finalized panama presentation linked in
TRANSCRIPT
Destination Panama
Family Insulation and Cushioning“Where Relationships Matter.”
Presented By: Matthew Benning, Daniel Fashoda, Ryan Gustafson, Jamaal Hamilton, Chase Renwick, April Zimmerman, and Michael Zubrickas.
Team A/Section 10
AgendaIntroduction:
Purpose of our report.Business activity recommendations.Supply chain positionBusiness/ Corporate level strategies.
Analysis:Our product line.Suppliers, customers, and consumers.Transporting.Government incentives and taxes.Panamas economy.Panama culture.Business decision criteria for expansion.
Recommendation:Immediate entry recommendations.Impact on profitability.Expansion issues. Long term approach to Panama.
Welcome to Panama(Introduction)
•Country- Panama•Product – Insulation and cushioning polystyrene foam product manufacturing
(NAICS 3216140)
Country and Business Activity
We plan on gaining a competitive advantage by:•Pursue manufacturing to supply U.S. operations
only, but no marketing activity.•Pursue marketing in the assigned country, but no
manufacturing activity.•Pursue both manufacturing and marketing
activities.
Materials Our role in the supply chain is the manufacturer.
•Polystyrene beads.• Steam chamber.•Block molds and press.•Heated coil slicer• Fire proofer (Hexabromocyclododecane) supplied
from Unibrom Corporation.
Corporate and Business level Strategies
Corporate Level:•Related Diversification by
Horizontal Integration.
Business Level:•Narrow target market.
Decision CriteriaWhen it comes to marketing:•Demand for the Product•Distribution Channel Considerations• Legal Factors• Economic Factors
When it comes to manufacturing:• Suppliers•Distance• Technology• Storage
Decision CriteriaWhen it comes to Strategy:• (Risk)• (Control)• (partners)
How is Polystyrene Manufactured?
Obtain Pellets from Americas Styrenics
Steam Chamber Expands Beads
Heated Coil Slicer Cuts to Size
Poured into a Block Mold
Fire Proofing
(Analysis)
Requirements for working for Family Insulation and
Cushioning.•Degree in science preferred.•On the job safety training priority.• Experience preferred.•90% Panamanian workforce.•Bilingual employees = plus!
Who Do We Sell To?•We sell to:•Distribution Warehouses with
shipping needs (cushioning).•Contractors (insulation).•Retailers (insulation).
Who Are Our End Consumers?• End Consumers Include:•Homeowners (Insulation)•Business Owners (Insulation)•Retail Distribution Centers
(Cushioning)
Our Target Market…• To have expendable income for
insulation.•Maintain a certain temperature
in their home.•Cut costs on heating and
cooling.
How is our product transported?
• Our manufacturing plant is located in Berkeley County, South Carolina.• This allows us:• Truck our product from our
manufacturing center to the Port of Charleston.•We then ship it to the Balboa
Port in Panama.• From there we will truck it direct
to our customers.
Our Direct Competitor•General Insulation Company•Been around since 1982.•Acquired their biggest
competitor “Clark Insulation” in 2008.•Distribute to multiple
manufactures such as 3M, National Fiber, etc.
Panama’s Economy •Growing at an 8.75% average rate•Rapid growth in construction industry •More investors•Panama Canal• Trade deficit
Panama’s Economy •Population 3.868 million (2014) •GDP $46.21 billion (2014) •Average income middle class•66.6% Urban population • Imports $23.27 billion
Government Incentives/Advantages• Law 41 (2007)• Favorable tax agreement • Lower corporate tax rates
Government Restrictions/Disadvantages•Panamanian Law • Lack of laws •Poor Business Management • Low minimum wage •No protection from government • Slow judicial system
Laws that impact Safety/Environment •Panamanian labor law• Employee injuries • Ethical Dilemmas •7% Child labor (59,294)
Import/Export Taxes•Commercial license•Phytosanitary permits• “Panama in transit” Labels • Industrial licenses
Political Climate/Currency• Progressive Government•Rapidly expanding economy• Panamanian Balboa• 1904 Switch from Peso• 1:1 Fixed with USD
http://i.ebayimg.com
Current Events• Panama Canal Expansion• Slower Traffic•Delays 2014 to 2016
http://www.mb.com.ph
Cultural Issues•Majority speak Spanish•USA created canal• Free trade zone 2012
http://pictureorphoto.blogspot.com
Location• Panama City Manufacturing
• Canal and Supplies
• Panama City Marketing
• Half in Panama City
http://www.mappery.com/map-of/Panama-Population-Map
Infrastructure• Excellent Transportation
• Technology is available
• Import 80% of energy
http://presstv.com
Decision Criteria- Manufacturing
1. Opportunity for access to supplier in Panama2. Manufacture within 50 miles from majority of customer
base3. Panama location has capacity for technology and
materials needed for manufacturing? Or import?4. Will we be able to have a warehouse close to Panama City
to increase distribution efficiency?
