Noel%20Watson

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EXPORT PLANNING WORKSHOP

• Noel Watson
• Aaron Parke
• Govind Seepersad
• Denise Leander-Watson
• Instructors Presentation Slides
• March 22-23,2012

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Structure of the Presentation

• Learning Objectives
• General Introduction
• About Export strategy
• Export cycle
• Getting ready to export

• PART 1- Research stage
• Market and industry trends
• Export audit
• Market audit
• SWOT Analysis
• SWOT Conclusion
• Competitor Analysis
• Market Assumptions

• PART 2- Supply chain management and Business
  Financial Instruments

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Agenda for Thursday 22, March
Thursday Time Activity
830 Introduction
845 Getting ready to exports
Sense of location, Sense of Direction, International Standards
1000 Research Cycle
Market industry trends
1100 Export Audit
Company Audit
1200 Lunch
1300 Company Audit
1430 Exporting to the FCORs Mr. Phillip Agostini
330 Wrap up
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Agenda for Friday 23, March
Thursday Time Activity
900 Introduction
905 Market Audit
945 Competitor Analysis
1200 Lunch
1300 Market Assumptions
1330 Supply Chain Analysis
1500 Payment Mechanisms/Financial Instruments
Wrap Up
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LEARNING OBJECTIVES

• Participants will be able to make sound, logical
  and fact-based decisions regarding exports
• Participants will be able to follow a sound
  methodology and use the tools for structuring
  and systemising their approaches to developing
  new markets or for expanding efforts in existing
  markets.
• Participants will be able to develop their export
  strategy and plan as an integrated part, or
  extension, of their companys business plan and
  for fully appropriating opportunities at the
  lowest possible cost

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Several Exercises

• Group work
• Interactive
• Need results as part of planning for Missions
• What we do not finish
• Homework
• Email to noelnwatson_at_gmail.com or
  noelwatson_at_hotmail.com

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Focus of Export Activities will be the FCORs
FCORs
Trinidad Tobago Firms
EXPORTS
Supported by BDC
Concepts can be applied to other markets
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GENERAL INTRODUCTIONWhy Export?

• Exporting can be a profitable way of expanding a
  business, spreading risks and reducing
  dependence on the local market.
• Exporting exposes the company management to new
  ideas, management practices, marketing
  techniques, and ways of competing
• Exporting can lead to increased efficiency and
  productivity of the firm
• Global brands can be built from small local
  companies

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Why Export to the FCORs
Access to 27 EU countries with market of 0.5
billion people
TT Firms
FCORs High income market in Caribbean
Supported by BDC
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GENERAL INTRODUCTION (cont)Important
Ingredients for Export Success?

• Exporting consumes time and money, and requires
  strong management commitment
• To have a successful international business, you
  need a product or service which is in demand in
  overseas markets, as well as the necessary
  commitment, resources, skills and information to
  support sustained exporting activities over the
  longer term.
• To achieve success, you need to have a plan and
  remain in control of your business, and not let
  the business control you

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Export Cycle

• The CBI Export Marketing Planner (A MANUAL ON HOW
  TO ENTER EUROPEAN MARKETS) identifies the
  following stages in the export cycle

1 The Perception and Preparation stage
2 The Research Stage
3 The Strategy Stage
4 The Operational Management Stage
We will focus mainly on 1 and 2 and after the
Fact Finding Mission we will be in a better
position to deal with 3 and 4
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EXPORT CYCLE (cont)GETTING READY TO EXPORT

• When preparing for export, the first thing to do
  is to put things into perspective and to prepare
  an introduction that includes a short historic
  track record and a brief statement on your
  current position and performance

Develop a Sense of Location
Where are we???
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Getting Ready to Export (cont.)Use 7 Ss Model
to Develop Sense of Location
The 7s Descriptors
Strategy The plan devised to maintain and build competitive advantage over the competition.
Structure The way the organization is structured and who reports to whom.
Systems The daily activities and procedures that staff members engage in to get the job done.
Shared Values These are the core values of the company that are evidenced in the corporate culture and the general work ethic also called superordinate goals
Style The style of leadership adopted.
Staff The employees and their general capabilities.
Skills The actual skills and competencies of the employees working for the company.
McKinsey Model
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GETTING READY TO EXPORT Cont...

• After establishing your sense of location then
  you include the companys mission statement,
  which is like a company charter.
• The mission statement should summarise your
  company goals and your companys strategy where
  you want to go and how you want to get there.

Develop a Sense of Direction
FCORs
Where are we going??
N
W
E
S
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Getting Ready to Export (cont.)Use 7 Ss Model
to Develop Sense of Direction
3 most prominent Critical Success Factors 3 most desired Critical Success Factors Short term, mid term and long term actions to address the gaps
1. Strategy
2. Structure
3. System
4. Staff
5. Style
6. Skills
7. Shared Values
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Developing a Sense of Direction
Current Profitability from exports to the FCORs is 100,000 Euros Desired Profitability from exports to the FCORS is 1 million Euros in 5 years Short Term, Medium Term and Long Term Actions to address the Gaps
Strategy Focus only on French Guiana Focus on the other 2 FCORs By 2013 should be exporting to Martinique and in 2015 - Guadeloupe
Structure Staff responsible for exports to the FCORs report the VP Sales Staff responsible for exports to the FCORs report directly to the MD Re-structure the company and implement the change in the organisation charts
Systems Systems utilised are more of less manual Automate all associated systems Design and implement projects to automate
Staff There are currently 2 staff members in the Unit which is charged with dealing with exports to the FCORs Have to triple the of staff in the unit Hire additional staff and cross train ot staff members from other departments.
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Developing a Sense of Direction
Current Profitability from exports to the FCORs is 100,000 Euros Desired Profitability from exports to the FCORS is 1 million Euros in 5 years Short Term, Medium Term and Long Term Actions to address the Gaps
Current Profitability from exports to the FCORs is 100,000 Euros Desired Profitability from exports to the FCORS is 1 million Euros in 5 years Short Term, Medium Term and Long Term Actions to address the Gaps
Skills Range of skills available are just enough to deal with the current level of exports to the FCORs A more expansive range of skills amongst staff deal with the new mandate Implement new training plan for staff
Style Leadership style tends to be top down with minimal involvement of the staff More inclusive leadership style Bring in a Facilitator to do team building and other related workshops
Shared Values Integrity and Honesty The same values No gaps identified
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Where are we in the process?
Sense of Direction
Sense of Location
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Getting ready to export Cont.Current Market
Position Meeting International Standards

