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Laura Evelia Mercado | Cn693592| Modelos de exportacin y comercializacin|

P2016
1. CAGE analysis
Country

Cultural
Distance

Administrative
Distance

Geographic
Distance

Economic
Distance

Brazil

Speaks
Portuguese
2nd largest
consumer
coffee
market

Only the 11%


of franchises
are foreign
based.

9054 km
away
Flight time
12 hrs. from
Brasilia to
Rome

Low per
capita
consumption

They used to
drink tea
Customers
prefer to eat
while
drinking
coffee and
dont like
bitter taste
of espresso
Interest in
espresso and
specialty
drinks

Hard to run
the business
High
competition
Difficult
franchising
system

8147 km
away
Flight time
11 hrs. from
Beijing to
Rome

Minimal togo sales


Saturated
and matured
market

736 km
away
Flight time 2
hrs. to Rome

15% per
capita
decline in
consumption

Sixth largest
producer of
coffee in the
world
Interest in
espresso and
specialty
drinks
Exposure of
Western
lifestyle
More growth
opportunity
for hoy
beverages

Ranked highly
on ease of
doing
business
Aggressive
competition
and high
concentration
High
competition
among other
coffee brands
Franchise
success but
young

5929 km
away

2nd fastest
economy in
the world
Over
bureaucratic

Difficult to
franchise
Innovation of
the product
and its
packaging
seen as key
to growth

Diverse
demography
Cultural
obsession

High
saturation
High
competition

China

Germany

India

Japan

United
Kingdom

6138 km
away
Flight time
13 hrs. to
Rome

Ranked 3 as
coffee
importer

893 km
away
Flight time 3
hrs. to Rome

Recent
growth of 6%
remained
stable

Laura Evelia Mercado | Cn693592| Modelos de exportacin y comercializacin|


P2016

United States

Interest in
premium
coffee

Few
restrictions to
franchising

1st consumer
of the 25%
worlds
coffee

Easy of doing
business
Hugh
saturation

4497 km
away
Flight time 9
hrs. to Rome

High
disposable
income

2. SWOT analysis
Strengths
Great brand
Quality product
Italy is centrally located
Already global
Viewed as authentic
Opportunities
Global expansion
Growth in coffee culture in
developing countries
Growth in espresso culture

Weaknesses
Expensive
Relies on an urban
customer
Viewed as an Italian brand
High-end product
Threats
Lots of competition
Affected by economy
Product differentiation
difficult

3. What does this analysis means to you?


This shows me the strengths and debilities in each country. How is the
coffee consumption in each country, if is an easy country to do business
with, and if the distance between them. I would recommend illy to
venture into UK first.
4. GE Matrix and the BCG Matrix

Competitive
Position

High
Medium
Low

Market
Growth

High
Low

Market attractiveness
high
medium
Brazil
China
Germany
US
Japan
UK
India
Relative market share
high
Low
Brazil
India
China
UK
Japan
Germany
US

5. Which variables from the case are the most important?

Low

Laura Evelia Mercado | Cn693592| Modelos de exportacin y comercializacin|


P2016
Coffee consumption
Coffee shop concentration
Urbanization rate
GDP per capita
Coffee sales
Ease of doing business
Competition from local and international players
Most attractive segments
6. How should Reale prioritize the foreign markets?
I would recommend illy to venture into UK first, then US, Brazil, India,
Germany, Japan and China.
7. What mode of entry should Reale consider?
UK
US
Brazil

India

Germany

Japan

China

Direct franchising.
Same as UK, Direct franchising.
Sequential Franchising and Joint Venture
partnership depending on the area.
Partnership with local companies in order
to thrive in a complex environment
Direct Franchising would work because
the minimum liability and low
investment.
Joint Venture, because of the differences
between the Italian style preferences
than the Japanese ones.
Regional partnership and as in japan, the
product needs to be localized.

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