International Business Plan

QuikTrip

Myers Park High School DECAMyers Park High School

2400 Colony RoadCharlotte, North Carolina 28209

Zahria Brown, Danny Ly, and Jonathan PerezApril 12, 2015

TABLE OF CONTENTS

I. EXECUTIVE SUMMARY 1

II. INTRODUCTION 2

III. ANALYSIS OF THE INTERNATIONAL BUSINESS SITUATION 4A. Economic, Political, and Legal Analysis of the Trading Country 4B. Trade Area and Cultural Analysis 8

IV. PLANNED OPERATION OF THE PROPOSED BUSINESS/PRODUCT/SERVICE 11A. Proposed Organization 11B. Proposed Product/Service 14C. Proposed Strategies 17

V. PLANNED FINANCING 20A. Projected Income & Expenses 20B. Projected Balance Sheet, End of First Year 21C. Planned Growth of the Proposed Business 22

VI. BIBLIOGRAPHY 23

VII. APPENDIX 24

I. EXECUTIVE SUMMARYIntroduction:

Across the Southern and Midwestern United States, a new trend in gas stations and convenience stores is taking root, one that breaks away from the stigma that is often associated with such stores: QuikTrip (QT). Born from the labors of Chester Cadieux (current CEO) and Burt B. Holmes in 1958, QT has since captured significant domestic market share in a short time period through its commitment to investing in its employees and the community, the provision of high quality products, and the culture of convenience behind the QT brand.

On the Scandinavian Peninsula, the Norwegian people are met with unfulfilled desires due to exorbitantly high prices for gasoline (nine to ten American dollars per gallon), a decline in the number of gasoline stations in the country, and lengthy distances between gas stations in some remote areas of the country. For all these reasons and more, QT is in a prime position to expand into Norway.

Analysis of the International Business Situation:QT will first be introduced in Oslo, the most populous city of Norway, before

expanding throughout Norway. The Norwegian economy is similar to that of the United States in that Norway has a mixed economy. Since Norway is a part of the European Free Trade Agreement and the European Economic Area, the government is sympathetic to free, unhindered trade. Norwegian society is very egalitarian, and there is little wage inequality as a result of a progressive tax system. The Norwegian people as a whole are very educated, with a literacy rate of one hundred percent and the majority of adults having graduated high school. Because Norway has some of the highest gas prices in the world, being able to provide quality gasoline at a slightly lower price would easily allow QT to penetrate the market and gain market share.

Planned Operation of the Business:The Norwegian branch of QT will be run under a product

division structure under the leadership of Chester Cadieux and his management team, meaning that among QT’s diverse product offerings, similar products will be grouped under one general product category. In this case, QT will be divided into its two main operations: the gasoline retailing aspect and the convenience store aspect, which can then be further subdivided. The Norwegian QT will also operate on a decentralized structure, in which the individual store has a great deal of independence, with few limitations imposed by the higher tiers of command. Our first store will employ twenty-four people to ensure that operations run smoothly and customers are serviced in time. Among these twenty-four employees, there will be five full-time managers, five assistant managers, three security officers, five kitchen and bakery team members, and six store clerks.Planned Financing:

In the first year of operation, QT will be established in Oslo with financing from the domestic branch of QT. QT will earn a net profit of $1,012,672 after all expenses and taxes, from a gross income from sales of $6,464,000. From this, five percent of all net profits will go to charity, as is done in the United States, twenty-five percent will go to end-of-year bonuses for employees, and the remaining seventy percent will go toward company growth and expansion. By doing so, QT reinvests in its employees, the community, and the company itself. Over the next three years, we expect to capture significant market share due to QT’s prices being about

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Leadership

Gasoline Retailing

Convenience Store

Beverages Candy Food Items Consumer Goods Alcohol

Figure 1: QT's areas of concentration

High-quality products/services

Accessible locations/products

Giving back to the community

Friendly, approachable stores

QuikTrip

two American dollars lower than the prices of its competitors and being able to satisfy all of its customers’ needs in a single visit, thereby saving them both time and money.II. INTRODUCTION

QuikTrip is more than just a chain of convenience stores that

operates in the Midwestern and Southern United States; QuikTrip is

a name that has become synonymous with accessibility, high-quality,

altruism, and cordiality (Figure 1). Based in Tulsa, Oklahoma and

originally opened in 1958 by the current CEO, Chester Cadieux, and co-founder Burt B. Holmes,

QuikTrip (QT) has established its position as a purveyor of convenience store products, as well

as high-quality gasoline that is protected by an unconditional guarantee. The business has

progressively grown to prominence since its 1958 opening and is now a ten billion dollar

company with over seven hundred stores in eleven states. Ranked as one of Forbes’ largest

privately held companies and one of Fortune magazine’s Best Companies to Work For in the last

twelve consecutive years, QT employs over seventeen thousand employees nationwide.

