BUSINESS CASE STUDY: NOVA ENERGY DRINK
Author Note
Business Case Study: Nova Energy Drink
Introduction
Every business wish is to attract a large number of customers globally. Nova beverage organization, with its strong slogan, “We Will Get You There,” is aiming to attract more customers not only in the United States but also in Latin America. Therefore, as the CEO of this organization, I would wish to further Nova’s products to Venezuela and Argentina. These two nations are thirsty for beverages due to their sports nature. It is prevalent that these nations are also football stars globally, therefore, introducing fresh energy drinks would benefit not only our organization but also the several sports personnel present in these nations. Therefore, beginning operation in a new country has challenges, which requires useful research to survive in the international competitive market.
Hofstede’s Cultural Dimensions
Hofstede (2009) positions that the cultural dimension’s model is applied to comprehend the dissimilarities in culture across nations. Additionally, the framework is used to comprehend the ways in which organizations conduct business across distinct cultures. The above notions imply that the structure is applied to differentiate among different national customs, the proportions of culture, and measure their effects on organization setting. Therefore, I will use this framework to assess the business culture of Brazil and Argentina. To begin with, I possess a lesser power distance. I sense that every individual needs to have a specific power limit, therefore, I have a particular power amount in particular issues. Moreover, the idea that a small team can have power over a larger group is not perfect. This is a contrary idea in Brazil, where individuals have beliefs that inequality is a typical subject.
On the other hand, Argentina poses a lesser power distance, therefore they fell permitted to a particular power amount (Inkon et al 2007). Additionally, I am an individualist person. This means that I fully rely in my own effort to achieve my objectives, and not asking for any help from the second party. The titles given to masculinity and femininity by Hofstede are sexist since he positions traits depending on gender. Also, am a high achiever, and more assertive. In have encountered lots of female who are aggressive and goal concerned, however, I do not rank them as masculine, but rather perceive them as humans who have their traits, and not just gender dependent. Based on Merkin (2018), Brazil are not collectivists, while Argentina positions at the centre on the rankings.
The author positions that based on migration and prior rise of wide median class, Argentina leads in being Individualist nation among the Latin nations. Also, am a risk taker and contented with little ambiguity. I prevail in structural certainty, however, will take an opportunity due to risks. Brazil are my opposite since they avoid ambiguity. Argentina poses a high certainty evasion, and her societies depict a strong concern for regulations mainly to makeup life (Bertsch et al 2013). Likewise, I tend to consider short term objectives. Brazil also believes in short term ideas and also value tradition. Argentina depicts entire respect for its traditions, and concentrate on short term objectives.
Barriers to entry
Lanciotti and Lluch (2015) positions that Argentinian markets levy their domestic taxes for instance, excise taxes, on alcoholic substances, soft drinks, tobacco and tape recorders. Other goods that undergoes domestic taxes in the market are syrups, extracts, television sets, record players, among other products. Therefore, domestic taxes on Nova drink is predictable, since it falls under drinks. Therefore, such taxes could be avoided since they are costly to the business. However, due to huge profits expected, Argentinian market would just be effective for operation. The most enormous cultural barrier therefore is language. In light with Ibrahim (2016), 98 percent of Argentinians speak Spanish Language. Since Nova is based in America, where English is spoken, the organization will be forced to hire new employees from Argentina or coach the already existing employees on Spanish language.
Different from Argentina, Venezuela poses fewer trade barriers. The nation regulates agricultural imports via import warrant regime. While not in action contemporarily, Venezuela has a history of asking for certifications to prove that the goods are not domestically present. Also, the aim of this certification is to prove importation. The government needs that all agricultural importers provide Sanitary and Phytosanitary warranties from Food and Agriculture ministries. Also, these legal barricades can be avoided by not operating in such a nation, however, due to huge profits expected, it would be worth for Nova Energy to venture its market reach in this nation. Additionally, most people in Venezuela speak Spanish, just like in Argentina. Thus, dealing with this barrier will necessitate teaching Nova’s staff Spanish Language.
The effects of currency on penetration of these new markets
To begin with, signing security and marketing firms in Venezuela and Argentina would be beneficial since they will be conversant with the localized customs. This is different from the USA, since we are already familiar with the local culture. Also, hiring the marketing organization in both nations would assist in deterring Nova’s market products from having a dissimilar sense than we planned for. If business proves effective in both the nations, then Nova would send Spanish learning products to American staff. Therefore, Nova would incur additional costs by sending its American staff to Venezuela an Argentina. This cost would be cut when the company signs in marketing and employees from Venezuela and Argentina.
