Opening Trader Joe's in Canada - Essay Example

This trade treaty is called the North American Free Trade Agreement (NAFTA). NAFTA is a trade agreement that began on January 1, 1994, which removes most barriers to trade and investment among the three countries (Usda). The existence of this trade agreement means that Joe’s Trader would not have any problems gaining market entry through the acquisition mechanism. The people of Canada enjoy eating seafood and dairy products. Due to the French influence in its culture cuisine food items such as pea soup, French pastries, bread, crepes, special cheeses, lamb, and veal are some of the food items Canadian citizens utilize in their homes on a daily basis (CultureGrams).

The eating habits and preference for gourmet items are aligned well with the product offering of Trader Joe’s. The food market in Canada just as in other parts of the world is very competitive and profit margins are very low. Joe Trader has a product selection of upscale organic products, fresh vegetables, and dairies, and many other cuisine food items that give this firm a product differentiation which will enable us to attract a customer in a market saturated with traditional supermarkets stores.

The chosen strategy for the entry into the Canadian marketplace is acquisition. An acquisition is a good strategy for Joe Trader because it would enable fast access for the company into Canada. An acquisition strategy gives the firm full control over its foreign operation. One of the downsides of the acquisition strategy is that it requires a high capital commitment and the overall business is higher than in other entry modes such as licensing and joint ventures. The company could take advantage of its Washington location for logistical purposes to serve as a distribution center for its Canadian stores.

In the fast-changing business environment of the 21st-century companies can not depend solely on its domestic marketplace. Global expansion is necessary to diversify the business risks and to achieve greater levels of growth. Joe’s Trader is a company food retail business that is seeking to become a multinational firm. They have chosen Canada as its target market and acquisition as the mode of entry. The proximity, cultural characteristics, income levels, and size of the population are some of the reasons Canada is a good location for the company to target.

The acquisition is the alternative that will allow the company to penetrate the Canadian market while keeping full control of supply chain and operation decisions.