Super_Sonic_Smoothie

Unit 9 Final Project: Super Sonic Smoothie MT330-International Marketing June 20, 2011 3A I: The Cultural Environment Today, France is one of the most modern countries in the world. Its culture has been shaped profoundly by historical events over the centuries. As one of the largest Western European nations, France takes enormous pride in its history and outstanding culture. From Renaissance till today, France’s culture has been greatly influenced by the acquisition of several historical provinces and overseas colonies into its geographical structure (France, 2011). Over decades these regions have molded France’s culture in terms of linguistic traditions in fashion, religious practices, regional language & accent, family structure, cuisine, leisure activities, industries, arts & architecture (France, 2011). France’s cultural heritage has a distinguished set of values, symbols, beliefs, and thought processes that influence deeply its business arena. According to Hofstede’s notions of cultural values study, France is one of the highest scoring nations in regards to individualism (Cateora & Graham, 2009). Its individuality is a crucial cultural attribute that reveals the French passion and uniqueness for freedom of opinion both in society and in business (Doing Business in France, 2007). The uniqueness of France’s culture is very symbolic; for instance, “The Marianne”, a national symbol, stands for ‘’liberty, equality and fraternity’’ (France, 2011). Additionally, to recognize modern France’s exclusivity today, one needs to point out its extensive ethnic background in arts, architecture, literature, music, folklore, film and music. Perhaps one of the most cherished notions of national French identity can be associated with the French language. In regards to preserving the purity of ‘’Francais’’ language, France is one of the few countries in the world that have taken official measures for protection since the seventeen century (France, 2011). In marketing successfully any product in France, a thorough understanding of the language and the ability to speak it must be taken in consideration by international companies (Cateora & Graham, 2009). 3B II: The Economic Environment According to the Economy Watch, France is the world’s fifth-largest economy with a 2.555 Trillion on a GDP basis in 2010 (Economy Watch, 2011). The article also mentions that France is one of the largest countries in the European Union and one of the key factors that contribute to its strong economy is tourism with a number of 82 million visitors annually. Furthermore, in 2010 according to the World Trade Organization, France was the 6th largest exporter, and 5th largest importer of manufactured goods (Economy Watch, 2011). Also during the global recent recession, France’s economy relied heavily on its well developed agricultural sector combined with the service and industry sectors. France‘s economy has considerable agricultural resources, a large industrialized base, and highly skilled workers. According to the Economy Watch, the global crisis has affected France’s trade (2011. Despite that fact, France exports and imports a variety of goods from electronics to raw materials and automobiles. Also, in 2010, France’s exports totaled $456.8 billion, while its imports were around $532.2 billion in Europe alone (Economy Watch, 2011). In today’s global economic turmoil, France has managed to prevail over other European economies primarily due to the relative resilience of domestic consumer spending, a large public sector, and less exposure to the downturn in global demand than in some other countries (The World Fact Book, 2011). Today, the French business market boasts a variety of foreign investors and is an important world supplier of agricultural and industrial products (Communicaid, 2011). 3A III: The Political Environment Currently, France’s political system consists of an executive branch, a legislative branch, a judicial branch, a constitutional council, and political parties, this is also known as the Fifth Republic which was established in 1958 (The French Political System, 2010). Over the past five decades, its institutional system has gone through changes, and today unlike other forms of democratic governments, France distinguishes itself as the only country that has a two-round single-winner voting system of elections (France Diplomatie, 2008). Furthermore, the French Fifth Republic is not a parliamentary system but a hybrid system characterized by a Presidency that is oversized in the absence of adequate counterweights (France Diplomatie, 2008). Additionally, with the establishment of the constitution of the current Fifth Republic, the President's powers have been boosted tremendously. As a result the Presidency is by far the most powerful position in the French political structure, with duties such as heading the armed forces, appointing a Prime Minister, chairing the Council of Ministers, and chairing the Higher Council of the Judiciary (A short guide to political French system, 2011). 