MGT/448 Final Global Business Plan Paper and Presentation

Learning Team Country Risk and Strategic Planning Analysis Paper

Political, Legal, and Regulatory Risks

“Political risk refers to the risk that a host country will make political decisions that will prove to have adverse effects on the multinational’s profits and or goals” states (Phung, 2009). There are two types of political risk which include macro risk and micro risk. A macro risk is a type of political risk companies’ face when doing business in foreign countries (a macro risk refers to any broad based risk for example an economic recession or major climate change; this type of risk can impact businesses in both a domestic setting and/or an international one). An example of a common macro risk is the changing value of a country’s currency. A micro risk refers to “adverse actions that will only affect a certain industrial sector or business, such as corruption and prejudicial actions against companies from foreign countries” states (Wisegeek, 2014).

Political risk insurance can be purchased by Quaker (who is Quaker, what is the business proposal and where is it planning to operate? These questions should be resolved in an introduction so that the action discussed can be understood in the proper context)to assist with protecting themselves from the potential political risk of doing business in Canada. “Political risk insurance helps companies ensure banks, lenders or private investors that they have taken precautions when starting operations in foreign countries” states (Wisegeek, 2014).

“Legal and regulatory risks refer to the chance that a government or institutional change will have a negative impact on an investment, a particular business, or an entire industry” states (Wisegeek, 2014). Negative effects can occur if new regulations are proposed or implemented, including profit losses, operational difficulties, and decreased investor interest. ( As stated previously, definitions are unnecessary. The paper should focus on the problems as they relate to the business proposal and discuss only those actions necessary as they specifically relate to the business within the proposed country)

Adhering to regulatory compliance is critical to managing risk and increasing shareholder worth for Quaker. BDO Compliance (2014) states “legislators in both Canada and the United States are demanding increased management accountability through the establishment of an effective system of internal controls”. To assist in following legal, regulatory and compliance laws Quaker can work with specific firms that possess expertise in these areas to best assist them with meeting these legal requirements. These firms will perform quality assurance reviews, perform internal audits, perform corporate government assessments and perform Sarbanes-Oxley and Bill 198 Readiness assessments to ensure legal and regulatory compliance is being met.

Exchange and repatriation of funds risks

Exchange and repatriation of funds refers to the process of converting a foreign currency into the currency of one's own country. The amount that the investor will yield depends on the exchange rate between the two currencies being traded at the settlement time (Investopedia, 2014). This can create a foreign-exchange risk for Quaker doing business in Canada since they are an American company. The main risk stems from the investment's value changing due to changes in currency exchange rates between the U.S. and Canada. How will Quaker protect itself from the exchange rate risk. The repatriation risk usually refers to host country regulations limiting the amount of profit a company can repatriate to the home country. Is there such a risk between Canada and the US?

Competitive risk assessment

With Quaker being fairly competitive in the foods market, adding a healthier and nutritious bar (?) to their product line will sustain their competiveness. Other food brands such as Nature Valley thatwho is owned by General Mills or Balance Bar thatwho makes itstheir own nutrition bars have already established themselves in the health food market. With this being said Quaker can use what has worked and what has not for them and implement a strategy that will keep Quaker’s competitive risk assessment under control. Our product entering Canada will keep a competitive advantage due to reality that our distribution site will be in Canada thus keeping our costs down that will allow for lower prices for Quaker customers (?).

Taxation and double taxation risks

The double taxation treaty is an international treaty that establishes the rules for double taxation between two countries (Hill, 2009). Canada does have a double taxation treaty with the United States but since the business resides in Canada and initially Quaker will be only selling to the people of Canada thereir will only be one tax (You misunderstand, double taxation refers to a tax on the profits made in Canada and then a second tax on the profits from the US. The treaty protects the firm from this.). Moving forward when and if the nutrition bars goes global and Quaker is selling to other countries such as Mexico or the United Kingdom, there will be a double taxation. In any case Quaker has consulted over these rules and has prepared to indefinitely comply with these terms and conditions.

Market risks (four Ps)

There are four market risks also known as the four Ps which include products, place, price and promotion. Quaker’s new product will be their new healthier and nutritional granola bar which will be sold to throughout their target market of Canada. When developing Quaker’s new granola bar the design, quality, customer service, packaging, and after sales service of their product should be considered.

Place refers to the “distribution, location and methods of getting the product to the customer” states (Small Biz Connect, 2014). Place includes the location of the company, distributors, and the potential use of the internet to sell products directly to consumers. Price is indicative of the amount of money that customers will pay in order to purchase Quaker’s new granola bars. “There are a number of considerations in relation to price including price setting, discounting, credit and cash purchases as well as credit collection” states (Small Biz Connection, 2014).

