SICA: Expanding Don Café as a Global Brand - MGT 3650

This case study analyzes Solubles Instantaneos C.A. (SICA), an instant coffee company, and its potential for international expansion. The analysis begins by recommending Germany as a suitable market for SICA, considering factors like market demand, economic stability, and political environment. It then evaluates the potential of SICA's Don Café brand to become a global brand, considering market opportunities, resources, and production needs. Finally, the study provides strategic and structural recommendations for SICA, including the importance of market research, promotional strategies, flexible production, and the adoption of advanced technologies to succeed in international markets. The assignment draws from the provided case study, course materials, and external research to provide a comprehensive analysis of SICA's international business prospects.

Running head: INTERNATIONAL BUSINESS STRATEGY
INTERNATIONAL BUSINESS STRATEGY
Name of the student
Name of the university
Author notes

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Table of Contents
Answer to Question 1:................................................................................................................2
SICA expansion to a new country..............................................................................................2
Germany as an Effective Market............................................................................................2
Objectives of Expansion........................................................................................................2
Reason for Choosing Germany..............................................................................................3
Answer to Question 3.................................................................................................................4
Don Café as a global brand........................................................................................................4
Answer to Question 4:................................................................................................................6
Structural or Strategic changes for SICA...................................................................................6
References..................................................................................................................................9

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Answer to Question 1:
SICA expansion to a new country
Entering the new market is the sign of company growth and most of the business big
names has considered expansion as an effective medium of growth. Companies have to rely
on different entry mode in a specific countries depending of more than one internal and
external factors (Hitt, Li & Xu, 2016). SICA has been quite successful in its business
ventures in Equator. With growing market competition, the instant coffee production
company also has the scope of expanding its business in new markets. SICA has its export
business in a number of countries all around the world. But when it comes to the expansion,
the best choice for the country would be Germany.
Germany as an Effective Market
Objectives of Expansion
First thing that need to be designed for the expansion purpose of SICA is their objectives for
expansion. Among the expansion goals the primary three are expansion of profit and sales,
acquisition of the resources and risk reduction.
 Expansion in sales will enable the company to have increased profit margins. Entering
a new market with the existing product range of SICA will increase the potential
market for the company. SICA will try to increase their sales market share by 2% in
the first year of market entry.
 The foreign country resources can be used in increasing the market performance of
the company both in local and international market.
 The risk of profit-loss cycle will be reduced if SICA is been able to expand their
product sales in the new market.

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Reason for Choosing Germany
Coffee manufacturing companies target to the country market that have the highest
demand for their products. Keeping with the objectives of SICA and analysing the market
scope for instant coffee business, Germany can be considered as the most profitable option
for expansion. This statement can be established after analysing some factors of Germany
operating environment
Physical and Institutional Factors
Cultural factors
Germany is the country that has been accounted for 26% of total coffee consumption of
Europe in the year 2018 (Volinchak et al., 2018). People in this country are interested in the
instant coffee and therefore, the products of SICA would be in great demand in this country.
SICA will get the solid customers base in this country for the coffee preferences on German
people. Again, the work culture of this country is quite impressive. The employment relations
are good than other European countries in context. Workforce for the production is available
and they have the skills and competence to manage the work pressure.
Economic Factors
Germany is economically settles country the number of recession are less in compare to the
other European country. The coffee production industry of this country has the business of
over USD 7,744.96 million in 2019 (Volinchak et al., 2018). These statistics shows that if
SICA tries to implement their plants for instant coffee, they can ensure a good cash flow
through quality products. As the inflation rate of the country is low and the GDP is high, the
economic challenges are less in Germany.
Political and Legal Factors

