Red Bull Inc and the Country Risk/Strategic Planning for Argentina

Essay by deeU September 2006

download word file, 15 pages 4.6

Downloaded 504 times

Expanding a product into a new market entitles a great deal of preparation, extensive planning, and a large amount of risk assessment. In a perfect world, the product would be introduced, sold, and become very profitable with little or no effort involved. Unfortunately, the real world functions much differently, and several different factors present themselves with a task of this nature. The following will discuss how Red Bull analyses the risks of expanding Red Bull to the Argentina nation.

Political, Legal, and Regulatory Risks

Although not nearly back to the glory days of the 1990's, Argentina's political outlook is improving. While the 2001 collapse of the government led to widespread default and the devaluation of the peso, a stronger and more robust government has emerged since the 2003 election of now president, Nestor Kirchner. However, a result of the dominant Peronist party in all elements of government is causing weak congressional oversight of the president and has led to political interference in judicial matters.

There is moderate risk of political upheaval; however, with social and political concerns a higher priority for Mr. Kirchner, business concerns will face more government interference (Viewswire: Argentina, 2006).

Confidence in Argentina's legal system was shattered after 2001 and there has been slow progress in restoring confidence and regaining control from corruption. Early reforms of the Supreme Court and police have lost momentum and have caused the government to move more cautiously going forward. Probably the most immediate regulatory risk to businesses is due to mandated price agreements used by government to combat inflation (Viewswire: Argentina, 2006).

Red Bull sees Argentina as a country poised for a great economic turn-around. Indicators and forecast models show that the country is on a steady uphill swing. The best way to manage these political and regulatory risks is...