism, the use of media and aggressive advertisement is a viable approach as well as adopting more information technology related approaches. Rewards and incentives should also be part of its promotion techniques. All these techniques are useful and can make a great 8 difference as far as marketing is concerned. However, it is essential to have enough capital therefore there’s the need of external funding. Similarly, home delivery opportunities as well are an avenue the company should target. At homes, the people value product’s price as compared to young urban professionals who consume the company’s products. This will also help in increasing reach to customers as many companies are not doing so and in turn, increase the volume of sales and customer base. Recommendation for how the firm can manage its future production As a forecast about what going global means to KGMC, it is expected that with the introduction of healthy coffee beverages in the international market as well as the diversification of the tastes and ingredients to suit custom and cultural demands, the sales would rise to $15, 500 million within the next one year as well as hit $16,345 million by 2018 (Feenstra, 2015). However, the only limitation with those projections is that even if there will be an increase in revenue, it won’t be proportionate as far as profits are concerned since the expenses will be more due to recurrent and fixed expenditure and in particular asset financing (Kerzner, 2013). With no doubt, introducing diversified coffee products in the international market would not only mean making a mere entry but it is also a permanent settlement and ensuring the product is accessible. In order to make this principle work, KGMC needs to ensure that there are enough outlets in every center that it operates and in the ratio of 1% of the population in an area being served with a fixed premise. Through projections, it is expected to consume close to $73million to make it a reality. This is another significant area that will involve having in place a logistics team. Due to travel, allowances, expenditure, as well as their payments, it is expected to consume close to $11 million before everything settles down. 9 Firm’s position within the market and among its competitors will allow it to take your recommended action As a keynote, Keurig Green Mountain Company position as an established retailer continues to be threatened by the rise of competitors whose main aim is fringe its performance and take over it. The products that the company produces are being replicated and sometimes offered at a cheaper price. The difference in target customers is the main factor that makes it able to cope with the pressure it is facing. In the light of that, it has the mandate to establish the rising gaps and answer the new demands in the market. However, although its products have been globally recognized for its style, appealing culture and Ubiquity's advantage, it is necessary to approach a different but closely related product line hence the investment in food products. One sure way of offsetting competition is avoiding just dealing with beverages, and investing heavily in healthy food products. Strategies for the firm to sustain its success going forward Keurig Green Mountain future plan is to phase out its present machines that are attuned with the unlicensed pods which are a big blow to its competitors such as Tree House. Keurig Green Mountain had at first guaranteed licensing profits through the Keurig 2.0 machine that is a license-requiring for all upcoming K-Cups. However, the company has assured more market shares through eliminating former machines that continue to work with unlicensed packs of KCups. Since Keurig Green Mountain pioneered an inventive homemade brew, it warrants to reap the repayments for that. The United States law of patenting prohibits companies from taking advantage of their marketing command over a long period of time. The future generation machine, Keurig 2.0 will therefore not benefit from a monopoly position. Another machine such as Nestle’s Nespresso machine will compete for coffee pod 10 earnings as well as licensing partnership and this will eliminate the unreasonable competition accusation against Keurig and thus assure it to continue earning profits. In addition, Keurig Green Mountain plans also to phase out Keurig Kold, one of its products. Further, they will provide to their consumers a full reimbursement if they had already bought one. Keurig Green Mountain intends to withdraw its cold-beverage machine that has operated in less than a year after there has been a crush hampered by delays as well as tepid demand. This move will go a long way to win customers trust. 11 References Brenton, P., & Pelkmans, J. (Eds.). (2016). Global Trade and European Workers. Springer. Bierman Jr, H., & Smidt, S. (2012). The capital budgeting decision: economic analysis of investment projects. Routledge Feenstra, R. C. (2015). Advanced International Trade: Theory and Evidence. Princeton university press. Hull, J. C. (2014). The evaluation of risk in business investment Elsevier Kerzner, H. R. (2013). Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons VERONICA SCOTT: Your Week Three assignment was completed well. The content was good. You were missing the required running head and page headers. You also used it extensively throughout the paper. Do not use a heading after the title or after the conclusion. The first paragraph should explain the topic and provide a brief summary of the various information that is covered in the paper, without using the word introduction. The conclusion is just that, do not add Market or anything else. Your graphs need citations. week 6 Signature Assignment: Challenges of Expansion to a Foreign Location Prepare a minimum1,750-word report addressing the points listed below. The use of tables and/or charts to display economic data over the time period discussed is highly encouraged, you may submit any economic data in Microsoft® Excel® format in a separate file. You may use the U.S. Department of Labor's Bureau of Labor Statistics (BLS), U.S. Dept. of Commerce's Bureau of Economic Analysis (BEA), the Federal Reserve of St. Louis's FRED data, the CIA World Fact Book, 12 World Bank data, and World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library. [OA] Challenges of Expansion to a Foreign Location100 1Global Economic Conditions(10.52%) Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not evaluate current global economic conditions and their effect on local macroeconomic indicators in your selected country. Analyzed current global economic conditions and their effect on local macroeconomic indicators in your selected country. Evaluated current global economic conditions and their effect on local macroeconomic indicators in your selected country. Synthesized economic co effect on loc indicators in Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not consider forecasts for population growth, GDP growth, GDP per capita growth, export growth, and sales growth. Analyzed forecasts for population growth, GDP growth, GDP per capita