Posh Pastries Entering the South America Proposal

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Updated: Dec 19th, 2023

Introduction

Posh Pastries is a US-based organization that specializes in the production of pastries. Following resounding success in Northern Mexico, the company now intends on entering the South American market through Colombia. A country analysis revealed that Colombia’s political and economic situation is quite promising. Posh’s products have a two-month shelf life, which allows for overseas shipping.

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Nonetheless, many consumers value the taste of freshly-baked pastries. As a result, this organization will ship some of its products from the USA and also prepare others at the chosen location in Colombia. The project will lead to cultural exchanges between the US and Colombia because most desserts in the target market do not consist of pastries. Since Posh Pasties will be offering something new, chances are that the organization will do relatively well.

Expansion into the South American country will require a sum of $526,150. Currently, the organization already has a series of equipment and supplies to create its products. Nonetheless, the freshly-made ones will require investment in new personnel, equipment supplies, marketing efforts and facilities. These costs have all been included in the budget.

The business expansion will diversify the business and boost its revenue streams. It will also foster cultural and political ties between the US and Colombia. The evaluation plan will measure the extent to which Posh Pastries achieves those results by looking at the revenue streams that some into the company after the project. It should record an increase of approximately 5% by the first year and this should increase by another 5% in the subsequent year.

The business will also analyze how effective Posh Pastries was at fostering cultural connections through an annual survey. Individuals in the chosen location will respond to a questionnaire in which they will state whether they are familiar with pastries sold at Posh. They will also state whether these foods have fostered an appreciation of American foods.

Statement of the Problem

Many people around the world are familiar with the American way of life. They have watched Hollywood films, which reflect only some aspects of American living. None-English speaking countries like Colombia may not be as cultural sensitive to the US as other English-speaking nations since they cannot follow these films. It is necessary to consider another platform that would speak universally to people, and food is one avenue.

Expanding a food business overseas would facilitate cultural sensitivity in a way that conventional methods would not. Traditionally, business lunches have brought people together in the most unrelated cultures. The food that Americans eat is symptomatic of their culture. It is a collection of the geography, the history and traditions that the country has enjoyed over the centuries.

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Therefore, when a food business expands into a foreign market, it engages in cultural diplomacy. The US is in need of a medium that will celebrate the richness and uniqueness of American cuisine. A small or intermediate enterprise can achieve this goal effortlessly (Wilk, 2006).

Posh Pastries is a medium-sized business that has been doing relatively well in its home country. Further, it has done well in the few foreign countries it has chosen so far. It requires new opportunities that will grow the business and take it to the next level. Companies that keep growing have a higher chance of succeeding than those that stagnate.

The company needs exposure to a different way of conducting business, and Colombia could be that answer. It is a given fact that the US is a mature market. Some countries around the world are at different levels of economic growth.

Therefore, they may not have accessed some of the products that are so common to US consumers. Posh Pastries is facing stiff competition from a diverse array of pastry makers in it base markets. It needs to diversify its business by going across the border and finding markets that are not as saturated as the US.

Project details

Goals and objectives

The purpose of this project is to increase revenue for Posh Pastries. As stated earlier, the company operates in a mature market where growth prospects are minimal. It is necessary to have an alternative that will reverse this stagnant growth. Net increases in revenue should be an indicator that the strategy is working. Another key goal for entering Colombia is to boost cultural ties between the US and Colombia.

The dietary customs of the Colombian people are significantly different from the ones in the American market. Therefore, this business intends on acting as a site for cultural and political exchanges. It intends on fostering an appreciation of American foods by influencing the eating habits of the Colombian people.

Clientele

The organization targets the average Colombian consumer. Posh Pastries will select convenience stores that have a high rate of visibility in the capital. Pastries tend to be consumed on the go; therefore, persons need to see the items easily. These goods will be within the price range of other baked goods in the location. Therefore, buyers are likely to represent middle-income consumers.

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Sweet things are usually not planned expenditures; this means that persons with some extra money to spare will buy the items. Since Colombia’s economy is doing relatively well, it is likely that a substantial portion of the population will have some discretionary cash. Clients in urban areas are ideal for this business because their population density will sustain Posh Pastries.

Persons living in metropolitan areas are also more open to new culinary ideas than people in the rural areas. University students will also provide a good consumer base. One of the convenience stores selling the commodity will be near a prominent university (Barrow et. al., 2008).

Methods

The organization will partner with local grocery stores to stock their products within their facilities. Since the pastries are exceptionally flavored and use superior ingredients, it will not be advisable to place them in supermarkets. Posh pastries will also have its own stores where it will sell its products exclusively.

