Pan Boricua must decide whether to expand, stay in markets where they are weak, and/or expand to other markets in the United States. Supplier Power -High differentiation of inputs -Low supplier power -Moderate supplier concentration -Low costs to total purchases in industry Buyer Power -High volume -High buyer power -High concentration (niche market) -High price sensitivity -High product differences Competitive Rivalry -Low profit margins -High variety of product -High competitive rivalry -High concentration of competitors -High amount of distributors Threat of Substitution -High threat of substitution -High variety of substitutes -Low switching costs Threat of New Entry -High access to inputs -Moderate threat of new entry -Low capital requirements -Moderate regulation -Moderate brand identity Analysis PESTLE Potential Growth Hispanic Population 2010 2015 2020 2025 49,872 56,836 64,203. 72,142 1,038 1,495 2,155 3,060 7.7% 7.6% 7.6% 7.3% (million) Hispanic Consumer Spending (billion) Average Annual Growth of Hispanic Consumer Spending Analysis PESTLE Hispanics spend 43% more on food than nonHispanics Hispanics spend more than 30% of food money on specialty shops such as bakeries Hispanics take and average of 26 trips to the store a month Food plays a large part in family traditions Analysis Strengths Weaknesses • Exclusive exportation rights with a leading producer* • Quality product • No competition agreement with Mi Pueblo supermarkets • Already established in large market • Weak brand image • Dependent on distributors • Limited exposure in the United States *distinctive competence in this area Opportunities Threats • Expansion of offerings • Increase in Hispanic population • Specialized product • • • • New entrants into the market Rising transportation costs Growth in Hispanic bakeries Niche market Analysis 1. 2. 3. 4. Stay in current markets (weak and strong) Explore new markets while revamping current market Merger with Mi Pan Replicate Mi Pan business plan Alternatives Positives Already Established ▪ Distributors ▪ Brand Image Low Cost Negatives Little growth potential Weak markets consume resources with low margins Competitors reach other markets Analysis Positives Negatives High Growth Potential Costly Spread Brand Chance of failure in New Recognition Markets No change in weak markets Analysis Positives Negatives Uses each companies Give up some control distinctive core competency Eliminates competition in low margin business Potential for Rejection and/or Failure of New Company Analysis Positive Negative Proven Business Model Reactive Followers Expansion into new Failure to replicate markets success More direct competition drives margins ever lower Analysis ALTERNATIVES: 1 Key Success Factor RATING Growth Potential 2 4 3 Rank Total Rank Total Rank Total Rank Total 0.3 1* .3 4 1.2 5 1.5 3 .9 Strategic Fit 0.2 2 .4 3 .6 4 .8 3 .6 Follow mission 0.25 2 .5 4 1.0 4 1.0 4 1.0 Financially Feasible 0.25 5 1.25 3 .75 4 1.0 2* .5 Total 1.00 WEIGHT Alternatives 1. Stay in current markets (weak and strong) 2. Explore new markets while revamping current market 3. Merger with Mi Pan 4. Replicate Mi Pan business plan 1.45 3.55 4.30 3.00 Ranking Scale 1: The alternative does not effectively address this criterion. 2: The alternative may contribute to addressing this criterion. 3: The alternative provides an average solutions to this criterion. 4: The alternative provides an above-average solution for this criterion. 5: The alternative effectively addresses this criterion. Analysis Alternative 3 - Merger with Mi Pan (I added this) Recommendation 3 months 6 months 9 months 12 months Develop Merger Proposal Negotiations Implement Merger Finalize Agreement for NY Enter NY Market Implementation Activity Details Develop Merger Proposal • • Company Executives Highlight distribution incentives and benefits of merger Negotiations • • • Company Executives Approach Mi Pan with proposal Negotiate Details Implement Merger • • Company Executives Consolidate companies & establish efficient means of conversion Finalize Agreement for NY • Finalize distribution agreements from previous plans that were developed through each company Enter NY Market • Begin distribution (Milestone Review) (Milestone Review) Implementation 24 months 30 months 36 months 48 months Research Miami Market Finalize Agreement for Miami Enter Miami Market Evaluate Expansion Plan Implementation Long-Term - Implementation Activity Details Research Miami Market • • Management Team Begin research and evaluation of entry Finalize Agreements for Miami • • Company Executives Finalize distribution and location agreements Enter Miami Market • Begin distribution Evaluate Expansion Plan • • Company Executives Evaluate Success of merger & potential for future expansion (Milestone Review) Implementation Joint venture into New York Expand into other markets and revamp current market hold Risks Probability Mitigation Contingency Mi Pan resists plan to merge Low Offer employment opportunities to displaced workers Explore alternate sources of funding to replicate Mi Pan business plan Implementation