Promotion refers to the act of conveying the benefits and value of the product to customers. Promotion entails convincing customers to become customers of your business by “using methods such as advertising, direct marketing, personal selling and sales promotion” states (Small Biz Connection, 2014). You have provided a series of definitions instead of solutions.

Distribution and supply chain risks

The distribution risk is low due to the retail concentration, channel length, channel exclusivity, and channel quality (Hill, 2009). By residing in Canada the product will have a shorter time getting to the customer as well as exploring the latest products of health bars that Quaker has to offer.

The supply chain risk will play a huge part (this is not a unique challenge given the relationship between Canada and the US and the high probability that Quaker already has operations in country.) entering this market in Canada. Quaker has established themselves within the foods market so there is already a developed operation in terms of the supply chain. With the addition of the new ingredients that will be used for the new nutritious bars Quaker will need to look for a supplier that will be cost effective. Quaker will create a relationship with the supplier and aim for continuity moving forward. By establishing an open and honest relationship with the new supplier the supply risk can be monitored and ultimately under control. Quaker is a massive foods company, it should be fairly straight forward to establish the needed relationships.

Physical and environmental challenges to entering and operating in target market

When entering a target market in a foreign country there are always some physical and environmental challenges. This is true with Quaker entering the Canadian market. Some of these challenges include the locations of the dense amount of consumers. (but these locations are well documented) These locations are based on environmental jobs such as timber logging, mining, and commercial fishing. Some of the risks involved are that acid rain around the Ggreat Llakes can cause fish to die; clear-cutting the forests leaves large areas with no growth and the population of consumers on the move, and Canadian Shield mining, which employs around 1.5 million workers, depleting (Slideshare, 2104). These are all important risks to consider when entering a target market in Canada (how are these things a risk to the business proposal, acid rain will not come down on the product and ruin it during delivery).

Social and cultural risks

In order for Quaker to build and maintain successful business partnerships, it is prudent for them to be aware of the social, customs, history and value system that exists within Canada. “French Canadians frequently use firm handshakes as a means of professional greeting, with men expecting women to extend their hand for a handshake first” states (Chakerian, 2010). When interacting with Canadian business associates it is essential to steer away from conversations that relate to health care, religion, politics, economic and foreign policy, and sexual orientation as both countries tend to have a difference of opinion on these topics. (are there some serious cultural risk, it is probably not a good idea to put down a local hockey team either)

Use of the English language is most common for Canada. However, French is spoken in Quebec, in some areas of New Brunswick and in Nova Scotia. Quaker should have resources that speak both English and French in order to do business in Canada. Quaker should also produce their marketing content and materials in both French and English in order to reach all Canadian potential customers. Being timely for meetings in Canada is also very important; “even if it is not always reciprocated in French areas of Canada where attention to schedules can be less strict” states (Chakerian, 2010).

Cyber or technology

The internet and other networked technologies have changed many aspects of how businesses operate within Canada. The ability to store and share data across interconnected networks has created new efficiencies in sales and marketing, data access and retrieval, and vendor relations and interaction (Marsh, 2014). While these benefits of the internet and other technologies are plentiful, so are the risks created. These risks include theft or manipulation of private information, computer viruses that can destroy important data and damage hardware, and computer fraud. In order for companies to protect themselves against these risks there are other companies like Marsh Canada who offer risk management and insurance solutions to address these complex technological risks (Marsh, 2014).

Define and clarify mission and objectives

Canada is a country rich in every possible resource that makes the people of its country experience a great living. Its economic and political standards are quite balanced which makes the country survive in the worst of conditions and making the people safe and secure (source? What does this statement have to do with clarify mission and objectives?).

The country follows a general mentality of coordinating with all its partners which help the country grow and prosper. The partners comprise the local government, the dealers, the contractors, national and military force, manufacturers and the global partners that help in both internal and external trade and commerce with focus on health care. (source?)

Canada’s objectives include promoting national security, health services, social and ethical responsibility, enhance education and bring in growth through increase in behavioral, economic and financial characteristics. Promoting globalization through mutual coordination among the private and the public sectors are the key objectives. (the objectives you should be discussing are those of the business. You have no direct knowledge of Canadian political policy)

SWOTT Analysis of Canada

The major strengths, weakness, threats and competition can be summarized as follows:

Strengths: Great market for goods and services (why) and adheres to NAFTA, huge collection of renewable and non-renewable resources and is one of the strongest economies in the world with the best in military services (source). Great educational background, opportunities for coordination and collaboration of the companies, increasing standards of workforce and workplace environments are used to bring in growth to the country. Once again you are making general statements that have little to do with the potential for the proposal. Is there a large potential market? How strong is the competition for this particular product? Is the Quaker brand recognition particularly strong?

