1. GLOBAL STRATEGIC ANALYSIS REPORT
INTERFACE, INC.
Group One
Shanie Ouimet
Allison Foresman
Megan Weber
Paris Alizadeh
Table of Contents
I. Background, Strategic Direction, & Global Extent……………………………………2
II. Current Condition Analysis……………………………………………………………..5

2. 1
III. Results, Business Challenges, & PAIN………………………………………………….9
IV. Core Strategic Focus & Strategies……………………………………………………..13
V. Strategy Assessment…………………………………………………………………….16
VI. Global Expansion Decision…………………………………………………….……….17
VII. Global Strategy & Geographical Target Alignment………………………………….20
VIII. Entry Mode……………………………………………………………………………...22
IX. Global Challenges & Risks…………………………………………..…………………24
X. Execution…………………………………………………....…………………………...28
XI. Sources & Team Member Roles……………………………………………………….29
I. BACKGROUND, STRATEGIC DIRECTION, GLOBAL EXTENT
A. Business In
Interface Inc. is the world’s largest designer and producer of carpet tile. Founded in 1973
by Ray Anderson, the company is based on ideas, courage, and vision. Design is seen as a way
of thinking at Interface, and serves as the inspiration for not only the company but also its
consumers. Since its beginning, Interface has grown through more than 50 acquisitions to a
company that now manufactures on four continents and sells in over 110 countries. Today,

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Interface offers broadloom carpet and modular carpet tile for both residential and commercial
surfaces. Their carpet tile business, FLOR, offers a variety of colors, textures, and patterns that
can be configured and rearranged to fit the unique needs and wants of each customer. More
flexible than a broadloom carpet, carpet tile offers the consumer the power of design in their own
home, and broadens the possibilities of carpet to become something innovative as opposed to
simply necessary. Interface Services offers convenience to Interface customers through product
selection assistance, installation services, and a reclamation and recycling program to create an
all-inclusive business offering for consumers all over the globe.
In 1994, Interface transitioned from a traditional industrial business model towards a
model more focused on commitment to sustainability. Ray Anderson challenged the company to
“become the first company that, by its deeds, shows the entire world that sustainability is in all
its dimensions: people, process, product, place, and profits - by 2020 - and in doing so, become
restorative through the power of influence.” Through the expertise and challenges of their Eco
Dream Team, Interface has developed a “Mission Zero” target for their environmental footprint.
By 2020, Interface strives to source 100% of its energy needs from renewable resources through
increasing their energy efficiency and use of renewable energy.
Interface uses three unique terms as inspiration when developing new products. First,
biomimicry refers to “the art of imitating nature’s best ideas.” This concept uses nature as an
inspiration for developing sustainable products and solutions. Second, the Life Cycle
Assessment is a tool used to evaluate the materials, energy, and wastes involved in each phase of
a product’s life cycle. Lastly, dematerialization refers to waste management and creating the
same quality with less- ultimately increasing efficiency. Two key initiatives, The Net Effect™
and Net-Works™, illustrate a strong commitment to sustainability and towards decreasing
Interface’s environmental footprint. The Net Effect™ Collection has served as a foundation for
the company’s carpet tile business for years. Based on biomimicry, or “the art of imitating
nature’s best ideas”, this collection not only focuses on high-quality design, but also on the
impact it has on the environment. Along these same lines, Net-Works™ is a “restorative loop in
carpet tile production”. Interface has partnered with the Zoological Society of London, yarn
producer Aquafil, and Project Seahorse to create a product that gives back to the environment by
sourcing raw materials in a way that helps clean oceans and beaches that 660 million people
depend on for survival. This inclusive process not only reduces pollution in these areas, but also
creates financial opportunities for some of the world’s poor population by providing an income
stream and supporting the creation of community banking. Both of these business divisions set
Interface one step closer to achieving Mission Zero.
Moving forward with this commitment to and passion for sustainability, Interface plans
on utilizing this positive business transformation to continue on their journey.

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B.
Strategic Direction
1. Vision: “To be the first company that, by its deeds, shows the entire industrial world what
sustainability is in all its dimensions: People, process, product, place and profits — by
2020 — and in doing so we will become restorative through the power of influence.”
2. Mission: “Interface will become the first name in commercial and institutional interiors
worldwide through its commitment to people, process, product, place and profits. We will
strive to create an organization wherein all people are accorded unconditional respect and
dignity; one that allows each person to continuously learn and develop. We will focus on
product (which includes service) through constant emphasis on process quality and
engineering, which we will combine with careful attention to our customers’ needs so as
always to deliver superior value to our customers, thereby maximizing all stakeholders’
satisfaction. We will honor the places where we do business by endeavoring to become
the first name in industrial ecology, a corporation that cherishes nature and restores the
environment. Interface will lead by example and validate by results, including profits,
leaving the world a better place than when we began, and we will be restorative through
the power of our influence in the world.”

