Global Expansion:
Lottafizz Corp.
Jesse W Pickerill
Bellevue University

GLOBAL EXPANSION 2
Abstract
Choosing to enter the global marketplace is a strategic step aimed at increasing profits and efficiency by reaching out to a larger number of potential consumers. By expanding globally, a company has the ability to generate increased levels of sales, achieve greater economies of scale, increase the power of the brand name, and even increase customer satisfaction. The rewards of expanding globally are tempting to all, but they do not come without risks. In order for Lottafizz Corp and its management team to make an informed global strategy, we must first understand what a global strategy entails. Following this explanation we will discuss the steps of building a global strategy, including the costs and benefits that can be expected. Finally we will be looking at a potential direction for Lottafizz Corp to consider on its path to a global business strategy.

GLOBAL EXPANSION
Global Expansion:
Lottafizz Corp.
Choosing to enter the global marketplace is a strategic step aimed at increasing profits and efficiency by reaching out to a larger number of potential consumers. By expanding globally, a company has the ability to generate increased levels of sales, achieve greater economies of scale, increase the
3 power of the brand name, and even increase customer satisfaction. The rewards of expanding globally are tempting to all, but they do not come without risks. In order for Lottafizz Corp and its management team to make an informed global strategy, we must first understand what a global strategy entails.
Following this explanation we will discuss the steps of building a global strategy, including the costs and benefits that can be expected. Finally we will be looking at a potential direction for Lottafizz Corp to consider on its path to a global business strategy.
The phrase global business strategy has become synonomous with any venture a company takes outside of its home country. While this definition fits, it is useful to understand the different levels of commitment to a global business strategy. There are three levels of involvement we will be covering, international strategies, multinational strategies, and truly global strategies. Each of these types of strategies brings a different level of benefits to a company while exposing it to a different level of risk.
(Lynch) By understanding how these different levels could be employed, the management team of
Lottafizz will be able to make an informed decision regarding the requested global strategy.
The least strategy considered is international business strategy. This category involves a company that performs some form of business activity outside of the home market. This typically involves importing or exporting of goods internationally. The primary reason for expanding with an international strategy is to advance the competitive advantage in the home market. (Lynch) From
Lottafizz Corp’s perspective, an international strategy could involve sourcing cans from an international location or exporting goods produced in the US to a foreign country for sale. These could potentially

GLOBAL EXPANSION 4 boost the competitive advantage of the home market and increase sales while being exposed to minimal risks.
A multinational strategy occurs when a company is heavily involved in multiple countries other than the home market. In addition to simply having multiple locations, a multinational strategy involves have adaptive business strategies for each region or county that allow the company to adequately appease local customs and customer demands. This also allows for more direct competition. As a result, competitive advantage is managed separately in each country or region. (Lynch) Lottafizz as a multinational corporation would involve marketing the brand name products differently in each country.
By doing so, Lottafizz could benefit from appealing to the different cultures and their demands. The alcoholic beverages would require specific attention as local customs often dictate the flavors of alcohol that are enjoyed. It may be beneficial of Lottafizz, as a multinational corporation, to develop different beverages to appeal to the different tastes of each country or region.
A truly global company is one that acts as though the global market, in its entirety, is in fact one market. Global brands are well established and accepted throughout the world. As a result, global companies are able to create competitive advantage across its entire business. Lottafizz Corp.’s aspirations to become a global company would involve creating a product to appeal to the entire world marketplace. Becoming a truly global company takes years of capital investments in production/distributions as well as marketing and other functional areas. This will ultimately be the goal for Lottafizz.
With the fundamental definitions of global expansion firmly understood, we will now move on to the construction of a global business strategy. There are several key concerns that must be answered prior to beginning a global expansion. One of the first will be the expansion location(s). To answer this question, we must perform an analysis of the potential countries. Items to include in the analysis include customer demand, competitors, infrastructure and other logistical concerns, political risks and

