Challenges of Expansion to a Foreign Location

I am currently in a graduate master’s level course for an upcoming signature assignment that I would appreciate any helpful feedback on in order to know how to go about this difficult research. Here are the following assignment steps I am having trouble on that is required: Purpose of Assignment This week students will review and revise their Week 3 “Research Analysis for Business” (this is attached below from Week 3) Signature Assignment based on economic analysis and the feedback provided by their facilitator. Students will also expand their Week 3 analyses to evaluate the challenges of expanding their chosen company’s production (company I used in Week 3 was the Coca-Cola Corporation) to a foreign market. About Your Signature Assignment This signature assignment is designed to align with specific program student learning outcome(s) in your program. Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree. The signature assignments might be graded with an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for program improvements. Assignment Steps Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products. Revise your Week 3 assignment, Research Analysis for Business (my Week 3 assignment is attached below), using the feedback provided by your facilitator (my graded feedback from my instructor is attached below). This Week 6 report should only include one conclusion, so you will need to rewrite your conclusion that goes along with this week’s course topics to include in your Week 3 assignment, Research Analysis for Business (is attached below). Select a foreign market in which to expand your chosen product. If you wish, you may use one of the countries your team analyzed in their Week 5 Comparative and Absolute Advantage Assignment (as a side note from my team’s Week 5 assignment, the countries we used was Canada and Germany, but am open to using another one for my Coca-Cola Company too). Prepare a minimum 1,750 word document report addressing the points listed below. This report also needs to include the use of tables and/or charts to display economic data over the time period discussed to where the data is inputted in the word document report and also needs to be formatted of the economic data in Microsoft® Excel® in a separate file upon final submission. You may use the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), U.S. Dept. of Commerce’s Bureau of Economic Analysis (BEA), the Federal Reserve of St. Louis’s FRED data, the CIA World Fact Book, World Bank data, and World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library. The new sections of your report should: Evaluate and discuss current global economic conditions and their effects on macroeconomic indicators in your selected country. Provide forecasts an economic data formatted on both word document and excel file for the following: population growth, gross domestic product (GDP) growth, GDP per capita growth, export growth, and sales growth.Evaluate any competitors’ existing production in the chosen country.Assess sales forecasts in the selected country by using the Federal Reserve of St. Louis’s FRED data, the CIA World Fact Book, World Bank data, World Trade Organization, or other appropriate sources you might find on the Internet or in the University Library.Categorize the type of economy that exists in your selected country as closed, mixed, or market. What is the difference between these types of economies and how might this affect your expansion?Assess how your chosen country’s current credit market conditions, especially interest rates and the availability of financing, affect demand for your product or service and your planning or operating decision for your production in that country.Analyze the role of the selected country’s central bank on that country’s economy.Compare the availability, education, and job skills of the work force in the selected country. Discuss any additional challenges of international production, such as political stability, availability of government financing or other incentives, threat of capital controls, and exchange rate risks.Explain any additional supply chain challenges you anticipate if attempting to make your product in your chosen country and selling the product in other countries.Based on the data gathered and analysis performed for this report, rewrite your conclusion in which you:Create business strategies, including price and non-price strategies, based on your market structure to ensure the market share and potential market expansions and explore global opportunities for your business in a dynamic business environment and provide recommendations.Develop a recommendation for how the firm can manage its future production by synthesizing the macroeconomic and microeconomic data presented.Propose how the firm’s position within the market and among its competitors will allow it to take your recommended action.Recommend strategies for the firm to sustain its success going forward by evaluating the findings from demand trends, price elasticity, current stage of the business cycle, and government.Recommend any comparative advantages your company will have over competitors currently operating in that country, and defend your position, either for or against, expanding your company’s production into your chosen country based on your research. Integrate with the Week 3 Individual Assignment, and incorporate corrections and suggestions from the instructor’s feedback (both attached below). The final report altogether should be a minimum of 2,800 words (Week 3 assignment combined with the 1,750 minimum word report). Cite a minimum of three peer-reviewed sources not including the textbook. Use APA citations in research and references; also include APA citations cited properly for the data graphs or table charts used formatted onto word document and excel file format. Include web links. Include all peer-reviewed references and government economic data sources/references from Week 3 (attached below). Format your assignment consistent with APA guidelines.