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3. Strategic Goals: Interface’s dedication
to sustainability has evolved into the
company’s ultimate strategic goal,
Mission Zero™, which promises “to
eliminate any negative impact Interface
has on the environment by 2020”.
Interface has nine core values that gives
a framework for which to make
decisions to reach Mission Zero: Service, Innovation, Leadership, Commitment,
Stewardship, Integrity, Communication, Individuality, and Professional Growth.
C. Global Extent
Interface has 40 global showrooms and manufacturing capabilities in Australia, China,
Netherlands, Thailand, UK, and U.S. Their goal is to manufacture globally and use local
materials to produce the carpet. For example, if they are producing in China, they want the yarn
used to make the carpet to come from a provider in China, rather than have it shipped in from
Italy. This attempts to lower production costs and make the production cycle more efficient.
Interface can also be found on six continents, excluding Antarctica. Their sales and production
capacity are highest in the Americas, followed by the EMEA (Europe Middle East, Africa), and
lastly Asia Pacific.
Interface operates fluently in more than 110 countries.
II. CURRENT CONDITION ANALYSIS

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A. External Analysis:
As of July 2015, the global
market for commercial carpet was
$8.8 billion and the carpet tile
segment of that market was $3.08
billion. Therefore, there is still $5.72
billion of untouched market where
carpet tile could grow. In that $3.08
billion market size, Interface has
divided this market into two different
segments: renovation and new
construction. Interface has a larger
percentage of the renovation market,
taking 90% of renovation compared to
only 10% of new construction in the
Americas, Europe, and Australia.
1. Competitors: Mohawk
Industries, Inc and Shaw Industries Group are the two largest flooring companies with
sustainability initiatives. Interface is the largest modular carpet producer, but as a general
carpet manufacturer, Mohawk is larger in sales.
2. Porter’s 5 Forces:
● Threat of New Entry: Due to the size of Interface, established quality, and
global reach it would be very difficult for a new carpet manufacturer to outreach
the level of Interface’s business.
● Buyer Power: Interface’s global sourcing strategy, with respect to principal yarn
suppliers and dual polymer manufacturing capability, allows it to guard against
any potential shortages of raw materials or raw material suppliers in a specific
polymer supply chain. By having multiple local sources, Interface is not fully
dependent on a single supplier.
● Threat of Substitution: There are a large number of competing carpet
manufacturers, but few who specialize in modular carpet to the same quality and
sustainability standards of Interface. Modular carpet is Interface’s core
competency.
● Supplier Power: Interface’s raw materials are generally available from multiple
sources – both regionally and globally – with the exception of synthetic fiber
(nylon yarn). For yarn, they principally rely upon two major global suppliers, but
also have significant relationships with at least two other suppliers. The company

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has diversified their risk in this regard so that the suppliers do not have as much
power.
● Competitive Rivalry: Although the industry has experienced significant
consolidation, a large number of manufacturers remain. Some of the competing
carpet manufacturers have the ability to extrude at least some of their
requirements for fiber used in carpet products, which decreases their dependence
on third party suppliers of fiber.
B. Internal Analysis:
1. Critical Resources and Capabilities: Interface has a distinct capability in meeting two
principal requirements of the specified products markets: providing custom samples
quickly and on-time delivery of customized final products. Its manufacturing locations
across four continents enable Interface to compete effectively with local producers in
international markets, while giving international customers more favorable delivery times
and freight costs.
2. Distinctive Competencies:
The quality, service, design, better and longer average product performance, flexibility
and convenience of modular carpet serve as Interface’s principal competitive advantages.
Interface’s global distinctive competencies
include:
➢ brand recognition
➢ quality
➢ design
➢ service
➢ broad product lines
➢ product performance
➢ marketing strategy
➢ pricing
3. Sustainable Competitive Advantages: Interface is a recognized thought leader in
sustainability with a unique approach to the market. It is the largest global manufacturer
of modular carpet with a presence on four continents and over half the business coming
from outside the US. Interface has lessened its dependence on the mature office market,
establishing diversified end use markets that include non-office commercial markets,
emerging markets, and consumer representing nearly 50% of the overall business.

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The chart above illustrates the value chain at Interface, with a focus on sustainability. Interface
prides itself in not only providing value to its customers, but also returning value to the
biosphere.
C. SWOT
1. Strengths (Internal)
● World’s leading manufacturer of carpet tile
● Established brand for high quality, reliability and leadership in the marketplace
● Innovative product design and development capabilities
● Made-to-Order and global manufacturing capabilities
● Recognized global leadership in ecological sustainability
2. Weaknesses (Internal)

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● Success depends significantly upon the efforts and abilities of senior management
executives and the principal design consultant; Loss of these individuals could
adversely affect the company
● Significant amount of indebtedness
● IT, management, marketing, and manufacturing is not aligned
● Supply chain is not currently leveraging capabilities and best practices from
region to region
3. Opportunities (External)
● Emerging markets, such as Mexico, China, India and Eastern Europe, represent
large and growing economies that are essentially new markets for modular carpet
products
● An alignment in supply chain globally and in strategy, marketing and branding
● Market the global capability to our global customers, and emphasize that few of
the operations are outsourced
3. Threats (External)
● Competitors in the highly competitive commercial floorcovering products market
have greater financial resources
● Principal products are affected by unfavorable economic cycles in the renovation
and construction of commercial and institutional buildings
● The worldwide financial and credit crisis could have a material negative effect on
the business, its financial condition, and operational results
● Significant cost increases in petroleum-based raw materials could adversely affect
the business if it is unable to pass these cost increases through to its customers
III. RESULTS, BUSINESS CHALLENGES, AND PAIN
A. Recent Financial Results and Trends

10. 9
At the end of the 2015 fiscal year, all results have positively changed since 2014. Most
notably, gross profit has increased by 13.1% and net sales by 4.4%. At the end of 2014,
Interface reached $1B in net sales. The change in net sales can be seen in further detail in the
graphs below.
Net sales have risen by $163 million since 2010 and by $21 since 2014. They have had
steady increases in net sales the past five years, except for a decline of $21 million in 2012. The
increase in net sales is primarily due to recovering economies in the Americas and Europe. Sales
in Asia-Pacific markets were offset by declines in government in retail segments, which
decreased by 42% and 20% respectively.

