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Downey Soup

international business
by

Kartika Tjandra

on 2 October 2012

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Transcript of Downey Soup

Kartika Tjandra
Xiaohan Sun Downey Soup Case Background Learning Objectives Did Downey Foods' export opportunity occur as a result of proactive action by Downey or was its strategy reactive? Why did Downey experience frustrations when trying to export to Japan?

What actions might Downey take to improve its prospects of succeeding in the Japanese market? You have been hired by Downey foods to develop an exporting strategy for the firm.

What steps do you think Downey should take to increase the volume of its exports? Activity time! 1. Selecting the foreign market 2. Timing of entry 3. scale of entry and strategic commitments economic & political
long run benefits
risk
the benefit-cost-risk trade-off
the value created Early vs. Late mover

First mover advantages vs. First mover disadvantages large scale entry vs. small scale entry an irish tavern in Philadelphia
Japanese External Trade Organization (JETRO) asked Downey to serve his lobster bisque at a minitrade show (1991)
Michael Fisher was sponsored for a marketing trip to Japan
Downey's Soup heavily relies on JETRO’s advices Proactive action: act in advance to seek for export opportunity.
Strategy reactive: slow response to change in a firm’s environment. Managers are forces to take rearguard actions.

Downey Food’s react slow to export opportunity. It did not seek for opportunity to expand its production, but Jetro has introduced it to the opportunity. Japanese market was unknown to Downey and all they have done is gone on a 10-day tripe that organized by Jetro. Therefore, Downey export opportunity occurs as a result of strategy reactive. When Downey’s soup first enter the market, it heavily relied on JETRO and failed to do its own research on Japanese market.
Its product contains a food processor called polysorbate that is banned in Japan. It did not realize that Japanese government is hostile to food imports.
Japanese government does not want to admit their mistakes. They think they will ‘lose face’ if they do that.
Downey's should do more research on Japanese market before they export their product to Japan instead of totally relying on JETRO.
It should work with local partners as they have better understanding of Japanese market.
It might also consider taking Global Geographic Division Structure, produce soups in Japan and hire Japanese managers to meet Japanese customer needs. Conclusion •Downey’s soup was refused to enter Japanese market due to lack understanding of Japanese market. •Foreign market selection, timing of entry, and scale of entry and strategic commitments should always be considered carefully before entering a new market. •Downey’s Soup did not actively seek for export opportunity to expand its production but heavily rely on JETRO. •It fails because it had too little understanding about Japanese market.
It should do more research on Japanese regulations and government policies and cultural. Hire local manager or work with local food importers . •As the people in charge in the organisation,
the volume of Downey's exports can be increased by the 3 strategies above. 1. Did Downey's Soup actively seek for export opportunities? explain! 2. Why did Downey's soup failed in Japan? 1. Introduction to the case

2. Answer exercise questions

3. Discuss about theories that can be related

4. Activity
Full transcript