Foxy Originals – Expansion into the U.S. Market
I did this case study for a management course a few years ago, I hope BBA students find this post useful. The following is the Executive Summary. The case study and exhibits are attached.
With the growing popularity of its products, Foxy Originals was running the risk of becoming over-saturated in the Canadian market. In an effort to avoid this problem, the company decided to enter theU.S.market by January, 2005. To achieve this goal, Foxy Originals had to make a vital decision regarding its distribution strategy: Would the company attend trade shows or hire sales representatives?
Foxy Originals’ strengths reside in its owners’ experience, stylish products, pricing strategy, and its current market presence. The company’s weaknesses include local market saturation, lack of international market experience, and the high cost of securing retail accounts. Tapping into theUSjewellery market creates virtually unlimited opportunities for Foxy Originals. The company will gain a larger customer base, wider brand exposure, and greater international market experience. Although entering theUSmarket presents Foxy Originals with huge opportunities, it also presents significant threats. Threats the company may face are the risk of being eliminated by stronger, better marketed competitors; potentially low demand for its product and expensive marketing and distribution.
Foxy Originals is trying to decide on the best strategy for expanding into theUSmarket. The company must overcome its unfamiliarity with theUSjewellery market, its lack of a solid marketing and distribution strategy, and the high costs of acquiring new retail accounts.
The company currently has three options: Foxy Originals can sell its products at trade shows; or it can hire sale representatives to sell their products; or the company can benefit from using both distribution methods. The company must carefully evaluate expected profits, market-entry time, and the complexity of each alternative
The costs of hiring sales representatives are much lower than any other alternative, and the expected revenues are much higher. Sales representatives have experience and contacts to make quick sales, assuring Foxy Originals a quick introduction into theU.S.market.
By the end of 2004, in majorUScities, with a cost of $19,182.50, Foxy Originals should will and train four sales representatives. Working with recruiters and following its regular employment procedures, the company should hire, train, and equip four ambitious, aggressive, enthusiastic account executives, assigning each to a majorUSmetropolitan area. Because the company will face fierce competition in large urban cities, Foxy Originals should focus on slightly smaller markets with less competition and higher demand. Foxy Originals also must develop a distinctly American collection—stylish and affordable. By differentiating itself, offering unique and affordable products, Foxy Originals will insure profitable expansion into theUSmarket.