Develop a brief overview of the fictitious company including its product(s)

Scenario
Imagine that you are an international business consultant to a fictitious company (make up your own product or products or service) that has decided to explore the possibilities of expansion into at least two countries.
Instructions
Create a 4–5-page paper in which you justify your assertions for each of the following:

Develop a brief overview of the fictitious company including its product(s).
Choose at least two different foreign countries where the company would globalize the product or their products, and analyze the following objectives:
Develop a brief profile of the countries that you have chosen.
Expected effects and driving forces as a result of the company´s globalization plan.
Successful strategies to enter the global market for the different foreign countries that you selected.
Comparative analysis between the company’s domestic and global environments.
External factors or environments of the selected countries (political, economic, technological, legal and others) which could benefit or discourage international business.
Investigate the key factors that you would need to understand to guide an effective pricing strategy for your product or service, based on your foreign currencies’ analysis for your selected countries.
Comparative analysis between international trade, foreign direct investment, and global join ventures. Explain which one of these models would you choose.
Better practices to look for international business opportunities for your company and for your product(s).

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Sample Answer

 

Globalization

Sweet Drinks Group Holdings is a total beverage company with its drink products sold in the United States. The company, however, aims to expand its services to two other countries across the globe. Sweet Drinks Group Holdings’ main aim is to refresh the world and make the feeling different. The company’s group of brands includes meridian, sweet soft, and refresher, among other sparkling soft drinks. The c sweet Drinks Group Holdings company hydration includes cool water, Topo, Diamond peak, vitamin water, and Yasin Blair. Besides, the company’s nutritious products include juice and other plant-based beverage brands such as simply the sweetest, Del Sweet, and Safelite. The company has an elaborate strategy of reducing sugar in the drinks to bringing a more innovative new product to the world market. Sweet Drinks Group Holdings seeks to positively impact people’s lives, communities, and the entire globe through water replenishment, recycling, proper packaging, carbon reduction in the whole value chain, and sustainable sourcing practices. In collaboration with the bottling partners, the company has in the company has been able to employ 10,000 individuals aiding in the economic empowerment of local communities and the world.

The two foreign countries Sweet Drinks Group Holdings considers globalizing their products are Mexico and South Africa. The United Mexican States, as it is officially known, is a country found in the southern part of North America. It borders the United States, the pacific ocean, Belize, and the Caribbean sea. Mexico covers about 1972,550 square kilometers, thus the world’s 13th largest country by geographical area (Mejía-Dorantes  & Villagrán, 2020). Besides, Mexico is the 10th most populous country in the globe, with the most Spanish speakers. The government organization of Mexico is composed of federal states and Mexico City. Other major urban centers include Puebla, Ciudad, and Monterrey. South Africa is the second country where Sweet Drinks Group Holdings intends to expand its operation. South Africa is found in the southmost part of the African continent. The country is a multi-ethnic, constitutional democracy composed of parliamentary units and nine provinces. South Africa is administered from three capitals; Pretoria, Bloemfontein, and Cape town. Johannesburg is located in the inland province and has the largest population of about 5 million people. Culturally, about 70% of South African citizens are of African origin, while 30% are descendants of Dutch settlers, Indians, and Asians. South Africans are passionate about sports and other cultural activities. South Africa has about 11 official languages with distinct geographical variations. The most commonly used languages include Xhosa, Zulu, Afrikaans, and English. The ruling party, ANC, promotes the use of English as the official language though other languages are still used across the country.

The driving forces behind Sweet Drinks Group Holdings globalization plan include economic, financial, political, social, and technological factors. Besides, globalization is expected to cause effects such as it will enable the company to specialize and intensify production, innovation, and capital in its output. The driving forces aiding globalization in Mexico and South Africa include rapid technology. Technology has been one of globalization’s most significant promoting factors ( Lechner & Boli,2020). Technology connects the world closer than ever before. Technological advancements have made tremendous development in product processing, communication, information, and transportation; thus, the company’s products can quickly enter the global market due to rapid technological advancements. Sweet Drinks Group Holdings moves to the two foreign markets to take advantage of the economics of scale as computers, telecommunication, and quality internet. The economies of scale above will facilitate informational delivery internationally and enhance the firm’s performance in the international market. Another strong driver for globalization is consumer pressure. The intention of the company to globalize its operations is driven by the need to provide international customers with beverages. International consumers, primarily in the countries of South Africa and Mexico, have increased pressures for more new, better, and quality products. Expected effects of the globalization plans by the company include, among others, lower cost production in foreign countries because the company will not need to export products and increased global competition; thus, prices of the products are expected to go down, and finally, it will give consumers a larger variety of choices in South Africa and Mexico.