QT’s marketing strategy revolves around its desire to become the dominant

gasoline and convenience retailer by means of “key, high-volume locations,” rather than

simply relying on sheer numbers of stores; the quality of the stores is valued more than

the quantity of stores. Epitomizing the culture of convenience behind the brand, the

chain’s simple yet iconic red emblem symbolizes more than just the QT brand. Dedicated

to giving back to the community, QT ultimately enhances its brand image by donating

five percent of all net profits to charitable organizations. With QT’s pledge to create a

positive brand image by means of prompt and cordial customer service, philanthropy,

store cleanliness, and the provision of fresh products, the chain is in a prime position to

further expand.

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QT’s marketing efforts are divided between diverse demographic, psychographic, and

geographic characteristics. With regard to demographics, QT’s primary, penetrated markets

consist of lower to middle class Caucasians of both sexes, aged fifteen to fifty-four, with at least

a high school education. Regarding geographic characteristics, QT serves consumers in the

Midwestern and Southern United States, especially those who value convenience and quality,

which represents QT’s desired psychographic characteristics. Behaviorally, the target market will

most likely own cars and actively drive.

In order to further develop QT to become a prominent global retailer, the most plausible

first step is to expand into Norway. Over ninety-eight percent of the Norwegian population of

5.1 million people is Caucasian, and about fifty-three percent of the population falls within the

age range of fifteen to fifty-four years old. In addition, eighty-four percent of Norwegian adults

graduate from high-school or the international equivalent, which also complements QT’s target

market. Norwegian culture is also receptive to the notion of convenience stores, as evidenced by

the country’s over 160 7-Eleven’s and over 380 Coop Marked’s, the local grocery store brand.

The Norwegian economy is perfectly suited to the expansion of the QT brand. With a

gross domestic product of 282.2 billion dollars, Norway is richly endowed with natural resources

and is the seventh largest oil exporter. Nearly thirty percent of the government’s revenue is from

petroleum exports. As a member of the European Economic Area and the European Free Trade

Association, the Norwegian government is sympathetic to unhindered trade. Given Norway’s

abundance of natural resources, QT has an opportunity to expand there. High gasoline prices of

over nine dollars per gallon, and a lack of gasoline stations will allow QT to successfully

penetrate the Norwegian market. Since 1999, the number of gasoline stations around Norway has

declined, from 2,200 stations in the year 1999 to about 1,610 in 2009. Competitors are being

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Figure 2: Norway's GDP Division

driven out due to high distribution costs, and stations may be over 120 miles apart in more

remote areas of the country, so demand for additional gasoline stations is high. In order to

generate increased profit for the QT brand, the opportunity to expand internationally into

Norway must be capitalized upon.

In order to facilitate the expansion of the QT brand to Norway, we will need to obtain

information from a variety of sources. Primarily, we will gather data from public websites and

government-sponsored websites, such as Export.gov, Forbes.com, Entrepreneur.com,

Businessnewsdaily.com, and Entrepreneurship.org. In addition, we aim to establish contact with

managers and store owners of local QT stores for further information.

III. ANALYSIS OF THE INTERNATIONAL BUSINESS SITUATION

A. Economic, Political, and Legal Analysis of the Trading Country

1. Description of the country’s economic system

The Norwegian economy is a mixed economy, meaning

that, like the United States, it combines both private and

public enterprise. In Norway, the local currency is known as

the Krone. Norway has both a vibrant private sector and a

large state sector. As previously stated, Norway ranks as

having the forty-eighth largest economy in gross domestic product (GDP), in terms of

purchasing power parity (PPP), with a GDP of over 280 billion dollars, and is also the

sixth largest economy in terms of per capita GDP, with an average of 55,400 dollars. It

has a population of 5.048 million, by a 2013 estimate, with a labor force consisting of

about 2.7 million people, meaning that over half of the population is actively working.

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Besides petroleum, which constitutes about thirty-percent of the government’s

revenue, Norway also exports hydropower, fish, forests, and minerals. Norway is the

world’s second largest natural gas exporter and is also the world’s fifth largest oil

exporter. In 2013, exports totaled over 154 billion dollars, and imports, which consist of

machinery and equipment, chemicals, metals, and foodstuffs, totaled ninety billion

dollars.

2. Description of the country’s governmental structure and stability

Norway’s government consists of a constitutional monarchy with a parliamentary

system, in which executive power is dependent upon the direct and indirect support of the

legislature. As a multi-partisan state, there is a wide spectrum of political parties: the

Norwegian Labor Party, the Progress Party, the Conservative Party, the Socialist Left

Party, the Christian Democratic Party, the Center Party, and the Liberal Party, to name a

few.

Norway also has a long and strong tradition of local government. The country is

divided into nineteen primary counties, which are then subdivided into 431

municipalities, varying in size and population. Political parties are highly involved at

both the local and national levels, and Norway follows a federalist system similar to the

United States, in which central national power is delegated to constituent governmental

units at the regional, state, or local levels. There are nineteen county governments in total,

in addition to the Sami Assembly, the symbolic government of the Sami population, an

ethnic minority in Norway. The primary rights and responsibilities of local authorities are

outlined under the Alderman Act of 1837. Under this act, county authorities are tasked

with managing secondary education and regional development, which entails managing

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county roads and public transport, regional planning and development, business

development, and cultural entities, such as museums and heritage. Municipalities, on the

other hand, manage preschool and primary education, care for the elderly and disabled,

and social services, such as social assistance, child welfare, and drug or alcohol

rehabilitation. In addition, the local government contributes to the management of land

use, agricultural and environmental issues, local roads, harbors, cultures, and utilities,

such as water, sewage, and waste disposal systems.