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Germany has a democratic constitution and parliamentary government. The government
emphasises the protection of the citizen’s right and the industrial rights as well. The
government bodies do not interfere much in the business decisions of the company and have
a favourable business policies for foreign companies. Hence, choosing the German market for
the expansion would be a wise decision for SICA.
Geographical Influences
SICA as a company takes sustainability as one if the important factors in their business
endeavours. If the company selects Germany for new market entries, the sustainability factors
can be catered easily. Other than that the diversity of the country gives the exposure to the
company. There are international customers as well in the country other than the local
crowds. This can give a great boost for the business to prosper.
Competitive Factors
Competition is high for any coffee producing company in Germany. The main competitors of
SICA would be Nescafe. In spite of stiff competition, SICA can get the market acquisition by
their unique product quality and reasonable price. Nescafe product cost in the country is
slightly high than that of the SICA products. Hence, SICA can try to increase their production
in this country and get a competitive advantage.
Answer to Question 3
Don Café as a global brand
Don Café is a major brand of Soluble Instantaneus CA and it has been successful to
capture the market of Equator for long time. The brand is known for its quality Robusta beans
coffee. The company owners can think of making the brand global one as it has ample scope
of becoming an international brand in the instant coffee markets.

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SICA has two major brands to themselves Don Café and Café Oro. Both of these
products have different characteristics. The Don Café is designed in a way that it uses the
older, spray- dry technology. It is the brand of SICA that is known for its unique taste and
aroma. Therefore, the brand can get a global recognition as SICA has the capabilities to fulfil
the need of the global markets. Some of the important aspects are discussed below-
Market Opportunities
The first positive aspects for Don Café is its global demands. The type of coffee beans
and their production techniques plays the pivotal role in popularity of the coffee. In the case
of Don Café, the old spray-dry technology is used. In this technique the aroma and quality of
the raw coffee is sustained better than the other modern techniques of instant coffee. With the
advancement of technology, many modern techniques have emerged. But the core coffee
lover worldwide still prefer to have the taste and smell of the basic coffee in their day to day
life. Globally the demand of coffee is increasing and Don Café has all the potentiality as a
brand to meet the demands. The old techniques are beginning to come in trend once again.
The overall impact is that companies and customers are looking for a more real and old
options for their instant coffee. This is the context where Don Café can get extra advantage. If
the company plans a strategic expansion of the product range throughout the world, there is a
great scope of Don Café becoming a global brand.
Resources and Sustainability
Another important strength of the SICA Company is its rich resources for the
production and distribution. The brand owners have a strong supply chain logistics and
skilled workforce. Therefore, SICA can promote their Don Café brand effectively if they
implement an effective promotional plan. Brand equity is depended on the differentiation
aspects. Don Café has the element of differentiation in its quality and price. Another positive

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part is the suitability in the production of the products under the brand. The SICA can get
more market or customer preference all over the world because of its sustainable business
model. They can explore this art of their business model and make the brand globally famous.
Production and Distribution Needs
In order to gain markets in the foreign countries, a company has to be able to produce
according to large demands and challenges. Don Café is now facing low profits because it is
not being able to sell their products effectively. The low market range for the product is
another challenge. Don Café can be established as global brand if the market exposure is
greater in company time. The global expansion would give it that market exposure. The
product differentiation will establish it as an efficient brand in instant coffee market. Other
than that, the company can try to sell their products in store and in bulks. This strategy would
increase the brand availability in the market. If SICA gets to improve their promotional
efforts, brand awareness will be increased and Don Café would be able to capture the global
customers. There are many players in the market, but Don Café have the scope of becoming
global brand through its strategic implementation and effective supply chain management.
Answer to Question 4:
Structural or Strategic changes for SICA
International business is the outcome of globalisation nd enhance technology.
Therefore, any company that wants to expand their business in international market, must
understand the cultural, social and technological implications of the international market
expansion (Jeong, Kim & Seo, 2018). SICA is no exception in this case. The company has
done well till now in the local market. But, recently it is struggling for the market saturation
and entry of the competitors like Nescafe. SICA has to think of their international expansion
in order to survive in both local and international markets. Some of the changes in their

