Gaining Competitive Edge: Exploiting Strategies & Models to Survive in Business - Essay Sample

Introduction

The local and international business environments keep experiencing changes and companies need to adjust to gain competitive advantages. Increasing globalization and international trade continue to offer companies the power and freedom to compete on both domestic and international markets. Consequently, businesses in the different parts of the world ought to tune themselves accordingly to survive. Above and beyond, companies need to exploit various strategies and models of operation to have an advantage over rivals. Expansion into international markets is recognized among the policy that enables fair competitions among corporate entities. To be specific, expansion into other territories allows businesses to serve a larger population and increase their customer base. This is as provided by Piercy (2014), who asserts that firms in various industries can compete in the international markets to accrues increased sales volume, control broader markets and earn a significant customer base. Consequently, the expansion beyond national borders enables the business to reach more customers and sell more of their products. This paper will investigate the possible market entry strategies that Brazil Santos Coffee can use to make a productive entrance into the United States market.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Company Background

Brazil is famous all over the world as the most fruitful and devoted of coffee producing nations. Approximately one-third of the entire world's coffee supply comes from Brazil with its premium brands labeled Santos, after the port through which they are shipped. While the nation is a prolific exporter, majority of the high-quality blends are made from either the Brazil Cercado or Bourbon Santos since the two strains have a unique ability to take dark roast without becoming bitter. The selection from Santos area is with no doubt the sweetest coffee offered, and many consumers get surprised at how light and smooth it is on their cups. It is consequently an excellent choice for those who enjoy mixing their coffee with sugar and milk. At its best, it also makes a delightful espresso.

Brazil Santos Coffee is known as one of the famous companies processing and selling the unique Santos coffee brand. The company is a business group made up of more than five members who produce and distribute coffee products. The company has operated for over a decade opening more than a thousand outlets within Brazil. The company considers the Brazilian coffee capital, and by the beginning of the current decade, it was selling to more than 10 billion people in various countries of Southern America. The company's well-known commodity is the instant espresso coffee, and the Santos ground coffee. The management of the company intends to build the brand not only within Brazil but also make it an international brand. In particular, the company has identified the United States as a potential market and is looking to extend the supply of its products to this region. The company would open various shops in states across the U.S. Each company has its reasons when expanding to a market. In this case, Brazil Santos Coffee considers the U.S as a desirable destination based on the nature of the market. The subsequent sections will interpret the reasons and entry of Brazil Santos Coffee in the United States market.

Reasons for Brazil Santos Coffee Internationalizing

As earlier stated, companies decide to expand their businesses into foreign markets because they would like to realize increased sales and improve their profits. On the same note, some firms might venture into the international market because of the development that can be accrued in such places in regards to competitiveness or minimization of cost of production. Cui, Meyer, and Hu (2014) offers significant drives for businesses expanding into foreign markets. According to the author, four motives exist and are the reasons for accessing international markets. He lists the four factors as market seeking, resource seeking, strategic asset investment, and efficiency seeking. In the case of Brazil Santos Coffee, it is market finding purpose that influences the expansion of the business into the United States. Cui, Meyer, and Hu (2014) further explains what market seeking motives are. In his definition of the phrase, he asserts that they are business endeavors to gain access to new opportunities and market. Brazil Santos Coffee is determined to extend widely into a significant international market and increase its brand presence in the United States market. With this effort, the company will compete with other famous coffee brands already in this new market, such as Starbucks.

Why the USA is Favorable for Expansion

The United States is an excellent destination for businesses dealing with coffee relative to the demography of consumers in the nation its high population that creates higher demands. It is effortless to come across coffee anywhere within the country. It is available in outlets, grocery stores, malls, restaurants and in almost every home. Americans enjoy coffee despite what place or time it is. The coffee business, mainly coffee shops have grown in recent years in regards to the specialty of the beverage. The American market for coffee has boomed as customers become more aware of the espresso-based drinks and how to brew them. A survey by Jaffee (2014) indicates an increase in the consumption of coffee by 9% since 2000 and 16% since 2010. This means that there is increased demand for coffee. The researchers further highlight that more than 108 million people, which is half of the adult population of the united states takes coffee. Drinking the beverage is regarded as part of the American culture since it has some benefits to the consumer. Some people take coffee because it relieves them from stress when working while others believe that it keeps the brain active. For others, it is a recreational drink that brings people to spend time together. Coffee shop chain stores grow in the country at the rate of 10% annually compared to 2% of fast food chains. Such statistics make the United States a desirable destination for Brazil Santos Coffee expansion and a probable beneficial aspect is to bring the authentic Brazilian beans to American customers.

