Reference no: EM135765

Bluebonnet Creameries is a large US ice cream company. The family-owned enterprise makes premium ice crease using only fresh, natural ingredients. Its butter-fat content is lower than that of Ben & Jerry's and Haagen-Dazs but higher than that of such national brands as Dreyer's. This allows the firm to hit the true ‘middle' of the market.

One ingredient in Bluebonnet's success has been its production and distribution model. Transporting ice cream over long distances requires that it be ‘deep frozen'. This process, unfortunately as well requires the addition of preservatives and produces a slightly altered taste. Consequently bluebonnet has built a number of mid-sized creameries near its major market centres throughout the US. The firm as well has its own fleet of delivery trucks and drivers to transport the ice cream and stock grocery shelves. Using this model, Bluebonnet doesn't have to ‘deep freeze' its products because their ice cream is made with a one-day drive of each market where it's delivered. Thus, a truck can leave a creamery with a full-load early in the morning, spend the day making deliveries and have an empty truck by the end of the same day.

Consumers may also order Bluebonnet products online. The order is packed in Styrofoam containers, retriggered with dry ice also shipped via FedEx or UPS with next day delivery. For the reason that distances are so short and export requirements clear, Bluebonnet can also fulfil orders to Canada, Mexico, Central America, and the Caribbean. A potential international customer from Europe Asia or somewhere else is informed early in the order process that Bluebonnet cannot ship to that individual's address. The primary reasons that Bluebonnet can't fulfil orders from these locations are that normal shipping times are simply too long and customs regulations too complicated in multiple countries.

The manager in charge of online service has been watching foreign orders for several years and has noticed a steady but dramatic increase in online order attempts from China. Indeed, the attempted order volume has grown to the point where the online service manager has brought it up to a couple of senior manager's exactness that revenues could increase by 25%.

Afterward careful consideration the family is considering a market expansion into Asia and has identified the following options-

1. Continue to follow their current business model and ignore the Asian market

2. Build a dedicated creamery designed for international distribution. The creamery would be built near a major FedEx or UPS shipping hub, and ice cream produced there would include preservatives. Overseas order from Asian, as well as Europe, Australia, South American, and Africa would be filled from this location only. The product would be ‘deep frozen', packed with chemicals, and be shipped within a 10-day cycle time to the customer. The expense for the additional cost would be passed onto the customer.

3. Contract with a Chinese distribution partner. Build a dedicated creamery near a west coast shipping port. Mass produce ice cream with preservatives at the creamery, 'deep freeze', the ice cream, and pack in large refrigerated shipping containers. Ship the containers via freighters to China and require the Chinese firm to control all distribution within China.

4. Contract with a Chinese partner and build a creamery in China in Beijing, Shanghai, or Hong Kong. There would be no additional preservatives and the product would be identical to what is sold in the US.

Please prepare a recommendation for only ONE of the options.