Opportunity for Access to Panama Suppliers
Pro’s -Lower costs to transport goods-Orders delivered more frequently-Delivery arrives within 48 hours-Ability to react quickly to Demand
Con’s-Quality risk by switching suppliers-Possibility of supplier offering more expensive pricing-Lose relationships with our current domestic suppliers
Manufacture <50 Miles From Our Customers
Pro’s • Quicker response to
demand• Ability to deliver rush orders • Just in time delivery
Con’s• Increased operating costs for
real estate near city• Trucking is only option of
transportation
Technological & Resources Capacity Pro’s• Faster production process
with up to date technology• Ability to maintain real-time
communication with U.S. operations• Decreased start up costs
Con’s• Importation of supplies
and/or machinery• Increased start up costs• Increased time to begin
manufacturing• On-site training of Panama
staff
Capable of Finished Goods Warehouse close to Panama
CityPro’s• Faster distribution to
customers• Hire Employees who are
knowledgeable of area• Allows us to keep additional
inventory for rush orders and new customers
Con’s• Increased operating costs
from second building• Real estate cost may be
higher • Increased risk of loss
Marketing Decision Criteria• Is there a demand in Panama for insulation & cushioning?• Are we capable of getting our product there efficiently?• Is our product legal and is their any foreign policy barriers to
entry in Panama?• Is the Panama economy stable and what is the risk of failure?
Panama’s Demand of Insulation & Cushioning
Pro’s • Growth in construction drives
demand for our product• Our product is affordable for
our target market(Wealthy, contractors, government)• Demand will continue to
increase as population increases
Con’s• Rapid growth of economy
will eventually plateau • Alternative forms of
cushioning exist
Capability To Efficiently Transport Our Product
Pro’s• Strong Bonds with Existing
Suppliers• Strong logistics will increase
satisfaction of customers
Con’s• Delays in delivery will lead to
rush orders and loss of customers• Cost increases by multiple
modes of transportation• Increase in transportation
distance increases cost
Panama Legal and Foreign Policy RestrictionsPro’s
•Our product is legal and abides by foreign policy•Added value to
customers by fireproofing our product
Con’s• Possibility or auditing and
testing by regulators•May have to modify product
to adhere with legal standards if policies are updated
Is the Panama Economy Stable Enough?
Pro’s• Panama is currently growing
and has construction projects• Panama Canal growth
increases ability to import and export
Con’s• Growth will eventually reach
maturity• Panama has a bad trade
deficit
Expansion Strategies for Destination Panama•Establish a Foreign Subsidiary
•Exporting
Three decision criteria:
1. Moderate risk tolerance2. Management control >60%3. Establishing partners with cultural expertise
Immediate Entry Plan(Recommendation)
•Marketing in Panama
•Manufacturing has too high costs
Expansion Implementation Plan
•Wholly Owned
•New entity
Profitability Impact•Higher profitability
•Net Profit Margin
How Do We Support This Claim?
•Marketing will not have high initial costs
•Growing housing market
Possible Expansion Problems
•More expansion means higher costs
•Manufacturing in Panama has high costs
Long-Term Plans•Manufacturing and
distribution centers
•Wholly owned
Questions?
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