The McGrew Company
Mini case 15.1
California Baptist University
August 4th, 2013
1. Assume you are Joan Beal. Prepare a list of all the options, and give the advantages and disadvantages of each.
It appears The McGrew Company has been utilizing the indirect exporting phase as its primary business model in Brazil. Rather than simply exporting its products to Brazilian distributers and selling it for a markup, McGrew could exercise different options.
OPTIONS * Direct Exporting
Direct exporting would allow for The McGrew Company to handle its own sales and marketing within the country of Brazil. This…show more content… * Franchising By utilizing this option McGrew could contract with another partner. This partner would put up the capital and operate the business, all the while paying McGrew franchise fees. This may not be economically sound, due to the fact that the fees may not even equal the original revenues generated from the current arrangement McGrew has with the Brazilian distributor. Though less capital is being sent to Brazil it may still not be practical enough for the company to pursue this option.
* Contract Manufacturing
Specific to the McGrew Company’s case, the firm could contract to a local manufacturer. This could enable its products to be both made and sold in Brazil and could be beneficial because McGrew would not need a plant of its own nor the personnel costs to run it. Investigating this option would involve a tax and regulations analysis of the two countries in which McGrew is involved. At this time a comparison should be made between the United States and Brazil so that the company could figure which country would have the lowest overhead.
2) Which of the options would you recommend?
Strategic Alternatives The decision for McGrew Company is relatively simple as they really only have two possible solutions. They can either keep producing their peanut combines abroad or import them to Brazil, or they can move production of these combines to Brazil. If