Hi there, The assignment questions to complete are the first file, Business Analysis 2, and you will read the case in the second file called: CountryManager Latin America Case to complete this...

Hi there,


COUNTRYMANAGER CM Case Analysis Student Name: The CountryManager case presents background information on the toothpaste industry, your company, and the region you will be entering. Below are a few guide questions to consider as you read the case. (Answer fields are expandable.) 1. (Page 8) 1. Name and describe the four BENEFITS segments in the CountryManager toothpaste markets. 2. (Page 10) 1. Which country in the region has the highest population? (Page 11) 2. Which has the highest sales per capita ($) of toothpaste? (Page 12) 3. Which market has the most competitors? 3. (Page 14) “Approximate Home Region Manufacturing Costs by Component” breaks out how much more or less a SKU you manufacture will differ from the standard or “base” product (medium, tube, paste, fluoride only). 1. What percentage more than the “base” cost will a large, pump, gel, hydrogen peroxide formulation cost to product? 4. (PAGE 17-18) 1. What retailers typically buy from wholesalers (indirect) rather than from the manufacturer (direct)? 2. Why do those retailers buy from wholesalers? 5. (Page 19-20) Manufacturers set a suggested retail price (MSRP) and offer discounts to wholesalers and retailers in the channel. Wholesalers typically receive the highest discount (30%) because they purchase large volumes and deliver product to small retailers. If the MSRP is $2.00 for a small tube of toothpaste, what price does a wholesaler pay for each small tube? 6. (Page 21) A slotting allowance (Allowance in this simulation) is a discount from the MSRP to encourage retailers to carry the brand on the shelf. 1. Will a new brand being introduced in the market usually offer a higher or lower Allowance than established brands? 2. Why? CountryManager Latin America Case COUNTRYMANAGER Latin America Case 6 Kay Pasah, head of the consumer healthcare division of Allstar Brands, looked across the table at her category and brand managers. She had a determined look. “Our sales in our traditional markets of Western Europe, North America, and Australia are performing well. But these markets are mature with lots of competition and aging, slow-growing populations. On the other hand, we’ve been too slow in developing our business in the newly emergent economies around the world, such as the BRIC nations (Brazil, Russia, India, and China). Our board believes, and I agree, that to generate the kind of growth needed to drive our stock price, we need to develop a stronger market presence in these types of countries. Our plans will be rolled out on a regional basis, with Latin America and Asia being the first two regions to consider. What I need from you is an analysis of these regional markets and a plan of entry. You need to tell me where we should be, when we should be there, and how we will need to manage the business. I want us to be in at least one country in the region next year. Each of you has been assigned one of these regions and I’ve provided you with some background information to get you started.” Allstar Brands Allstar Brands is a multinational consumer products company that produces and sells ethical (prescription) pharmaceuticals, OTC (over-the-counter, or nonprescription) drugs, and consumer products. It is an $10.9 billion firm that was formed in 1924 and competes with a variety of larger and smaller firms, depending on the product market. It has leading brands in various product categories, including (in the OTC division) Allround, the leading liquid cold remedy in North America, and Zemlef, a heartburn remedy soon to be converted from prescription to OTC status. The consumer products division includes various types of packaged goods: hand and beauty soaps, laundry detergent, shampoo, toothpaste, shaving cream, etc. Over the years, it has expanded its product category width through internal new product development and through acquisition of brands and companies around the globe. The company had been historically organized into Ethical Pharmaceuticals, Consumer Products, and International divisions, but it recently reorganized into a global product management structure with Ethical Drugs, Consumer Health Care, and Consumer Products divisions. A group of category managers exists within each division. For example, the Consumer Healthcare division has an oral care category manager, a vision care category manager, etc. Most major brands also have their own brand manager who reports to the category manager. Under the new structure, each division is responsible for its own international operations and, to some extent at least, can pick the products and categories to pursue internationally. The country managers are responsible for the selection and marketing of products in a particular country. The current organizational structure is shown below. 