Eliott Favino Assignment 3 1 (9)

Haaga-Helia University of Applied Sciences CASE FAZER

GLO3LH101C-3014
15 October 2022

Risk analysis: risks in international trade and how to mitigate them:

Fazer, a Finnish company that shares the flavours of Northern European

life, wants to create a new product line, and bring it to the US, initially to
the New York market.
It wants to introduce a line of dark chocolate bars called Fazer, which
consists of Nordic flavour combinations. The new line will be sold initially in
Fairway Market shops and later this year in other grocery shops and
specialty retailers in the United States and other countries internationally.
The new Fazer Nordi line was also presented at the Sweets & Snacks
Expo in Chicago.

This entry into the US market is not without risk, so we will look at the risks
that Fazer faces in seeking to expand, and how the company can manage
these risks.

A) Risks in international trade:

Before entering the US market, Fazer needs to focus on the problems
associated with its local operations in Finland and the problems associated
with its operations in other countries internationally, as the company
operates in 40 countries. Like any other country, the United States has its
own regulations and culture.
There are many risks to consider before entering a new market, especially
in a country as large as the United States.

1) Political restriction risks:

Like every country, the US has its own food import process, chocolate is a
Food and Drug Administration (FDA) regulated product and therefore must
comply with the laws imposed by the agency but before they do they are
subject to US Customs and Border Protection (CBP).
The company must also file strict notices accurately and on time. Since
2003, the FDA has required food importers to provide advance notice of
shipments of imported or proposed imported food and feed, allowing
government agencies to target inspections more effectively against
potential health problems or terrorist acts.

2) Country risk: According to the Finnvera website, which classifies countries according to
their import risk, for the United States, the website has classified the
country as A, so without restrictions, as you can see on the attached
attachment n°1.
Finnvera closely monitors world events that could have an impact on the
activities of exporters/importers and thus assesses the risks.
Therefore, there is a no problem for Fazer to establish itself in this country.
The HS Code for the chocolate product is 180690

3) Culture risk: A major risk that can occur when implementing Fazer in the United States
is the cultural risk, indeed each country has its history, its customs, and its
tastes. This risk is one of the least important, as in the case of Puma,
which wanted to celebrate the bank holidays of the United Arab Emirates
by making a pair of shoes with the country's flag on the whole shoe, but
which was very criticized by the inhabitants who did not like the fact that
people could walk on their flag which represents their country.
The Fazer company must therefore be careful to adapt to the country in
which it wishes to set up, and to pay attention to the marketing aspect and
to discussions with representatives in the United States.
Eliott Favino Assignment 3 2 (9)
Haaga-Helia University of Applied Sciences CASE FAZER
GLO3LH101C-3014
15 October 2022

4) Company risk : Another risk is the risk linked directly with the company, one is the
transport especially for the delivery to the United States, if the chocolate
leaves from Finland, there are two modes of delivery that can be used to
bring it to America, these two modes of transport are the boat and the
plane, although they are both very safe, there is always a risk of accident,
Fazer has to go for companies that have the least accidents, and/or good
insurances.
Once on the mainland, the company can transport the chocolate by truck,
but as with planes and ships, there are always accidents, as shown in
attachment 2, there are an average of 4377 accidents involving fatalities,
so Fazer needs to take out insurance in line with the high number of
accidents.
Regardless of the means of transport, these accidents result in damage to
goods, delayed deliveries, or lost goods.

5) Unforeseen events risks:

Another risk that is very important and unfortunately cannot be managed
by anyone is the risk related to unforeseen events, such as recently with
the Covid-19 which created an economic crisis and affected the entire
planet, whether it be governments, companies, or any individual, and in
particular the United States.
As can be seen in attachment 3, there has been a clear decrease in
imports to the US, imports for 2020 were $2,774.60 billion, a decrease of
10.96% from 2019.
The same graph shows the subprime crisis between 2008 and 2009,
financial crises can also be unexpected and dangerous risks.

Another risk that cannot be foreseen are natural disasters, and the United
States has many of them, especially earthquakes because of the tectonic
plates, and especially the Juan de Fuca plate, which plunges under the
North American plate, which generates incredible tension in the whole
area. But there are many others, such as heat waves, forest fires,
tornadoes, floods, storms, and droughts, as you can see in attachment 4.
If we compare the United States with other countries, we can even see that
it is the country with the most natural disasters in 2021, ahead of Indonesia
and India, as you can see in attachment 5.

B) Assess, prepare, and mitigate the risk:

How to assess, prepare and mitigate the risks we have just seen?
The best advice I have found in several sites is in planning, indeed, to
avoid many risks and problems, the best thing to do is to anticipate them
by planning.
This management of problems is the key to allowing your business to last
over time, and thus to generate profit.
But as we have seen, some risks cannot be foreseen, so the best thing to
do is to assess them at the time they occur and, depending on how difficult
they are, to solve them.
Thus, if Fazer encounters a difficulty when setting up in the US, it will need
to know how to respond to these difficulties and how to erase them.
For example, for political risk, Fazer must follow the news of the country
and respect its laws. Regarding the cultural risk, it is very important that
Fazer learns about the customs of the United States so as not to harm the
American nation. For the transport risk, Fazer must have very solid
Eliott Favino Assignment 3 3 (9)
Haaga-Helia University of Applied Sciences CASE FAZER
GLO3LH101C-3014
15 October 2022

insurance, which can reimburse a whole cargo for example if a ship were
to sink.
Eliott Favino Assignment 3 4 (9)
Haaga-Helia University of Applied Sciences CASE FAZER
GLO3LH101C-3014
15 October 2022

