CASE STUDY

The Rialto Tractor Company, based in Edmonton, Alberta has manufactured a line of high quality "snow blowers" since 1959.The typically cold and snow filled winters across Canada has generated high demand for Rialto's reliable and well-engineered product.Peak demand for these products is usually reached from September to February as potential customers prepare for the winter ahead.Production of the snow blowers therefore starts in early spring, then decreases dramatically by late August when the distribution channel is filled, and sales take over.Since Rialto's production/operations slow thereafter resulting in declining revenue and employee layoffs, Rialto needed to fill this gap with a new and complementary product line.Finally, in 1997, to achieve a better balance in production, sales, cash flow and revenues, Rialto developed a new product line of garden tractors to meet demand in other parts of the year and use under-utilized production capacity.

Tractors proved to be a very popular and profitable product for Rialto and encouraged the company to expand their facility in 2005 and again in 2016 to make room for increased production and future growth.Rialto now manufactures several different models of small and medium size tractors within its facility.With this additional capacity now in place Rialto set its sights on developing new markets for export.

The General Manager of Operations and Rialto's sales team have decided to target Brazil, a strong market for the Rialto Super V1000, a larger version of the lawn tractor that can be used in mid-sized farms to pull wagons loaded with fruits and vegetables from the orchards and fields to processing facilities or where light duty tilling is required.Since shipping to Brazil was a new venture, the GM considered obtaining the services of an export agent who was familiar with this new market.

Although Brazil has suffered through a severe recession (2016-2017) and corruption scandals involving senior, government officials, it is considered a strong agricultural market.As a member of Mercosur, the South American Common Market, access to additional agricultural business Argentina, Paraguay and Uruguay is also possible through Brazil.Moreover, Mercosur is currently negotiating Free Trade Agreements with the European Union and Canada.Rialto's management's initial thought is to enter Brazil through the Porto de Vitria.

If a suitable distributor or agent is found within a reasonable distance of this port, it could be used as a staging ground for access to the major commercial centres in the country, the central agricultural regions of Brazil as well as a base from which to eventually enter the other Mercosur markets.

ASSIGNMENT

Initial research by the sales and marketing team at Rialto has found that Brazil is the largest agriculture producing region in South America, creating a need for tractors in that region.The major drivers for the market include an increase in demand for high power tractors, growing involvement of multinational companies for tractors in the region, government policies supporting agricultural companies, mounting demand for agriculture products as a result of an expanding population, as well as government subsidies for the supply of agro-machinery to farmers.According to Statistica.com, the sales value of agricultural tractors in Brazil is expected to reach $3.63 Billion (US) by 2020.

Although there are well recognized competitors in the market (like Deere & Co., Kabota & Mahindra), Rialto has selected the V1000 to target only a lucrative segment of the market - as noted above - for mid-sized produce and orchard agricultural operations.First and foremost, Rialto must identify a "Customer Satisfaction Profile", which, among other things, illustrates the end customer's expectations and models the key elements of a customer's satisfaction.First and foremost, Rialto must identify a "Customer Satisfaction Profile", which, among other things, illustrates the end customer's expectations and models the key elements of a customer's satisfaction.