Problem Statement
The main problem faced by the company is choosing whether it should go for the international expansion in Asia through skin care and hair care products or should it promote its nutraceutical products in Northern America and European markets.
Key Issues
Splash Corporation was Philippines based and its skin care and hair care products had a great demand in the Philippines as well as in its neighboring countries. Due to increasing demand of Splash’s product line, Hortaleza, CEO of Splash wanted to expand the company beyond Philippines. Though expansion of the company was a good vision, but there were many issues that the company was facing.The major issue was that Splash did not have brand recognition in the foreign markets. In addition to this, Splash was though having high recognition in its domestic market, but the recognition of Philippines’ products in the foreign markets especially inWest was very low.
One of the major problems faced by Splash was that the company lacked in hiring the professionals which could give an edge to the company in expanding internationally. Hiring talented staff like its competitors was not a piece of cake. Another issue which the company faced was that the company was carrying out its production in Philippines; therefore, it was proving to be quite costly penetrating in Indonesia and other foreign countries.
Hence, it resulted in setting high prices in Indonesia and other foreign countries. In addition to this, Splash could not rely on outsourcing its production in Indonesia as the local producers in Indonesia were manufacturing for Splash’s rivals too.The company was having problem in generating profits from Indonesia and other foreign countries. These regions demanded for investments in order to generate profits.
Alternatives
Alternative 1: Exporting in Asian Market
Pros
- Already having brand recognition
- Similar consumer needs
- Easier Expansion
Cons
- High cost
- Credit terms
- Low profitability
Alternative 2: Launching Nutraceutical products in West
Pros
- High profits
- Targeting mass market
- Low competitors
Cons
- Low recognition of Filipino products
- Tough to make presence in West
- High capital
Recommendation
Both the alternatives have different advantages and disadvantages. But the best alternative that Hortaleza can choose is alternative 1. This is because it is a good option for the company as Splash had already promoted its products in neighboring countries and the products were already recognized there and Splash was familiar with the distribution channel there. Moreover, the company was also having the opportunity that in countries like Vietnam, Malaysia and Thailand, the consumer needs were almost same like Philippines. So the chances are high that the consumers in these countries would accept the products as word of mouth plays its role.
To some extent the company can implement the same business model like it did in Indonesia. It can be implemented in a way that the company can export its products via third party distributors, as there were countries in Asia having Splash distributorships. Moreover, the company can also implement the strategy of producing the products in Indonesia so that the cost of the products can be minimized and the products can be easily distributed in the neighboring countries.............................
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