• Developing, producing improving in accordance
  with international standards is essential to
  success in the international arena.
• This will launch a process of continuous
  performance improvement that will help you make
  sure your company remains the best performer,
  first choice for any buyer.

For example, it may be advisable to embrace the
philosophy of Total Quality Management (TQM) and
to embed it in your organisation with ISO
90012008 certification.
You may have to become HACCP compliant
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Getting ready to export Cont.Current Market
Position in terms of Meeting International
Standards
FCORs
Our Export Readiness Assessment suggests that
most companies are meeting International
Standards

• Been there done that!

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Getting Ready to Export (Cont)Current Market
Position in terms of Marketing Mix?
6 Ps Description
1. Product What products do you sell, what is their market position, and what competitive alternatives are available in the market?
2. Place What is your current market coverage, which distribution channels do you use, and how does this relate to the competition?
3. Price What is your pricing policy, to what extent do you apply different pricing from the competition, and how do you apply pricing flexibility in order to promote sales (e.g. discounts, quantity offers, contractual tenders etc.)?
4. Promotion Describe the promotional tools you employ, i.e. your promotional mix (advertising, trade fair participation, Direct Marketing, e-Marketing etc.).
5. People Describe the companys policy towards social accountability, in terms of occupational health safety for the workers, and to society as a whole.
6. Plant Elaborate on your companys environmental awareness, eco-mindedness and your position on environmental management
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Where are we in the process?
Sense of Direction
Sense of Location
Current Market Position International
Standards Marketing Mix (6 Ps)
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Export Readiness Some key signs of export
readiness

• Significant management time and strong
  management commitment
• Strength in the domestic market
• The resources to succeed
• Business and export planning in place

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PART 1

• RESEARCH STAGE

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THE RESEARCH STAGE

• THE RESEARCH STAGE COVERS THE FOLLOWING ASPECTS
  OF THE EXPORT PLANNING CYCLE
• MARKET AND INDUSTRY TRENDS
• EXPORT AUDIT (COMPANY AUDIT MARKET AUDIT SWOT
  COMPETITOR ANALYSIS )
• MARKET ASSUMPTIONS

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Market and Industry TrendsWhat is a Market?

• Before identifying potential markets, we need to
  understand what a market is.
• Simple definition A market is a group of people
  with similar needs, with money to spend and the
  willingness to spend that money to satisfy these
  needs.
• Early identification of trend changes in your
  target markets will enable you to embrace the new
  trends, adapt your products accordingly and
  adjust your value chain.
• The supplier who acts fastest is most likely to
  see his market share grow

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Market and industry trendsMarket Research

• Market research should not be an academic
  exercise of assembled facts and figures. Good
  market research entails finding out what actually
  drives a market and how to get the best out of
  it.
• Market research involves finding out about things
  you need to know such as import duties,
  regulations, distribution channels, market size
  and growth, competition, demographics and local
  production so you can assess market
  opportunities and the costs of capturing them

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Market and industry trends Cont....

• The first step is to gather basic market
  information ranging from import regulations to
  exchange rates. This is available from free
  online sources.
• Examine the market size and favourable import
  growth.
• NOTE
• To single out first priority markets from among
  the 27 EU member states, make use of
• the statistical tools of the International Trade
  Centre (ITC) (www.trademap.org)
• the CBIs Research Action Planner and
• the CBIs market information (www.cbi.eu ).

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Market and industry trends Cont...Identify
market trends using the 6 Ps

• Product Look for trends that influence the
  physical properties of your product.
• Examples colour, smell, sensorial properties,
  health properties, design customisation, size,
  volume, weight, function, capacity, usage,
  convenience and packaging.
• For cosmetics what smells do French like?
• What size bottles?
• How should packaging look?

The French often feels that they are at the
pinnacle of quality, fashion, style
Our fact finding Mission will provide more
insights
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Market and industry trends Cont.Price

• Price You may notice trends towards the low end
  of the market or, reversely, the high end of the
  market etc.
• Which end of the market do you want to come in
• Do you just want to come in some where in between

• Depends on many factors
• Where company wants to position itself
• Number of substitute products
• Income level of target market
• Tastes and preference
• Costs

Price
Quantity
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Market and industry trends Cont.Place

• Place trends may include
• The trend towards a shorter or longer
  distribution chain, or towards a different or
  completely new distribution chain.
• In-chain availability or a certain lead-time if
  youre producing on order may also be a trend.
• The adjustment of delivery times, upward or
  downward, may also be a trend.
• Other place-related trends include the rise of
  e-commerce, e-markets.

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Market and industry trends Cont.Promotion

• Note the shifts in
• communication tools
• Brands
• Images
• Target groups
• Product branding to company branding

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Market and industry trends Cont.People

• People
• Ageing societies and the trend towards health
  nutrition claims are typical people-related
  developments
• Transparent responsibility accountability
• Corporate social responsibility (CSR) and
• The growing market share of fair trade products.

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Market and industry trends Cont.Planet

• Planet-related trends have to do with issues like
  
• Natural origins linkage
• Energy efficiency economy
• Recyclability
• Sponsorships
• Environmental management and investment.
• Sustainability and accountability are also key
  trends

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Market and industry trends Cont.