At this location, customers can find freshly-baked goods, which may not be available in the other locations. Therefore, the entry strategy into Colombia will entail direct importing and joint ventures. These local stores speak the same language as the target consumers.

They also have thorough knowledge of the Colombian food market, so they will enrich Posh Pastries’ skill levels. Besides the joint venture, it will be necessary to have a local branch in the country. This approach will ascertain that customers know how the freshly-made versions taste.

It will lure buyers into the location simply because of the smell. All the partners working together with the organization will receive training on how to display the pastries attractively. Since visual stimulation is a key marketing tool, then all the grocery stores must learn how to do store displays.

Administration and staff

All the conveniences stores, as well as the branches working with Posh Pastries in Colombia, will be under a country manager. The person will have a branch manager in each store to oversee operations. These managers will be responsible for the creation of marketing and promotional strategies, expansion and other aspects of business operation in Colombia.

A cashier will be imperative in the business as he or she will receive cash and issue receipts for orders made. The business will have pastry chefs in the local bakery. Here, a head chef will plan the day’s baking schedule. He or she will also oversee the preparation, decoration and completion of orders. In some circumstances when client traffic is overwhelming, the head chef will also participate in cooking.

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Other pastry chefs will carry out routine baking. They will also decorate and present the items. Each shop will have a busboy who will clean the shop as well as the baking utensils. There will be sales assistants who will sell the product and ensure that others meet customer needs.

Available resources

Posh Pastries has already been in business in four countries. Therefore, it has capital for running a Pastry business successfully. First, the organization has equipment like the industrial mixer. It also has a double stack oven, work tables, display cases, stovetop ranges, cash registers and cooking utensils. Some of these utensils include stencils, baking sheets, pans, and plastic spatulas.

These equipments are in the US where workers make products and then ship them to intended locations. However, since t the company will combine local production with shipping in this project, then these equipments will need to be replicated in the said market.

Other than equipment, Posh Pastries already has locations in the US, where it makes the pastries. The baking facilities are already in good condition, so they do not require any renovation. These locations will account for a substantial portion of the shipped goods. Additionally, the company has a series of pastry chefs, and managers within the business.

These individuals have vast knowledge of what it takes to succeed in the highly competitive US pastry market. Since the organization has been doing relatively well, it has some financial resources needed to expand into Colombia. However, this money is not enough. An external source of funding will boost the company’s project by preventing it from using its internal revenue.

Some intangible assets available in the company include knowledge about pastry making, media advertising and campaign strategies. The organization also knows selection of prime locations, employee training, selection of business partners, and consumer targeting. Posh Pastries has acquired some knowledge about the Colombian food market.

The organization has already researched about the flexible nature of food tastes in the country. It has also identified the best locations for the business. These are areas that have high foot traffic, a relatively young population as well as middle income earners. This company also has knowledge of the competitive situation in the country. It will also replicate the success it has reported in Mexico by maintaining the display systems and operations used in this country.

Needed resources

Personnel

Most of the pastry chefs and managers available are in the US. It will be necessary to hire persons from Colombia. Branch managers need to come from the country as they will already have their own convenience stores. However, country managers will come from the US as they will bring expertise from Posh pastries’ thriving business.

Additionally, the head pastry chef will also come from the US branch, but other chefs should be Colombian locals. They ought to receive training on how to prepare the goods before they can start work. A total of six branch managers is necessary.

All other casual employees such as the busboy, cashier, sales persons will come from Colombia. It is essential to get these people from the local community because they understand local payment systems, they know about the business culture and the working hours in those areas. They will speak to consumers and other partners in a language that they understand.

Facilities

Some of the partnering convenience stores will already possess premises for the sale of those goods. However, the company will also have its own bakery located in the target country. It is advisable to rent the premises other than purchase it; at least for the first few months.

A place of 1,600 square feet will be necessary. Rent payment for the first 12 months is essential. Inside the convenience stores, Posh Pastries will require display cases. There will also be an office for the country manager as the person will conduct media strategies and make other decisions in this location.

Equipment, supplies and communication

The available equipment cannot be transported to the new target country. Therefore, Posh Pastries will have to purchase new equipment for the successful creation of a bakery in Colombia. The company will need a double stack oven, and industrial mixer, work tables, display cases, fridges, cash register, stovetop range, and a coffee machine.

It is advisable for the organization to have enough supplies to cover operating costs for the first twelve months. Therefore, the organization needs to purchase baking flour, baking powder, milk, sugar, oil, butter, vanilla, vinegar, eggs, preservatives, dried coconut, chocolate, cocoa and salt. Workers will purchase these items in bulk at the beginning of the project. However those that do not keep well, like butter and milk should be purchased daily or at least weekly.