In the oil industry, mainland industry, and the less developed regions of Norway,

which are located in the central and northern areas, the Norwegian government is

generally very receptive toward foreign investment. Although Norway offers no

significant tax incentives for individual investors, other benefits for investors exist. By

investing in Norwegian industries, individuals are granted lower social security

payments, lower tax rates, and extra deductions. Innovation Norway was formed in 2004

to promote further industrial development that is profitable to the business economy and

the national economy, while also releasing the potential of different districts and regions

by contributing toward innovation, internationalization, and promotion. Under Innovation

Norway, the four organizations that existed as individual entities, the Norwegian Tourist

Board, the Norwegian Trade Council, the Norwegian Industrial and Regional

Development Fund, and the Government Consultative Office for Inventors, were all

combined. Innovation Norway is, consequently, a government agency that is designed to

assist businesses and encourage investment by offering financing through Norwegian

Industrial and Research Development Contracts.

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As a country with an open economy, a high level of employment is dependent on

international trade. The government maintains the monetary stability relatively well and

also imposes tariffs on nearly two-thirds of imports, such as seasonal tariffs on fruits and

vegetables. Besides these tariffs, access to the Norwegian market is generally

unrestricted, with the exception of textiles, clothes, and trade with nations with whom

Norway has embargoed trade. To date, Norway has embargoed the trade of animals and

plants that are infected with pests and disease from South Africa and Iraq, and the trade

of coniferous timber, wood, and wood chips from Canada, China, Japan, and the United

States. Import licenses may be required for ships, textiles, clothing, and the oil of marine

mammals, although these licenses are suspended for certain vegetables, fruits, and plants

during certain times.

3. Description of laws affecting the product and/or service

As a member of the European Economic Area (EEA), Norway is subject to the agreed

upon policies that pertain to the four freedoms: the free movement of goods, persons,

services, and capital. In addition to the four freedoms policy, regulation exists in what is

known as flanking areas, which consist of fields such as research and technological

development, information services, environment, education, training and youth, social

policy, consumer protection, tourism, culture, energy, employment, enterprise and

entrepreneurship, civil protection, public health, and statistics.

Besides being a member of the EEA, Norway is also a member of the European Free

Trade Agreement (EFTA), an “intergovernmental organization set up for the promotion

of free trade and economic integration to the benefit of its member states,” as defined by

the organization’s official website. As a part of both agreements, Norway is dedicated to

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upholding free unhindered trade between nations. Other than the EEA and EFTA, since

the Norwegian economy is a mixed one, the Norwegian government interferes in the

market, imposing various other restrictive laws and statutes, including:

“Sunday shopping laws,” under which no stores, with the exception of gasoline stations,

flower nurseries, and grocery stores that are smaller than one hundred square meters can

operate on Sunday, the recognized the Sabbath, day of rest

High tariffs on agricultural products, wheat, beef, dairy, other meats, and limitations on the

importation of services

Low tariffs on textiles, and clothing, and little documentation required for importation

B. Trade Area and Cultural Analysis

In expanding QT to Norway, we aim to act upon the consumer’s unsatisfied desires: a

lack of gasoline stations and a large distance between stations will necessitate that we

establish stores throughout Norway, not just in one central location. In order to

successfully accomplish QT’s goals, having an understanding of Norway is imperative.

1. Geographic and demographic information

Norway is a Scandinavian country, whose territory comprises the western

Scandinavian Peninsula. Located in Northern Europe, to the west of Sweden, it borders

both the North Sea and the North Atlantic Ocean. With a population of 5.1 million

people, Norwegian society is based on egalitarianism, the belief that all people should be

treated as equals and have the same political, economic, social, and civil rights.

Consequently, there is a high degree of social consensus (people will often agree with

one another), inclusiveness (people feel valued and their differences are respected), and

social cohesion (society fights social exclusion, creates a sense of belonging and trust,

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and offers the opportunity of upward mobility). There is little wage inequality; the

average income of the top twenty percent of the population is about 54,999 American

dollars a year, and the bottom twenty percent live on about 14,916 American dollars a

year. What inequality exists is lessened by Norway’s progressive tax system, where a tax

rate is determined by wealth. Those with more wealth pay more taxes, and those with less

wealth pay fewer taxes.

Norway has a very temperate climate along the coast but a much colder interior, with

increased precipitation and colder summers. The country’s west coast is rainy year-round,

and there is also very little racial or ethnic diversity, with 94.4 percent of Norway’s

population being Norwegian, 3.6 percent being of another European ethnicity, and only 2

percent being other ethnicities.

With regard to education, Norway is a relatively educated society. Eighty-two percent

of adults between the ages of twenty-five and sixty-four, and eighty-four percent of

twenty-five to thirty-four year olds have earned the equivalent of a high-school degree.