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As for trends in specific markets, both office and non-office commercial sales have seen
growth in the past year. Office market sales have grown by 6%, whereas non-office commercial
sales grew by only 3% in Q2 2015.
According to the 2014 annual report, Interface common stock reached a high of $17.28
during the first quarter of 2015 on the Nasdaq Global Select Market. This price is fairly low,
especially when compared to their lowest price of $18.63 during the first quarter of 2014.
The above table shows data on the effect of fluctuating exchange rates on net sales.
Interface operates in the euro, US dollar, British pound sterling, Canadian dollar, Australian
dollar, Thai baht and Japanese yen. They are mostly influenced by the exchange rate between
the USD and the euro, however. Because the Euro was relatively stable during 2014, overall net
sales were not greatly impacted. The negative outcomes of 2012, however, show how influential
a strong dollar can be on exporting firms.
The cost of sales increased by $45M in 2014, mostly due to differing prices in raw
materials and labor costs. A new manufacturing facility also opened in Australia, which added
to fixed costs and overall inefficiency. The original facility was extensively damaged by a fire in
July 2012, which incurred between $21-$41 million in loss of net sales.

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B. Business Challenges (PAIN)
There are several challenges
confronting Interface Inc. as well as the
general industry in which they play. How the
company goes about handling these challenges
will be essential determinants of their success,
and will impact the implementation of their
business strategy. These challenges are
detailed and quantified below.
The floorcovering products market is
highly competitive, and some of the
competitors have greater financial resources
than Interface. Despite a large amount of
industry consolidation, a large number of manufacturers remain. As shown in the image to the
right, Imports/Other accounts for 37% of the flooring industry, while Mohawk accounts for 22%
and Shaw accounts for 18%. With Interface only accounting for 2% of the flooring industry, the
impact the company can have on the market as only one of many competitors in the industry is
very limited.
A second pain for Interface was a fire that occurred at a manufacturing facility in Picton,
Australia in July of 2012. The fire caused extreme damage to the facility and ultimately
rendered it inoperable. As a result of the fire, Interface faced a total expense of $69.7 million
due to impaired fixed assets and and excess production costs as well as other costs totaling $1.7
million. Over the course of both 2012 and 2013, the company received $76.7 million in
aggregate cash insurance proceeds. The extra $7 million was recorded as a gain during 2013,
however, these large unexpected expenses and changes created a difficult time for the company.
Overall, the fire in Picton, Australia originally caused a disruption of business, but is now seen in
a positive light. When the facility was shut down, Interface chose to continue paying their staff
for the duration of the shutdown. When it came back online, customers appreciated that
Interface’s employees were supported and it only took roughly one year for their capabilities to
get back to their levels before the fire. A new facility in Minto, Australia commenced operations
in January 2014.
The worldwide financial and credit crisis most definitely could have a material adverse
effect on Interface’s business, financial conditions, and results of operations. The crisis, which
started in 2008, has reduced the liquidity of financial resources for businesses to continue
expansion. This lack of credit negatively impacts the ability of customers and suppliers to gain
financial support for purchases and operations. In 2008, the carpet filament consumption rate
decreased by 13.2%. If the world were to experience such an extreme recession, customers may
defer, delay, or cancel renovation and construction projects where Interface’s products are used,
leading to a decrease in orders, sales, and revenue for the company. A decrease of this
percentage based on 2014 sales data would result in a loss of nearly $130.5 million in sales

13. 12
revenue for Interface. This decrease in profitability could prevent Interface from “pursuing
important strategic growth plans, from reacting to changing economic and business conditions,
and from refinancing existing debt.” One last effect from this worldwide crisis involves the
maturity of the syndicated credit facility in October of 2019 with a value of $266.6 million.
Interface can not guarantee that they will be able to renegotiate or refinance this debt “on
commercially reasonable terms, or at all” and may have to sell assets or use cash that would have
been used for other purposes in order to meet their debt obligations.
IV. CORE STRATEGIC FOCUS AND STRATEGIES
A. Core Strategy
Since 2001, Interface has been implementing a market diversification strategy, following
a value-add core strategy. The company has an existing leadership in the corporate office market
segment, but would like to expand into non-corporate segments such as government, education,
healthcare, hospitality and retail space. These new segments represent a combined market of
over $2 billion, which is more than twice the size of Interface’s current corporate office market
segment. Additionally, the company is trying to penetrate the North American residential carpet

