Azure Sky Tea Case Study Answers

In the model there are four variables to consider when deciding on a business transaction. The model also identifies how a product would fair within a given market and the type of business that would create the most benefit. For example when deciding to export it is important to consider transportation cost.
When exporting a product it is important to understand the value to weight ratio. In this aspect I choose microchips to most closely represent the value to weight ratio of Azure Sky Tea products. According to the model the company can continue to export into Canada. The shipping costs are low enough that it will produce a profit with relative certainty. This is not the case with the other three possible locations due to the distance from the production site in Jackson Hole, Wyoming.
The next thing to consider before foreign direct investment is leasing. Leasing is far more cost effective, but it can only work with products that limit needed control by management in pricing and marketing. Leasing a product to another company can also lead to theft of design or process. Azure Sky’s tea products are innovative and it could result in theft of the companies design or tea production process. If leasing is not an option then the company must consider foreign direct investment.
The Japanese tea market is huge with sales of Green Tea. If the company were to move into Japan, Azure Sky’s herbal black tea may be a hard sell and it could take some time to develop the brand. It would take an investment in land and marketing strategy that promotes the benefits of drinking black herbal tea. If the transportation costs weren’t so high along with the innovative nature of our tea I would suggest that we export or license it. But because Japan produces so much tea a licensee could steal our product. The same suggestion holds true with