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1
Research Analysis for Business
Research Analysis for Business
Andrea Markiewicz
ECO/561
December 11, 2017
Maria Ramjerdi
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Research Analysis for Business
Research Analysis for Business
The Coca-Cola Company is one of the world’s largest multinational organization that
deals in the manufacturing, retail, and distribution of soda beverage drinks in the world. The firm
got established in 1892 with its headquarter in Atlanta, Georgia. Asa Candler founded it; the
current CEO of the company is James Quincey. Its products are Coke, Sprite, Fanta, Dasani,
Fresca, Simply Orange, and others (“Coca-Cola Journey,” 2017). The company is known for its
anchor product of the Coke soda beverage. The organization’s stock is registered on the New
York Stock Exchange (NYSE) and is also part of the Dow Jones Industrial Average (DJIA)
along with Standard & Poor’s (S&P) 500 Index. The company has a workforce of approximately
100,300 employees spread across the world (“Number of Coca-Cola Employees Worldwide
From 2007-2016,” 2017). Its competitors include PepsiCo, Inc., Dr. Pepper, and Snapple among
other soft drinks manufactures (“Coca-Cola Co: Industry Peers,” 2017). As of 2015, Coca-Cola
controlled 48.6 percent of the market share, while PepsiCo Inc. controlled 20.5 percent and
others took the leftover 30.9 percent of the total market (“Market Share of Carbonated Beverages
Worldwide as of 2015, By Company,” 2015).
Coca-Cola Market Structure
The Coca-Cola Company operates in the oligopoly market because it controls a vast
percentage of the market share that gets dominated by both Coca-Cola and their main rivals the
Pepsi-Cola Company. Even though the soft drink industry has mainly obtained influence by
these two brand-name soft drinks, there are other soda drink contenders out in the beverage
industry as well. The cause for low competition out in the soft drink industry has seen Coca-Cola
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Research Analysis for Business
and Pepsi controlling the market with significant resources such as equipment used for
production, advertising, and brand materials required by soft drink firms to produce for a broader
market. The cost of operations in this sector is also significant, thereby denying several
companies to venture into this business structure. Coca-Cola and their competitor Pepsi engage
themselves in non-price product differentiation, and therefore, you will never find them
competing based on the price cuts between the two company’s products, but instead, they use
creative advertisement to challenge one another (Neary & Leahy, 2000).
Trends in Current Macroeconomic Indicators
The current U.S. economy is at an expansion stage, although recent hurricanes this past
year have attempted to erode the benefits gained. The real gross domestic product (GDP) as
recorded in quarter three was 3.3 percent compared to the same period last year of 2.8 percent,
while in 2015 the real gross domestic product (GDP) for quarter three was 1.6 percent (“Real
GDP: Percent Change from Preceding Quarter,” 2017). The data shows a consistent increase in
the national GDP for the last three years which justifies the expansionary state of the businesses
in the economy.
Fig 1: Quarterly Real Gross Domestic Product, (2017).
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Research Analysis for Business
The current inflation rate stands at 2.0 percent while during the same period last year was at
1.8 percent and 1.5 percent in 2015 (“Consumer Price Index for All Urban Consumers: All
Items,” 2017). This information indicates a little bit of an increase in inflation for the last three
years. The change in the rise of the inflation rate will call for increases in wages as this erodes
the consumer’s purchasing power. This increase also means that the cost of raw materials will
rise, and therefore slows the growth of the economy (De Gregorio, 2012). The government
should employ its monetary policies to regulate the rise of the inflation rate to curb any further
increase and empower its people’s purchasing power.
Fig 2: Consumer Price Index for All Urban Consumers: All Items, (2017)
The rate of unemployment as recorded during the month of October indicates an
improvement from the last three years. During this year the unemployment rate was at 4.1
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Research Analysis for Business
percent compared to the same period last year of 4.8 percent while in 2015 it stood at around 5.5
percent (“U.S. Unemployment Rate,” 2017). These statistics show that the number of U.S.
citizens has gotten absorbed into the job market with businesses expanding and the demand for
labor is high. The government efforts to create more jobs seems to have bear fruits.
Fig. 3: U.S. Unemployment Rate, (2017)
The federal funds rate currently is standing at 1.16 percent in the month of December of
this year while in the same period last year it was recorded at 0.41 percent while in 2015 it held
at around 0.15 percent during the same period (“Effective Federal Funds Rate,” 2017). The
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Research Analysis for Business
increase could be attributed as a measure by the reserve bank to regulate the flow of money in
the economy and curb the rising level of inflation.
