Expanding a Distribution Network

Executive Summary

The south American economy provides a unique opportunity to take advantage of a growing middle class, a developing capitalistic society, improved purchasing power, and a healthy respect for capital investment. Here, these elements coalesce to form an ideal situation in which operations can be improved and expanded profitably. This can be accomplished by opening another distribution center inside Mexico. By opening a distribution center inside Mexico, the company can lower its overall overhead through lower cost labor, improve efficiencies, and achieve economies of scale. Through these benefits the organization can ultimately improve the profitability of the coffee franchise

Introduction

Globalization has now become a much more prominent element with the overall business environment. Here, global trade has expanded markets for small and large businesses alike. Trade agreement have also improved the ease in which goods and services can cross borders and territories. These elements have ultimately improved the lives of millions of people around the world who now have access to better goods, services, and products. Likewise, society overall has improved as nations around the world continue to generate wealth and prosperity for their respective citizens. Countries should as India and China have lifted millions of people out of poverty, in part due to globalizations. Research conducted by Jeffrey Wasserstrom, found that Chinas adoption of capitalistic principles has created overall 300 billion dollars worth of value to the world in the form of products and labor (Wasserstrom). Here, Wasserstrom revised the overall transition of China, and how globalization how propel the country into a global economic power.

Mexico is no different in this regard, much like China and India before it, Mexico continues to adopt principles of globalization. Here, the country has adopted a health respect for capital, a good rule of law, and encouragement of entrepreneurship....

The country over many decades has continues to adopt and apply these principles to improve the quality of life for all of its residents. These improvements were documented by research conducted by Jon Shefner in the Interdisciplinary Journal. Here, Shefner, outlines Mexicos tumultuous transition into democracy and how it would ultimately impact the overall improve of millions of Mexican lives in the process (Sherner, 2004). In his research Shefner also provides insights into the future of the Mexican economy and how it is projected to grow at its fastest rate in decades. His predictions appear to be coming true as Mexico continues to improve economically after the pandemic. In 2021, GDP grew by 5.9%, much faster than the United States and other developed countries. Likewise, GDP growth in 2022 is likewise expected to be robust, providing...…can lower its per unit cost of production, thus lowering the break-even amount required to remain profitable. Through this activity the company can better insulate itself from world wide reductions in coffee prices.

In addition to economies of scale, the company also increases its ability to more seamless address risking coffee demand in Latin American regions. South America in particular is experiencing rapid coffee adoption, in large part due to the rising wealth and middle class of the region. Chart 1 below indicates the coffee consumption of Latin American countries over the last three years. Here, consumption has increases in most of the countries with the largest increases coming from Brazil, Mexico and Columbia. From an economic perspective, these are the countries that are the most developed within Latin America. The only exception is Venezuela who is undergoing an economic contraction due to a much more totalitarian regime, severe economic contraction, and serve social upheaval. Overall however, coffee consumption throughout Latin America, continues to increase which presents a great opportunity for those prepared to make capital investments in distribution and other services. Here, by establishing a second distribution network, the company can continue to take advantage of rising coffee demand in high growth areas throughout Latin America. In addition, the company can continue to take market share as it products are more readily…