Norway’s literacy rate, which is defined by the percent of people over the age of fifteen

who can read and write, is one hundred percent for both males and females.

Although it is a multi-partisan state, Norway’s religious

diversity is limited. About 83.6 percent of Norwegian

people identify themselves as Christians, 2.1 percent

identify as Muslims, 0.2 percent identify as Buddhists, and

14.1 percent identify as being part of another religion

(Figure 4). Among Norwegian traditions, one of the most

prominent customs involves the Bunad, which is worn for celebrations and special

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Figure 3: Norway's Belief Systems

occasions. The primary sports of Norway are handball and soccer, or football, as it is

known in Europe.

2. Market segment analysis

Demographic: As previously stated, QT’s primary, penetrated targets markets are lower to

middle class Caucasians of both sexes, between the ages of fifteen to fifty-four, with at least

a high school education. The reason for this is that people in this age range are most likely to

be active drivers, and consequently, will most likely be buyers of gasoline. Along with this,

teenagers and parents in this range may often buy snacks or quick meals for themselves or for

their children.

Geographic: Currently, in the United States, QuikTrip targets customers in the Southern and

Midwestern United States. In Norway, we will initially open a trial location in Oslo, the

country’s capital and the most populous city. Oslo is the economic and governmental center

of Norway and is a hub of trade, banking, industry, and shipping. Our decision to expand to

other areas of the country will then be based on our success in Oslo.

Psychographic: The target market will be those who value convenience and quality.

Customers will most likely own cars and be active drivers for both themselves, and for their

families.

Behavioral: The customers whom we target will be active buyers of gasoline. They will be

interested in buying quick and easy meals or snacks for themselves or other family members,

such as children. These customers will actively drive.

3. Analysis of the potential location

We chose Norway as the prospective location for a variety of reasons. For one,

Norway has the highest gasoline prices in the world, at about 10.76 American dollars per

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gallon of regular gasoline. Additionally, Norway is the world’s second largest exporter of

natural gas, and the fifth largest exporter of oil. The oil industry is Norway’s largest

mainland industry, and these reserves, if permitted by the Norwegian government, would

allow quick and inexpensive access to gasoline to supply. In addition, since the number

of gas stations has decreased and long distances exist between gas stations, customers are

dissatisfied, thus creating a viable market opportunity to expand into Norway. In terms of

competition, QT’s primary competitors in the gas market are Statoil and LP Gas, and 7-

Eleven and Coop’s Marked in the convenience store market.

IV. PLANNED OPERATION OF THE PROPOSED BUSINESS/PRODUCT/SERVICES

A. Proposed Organization

The Norwegian branch of QT

will be run under a product

division structure under the

leadership of current CEO Chester

Cadieux. Popular among companies with diverse products, a product division structure

will group similar products under one general product category. This strategy is best

suited for a global strategy. In this case, QT will be divided into two main operations: the

gasoline retailing aspect and the convenience store aspect, which can then be further

subdivided into beverages, candy, food items, consumer goods, and alcohol (Figure 4).

The Norwegian QT will also be run under a decentralized structure, where individual

stores are smaller representations of a single structure, that is to say, every individual

store has the same structure with little variation, as can be seen in the Appendix. Most

product development and marketing decisions will be made at the higher tiers of

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Leadership

Gasoline Retailing

Convenience Store

Beverages Candy Food Items Consumer Goods Alcohol

Figure 4: Example Product Division

command, yet a great deal of independence will exist for individual store managers and

employees. Although the managers will make staffing decisions and decisions on

working hours, their product choices will be limited to the decisions of the QT leadership.

In addition, employees will have more motivation to take initiative, since there is a higher

chance that their ideas will be implemented or their actions rewarded, and they will be

more able to respond flexibly and adapt to rapid changes at the local level, especially

after QT begins expansion within Norway. We will expand into the international market

through the use of horizontal foreign direct investment, in which we have full ownership.

This means that we will carry the same activities abroad as we do in the United States,

while also making physical investments in Norway, such as buildings, machines, and

other equipment.

Start-up Steps to Form the Norwegian QuikTrip:1. Register as a Norwegian-registered foreign enterprise by submitting a Coordinated

Register Notification Form. By doing so, we accept legal responsibility for the activity conducted in Norway. We must also submit the following documents:

a. The principal enterprise’s memorandum of association and articles of associationb. Minutes of the governing body of the enterprise showing that the enterprise

wishes to establish a branch in Norwayc. A certificate of registration from American authorities

2. Make expansions to the current QT website (www.quiktrip.com) by registering a new domain for the Norwegian branch (www.quiktrip.no)

3. Select an obtain an initial location within Oslo, Norway, keeping in mind the following criteria:

a. Must be consistent with the QT brand image: Is it a location that we can take pride in owning, that contributes to the sense of quality? How much crime is in the area?

b. Are the surrounding business complementary or competing?c. Are there potential employees, and what would their commute be like?d. Is it accessible by both suppliers and by customers?e. Is it a financially sound location? Are there any hidden costs, such as renovation

costs, decoration costs, IT system upgrade costs, et cetera? What are the income/sales/property tax rates? Is the location affordable?

