MBA 540 Module 8 Final Project Strategic Planning Proposal example

Strategic Planning Proposal: Entering Mexico Through an Alliance to Double International Revenue at a Composite U.S. Water Filtration Company

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Southern New Hampshire University

MBA 540: Organizational Strategy in a Global Environment

Module Eight Final Project

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[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

Strategic Planning Proposal: Entering Mexico Through an Alliance to Double International Revenue at a Composite U.S. Water Filtration Company

Executive Summary

Northfield Water Technologies' board has set a goal of doubling international revenue within five years, from about 49 million dollars, all from Canada, to about 98 million dollars. This proposal recommends that the company reach roughly half of the increase by entering Mexico, and the rest through continued growth in Canada. In Mexico, Northfield should compete through focused differentiation, offering certified, professionally installed filtration to urban middle-class households that now buy delivered water jugs, and it should enter by partnering with a regional firm that already delivers water to homes, rather than by building alone or acquiring a local firm. The strategy requires about 2 million dollars of initial investment, targets about 25 million dollars in Mexican revenue by year five, and includes a review in year three that determines whether to deepen the alliance, build independently or acquire.

Where the Company Stands

Northfield is a profitable U.S. manufacturer with 410 million dollars in revenue, most of its profit coming from replacement cartridges. Its analysis of resources found that certifications and the cartridge model are common in the industry, while its network of about 3,200 trained installers is valuable, rare and hard to imitate, the one resource that gives it sustained advantage (Barney, 1991). Its dependence on two large retailers for nearly half of revenue is a vulnerability, and its international experience is limited to Canada, a market so similar to its home that the business model never had to change.

The Environment in Mexico

Mexico is close geographically and linked by trade agreement, but it differs in culture, channels and incomes (Ghemawat, 2001). Many households distrust tap water and buy delivered water jugs, which makes bottled water the company's main competitor rather than other filters. Lower installation labor costs make professional systems affordable, but price sensitivity is high and cartridge imports would expose margins to currency swings. Among the competitive forces, the threat of substitutes is strongest (Porter, 2008). The market's opportunity lies in the gap between widespread concern about water quality and the absence of a trusted, installed filtration service.

Alternatives Considered

Four alternatives were evaluated. Expanding only in Canada would be low-risk but could not double international revenue. Entering India would reach a larger market but would face every form of distance at once and entrenched local competitors. Entering Mexico by building a subsidiary would keep full control but take four to five years to build an installer base. Entering Mexico by acquiring a local reverse osmosis installer would be faster but would buy a small business built around a different technology, with a risk of losing its key people. Entering Mexico through an alliance with a delivery company that already visits about 180,000 households offers the fastest access to customers at the lowest cost, while preserving later options.

The Recommended Strategy

Where Northfield will compete: urban middle-class homeowners in two Mexican metropolitan areas, expanding to five, who currently buy delivered water. How it will win: by offering filtration that costs slightly more than bottled water in the first year and far less afterward, installed and serviced by trained technicians, with cartridges delivered by subscription. How it will enter: through an alliance in which the partner's technicians install Northfield systems and share revenue, while Northfield controls product quality, certification and the subscription platform (Capron & Mitchell, 2012). The strategy borrows the one thing Northfield lacks in Mexico, trusted access to homes, and contributes the things it does best, certified products and a service model built around installers.

Five-Year Revenue Ramp

Table 1 shows the targeted growth.

Table 1

Targeted International Revenue by Year

Note. Composite projections. Mexico revenue includes Northfield's share of installation revenue and all cartridge revenue.

Implementation

In the first six months, Northfield will negotiate the alliance agreement, obtain Mexican certification and labeling approval, hire a country manager with home services experience and train the partner's first 40 technicians. Sales will begin in month seven in two cities. In year two, the subscription platform will launch in Spanish, and a financing option will spread installation costs over twelve months. The year three review will compare installations, cartridge renewal rates, customer satisfaction and partner commitment against targets and decide whether to form a joint venture with an option to buy a majority stake, build independently or acquire. Cartridge assembly will move to Mexico in year four if volume exceeds 150,000 cartridges a year. Resource needs are about 2 million dollars in the first two years, mainly for training, marketing, certification and inventory, plus a country team of eight people by year three.

Risks and Contingencies

Three risks matter most. If households prove unwilling to switch from bottled water, visible in fewer than 4,000 installations by the end of year one, the company will test a lower-cost countertop product sold through the partner before expanding further. If the partner's commitment weakens, visible in declining installations per technician, Northfield will exercise its termination rights and recruit installers directly in the cities already proven, drawing on what the alliance taught it. If the peso weakens sharply, cartridge prices will be adjusted and local assembly accelerated. Ethical commitments, including claims matched to certification, free water tests and a cartridge take-back program, will be written into the alliance agreement from the start (Porter & Kramer, 2011).

Balanced Scorecard

The board should track four kinds of measures each quarter. Financial: Mexico revenue and contribution margin against the ramp in Table 1. Customer: installations, cartridge renewal rate and satisfaction scores. Internal process: installation audit pass rate and time from order to installation. Learning and growth: trained technicians and country team capability. Tracking all four shows whether the strategy is being executed well before its financial results fully appear, which matters for a strategy expected to take several years to mature (Rothaermel, 2021).

References

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120. https://doi.org/10.1177/014920639101700108

Capron, L., & Mitchell, W. (2012). Build, borrow, or buy: Solving the growth dilemma. Harvard Business Review Press.

Ghemawat, P. (2001). Distance still matters: The hard reality of global expansion. Harvard Business Review, 79(8), 137-147.

Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78-93.

Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89(1/2), 62-77.

Rothaermel, F. T. (2021). Strategic management (5th ed.). McGraw Hill.