Successful strategies for entering the two global markets of South Africa and Mexico include exporting, direct investments, joint ventures, franchising, and the use of trade intermediaries. Many firms enter international markets cautiously, and Sweet Drinks Group Holdings is not exceptional. Analysis of internal capabilities will give the best strategy to approach the two foreign markets. One of the strategies is exporting. Exporting encompasses sending goods produced in the home country to two foreign countries. Exportation is a low-risk strategy and will enable the company to establish itself well in foreign countries. The company can choose this strategy to balance seasonal demand in the home country. The second strategy for entering the two foreign markets is joint ventures. This will see the company partner with some foreign firms; the company intends to partner with foreign bottlers companies, thus shared ownership. The foreign partner is essential in providing expertise and challenges in the new markets. The comparative analysis of the domestic and foreign environment of Sweet Drinks Group Holdings is anchored on social, economic, and political fronts. In the domestic country, the company enjoys trading liberalism. It can operate freely without any hindrance by the government of competing firms because of well-established laws governing firms. Besides, there is a stable political environment to conduct business in the domestic country, unlike in Mexico and South Africa, which experience turmoil periodically due to terrorism and xenophobic expressions. In a counter analysis, in the foreign country of South Africa, there are several trade barriers, unlike the domestic market environment. However, foreign countries offer more customers and consumers of the products compared to the domestic country.

In Mexico and South Africa’s foreign markets, several factors would influence the business. The environments or factors include political factors and social and economic factors. External factors refer to things existing outside the business that will have an effect on its success. A business operating in the home and foreign markets cannot control external factors (Kett, 2020). Political factors include laws and decisions that foreign governments make. The decisions include laws, taxation, and political stability. The government can lower or raise corporation tax which will affect profits. Regarding the two foreign countries, Mexico and South Africa have favorable taxation systems; thus, the beverage business will thrive in actualizing the globalization plans. Besides, these governments have a favorable value-added tax, which will enable foreign investors to have their businesses grow. Economic factors concern unemployment, interest rates, inflation, economic growth, and exchange rate. Unemployment rates in South Africa are high; therefore, the company would get ready labor to work in its foreign firms to maximize production. Besides, the Mexican foreign exchange rates are favorable to the domestic market of Sweet Drinks Group Holdings; thus, foreign trade will benefit the company. On the contrary, South Africa’s relatively lower foreign exchange rates thus will negatively affect the company’s profit margins.

In setting good pricing strategies in the foreign market, Sweet Drinks Group Holdings Company would consider the local culture of South Africa and Mexico, its climates, and the geography of the place beside the company. The rate of return, demand, pricing, market penetration, and market stabilization.There is a distinct line between international trade, foreign direct investment, and global joint ventures, as seen in the comparative analysis of the three terms.FDI and international trade are both promoters of the global economy, enhancing cross-border exchange and transfer of goods, capital, and services worldwide. On the other hand, Joint global ventures include incorporating a company in a foreign country to enhance expertise and efficient business running. International trade encompasses buying and selling goods in the foreign market to increase consumer choices, thus reducing prices and increasing quality due to competition. On the other hand, a foreign direct investment involves a company based in none country investing business proceeds in another country (Abidin et al .,2015). I would use the foreign direct investment model when venturing into a foreign market. The company would choose the FDI model because it enables the foreign company to be directly engaged in everyday tasks from the other country leading to the transfer of knowledge, skills, technology, and money (Kett, 2020).Some of the best practices to look for and that the company will be seeking to implement in the foreign market include extensive market research to widen profitability, a promising political and economic landscape, and good customer relations.

 

References

Abidin, I. S. Z., Haseeb, M., Muhammad, A. Z. A. M., & Islam, R. (2015). Foreign Direct Investment, Financial Development, international trade, and Energy Consumption: Panel Data Evidence from selected ASEAN Countries. International Journal of Energy Economics and Policy5(3), 841–850.

Kett, B. (2020). Essays on foreign direct investment and international trade (Doctoral dissertation, University of Oxford).

Lechner, F. J., & Boli, J. (Eds.). (2020). The globalization reader. John Wiley & Sons.

Mejía-Dorantes, L., & Villagrán, P. S. (2020). A review on the influence of barriers on gender equality to access the city: A synthesis approach of Mexico City and its Metropolitan Area. Cities96, 102439.

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