Fig. 4: Effective Federal Funds, (2017).
The bank’s prime rate in December of this month is at 4.25 percent while in the same period
last year was at 3.5 percent and in 2015 was at 3.25 percent. An increase like this can get
justified by the rise in the inflation rate which will propel the government to take measures to
correct this. Such actions could range from the increase in the federal funds rate which will mean
that banks will have to borrow at high rates to discourage them from seeking funds from the
government, but rather collect the excess that is out in the market supply (Atinc, Atinc &
Uwakonye, 2012).
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Research Analysis for Business
Fig. 5: Bank Prime Loan Rate, (2017)
Market Demand for Coca-Cola
The soft drink industry has gotten faced with challenges emanating from the current
generations consciousness of their health. Several consumers are avoiding high-calorie drinks
and instead shifting to other soft drinks like flavored water and fresh juices. This trend has seen
the industry record a decline in its revenue. The total sales revenue during the financial year that
ended in 2016 saw the company report a revenue of $41,863 million while in 2015 sales revenue
were $44,294 million and $45,998 million in 2014. The unit case volume for the three
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Research Analysis for Business
consecutive years was 29.3 million in 2016, 29.2 million in 2015 and 28.6 million in 2014 as
reported for the fiscal year that ended in 2016 (“2016 Annual Report on Form 10-K,” 2017).
The company reported a drop in their gross profit during its third quarter in 2017 at $5,683
million from $11,648 million that got reported in the second quarter (“Archives of Quarterly
Earnings Release,” 2017).
Fig. 6: Coca-Cola Annual Report on Form 10-K, (2017)
Coca-Cola Sales Revenue
$47,000
$45,998
$46,000
$44,294
$45,000
Millions
$44,000
$43,000
$42,000
$41,863
$41,000
$40,000
$39,000
2016
2015
Three-Year Trend
2014
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Research Analysis for Business
Fig. 7: Coca-Cola Archives of Quarterly Earnings Release, (2017).
Coca-Cola Earnings Period
$14,000
$11,648
$12,000
Gross Profit (Millions)
$10,000
$8,000
$6,000
$5,683
$4,000
$2,000
$0
2017 Third Quarter
2017 Second Quarter
Consolidated Statement of Income
From the above graphs, it is clear that the sales in dollars have been decreasing for the last
three years, along with a significant reduction in their recent 2017 quarterly earnings in gross
profit. To reverse this trend, the company needs to be part of the solution for the reported
increase in obesity in the country as a result of the high-calorie contents of soda beverages by
lowering or eliminating calories in their ingredients (Ball, McNaughton, MHurchu & et al.,
2011). The Coca-Cola Company should focus on product safety and quality to win the hearts of
those who are sugar conscious through the provision of other alternatives with conducting
responsible marketing with no advertisements targeting young children and continuous product
differentiation.
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Research Analysis for Business
Price Elasticity of Coca-Cola
An increase in the price of Coca-Cola’s beverage product will lead to shifting its substitute
products from the Pepsi-Cola Company, and therefore elastic. The elasticity of a product gets
determined by the availability of close substitutes, and in this case, the Pepsi-Cola Company will
benefit if Coca-Cola increases their prices. Now that the company’s cost is elastic, it cannot raise
the price, and during product pricing, they must consider the expense of its rivals to ensure they
offer affordable products in relation to their competitor (McConnell, Brue & Flynn, 2015). This
process means reduced profit from the unit sold, but such firms should capitalize on the
economies of scale by selling to a broader market. The company’s variable cost comprises of the
cost of sales as reported in their 2016 annual report of $16,465 million. The fixed costs are the
selling, general and administrative expenses of $15,262 million and net plant property and
equipment of 10,635 million (“2016 Annual Report on Form 10-K,” 2017).
Conclusion
Coca-Cola should price its products at an affordable price to avoid competition from their
rival Pepsi-Cola. The firm should look into increasing its corporate social responsibility to
enhance its reputation and protect it from the accusations of its products being a cause of obesity.
The organization can also continue with its strategy of product differentiation to take care of the
changing tastes and preferences of its clients. The company needs to diversify its products more
by producing fresh juice as a mean of ensuring everyone’s nutritious needs in the market have
been taken care of appropriately. The firm has been under stiff competition from Pepsi-Cola and
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Research Analysis for Business
has called for avoidance of Coke’s products due to the increase in cases of obesity and weight
gain, therefore it becomes fundamentally essential for the company to consider this proposal
(O’Reilly, 2015).). The current market trend looks very favorable for Coca-Cola to flourish due
to the level of unemployment being on a downward scale implying more people are getting into
the job market and thereby increasing their purchasing power.