14. 13
market ($9 billion) with their newest line of products,
FLOR. There are currently 21 FLOR stores across the US
and Canada that offer services of in-store design, in-home
consultations and installation.
The 2014 Annual Report details the growing
utilization and appeal of modular carpet, for which
Interface plans to capitalize upon by using their existing
strengths and experience. The focus of resources and
intellectual property to this strategy proves it to be the
core strategy of Interface, as opposed to a low-cost
strategy.
Because Interface is diversifying across the
modular carpet industry, their strategy is considered horizontal diversification. With each new
segment, they are adding value by diversifying their portfolio, offering more options to
consumers, and expanding their global reach. Interface has implemented this strategy through
the following three tactics:
1) They have introduced specialized product offerings that suit the unique demands
of these new segments. For example, the FLOR line targets the North American
residential segments and offers unique in-store services.
2) Interface has created sales teams that are solely dedicated to reaching these new
segments. Their focus is on specific customer accounts, as opposed to entire
geographic territories.
3) Interface has redesigned their incentives for the existing corporate office segment
sales force in order to facilitate penetration of the new markets.
4) As part of the implementation of their overall strategy to diversify their segments,
they have allowed for localization of the marketing, management, IT, and
manufacturing.
B. Current Strategies
1. Corporate Level Strategies: At a corporate strategy level, Interface plans to expand its
international business in all market segments globally. The company is currently the
worldwide leader for modular carpet, and hopes to use this ranking to break into
emerging markets such as China, India, Central America, Russia, and Eastern Europe.
These expanding economies signify a growth opportunity for Interface in an essentially
new market. Other countries, like Germany and Italy, present opportunities in existing
markets as they transition into the use of modular carpet.
Interface also plans to use the emerging Chinese market as a location for
manufacturing. This would allow direct access to local customers, improved service
speed, custom design capabilities, and an opportunity to capitalize on their popularity as a

15. 14
leading US brand. More foreign manufacturing plants would hedge against exchange
risk and create a stronger foreign presence. This strategy will directly lower costs, but
also indirectly increase revenue through exposure to emerging markets. Currently,
Chinese sales are at 15% and production is at 19%.
2. Business Level Strategies: Interface has a total of seven manufacturing facilities
worldwide, placing them in six countries and four continents. The location of each of
these facilities has allowed Interface to create a competitive advantage through efficient
delivery times, bypassing exchange rates, lowering transportation costs, and fostering a
strong local presence. Altogether, Interface is pursuing a localized strategy in order to
better reach foreign markets.
In addition to foreign markets, the widespread manufacturing facilities also appeal
to multinational firms looking for a globalized modular carpet supplier. With each new
country a customer company enters, the availability of Interface products will cement the
relationship between Interface and its consumers. The products and procedures may vary
country to country, however, which may deter highly standardized global customers.
As for attracting the firms based in manufacturing countries, Interface has gone so
far as to customize its manufacturing facilities to fit with local customs. For example, at
the manufacturing facility in Thailand, a Buddhist temple was constructed at the entry of
the factory. Buddhist monks visit the
temple each month to bless the
employees and machinery.
At the newly rebuilt facility in
Australia, Interface
has honored the past
by displaying a piece
of machinery that was saved from the
fire. The company has attached the
word “RENEW” to insinuate their
forward-looking attitude, as seen to the
right.
In accordance with the
localization strategy, Interface has also
personalized some of its product

16. 15
campaigns to the targeted market. These small changes allow for the company to adapt its
behaviors to its surroundings to have better results. Because Interface functions on such a large
scale, altering its image on a segment basis keeps the brand relevant in a multitude of constantly
evolving markets. For instance, there is a new product line, “Beautiful Thinking”, that is being
promoted across the Americas, Europe, and Asia-Pacific. On the website for Interface UK, the
advertisement features a woman standing among the clouds. For the Interface Asia-Pacific page,
however, the advertisement shows a man looking out from a grassy area. Pictured on the left is
the advertisement for the UK, with the Asia-Pacific advertisement on the right.
On a business level, localization has allowed Interface to remain competitive and active
in foreign markets. The use of multiple manufacturing facilities cuts costs for both the consumer
and producer, and also creates more efficient supply chains. Divisional executives are given
freedom to tailor their practices to the area, as seen in the differences in facility design and
advertisements. For potential customers, Interface is more appealing and less risky because of
their localization initiatives.
V. STRATEGY ASSESSMENT
The current strategy is predominantly striving to diversify the market segment to expand
into new market possibilities outside of the corporate segment. While doing this, Interface has
been allowing each global area to localize the marketing efforts, management methods, IT
systems, and manufacturing. The strategy to diversify the market segments is necessary, but the
localization tactics have been the predominant hindrance.
Interface is successful worldwide, but there is a lack of synergy within the organization.
With each market operating independently, effective communication is difficult. For example,
each global market is using separate IT systems that do not communicate data effectively
between one another, causing the company to lack one stream of data coming from all markets.
The manufacturing capabilities are underutilized and not leveraged across divisions. For
instance, when China can produce something at a more productive rate, this knowledge should
be shared with the United States. Currently, this standardized approach is not being