3B I: Franchising Franchising is perhaps one of the best ways to expand a business. According to unit’s 6 reading, franchising is a form of licensing in which the franchiser presents a package of product and management service, where as the franchisee provides market knowledge, capital, and personal involvement in management (Cateora & Graham, 2009). In this case, Super Sonic Smoothie’s goal is to expand into the French market and forming a partnership with Innocent Drinks. Super Sonic Smoothie is a company dedicated to offer healthy food products, organic ingredients and non-fried items. The company’s approach of launching a franchising partnership with Innocent Drinks has its advantages. To begin with, Innocent Drinks offers equally healthy food items without the environmental consciousness that Sonic delivers. In addition, Innocent Drinks has not generated substantial revenue in the past three years (Cateora & Graham, 2009). From a strategic point of view, the advantage of franchising for Super Sonic mainly involves faster network expansion into the French market by offering young French consumers a new taste of foreign healthy food items and additionally gaining its reputation into the food industry. From a franchisor point of view, there is great benefit with regards to the financing involved in the expansion of the business. This form of partnership would allow Super Sonic to generate another source of income through a boost in cash flow, payments of franchisee fees and royalties, a higher return on investment, and ultimately higher profits (Cateora & Graham, 2009). As far as operations, Super Sonic is at an advantage as well, primarily because of the option of not having to open and develop new locations, but rather provide Innocent Drinks with management services (Cateora & Graham, 2009). Additionally, this form of franchising poses some disadvantages as well for Super Sonic. One of them is the risk that Super Sonic is taking in disclosing confidential information in regards to their business model, given the fact that Innocent Drinks offers the same food product (Cateora & Graham, 2009). Furthermore, to start the franchise operation, Super Sonic needs to allocate considerable capital in building its infrastructure along with providing Innocent Drinks with resources of recruiting, training and supporting the franchisee. Another drawback for Super Sonic would be the lack of the franchisee implementing policies and procedures that will ensure exceptional product quality and service (Cateora & Graham, 2009). Overall, Super Sonic franchising partnership with Innocent Drinks presents considerable advantages when it comes to expanding into the French market quickly and with minimal capital. 3B II: Joint Venture Unlike any other form of partnerships, joint venture is a type of international strategic alliance and collaboration of two companies that have joined forces to create separate legal entities (Cateora & Graham, 2009). The main characteristics that define international joint ventures are the establishment of separate legal entities, and the acknowledgement between two companies to share management responsibilities and equity (Cateora & Graham, 2009). One major advantage Super Sonic would have in a joint venture scenario with Innocent Drinks is that the local partner would have familiarity with the buyers and suppliers as well as an understanding of channels of distribution (Reference for Business, 2011). This outcome is highly favorably for Super Sonic as this access is usually unobtainable to outsiders. As far as disadvantages, according to the reading in chapter 11 joint ventures can be hard to manage as they share the same risks (Cateora & Graham, 2009). Innocent Drinks in particular has a history of poor success and this alone should be reason enough to participate in a joint venture with Super Sonic Smoothie. 3 C: Recommendation Based on the information relative to the French culture (i.e. economic and political standing) as well as Super Sonic Smoothie long awaited entry into an international market, France presents itself as a favorable nation to expand the Super Sonic product. Upon comparing the options of a franchise versus a joint venture for this international quest, implementing a franchise partnership would be most appropriate. With a franchise opportunity Innocent Drinks and Super Sonic Smoothie can combine knowledge and opportunities, especially in a strong economy such as France were laws and regulations are favorable for investors. A joint venture option draws considerable risks in terms of shared finances and losses. For a company like Super Sonic Smoothie, who has been very successful across major cities in the United States for the past six years, risking this success does not seem prudent. Therefore, in an effort to propagate the concept of using fresh fruits and vegetables, and organic milk products & juices in a country that already welcomes a healthy lifestyle, franchising would be best. References: Cateora P.R. & Graham J.L.(2009). International Marketing, 14th ed. McGraw Hill Countries and their Cultures. (2011). France. Retrieved on June 18, 2011 from: http://www.everyculture.com/Cr-Ga/France.html Communicaid. (2007). Doing Business in France Retrieved on June 18, 2011 from: http://www.communicaid.com/cross-cultural-training/culture-for-business-and-management/doing-business-in/French_business_culture.php# Central Intelligence Agency. (2011). the World Fact Book, Retrieved on June 18, 2011 from https://www.cia.gov/library/publications/the-world-factbook/geos/fr.html Economy Watch. (2011). France Economy Retrieved on June 18, 2011 from: http://www.economywatch.com/world_economy/france France Diplomatie. (2008). the French Political System Retrieved on June 18, 2011 from http://www.diplomatie.gouv.fr/en/france_159/institutions-and-politics_6814/the-french-political-system_6827/index.html Roger Darlington’s World. (2010). A Short Guide to French Political System Retrieved on June 18, 2011 from: http://www.rogerdarlington.co.uk/Frenchpoliticalsystem.html