Secondly, the American population can result in higher demands for coffee. The country is recognized as the nation with the majority of coffee drinkers globally. In his ranking, Loftfield, et al. (2016) states that the United States is the 15th biggest consumer of coffee with an average of 0.931 cups per day. Besides, the country has a higher population of over 312 million per the latest census. The nation also spends significant amounts of money, about 4 billion dollars annually, in importing coffee. These among other factors indicate that the demand for coffee is significantly high in the U.S. Consequently, the nation remains a dream market for all companies dealing with coffee in general and Brazil Santos Coffee as well.

Analysis of United States Coffee Business Environment

Success in any industry requires accurate analysis of the business environment, and these are factors beyond the control of a company. The chain of production in the coffee industry extends across various nations hence many political, economic, legal, and cultural issues to contend with. These matters are not only different, but the impact they create to the industry differs from region to the other. To outline the strategic management and decision-making approaches, the various aspects are discussed as crucial tools for analyzing the United States market.

Political Environment

The term politics concentrates on the government's roles, exploring administrative and legal aspects that affect the development of the business environment and regulations imposed. Political factors determine governments influence on industry or policies in that economy. The element includes labor laws, tax policies, political stability, government leadership, corruption levels, bureaucracy issues, the balance of labor, trade restrictions and trade tariffs. Without a doubt, these factors are crucial influencers of business performance and the elements that need to be analyzed in the first place. The role played by the government is extremely extensive in the growth of commerce, and the improvement of both domestic and international trade. Political factors impact on the national economy both directly and indirectly. Griffiths (2019) states that politically stable nations have some changes in policies that can affect the performance of businesses.

Many political factors can affect the coffee industry, but the most important ones are the nature of trade relations between the exporting and producing countries, taxation, labor laws, stability, and corruption. It would be necessary for the manufacturer to access the trade relation between Brazil and the United States before venturing into the foreign market. For example, it may be challenging to operate in the United States if Anti-American sentiments are widespread in Brazil. Also, incidents in which mobs have set fire on American franchises can in turn impact negatively on the sales of that nation's goods in the United States. While this is the case, Brazil, and the United States as two of the largest economies in the Western Hemisphere enjoys trade partnership rooted in a shared commitment of expanding economic growth and prosperity. The United States has a progressive system of taxation with the highest cut on total sales at 13%. The labor laws are also not strict with if workers earn above the minimum wage, and entitled to various leave benefits. Lastly, the nation is among the least corrupt and politically stable in the world.

Economic Environment

The economic environment of a business strongly affects the decisions made by its management. Some factors that are part of the economic environment includes interest, exchange, and inflation rates. Such aspects would change the way a firm sets the prices of their services and products, as well as the cost of exporting or importing them as well. Consequently, the economic environment has a significant effect on how customers will behave, their purchasing power about the adjustment of demand-supply models of the given economy. The United States is among the largest economies in the world and comes second after China. The 2017 approximation of the nation's nominal GDP was around $17.295 billion (Papadimitriou & Wolff, 2016). The figure places the United States as the largest GDP compared with that of any other single country. Besides, the well-advanced infrastructure, various natural resources, and higher productivity in the country makes the United States a favorable destination and strategic market for investors.

The exchange rate is an important economic factor to consider while venturing into a foreign market. According to Iamsiraroj (2016) foreign exchange has a direct impact on the value of a firm. As a result, it will impact on the growth of a company by offering better opportunities for trading. For instance, the average price of a commodity varies from a country to the other relative to the exchange rates. What is cheap in one country can be expensive in the other. As a result, currency conversion will affect sales in foreign nations either positively or negatively. A higher exchange rate can make importation expensive forcing companies to adjust their prices higher so that they do not affect their profits. This tactic can only be successful if the country has higher average spending power. If this is not the case, then the commodity will be expensive hence reduction in demand.

Brazil Santos Coffee may face the challenge about the different values of the currency. The current exchange rate...