References :
 CFR - Code of Federal Regulations Title 21. (n.d.). Retrieved 18
october 2022, from
https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearc
h.cfm?CFRPart=163
 Country classification. (n.d.-b). Finnvera. Retrieved 17 October
2022, from https://www.finnvera.fi/eng/export/export-credit-
guarantee-operations/country-classification
 Fazer Confectionery — Fazer Group. (n.d.). Fazer. Retrieved 15
October 2022, from https://www.fazergroup.com/this-is-fazer/our-
businesses/fazer-confectionery/
 Fazer launches Fazer Nordi chocolate in the USA. (2019, May 9).
News Powered by Cision. Retrieved 15 October 2022, from
https://news.cision.com/fazer-group/r/fazer-launches-fazer-nordi-
chocolate-in-the-usa,c2808024
 Impact of COVID-19 on imports of goods: results based on end-use
products. (2021, February 2). Retrieved 18 October 2022, from
https://www150.statcan.gc.ca/n1/pub/13-605-x/2021001/article/000
01-fra.htm
 Number of fatal large truck crashes in the United States from 2001
to 2020. (n.d.). Retrieved 17 October 2022, from
https://login.hub.tbs-education.fr/login?qurl=https://www.statista.co
m%2fstatistics%2f191544%2ffatal-large-truck-crashes-in-the-us
%2f
 Quels sont les risques liés au commerce international et comment
les gérer? | Desjardins. (n.d.). Desjardins.com. Retrieved 15
October 2022, from
https://www.desjardins.com/coopmoi/entreprises/fiches-conseils/qu
els-risques-lies-commerce-international-comment-gerer/index.jsp
 The analysis of the strange geological activity of the Northwest
Pacific allows us to the phenomena that characterise the last
moments of an oceanic plate in a subduction zone. National
Geographic. Retrieved 17 October 2022, from
https://www.nationalgeographic.fr/sciences/2019/07/etats-unis-les-
geologues-fascines-par-une-plaque-tectonique-en-fin-de-vie
 The United Arab Emirates Is Up In Arms Over This Pair Of Puma
Sneakers. (2011, November 29). Business Insider. Retrieved 18
October 2022, from https://www.businessinsider.com/puma-
sneakers-flag-colors-uae-2011-11?international=true&r=US&IR=T
 Three Things You Need to Know about Importing Chocolate
(February 2, 2017). Now that’s logistics. Retrieved 15 October
2022, from https://nowthatslogistics.com/dont-let-your-chocolates-
melt-in-port-this-valentines-day/
 USA: Fazer rolls out Nordic-inspired chocolate. (2019, May 10).
Gama. Retrieved 15 October 2022, from
http://www.gamaconsumer.com/usa-fazer-rolls-nordic-inspired-
chocolate/
 Export Development Canada. (2019, June 6). Managing the risks
of doing business outside of Canada. Retrieved 18 October 2022,
from https://www.edc.ca/en/blog/managing-risks-doing-business-
internationally.html
Eliott Favino Assignment 3 5 (9)
Haaga-Helia University of Applied Sciences CASE FAZER
GLO3LH101C-3014
15 October 2022

Attachments :
Attachment 1 :

Source: Screenshot from the Finnvera website, in the country classification

section. Finnvera. Accessed: October 17, 2022.
https://www.finnvera.fi/eng/export/export-credit-guarantee-operations/
country-classification
Eliott Favino Assignment 3 6 (9)
Haaga-Helia University of Applied Sciences CASE FAZER
GLO3LH101C-3014
15 October 2022

Attachment 2 :

Source : Number of fatal large truck crashes in the United States from
2001 to 2020. Statista. Statista Inc.. Accessed: October 18, 2022.
https://www-statista-com.hub.tbs-education.fr/statistics/191544/fatal-large-
truck-crashes-in-the-us/
Eliott Favino Assignment 3 7 (9)
Haaga-Helia University of Applied Sciences CASE FAZER
GLO3LH101C-3014
15 October 2022

Attachment 3 :

Source : U .S. Imports 1970-2022. Macrotrends. Accessed: October 18,

2022. https://www.macrotrends.net/countries/USA/united-states/imports
Eliott Favino Assignment 3 8 (9)
Haaga-Helia University of Applied Sciences CASE FAZER
GLO3LH101C-3014
15 October 2022

Attachment 4 :

Source : Insurance Information Institute. (February 2, 2022). Number of

natural disasters in the United States in 2021, by type [Graph]. In Statista.
Retrieved October 18, 2022, from https://www-statista-com.hub.tbs-
education.fr/statistics/216819/natural-disasters-in-the-united-states/
Eliott Favino Assignment 3 9 (9)
Haaga-Helia University of Applied Sciences CASE FAZER
GLO3LH101C-3014
15 October 2022

Attachment 5 :

Source : CRED. (April 21, 2022). Countries with the most natural disasters
in 2021 [Graph]. In Statista. Retrieved October 18, 2022, from https://www-
statista-com.hub.tbs-education.fr/statistics/269652/countries-with-the-
most-natural-disasters/