The purpose of this report is to outline a busines plan for ChocoSol’s expansion to the USA market. The company is a social enterprise that focuses on making the food of the gods commonly known as cacao into stone ground, artisanal dark chocolate and in Toronto, Canada.
ChocoSol’s mission is to craft revolutionary chocolate and maize foods that are good for mind, body, and soil. Our Vision is to craft revolutionary chocolate and maize foods that are good for mind, body, and soil (ChocoSol Traders, 2018).
Under this section, we will explore the PESTEL analysis model to explain why we have selected USA as the best country for the expansion of our Canadian’s based business.
USA is considered as the second largest democracy in the world. The country shows to have a stable political climate even if there have been some challenges recently. It is also has an enormous influence over the political dynamics of many countries around the world and it classifies itself as the best destination for foreign direct investment (David, 2017).
Politically, there is a Canada – USA free trade agreement which was signed on 4th October 1987 and had placed both countries at the forefront of the trade liberalization (Global Affairs Canada, 2018). This historic agreement included items of agreement such as reduction of many non-tariff barriers, elimination of tariffs, and a dispute settlement mechanism for the fair and expeditious resolution of trade disputes. However, we need to note that there have been new tariffs imposed by the USA to Canada on steel and aluminium products.
Department of Finance Canada (2018) mentioned that “On May 31, 2018, the United States (U.S.) announced the imposition of tariffs on imports of certain steel and aluminium products from Canada (at the rates of 25% and 10%, respectively)”.
Fortunately, the introduction of the new tariffs will not affect our business expansion as it is solely for steel and aluminium products. ChocoSol is a Canadian based company dealing in confectionery products, so we are automatically qualified for the free trade agreement.
In terms of nominal GDP, USA is the largest economy worldwide. Most of all giants companies in world have headquarters (e.g. Apple, Coca cola, Google, etc.) and influence the shape and direct the socio-political discussion in the world. The economy system is well-established and advanced to be able to gather its strength from its. The country’s economy was adversely affected by the recession in 2009 and unemployment rates reached at an alarming point.
Focus Economics stated that “The U.S. government intervened by using USD 700 billion to purchase troubled mortgage-related assets and propping up large floundering corporations in order to stabilize the financial system” and inflation expectations for the year ahead edged down to 2.8% from 3 % and the 5-year outlook for inflation also fell to 2.4 % from 2.6%.
We can see some changes happened in the last few years as unemployment rate was high (5%) in 2015 than (4.1%) in 2018. Nevertheless, it is worth stating that labour is not cheap in the USA, particularly when compared to that in Japan, China, India, and Mexico. Availability of cheap labour has stimulated many US firms to subcontract many of their business activities around the world (Trading Economics, 2018).
The U.S. currency knows as dollar ($) is frequently referred to as the world’s currency as it is by far the most currency used in international trades. Almost two thirds of currency reserves held throughout the world are in U.S. dollars (Focus Economics, 2018).
Looking at the current inflation rate which seems to be stable. I presume the company is in a better position not to lose profit when doing financial transactions and we won’t be affected by the trade tariffs due to the free trade agreement between the U.S.A and Canada.
U.S.A is the third most populous country worldwide with a population of approximately 326 million and comprise 50 states. The country is ethnically diverse. The country’s education system is one of the best in the world. On the other hand, healthcare is not normally free and definitely not cheap for many people (David, 2017). Though, habit of fast food has increased obesity in the country even if people are health conscious. A majority of the population has a liberal mind set even though we have recently witnessed racial tensions.
Waugh (2011) mentioned in his article that “According to Grabb, Canada and the U.S. go through regular periods of divergence and convergence on issues, depending on the historical period and the issue being considered as Canadians and Americans are not identical, but they are much more alike than people think”. Based on this, we can at least say that American’s culture is much closer to Canadian than Japanese’s one.
Kotler ; Keller (p.252, 2016) mentioned that “Consumer behaviour may reflect cultural differences that can be pronounced across countries”. I will also use Hofstede’s cultural dimension to show some similarity between Canadians and Americans versus to Japanese.
In terms of Science technology, the USA is the global leader. The country has kept the lead for adapting and applying technologies in a wide range of fields. Many things have changed due to technologies.
In some instance, some jobs have been transferred to other countries from the USA and production facilities have changed location. Hence, saving cost of production from companies. The rate of technological innovation and change is extremely rapid in the USA. Yet, the country faces robust challengers like India, China and South Korea.
Based on the size and government structure, each state has its own structure and legal scheme. Likely businesses come under the regulatory environment of the state. The USA also offers a strong legal system to protect Intellectual Property Rights. However, the USA has its National Chocolate Day according to (2018) register corp. The country is part of the top 10 chocolate consuming countries in the world as shown below.