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Ecuador: A Rosy Export Future

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Andy Awadalla

on 10 October 2013

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Transcript of Ecuador: A Rosy Export Future

Ensuring buyer confidence

Negotiations are done via email

Exporters make occasional visits to importers

Credit

Sales are f.o.b. Quito

Underground market



Importers sell to wholesalers

Market retailers and hotels

Wholesalers sell to florists then to final consumers

Sales to importers are highly personalized



5. There are a number of ways that Ecuadoran growers might increase demand for their cut roses. Among these are;

(a) to try to get more consumers to move up-market by buying premium roses,
(b) to promote more rose demand for a different special day, and
(c) to promote sales in relatively untapped markets, such as the Middle East.

Compare these and any other alternatives that you can think of.

Question

1. Cultural Factors

2. Legal/Political Factors

3. Economic Factors


Answer

Two Major Factors:

1. Expanding Sales

2. Improved Technology

Answer

Comparative Advantage- Global efficiency gains may still result from trade if a country specializes in what it can produce most efficiently-regardless of whether other countries can produce those same products more efficiently.

Answer

Absolute Advantage- Ecuador has an absolute advantage in producing a premium flower from its natural resources.

Answer

Grower’s Influence

Increase Demand

Many Players

Main Exports





Present Market



Individual families owned farms and diversification

Expoflores

Competition

United States largest market





Ecuador’s cut flowers exports consist mainly of roses

Exceeded only by petroleum and banana exports

700 companies, 70,000 people directly and 250,00 indirectly

300 rose farms


Colombia is top exporter

Kenya and Ecuador right behind

Ship regionally (Colombia and Ecuador primarily to the U.S., Kenya to the Netherlands)

UPS, FEDEX etc. Allow for same day delivery

Global Changes (cont.)


Grower’s Lack of Control

Market Ignorance

Promote Natural Resources

Answer

6. Some countries have had success by promoting the nationality of their products, such as the Juan Valdez campaign for Colombian coffee and the “If it’s Danish it’s good” campaign for Danish agriculture products. Discuss the viability of a national campaign to promote Ecuadoran roses abroad.

Question

A. Change Consumer Demand

B. Promote More Special Days

C. Market to the Middle East

D. Team Recommendation


Answer

4. Think back to the external environmental conditions (cultural, legal-political, and economic) discussed in Chapters 2 through 3 and discuss how these have affected and might affect future demand for Ecuadoran cut roses.

Question

3. Look back in Chapter 1 to the factors in increased globalization and explain which factors have influenced the growth of world in cut roses and why.

Question

Theory of Country Size – Large countries usually depend less on trade than small ones.

Answer

2. What trade theories do not help explain Ecuador’s competitive position in exporting roses?

Why do these theories fail to explain?

Question

Factor-Proportions Theory- The differences in countries endowments of labor compared to land or capital endowments explain differences in the cost of production factors.

Answer

1. Explain each of the trade theories that help to explain Ecuador’s competitive position in exporting roses.

Question

Market Development

Middle East

Market Skeptics

Factors to Grow




Future Market

Expendable Product

Saturated Market

Seasonal Demand

Alignment with Demand




Present Market

Ecuadorian roses have larger buds, more vibrant colors and last longer once cut.

Sell for more than Colombian roses, higher margins.

Ecuadorian Adv. (cont.)

Cheap Labor

Position on Equator

High altitude growth

Watered with melted snow from the Andes

Less rain than Colombia, less risk of damage

Ecuadorian
Advantages

Rose cultivation started in Ancient China
Small market due to perishable product
Air travel allowed for fast delivery
Account for almost half industry

Global Changes

A Rosy Export Future
Keith Shaffer
Sean Moore
Matt Williams
Andy Awadalla

Questions?
Thank you.
International Business
Professor Ray Valadez
Full transcript