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4. Obtain needed supplies and inventory5. Hire employees who fit the following criteria:

a. Are over the age of eighteenb. Are friendly and willing to assist customersc. Are hardworking and responsibled. Are able to work quickly and accurately

6. Obtain the initial location and commence business operations.7. Advertise and publicize the sites and the store, adapting any strategies as necessary.

Proposed Staffing: QT currently employs about 16,700 employees at about 700 locations in the

United States. This averages to about twenty-four employees per store. As previously stated, we

are looking for employees who are over the age of eighteen, friendly, willing to assist customers,

hardworking, responsible, and able to work quickly and accurately.

In order to facilitate the operations of each store, we must begin by hiring employees, after an

international branch of QT is established at the headquarters. Since it is imperative that

employees are aware of their duties and responsibilities, the follow list contains the proposed

staffing structure and job descriptions:

5 Full-Time Managers – Tasked with maintaining the store by recruiting, selecting, orienting,

and training employees. Oversees overall staff and store progress, which includes coaching,

counseling, disciplining, monitoring, and appraising job results; paid $58,210 annually, for a

total of $291,050.

5 Assistant Managers – In charge of the store during their shifts. Tasked with supervising

part-time employees. Eligible for performance-based promotion to Second Assistant

Managers, who are then eligible for promotion to the Store Manager position; paid $34,655

annually, for a total of $173,275

3 Store Security Officers – Patrol the premises to prevent and detect signs of intrusion and

ensure the security of any potential entrances. Answer alarms and investigates disturbances.

Monitor the entrance and departure of employees, visitors, and other persons to guard against

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QuikTrip Executive Branch (CEO)

Norwegian QT Branch

Store Managers

Assistant Managers

Store Security Officers

Kitchen/Bakery Team Members Store Clerks

Domestic QT Branch (follows the same store staffing structure

as the Norwegian branch)

theft and maintain security. Prepare daily reports about daily activities and irregularities, and

call police or fire departments in case of emergencies; paid $30,000 annually, for a total of

$90,000.

5 Kitchen and Bakery Team Members – Responsible for quality production and preparation

of fresh food to be served in stores; paid $26,312 annually, for a total of $131,560.

6 Store Clerks – The entry level position. Accountable for performing cashier duties and

providing excellent customer services to consumers. Greets and cooperates with customers,

and also maintains the store appearance by restocking shelves, dusting, cleaning, sweeping,

and mopping as necessary; paid $22,413 annually, for a total of $134,478.

The flowchart below demonstrates the proposed chain of command for QuikTrip (Figure 5):

B. Proposed Product/Service

1. Details of the product(s)/services to be offered:

As previously stated, QT is a Tulsa-based chain of convenience stores and self-serve

gas stations that offers commonly available consumer goods, non-alcoholic and alcoholic

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Figure 5: Proposed QT Store Staffing/Chain of Command

beverages, candy, freshly prepared food and snack items, and high-quality gasoline that is

protected by an unconditional guarantee, a list of which is available in the Appendix.

After driving to a QT store near them, customers will be able to purchase products

directly in-store. By stocking a wide range of consumer goods, customers are then

enabled to choose what they want and possibly generate higher sales revenue for the

store. QT’s fundamental belief in the culture of convenience necessitates a broader

product mix; it allows customers to simply visit one nearby location to fulfill the majority

of their needs, rather than spending additional time going to multiple stores.

In doing business in the Norwegian market, we will not adapt the products offered

to regional tastes. Seeing as we will sell standardized, globally-known products,

Norwegian consumers will have some prior experience with the products offered. It

would be the best to sell the same standardized products that are sold in the United States,

since they are globalized goods such as chips and soft drinks that are sold around the

world.

We plan to obtain crude oil from Preemraff Lysekil in Sweden. Located at

Brofjorden, near the Swedish city of Lysekil, the refinery has an excellent natural harbor.

Preemraff Lysekil has one crude oil jetty with a capacity of 500,000 deadweight tons

(DWT), and has five jetties for products with a capacity of about 80,000 DWT. It was

acquired by the company Preem in 2003, and is the largest refinery in Scandinavia, with

an annual capacity of eleven million metric tons of crude oil. The terminal is accessible

twenty-four hours a day, with no tidal or daylight restrictions. Although the refinery is

located in Sweden, it was chosen because the two main Norwegian oil refineries,

Mongstad and Tjeldbergodden, are owned and dominated by a competitor, Statoil.

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As for the consumer goods and food products, they will be imported into Norway

from a domestic subsidiary and supplier, QuikTrip Distribution (QTD). With distribution

centers in Kansas City, Phoenix, Atlanta, and Dallas metropolitan areas, QTD

warehouses ship approximately seventy percent of the products sold in domestic stores.

2. How the product/supplies will be transported to/from the home country

Since we are transporting perishable food products from the United States to Norway,

QT will be using reefer ships rather than cargo planes as a mode of transportation,

because these reefer ships are refrigerated. QT will also use ships as a means of transport

for the gasoline, because Preemraff Lysekil has a harbor that is capable of exporting

crude oil, and there are no stable rail or road connections to the refinery.