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Research Analysis for Business
References
Atinc, G., Atinc, Y. O., & Uwakonye, M. (2012). FED’s Impact on the Value of Dollar
Through Interest Rates. Journal of Business & Economics Research
(Online), 10(1), 45. Retrieved from https://search-proquestcom.contentproxy.phoenix.edu/docview/1418703925/8E82131449A74312PQ/1?a
ccountid=35812
Ball, K., McNaughton, S.A., Mhurchu, C.N. & et al. (2011). Supermarket Healthy Eating
for Life (SHELF): Protocol of a Randomised Controlled Trial Promoting Healthy
Food and Beverage Consumption Through Price Reduction and Skill-Building
Strategies. BMC Public Health. Retrieved from
https://bmcpublichealth.biomedcentral.com/articles/10.1186/1471-2458-11-715
Bank Prime Loan Rate. (2017). YCharts Federal Reserve. Retrieved from
https://ycharts.com/indicators/bank_prime_loan_rate
Coca-Cola Co: Industry Peers. (2017). Morningstar. Retrieved from
http://financials.morningstar.com/competitors/industry-peer.action?t=KO
Coca-Cola Journey: Annual & Other Reports. (2017). 2016 Annual Report on Form 10K. Retrieved from chromeextension://oemmndcbldboiebfnladdacbdfmadadm/http://www.cocacolacompany.com/content/dam/journey/us/en/private/fileassets/pdf/investors/201
6-AR-10-K.pdf
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Research Analysis for Business
Coca-Cola Journey: Financial Reports and Information. (2017). Archives of Quarterly
Earnings Release. Retrieved from http://www.cocacolacompany.com/investors/archive-of-quarterly-earnings-releases
Coca-Cola Journey. (2017). The Coca-Cola Company. Retrieved from http://www.cocacolacompany.com/
Consumer Price Index for All Urban Consumers: All Items. (2017). Federal Reserve
Bank of St. Louis. (FRED). Economic Research. Retrieved from
https://fred.stlouisfed.org/graph/?id=CPIAUCSL,#0
De Gregorio, J. (2012). Commodity Prices, Monetary Policy, and Inflation Dagger. IMF
Economic Review, 60(4), 600-633. Retrieved from https://search-proquestcom.contentproxy.phoenix.edu/docview/1241935710/FE488442B3C3490FPQ/12
?accountid=35812
Effective Federal Funds. (2017). YCharts Federal Reserve. Retrieved from
https://ycharts.com/indicators/effective_federal_funds_rate
Market Share of Carbonated Beverages Worldwide as of 2015, By Company. (2015). The
Statistics Portal. Retrieved from
https://www.statista.com/statistics/387318/market-share-of-leading-carbonatedbeverage-companies-worldwide/
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Research Analysis for Business
McConnell, C., Brue, S., & Flynn, S. (2015). Economics. (20th Ed.). McGraw-Hill
Education. Retrieved from University of Phoenix Online Database VitalSource
Bookshelf.
Neary, J., & Leahy, D. (2000). Strategic Trade and Industrial Policy Towards Dynamic
Oligopolies. The Economic Journal,110(463), 484-508. Retrieved from
http://www.jstor.org/stable/2566244
Number of Coca-Cola Employees Worldwide From 2007-2016. (2017). The Statistics
Portal. Retrieved from https://www.statista.com/statistics/254562/coca-colasnumber-of-employees-worldwide/
O’Reilly, L. (2015). The End of the Coke Era. Business Insider. Retrieved from
http://www.businessinsider.com/what-is-the-future-for-the-coca-cola-brand-sodasales-decline-2015-4
Real GDP: Percent Change from Preceding Quarter. (2017). Bureau of Economic
Analysis. Retrieved from
https://bea.gov/newsreleases/national/gdp/gdp_glance.htm
U.S. Unemployment Rate. (2017). YCharts. Bureau of Labor Statistics. Retrieved from
https://ycharts.com/indicators/unemployment_rate
Grading Guide
Content
Met
Identified the market structure student’s
chosen firm operates in, analyzed student’s
chosen firm’s current market share, and
identified the firm’s local/global competitors.