• Next you can consider variables like
• Favourable trade relations (EPA)
• Historical, cultural or geographic
  characteristics
• Affinity and proximity(much closer than mainland
  France)
• Market characteristics (high income)
• Supply chain characteristics (are distributors
  available)
• Economic, political and technological
  developments
• Competitor activity
• Fashion
• Innovation
• Market access regulations (EPA)
• Consumer preferences

Read and learn as much as possible about these
factors in the FCORs
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Checklist for market and industry trends

• Develop a short list of markets and create a
  structured search outline.
• Search deeper than the basic facts and figures.
• Gain a feel for the environment and trends
  operating in the market of interest to you.
• Seek out practical advice at market-specific
  seminars.
• Gather basic information from the Internet.
• Develop direct contacts with potential buyers.
• Check out online reports that are available from
  various sources

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What Do We Know About The FCORs?

• What does FCORs mean?
• Where are FCORs?
• What are countries in FCORs?
• What is the capital of each FCOR?
• What language is spoken in the FCORs?
• Who is the President of the people of the FCORs?
• What is the population of each of the FCORs?
• What is the demographic breakdown of the FCORs?
• What is the dominant culture of the FCORs?
• Do the people consider themselves to be French or
  Caribbean?
• What kind of music do they like in the FCORs?

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What Do We Know About The FCORs?

• What is the GDP per capita of each FCOR?
• What are the main products of the FCORs?
• What are main exports of the FCOR?
• What are main imports of FCOR?
• What shipping lines go to the FCORs from TT?
• What are visa requirements for entering FCORs?
• What are duties when exporting to FCORs?
• Which TT companies are exporting to the FCORs?

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Socio-Economic Data on FCORs
Socioeconomic Variable Martinique Guadeloupe French Guiana
GDP, current prices (U.S Dollar, Billions, 2006) 9, 682 9,734 3.232
GDP per capita, current prices (US Dollar) 24, 120 21,703 15.955
Inflation, average consumer prices (Index, 2000100) 2007-2008 2.7 2.2 3,3
Population 397 732 400 736 205 954
HDI Rating (French Rating) Very High Very High Very High
Internet Penetration Population(Penetration)      
Minimum wage rate 8.86 per hour 8.86 per hour 8,86 per hour
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Main Exports and Industries
Martinique
Guadeloupe
French Guiana
Main Exports Refined oil, agro-products (banana, rum) Agro-products (sugarcane, banana), light industry, transshipments Gold, fishing (shrimps), rice, wood.
Main Industries Agro-products, construction, oil refinery, services (trade, tourism, public) Agro-products, construction, services (trade, tourism, public) Agro-products, construction, services (trade, tourism, public), aerospace industries
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Distances to FCORs
Martinique
Guadeloupe
French Guiana
Distance from Miami - Miles 1464 1377 3768
Distance from London Miles 4209 4140 4400
Distance from Paris Miles 4278 4215 4416
Distance from Paris Hours 8 8 9
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TT Companies Exporting to Martinique

1. ABRAHAM SHIPPING CO LTD
2. AG'S GARMENTS
3. ANGOSTURA BITTERS LTD
4. ASSOC BRANDS INDUSTRIES LTD
5. C G A LIMITED
6. CARIBBEAN BOTTLERS T T LTD
7. CARIBBEAN DEVEL CO LTD
8. CARIBBEAN ISPAT LTD
9. CHAI'S EXOTICS
10. COLLEGE HEALTH FOODS
11. F A AGOSTINI ESTATES LTD
12. FORMULA I I I MARINE LIMITED
13. GENERAL PACKAGING LIMITED
14. HUMMINGBIRD GRAINS LTD
15. INDUSTRIAL GASES LTD
16. K C CONFECTIONERY LTD
17. KHAN'S ALUMINIUM PRODUCTS LTD

1. MARITIME PRESERVATION LIMITED
2. MEILING
3. MESSER TRINIDAD TOBAGO LTD
4. NAT FLOUR MILLS LTD
5. PCS NITROGEN TRINIDAD LIMITED
6. PEPSI-COLA TRINIDAD BOTTLING
7. PETROLEUM COMPANY OF T T LTD
8. PHOENIX PARK GAS PROCESSORS
9. PIARCO AIR SERVICES LTD
10. RADICAL DESIGNS LIMITED
11. SOLOMON YUFE CO LTD
12. STUART BROTHERS (W I) LTD
13. TASTE MAKER MANUF CO LTD
14. TDAD AGGREGATE PRODUCTS LTD
15. THE TEXTILE KING
16. TRINIDAD TOBAGO TIRES LIMITED
17. WEST INDIAN TOBACCO CO LTD

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TT Companies Exporting to Guadeloupe

1. CARIB BREWERY LTD
2. CARIBBEAN DEVEL CO LTD
3. CARIBBEAN ISPAT LTD
4. COLLEGE HEALTH FOODS
5. ECHO MARINE LIMITED
6. GLOBAL M'KETING ENT CO LTD
7. INDUSTRIAL GASES LTD
8. JANOURAS FASHION HEADWEAR LTD
9. K C CONFECTIONERY LTD
10. MEILING
11. NAT FLOUR MILLS LTD
12. PEAKE INDUSTRIES LTD

1. PETROLEUM COMPANY OF T T LTD
2. PHOENIX PARK GAS PROCESSORS
3. PRINT-A-PAK LIMITED
4. PROTECTOR'S SECURITY SERV
5. REGAL PRODUCTS LTD
6. SKYLINE FREIGHT LTD
7. SOLO BEVERAGES LIMITED
8. SOLOMON YUFE CO LTD
9. TEXACO TDAD LUBE SERVICE LTD
10. THE TEXTILE KING
11. THREE STAR SPORTSWEAR LTD

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TT Companies Exporting to French Guiana

