Economics and United States Essay

Introduction to Allstar BrandAllstar Brand is a social united States found consumer crossings company that produces and sells ethical (prescription) pharmaceuticals, OTC (over-the-counter or nonprescription) drugs, and consumer products. It is an $8.9 billion firm that was create in 1924 and competes with a novelty of commodiousr and sm every(prenominal)er firms, dep eat uping on the product mart. It has a sum up of leading brands in various product categories. over the years, it has expanded its product category width through internal directionrnistic product development and acquisition of brands as well as companies. Allstar has operations in Europe and on the wholeiances in Asia. These have proven to be really successful markets that performing exceedingly well. But these markets are maturing very quickly, and with change magnitude competition and slowing populations, it is now necessary to look elsewhere for proceed outgrowth and profit margins.The Allstar Boar d believes that to gene say the kind of growth take to drive their stock price, Allstar needs to develop a market front in sulphur the States. southwest America is a region of outstanding potential. With a population of approximately 450 million, the region represents a population that is 50 percent larger than that of the United States and Canada. The dominant national language across South America is Spanish, as is the case with genus Argentina. A variety of cope enhancement actions have put in place in new-made-fashioned years.The MERCOSUR agreement was set up among the South American countries of Argentina, Brazil, Chile, Paraguay, and Uruguay, including association agreements ( plainly not membership) with Bolivia. This agreement reduces trade barriers among these countries and has encouraged a variety of companies to establish crinkle inside their borders to take advantage of low fight costs and jolly seamless access to neighboring markets. For accounting purposes at Allstars unified offices, revenues and costs are converted into US$. therefore, fluctuations in the exchange rate will affect consolidated reports at a time.Allsmile DemographicsAllsmile, a tooth spreading brand, is a key asset of Allstar Brands. It is one of the companys highest recognition brands in the United States. It is produced in the United States and in Germany for the United States and European markets, respectively. A large number of stock keeping units (SKUs) are produced. South Korean and Japanese manufacturers to a fault produce Allsmile under license for distribution and sales in Asia. There have been reformulations of the brand, but as of today, the product formulations are essentially the said(prenominal) across all markets for a given SKU (although there are exquisite differences in packaging and in the type and intensity of flavoring that are thought to reflect regional preferences). With an entrance to South America, it may end up being cost effective to build a deeds in South America instead of shipping products from the United States. on-going world toothpaste sales total approximately $10 billion. The largest soil market for toothpaste is the United States, with $1.4 billion spent during the past year. Toothpaste is available in a number of sizes, delivery systems, textures (paste or gel), and formulations. The basic toothpaste product is a paste or gel with flavoring and one or more(prenominal) agile ingredients that provide specific benefits to consumers. A general description of these variations in the United States market is listed to a lower place. It is consequential to shade that not all companies produce all possible combinations as each company determines where the holes in the market are and where the some money can be made.Why Argentina? infra is a market attractiveness index for the potential countries Allstar could enter. We have listed fivesome criteria which we believe most accurately provide the best com parative results. The wideness weight displays the percentage of sizeableness to the criteria compared other criteria. Under each arena is a rating. The ratings illustrate the importance of the criteria in that specified country. The assessment combines the importance weight of the criterias and the overall assessment of the country. As you can try by this chart, we have determined that Argentina would be the best country to sell Allsmile toothpaste.Background on ArgentinaArgentina is a large country comprised of approximately 1,068,302.2 square miles, slightly smaller than 3/10 the size of the United States. It has a democratic regimen that was set up in 1983. It has a population of 39.9 million people of which close 49% are male and 51% are female. Of the population, 97.1% of the people ages 15 and high can read and write. Eighty-eight percent of the population lives in urban areas. The population of Argentina is pretty steady and is only growing at 0.96%. At 97%, Argentin a is comprised primarily of Spanish and Italian (white-skinned) people. The life history expectancy of Argentina is quite high with males living to 76 years of age and women living to 80. The age structure of Argentina is typical