Case Study Analysis: Coe's Expansion Strategy in Mexico

This case study examines the potential expansion of Coe's, a business specializing in leasing household appliances and furniture, into Mexico. The analysis explores the strengths, weaknesses, opportunities, and threats (SWOT) associated with this venture. Strengths include the absence of a robust credit system in Mexico, existing business connections, language proficiency among employees, and a flexible payment policy. Weaknesses identified involve potential high inventory holding costs, border trade expenses, and risks associated with operating in a developing country. Opportunities include the lack of direct competitors, lower operational costs, and a growing demand for furniture rentals. Threats include border disputes, potential negative impacts on the company's reputation due to US government actions, and the risk of losing market share in the US due to the expansion. The case study provides a comprehensive overview of the strategic considerations for Coe's, highlighting the potential benefits and challenges of entering the Mexican market.

Strengths
1) The Lease or Rental household appliances and furniture business will be more effective
and sustainable in a country like Mexico as there is no proper unconventional credit system.
2) Coe’s is a known business entity in Mexico and also many of the employees and customers
included are Mexican, hence there will be more outlook of expansion in Mexico.
3) In case of expansion to mexico, the language barrier will not be an issue as many of the
employees for eg Aubrey knows spanish which is the national language of mexico so
interacting with the employees wouldn’t hinder the business operations
4) Coe’s payment policy gives an edge to expand in a third world country such as Mexico,
where if in case the customers could not afford to pay the more rent, they can return those
goods without any penalty imposed.
5) Coe’s serves different varieties of products at different price and by expanding in a
populated country like Mexico can be favourable as requirements are wide.
Weakness
1) Here Probably it was only Stan who was curious and intrigued about the decision to
expand it to mexico whilst the CFO, Carl was relctant about it and this was due to failure of
their venture at Puerto Rico in the past.
2) The inventory holding cost of Coe’s will be high
3) There is a substantial cost associated with trading borders in Mexico which is higher
compared to South America and mediterrenian countries.
4) Setting up a new business or expanding in a third world country like Mexico can be risky
due to factors such as high crime rates, corruption and other decent factors such as low
wages.
Opportunities
1) The Coe’s not only have an advantage of having almost no competitiors but also skim the
cream of being a first mover in that territory.
2) The labour and real estate costs in Mexico is much lower than any other country which
helps it to achieve cost benefits
3) The demand for lease furniture in Mexico is rising and also according to the mexican
culture, any business which dealt with consumer goods and furniture are profitable creating
an opportunity for Coe’s to explore

4) The rent to own industry are subjected to many stringent ploicies and regulations during
recesssions in United states and Coe’s can share the risks by expanding someowhere outside
America.
Threats
1) The American mexican border dispute can be a major threat. As countries like Mexico rely
more on exports the flow of goods might be affected.
2) The Decisions taken by American governement might have a negative impact on the
goodwill of the firm for eg There are many mexican citizens who are resided in US Illegaly
and If the US Govt takes any action on them then COE’s being a purely American venture
may have its goodwill get reduced by mexicans
3) There are high chances that Coe might lose its market share in US as initial investment
may be high and also they maybe spreading the line too thin by expanding it to other
countries.