Closing Case: Barrett Farm Foods
1. Philip Austin’s plan for European expansion is very simplified and will rely mostly on the foreign intermediary to complete export and complete sales transactions. I believe that this is the main problem of this expansion plan; there is too much liability in someone outside of the company that possibly doesn’t share the same goals and objectives of the company and sometimes is not completed committed with the process. There are some important issues to consider when dealing with intermediaries on an exporting process: First of all the company would need to identify the appropriate commission structure for compensating intermediaries, which sometimes might lead to disagreements. Also, because the company won’t actually be present in the target countries, they would have fewer opportunities to learn about customers, competitors and the marketplace, which are essential knowledge if the firm wants to succeed in the long term. A more systematic approach to exporting requires a considerable more thorough planning and investments. The firm should start by identifying the most qualified distributors and estimate market and sales potential; then the company should assess its resources and organize for exporting; another important process would be acquiring needed skills and competencies for the exporting process, such as a logistics department for international sales; and last but not least, they should adapt their products to foreign markets and their different needs.
2. Exporting bring some advantages to Barrett over foreign direct investment, the most notable one is that this process involve less risk than the other options. Firs because it minimizes the costs and maximizes flexibility, the company can always stop selling to a specific country if they want to, or they can also increase its operations in certain country after “experimenting” with exporting, and...
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