1. AGOSTINI INDUSTRIES LTD
2. ANSA MC AL LIMITED
3. CAMACHO BROS LTD
4. CARIBBEAN DEVEL CO LTD
5. D H L DATA FORMS
6. D S MAHARAJ FURN APPL LTD
7. INDUSTRIAL GASES LTD

1. METHANOL HOLDINGS (TRINIDAD) LTD
2. PETROLEUM COMPANY OF T T LTD
3. PHOENIX PARK GAS PROCESSORS
4. ROTO PLASTICS TDAD LTD
5. TASTE MAKER MANUF CO LTD
6. TEXACO TDAD LUBE SERVICE LTD
7. THE TEXTILE KING

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Where are we in the process?
Sense of Direction
Sense of Location
Current Market Position International
Standards Marketing Mix (6 Ps)
Market and Industry Trends
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EXPORT AUDIT

• Following the market trend analysis, the next
  step involves the company audit

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Export AuditWhat are two components?

• Company Audit
• In making your company audit, you will visualize
  analyze the relevant internal elements that
  will impact on the outcome of your market
  research findings.
• A key characteristic of the company audit is that
  the elements covered are all controllable by your
  company management.

• (Export) Market Audit
• An external analysis of the Opportunities and
  Threats in your market.
• In conducting your market audit, you will
  visualize and analyze the relevant external
  elements that will impact on the outcome of all
  your research findings
• A key characteristic of the market audit is that
  the aspects covered are market conditions which
  are uncontrollable by your company management.

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EXPORT AUDIT Contd.

• To conduct an export audit, we use the SWOT
  methodology, in which the Strength and Weakness
  analysis covers your company environment, while
  the Opportunities and Threats analysis covers
  your market environment.
• In this stage, you are to describe the Strengths
  and Weaknesses of your company in relation to
  your expansion strategy. Identify the company
  strength and weaknesses on the basis of the 5Ms
  (see format) Men, Means (resources), Methods
  (management), Machines, and Measurables
  (marketing impact, customer and employee
  satisfaction, qualitative certifications).

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SWOT Analysis - Diagram
Helpful To achieving the Objective
Harmful To achieving the Objective
Strengths
Weaknesses
Internal Attributes of the Organisation
Opportunities
Threats
External Attributes of the Environment
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Format for Strength and Weakness analysis using
the 5M methodology
Strengths Weaknesses
MEN
MEANS
METHOD
MACHINES
MEASURABLES
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Strength and Weakness analysis using the 5M
methodology A water production Co.
Strengths Weaknesses
MEN The Company has well trained personnel at every level of the company Staff members do not speak French
MEANS Company is in a position to secure loans Cash flow can be slow at times
METHOD The company has a well trained management team The Management Team does not have the understanding of the FCORs
MACHINES The company has state of the art bottling machines The company has a limited range of blow moulding machines in terms of bottle production
MEASURABLES The company has the relevant ISO and HACCP certification The company does not consistently do customer satisfaction surveys
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Strength and Weakness analysis using the Value
Chain diagram

• Inbound logistics
• Operations (production)
• Outbound logistics
• Marketing sales (demand)
• Services (maintenance)

• Administrative infrastructure management
• Human resource management
• Technology (RD)
• Procurement.

Primary Activities
Support Activities
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Format for Strength and Weakness analysis using
the Value Chain diagram
Inbound logistics Operations Outbound logistics Marketing Sales Service
Firm infrastructure
Human Resource Management
Technology
Procurement
Gross Sales
For each cell in the above matrix indicate Strong
, Fair or Weak
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Strength and Weakness analysis using the Value
Chain diagram Chemical Co
Inbound logistics Operations Outbound logistics Marketing Sales Service
Firm infrastructure Strong Strong Strong Strong Fair
Human Resource Management Strong Strong Strong Strong Strong
Technology Strong Strong Fair Fair Fair
Procurement Strong Strong Strong Strong Strong

Gross Sales
For each cell in the above matrix indicate Strong
, Fair or Weak
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Where are we in the process?
Current Market Position International
Standards Marketing Mix (6 Ps)
Sense of Location
Sense of Direction
Market and Industry Trends

• Export Audit
• Company Audit
• Market Audit

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Format for Opportunities and Threats Analysis
Using the STEEP Methodology
Opportunities Threats
Socio-cultural
Technological
Economic
Environmental
Political
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Opportunities and Threats Analysis Using the
STEEP Methodology
Opportunities Threats
Socio-cultural On the one hand, the people of the FCORs have a similar socio-cultural background - Caribbean Part of France and consequently the people in the FCORs have French taste.
Technological Use of the Internet, for example in the proliferation of online shopping The same proliferation of online shopping could actually be a threat to a company which lacks technological savvy and is not sufficiently nimble
Economic Persons in the FCORs have higher disposable income Some of the taxes in the FCORs which would make a product from this region uncompetitive
58
Opportunities and Threats Analysis Using the
STEEP Methodology cont
Opportunities Threats
Environmental Increase use of energy efficiency solutions e.g. solar Initial high capital costs associated with green energy solutions
Political EU initiated Economic Partnership Agreement with the CARIFORUM countries Change in government could see a change in trade policies.
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SWOT conclusions

• The opportunities and threats you identify should
  be considered drivers for company adaptation and
  improvement.
• It is important to realise that market
  conditions can not be changed and thus have a
  strong influence on the market entry direction
  your company will have to take
• Once you have completed the SWOT you should be
  able to make the final decision to export or not

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SWOT then What?

• Once you have completed the SWOT you should be
  able to make the final decision to export or not.
  
• You will have to balance the strong points and
  opportunities against the weak points and the
  threats.
• You should consider the fact that exporting will
  put an extra strain on all people and other
  corporate resources.

