International Market Entry Strategies of Breezy Auto Parts

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School of Business, Algonquin College of Applied Arts & Technology
International Market Entry Strategies – MGT1103 300
Case Study Module #2
Submitted to: Professor Norman Hotchkiss
November 25, 2021

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Table of Contents
Executive Summary.....................................................................................................3
Situational Analysis......................................................................................................3
Assumptions.................................................................................................................6
Core Problem...............................................................................................................7
Evaluative Criteria........................................................................................................7
Alternatives and Analysis of Alternatives......................................................................9
Decision and Justification...........................................................................................11
Implementation........................................................................................................... 13
References................................................................................................................ 16
Annexes..................................................................................................................... 19
Questions answered for Case study #2, Breezy.........................................................19

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Executive Summary
This case study analysis showcases how Breezy, a manufacturer of Auto Parts can
redefine its market strategy and business plan. Until a few years ago, Breezy was a leading
industry supplier of carburetors, fuel injectors and air filters in North America. In the last few
years, the company has struggled with steady business decline due to pressure from external
factors such as rising gas prices; car manufacturers redesigning their vehicles for fuel efficiency
and installing different sources to power their cars such as hybrid and electric motors, leading to
anemic sales and declining profit margins.
In light of these facts, the company's CEO announced a visioning workshop for senior
managers to investigate this matter to avoid further financial losses. The key aim for this
workshop was to redesign the company's strategy in order to recapture its lost domestic market
share and to bring its products to international markets. A SWOT and PESTE analysis were
carried out so as to determine the present situation and the possibilities to expand
internationally.
We present this case study based on market information to define the best action plan
for the expansion of the Breezy company to international markets, taking into account the
company's current financial and capacity restrictions.
Undergoing the following analysis and research, it was concluded that it would be most
suitable for Breezy to look forward to expand in South American market by forming a Strategic
Alliance with a well-established Automobile manufacturer as a primary step. Breezy can provide
auto parts as raw material required by the alliance and the assembling of the same can be done
in the target market. Benefits, advantages and shortcomings of this international market entry
strategy is elaborated in the following report including the associated alternatives, evaluation
and timeline so as to make it an achievable business idea.
Situational Analysis
In the face of automotive industry issues, Breezy Auto Parts has struggled to overcome
them in its domestic market, North America, and so reverse its commercial slide. The
organization then chose to do a deeper scenario analysis in order to gain a better knowledge of
the issues that are affecting it. The analysis will enable Breezy to identify its strengths and
weaknesses as they relate to external threats and opportunities. It is thus a way of helping
management to select a position in that environment based on known facts.

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The PESTE analysis stands for political, economic, social and technological influences
on a business. SWOT is a situational analysis tool for company leaders that involves assessing
strengths, weaknesses, opportunities and threats. The PESTE analysis has correlated strongly
with the threats analyzed out of SWOT, but also has relevance to the opportunities assessed
under the same (Kokemuller, 2019).
SWOT Analysis:
Strengths - Breezy Auto Parts, based in North America, is an experienced company in
the domestic market for more than half a century. The company is considered a significant
player in the automobile parts industry, recognized as North America's leading supplier of fuel
injectors and air filters, which means a decisive competitive advantage.
The partnerships are an important part of its businesses, Breeze is a supplier of the Big
Three domestic manufacturers and also developed strategic partnership with foreign car
manufactures, redesigning some of its products to fit the foreign models.
Besides, another company's competitive advantage is the integration established with its
customers by using industry best practices, through its just-in-time manufacturing and just-in-
time inventory models with electronic data interchange (EDI), which allows Breezy to have low
storage costs, more cost-efficient production, improve cash flow and waste elimination.
Weaknesses - The profits are getting razor-thin. Breezy can no longer count on
respectable profit margins due to its anemic sales and the company's fixed costs, tied to its
manufacturing plant.
The company has little influence over broad trends such as gas prices or the pace at
which car manufacturers decide to redesign their vehicles for fuel-efficiency or install different
sources to power their cars. Moving into new products and redesign would require more R&D,
retooling and which may take years. It demands more careful coordination and efforts to follow
what the industry is working on. Although, it must follow the just-in-time delivery model, as the
company's pattern.
Opportunities - Due to the previous success and the overwhelming size of that market,
Breezy had focused exclusively on the North American market. However, there are other
automotive markets to be considered, especially in developing countries, as India, Mexico and
Brazil. In addition, India's Tata Company had announced its intention to develop a popular car
for the Indian market.

