Selling a simple product to a global market

The Pasta Shoppe, located in Nashville, Tennessee, manufactures and distributes pasta. John Aron and his wife Carey, cofounders of The Pasta Shoppe, first came up with the idea for a pasta business while on their honeymoon in Italy. They were inspired by the many shapes of pasta they discovered as they traveled throughout the many regions of Italy. What differentiates The Pasta Shoppe from its competitors is that it makes pasta in a variety of fun shapes that are tied to people's favorite college sports teams and to various such as Christmas, St Patrick's Day, Halloween, and Thanksgiving. holida Arons found a way to Americanize the variety of pasta shapes that had caught their imaginations while on their honeymoon.

Rather than compete with other mass-production pasta businesses, the Arons chose to build the company by focusing on small batch production using high-quality ingredients and a carefully designed manufacturing process. The company buys all of its wheat from the Dakotas and uses specially designed bronze tools to cut the pasta into the various shapes. The Pasta Shoppe dries the pasta overnight in carts rather than using the speed- drying machines favored by large manufacturers. The company sells its products online, through specialty retailers, and as fund-raising products for schools and youth programs. The Pasta Shoppe is able to favorably price its products by avoiding selling through mass retailers, which typically demand discounts. Since it was founded in 1994, the company has experienced strong growth in the U.S. market, even during economic downturns.

In 1998, The Pasta Shoppe entered its first international market, Japan, which remains its largest market outside the United States. Its success in Japan is due to Japanese interest in Western celebrations and holidays. John Aron recognized that international markets would extend the company's season for its holiday products due to the earlier production needed to move its product to Japanese distributors. The company quickly learned that to be successful, it had to customize its products and packaging to fit the Japanese consumer market. The Pasta Shoppe's first entry into Japan had to be cut short due to the outbreak of Asian flu. Because the two years it sold in Japan were highly successful, the company reentered the Japanese market three years later, after the Asian flu scare had passed. Based on its success in Japan, The Pasta Shoppe now exports to Canada, Australia, the United Kingdom, Mexico, Chile, and Guam. The company is currently attempting to develop distribution channels in the Philippines and South Korea. However, although the Arons have tried, they have made no headway into exporting to China. When considering a move into a new international market, the Arons use specific criteria to assess its attractiveness. In additi to the quality of the foreign distributor and projected cash flow, timing is everything. The company looks for international sales that do not conflict with sales in the domestic market, which peak from September through December, because the U.S. market remains its most profitable market.

 Pricing is key to success in international markets for The Pasta Shoppe. Aron says that international sales channels are the toughest to price. 

Required : 

1. Identify the risks and the benefits The Pasta Shoppe faces by operating as a global business.

2. Identify some of the barriers that companies such as The Pasta Shoppe encounter as they expand internationally. What steps can entrepreneurs take to overcome these obstacles?

3. What steps do you recommend that entrepreneurs such as John Aron take before they make the decision to take their companies global?

Answer rating: 100% (QA)

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