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Key Post-SWOT Decision

• Do you think the organisation is strong enough to
  cope with the extra challenge and workload of the
  exporting venture?
• If you are convinced that your organisation is
  ready for the Big Jump, then go ahead.
• The next step will be to focus on your immediate
  and potential competition.
• Get ready to take them on!

62
Helpful Factors in Exporting to FCORs

• The French Caribbean has shown a desire to
  integrate with the English-speaking Caribbean.
  This is reflected by the presence of Attachés
  from Guadeloupe based at the Coalition of
  Services Providers, to identify, promote and
  facilitate business with TT.
• There is a weekly container service between TT
  and Martinique -CMACGM has a weekly service from
  TT to Martinique.
• Several TT entities across the spectrum of
  industries are already exporting to the FCORs so
  the know-how is readily available in TT.

63
Helpful Factors in Exporting to FCORs (cont)

• TT is in the process of developing a state of
  the art Telecommunication services which will
  facilitate trade with the FCORs. Digicel has
  interests in both TT and Martinique.
• TT has supportive BSOs - the TT Chamber of
  Commerce is very friendly to new entrants and
  supportive of its members and the Business
  Development Company (BDC) of TT is already
  seeking opportunities for SMEs in the FCOR.
• There are EU funds available for market research
  and for trade missions.

64
Possible Constraining Factors

• Labelling products have to be labelled in
  French and use EU metrification standards. This
  will be costly for exporters who are currently
  not shipping to the French market.
• In the case of Establishment in the FCORs, cost
  of operating is high compared to TT
• The language barrier TT is English speaking
  so there are implications for advertising as well
  as labelling
• Certification and regulatory requirements to meet
  French standards.
• Perceived inadequate transportation and shipping
  routes
• French products still dominate the
  markets/supermarkets in the FCORs and probably
  also dominate the minds of locals.

65
Possible Constraining Factors (cont.)

• There is a mindset which says that the products
  from the Caribbean are inferior
• High duties on goods entering the FCORs.
• Inadequate knowledge of distributorships, laws,
  regulations, bureaucracy, licensing, cost,
  duties, technical barriers (such as SPS
  requirements) and limited knowledge of market
  conditions and expectations.

66
Where are we in the process?
Current Market Position International
Standards Marketing Mix (6 Ps)
Sense of Location
Sense of Direction
Market and Industry Trends

• Export Audit
• Company Audit
• Market Audit

67
Competitor analysis

• The Competitor Analysis follows the SWOT
  analysis, and the aim is to identify the main
  competitors in the target markets.
• What are their strengths and weaknesses?
• Which strategic moves are they likely to make in
  response to the opportunities and threats
  presented by the market?
• To identify competitors, you can use you can use
  Porters Five Forces Model, which includes three
  forces of horizontal competition the threat of
  substitute products, the threat of established
  rivals, and the threat of new entrants.

68
Competitor analysis Cont. Porters Five Forces
Model
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Competitor analysis Cont. Threat of substitutes

• The availability of close substitute products
  will increase the propensity of customers to
  switch to alternatives in response to price
  increases (high elasticity of demand).
• Factors that determine the threat of substitute
  products
• ?buyer propensity to substitute
• ?relative price performance of substitutes
• ?buyer switching costs
• ?perceived level of product differentiation

70
Competitor analysis Cont. Threat of entry of
new competitors

• Profitable markets that yield high returns will
  draw new entrants, effectively decreasing
  profitability. Unless the entry of new firms can
  be blocked by incumbents, the profit rate will
  fall to a competitive level (perfect
  competition).
• Factors that determine the threat of entry of new
  competitors
• ?the presence of entry barriers
• ?brand equity
• ?switching costs or sunk costs
• ?capital requirements
• ?access to distribution
• ?absolute cost advantages
• ?learning curve advantages
• ?expected retaliation by incumbents
• ?government policies

71
Competitor analysis Cont. Intensity of
Competitive Rivalry

• For most industries, this is the major
  competitiveness determinant.
• Sometimes rivals compete aggressively on price,
  sometimes rivals compete in
• non-price dimensions such as innovation and
  marketing.
• Factors that determine the intensity of
  competitive rivalry
• ?number of competitors
• ?industry growth rate
• ?intermittent industry overcapacity
• ?diversity of competitors
• ?level of advertising expenses
• ?economies of scale

72
Competitor analysis Cont. Porters Five Forces
Model
Show YouTube Video and Participants do the
following exercise

• Who are the main direct rivals in the FCORs? Are
  you concerned about any of them?
• What are the main substitute products you are
  likely to face in FCORs? Are these likely to
  impact you in anyway
• Who are possible new entrants into your FCOR
  market?
• Which suppliers could affect your ability to be
  competitive in the FCORs?
• Which customers could cause you to be
  uncompetitive in the FCORs?

73
Competitor analysis Cont.Porters Five Forces
Model Exercise

• Who are the main rivals that you would be
  concerned about in the FCORs?
• What are the main substitute products in FCORs?
• Who are possible new entrants into your FCOR
  market?
• Which suppliers could affect your ability to be
  competitive in the FCORs?
• Which customers could cause you to be
  uncompetitive in the FCORs?

74
Competitor analysis Cont.

• REFER TO PAGE 25-28 OF THE MANUAL FOR EXERCISES
  WITH RESPECT TO DEVELOPING THE COMPANY AUDIT AND
  THE EU MARKET AUDIT.

Need all firms to complete the answers to these
questions and send to us
75
Market Assumptions

• Before formulating your SMART objectives and
  define a strategy for realising those objectives,
  it makes sense to consider what assumptions lie
  at the basis of your strategy.
• The main assumptions usually include the following

Smart Objective Make profits of EURO 1.5 million
from sales in the FCORs by 2015
76
Market assumptions Contd.Market prospects

• These assumptions show how the market will
  develop if there are predictable changes in the
  present situation, as shown by your research.
• Factors influencing your prospects for successful
  market entry include
• The level of market growth or saturation, or even
  market shrinkage (e.g. modest growth)
• The phase of the product life cycle
  (introduction, growth, mature, decline)
• Developments in consumer growth and the
  development of cost prices (e.g. consumer growth
  will remain constant and input costs will
  increase with the rate of inflation).
• Consider all of these with your present and
  future product offer and value proposition in
  mind (e.g. funds will be available for label
  changing or different colours or bottle sizes).