Advertisements on key media outlets like radio, magazines and the internet will be the main communication channels. The organization will investment in placement of advertisements on well-known magazines in the country. These publications will have high circulation rates around the selected locations. Posh Pastries will also open a website for the Colombian population.

It will contain colorful depictions of the product offerings as well as where to find them. This company will also advertise on the internet by targeting likely sites for Colombian cuisine. Radio advertisements will talk about where the products are and how they can be derived (Barrow et. al., 2008).

Budget

The following is a budget for the first year of operation in Colombia.

AmountPrice per itemTotal cost
Capital expenditure
Fridges3$1,300$3,900
Display cases7$2,000$14,000
Industrial mixer1$3,000$3,000
Cash registers7$100$700
Work tables4$100$400
Double stack ovens3$2,500$7,500
Stovetop range2$700$1,400
Rubbish bins2$100$200
Coffee machine1$350$350
Utensils30$ 90$2,700
Operating costs
Annual material costs(baking flour etc)$300,000$300,000
Advertising$150,000
Rent for one year1$28,000$28,000
Manager’s office1$14,000$14,000
Licensing costs$1,000
Transportation of supplies$130,000
Import costs$200,000
Salaries25$150,000
Total annual cost$526,150

Evaluation plan

As stated earlier, the purpose of expanding into Colombia is to increase net sales. The organization’s net sales are dependent on a number of factors; each factor requires evaluation in equal measure. First, the company will start with the annual increase in net sales. This percentage should be no less than 5% in the first year, and the same will apply in the subsequent year.

However, if the firm does not achieve these targets, the project will still not be a failure if other parameters indicate a change of dynamics. First, the business will assess the length of time it takes to make a new product. It will then compare this to the amount of time that it takes to receive the full payment. This procedure will not be necessary when considering the local products.

However, it will be quite useful when analyzing the goods that Posh will ship into the country. If this process takes longer than a month, then the company may need to consider making all the goods locally. The company will also assess the effort or time it takes to make a sale in the convenience store. Foot traffic is the main source of customer awareness. Therefore, if it takes too much effort to make a sale, then the organization is not doing well.

Other indicators of success will be the staff turnover rate. High employee turnovers indicate that the company culture is not conducive. This could compromise on the quality of products made as different employees would interpret the recipes differently. This figure should not be lower than Posh Pastries’ turnover in the US. Additionally the country manager must analyze the safety and health records of the business.

The business will also carry out an analysis of the customer complaints. If these seem to be reducing instead of increasing, then the business is doing well. Certain external factors may affect the success of the project. These include foreign exchange rates as well as economic growth in the US and the target market. Changes in supply chains such as the ban of key ingredients or excessive increases in price may affect outcomes.

Even entry of new competitors or alterations in customer demographics may come in the way. If net sales reduce due to these factors, then the business will need to mitigate those changes through different alternatives. The second objective of expanding Posh Pastries into Colombia is to foster cultural exchange. It is a difficult thing to measure the rate of culture change in any setting.

However, some quantitative approaches would still give the company an idea of how well it is faring. One way of assessing this change would be to understand current cultures first. The organization could select a focus group in which it asks participants what their favorite desserts or treats are. These groups could be separated into ten to twelve members.

One year after operating in the business, the company could randomly select individuals who live within the six targeted locations. It could ask them about their favorite baked treats. If they mention Posh Pastries’ products, interviewers could determine whether they have developed an appreciation of American things. An increase in affirmative responses will show that some cultural exchange occurred.

References

Barrow, C., Barrow, P., Brown, R., & NetLibrary, I. (2008). The business plan workbook: The definitive guide to researching, writing up and presenting a winning plan. Philadelphia: Kogan Page.

Wilk, R. (2006). Fast Food/Slow Food: The Cultural Economy of the Global Food System. Lanham: Altamira Press.

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IvyPanda. (2023, December 19). Posh Pastries Entering the South America. https://ivypanda.com/essays/posh-pastries-entering-the-south-america/

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IvyPanda. (2023) 'Posh Pastries Entering the South America'. 19 December.

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IvyPanda. 2023. "Posh Pastries Entering the South America." December 19, 2023. https://ivypanda.com/essays/posh-pastries-entering-the-south-america/.

1. IvyPanda. "Posh Pastries Entering the South America." December 19, 2023. https://ivypanda.com/essays/posh-pastries-entering-the-south-america/.


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