Downey's Soups Business Strategy

Downey's soup case study analysis

Introduction

The purposed of this case study is to analyse actions which had been done by Downey's Soup in order to expand its market to Japan. This case study will focus on SWOT analysis of Downey's Soup actions. Case Summary Downey’s Soup was established by Jack Downey in over twenty years ago. Its history had proved that its lobster bisque soup had helped it survived in an economic downturn situation in years.

Moreover, it is the lobster bisque of Downey’s Soup which had made Japanese delegation on Japanese External Trade Organization (JETRO) impressed and offered the company a chance to export Lobster Bisque Soup to Japan.

However, Downey’s Soup learned that exporting agricultural product to Japan was not as easy as it seem. JETRO did not provide complete information about the manner of exporting an agriculture product to Japan and this has resulted in losing money for the cost of research and development effort, packaging, and delivery.

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Nevertheless, Downey’s Soup received a valuable lesson from this event. It used its research and development effort to expand the domestic market and attract the attention of one of the nation largest distributor, Liberty Richter Inc.

SWOT Analysis Strengths

There are a few things that can be considered as strengths for Downey’s Soup. Among other as follows:

1. The lobster bisque soup has become a favorite menu and its popularity was increased.
2. Its research and development effort as strength for developing new product for expanding its domestic market.
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Weaknesses

Things which can be considered as Downey’s Soups weaknesses in conducting its business are:

1. Sporadic marketing strategic for the lobster bisque soup
2. Did not have a formal product line
3. Lack of expertise knowledge about exporting agriculture products to Japan.

Opportunities

1. Expanding domestic market with the result from its research and development effort
2. Expanding international market in different countries which had a more flexible requirement
3. Cooperate with local entrepreneurs in Japan to be able to export their products because of the potential as a favored product by the Japanese.

Threats

1. If not immediately associated with local businessmen as one of the requirements to be able to export its products, Downey’s Soup will loss export potential to Japan
2. More New York based Japanese trader to export Downey’s Soup products back home. Recommendation It is a company’s goal to maximize the value of its products and the company’s it-self.

To maximize the company’s value, management needs a strategy for achieving profitability and profit growth. Based on Michael Porter theory1, low cost strategy and differentiation strategy are keys to achieve that goal. Moreover, Downey's Soup also faced a strong pressure of cost reduction and local responsiveness. Hence, in Downey's Soup, writer wants to recommend the company to take two kinds of strategy. First, Downey's Soup needs to adopt localization strategy. This strategy required Downey's Soup to customize its product to the local preference and taste, the Japanese.

Based on the case we were not given information about price would the problem, thus the cost for customization were not the problem. Therefore Downey's Soup could enter Japanese market by using Foreign Direct Investment or licensing its recipe to its business local partner. Second, Downey's Soup could enter the Japanese market by exporting its product. In this case, Downey's Soup will use International strategy. By making the product back home in the US and exporting it through a local business partner, Downey's Soup will be able to expand its market internationally.

Furthermore, by using international strategy, Downey's Soup able to decrease its production cost due to economies of scale and learning effect with a minimal customization to faced pressure in cost reduction. All in all, Downey's Soup has a potential to growth its international market by establish a corporation with foreign countries' local entrepreneurs either by using FDI, Licensing or Export strategy.