77
Market assumptions Cont.Strategic resistance

• Next, try to estimate the amount of effort it
  will take you to enter the market and gain and
  sustain a reasonable position.
• This depends on medium and longer term
  developments in the market structure (e.g. remain
  competitive)
• The supply/demand relationship (e.g. steady
  growth)
• The intensity of the competition (e.g. remain
  same)
• The extent and aggressiveness of advertising and
  sales promotion (e.g. remain same)
• Fluctuations in purchasing power, demand, supply
  and prices
• The amount of funds necessary for adaptive or
  even innovative product develop (e.g. funds
  available)

78
Market assumptions Cont.Sensitivity to external
developments

• Social
• Technological
• Economic
• Environmental
• Political developments can cause changes in your
  market prospects.

Changes in the above may force you to deviate
from your prognosis, or cause opportunities and
threats, risk levels and flexibility requirements
to change.
79
Checklist using assumptions Bottled Water
Entry Phase Medium Term Long Term Strategic Resistance Sensitivity to External Devts.
Will there be a sustainable market for your product Yes -Niche only Yes - Several segments Yes by this time, will figure out the profitable segments Niche as defensive position - not much position Relatively low sensitivity
Is this market profitable in the short, medium and longer terms No - Not so profitable Somewhat - Break even phase with small profits Yes - Profitable Phase Relatively small player - not much resistance Relatively low sensitivity
Will your product offer satisfy identifiable needs Yes in the short run Yes Yes Small Market player not much resistance Relatively low sensitivity
80
Checklist using assumptions (contd.)
Entry Phase Medium Term Long Term Strategic Resistance Sensitivity to External Devts.
Will your product offer be looked upon as a novelty both by traders and end users? Yes in the short term No medium term No long term Small Market player not much resistance Relatively low sensitivity
Is the market evenly distributed in all segments (i.e. market location and concentration higher demand in some segments) Even demand in the niche segments Mixture of even demand in some segments and higher demands in other segments Higher demand in the profitable segment Small Market player not much resistance Relatively low sensitivity
81
Checklist using assumptions (contd.)
Entry Phase Medium Term Long Term Strategic Resistance Sensitivity to External Devts.
Is the target group geared toward and willing to spend money on your product offer and how much, now and later? Somewhat in the short term Yes Yes Small Market player not much resistance Relatively low sensitivity
Through which communication mix (media and or promotional) can your prospective customer best be reached? In store promotions social networking Electronic and Print In store promotions as well as electronic and print Small Market player not much resistance Relatively low sensitivity
82
Useful Data sources
83
PART 2

• SUPPLY CHAIN MANAGEMENT
• BUSINESS FINANCIAL INSTRUMENTS

84
SUPPLY CHAIN MANAGEMENT

• The downstream supply chain starts when you
  transfer the ownership of your products to a
  third party that is one distribution step closer
  to the final buyer
• We use the supply chain to outsource trade
  activities to specialists in order to reduce risk
  but also to reduce your own marketing
  involvement.
• This approach creates a high degree of dependency
  and a low degree of goodwill. You simply will
  not know where your products end up most of the
  time

85
Supply Chain Management
86
SUPPLY CHAIN MANAGEMENT Cont...

• The role of an agent
• Agents do not take ownership of goods but act as
  a representative of the supplier. They are also
  engaged by exporters of services to represent
  them in overseas markets
• An agent is generally paid by the exporter based
  on a commission of sales value generated
• The exporter receives orders for customers from
  the agent but then delivers goods or services
  directly to customers, invoices the customers,
  and collects payments from the customers

87
SUPPLY CHAIN MANAGEMENT Cont.

• The role of an agent (cont.)
• The exporter is also responsible for setting the
  selling price, although the agent will likely
  provide input on local market conditions to help
  the exporter decide on pricing
• Agents are generally based in the export market
  and often represent several complementary product
  or service lines.
• They may operate on an exclusive basis, as the
  sole agent for a companys goods or services in a
  specific export market, or as one of a number of
  agents for the exporter in that market that is,
  on a non-exclusive basis

88
SUPPLY CHAIN MANAGEMENT Cont.

• The role of a distributor
• A distributor buys goods that is, the
  distributor takes title of the goods and then
  resells the goods to local end users who may be
  retailers or consumers. In some cases, the
  distributor may sell to other wholesalers who
  then sell to local retailers or end users
• Distributors may carry complementary and
  competing lines and usually offer after-sales
  service
• Distributors are paid fees by adding a margin to
  products, and their fees are higher than those of
  agents because they usually carry inventory,
  extend credit for customers, and are responsible
  for marketing

89
SUPPLY CHAIN MANAGEMENT Cont...

• The role of a distributor
• Because a distributor has more responsibilities
  in selling your product in market than an agent,
  they require a higher margin.
• This may impact on how you price your product
  you will probably need to absorb the distributor
  margin otherwise your pricing to the end customer
  will be too high.
• Some exporters find that they are unable to use a
  distributor as their profit margin is too small
  to provide enough margin for the distributor and
  a competitive price for end users.

