MGT 3650 - SICA Case Analysis: Expansion and Recommendations

This case study analysis examines Solubles Instantaneos C.A. (SICA), an Ecuadorian instant coffee company, focusing on its expansion strategies and market entry tactics. The analysis explores potential expansion into the Indian market, highlighting the country's youth population, growing coffee culture, and increasing disposable income as key drivers. It assesses SICA's current Peruvian market entry strategy, which relies heavily on social media, and provides recommendations for enhancement, including comprehensive market and industry analyses, SWOT and Porter's Five Forces models, and STP marketing strategies. The study also evaluates the potential of Don Café as a global brand, considering its financial performance, pricing strategy, and product diversity. Finally, the analysis offers recommendations for structural and strategic changes to SICA, including adopting a hierarchical structure, forming joint ventures, and implementing product and market development strategies, along with employee training and development, to ensure its success at the international level.

INDIVIDUAL CASE
ANALYSIS

Contents
INTRODUCTION.......................................................................................................................................3
Expansion of SICA to other country like India........................................................................................3
Current Peruvian market entry strategy...................................................................................................4
Don Café work as a global brand.............................................................................................................6
Structural and strategic changes to SICA................................................................................................7
REFERENCE............................................................................................................................................10

INTRODUCTION
Expansion of business is not an easy task. It requires lot of analysis and market research which is to be
done by the marketing department of the relevant company (Botha & et al., 2016). Organization which is
to be considered for this report is case is SICA which stands for Soluble Instantaneous C. A. which deals
in instant coffee making and is based out of Ecuador. This was started in July 2017 and in this report the
explanation of expansion of SICA’s business will be discussed. It will further analyze the present
Peruvian market strategy. The reason for Don Café being global will discussed. And last of the report will
put focus on structural or strategic changes in SICA.
Expansion of SICA to other country like India.
If SICA wants to expand its business into the global market then India is one of the most preferred
company where it can expand its business. This is because India has the maximum population of youth
and majority of them are being addictive to coffee. The café are increasing in the country and global
brands of coffee are getting good responses. Moreover by expanding business in India, the SICA could
earn more profit as there it will require less promotion because little promotion is enough to tap the
population and the cost of labor is also low plus the resources are easily available. The increase in the
disposable income and expansion of consumption culture is increasing day by day India which gives more
opportunity to the company to become successful. People are easily attracted towards the global brand
and exclusive interiors of the café because they are becoming one of the most prominent meeting hub for
people. Furthermore, consumption of beverages is becoming important among the people. Many people
are leaving tea and wants coffee. Indians are heading towards different cafes and ready to pay any price
for the coffee. Cafes are easily acceptable as a casual meeting place. Increase in the consumption of
alcohol has also forced people to switch to some other beverages like black coffee or blended coffee.
When everything will be available at cheaper rates compared to other countries then this will give better
chance to the organization to earn greater amount of revenue (Uhl & Gollenia, 2016).

In India, the company will experience lesser competition though there are several other global
brands operating but still the people of India are more into the tea tradition rather than coffee so before
entering into the country the company will be required to make proper market analyses of internal and
external business environment. This will help the company in knowing that what kind of coffee taste is
preferred by the population of the country because every country likes different taste of coffee like come
prefer without milk while some prefer with milk and many prefer strong and dark coffee as well
(Maunder, 2019) . Apart from this, the company must do quantitative research as well that will help in
knowing that what percentage of market population is giving favor to the coffee over tea. It will also help
in knowing the kind of taste preferred by maximum population. The trend of coffee shops and café has
increased so much in the country from past few year that today’s generation wants something new
everyday and its global sign will help them to easily get tapped. The only thing over which the brand and
organization has to put its focus is presentation and interior of the café because Indians prefer more
extraordinarily presented products. Moreover, several business owners are focusing towards getting
franchise of the global brands in the country because of increasing competition in the market so this is the
another major advantage that the company will get.
Current Peruvian market entry strategy.
The present entry strategy of SICA to expand business in Peru was to promote the brand in the country
through wholesalers as stipulated in its agreement with SICA which is mentioned in the case study given
by the client. But this was not sufficient as it will not be able to promote the promote properly. So
recently, for entering into the Peruvian market, the company has opted the way of social media in order to
reach to the local people and customers. Social media is one of the most prominent way through which
large amount of population can be tapped easily with lesser time and is also cost effective (Parris & et al.,
2016). There the company has organized online survey on social media platform from which it came to
know different habits of people which will eventually useful in developing the coffee taste for the country
and its population. Furthermore, due to busy schedules many people were not showing any interest in