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strategic aspects is required if SICA wants to promote their business globally. The following
are the strategic recommendation that the company can follow for success of future global
ventures.
1. Doing Effective Market Research
Before entering any global market, SICA has to do market research of the country’s
economy, past histories in business context and the political and legal aspects. These are the
core things that keeps changing with the country name. Again, the demands and the trends of
the customers changes according to the country social and economic environment
(Weerawardena, Mort & Liesch, 2019). SICA managers should not try to implement their
local market experience in the global market. The nature and outcomes of global markets
vary extensively. Hence, the company has to be up to date about the pros and cons of the
country market they are trying to explore.
2. Revising their Promotional Strategies
Promotional strategies of SICA are backdated and they are not compatible for the
international markets. Importance of promotional and advertisements includes the customers
relations and brand recognition (Kaleka & Morgan, 2017). Products of the company are quite
impressive and they have a long story to tell. But the SICA has failed to promote their brands
effectively. More modern means of promotional channels need to be adopted by the
company. The use of social media nd public relations need to be elevated. In the international
market, the companies that have higher brand recognition would get better prospect. Hence,
companies have to take special care of their advertising mediums. SICA can do the same by
using Facebook, Twitter, YouTube, SEO marketing and building public relations in their
international ventures.
3. Adopting Flexible Production Strategies

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As the company wants to enter the international markets, the authorities have to be prepared
for the challenges and changing conditions at every step. To do this they have to think of the
flexible production and operational strategies. The changes in the international market are
more frequent than the local market (Singh & Delios, 2017). Hence, SICA has to move with
flexibility. The political context and business environment changes are usual in interaction
markets. Therefore, adopting a strict strategy for all time would not work for the international
business contexts.
4. Including Advanced Technologies
SICA has to implement new technologies in their supply chain and production for better
results. This is company has relied upon some old technologies for long and this was fruitful
only in the local markets. When it is going to expand in the global markets, the more
technologically advanced company is going to get a greater share. According to van der Loos
et al. (2020), use of technologies like AI, IT, internet of things and other technologies can
improve the production and promotions. All these put together would be effective for the
successful international venture of the company.
5. Accommodating with Local Cultures
The context of diversity should not be neglected in the company strategies. Local cultures in
the countries influences the work culture directly. The lifestyle and preferences of country
citizens determinates the business types and strategies (Domurath et al., 2020). Hence. Before
entering any international market, SICA has to evaluate the local culture and then decide the
marketing strategies. This way, they would be able to establish a sustainable business in the
international market.

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References
Domurath, A., Coviello, N., Patzelt, H., & Ganal, B. (2020). New venture adaptation in
international markets: A goal orientation theory perspective. Journal of World
Business, 55(1), 101019.
Hitt, M. A., Li, D., & Xu, K. (2016). International strategy: From local to global and beyond.
Journal of World Business, 51(1), 58-73.
Jeong, I., Kim, E., & Seo, E. (2018). An empirical study of the relationship between
marketing standardization and performance of Japanese firms in international
markets: the moderating role of product strategy. International Journal of Marketing
& Distribution, 2(1), 15-24.
Kaleka, A., & Morgan, N. A. (2017). Which competitive advantage (s)? Competitive
advantage–Market performance relationships in international markets. Journal of
International Marketing, 25(4), 25-49.
Singh, D., & Delios, A. (2017). Corporate governance, board networks and growth in
domestic and international markets: Evidence from India. Journal of World Business,
52(5), 615-627.
van der Loos, H. A., Negro, S. O., & Hekkert, M. P. (2020). International markets and
technological innovation systems: The case of offshore wind. Environmental
Innovation and Societal Transitions, 34, 121-138.
Volinchak, C. M., Whitehouse, E. M., Yourstowsky, M. R., Woolley, R. G., & Karpak, B.
(2018). ANALYZING CORPORATE EXPANSION TO INTERNATIONAL
MARKETS: THE CASE OF GERMANY, UNITED KINGDOM, CANADA,
MEXICO AND CHINA. International Journal of the Analytic Hierarchy Process,
10(1).

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Weerawardena, J., Mort, G. S., & Liesch, P. W. (2019). Capabilities development and
deployment activities in born global B-to-B firms for early entry into international
markets. Industrial Marketing Management, 78, 122-136.