growth, export growth, and sales growth. Considered forecasts for population growth, GDP growth, GDP per capita growth, export growth, and sales growth. Developed f growth, GDP capita growt sales growth Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not differentiate the competitors’ existing production in the chosen country. Explained the competitors’ existing production in the chosen country. Differentiated the competitors’ existing production in the chosen country. Evaluated th production in Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not assess forecast sales in the selected country. Analyzed forecast sales in the selected country. Assessed forecast sales in the selected country. Assessed fo selected cou went beyond requirement Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not prioritize the type of economy that exists in your selected country – closed, mixed, or market. Explained the type of economy that exists in your selected country – closed, mixed, or market. Prioritized the type of economy that exists in your selected country – closed, mixed, or market. Evaluated th exists in you closed, mixe 2Forecasts(5.26%) 3Competitor Production(5.26%) 4Forecast Sales(5.26%) 5Types of Economy(5.26%) 6Differences in Types of Economy(0.05%) Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not explain the difference between these types of economies and how this might affect your expansion. Identified the difference between these types of economies and how this might affect your expansion. Explained the difference between these types of economies and how this might affect your expansion. Evaluated th these types this might af Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not justify how your chosen country’s current credit market conditions affect demand for your product or service and your planning or operating decision for your production in that country. Analyzed how your chosen country’s current credit market conditions affect demand for your product or service and your planning or operating decision for your production in that country. Justified how your chosen country’s current credit market conditions affect demand for your product or service and your planning or operating decision for your production in that country. Justified how country’s cu conditions a product or se planning or o your product Justification 7Credit Market Conditions(5.26%) expectations 8Role of Central Bank(5.26%) Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not analyze the role of the selected country’s central bank on that country’s economy. Explained the role of the selected country’s central bank on that country’s economy. Analyzed the role of the selected country’s central bank on that country’s economy. Evaluated th country’s ce country’s ec Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not compare the availability, education, and job skills of the work force in the selected country. Identified the availability, education, and job skills of the work force in the selected country. Compared the availability, education, and job skills of the work force in the selected country. Evaluated th education, a work force in Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not explain the additional challenges of international production, such as political stability, availability of government financing or other incentives, threat of capital controls, and exchange rate risks. Identified the additional challenges of international production, such as political stability, availability of government financing or other incentives, threat of capital controls, and exchange rate risks. Explained the additional challenges of international production, such as political stability, availability of government financing or other incentives, threat of capital controls, and exchange rate risks. Evaluated th challenges o production, s stability, ava financing or of capital co rate risks. 9Comparisons(5.26%) 10Challenges(5.26%) 11Supply Chain Challenges(5.26%) Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not explain any additional supply chain challenges you anticipate if attempting to sell your product made in your chosen country to countries outside of that market. Identified any additional supply chain challenges you anticipate if attempting to sell your product made in your chosen country to countries outside of that market. Explained any additional supply chain challenges you anticipate if attempting to sell your product made in your chosen country to countries outside of that market. Evaluated an chain challen attempting to made in you countries ou 12Comparative Advantages(5.26%) Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not recommend any comparative advantages your company will have over competitors in that country. Analyzed any comparative advantages your company will have over competitors in that country. Recommended any comparative advantages your company will have over competitors in that country. Recommend advantages have over co country. Rec beyond the e assignment. Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Did not defend your position, either for or against, expanding your company’s production into your chosen country based on your research. Analyzed your position, either for or against, expanding your company’s production into your chosen country based on your research. Defended your position, either for or against, expanding your company’s production into your chosen country based on your research. Synthesized for or agains company’s p chosen coun research. 13Position(5.26%) 14The paper is organized in a logical and coherent manner. Transitions are used to improved flow.(10.52%) Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Paper is organized in a logical or coherent manner but not both. Paper is generally organized in a logical and coherent manner; transitions, however, are awkward. Paper is generally organized in a logical and coherent manner; transitions for the most part are smooth. Paper is fully and coheren are smooth a from one po 15Valid research is used to appropriately support the content. References to sources are used when required.(10.52%) Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Valid research is not used to support content; references to sources are not used when required. Valid research is generally used to support content; references to sources are minimally used when required. Valid research is properly used to support content; cited at least two references. Valid resear support cont two referenc 16The author uses correct grammar and spelling. Format and citations are consistent with APA rules.(10.52%) Does Not Meet Expectations Approaches Expectations Meets Expectations Exceeds E Multiple errors in grammar and spelling; some format and citations are not consistent with APA rules. Several errors in grammar and spelling; some format and citations consistent with APA rules. Few errors in grammar and spelling; most format and citations consistent with APA rules. No errors in all format an with APA rul
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Explanation & Answer