answering to the survey so when company discovered that the population is more involved in smart
phones and internet so its organized the contest for which it also gave prizes to the people who have
participated in that contest. This has become more effective way in promoting the brand. It has
successfully captured the attention of the customers and also helped the company to go through more
marketing channels and options for increasing the brands promotion because of the favorable response
shown by the people.
By expanding business in Peruvian market the company has occupied the total market share of coffee at
20 per cent. The company could have restructure or enhance their market by opting more different options
(North & Kumta, 2018). Some of the following recommendations must be taken into account by the
company and they are discussed below:
 The company should do market analyses in which it will perform market research of business
environment of the country. The internal atmosphere will help in knowing the internal
capabilities, skills and knowledge base of the people which is extremely important in expanding
the business at global level. This will be done by applying SWOT analyses in which strength,
weakness, opportunities and threat will be taken into account. On contrary, external market
research is also equally important because this will help in knowing the different political issues
and consequences which may restrict the business, economic condition of the country because if
economy is not good then people may not spend too much on coffee, social buying behavior and
preferences of the customers, technology which is important in producing coffee, legal
compliances and frameworks to be known before entering into the country and must be
completed so that the company becomes official and legal (Burns & Dewhurst, 2016) .
 Apart from environmental scanning, the company should do industry analyses. In industry
analyses, Porter’s five forces model will be applied which will help the organization in knowing
different type of threats which the company may have, bargaining power of customers,
bargaining power of suppliers, rivalry among existing firms and threat of substitutes. It will give

proper understanding of the industry and companies operating and leading in the country in the
same field. Moreover, the strategies of the companies will help the SICA in redefining and
restructuring the methods and ways of the company in the country so that they could easily
establish their position. Furthermore, the STP model can also be used wherein the market will be
segmented on basis of behavior, gender, age, etc. Similarly, the target population will be targeted
like youngsters. And unique selling proposition will be used that helps in defining the uniqueness
of the product sold by SICA (Raut & et al., 2019).
Don Café work as a global brand
For being a global brand, it is important for any company to perform positively in their past
working operations as it creates a favorable environment in the future. According to the data
given in the case study, it can be said that Don Café has the capability and potential of being a
global brand. For instance, company revenue has attain a steady positive rate as 2010 net income
was 89 thousand dollars which rose to 3,241 thousands dollar in 2016 which reflects the strong
financial numbers of the company. With the help of these capital, it would be easier for café to
invest in their product or marketing activities resulting in better market awareness and
performance in the future (Cokins, 2017).
Being a new brand in the global market, company can attract other competitors customer
share as potential customers looks for innovative and new product and they are not loyal to only
single brand. For instance, Nestle market share has decreased in 2016 which shows that company
needs to bring innovative product in the market if they want to sustain in the market for the
longer period of time. Don Café has the potential of doing it with the help of their financial
number.

In terms of pricing, Don Café has set the price range which can be easily afforded by
every income class of potential customers. Like 50g sachet cost 1.43 dollars in Don café as
compare to Nestle which cost 1.98 dollars. Although El café has lower price as compare to Don
but the latter one can take the advantage of being a premium product as compare to El Café but
cheaper than the Nestle resulting in better customer attraction.
On the other hand, Don Café has the negative impact of being the less diverse café in the
market in terms of products and services but it can be turn into stronger aspect if company is able
to produce or innovate their product by doing the market research in the global market before
launching their product respectively (Linton & Solomon, 2017) .
At last, it can be conclude that Don café has the potential of being the market leader in
future if they would be able to use their capital and other resources to its highest.
Structural and strategic changes to SICA
It is very important for business to implement different plans and policies to get growth as well as
success at competitive market. In case of SICA to grow at international level, it has to adopt different
strategies, structure, products for their business. Some of the recommendations for better improvement at
global level are as follows:
Structure
It is recommended to respective organization to follow hierarchical structure for their business so
that proper follow of information and data are transferred from one authority to another in positive
manner. In this style, there is one head or superior who direct to another so there is no chances of any

conflict or miscommunication among employees for work performance. This helps them to carry out
work in proper manner for accomplishment of positive results.
Strategy
The respective organization has to adopt joint venture strategy with other similar business at
market so that they can easily expand their firm at high level which helps in brand value and goodwill in
most effective manner. Strategy should be updated on regular basis for positive outcomes. Apart from
this, SICA can adopt market development, product development strategy for their business to grow and
success at competitive place (Zhu & et al., 2017) .
Products
SICA has to further add more variety of products in their menu for their consumers so that they
have many options while they come for drinking coffee at that place. Before introducing any product, it is
recommended to respective organization to perform market analysis and feedback of consumer and
accordingly add more number of products. This will assist in rising profits as well as sustainability at
competitive marketplace.
Training and Development
It is also another way to get success and grow at international level. It is very important for
respective organization to conduct training and development of their staffs and employees so that they can
serve their consumers in polities and effective manner. The behavior of staff or employees plays an
positive role in attracting large number of consumer towards business and their products. It is important to
update them about market, taste and preference of consumers so that they will manufacture accordingly
for their users (Castillo & et al., 2017).

REFERENCE
Books and Journals
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García-Arenas, M. I. (2017). Applying computational intelligence methods for predicting the
sales of newly published books in a real editorial business management environment.
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Maunder, W. J. (2019). The human impact of climate uncertainty: weather information, economic
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