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Unit 3 Assignment: Continue working with your Zip-6 Scenario

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Following Coca-Cola’s model, Ravi and Keith want to standardize and centralize syrup production in the U.S. for Zip-6 concentrate they will then ship to each bottling plant within each country. Zip-6 management feels that this will be the best way to ensure consistency across different markets and better protect the firm’s formulation. Accordingly, Zip-6 notified each government’s trade authorities and received permissions from Korea and Mexico to import the syrup concentrate. To their surprise however, Brazil’s Department of Foreign Trade (Carteira de Comércio Exterior--Cacex) has refused to approve the import of the concentrate, insisting that the ingredients available from Brazilian sources be used in the product that is sold within that country. An existing permission has allowed the importation of the herbal ingredient. There exists within Brazil a difficult and time-consuming appeal process to the agency’s ruling (for importing ingredients), within the Brazilian legal system.

Ravi and Keith believe that centralizing this production would be in the best interests of Zip-6 but are hesitant to go forward without one of its biggest markets (Brazil). Based on your reading on pages 204-220, respond to the following:

Political Risk Factors according to Hill, (2011) refers to “The likelihood that political forces [or the government] will cause drastic changes in a country’s business environment that will adversely affect…goals of a business enterprise” (p.82).

Checklist:

• Based on the political risk factor’s definition above, what political risk factors to Zip-6 would be involved in adopting each of the following options: 1) appeal the decision, 2) treat Brazil as the central concentration site rather than the U.S., or 3) forget about adding in concentrate production to the existing operations in Brazil altogether.
• For each of the options above, how might each of these options affect them financially?

Respond to the checklist items in a 1 to 2 page APA formatted paper. Make sure that if you use citations you limit these to maximum two very short citations and include the accompanying APA citations and an additional References page.

Reference

Hill, C.W. (2011). Global business today (7th ed.). New York, NY: McGraw- Hill.