Countrymanager case

Our board believes, ND I agree, that to generate the kind of growth needed to drive our stock price, we need to develop a market presence In Latin America. What I need from you Is an analysis of the markets In Latin America and a plan to enter the region.

You need to tell me where we should be, when we should be there, and how we will need to manage the business. I want us to be in at least one country in the region next year. The board feels that in the near term we need to be in one or more of the following countries: Argentina, Brazil, Chile, Mexico, Peru, and/or Venezuela. Alistair Brands Alistair Brands is a u. S. Based consumer products company that produces and sells ethical (prescription) pharmaceuticals, ETC (over-the-counter or nonprescription) drugs, and consumer products.

Figure 1 Illustrates this organizational structure. I en countryman’s case? page Figure 1: Organizational Structure of Alistair Brands Ethical Drugs Consumer Healthcare Consumer Products Product Categories International Operations U. S. Operations Europe Oral Category Asia Toothpaste Latin America Finance Accounting Production MIS Country Management Country Analysis and Entry Decisions Latin America is a region of great potential.

With a population of approximately 450 lions, the region represents a population that is 50 percent larger than that of the United States and Canada.

“ Our tax dollars at work! ” Kay exclaimed. A summary of key information from this site appears in the Market Attractiveness Excel Spreadsheet. Tables 1 and 2 below compare economic and social characteristics of the home market and the scenario markets under consideration. Page 8? Countryman’s Student Guide

Table 1: Market Comparison on Basic Economic Characteristics Table 2: Market Comparison on Basic Social Characteristics Urban population % data from: www. BRB. Org/Daffier Population with access to safe water from: www.

Toothpaste is available in a number of sizes, delivery systems, textures (paste or gel), and formulations.

The basic toothpaste product is a paste or gel with flavoring and one or more active ingredients that provide specific benefits to consumers. A general description of these variations in the United States market is listed below. Not all companies produce all possible combinations. Table 4: Toothpaste Packaging and Formulation Variations Sizes (grams) Travel (25) Personal (75) Family (150) Delivery Systems Tube Pump Texture Paste Gel Formulations (Ingredient/Benefit) Basic contains fluoride for prevention of dental cavities.

Also, single people might prefer the convenience of smaller package sizes, whereas families may prefer a larger package which is typically more economical on a cost per gram basis. Your R department may offer other SKU combinations as the simulation progresses. A number of firms produce and/or market toothpaste in the world market. Table 5 lists the five major producers of toothpaste for the world market, including Alistair Brands.

Not all global brands or global competitors will be represented in every market, and some markets might include brands produced by local firms.

3 4. 3 Argentina 425 443 460 470481. 1 507. 9 2. 56 Brazil 767982 85 66.

7 99. 8 6. 01 Chile 211 221 232 245 187. 1 229. 3 2.

Overall toothpaste market growth in the United States is very slow, matching the slow growth of the population, so that increases in sales of a brand are due to reductions in share of competitors. Much of the shift in market share in toothpaste has resulted from aggressive product development and formulation supported by promotion to create brand curiosity in the category. For example, product management has developed three line extensions of the Allspice brand for the United States market: Allspice Whitening, Allspice Tarter Control, and Allspice Kids.

These line extensions focus on particular benefit and demographic segments. Page 12? Countryman’s Student Guide Thus, the United States market consists of 24 SKU of Allspice: Allspice (original): Allspice Whitening: Allspice Tartar Control: Allspice Kids: 6 SKU – 3 sizes, 1 delivery system, 2 textures, fluoride formulation 6 SKU – 3 sizes, 2 delivery systems, 2 sutures, fluoride plus sodium hypochlorite* 6 SKU – 3 sizes, 2 delivery systems, 2 textures, fluoride plus abrasive material* 6 SKU – 3 sizes, 2 delivery systems, 2 textures, fluoride plus special flavoring* * Not all combinations are available.

Goals and objectives are likely to be set with your instructor at the beginning of the simulation. Your instructor may also provide guidance as to regional roll timeliness. Production Toothpaste manufacturing and delivery is reasonably flexible. Production may take place in any location throughout the world and be shipped to the ultimate estimation. Alternatively, production may be manufactured locally at a company- owned facility.

From the perspective of the subsidiary, product can be obtained by purchasing from the existing manufacturing division of the parent firm.

50 to produce.

These costs incorporate labor and materials and also an allocation for manufacturing fixed costs. From the point of view of the country manager, these are COGS. Producing in a regional plant is advantageous, in part because certain labor and material costs are lower than in the existing facility. Table 9 shows the percentage reduction in COGS that can be expected when products are manufactured in a regional plant. These costs are based on 100 million units of cumulative production.

As already noted, COGS reflects manufacturing costs and is affected by production volume. In addition, the subsidiary needs to consider international shipping costs (SC) between the manufacturing plant and the served market, and import taxes and duties in certain cross-border situations. Weight (volume), distance, and mode of shipment affect shipping costs. With regard to mode of shipment, container ships embarking from Miami are used to ship products from the United States to Latin American locations. Container shipments embarking from Cancan are used to ship products from Mexico to South American markets.

Within

But when the plant begins producing for a second regional market, higher volume and capacity utilization may yield lower COGS that are realized in the initial and the new markets. Page 16? Countryman’s Student Guide Distribution Domestic. Toothpaste is sold through a variety of retail outlets in the United States. Grocery stores (e. G.

Kroger), drug stores (e. G. Rite Aid), mass merchandisers (e. G. Wall- Mart), convenience stores (e.

In general, there are fewer types of retailers carrying toothpaste than are found in the United States. Also, while there is increasing consolidation of retailing globally, it is seasonable to generalize that there is less concentration in most of the rest of the world compared with the United States. That is particularly true in developing markets where traditional “ mom and pop” retailing remains the norm. Distribution channels in Latin America have been grouped historically as traditional, self-serve, and hypermarket.

Traditional channels are small, independent stores or open market areas almost exclusively served by wholesalers (indirect distribution).