17. 16
implemented. That lack of mobility amongst the manufacturing plants has caused each market to
underutilize the capabilities of other manufacturers to lower costs by simply sharing core
capabilities.
There is also a lack of communication between product lines. When a product is
developed and launched in the United States, the other geographic regions are either not
informed about this new product or are not supplied with the marketing tactics being used in the
United States. This causes a disconnect of available products worldwide, creating a lack of
consistency. Also, without the communication of successful marketing strategies, money is
wasted in the implementation of less effective strategies that do not allow the products to sell as
successfully in the markets that are not given the proper information. This lack of
communication also causes confusion at a global level and complicates upper level management
of global markets due to a lack of information to make proper strategies and implementations
that would have been provided via standardized IT systems.
VI. GLOBAL EXPANSION DECISION
A. Why?
The main strategic issue Interface has been facing in recent years has been the
incohesiveness and distance, both geographically and non-geographically, between their
different business segments and offices. Among other tactics, standardized global expansion
could be beneficial to solving this strategic inefficiency. Instead of simply having a presence in
multiple nations across the globe, it is important that Interface maintains a consistent global
presence and image and truly transforms itself into a global company. By expanding into new
markets, Interface will have the opportunity to align their individual strategies, tactics, and
practices in the areas of marketing, management, IT, and manufacturing. This expansion will
allow them to communicate as one large company, that can then transfer best practices in an
effort to saturate the global market, as opposed to the individual markets in which they are
located. This newfound consistency will help the company achieve more notoriety and
recognition, which could ultimately lead to new and loyal customers driving higher profits.
Additionally, by continuing to make smart choices about which markets to enter, Interface will

18. 17
be more efficiently utilizing their resources to gain advantages on their competitors. In other
words, global expansion on top of what the company has already achieved would give Interface a
new opportunity to rebrand itself as a leading carpet tile manufacturer, as opposed to individual
business segments located around the world.
B. How?
Global expansion would obviously benefit Interface, specifically in the areas of resources
and capabilities, distinctive competencies, Porter’s 5 Forces, and competitive advantage. The
following paragraphs detail how exactly global expansion will prove beneficial to Interface in
each of these areas:
1. Resources and Capabilities: First, global expansion would leverage the resources and
capabilities of Interface, Inc. in a variety of ways. By creating a single IT system that is
used by each individual business around the globe, Interface would be facilitating more
efficient communication between employees, business segments, and international
markets. This could substantially decrease costs by preventing overlap and duplication of
time and effort by all employees, for instance in new product development, innovation,
and marketing promotion. This can be illustrated with a fictional example. Suppose an
Interface facility in China develops a new product for the company, and has found a way
to manufacture and distribute it for a lower cost than its European equivalent. In this
example, the Chinese group could share their findings and capabilities with the European
market to improve their production, while the European group might have some insight
for the Chinese group on how to market or promote this new product. Also, time would
be used more efficiently in the European market as they would not spend time
brainstorming an idea that has already been executed in another separate Interface
market. Therefore, it can be seen that global expansion and creation of a streamlined,
consistent company could facilitate a more efficient supply chain, along with more
efficient manufacturing, marketing, IT, and management. This efficiency is perceived to
contribute to lower costs and higher profit margins for the company as a whole.
2. Distinctive Competencies: Second, global expansion and consistency would be a great
vehicle to drive the distinct competencies of Interface, Inc. The first of these
competencies is the brand recognition, quality, design, and service in the marketplace.
This new strategy of cohesiveness would strengthen the global brand due to the
consistency perceived by consumers worldwide. By not only functioning more
efficiently, but also portraying a standardized image to consumers, Interface would
benefit from increased consumer recognition and awareness. This strategy would also
enhance the other distinct competencies of marketing strategy, pricing, and product
performance. By participating in knowledge sharing between all of its business
segments, Interface can capitalize on its best practices from around the world. Lastly,

19. 18
through the decreased costs and time spent on duplication, there would be more time to
focus on ecological sustainability, the last of Interface’s distinct competencies.
3. Porter’s 5 Forces: Global expansion would also impact Porter’s 5 Forces for Interface
as a whole. By allocating resources to what matters for the company, high quality design
and sustainability, Interface is decreasing the threat of substitutes for itself. With more
cohesive global expansion, Interface will further differentiate themselves from their
competitors. Despite new entrants in the industry, no one will be able to mimic the
quality, design, innovation, and commitment to sustainability of Interface. Additionally,
the presence of such vast differentiation already in the industry after this new strategy
implementation could ward off possible new entrants, seeing as how the industry will
already be saturated. This new strategy will also affect the buying power of buyers and
sellers. With increased value and differentiation, buyers will perceive a better brand.
Coupled with lower prices due to decreased costs and the decrease in substitutes, the
buying power of buyers will go down due to their perceived increased loyalty.
Additionally, with a more efficient supply chain, the buying power of sellers will also
decrease. The last of the five forces, central to the model, is industry rivalry. This new
global expansion strategy will increase industry rivalry, but to the advantage of Interface.
By creating a stronger company, with more efficiency and awareness, Interface will be
seen as a more worthy competitor in the modular carpet industry.
4. Increase Competitive Advantage: Lastly, Interface’s new global expansion and
connectivity strategies would enhance the company’s competitive advantage, as a leading
sustainable manufacturer of modular carpet. By continuing to diversify the markets and
acting as a leader in design for modular carpet, but as a unified company, Interface will
achieve greater prosperity than before. As a unified company, Interface will enjoy
increased consumer awareness and decreased costs, that will allow for more focus and
attention on these sorts of activities. Such activities lend themselves to creating a
company that is distinguished from all the rest in the market. Without having to spend
valuable time and effort on already-executed strategies and tactics, Interface employees
can focus on what truly matters- high quality designs and sustainability. Interface will no
longer simply be functioning as one of the several competitors in the market, but will be a
stronger company with an increased competitive advantage, and will therefore enjoy
more long-lasting prosperity.