To calculate the range of costs that we can expect by shipping crude oil from

Preemraff Lysekil, we must find the capacity of an oil tanker in gallons, and then

multiply that capacity by the average cost of shipping a gallon of crude oil. We have

found that Long Range (LR) class ships are the most common tankers. Considering that a

barrel of oil contains forty-two gallons, a typical LR class ship can carry about 310,000 to

550,000 barrels, or 13.02 to 23.1 million gallons of crude oil. With an average shipping

cost of two to three cents per gallon, costs will range from about 260,400 dollars to

462,000 dollars at two cents per gallon, and about 390,600 dollars to 693,000 dollars at

three cents per gallon. About nineteen gallons of motor gasoline can be produced from

one barrel (forty-two gallons) of crude oil, so we will obtain 5.89 to 10.54 million gallons

of motor gasoline, for a marginal cost that is as low as three cents per gallon to as high as

eleven cents per gallon. An average gasoline station uses 132,000 gallons of gas per

month, which will allow us to last 3.72 to 6.65 years on a single shipment of this

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magnitude. Although we will not obtain this much gasoline in a single shipment, due to

high warehousing costs, these numbers serve to show how efficient oil tankers are.

By shipping gasoline and products by sea on tankers and ships, several benefits and

only minimal risks will be incurred. For example, shipping by sea is one of the most

efficient modes of transport. As shown by the information in the previous paragraph, a

single large tanker is able to carry over thirteen million gallons of crude oil on a single

voyage, and the costs are minute, ranging from two to three cents per gallon.

Additionally, since QT aims to be a responsible corporate citizen, it is important that the

mode of transportation that we select has a low environmental impact. Compared to other

modes of transportation, international maritime shipping accounts for only 2.7 percent of

the annual global greenhouse gas emissions. The National Oceanic and Atmospheric

Administration (NOAA) reports that only 7.7 percent of the oil in the ocean is a result of

spillage from a transport tanker. However, Michael Levi, the David M. Rubenstein senior

fellow for energy and environment at the Council on Foreign Relations, believes that the

NOAA was incorrect in its analysis, saying that it is actually as low as one to two

percent. His results are corroborated by other credible sources.

In shipping products to Norway, several export documents will likely be needed, as

recommended by Export.gov. Some of these documents include:

Commercial invoices: A bill for the goods from the seller to the buyer

Export packing lists: Includes information such as seller, buyer, shipper, invoice number,

date of shipment, mode of transport, carrier, and itemizes quantity, description, the type

of package, quantity, total net and gross weight (in kilograms), package marks, and

dimensions

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Pro forma invoices: Invoices prepared by the exporter before shipping the goods,

informing the buyer of the goods to be sent, their value, and other key specifications

Bills of lading: A contract between the owner of the goods and the carrier; can be straight

bills of lading (non-negotiable) or shipper’s order bill of lading (negotiable)

Certificates of Origin: A document that attests that goods in a particular export shipment

are wholly obtained, produced, manufactured or processed in a particular country

C. Proposed Strategies

1. Proposed pricing policies

By operating in Norway, we aim to gain considerable market share and high sales

volume through a penetration strategy, with which we price our products lower than our

competitor’s prices. Because QT is an American business, we will accept both American

Dollars (USD) and Norwegian Krones (NOK), although we expect the majority of our

revenue to be in Krones. One NOK equals 0.14 American dollars, and one USD equals

7.40 NOK.

Compared to our competitors in the gas industry, who sell gas at an abnormally high

average of 10.76 dollars per gallon, we will price our gas at about 8.50 American dollars,

or 62.81 Norwegian Krones. By pricing our gas about two American dollars less per

gallon, or 13.54 NOK, we expect to gain market share in the Norwegian market, benefit

from increased sales volume, and benefit the customers, who will be willing to accept our

prices because they are able to save money.

While conducting operations in Norway, we must also consider exporting and

importing costs and duties. Typically, the export duty rates range from zero percent to

twenty-five percent, but the average import duty rate is 1.06 percent. To recoup our costs

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and expenses, we will offer our food products and other consumer goods at a thirty

percent markup from selling price in domestic QT stores. Based on our inventory of a

QuikTrip store, located in the Appendix, we have a median price of 1.99 American

dollars and an average price of 4.26 American dollars. With a thirty percent markup, this

results in a median price of 2.59 American dollars and an average price of 5.54 American

dollars, a sixty cent and 1.28 American dollar difference, respectively. Note that the

average price is affected by any outliers that exist in the price. This information is also

located within the Appendix.

