Zip-6 management held a planning retreat late last year in which Ravi and Keith announced plans to expand the brand to another major market. Several countries were discussed as possibilities including Argentina, South Africa, and Japan. Ravi pointed out that he believed good demand could be created in each of these markets. Below is a summary from Ravi’s notes from this planning session: Argentina: Pros: Potentially good market. Argentina is a neighbor to existing Brazilian market. Cons: Argentine government not receptive to Greenfield Investment by foreign business. Regulations favor protecting domestic drink manufacturers. Currently no large acquisitions are available within the country. South Africa: Pros: Potentially a large competitive market. South Africa would give Zip-6 and entry point in Africa. Cons: South Africa has a relatively heavy tax on business profits and an additional tax on dividends. Japan: Pros: Potentially a large market. Entry could complement licensing agreement with Korean partner. Cons: Very costly market to enter. Japanese government resists both FDI and acquisitions by foreign firms and existing Japanese bottlers are financially strong and protected by government regulations. Based on your assigned reading in this unit, and after reading the following information on FDI Inflows at: http://www.international.gc.ca/economist-economiste/performance/state-point/state_2011_point/2011_6.aspx?lang=eng&view=d Checklist: Which of these three countries would you, as CEO of Zip-6, suggest as the next country for expansion and why? Which form of entry strategy (Greenfield Investment, Licensing, Acquisition, and Exporting) would be best and why?
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