GLOBAL EXPANSION hindrances to trade. By considering these factors, Lottafizz will be able to develop a path of countries
5 that meet the desired criteria for international expansion.
The next questions that should be addressed is why and how the company plans to expand globally. Understanding the driving factors of considering global expansion will further enhance the company’s ability to target specific economic factors during the country selection phase. In addition, it will help to define the type of expansion (international, multinational, global) that the company is pursuing. By realizing this strategy early, it will help to shape not only the strategy but also the structure of the expansion. The how portion of the questions seeks to define the current specialty of the company in its home market. (Lynch) What makes Lottafizz a success in the United States? What competitive advantages does Lottafizz hold in the United States? Is it the cost, the taste, the uniqueness, the branding? The answer to these questions will prove to be the foundation for global expansion.
We have now answered why, how, and where the global expansion will take place. It is now time to address the company’s objectives or goals for international expansion. These could include expanding to a larger customer base, increasing efficiencies through the exploitation of economies of scale, or expanding into an area of decreased competitiveness. At this point, it is also important to manage expectations by discussing expected profits over a given time frame. (Lynch) This will help to ensure that all involved parties are well informed and not surprised by the lack of immediate profitability. By determining the goals, Lottafizz will further refine the global strategy in planning.
With the majority of the planning accomplished, businesses will now begin to finalize the plan and move towards preparation. This phase will be based upon all of the work put into the planning phase and will consist of two considerations, Method of entry and Country/Regional Choice. During the planning phase, the type of strategy (international, multinational, global) was defined by the management team. This will help to define the method of entry into the global market. Determination of how the company will proceed is made during this preparation phase. This could include exporting of

GLOBAL EXPANSION goods produced in home market, arrangement for overseas manufacturing/importation of finished products, or the development of multinational or global operations. In addition to defining the method
6 of entry, a country will be chosen at this point to begin final preparations. This country will be chosen due to earlier analysis of potential markets and also the ability to function with the chosen method of entry. (Lynch) With these choices made the preparation phase will continue on a more targeted basis.
The choices for method of entry and country will allow the management team to focus on developing a targeted plan for operations within the given area. During this time, Lottafizz would be developing pricing, marketing, and operational strategies to meet the demands of the newly established market. With this done, the preparation phase is concluded and the execution phase begins. This phase focuses on managing the newly established global/multinational business unit. (Lynch) This high level understanding of the construction of a global business strategy will help to guide the Management team of Lottafizz as they explore their global expansion options.
When considering the different forms of global expansion, Lottafizz will have to understand the potential benefits and risks in order to properly weigh their options. The potential benefits include the expansion into a new and growing consumer base. This could potentially increase revenues exponentially but also lead to great economies of scale and scope, producing greater levels of efficiencies within the company. Additionally, international expansion should lead to increased brand recognition which will continually improve sales when coupled with a quality and well-liked product.
(Lynch)
Establishing a product within the global economy does not come without its own costs and risks.
Costs that should be considered are increased marketing (new and targeted to each country), increased logistical costs (due to lack of or developing infrastructure) and barriers to trade. These costs must be considered prior to global expansion. Additionally, expanding globally increases the risk. As global brand recognition grows, the threat of a distributor/manufacturer producing and distributing a subpar product

GLOBAL EXPANSION could greatly damage a brand’s reputation. In addition, political and legal risks increase with global expansion, as does the threat of introducing a product that does not appeal to the local consumer base.
7
For these reasons, proper planning is considered critical prior to global expansion. (Lynch)
As we have discussed the definition of global strategies as well as the methods of constructing a global business strategy, it is now time for a recommendation for Lottafizz Corp. As Lottafizz is a wellestablished brand in the US, it has a certain level of competitive advantage that will assist in carrying it during global expansion. After careful consideration of potential benefits and risks, it is my opinion that
Lottafizz should immediately pursue a multinational corporation strategy with aspirations of becoming a global company after establishing itself within the global economy. Lottafizz does not have a singular product which defines the company. As a result of this, the best path would be to perform a thorough analysis of the desired country of expansion and adapt the beverages to meet the demands of the local culture and tastes of the consumers. This flexibility will prove to be the major competitive advantage of
Lottafizz over its competition. An example from which to draw from would be Coca-Cola. In many aspects, Coca-Cola is a global enterprise with a globally known, recognized, and respected product. The company also branches out to fulfill the needs of its customers within each country through the production and distribution of other products. (Coca-Cola Case Study) This flexibility is something that
Lottafizz should emulate and expound upon with the alcoholic beverage industry.
Prior to expanding globally, a company must thoroughly plan and understand the global marketplace. The planning phase helps to identify the goals of the organization and also the resources it has (uniqueness, cost, etc) that will enable it to expand globally. It also sets the stage for the company to select its method of entry and country/region of expansion. A company such as Lottafizz has many competitors that have already made the global expansion. Learning from the mistakes and successes of a competitor is always a good idea prior to making any decision, especially one as potentially beneficial and risky as global expansion.

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References
Lynch, R. (n.d.). What is global strategy? And why is it important?. Global Strategy RSS. Retrieved August
1, 2014, from http://www.global-strategy.net/what-is-global-strategy/
Creating an effective organisational structureA Coca-Cola Great Britain case study. (n.d.).Structure and culture. Retrieved August 1, 2014, from http://businesscasestudies.co.uk/coca-cola-greatbritain/creating-an-effective-organisational-structure/structure-andculture.html#axzz396oqKgzd