Here you go.

Expansion to a Foreign Market outline
I.

Current global conditions

II.

Economic forecast

III.

The target economy

IV.

The central bank and its role

V.

The support of the government, availability of skilled labor and the challenges involved
in investing in Canada

VI.

References


Running Head: EXPANSION TO A FOREIGN MARKET

Expansion To A Foreign Market
Students Name
Course name
Professors name
Institution Affiliation
Date

1

EXPANSION TO A FOREIGN MARKET

2

Expansion To A Foreign Market.
There exist numerous advantages for expanding a business into the international market.
These benefits include; streamlining efficiency, tax incentives, faster growth and international
partnerships. This returns increases the capital asset base of a firm and hence high returns to the
company. However, despite this many advantages, there exist a lot challenges in taking in taking
a company globally. This challenges can sometimes overwhelm a business leading to its closure.
Nevertheless, with careful and tactical planning and by choosing the ideal foreign location.
Companies can experience a smooth conversion when growing their global print. To careful
mitigate this the company must first look at the current global economic conditions and how that
may affect its operation. Secondly, the firm must also consider the threat posed by its competitor
in that ideal location. Also, the firm also must analyze the type of economy the country operates
in and the role the government and the central bank in the economy. Through thorough analysis
of this factors, the firm can develop a strong business strategy to manage any future challenges.
Current global conditions
The world economy has over the years performed dismally. This has been cited to near
recession conditions that have affected major economies such as Europe and Asia. Furthermore,
slow economic growth in emerging economies such as China and Japan has contributed
enormously to this decline in global economic growth.(Cortez&Areal, 2012) Nonetheless,
recently there has been a considerable improvement in the global economic conditions. This has
been cited to the following conditions;
To start with, major economies, including China Europe and Canada, have introduced
friendly monetary policies, for instance, the low-interest rate to stimulate economies. This
changes in monetary policies have led to positive economic growth in those economies hence

EXPANSION TO A FOREIGN MARKET

3

boosting the global economic growth. Another contributing factor has been the difference in
monetary value between the U.S. dollar and the rest of the world currency. Recently, the U.S.
dollar has reigned supreme compared to other currencies gaining significantly against every
major currency. This has greatly a...


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