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VII. GLOBAL AND GEOGRAPHICAL ALIGNMENT
A. Geographical Target
Alignment
Mexico provides the best
opportunity for global
expansion. Interface currently
sells in a showroom in Mexico
City, Mexico. Although
Interface already has a presence
in Mexico, this market has not
been adequately saturated by
Interface, nor has it been staffed
and trained for the potential
opportunities. Mexico has much more space to be tapped into, and we believe that the current
strategies and capabilities of Interface align perfectly with this market. Recently, Mexico
loosened its policies regarding oil production, causing an influx of foreign investment.
Subsequently, there is new construction and money coming through investments in corporate
real estate, which presents a perfect opportunity for Interface carpet tile.

21. 20
Projected Real GDP Growth (%) for Mexico vs. World
B. Global Strategy Selection
Interface should consider global standardization, since this strategy aligns with the
approach it has in all other markets. Management should view its overseas operations as a
gateway to a further unified global market. This strategy provides the lowest cost for its
products and services, and more importantly further compacts its value supply chain by
maintaining consistency throughout every market. The alternative strategy of localizing would
allow the product to be highly customizable, but would drive the cost of production and price
higher. Instead of uniting the different operations in each continent, management would oversee
each operation as a portfolio of independent businesses, which would only hinder Interface’s
goal of unifying their technology, management, marketing, and manufacturing.

22. 21
VIII. ENTRY MODE
Interface is a global organization operation in over 110 countries, but there is one
emerging region with large growth potential: Mexico. Interface is already selling its products in
Mexico, but several factors are highlighting Mexico as a potential place for rapid growth. On a
governmental level, the Mexican government has passed legislation to facilitate real estate
developers funding projects in Mexico. Before, if a developer wanted to invest in real estate,
they had to enter the country with the cash to develop. Now, they are given the option to borrow
money to finance the new constructions. New construction is a key source of revenue for
Interface and this legislation is indirectly creating a lot of revenue potential for modular carpet.
Another example of an economic driver in Mexico involves the Mexican oil company, Sierra Oil
& Gas, opening up to private investment. This change is also bringing a lot of new investments
into Mexico, helping to create a more stable economy of growth. With this said, we believe that
Interface should take a big bang approach to enter and saturate the Mexican market. Interface
has already been exposed to the workings of this market through its existing presence there, but
the company is understaffed for the economic developments that are coming and should
positions themselves in a way to take advantage of this new age of growth and expansion.
Timing will also be an important consideration when entering Mexico. When evaluating
the optimal time for Interface to re-enter Mexico, we must consider the different segments the
company will be targeting. The segment Interface should focus on is the hospitality segment. We
are choosing to narrow in on this segment because we want to target markets that have enough
money to adopt modular carpet, since hard surfaces are 90% of the total flooring market in
Mexico. Also, the hospitality sector has an unmet need that could be resolved through use of
modular carpet tile - noise control. Hotels need to control the amount of noise in their building,
whether it be in the bedrooms or in conference rooms, to increase customer satisfaction. This
type of noise control is often best achieved with carpet. Also, the timing for entering this sector

23. 22
is very predictable, seeing as how hotels tend to turn their carpets every 5 to 6 years. It is also
important to note that revenues from the hospitality segment are stronger during the 3rd and 4th
quarter of the fiscal year. During these quarters, hospitality managers will be more aware of
their budget for the following year, and how much of that they can spend on renovation.
Therefore, we conclude that Interface should enter the Mexican hospitality industry segment in
the 3rd and 4th quarters of the fiscal year. In respect to a local vs global strategy, we are
proposing Interface adapt slightly to local needs, but that Interface Mexico reflects the global
corporate strategy and is aligned with the global mission of aligning all territories.
A comparison of noise reduction ability by flooring material

24. 23
IX. GLOBAL CHALLENGES AND RISKS
A. Globalization Drivers
The global driver for Mexico is its GDP and the emerging growth within the country. As
previously mentioned, Mexico is bringing in large amounts of growth through the oil industry
and real estate potential. In addition to these forms of growth, tourism continues to be an
economic driver for Mexico that motivates developers to continue funding construction for
hotels, which presents an opportunity for Interface. Also, Mexico has a reverse population;
meaning they have more young people than old people. This creates a great opportunity because
this youthful population can become an economic force once they are educated, which leads to
growth.
B. Geopolitical
Currently, Mexico is facing issues of government instability and corruption. Fortunately
for business purposes, the stability of the government is improving, but the corruption is still
very prevalent and causes reason for worriness in investors.
Safety is the greatest geopolitical hindrance in Mexico, largely caused by drug
cartelization and the fragile government. The final concern in the Mexican market is the higher
price of employment caused by higher taxes, which then provide strong social welfare programs.
Indicator Unit Report Time Series 2010 2011 2012
Hourly compensation costs in
manufacturing
Hourly compensation costs U.S. dollars HTM XLS 6.14 6.49 6.36
Hourly direct pay U.S. dollars HTM XLS 4.30 4.54 4.45
Hourly social insurance expenditures
and labor-related taxes
U.S. dollars HTM XLS 1.84 1.95 1.92
U.S. Bureau of Labor Statistics: Mexico