90
SUPPLY CHAIN MANAGEMENT Contd.

• Exclusivity versus non-exclusivity
• Appointing an agent or distributor on an
  exclusive basis they have sole rights to sell
  your product within a defined territory allows
  the agent or distributor to build their business
  free of competition in that territory.
• Many agents and distributors want exclusivity as
  they will invest effort and financial resources
  into building brand awareness to create a market
  for your product.
• The stronger the brand reputation, the more
  valuable an exclusive arrangement will be.
• It is a good idea to think through the issue of
  exclusivity versus non-exclusivity before
  entering into negotiations with potential
  partners.
• If you intend to agree to an exclusive
  arrangement, performance measures will need to be
  established, as well as a termination clause
  within the agreement in the event of
  non-performance

91
SUPPLY CHAIN MANAGEMENT Cont.

• Choosing an agent or distributor
• The most important factor in choosing an agent or
  distributor is that you can establish a close
  working relationship.
• You have to be able to build high levels of trust
  and communicate regularly. Business is much
  easier to transact if your enjoy working with
  each other
• Before choosing an overseas partner you should
  undertake a rigorous research process and speak
  with a range of potential agents or distributors
  perhaps four or five before narrowing the list

92
SUPPLY CHAIN MANAGEMENT Contd.

• Choosing an agent or distributor (cont.)
• Before making a final decision ask your potential
  partner for trade references, and also consider
  using a professional credit checking agency to
  confirm the potential partners financial
  stability
• It is also important that you meet the potential
  partners in their own market.
• They should show you the market firsthand, which
  will not only give you a feel for how well they
  know the market, but also give you a chance to
  get to know them better as a person.

93
Reliance on e-Mail

• In this day and age many people rely on e-mail
  for everything and would try to use it to avoid
  travelling to meet representatives
• How do you feel about this?
• What are the risks?

94
Reliance on e-Mail (cont)

• Exporters who rely only on email communication
  with overseas partners often have
  misunderstandings leading to problematic
  relationships.
• While email is ideal for confirming discussions,
  meeting in person or even using the telephone or
  Skype in the early stages can go a long way
  towards reducing misunderstandings. How many
  people here use Skype?
• www.skype.com
• Remember that you are relying on your
  representatives local knowledge and contacts to
  win business in the market, so make sure that the
  relationship is real. You may need to meet
  several times to build a relationship and work
  through the fundamentals of how you will work
  together and what should be included in an
  agreement.

95
Reliance on e-Mail

• In this day and age many people rely on e-mail
  for everything and would try to use it to avoid
  travelling to meet representatives
• How do you feel about this?
• What are the risks?

96
Knowledge of the market

• Your chosen representative should have a thorough
  understanding of competitive products and prices
  to assist in product modification, advertising
  requirements, or changes.

97
SUPPLY CHAIN MANAGEMENT Contd.

• Advantages of working with an agent
• There are many advantages in doing business
  through an agent. Here are some of them
• You have control over branding, marketing and
  pricing.
• Commission only-based agent agreements can be a
  good incentive for higher sales volumes for your
  products.
• Agents tend to have smaller product ranges than
  distributors, which means that they can provide
  more focus on your products.

98
SUPPLY CHAIN MANAGEMENT Cont..

• Disadvantages of working with an agent
• Working through an agent can also have
  disadvantages
• A sales agent may have fewer resources than a
  distributor.
• Working on a commission basis can mean that the
  agent is less committed to your success.
• Significant overseas marketing and management
  support is required for a successful agent/client
  relationship. More effort is required from your
  business, such as fulfilling orders directly to
  customers and obtaining payment.
• Close attention is required to monitor the
  effectiveness of the agent.

99
SUPPLY CHAIN MANAGEMENT Cont..

• Disadvantages of working with an agent cont
• Close attention is required to monitor the
  effectiveness of the agent.
• A poor agent can not only ruin your opportunities
  in the market but also undermine your marketing
  efforts and reputation.
• Working through agents (as opposed to
  distributors) provides less protection from risk
  of non-payment, currency fluctuations, product
  rejections, warranty claims, etc.
• You risk losing market share if your agent is
  poached by a competitor

100
SUPPLY CHAIN MANAGEMENT Cont..

• Advantages of a distributor
• The exporter has one large customer who supplies
  many smaller end customers in the market.
• The exporter maintains some control over
  distribution.
• The distributor provides back-up service to
  clients.
• The distributor holds stock in the market to
  reduce order lead time for customers.
• The distributor helps pay for and undertake
  marketing and promotion of your product in the
  market.
• The distributor develops a customer base for your
  product.
• The distributor handles more of the in-market
  work, saving you both time and costs.
• In-market risks are largely carried by the
  distributor.

101
SUPPLY CHAIN MANAGEMENT Cont..

• Disadvantages of a distributor
• You have no control over the selling process.
• The costs of selling through a distributor can
  force the product out of market competition for
  example, a distributor may add up to a 50 per
  cent mark-up, or more, on your product before it
  reaches a retailer.
• The distributor and sales staff will be less
  knowledgeable about your products than your own
  people.
• You can become removed from the market and not
  have first hand knowledge of conditions.
• You may not know who your customers are.
• Because a distributor shares responsibility for
  marketing and promotion, you may not retain total
  control over the branding of your product.

102
SUPPLY CHAIN MANAGEMENT Cont...

• Disadvantages of a distributor (cont.)
• If the distributor is a wholesaler rather than a
  specialised master distributor, they may not sell
  as effectively as other wholesalers.
• The distributor may not have the sales force for
  new product introductions in larger markets.
• The distributor may represent multiple products,
  so attention and time may be divided away from
  your product.
• Sales-rights to your product are a valuable
  right and should not be surrendered without a
  full analysis of the available options.
• Your distributor may be difficult to disengage
  if you are unhappy with their service

103
Key issues to address with your potential agent
before a legal agreement

• The product range.
• What you, the exporter (supplier), will provide
  for example, printed brochures, price list, new
  product briefings, product training, and so
  forth.
• Supply of samples at what price, who pays for
  their cost and freight, the length of time
  samples will be available, and the process and
  payment for their return.
• The territory covered the geographical area and
  market segment.
• How the goods will be supplied.
• How online sales in the territory will be
  managed.
• Commission the amount and the conditions.
• Reporting monthly or quarterly, and the content
  of the reports
• Communications how the timeliness of
  communications on major issues will be dealt
  with. For example delivery delays or major
  customer issues.

