Pan Boricua must decide whether to expand, stay in markets where they are weak, and/or expand to other markets in the United States.
Supplier Power Buyer Power Competitive Rivalry Threat of Substitution Threat of New Entry -Low supplier power -High differentiation of inputs -Moderate supplier concentration -Low costs to total purchases in industry -High buyer power -High volume -High concentration (niche market) -High price sensitivity -High product differences -High threat of substitution -High variety of substitutes -Low switching costs -Moderate threat of new entry -Low capital requirements -Moderate regulation -High access to inputs -Moderate brand identity -High competitive rivalry -Low profit margins -High concentration of competitors -High variety of product -High amount of distributors
Potential Growth Hispanic Population (million) 49,87256,83664,203.72,142 Hispanic Consumer Spending (billion) 1,0381,4952,1553,060 Average Annual Growth of Hispanic Consumer Spending 7.7%7.6% 7.3%
Hispanics spend 43% more on food than non- Hispanics Hispanics spend more than 30% of food money on specialty shops such as bakeries Hispanics take and average of 26 trips to the store a month Food plays a large part in family traditions
Strengths Quality product Exclusive exportation rights with a leading producer No competition agreement with Mi Pueblo supermarkets Already established in large market Weaknesses Weak brand image Dependent on distributors Limited exposure in the United States Opportunities Expansion of offerings Increase in Hispanic population Specialized product Threats New entrants into the market Rising transportation costs Growth in Hispanic bakeries Niche market
1. Stay in current markets (weak and strong) 2. Explore new markets while revamping current market 3. Merger with Mi Pan 4. Replicate Mi Pan business plan
Positives Already Established ▪ Distributors ▪ Brand Image Low Cost Negatives Little growth potential Weak markets consume resources with low margins Competitors reach other markets
Positives High Growth Potential Spread Brand Recognition Negatives Costly Chance of failure in New Markets No change in weak markets
Positives Uses each companies distinctive core competency Eliminates competition in low margin business Negatives Give up some control Potential for Rejection and/or Failure of New Company
Positive Proven Business Model Expansion into new markets Negative Reactive Followers Failure to replicate success More direct competition drives margins ever lower
Key Success Factor RATINGRankTotalRankTotalRankTotalRankTotal Growth Potential Strategic Fit Follow mission Financially Feasible Total ALTERNATIVES: 1234 Alternatives 1.Stay in current markets (weak and strong) 2.Explore new markets while revamping current market 3.Merger with Mi Pan 4.Replicate Mi Pan business plan Ranking Scale 1: The alternative does not effectively address this criterion. 2: The alternative may contribute to addressing this criterion. 3: The alternative provides an average solutions to this criterion. 4: The alternative provides an above-average solution for this criterion. 5: The alternative effectively addresses this criterion.
Alternative 3
3 months6 months9 months12 months Develop Merger Proposal Negotiations Implement Merger Finalize Agreement for NY Enter NY Market
24 months30 months36 months48 months Research Miami Market Finalize Agreement for Miami Enter Miami Market Evaluate Expansion Plan
ActivityDetails Develop Merger Proposal Company Executives Highlight distribution incentives and benefits of merger Negotiations Company Executives Approach Mi Pan with proposal Negotiate Details Implement Merger (Milestone Review) Company Executives Consolidate companies & establish efficient means of conversion Finalize Agreement for NY Finalize distribution agreements from previous plans that were developed through each company Enter NY Market (Milestone Review) Begin distribution
Implementation ActivityDetails Research Miami Market Management Team Begin research and evaluation of entry Finalize Agreements for Miami (Milestone Review) Company Executives Finalize distribution and location agreements Enter Miami Market Begin distribution Evaluate Expansion Plan Company Executives Evaluate Success of merger & potential for future expansion
Joint venture into New York Expand into other markets and revamp current market hold