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INTL706 Global Business Strategy

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Question:

Case Study:

Planning the Global Business Enterprise

SunRype has a simple business objective: to provide high-quality, healthy fruit snacks that contribute to the community, the environment, and the well-being of their consumers. Now more than ever, the company’s commitment to achieving their mission is relevant on a global scale. This provides options for SunRype to enter new foreign markets not just any country will be the most suitable to facilitating a fruitful international venture.

SunRype currently operates and sources product in the Okanagan, where it all started, and sells and sources its fruit in the United States. Some of the primary areas of the world we will explore as options to operate in will need to have developed economies suitable for consumers with expendable income and environmental and health-consciousness. Political support for such values will have an impact on the success of venturing into these areas. Lastly, the geographic availability to produce fruit across seas will be a significant factor in deciding on the most ideal region to begin. 

Options for Expansion

After performing preliminary research based on the factors listed above, we identified New Zealand, Italy, and Chile. These countries were selected for their fruit-growing capabilities initially, but we will explore how our other factors will contribute to selecting the best prospective option. Fruit production in these countries is not a new idea but translating these factor endowments to create a revitalized concept that is fresh and relevant to the current demands of consumers is how SunRype can create a competitive advantage in a new market.

Analysis of International Competitors

Food production and agriculture as a history reaches back ages. The lands we are analyzing have had companies, both foreign and domestic, attempt to leverage the natural endowments of these countries. This is not a novel idea but the response to current demands in these regions may not be the most up to date. One of the largest competitors for SunRype is Oppy, also a Canadian fruit company. This company achieved large success for over a century for their achievements in fruit imports and strategic partnerships with Ocean Spray. They have also adopted environmental consciousness in their fruit packaging (Oppy, 2021). Another competitor that operates closer to SunRype is Welch’s. Welch’s has a similar variety of different fruit snacks that are widely available on a global scale. Beating SunRype for their cost of goods at 81 cents per 100 grams versus $2.76 per 100 grams (Walmart, 2021), Welch’s has a significant cost advantage. The gripe with Welch’s comparative advantage resides in the question not on how they are able to provide healthy fruit snack on a global scale but are they truthful and forthcoming about the ingredients in their products? In 2015, a lawsuit was filed against Welch’s for violating federal food labeling requirements (Watson, 2015). These fruit snacks are not nearly as healthy as the packaging may lead consumers to believe and the ingredients attest to it by being loaded with sugar and corn syrup. This removes competitive advantage in association with health implications on the consumers for the company.
SunRype has unique differentiating components that separate themselves from their competitors. Oppy is a large importer of fresh whole fruit while Welch’s delivers quantity over quality with over-processed fruit snacks. As we will see in the following analysis, the size and spread of SunRype’s competitors may not hinder its ability to penetrate new foreign markets.

 Accessing the Economic-Geographic Environment

Chile is one of the longest countries on the globe. It boasts a widely diverse geography with the north comprising of mostly desert land, extensive mountainous terrain along most of the country due to bordering the Andes mountains, and, in its center, moderate climate suitable for agriculture and natural resources (Drake, 2021). Chile has been one of the largest growers and exporters of fruit throughout history but, due to COVID-19, an ageing workforce, drought conditions, and limited access to technology (Kanter & Boza, 2020), they have seen significant loses. These losses have lagged their potential for a foreign venture and other countries such as New Zealand and many Asian countries have risen to the top of global fruit production (OEC, 2019). In 2019, Chile ranked at producing 2.17% of the global fruit exports compared to New Zealand at 16.5% (OEC, 2019).
 
Economically, Chile has thrived from its manufacturing exports of natural resources such as copper ore, sulfate chemical wood pulp, and refined copper valued at $18.4 Billion USD, $2.82 Billion USD, and $13.4 Billion USD respectively (OEC, 2019). The economic priorities are not as emphasized on fruit production as they are most widely known for with pitted fruits encompassing $1.96 Billion USD or 5% of the country’s total exports in 2019.
 
The most promising component of this analysis is the geographic capabilities of Chile to be able to support the growth of fruit in the area. The economic component of demonstrates the priorities Chile has a country and, due to current trends, could be a less than optimal choice for SunRype to invest in.

New Zealand is a more promising option for SunRype to examine. Much like Chile, this country has spectacular mountain regions that dominate its north island. The north island has active volcanic activity regularly but also leads into vast flat lands that are optimal for farming (New Zealand.com, 2021). The South Island is dominated by mountains that encompass 2/3 of the area. The country’s closest neighbours are Australia, Fiji, Tonga, and Norfolk Island (OEC, 2019). The lands dedicated to horticulture produce primarily wine grapes, kiwis, and apples. According to OEC, New Zealand produced 16.5% of global fresh fruit which is staggering as it is only second to Thailand (OEC, 2019). Kiwis are the most famous for the most famous fruit globally and amount to over $2 billion in exports. Moreover, the country is known globally for its Sauvignon Blanc varietal and exports in 2019 amounted to $1.8 billion and went to over 100 countries. Between 2013 and 2019, apple production and exports doubled earning the country just shy of $1 billion – a great sign for SunRype (Plant and Food Research Ltd., 2019). Due to the highly fertile soil in the country, New Zealand has become one of the top exporters of fresh fruit globally.

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