7 Organizational Structure of Allstar Brands 8 World Toothpaste Market Current world toothpaste sales total approximately $20 billion. The country with the largest market for toothpaste is the United States, with $3.4 billion spent during the past year. A number of firms produce and/or market toothpaste in the world market. The table below lists the five major producers of toothpaste for the world market, including Allstar Brands. Not all global brands or global competitors will be represented in every market, and some markets might include brands produced by local firms. These local brands may have a minor or major share of the market, depending on the country. World Toothpaste Producers with Major Brands Company Name World Sales (% of World Market) Brands Allstar Brands 13% Allsmile B & B Healthcare 15% Britesmile Bancav Caremore Company 21% Clean & White Caregate Driscol Corporation 10% Dentacare Evers Consumer 7% Eversmile Toothpaste is available in a number of sizes, delivery systems, textures (paste or gel), and formulations. The basic toothpaste product is a paste or gel with flavoring and one or more active ingredients that provide specific benefits to consumers. Research has identified four key consumer segments in markets around the world based on benefits sought: • Economy: basic cavity protection at a low price • Whitening: whiter teeth • Healthy: tartar control and disease prevention for healthy teeth • Kids: a good tasting product that appeals to children Consumers purchase different formulations based on the benefits they seek and their purchasing ability. The benefit segments also link to demographics. For example, families with children often focus on decay prevention; young singles are typically more interested in whiter teeth; those in middle age are concerned with tartar and gingivitis; and children find taste of the toothpaste to be a primary feature. Similarly, the appeal of certain attributes may differ among consumer groups. For example, pump dispensers add convenience and may be a novelty for children but are more expensive to produce than tubes. Also, single people might prefer the convenience of smaller package sizes, whereas families may prefer a larger package which is typically more economical on a cost per gram basis. 9 A general description of these variations in the United States market is listed below. Not all companies produce all possible combinations. Sizes • Small (25 g) • Medium (75 g) • Large (150 g) Delivery Systems • Tube • Pump Textures • Paste • Gel Benefits/Formulations (All formulations contain fluoride) • Economy is a basic formulation for prevention of dental cavities. • Whitening formulation contains hydrogen peroxide for whitening and prevention of gingivitis. • Healthy contains baking soda for tartar control. • Kids contains special flavorings to appeal to children. 10 Country Analysis Latin America is a region of great potential. Its population of over 600 million is more than 60% larger than that of the United States and Canada combined. The region has a history of having been politically unstable and has had many weak economies characterized by low growth, high inflation, and a reluctance to take tough economic actions to correct these problems. The dominant national language across Mexico, Central America, and South America is Spanish, except for Brazil, where the primary language is Portuguese. Some portions of the population in many South American countries speak one or more indigenous languages. Kay’s team scoured the internet for additional sources of data and came across a site maintained by the CIA. “Our tax dollars at work!” Kay exclaimed. The following tables compare economic and social characteristics of the home market and the markets under consideration. Market Comparison on Economic Considerations (Source: CIA World Factbook 2020) Country Population (Millions) GDP (Billions)* GDP/Capita* GDP Growth CPI Increase % Below Poverty Line Argentina 45.5 $922 $20,300 2.9% 25.7% 25.7% Brazil 211.7 $3,248 $15,300 1.0% 3.4% 4.2% Chile 18.2 $452 $24,800 1.5% 1.7% 14.4% Colombia 49.1 $712 $14,500 1.8% 4.3% 28.0% Mexico 128.6 $2,463 $19,200 2.0% 6.0% 46.2% Peru 31.9 $430 $13,500 2.5% 2.8% 22.7% Regional Avg. 80.8 $1,400 $17,900 2.0% 7.3% 23.5% Home 332.6 $19,490 $58,600 2.2% 2.1% 15.1% * Purchasing Power Parity Market Comparison on Social Characteristics (Source: CIA World Factbook 2020) Country Population Aged 65+ Urban Pop. Pop. in 3 Largest Cities Population Growth Pop. with Access to Safe Water Infant Mortality per 1,000 births Argentina 12.1% 92.1% 42.7% 0.9% 99.1% 9.0 Brazil 9.2% 87.1% 21.8% 0.7% 98.1% 15.9 Chile 11.8% 87.7% 47.4% 0.7% 99.0% 6.2 Colombia 8.4% 81.4% 40.8% 0.9% 91.4% 12.3 Mexico 7.7% 80.7% 27.2% 1.0% 96.1% 10.7 Peru 8.3% 78.3% 39.2% 0.9% 86.7% 16.7 Regional Avg. 9.6% 84.6% 36.5% 0.9% 95.1% 11.8 Home 16.8% 82.7%