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According to the International Organization of Motor Vehicle Manufacturers, the following
countries are the top automobile producers in the world based on 2020 statistics. Numbers
include total vehicles produced, both cars and commercial vehicles (OICA, 2021):
1. China (25.22 million)
2. United States (8.82 million)
3. Japan (8.06 million)
4. Germany (3.74 million)
5. South Korea (3.50 million)
6. India (3.39 million)
7. Mexico (3.17 million)
8. Spain (2.26 million)
9. Brazil (2.01 million)
Threats - Foreseeable future with the increase of crude oil cost, offset periodically by
drops in oil prices. This trend indicates that the cost of driving gas-run cars will increase.
Another important observation is that there is a popularity declining of gas-guzzling models in
the face of the market share increase of hybrids and electric vehicles driven by Tesla's entry
into this market.
The World Economic Forum (Richter, 2021) said, "Tesla's meteoric stock market rise in
2020 and several countries and car manufacturers announcing new electric vehicle targets,
electric cars have been in the spotlight for a while now". Besides, the report indicates that
China, Germany, and the United States were the largest market in plug-in electric passenger
car sales in 2020. Also, the China Association of Automobile Manufacturers (CAAM), sales of
battery electric vehicles (BEV) and plug-in hybrids (PHEV) amounted to 1.00 and 0.25 million in
2020, respectively. That puts China ahead of Germany (395,000), which overtook the United
States inV sales (Richter, 2021).
In addition, the North American market is saturated, and consequently, the scope for
expanding sales is limited there. Therefore, after the SWOT analysis, developing countries can
offer favourable market conditions that Breezy could explore more through PESTE analysis. It
will focus on the Latin American landscape, considering Brazil due to your strategic position in
the region.

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PESTE Analysis - Brazil:
Factor Opportunity Threat
Political
Democratic country.
There is increased
criticism from the
population, political
instability and corruption
with delay in major
economic reforms.
States are also
independent in many
aspects. It is common for
them to create state laws
that benefit the entry of
foreign companies through
tax incentives.
Polarization in Brazil
has been considered a
political risk regarding
the future of its
democracy (Pantano,
2021).
Economic
The country has been
experiencing instability in
its economy with growing
inflation and poverty.
The economy contracted
by 0.1% in the second
quarter of 2021, a
reversal from the previous
three quarters of growth.
The domestic market, the
6th in the world for
automotive, and Brazil'
strong export vocation are
two of the major assets
responsible for holding the
country as one of the top
ten automotive producers
in recent years (Apex-
Brasil, 2021).
Implementation of
Federal Law called Rota
2030. It benefits
automakers that build
full-electric vehicles
(Bland, 2018)
Socio-Cultural
In general, the country
has an optimistic
population, however
poverty remains a
significant issue.
The high cost of hybrids
and electric vehicles driven
does not allow most of
Brazilian can afford them.
There are movements
indicating that Brazilian
government wants
Tesla opens a
Gigafactory in the
country (Siqueira,
2020).
Technological
The Brazilian projects that
light electric vehicles in
Brazil will triple till 2050,
reaching 130M units, out
of which 11.9M being fully
electric vehicles (Apex-
Brasil, 2021).
Limited infrastructure for
the use of alternative
energy and its high cost.
There are increasing
incentives and initiatives
to develop electric
mobility in the country
and a great potential for
public and inter-city
transportation (Apex-
Brasil, 2021).
Environmental
Brazil is the 8th world
vehicle producer and has
the 6th largest market for
automotive industries
(Apex-Brasil, 2021).
Brazil is the 9th world oil
production and export
(World Population Review,
2021)
Oil is a nonrenewable
resource.