Question. A. Describe the four factors of production. How have the owners of fin

Question

Question.
A. Describe the four factors of production. How have the owners of finagle A bagel used them to build the business over time?

B. Do some research on finagle A Bagel. Does the company follow the economic or socioeconomic model of social responsibility? support your answer.

C. Analyze the pro and cons of the various methods of entering international markets ( chapter 3-2) as they relate to the company's proposed expansion to Hong Kong. what method would you recommend to finagle A Bagel? support your answer.

Explanation / Answer

A) The four factors of production are :

1) Land 2) Labor 3)Capital 4)Enterprise

When taken in a broad sense, Land includes all natural resources. Labor includes all human resources. Capital includes all man made resources. Enterprise is the skill required to bring all the first three factors together and run a business.

Now, if we consider finagle A bagel, we could see that the input of 'Labor' factor is more in the business. The speciality of finagle is hand made bagels. This increases the 'Labor' required for process but decreases the 'Capital' slightly (the automated machines are not required). Obviously, finagle concentrated on it's employees to build the business. The company has many workers who are working with finagle for decades. They considered their employees as their family members and managed to keep excellent employee retention. This helped in maintaining the quality of their bagels.

The other important factor of production is enterprise. Fingale changed it's strategies according to emerging market trends. An example is their switch in focus from retail to wholesale business in 2008. This indicates that the company is ready for change, which is an important factor in enterprise. Also, they widened their product range and gave the customers a wide range to choose from. This increased their customer base and also retained the existing customers who would otherwise had been lured by other brands using novel products.

B) Finagle A Bagel donates the bagels that are not 'aesthetic' to greater boston food bank. It is noteworthy that aesthetically bad products do not have bad quality or bad neutritional value. These bagels are used for feeding the needy in the society. This should be considered an example of social responsibility.

Unsold bagels are donated at end of the day to schools, shelter homes and other non profit organizations.

Thus, we could say that the company does follow socioeconomic model of social responsibility.

C)The various methods of entering international market include :

1) Direct exporting 2) Licensing 3) Franchising 4) Partnering 5)Joint Ventures 6) Takeover of a foreign company 7) Piggybacking 8) Turnkey projects 9) Greenfield investments

Direct exporting is easy because it does not involve the cost risks associated with setting up a venture in foreign lands or the legal hassles involved in licensing, franchising or partnering with a foreign party. However, this model may be difficult for food business, because the food products are perishable. Export of food products will involve special methods of transportation and thus become restrictively costly.

Licensing , Partnering or Joint Ventures are cost effective. The disadvantage here might be that the brand name might be difficult to maintain and the customer base for the product would take time to build.

Takeover of a company in foreign land is tricky. It is costly and also determining actual value of the company to be taken over is difficult. Greenfield investments are also costly as it involves setting up all the facilities from scratch.

Turnkey projects is a good method for engineering firm but not applicable to a food manufacturing company. What kind of turnkey projects are they going to offer in Hongkong?

In piggybacking, the material to be sold in foreign market is sold to a local company having a significant share in the target foreign market. The concerned local company then market the product in foreign market. This method is again not applicable in finagle's case as there is not such firm which could market finagle's Bagels in Hong Kong.

The best methods for finagle A Bagel to enter the Hong Kong market would thus be Franchising. Fingle is a big name in North America. The brand name would be useful to get a customer base in Hong Kong. They might have to take a partner, or make some investment in Hong Kong to comply with the government regulation and local laws, but Franchising is the best way for Finagle to enter Hong Kong.

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