Marco Shoe Company Wants To Expand Shoe Stores
Marco Shoe Company Would Like To Expand Their Shoe Stores To Other Par
Marco shoe company would like to expand their shoe stores to other parts of the world. They currently operate in United States, Canada, Germany, France, Ireland and Spain. The company is now looking to open one additional store in the upcoming year and would like to calculate the risk and decide on where to open the new store. The risk in each location is different. Here is the chart of each of the current last year’s income. The business analyst has evaluated the risk associated with opening another store in each country had has presented the probability of success for the next five years. The country probability attached below. Based on the information provided, create a table to show the potential profitability for each location for the next five years, then make your expansion selection. Please write a small summary of why this location was chosen for the expansion.
Paper For Above instruction
Expansion Analysis for Marco Shoe Company
Marco Shoe Company's strategic plan to expand into new international markets necessitates a comprehensive analysis of potential locations based on profitability and risk. Currently operating in the United States, Canada, Germany, France, Ireland, and Spain, the company aims to open one additional store within the upcoming year. This decision hinges on evaluating the projected profitability over the next five years, considering each country's specific risk factors and success probabilities.
The process involves creating a detailed table that forecasts potential earnings for each country over the next five years. To do this, we need to assess the current income levels in each country and adjust these figures according to the success probabilities and risk evaluations provided by the company’s business analysts. The success probability indicates the likelihood of the store thriving in each location, while the risk assessments help measure the potential variability in outcomes.
Assuming the current income figures for each country are as follows: United States: $10 million, Canada: $5 million, Germany: $7 million, France: $6 million, Ireland: $4 million, Spain: $3 million. The success probabilities over the next five years are: US: 80%, Canada: 70%, Germany: 75%, France: 65%, Ireland: 60%, Spain: 55%. To adjust projected profits, we multiply the current income by the success probability for each year, summing these values for a total projected profit over five years for each country.
Projected Profit Calculations
| Country | Current Income | Success Probability | Projected Income per Year | Five-Year Total |
|---|---|---|---|---|
| United States | $10,000,000 | 80% | $8,000,000 | $40,000,000 |
| Canada | $5,000,000 | 70% | $3,500,000 | $17,500,000 |
| Germany | $7,000,000 | 75% | $5,250,000 | $26,250,000 |
| France | $6,000,000 | 65% | $3,900,000 | $19,500,000 |
| Ireland | $4,000,000 | 60% | $2,400,000 | $12,000,000 |
| Spain | $3,000,000 | 55% | $1,650,000 | $8,250,000 |
Based on these calculations, the United States offers the highest projected total profit over five years, followed by Germany, France, Canada, Ireland, and Spain. While the U.S. shows strong profitability, considerations such as market saturation or regulatory environment must also be factored into the final decision.
In conclusion, the decision to expand should weigh both the projected profitability and the associated risks. Given the high projected total profit, the United States emerges as the most viable option for expansion. The U.S. market offers stability, substantial income, and favorable success probabilities. However, it is also vital to consider other qualitative factors such as market competition, cultural fit, and logistical considerations.
Therefore, after analyzing profitability projections and associated success probabilities, the United States is the recommended location for Marco Shoe Company's expansion. This strategic choice aligns with maximizing returns while managing identified risks effectively.
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