Minicase: method of Entry-The Foley Company

The Foley Company, a manufacturer of soybean harvesters, has for years sold a substantial number of machine sin Brazil. However, a Brazilian firm has begun to manufacture them, and Foley's local distributor has told Jesse Osborne, Foley's president, that if Foley expects to maintain its share of the market, it will also have to manufacture locally. Osborne is in a quandary. The market is too good to lose, but Foley has had no experience with foreign manufacturing operations. Because Brazilian sales and repairs have been handled by the distributor, no one in Foley has had any firsthand experience in that country.

Osborne has made some rough calculations that indicate the firm can make money by manufacturing in Brazil, but the firms lack of marketing expertise in the country troubles him. He calls in Joanne Poe, the export manager, and asks her to prepare a list of all the options open to Foley, with their advantages and disadvantages. Osborne also asks Poe to indicate her recommendation.

Question:

1. Assume you are Joanne Poe. Prepare a list of all the options available to Foley, and give the advantages and disadvantages of each.

2. Which of the options would you recommend?Why?

3. Assuming that the president's calculations are correct and that a factory to produce locally the number of machines that Foley now exports to Brazil will offer a satisfactory return on investment, what special information about Brazil will you want to gather?