Tavazo Case Essay

954 Words Oct 12th, 2013 4 Pages
In 2010, the Tavazo brothers were thinking about how to keep on growing and started to analyse opportunities for further expansion. One potential source of growth is represented by the chance of expanding its current business within Canada and Iran, through the retail or wholesale channels. One plus point of this strategy is that it would let the company to maintain the same organizational structure without introducing revolutionary changes, which would be costly to make. Indeed, focusing on these two markets would let the company to grow constantly and would allow the management to produce gradual changes to the organization alongside with its expansion. However, a potential downside of the strategy is given by the nature of the Tavazo …show more content…
Among the cities analysed by the owners, I would prefer Dubai rather than Los Angeles, for a twofold reason. First of all, the US government has introduced heavy tariffs of up to 400-500% on imported pistachios, in order to protect and encourage the internal production of pistachios. This would oblige the company to apply a higher mark-up in order to reach profitability and it is likely that the company would have to face a tougher competition made by Us companies. Secondly, the costs of setting up the necessary warehouses and stores would be very high, increasing the need of the company to get high volumes of sales. On the other hand, the choice of Dubai would allow the company to enter into a market much similar to the Iranian one in terms of costs, which are much lower than in USA. Moreover, the United Arab Emirates represents the first import partner for Iran, which make easier to import raw materials in that country. For what concerns the course of action to enter into a new market, I would suggest to focus on the retail channel. Indeed it would allow the company to have a direct control over the product, avoiding the risk of harming the Tavazo brand. Consequently, the company will have to manage a higher degree of operational leverage, which means that the firm will have to focus its future

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