Vera (2015) positions that as from 2003, Venezuela has applied the most preventive model to handle oversea currency flow. Dissimilar alterations have been stationed in the past years and a difference scheme with numerous exchange duties in force of the nation. Correspondingly, the black market has reduced. Black market exchange extent values at 10,000 times the least required exchange rate. This surrounding of an ended capital tally the Venezuelan payment balance for American organizations poses dissimilar dangers and troubles particularly concerning late expenditures from Venezuelan traders and local firms of multinational businesses for deported shares to their primary offices. A profusion of foreign money certified the economy to have enhancement development for numerous years due to high costs of oil. Therefore, based on Boshkov (2018), the nation is undergoing shortages of liquidity in external currency restricting its capability to import essential products and to obey its fiscal promises. These economic circumstances cause the conclusion that the static-exchange degree and capital regulation system in operation in Venezuela depicts an unfriendly surrounding under circumstances of regulated inflow of distant currency, thus creating a great volatility in trade rates. Therefore, this makes it tough for organizations to import and obey the financial agreements.
Uncertainty in Argentina has caused the acceptance of various models of foreign exchange schemes in prior years. From the dollar-pegged fiscal scheme as a Currency Board applied in 1991 as an answer to hyperinflationary procedures noted in the nation from 1989 to 1991 (Guida 2019). Currently, Argentina’s economy has floating exchange amount scheme. Moreover, an essential procedure of in debt has been created to decrease the break in economy. The model is founded on the conduct of payment balance of the nation which lets business individuals and foreign organizations to examine the instability of the exchange degree as the resource for its preparation procedure. For an organization in USA, the reality of a free foreign money market in Argentina brings opportunities and risks. Activities in foreign money below the floating scheme denotes the reality of currency danger, which associates with instability in exchange rate. Nonetheless, below these situations, an effective examination of economic surrounding will enable us to apply plans to handle risks for instance hedging tools, for the danger to be combined in the general plan of the organization, and is indicated in the price.
Socially responsible company
In light with Kasim and Naima (2018), Venezuela leads globally with the highest inflation rate. The author positions that as at 2016 December, Venezuela recorded an 800% inflation, and this has notable reduced then. According to Littman (2016), an individual purchasing a dozen of eggs would spend $150 as at 2016. Therefore, this hyperinflation has therefore made the country’s currency, Bolivar Fuerte, to devalue. As a result, the nation’s poverty rate has moved to past 80 percent. Consequently, due to financial constrains in Venezuela, the only option will be to purchase Nova’s raw materials from a cheaper source. If Nova can make huge profits, then it will have to be socially responsible. For instance, the company can venture in offering free education services, and also encouraging its employees to be much involved in community service operations. Likewise, by providing education on how to operate in the company, Nova will also benefit since its employees, both local and international would have effective skills of operation. Examples of these skills to be educated and those that will also benefit the organization include, computer literacy, communication, time management, team working, among other skills.
Rossignolo (2017) positions that individuals in poverty in Argentina progressed by 1.5 million in number as from 2015 to 2016. This therefore indicated a percentage increase from 29 to 32 percent. With this in mind, it would be effective if prices can be reduced by acquiring segments of production from cheaper bases. Therefore, if Nova could engage in outsourcing raw materials from cheaper sources, without reducing quality, then the products would be more affordable to a large number of the customers. Also, the company could also venture its profits to socially benefit the community. One way is to construct a homeless house for the homeless. Nova could also encourage its employees to engage in community volunteering jobs. In all the nations, Nova should maintain highest levels of environment responsibility aligning with the organization information of being eco-friendly.
Any management infrastructure requirements
The demanding infrastructure required to operate an organization in both the nations is by now available in the extremely populated regions. Examples of these demanding resources include, means of transportation for instance, vehicles, electricity, telephone, clean a healthy water and energy. After the organization ventures in both the nations, certain criteria would be obeyed to allow water opened in the company and also electricity. Provision of organization cars is voluntary, however, to promote time efficiency, Nova would venture in offering free rides to work, each morning and in the evenings after work to employees. Correspondingly, based on Narodowski and Moschetti (2015), Argentina’s education scheme is effective in an international stage. This is also seen since Argentina has over 98 percent literacy levels among all Latin American nations. The same case applies to Venezuela, which has its literacy levels ranging at 95 percent. The fiscal surrounding is not steady in Venezuela, this therefore implies that the management in this nation would be forced to receive coaching to study means of mitigating risks and preventive steps. Besides, the fiscal environment in Argentina is more stable than Venezuela’s (Moro & Beker 2016). Agreements would be compulsory in both the countries.
Conclusion
As the CEO of Nova energy drinks, I plan to expand our services to two Latin nations, Argentina and Venezuela. Therefore, this analysis examine particular business complications that would occur due to international extension. First, I began by examining the business nature of the two nations by using Hofstede’s Cultural Dimensions. Also, language barrier would affect the organization’s venture in Argentina and Venezuela. Nova would also face legal complications for instance paying taxes.
References
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