Analyzed the barriers to entry in this market to
illustrate the potential for new competition and
its impact on firm’s future in the market.
x
Identified and explained trends in current
macroeconomic indicators for last three years
including:
• Current stage of the business cycle.
• Real gross domestic product (GDP).
• Inflation as measured by the consumer
price index (CPI).
• Unemployment rate.
• Federal funds rate.
• Current rate for borrowing funds such as
the so-called “prime rate.”
x
Evaluated trends in demand over last three
years and explained their impact on the
industry and the firm. Included quarterly (last
two quarters) and annual sales (last three
years) figures for the product student’s firm
sells. Created business strategies by
analyzing information and data related to the
demand for and supply of firm’s product(s) to
support student’s recommendation for the
firm’s actions. Included a graphical
representation of the data and information
used in student’s analysis.
x
Examined available, current data and
information, such as pricing and the
availability of substitutes, and explained how
student could determine the price elasticity of
demand for firm’s product. Assessed how the
price elasticity of demand impacts the firm’s
pricing decisions and revenue growth.
x
Applied the concepts of variable and fixed
costs to firm for informing its output decisions.
Analyzed how different kinds of costs (labor,
research and development, raw materials)
affect the firm’s level of output.
x
Based on the data gathered and analysis
performed student’s conclusion included:
• Business strategies, including price and
non-price strategies, based on market
structure to ensure the market share and
x
Partially
Met
Not Met
Comments:
Good analysis
Research Analysis for Business
Grading Guide ECO/561 Version
12
Content
•
•
•
Met
Partially
Met
Not Met
Total
Available
Total
Earned
7
7/7
Partially
Met
Not Met
Comments:
potential market expansions. Also
included exploration of global
opportunities for student’s business in a
dynamic business environment and
provided recommendations.
A recommendation for how the firm can
manage its future production by
synthesizing the macroeconomic and
microeconomic data presented.
Proposal for how the firm’s position within
the market and among its competitors will
allow it to take your recommended action.
Recommended strategies for the firm to
sustain its success going forward by
evaluating the findings from demand
trends, price elasticity, current stage of
the business cycle, and government
policies.
Cited a minimum of three peer-reviewed
references and a minimum of two government
economic data sources/references.
x
The analysis is a minimum of 1,050 words in
length.
x
Writing Guidelines
Met
The paper—including tables and graphs,
headings, title page, and reference page—is
consistent with APA formatting guidelines and
meets course-level requirements.
x
Intellectual property is recognized with in-text
citations and a reference page.
Comments:
A few statements references
are not cited, for example
“The company is known
x
x
for its anchor product of
the Coke soda beverage.
The organization’s stock is
registered on the New
York Stock Exchange
(NYSE) and is also part of
the Dow Jones Industrial
Average (DJIA) along with
Standard & Poor’s (S&P)
2
Research Analysis for Business
Grading Guide ECO/561 Version
12
Writing Guidelines
Met
Partially
Met
Not Met
Comments:
500 Index”
Or
“The Coca-Cola
Company
operates in the oligopoly
market because it controls
a vast percentage of the
market share that gets
dominated by both CocaCola and their main rivals
the Pepsi-Cola Company.”
Paragraph and sentence transitions are
present, logical, and maintain the flow
throughout the paper.
Sentences are complete, clear, and concise.
Rules of grammar and usage are followed
including spelling and punctuation.
Assignment Total
x
x
x
#
Total
Available
Total
Earned
3
2.85/3
10
9.85/10
Additional comments:
References must be listed APA style
Author/s (year) title of the article, publisher
For example
YCharts (2017). Bank Prime Loan Rate. Retrieved from
https://ycharts.com/indicators/bank_prime_loan_rate
Coca-Cola Co: Industry Peers. (2017). Morningstar. Retrieved from
http://financials.morningstar.com/competitors/industry-peer.action?t=KO
Should be listed as follows
Bank Prime Loan Rate. (2017). Federal Reserve. Retrieved from
https://ycharts.com/indicators/bank_prime_loan_rate
Morningstar (2017) Coca-Cola Co: Industry Peers. Retrieved from
3
Research Analysis for Business
Grading Guide ECO/561 Version
12
Assignment Total
#
10
9.85/10
http://financials.morningstar.com/competitors/industry-peer.action?t=KO
4

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