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Export project IBUS 205

Anne-Laure, Camille, Marc
by

Anne-Laure Brémond

on 27 May 2013

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Transcript of Export project IBUS 205

ARGENTINA • Buenos Aires China • Shanghai Export project: New Zealand Camille Cochrane, Marc Shoppmann, Anne-Laure Brémond - IBUS 205 Introduction • Phil and Ted were a father and son team who founded the company in 1994 under the name "Phil and Teds"

• In 1998, phil&teds was purchased by Campbell Gower who became CEO of the company.

• Baby products: 3 wheel Buggy, Convertible car seat, travel cot, highchair, baby carrier or weather nursery accessories

• Philosophy: « Our mission is lofty:  we strive to be the world's number one business for parents, by creating ultra adaptable products that enable them to escape nursery prison, and live a dynamic life with kids»

• Presence in 52 countries

• Annual sales of more than 150 Million Company Background Selected Product "Classic three-wheel Buggy" • Cheapest buggy

• Oldest one so more recognized

• Highly adaptable product Selected Country Export Planning Strategy Market Entry Finance Competitors Assumptions:
• Sale price to distributor: US$ 278
• Production cost: US$ 61,5
• Discount Rate: 14,1%
• Demand forecast: 12,000,000 population; 17/1000 Fertility rate; 2.3 Children
per family; 15% High income target group; 1% Population growth; x Market
share • Direct exporting via a distributor situated in Buenos Aires

• Why using a distributor?
- The normal Phil & Teds process
- Local knowledge and contacts
- Flexibility – able to exit a country in adverse conditions
- Because Phil & Teds establish the market themselves during the first year
and only need someone to create a connection with the retailers during
the following years.

• Risks of using a distributor
- Identifying a suitable distributor
- Motivation and support
- Payment risks

• Solution
- Presence in Argentina during the first year to find and develop a good
relationship with a distributor chosen for its passion and commitment
- The channel agreement will consist of terms developed by P&T to
ensure they retain the control over the distributor's actions • First year: Enter the market with our own resources to
establish relations, establish a customer profile, develop the
brand and familiarise ourselves with the new external
environment.

• 2nd year: Contract with a distributor strategically chosen by
their passion and relationship.

• After 5 years: Keep doing direct exporting but reevaluate the
contract every year--> Auto distribution by Phil & Teds Phil & Teds main competitors are already in the Argentinian market but the company has a competitive advantage through the adaptability of its premium products, its unique brand and their security focus. • Production in Shanghai, so shipping directly
from Shanghai to Buenos Aires harbour in
FOB Logistics • Sea freight with LCL container. Why?
- Cheaper
- Large volume
- Best utilization of resources
- No time pressure
- Nature of product • Name describing the product
• Country of origin
• Quality
• Net weight
• Child safety information
• Official "S" mark to show
conformity with
regulations • All the documentations are required to be in Spanish
• Commercial invoice
• Bill of lading
• Packing list
• Insurance certificate
• Certificate of origin • Organise by P&T but the importer is to carry
out this process and is charged a fee for this
arrangement

• Using license customs broker "Global Exar"

• Better to use an Argentinian custom broker
as they speak competent spanish and know
legal processes of legal customs
in their own country Risks
Management Cross-cultural risk Political risk Commercial risks Financial risk • Political tensions --> involving labour unions, and incidents of street
protests and massive strikes (2011).

• State intervention in the form of nationalization:
- Limited access to international currencies
- Repatriation of all capital
- Price fixing
- Trade limitations --> Discouraging import

• Increase of black market and counterfeit market

• Corruption

• Compliance with foreign regulations / standards: Maximum level of
security in its products

• IP risk: Double strategy from P&T to protect itself:
- Protected by a legal way "Madrid protocol"
- Innovation "Stay ahead of the curve", R. Shirtcliffe • Payment risk: Prepayment will be asked in US$--> Have positive
cash flows

• Very high inflation: was recorded at 10.60% (March 2013).
- The government cannot access the financial markets except by
paying very high interest rates
- It finances its deficit by unorthodox means: by drawing on the
reserves of the Central Bank or of the Social Security
Guarantee Fund.

• High inflation--> P&T's hedging strategy:
- 1. Natural hedging, Chinese supplier is paid in US$, large
proportion of sales (US and smaller countries) is concluded in
US$
- 2. Financial hedging instruments, mainly to insure against
US$/NZ$ • Cultural differences:
- Language (Spanish) --> Required documentations must be
written in Spanish
- Hofstede and Trompenaar's cultural dimensions
- Family culture: strong emphasize on hierarchy and
orientation to the person, traditions and customs
* Titles are very important especially among the
elderly
* Appearance is very important
- High context culture: Messages are often highly-coded
and implicit

• Negotiation patterns: Concept of time (often late), close
personal relationships are important, taking time to know
your partner, several dinners, several meetings, patience • Logistics risk: export with FOB so freight
+ insurance shall be the responsibility of
the importer

• Financial strength of the distributor and
nature of relationship

• High competitive intensity

• Timing of entry • Net present value: US$ 380,751.99

• Funding: 2 options: Take a loan or finance with retained earnings (equity) Customs clearance Documentation required Packaging and Packing: Labeling requirement
Full transcript