of what it to be expected for a South American country. The Age Structure chart below shows the different classifications.Argentinas EconomyArgentina shortly has a strong economy compared to its neighbors. Argentina benefits from rich natural resources, a highly literate population, and an export-oriented agricultural sector. It has a large industrial section. everyplace the past decade however, the country has suffered recurring economic problems of inflation, external debt, smashing flight, and reckon deficits. Growth in 2000 was at negative 0.8%, as two domestic and foreign investors remained skeptical of the governments ability to stick out debts and maintain the pesos fixed exchange rate with the US dollar. The economic situation worsened in 200 1 with the widening of spreads on Argentine bonds, massive withdrawals from the banks, and a further decline in consumer and investor confidence. Government efforts to fulfil a zero deficit, to stabilize the banking system and to restore economic growth proved inadequate in the face of the mounting economic problems.The pesos peg to the dollar was abandoned in January 2002, and the peso was floated in February. The exchange rate plunged and real GDP fell by 10.9% in 2002, but by mid-year the economy had stabilized. GDP expanded by about 9% per year from 2003 to 2005. Growth is being led by a revival in domestic demand, solid exports, and favorable external conditions. The government took corrective action and boosted spending ahead of the October 2005 midterm congressional elections, but strong revenue performance allowed Argentina to maintain a budget surplus. Inflation has been rising steadily and has now reached 12.3%. The unemployment rate for Argentina is currently 11.5% whic h translates to businesses the people have money to purchase products. As you can go across on the Market Comparison Chart below, Argentina is the leader in GDP/Capita and is second in GDP Growth and CPI Growth.Argentinas InfrastructureArgentina, while smaller than some countries in South America, has a great infrastructure. Argentina has 21,183 miles of railways, 129,463 miles of highways, and 6,835 miles of waterways. In addition, Argentina has 11 ports and harbors and 1,333 airports. This terrific infrastructure makes doing business in Argentina very reliable and smooth. As mentioned before, Argentina falls under the MERCOSUR Agreement which allows for seamless transactions surrounded by the countries under the agreement (Brazil, Chile, Paraguay, and Uruguay, and Bolivia). This agreement reduces trade barriers among these countries and has encouraged a variety of companies to establish production inside their borders to take advantage of low labor costs and fairly seamless acc ess to neighboring markets. The chart below shows the benefits of doing business in Argentina. It as well as points out the extra costs of doing business outside this agreement.When deciding whether to build a whole kit and caboodle in Argentina, we barrack looking at another country. It is important to take into effect all factors.For example, one may at first glance think Mexico is the most suitable to manufacturing, and this may be the case if the company was going to do business in the United States or Canada. However, when doing business in South America, it is important to stay within whichever trade agreement you will be doing business under. Otherwise, high tariffs and duties will blanket your company. It is also very important to look at means of distribution, specifically shipping. The table below shows the per unit costs for shipping toothpaste from various manufacturing locations, assuming the usual shipping mode for each origin destination combination. As you will n otice, having a plant in the United States is not so valuable because imports to Latin America come with a high price on shipping comparatively from shipping from within Latin America.As mentioned earlier, it is of great importance to note that in addition to shipping originating within Latin America, one also has no import duties or tariffs if shipping is done within the regional shipping agreements, such as is the case with the MERCOSUR agreement. Distribution channels in Latin America have traditionally been grouped into four categories traditional, self-serve, hypermarket, and saucily emerging is web purchases. Traditional channels are small, independent stores or open market areas almost exclusively served by wholesalers (indirect distribution). Self-serve is a more developed store where customers serve themselves, but that typically offers a delimit line of merchandise.These may be independent or part of a regional chain but are almost all locally owned. Convenience stores a nd grocery stores would fall in this category. Hypermarkets are a new style of channel that is found primarily in cities. These are normally large stores with a wide variety of goods and typically purchase items directly from the manufacturer (direct distribution). Many of the hypermarket chains are foreign owned or allied with a global distributor, such as Wal-Mart or Carrefour. The chart below shows the toothpaste distribution within each channel.