Tootsie Roll Industries, Inc. Globalization Plan

Tootsie Roll Industries, Inc. Globalization Plan

Tootsie Roll Industries (TRI) started their globalization plan to market their product back in 1960 when the established a subsidiary in Mexico. This subsidiary allowed TRI to realize that there was a market for their candy in the global market as their “Tutsi”, as it was known in Mexico, sold well. TRI’s next expansion was in the Philippines in 1969 after they negotiated a licensing agreement. TRI then expanded into Canada in 1971 moving them throughout North America. During this time, TRI was also working on the plans of expanding their market share in the United States through acquisitions of other well branded candy companies, In 1972 they acquired The Candy Corporation of America’s Mason Division and during the 1980’s they acquired Cellas’s Confections (1985) and The Charms Company (1988).

The management team of Melvin and Ellen Gordon has been able to lead the company into having strong financial balance sheets (Appendix 1) while continuing to expand their market share in the candy industry globally. The company has seen 20 years of continued growth while maintaining very little debt allowing their cash flow to remain solid. This cash flow allowed TRI to acquire Andes Candies (2000) and Concord Confections (2004) has now allowed them to sell their Tootsie, Charms, and Concord products to now be sold in Mexico, Canada, and 75 other countries throughout Europe, Asia, South America, and Central America (FundingUniverse, 2015).

TRI has positioned itself globally through the acquisitions of subsidiary companies in different countries, allowing them to compete against companies such as MARS, Inc. and Hershey Company who already have a global presence for their products. In acquiring these subsidiary companies, TSI is able to avid issues in the countries with licensing and government regulations as the companies are already set up for these restrictions. Another advantage to these acquisitions is that TSI remains in control of all trade secrets and recipes as the parent company. This is very important in the confection industry as each product has their own unique taste and if the recipes were to get out a competitor could duplicate the effort and gain the market share for the product.

TSI has been able to keep costs down globally by allowing each subsidiary to purchase raw materials locally, cutting down on the cost of shipping the same raw materials all over the world from one supplier. This follows the corporate beliefs of TSI to only outsource if it necessary and to keep costs down making each subsidiary profitable (Tootsie Roll, 2015). The current distribution network for TSI is established and because of their marketing campaigns their product is well known in the different markets. In purchasing subsidiary confection companies, introduction of TSI’s product line into the new factories is less expensive than having to