Weaknesses: Failure in bringing global level health standards, weakness in maritime resources and disadvantages in road and rail transport. (?)

Threats: External threats from crimes and terrorist attacks from other countries, division of the Canadian culture into sub cultures and traditions are often are challenge for each other and in spite of organizations step to make changes to the workplace benefits employees often protest and are unsatisfied. Also due to unemployment and less job opportunities, newcomers indulge themselves in criminal activities.(please, what are the potential threats to this business proposal?)

Competition: The major competition it faces is from external organizations that do business in the Canadian markets and are becoming challenge for the local companies and with increased inflation and recession its workforce is migrating to other countries thatwho provide more benefits and in turn is causing skilled workforce reduction in the country. What does any of this have to do with competition to the proposed product?

Make strategy selection

The country has associated itself to NAFTA and this has helped the country grow its economy through trade and commerce with other countries and the companies are investing on resources that are the fuels and source of energy for the future (relevance?). Moreover they are enhancing on advertising and promotional activities to make the products popular in both domestics and international market (what does this general statement mean?).

Considering the psychographic, demographic, behavioral and geographic characteristics are of major concern that will help create a strong influence on the people demands and needs (this is not a proper sentence and even if it was you have not defined these conditions and have little direct knowledge of what is being discussed.). Industries like fashion, beauty, cooking and other fields that were not popular in the past have started to gain worldwide influence (source). Export, ethnic and multicultural strategies and making things more digitalized through use of internet as the main medium has been the key points of success (?). Giving opportunities to the individuals, groups and organizations inside the country and also to outside companies and firm to bring in growth to the economy are some of the deployed strategies (the strategies being referred to are strategies to create success for the business proposal not strategies for expanding the national economy.).

Select and justify an appropriate mode of entry for your global product or service

The Selected mode of entry into Canada for our nutrition bars that is most appropriate would be licensing foreign production. Licensing involves a firm in one country the right to allow another firm in another country to use manufacturing, trademark, processing, know-how, and any other necessary skills that is provided by the licensor to produce their product (the definition of licensing is unnecessary). The justification to license the product with the foreign partner is not only based on its regional alliance and the free trade agreements (free trade agreement is not necessary to license production it would be relevant if you were shipping across the border) in place with a number of other countries but, also because of the competitive advantage we would have by licensing in the country (how does this provide a competitive advantage). Further, licensing our product to the Canadians would lower our company’s risk as Quaker production facilities are already in-place in the region (if Quaker production facilities are already in place why would you license the product instead of using the company’s own facilities where product control is much easier?).

Control and evaluation

Control and evaluation of the country (a business can not control a country) we chose to do business with not only can affect our product, it can also affect our relationship in that region. Since we would have our product licensed in Canada, evaluating and choosing the foreign distribution company that works best for our needs is important. When evaluating we should already know the reputation of the distributor. Their trade and banking references will give us some insight into their track record and also give us knowledge to any risk factors. As we evaluate our distributor, we must ensure all facts are discussed and all specifics answered. Controlling our product in Canada does not appear to be as difficult as it would be in a country that did not have the regional structure already in place. The Canadian work ethic and ways of doing business with other countries is positive and also reflects in the country’s wealth and government rating as one of the nation’s healthiest economies.

Devise contingency plan

Devising a contingency plan is necessary for any business. Contingency plans give businesses a “plan B” in case of such factors like natural disasters, distributor shortfalls, illnesses, any disorder or interruptions that will affect the day-to-day operations. Our contingency plan will begin with a risk assessment the will address any critical business operations. This will help keep any losses at a minimum. As we begin to identify each risk we may face, we will conduct a risk analysis to ensure we know what may significantly disrupt the business. After we have identified all of our risk, we will prioritize. It is important for us to not over think possible situations that may never occur, however, prioritizing what will affect the company most will help us respond more quickly and efficiently in case any situations occur. Our contingency plan will contain the following information; what the necessary minimums are to continue business, what will need to happen immediately once the contingency plan is active, will any capabilities be reduced because of the contingency plan, what the employees need to continue operations, how to manage our risk during and after the contingency, and finally what we will need to do to successfully get back to day-to-day operations.

References