25. 24
C. Cultural
The culture in Mexico is not as dramatically different as some other areas of the world,
but one thing that does affect business is their use of ceramics. In Mexico, it is the norm for
ceramics to be used as the primary method of flooring causing difficulty in the growth of
modular carpet. Carpet is traditionally seen as a more maintenance-oriented method of flooring
due to its ability to get dirty. This is a challenge Interface faces in Mexico that directly affects the
company’s ability to sell its products.
When doing business in Mexico, it is important for Interface to remember that business
men and women in Mexico lead with their subjective feelings rather than facts, different from the
United States. Machismo is also very strong in Mexico, and this could lead to difficulties when
women hold authority in dealings with Mexico. Their faith is also important to them, so it will be
important to tread carefully and not offend their religion. It would probably be seen as respectful
to not send emails on Sundays. The key most important thing to remember when doing business
in Mexico is that relationships are fundamental to making business deals. In order to help form
relationships, inviting them to a late dinner would be a good way to initiate a relationship. It is
also important to note that Mexicans can be resistant to change because their societal norms have
remained unchanged in the past decade.
When doing negotiations, it is will be important to remind employees that as a foreigner,
you are expected to be on time, but they will likely be late to meetings. Also, allow the
counterpart to decide on a meeting time, and keep in mind that negotiations may be lengthy.
In regards to safety concerns, it will be important to take specific safety measures
because street crimes and kidnappings are a serious threat for visitors entering Mexico. It is not
uncommon for people to be robbed of their personal belongings in Mexico.
The official language of Mexico is Spanish. Spanish does not cause a lot of concern for
Interface because it is a language commonly spoken and taught in the United States. Also, since
Interface currently has a workforce in Mexico, this barrier will be easy to overcome. With that
said, it will be important for new employees to have an understanding of the language or at least
be open to learning a few general phrases to show an effort was made to assimilate to the culture.
D. Ethical
Corruption and impunity makes business difficult in Mexico. The lack of legal
enforcement in corrupt business practices could lead to temptation for corrupt business practices
and business deals. Therefore, doing business in Mexico can be considered more risky due to the
lack of security you may encounter when doing business deals in Mexico.
Interface has considered manufacturing in Mexico, but emissions standards in Mexico are
lower than in the United States. As a leader in sustainable business practices, engaging in what
some call cultural relativism (adapting standards) directly contradicts the mission and company
culture at Interface. In addition to the lower standards of emissions, Mexico also has severely
lower wages for workers than the United States. Due to these ethical discrepancies, and the easy

26. 25
facilitation of trade as a result of NAFTA, Interface should currently pursue an exporting entry
mode as opposed to manufacturing within the Mexican borders. This would allow them to
saturate the Mexican carpet tile market without sacrificing their standards and company values.
E. Legal/Trade Barriers
Since Interface, Inc. is an American company and its products are produced in the United
States, NAFTA provides facilitates free trade between Mexico and the US. Because of this,
Interface is free of duties. In terms of legal and trade barriers, an indirect issue with Mexico
would be the inability for real estate investments in Mexico’s Restricted Zones. The restricted
zone stretches 65 miles from Mexico’s international borders and 35 miles from all of its
coastlines. Fortunately, in recent years, Mexico has provided a remedy for to this barrier by
allowing firms to own property in this zone as long as they form a Mexican corporation. This
allows investors to avoid fees and create developments without trustees.
A map of the Restricted Zones as of 2015
Mexico has many other laws that govern the nation, but fortunately there are many
legitimate Mexican law firms that handle local laws affecting foreign investors. Therefore, with a
well equipped team that is knowledgeable of the laws and security issues, Interface can feasibly
do business in Mexico.
F. Currency Exchange
Currency can be considered as an issue in Mexico, since the national currency has been
devalued. The Peso has recently experienced a devaluation of about 25%. This could lead to
inflation, and could cause problems when issuing invoices. Suddenly, Interface carpet is 25%
more expensive. Since there are not many modular carpet companies manufacturing in Mexico,
customers often have to face currency exchanges when buying modular carpet. Although this

27. 26
risk would have to be factored in, Interface has already been experiencing such risk in other
markets and therefore has the capabilities to deal with foreign exchange risk.
G. Supply Chain
Mexico does not produce any of the raw materials needed to manufacture carpet. Instead,
Interface provides products made in the US, a geographical neighbor to Mexico. This provides
convenience to the buyers because of close proximity, a reasonable freight, and no tariffs or duty
rates. If Interface were to produce in Mexico, all of the raw materials would have to be imported
and this would add costs to the transactions. By doing this, Interface would go against its goal of
producing in areas where the close proximity of the raw materials cuts costs of production.
H. Historical Context
Mexico has a colorful history enriched with culture and a variety of different rulers.
Mexico had difficult times as they fought for their independence and eventually won, but lost
Texas to the United States. After rebellions came to a cease in 1920, there was a great cost in
human lives and the population did not see a boom until WWII, when the economy prospered
and the population followed. A new president, Carlos Salinas de Gortari, took position in 1988
and from then until 1994 the Mexican economy continued to improve. Under Salinas’ rule,
NAFTA was signed, which is known in Mexico as TLC. In 2000, a new president, Vicente Fox
Quesada, was elected, ending the 71 years of national dominance by the Industrial Revolutionary
Party.
The creation of NAFTA on January 1, 1994 removed barriers to trade and investment
between the United States, Mexico, and Canada. This historical moment greatly facilitated
business with Mexico and is one of the leading reasons why Interface is choosing to not build a
Mexican manufacturing plant. Facilitated trade between the US and Mexico will allow rapid and
risk-free exporting.
Historically, hispanic families that have moved to the United States have been sending
US currency back to the family members still residing in Mexico. This influx of currency from
the United States has helped the Mexican economy significantly. An article from Daily Mail UK
revealed that in 2012 alone, migrants in the US sent back $120 billion to their home countries.
The uncertainty of the immigration policy between Mexico and the United States, however,
could adversely influence the economic stability in Mexico.
Recently, the United States FDI in Mexico has grown 11.3% from 2011 to 2012. This
has encouraged a growth in the economy and possibly creates new business opportunities for
Interface.

