The McGrew Company
Mini case 15.1
California Baptist University
August 4th, 2013
1. Assume you are Joan Beal. Prepare a list of all the options, and give the advantages and disadvantages of each.
It appears The McGrew Company has been utilizing the indirect exporting phase as its primary business model in Brazil. Rather than simply exporting its products to Brazilian distributers and selling it for a markup, McGrew could exercise different options.
OPTIONS * Direct Exporting
Direct exporting would allow for The McGrew Company to handle its own sales and marketing within the country of Brazil. This
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According to the local distributor, they need to open a local manufacturing plant to maintain their share of the Brazilian market. They would also save on the cost of importing their finished products to the company and could hire local workers who would require lower salaries. They would also enhance the local economy by putting extra money into it, which will end up helping the local market. However, their company does not have anyone with any experience marketing or producing in Brazil. Brazil also has a higher risk of potential political and economic problems compared to the US and would cost some extra money to set up the necessary facilities. McGrew Company is also not completely sure about how successful their local production operation would be. However, judging from the current economic conditions from Brazil, the recommendations from the local distributor, and the company’s current status, we feel that it would be advantageous if they start manufacturing peanut combines in Brazil. Recommended Strategy It is recommended that the McGrew Company establish a peanut combine production facility in Brazil. Because of the nature of Brazil’s economy, production should be cheaper in Brazil than the US, and importing the raw goods should not cost any more than importing the whole products. Thus it should not be any more expensive to produce the peanut combines in Brazil. In addition, by producing these products in