2. Proposed promotional program

Our primary promotional objective is to appeal to customers who enjoy eating high

quality snack foods and paying reasonable gas prices for their vehicles, at a convenient

location. We want to ensure that customers are able to obtain the best products and

gasoline from a single trip to our stores and that they are willing to visit our stores,

whether it is because they want something quick to eat, or because they need to fill their

gas tank. In order to achieve our goals, we must first make the QT brand known and

visible to the Norwegian market. One method with which we will attract customers is the

use of a simple gas station sign that lists prices, similar to ones in the United States. With

this, potential customers are able to see an attractive logo and store, and the lower gas

prices that we would offer. Once they enter the store, they would ideally be enthralled by

variety of our products, the cleanliness of the store, and the cordiality of the staff, all of

which are hallmarks of the QT chain. To ensure that the customers are truly satisfied and

that there are no issues with the business, we will have customers fill out satisfaction

surveys through QT Connect, an existing program that aims to partner with members to

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learn how to better serve customers. After customers enroll in the QT Connect program,

they will be randomly selected to complete surveys, every month, three months, or even

six months. As compensation for completing a survey, a coupon will be rewarded to

customers by email, to be printed and redeemed in store.

Other forms of advertising that we will implement include magazine advertisements,

Internet advertisements, and televised advertisements. For example, we will register the

domain www.quiktrip.no for the purpose of having a localized website for Norwegian

customers to learn more about the brand. We will also give out sales promotions on the

backs of receipts, and possibly even through mail and newspapers.

We expect to gain publicity by sending news releases about the QT chain to local

newspapers and the media, so that customers are aware of what the chain is about and

how we will attempt to satisfy their desires. In addition, we will use billboards to appeal

to customers who are travelling, and to encourage them to grab a quick snack or refill

their gas tank.

V. PLANNED FINANCING

A. Projected Income & Expenses

The income statement below represents QuikTrip’s projected income and expenses

during the first year, while operating in Oslo, Norway.

QuikTrip Income StatementFinancial statements in U.S. Dollars

January 2015 to December 2015

RevenueGross Sales $14,964,000.00Less: Sales Returns and Allowances

$0.00

Net Sales $14,964,000.00Profit

Beginning Inventory $12,000,000.00Inventory Available 900,000 units

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Less: Ending Inventory $3,500,000.00Cost of Goods Sold $8,500,000.00

Gross Profit (Loss) $6,464,000.00Expenses

Advertising $5,000.00Insurance $4,500.00Freight Shipping $35,000.00Legal and Professional Fees $3,000.00Licenses and Fees $500.00Miscellaneous $500.00Office Expense $750.00Payroll Taxes $115,671.22Rent $105,000.00Repairs and Maintenance $10,000.00Taxes $4,040,280.00Start-Up Costs $200,000.00Supplies $100,000.00Telephone $236.16Utilities $10,526.94Wages $820,363.24Cost of Goods Sold $5,451,327.56

Net Operating Income $1,012,672.44Other Income

Warehouse Space Sublet $0.00Total Other Income $0.00

Net Income (Loss) $1,012,672.44

B. Projected Balance Sheet, End of First Year

QuikTrip Balance SheetFinancial statements in U.S. Dollars

January 2014 to December 2014

AssetsCurrent Assets

Cash $850,000.00Accounts receivable $0.00(less doubtful accounts) $0.00Inventory $3,000,000.00Temporary Investment $0.00Prepaid Expenses $0.00

Total Current Assets $3,850,000.00Fixed Assets

Long-term investments $0.00Land $0.00Buildings $500,000.00(less accumulated depreciation)

$0.00

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Plant and Equipment $10,000.00(less accumulated depreciation)

$0.00

Furniture and Fixtures $3,000.00(less accumulated depreciation)

$0.00

Total Net Fixed Assets

$513,000.00

Total Assets $4,363,000.00LiabilitiesCurrent Liabilities

Accounts payable $2,000,000.00Short-term notes $0.00Current portion of long-term notes

$0.00

Interest payable $0.00Taxes payable $0.00Accrued payroll $450,000.00

Total Current Liabilities

$2,450,000.00

Long-Term LiabilitiesTotal Long-Term

Liabilities$0.00

Total Liabilities $2,450,000.00Shareholders' Equity

Net Income $1,012,672.44Retained Earnings $900,327.56

Total Shareholders' Equity

$1,913,000.00

Total Liabilities and Shareholders' Equity $4,363,000.00

C. Planned Growth of the Proposed Business

After renting a 4,500 square foot building in Oslo, Norway to use as our preliminary

store, we anticipate net sales of $14.964 million and a net profit of $1,012,672.44. Based

on the thirty percent markup imposed on convenience store goods and the price of $8.50

per gallon of gasoline, almost a 325% markup to meet the Norwegian market price,

$14.964 million in sales is undoubtedly achievable. During the first year in the

Norwegian market, our sales and profits will be understandably lower than that of other

competitors and lower than that of future years, due to a lack of familiarity with the QT

brand and the process of becoming accustomed to doing business in Norway. Over the

next three years, we expect to gain significant market share in Norway, due to our gas

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prices being about two dollars cheaper than that of competitors and our stores being able

to meet all of the customers’ needs in a single visit, thereby saving customers both time

and money. With the ability to obtain funding from the domestic branch of QT, we will

not seek a loan. Five percent of our net profits will go to charity, as is done in the United

States, twenty percent of our net profits will go to end-of-year bonuses for employees,

and the remaining seventy-five percent will go towards company growth and expansion

in Norway. By doing so, we make the biggest investment of all, an investment in the

community, and an investment in our employees, the same means by which QuikTrip is

gaining dominance in the United States.