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X. EXECUTION
The biggest challenge with our strategy to enter Mexico in a big bang effort is the
possibility of overestimating the growth potential of the Mexican market, and placing too many
resources into it at once. Assuming these risks, we have decided to focus on exporting into the
market as opposed to manufacturing within their borders. This decision may very-well be
readdressed in the future, but exporting currently better suits the needs and capabilities of the
business.
Secondly, by restructuring the global business to be more standardized across the various
regions, Interface will be incurring large costs. Interface will likely face large tactical and
financial costs by changing all internal messaging and communications, as well as external
advertising, marketing, and PR to maintain a standardized corporate strategy and culture. These
costs could range from restructuring IT systems and corporate departments, to creating new
material and communications mediums.
Additionally, we plan on nominating a VP of Central American Operations from within
our organization that is familiar with the region and its culture. This person would serve as the
single point of accountability for our expansion into this region. However, there is a lot of risk
with this decision. The first management challenge is appointing the best qualified individual for
the position, who properly fits the necessities of this specific role. In addition to this, Interface
will need to ensure this newly-appointed VP receives the same messages and communications as
the other global VP’s to instill a standardized strategy and culture from headquarters.
Lastly, Interface will need to continuously adapt and readjust this strategy to better fit the
current changes in the marketplace. This adaptation could be costly of both financial and time-
related resources. Flexibility in this regard could be the key to their success in the Mexican
market.
XI. SOURCES AND TEAM MEMBER ROLES

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1. Sources
Our primary contact with Interface, Inc. was the senior VP GM of Canada and
Latin America, Claude Ouimet. Mr. Ouimet was able to provide us with valuable information on
the current condition of the company, including strengths, weaknesses, and organizational
challenges. From his information and the sources below, we were able to devise our
recommended global strategy.
➢ Bloomberg: “Four Reasons Mexico is Becoming a Global Manufacturing Power”
○ http://www.bloomberg.com/bw/articles/2013-06-27/four-reasons-mexico-is-
becoming-a-global-manufacturing-power
➢ Commercial Investment: Doing Business in Mexico
○ http://www.ccim.com/cire-magazine/articles/doing-business-mexico
➢ Competitors in Chinese Market
○ http://www.fcnews.net/2012/06/shaw-increases-presence-with-showrooms-in-
mexico-beijing/
➢ Implications of the World Economic Crisis for the Global Textile Industry
○ http://www.itmf.org/fgrs-shanghai/07-Lee.pdf
➢ Interface, Inc. Annual Report 2015
○ http://www.interfaceglobal.com/Investor-Relations/Annual-Reports.aspx
➢ Interface, Inc. Investor Presentation 2015
○ file:///C:/Users/Megan/Downloads/MHK_Q2_2015_Investor_Presentation_Augus
t_2015.pdf
➢ Mexican Oil Industry Partners
○ http://blogs.ft.com/beyond-brics/2015/03/13/weighing-up-partners-for-mexico-
oil-tenders/
➢ Migrants Sending Money
○ http://www.dailymail.co.uk/news/article-2271455/Revealed-How-immigrants-
America-sending-120-BILLION-struggling-families-home.html
➢ Office of the United States Trade Representative: Mexico
○ https://ustr.gov/countries-regions/americas/mexico
➢ Restricted Zones

30. 29
○ http://www.theyucatantimes.com/2015/07/purchasing-property-in-the-restricted-
zones-of-mexico/
➢ U.S. Bureau of Labor Statistics: Mexico
○ http://data.bls.gov/cgi-bin/print.pl/fls/country/mexico.htm
➢ U.S. Department of State: Mexico
○ http://www.state.gov/p/wha/ci/mx/
➢ World Bank: Mexico v. World GDP
○ http://data.worldbank.org/country/mexico#cp_gep
2. Team Member Roles
● Paris Alizadeh
○ Strategic Direction, SWOT Analysis, Internal Analysis, Global Strategy &
Geographical Target Alignment, Presentation
● Allison Foresman
○ Financial Results, Core Strategic Focus & Strategies, Sources, Report Finalization
● Shanie Ouimet
○ Global Extent, External Analysis, Entry Mode, Global Challenges,
● Megan Weber
○ Business In, Business Challenges, Strategy Assessment, Global Expansion
Decision, Execution, Report Finalization