Raisio's Global Nutriceutical Case (Coursework Sample)

Raisio’s Global Nutriceutical Case
Name:
Institution:
Raisio’s Global Nutriceutical Case
Requirement for Global Product Roll-Out, Including Who Expends Which Capital, Takes Which Risks, and Reaps Which Rewards
The case of Raisio’s is Finnish grain and chemical company. It has been in the Nutriceutical business, where it tries to create human nutrient-based products. The company is a very proud owner of a product that has been considered globally as one of the most important and essential nutritional innovations around the whole world. This product is an exclusive component, which is fundamentally composed of plant stanol esters as well as one that has been scientifically proven the assist in reducing or maintaining lower cholesterol levels among human beings. In addition, with the occurrence of high cholesterol among people around the world in addition to the high incidence of mortality related with high cholesterol levels, it is no doubt that Raisio Company had a very deep desire in order to share their unique product with the entire world.
The company’s (Raisio) first introduction of Benocol margarine was during the year 1995 in the nation of Finland. Even if the product cost considerably more than the regular margarine, it had a very high demand, which let it flew off the shelves. Witnessing the high potential of Benecol, the company (Raisio) formed a plan in order to take this product into the global market. Therefore, a successful global product rollout needs an intricate knowhow of the global market as well as a very careful planning in addition to preparation of all the critical channels (Kautz, 1998). There are ten major important steps for global launch success, which include (Hollis, 2008):
1) Evaluating the local market opportunities
2) Creating a global plan as well as roadmap
3) Designing an effective launch process globally
4) Engaging the launch team across all cultures
5) Communicating across functions as well as cultures
6) Testing the company’s message and image
7) Internationalizing customer communications
8) Ensuring timely as well as localized deliverables
9) Delivering efficient support tools for ensuring global readiness, and
10) Enabling local sales teams through sufficient training
As Raisio did not have any prior knowledge of dealing with foodstuffs, the company required a global partner, who could undertake the above identified, therefore, Johnson & Johnson became this necessary partner for Raisio Company. Thus, with this joint venture with J&J (McNeil), Raisio’s products were ensured of quick access the international market through the already established marketing as well as distribution networks and experience of international market operations from J&J (McNeil) (Eiteman, Stonehill, and Moffett, 1999). 
To a large extent, the investments in the production of products, their distribution as well as promotion of Raisio’s products must be funded by McNeil. Here McNeil undertakes a significant financial risk related with sufficient returns on its own investments as well as expenditures. Though Raisio has not invested capital in any significant way to supports its products’ global distribution, it stands a risk if the distributor does not undertake an excellent work with its exclusive rights (Eiteman, Stonehill, and Moffett, 2013). Raisio would therefore, suffer opportunity losses that may be related to the lost potential market, however, not the out-of-pocket expenses or investment as compared to McNeil
How the Returns to Raisio Will Accrue Over the Short-To-Medium-To-Long Term under the Agreement, Assuming That the Product Is Met With Relative Success
Under the agreement, Raisio receives the returns from the agreement in three fundamental ways, which includes the following:
In the short-term, the milestone payments represent a renowned and assured series of cash inflows to Raisio for its intellectual property. The company, Raisio incurs no direct expenses that are related to these payments, which are simply the returns on the intellectual property held by Raisio, and in which, it has heavily invested many years of capital as well as intellectual resources in order to create the product.
On a continuing basis, as Benecol achieves wider and wider acceptance as well as distribution, Raisio would continue in order to provide all of the stanol estor, which is Bencol’s fundamental chemical ingredient that is manufactured by Raisio alone – assuring an enduring sale at an acceptable transfer price. It is worth to note that this is more consistent with Raisio’s core capabilities, the manufacturing of industrial chemicals.
Over the life of the agreement, Raisio would receive a royalty payment that computed as a percentage of the final product price of any product containing Benecol. This is a very striking component of the agreement to Raisio, because does not require Raisio to be involeved with the different products or ways in which these products would be distributed. Given this, Raisio will simply reap an income stream based on sales and not on profitability.
The following figure illustrates what Raisio’s reaps from distributing its products in Finland (Eiteman, Stonehill, and Moffett, 1999). 
Individual use of Benecol
One package of Benecol margarine per KgSize (grams)
250Sterol Ester
20Raisio’s Finland Market
Population in Finland
Penetration rate
Gross revenues per year
Accrued to Raisio after distribution costs
Raisio’s revenues in Finland1998
5,100,000
3.5 %
912.5
593.13
105, 872, 8131999
5,100,000
3.6%
912.5
593.13
108, 897, 750
Some of the Possible Motivations to Raisio and Mcneil behind A Milestone Agreement, Assuming
Raisio successfully completes the expansion of its manufacturing capabilities for stanol ester.
McNeil (J&J) might be greatly worried that it would invest as well as expand in developing and marketing Benecol-based brands only to realize that Raisio is no longer prepared in order to provide enough stanol estor for the quickly increasing levels of sales.
McNeil successfully introduces Benecol products in major industrial markets, overcoming regulatory hurdles or reaching specific goals
Provided the risks related with these new products McNeil might have fundamentally wished for Raisio to share the risks of overcoming the initial barriers to market penetration. If the company, Raisio, were to receive the payments with successful market penetration, McNeil has reduced its t...