Strategic Suggestion Paper

Strategic Suggestion Paper (1st Draft)

1. Introduction

With many years production experience of various preserves, vinegar, mustard and tea, Prince Edward Island Preserve Co. is a company whose target market is gift/gourmet and specialty food market. Between the president of PEIPC Brute MacNaughton's two chooses of future expansion: Toronto and Tokyo, I will suggest him to choose Toronto as the new market. The existing diverse product line and the band spread in Japan is the central strengths I will use in my suggestion to make sure the growth and survival of PEIEC in new market. This company locates in the P.E.I., an island, which draws tourists from all over the world. In particular, nearly 15000 Japanese tourists visit P.E.I every year. They spend much money on purchasing the product of PEIPC so that the production of PEIEC is not totally unfamiliar for Japanese. Besides, the sales of production in Canadian World make PEIEC not strange for Tokyo customers. Except the recognition in Japanese market, another advantage PEIEC can take advantage is its diverse product line. Through many years accumulation, this diverse product line of PEIPC can produce over 80 items. The various productions can satisfy the diversification of Japanese consumer preferences.

The weakness of lack of enough financial resource in PEIEC cannot be ignored. So I suggest PEIEC to export production to Tokyo market and build its own controlled stores to sell the gift box and single jam production in Japan. Exporting will avoid the finance problem caused by investing a large amount of money in new market. However, the company has to face the high import duties for jam in Japan, which is average about 28%. Another threat PEIPC would face is that they are unfamiliar with Japanese market. Hence, it may be hard for them to build new distribution and marketing in this new battlefield.

Despite the threatens and weaknesses challenge PEIPC to expend in Tokyo, the huge demand of jam production in Japanese market and the high profit margin of controlled retailer bring hope to PEIPC. In order to achieve the maximize performance, PEIPC must adhere to the major themes of understanding customers and distribution/manufacturing efficiency so that it can overcome the threats in Japanese market.

2. Strategic Suggestion

I suggest PEIPC to expand its new market in Tokyo. To be specific, the vehicle I suggest is exporting. Then PEIPC builds new controlled stores in Tokyo's shopping districts to sell the high quality jam productions in Japanese. The size of the production sold in controlled stores is mainly 30 grams. They can be sold singly and in gift boxes with large size bottles. A new manager who is familiar with Japanese marked should be hired. She or he is in charge of the location choice of retailer stores, the plans of jam combination in gift boxes according to Japanese customers' preference and price of each production in new stores.

The first reason why I give this suggestion is people's high level of spending on gift giving, large demand market of jam, in Tokyo. Given to the data provided in the article, 80,000 tons jam consumed in Japan market. Among them, 16,000 to 24,000 tons are highergrade products exported from foreign countries. Hence, for PEIPC Japan is a huge potential market because of the large demand of jam. Then, as what says in the article, "gift giving and entertainment expenses at the corporate level are enormous in Japan"(510). It also shows PEIPC that Japan is a reasonable market to step into.

The vehicle I suggest in Tokyo market is exporting. Two reasons drive me choose this vehicle. The first one is that P.E.I. Preserves' has very favorable lease arrangement in Canada. It is well below the normal $275 per month for the similar space size. The low lease arrangement would save PEIPC much money on rent investment. Therefore, exporting from Canada guarantees PEIPC to take advantage of this low investment. Secondly, PEIPC does not need to spend much time on building factories in Japan and learning the local knowledge of Japan if it exports product from Canada. The advantages of exporting include low initial investment and low local knowledge demands. One weakness of PEIPC is that it has little knowledge about Tokyo market. In order to overcome this weakness, I refuse any direct factory investment in Japan.

On the opposite, for selling methods I suggest PEIPC to build its own stores to sell jam productions, equaling to Greenfield investment in Japanese market. The big profit margin of wholesaler and retailers makes me choose this strategy. In the exhibit 7, the profit margin of retailers of jam in Japan is 30%-35% of whole price. Controlled stores will bring the high profits directly to PEIPC instead of others. Besides, PEIPC can have highest level of knowledge generation by the use of controlled stores. In the controlled stores, the sellers can have the most directly contact with Japanese consumers. The customers will receive much more