Tavazo Case

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In 2010, the Tavazo brothers were thinking about how to keep on growing and started to analyse opportunities for further expansion. One potential source of growth is represented by the chance of expanding its current business within Canada and Iran, through the retail or wholesale channels. One plus point of this strategy is that it would let the company to maintain the same organizational structure without introducing revolutionary changes, which would be costly to make. Indeed, focusing on these two markets would let the company to grow constantly and would allow the management to produce gradual changes to the organization alongside with its expansion. However, a potential downside of the strategy is given by the nature of the Tavazo…show more content…
Looking at the estimates of the financial position of the company in 2009 (exhibit 5-6) we observe that Tavazo has limited financial resources and a high debt level, which might represent serious hurdles to a potential expansion of the retail chain. Finally, also the size of the company has important implications in the decision to go international. Indeed, being a family business, as Tavazo Co, may have two specific plus points: the decision making is flowing, which would let the company to respond quickly to potential threats (i.e. tougher competition); the organizational structure is slender, which would let the company to adapt easily to permanent changes in the external environment (i.e. a down move in the demand level). On ther other hand, SMEs may lack of the necessary organizational skills to employ a direct exportation strategy. Indeed, such a strategy requires a deep knowledge of the markets in which the company wants to establish its own business, which in turn requires high managerial capabilities. Therefore, if the organization wants to pursue an international growth, it has to produce significative changes to its structure, enlarging its management team and hiring managers with the necessary skills to lead the expansion. To conclude, given all the issues just explained, in a long term perspective this choice represents the most prominent source of growth for the company. Even if it is riskier than focusing on Iran and Canada, this choice
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