104
BUSINESS FINANCIAL INSTRUMENTS

• There are a number of payment methods used in
  international exporting. The best payment option
  for you at any particular time will depend on a
  number of factors
• How much can you trust your buyer? How well do
  you know the company? Have you established a
  relationship of trust, or is this the first
  transaction?
• How much risk are you prepared to take?
• How much risk is your buyer prepared to take?
• How big is the transaction?
• And, can you bargain for more favourable terms
  with this buyer?

105
Methods of Payment

• Pre-Payment or Upfront Payment
• Known as Pre-Payment, Upfront Payment, or Cash
  Sale, the buyer pays cash in advance of a
  shipment. This method of payment is unusual in
  international trade but has become common in
  Internet transactions.
• While Pre-Payment greatly limits your risks as
  the exporter, it has the opposite effect on the
  buyer. By paying cash in advance, the buyer has
  to trust that you will deliver quality products
  on time.

106
Methods of Payment Cont.

• Letters of Credit
• In a Letter of Credit, the importers bank issues
  a document stating that they will pay the
  exporter when the terms of the Letter of Credit
  are fulfilled.
• Terms that could be specified include quantity,
  description and documentation.
• The onus is on the exporter to ensure that the
  documents and quantities shipped are correct
  otherwise the exporter risks non-payment.
• A Letter of Credit also locks the importer in to
  the contract and ensures that they cannot renege
  or pull out of the deal.
• As the exporter, you must make sure that you get
  the Letter of Credit before you start the
  production phase of the transaction you
  definitely should have the Letter of Credit in
  place before you ship any products.

107
Methods of Payment

• Documentary Collection
• When you use the Documentary Collection payment
  method, you entrust the handling of your trade
  documents to your bank
• Documentary Collections are governed by
  International Chamber of Commerce rules. There
  are two main types
• Documents against payment using a sight draft
• Documents against acceptance using a term draft.
• Documents against acceptance is considered
  riskier than Documents against payment because
  it relies on the customer making payment after
  the agreed time.

108
Methods of Payment Cont.

• Credit terms also known as Open Account
• Your customers may ask you to offer credit terms
  or you may find that you need to match your
  competitors in this way.
• The demand for your product, your price and how
  badly you need to do the business will all affect
  what terms you decide to offer. An Open Account,
  with an agreed payment period, is increasingly
  required by buyers.
• However, extending credit terms will have a real
  cost impact on your business because it impacts
  cash flow, so it is important to estimate the
  cost of the time it takes to receive payment at
  the end of the credit period and to build this
  cost into your price

109
Methods of Payment (cont)Bank Transfer versus
Cheque

• Try to insist on bank transfer
• It may take up to 10 days for the funds to get
  into your account
• Cheques may take up to three months to clear
• Cheques may bounce and in some cases you may not
  find the person
• Find out the cost of bank transfers usually no
  more than US50

110
Export strategy A few words

• An export strategy is an essential component of
  the business plan.
• A well-developed export strategy will help in
  dealing with a range of service providers and
  positions the firm to achieve realistic goals
• An export strategy must be integrated with your
  companys overall business plan

Govind Seepersad
111
Export strategy Cont.

• A sound export strategy will help you in dealing
  with bankers, financial advisers and government
  agencies. It will ensure you grow within your
  capability and not stretch resources.
• Make sure your domestic and international
  marketing activities are aligned.
• Recognise your competitive strengths and outline
  for weaknesses.

Denise Leander-Watson
112
Export strategy Cont.

• Create your export strategy with quantifiable
  objectives.
• Develop networking to help create export
  opportunities
• Develop basic scenarios to test how your company
  will respond to change.

Noel Watson
113
Where are we in the process?
Current Market Position International
Standards Marketing Mix (6 Ps)
Sense of Location
Sense of Direction
Market and Industry Trends
Evaluation Wrap Up
Supply Chain and Payment Mechanisms

• Export Audit
• Company Audit
• Market Audit

Competitor Analysis
Market Assumptions
114
Thank you very much

• We enjoyed it

115
Participating Companies
Company Export Readiness Completed Profile Completed Participating in Mission Industry
Ansa McAl Chemicals Ltd Yes Yes Yes Chemicals
Bonsal Caribbean Ltd Yes Yes Yes Thinset Mortars Sealants
Bowen Boats Company Ltd Yes Yes Yes Boats
Caribbean Safety Products Yes Yes Yes Safety Products
Chemtrax Ltd Yes No Yes Household cleaning agents and candles
Dyna Plas Ltd Yes Yes Yes Small jars
Electrical Industries Ltd Yes Yes Yes Electrical wires
Global Marketing Enterprises Ltd Yes Yes Yes Biodegradable Plastic Bags
Hyline Label Company Ltd Yes Outstanding Yes Labels
KC Confectionery Ltd Yes Yes Yes Confectionery
MDC-UM Business and Home Furniture Yes Emailed 6/2/2012 Yes Office Furniture
National Canners Ltd Yes Outstanding Yes Canned Foods
Oasis One Brand Ltd Yes Yes Yes Purified bottled Water
Print-a-Pak Ltd Yes Yes Yes Paperboard Boxes
Rotoplastics Trinidad Ltd Yes Yes Yes Water tanks
Sacha Cosmetics Ltd Yes Yes Yes Cosmetics
Stuart Brothers (WI) Ltd Yes Yes Yes Flavouring
Trinidad Aggregate Products Ltd Yes Yes Yes Clay Tiles and other clay products
Trinidad Tissues Ltd Yes Yes Yes Tissue Products
Woodhouse Trinidad Ltd Yes Yes Yes Furniture