Introduction
Saputo Inc. is a company that produces dairy products in Canada and is one of the largest in the local market. To expand its capabilities, Saputo needs to develop and adjust its strategies to the markets of new countries. To expand into the Brazilian market, a company should consider the cultural differences of buyers as one of the significant factors. A CAGE Analysis will determine what factors will correctly affect the company’s expansion attempts in Brazil.
Ownership Advantage
The organization has steadily evolved and implemented new expansion strategies in many countries. In this way, they managed to distribute their products in more than 50 countries without being present (Saputo, 2023). This strategy continues to make the company profitable and successful, so it is important to consider entering new markets like Brazil.
Saputo enjoys the unique advantages of its branches in each country, which allows them to use different brands. This is the advantage of ownership, as this approach ensures sustainability and competitiveness. The company’s main strength is that each branch operates independently, choosing the most profitable strategy, which allows them to succeed at the international level.
CAGE Analysis
Cultural Aspect
The first determinant in the analysis is the cultural component. The company’s main operating markets are Canada, Australia, the USA, the UK, and Argentina (Saputo, 2023). Significant cultural differences have been formed in these countries due to historical development. However, one common feature that can unite the above countries is that they were all colonies of Great Britain before.
This common feature does not apply to Brazil, which makes its cultural aspects more detached and distant. Support for sustainable development in Brazil can be provided through cooperation with local companies and support for socially significant events. In this way, Saputo will achieve better integration into the cultural environment of the new country.
Administrative Aspect
The second aspect is administrative, and it is important to consider how the company will manage the new branch in Brazil. This country follows the international rules of free trade and is an open market, which allows applying a similar strategy in administration as in other countries. Brazil is open to the entry of new companies into the market, and many international corporations operate there. In this regard, it can be assumed that problems from the administrative side cannot arise.
Geographical Aspect
The geographical aspect is one of the most important since all other parameters in the list partially depend on it. Argentina is a country close to Brazil, which can provide a more convenient business organization in terms of logistics. In addition, these two countries have cheap labor, which will minimize the cost of local production (Féliz, 2019). Based on the factors mentioned, it can be concluded that Brazil is the best option for expanding business from Argentina.
Economic Aspect
From an economic point of view, all countries have free markets and allow companies to develop. However, in this situation, Argentina will again play an important role since this country and Brazil have plans to create one common currency (The Economist, 2023). Thus, the distribution of goods in these two countries can be united by one financial department, which facilitates the control of foreign exchange transactions.
Conclusion: Risks and Recommendations
The main risk for expanding into the Brazilian market new to Saputo may be the cultural development organization since this characteristic differs from other countries where the company operates. A recommendation to prevent this risk may be to conduct a primary advertising campaign to prepare the market for a new product.
In addition, this will allow for an analysis of how people will perceive Saputo and whether it is worth changing the strategy based on this. Another effective approach to creating a plan for developing a corporate cultural campaign in Brazil would be to familiarize itself with the features of Argentina since this country is the closest.
Bibliography
Féliz, M. (2019). Neodevelopmentalism and dependency in twenty-first-century Argentina: insights from the work of Ruy Mauro Marini. Latin American Perspectives, 46(1), 105–121. Web.
Saputo. (2023). Our company. Web.
The Economist. (2023). Argentina and Brazil propose a bizarre common currency. Web.