VI. BIBLIOGRAPHY

Printed Sources (1):Kleindl, Brad Alan. International Marketing. Australia: Thomson Southwestern, 2007. Print.

Internet Sources (12):"Cost of Living in Norway." Cost of Living in Norway. InterNations. Web. 26 Jan. 2015.

<http://www.internations.org/norway-expats/guide/cost-of-living-in-norway-17129>"Freshen Your Routine with QuikTrip." QuikTrip Corporation Home. QuikTrip. Web. 26 Jan.

2015. <http://www.quiktrip.com/>."Norway." Norway | Center For Global Development. Center for Global Development. Web. 26

Jan. 2015. <http://www.cgdev.org/page/norway-1>."Norway." Norway. OECD Better Life Index. Web. 25 Jan. 2015.

<http://www.oecdbetterlifeindex.org/countries/norway/>."Starting a Business in Norway - Doing Business - World Bank Group."Starting a Business in

Norway. World Bank Group. Web. 26 Jan. 2015. <http://www.doingbusiness.org/data/exploreeconomies/norway/starting-a-business>.

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"The European Free Trade Association." The European Free Trade Association -. Permanent Mission of Ukraine to the UNO Branch and Other International Organizations in Geneva. Web. 26 Jan. 2015. <http://geneva.mfa.gov.ua/en/ukraine-io/efta>.

"U.S. Energy Information Administration - EIA - Independent Statistics and Analysis." Oil Tanker Sizes Range from General Purpose to Ultra-large Crude Carriers on AFRA Scale. U.S. Energy Information Administration. Web. 26 Jan. 2015. <http://www.eia.gov/todayinenergy/detail.cfm?id=17991>.

2012 CCG NORWAY. U.S. Commercial Service and U.S. Department of State. PDF.Convenience Stores. Hampton, Middlesex: Key Note Publications, 1991.Convenience Stores

Industry Snapshot. Center for Economic Vitality. Web. <http://www.pacificedc.org/Library%20Docs/Convenience%20Stores%20Industry%20Snapshot.pdf>.

Fortune. 100 Best Companies to Work For: QuikTrip, http://archive.fortune.com/magazines/fortune/bestcompanies/snapshots/2322.html (accessed Jan 26, 2015).

Norway's free trade agreements. Norway's free trade agreements, https://www.regjeringen.no/nb/tema/naringsliv/frihandelsavtaler/norways-free-trade-agreements/id457017/ (accessed Jan 26, 2015).

Rongevaer, K. Bjoern. Government Structure in Norway. Government Structure in Norway. Europa Majanduspiirkonna Ja Norra Toetused. Web. <http://eeagrants.fin.ee/sites/default/files/Bjoern_LocalGovernmentNorway.pdf>.

World Shipping Council - Partners in Trade. Benefits of Liner Shipping, http://www.worldshipping.org/benefits-of-liner-shipping (accessed Jan 26, 2015).

Consultant (1):Ms. Kimberly Edwards, Marketing Teacher, DECA Advisor

Store Visits and Observations (1):Business Observation – January 2, 2015 10:30 AM to 2:00 PM

VII. APPENDIX

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Photos taken from inside a local QuikTrip Store, depicting the gas pumps (top left), the frozen drinks dispenser (top right), QuikTrip Kitchens (bottom left), and some ready-made

meals offered at QuikTrip (bottom right)

Photo taken from outside of the store, showing the store in its entirety

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Additional photos from inside the local QuikTrip, depicting its variety of “Roller Grill” items (left) and a photo of the main aisle of the store (right)

Portraits of the co- founders of QuikTrip: Current CEO, Chester “Chet” Cadieux, (left) and Burt B. Holmes (right)

Prices w/ 30% Markup

CONSUMER GOODS Total Price of Items: $335.94 $436.72Total Quantity: 106# of Different Items 4Average Price: $5.44 $7.07Median price: $4.99 $6.49

FOOD ITEMS Total Price of Items: $6,786.65 $8,822.65Total Quantity: 3109# of Different Items 175Average Price: $2.32 $3.01Median price: $1.69 $2.20

CANDY Total Price of Items: $6,307.92 $8,200.30

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Total Quantity: 4578# of Different Items 81Average Price: $1.51 $1.96Median price: $1.29 $1.68

ALCOHOL Total Price of Items: $5,025.00 $6,532.50Total Quantity: 570# of Different Items 152Average Price: $9.02 $11.73Median price: $8.99 $11.69

BEVERAGES Total Price of Items: $6,760.77 $8,789.00Total Quantity: 3203# of Different Items 129Average Price: $2.98 $3.87Median Price: $1.99 $2.59

TOTAL Price of Items: $25,216.28 $32,781.16Average Item Price: $4.26 $5.54Median Item Price: $1.99 $2.59Total Store Inventory: 11,566 itemsTotal # of Item Types: 541

We took a manual inventory of a local QuikTrip store, recording each item in the store and its retail price. This is working under the assumption that the store has already sold half of

its inventory, and is broken down into five main categories of items.

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