Phillo Bags Company
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In attempting to successfully enter the market of the Philippines, it is recommended to pursue a strategy that focuses on ownership and independent channels. Through ownership (as opposed to licensing or joint ventures), there is greater control over the company’s operations, which is advantageous (when striving to minimize costs and maximize efficiency). Furthermore, through independent channels (as opposed to integrated channels) the company manages to gain in terms of local knowledge and credibility. The company intends to focus on producing and distributing fair quality, low cost, reusable shopping bags. Given that the Philippines is a country with a stagnant economy, a country where the majority of the population lives in poverty, it is worthless to develop a high-quality high cost product. Initially, Phillo Bags Company’s value proposition is consistent with the needs of the market.
In order to be successful in its endeavor, the company must control costs and quality; it is instrumental that quality be upheld to some minimum standard in order to generate a value proposition that appeals to the market. This will be tough, as will be merchandizing the product effectively, given that the company’s channels are independent. However, it is important not to lose sight of the fact that independent channels allow for cost minimization and enhanced local market knowledge; these two factors are highly important for the product developed by the company. Therefore, in order to secure successful production, distribution, and merchandizing, contingencies must be designed as well. On the merchandizing front, a viable option might be undertaking integrated merchandizing channels (in case the independent channels fail to function). On the production front, location and resource procurement will be instrumental, as will be skilled human capital. It is possible that the company may have to switch suppliers or even replace human capital. These contingencies must be taken into account, but above all, the plant’s localization is the most important aspect in order to keep costs down and consolidate a profitable business.