Business Studies Essay Paper on Export/Market Potential

Export/Market Potential

Memo

TO: Manager, Premier Coffee Experts

FROM: International Marketing officer

DATE: November 4, 2014

SUBJECT: Export of Coffee to India

For over 20 years now, the company been operating at its full potential here in the US and doing very well in its exports to Rwanda, China, Japan and other countries of the world. This has not only meant huge profits for the company but also attaining global legitimacy in terms of high quality products having been approved by international bodies such as thus positioning our coffee product for quality, healthy and economical. As such, the company seeks to start exporting the product to India as part of its further expansion strategy.

Market analysis

The market research that was conducted shows that India is a strategic country for the product due to the following reasons:

  • Currently there are direct flights into India from US meaning that the company can work efficiently with freight forwarders. This will prove more economical than other methods.
  • Indians have had a good trade and professional relationships with Americans and therefore increasing the chance for our product acceptability.

Demand for the coffee

India is found favourable because:

  • It has a high population which would mean a huge market for our coffee and hence high and constant demand for our product.
  • The government of India is currently giving incentives to foreign investors and exporters in order to encourage investments.
  • Coffee is one of the least consumed beverages in India since they tend to stick to their tradition Aam Panha and Masala. They will therefore find it fun to try using coffee if the company carries out plans to increase visibility of the product.
  • Majority of Indians are in the low-income brackets. Therefore, by making the product lower in price relative to other products, majority of them will prefer it to other beverages. This would mean a market penetration strategy for the company

Competition

The product will face competition due to availability of close substitutes such as tea and traditional beverages. However, the lower prices of the product will provide a competitive advantage over them.

The only extensive coffee firm in India is Starbucks which targets the middle and high income class. Through market segmentation, differentiation and price discrimination premieres coffee product as a brand target all persons thereby countering competition.

Business environment

Exporting India will accrue many advantages due to its favorable business environment. The cost of capital is lower compared to other countries in Asia. This will mean great deal while investing in warehouses for the exports as well as construction of administration offices. The interest rates are generally favorable.  As mentioned earlier, the government is offering incentives to exporters which include tax incentives and other deductions in order to encourage foreign investments thereby creating employment opportunities for Indians in an effort to grow its economy to a two digit figure.

Rules and regulations

The rules and regulations placed by Indian government are all favourable for the company since they are in congruence with the mission of ensuring quality to consumers. The key regulations relating to exports to India rotate around ensuring sustainable growth for the country, providing quality goods for the consumers, enhancing technological advancements as well as creation of employment. The understanding is that this export business will meet the required threshold for exporting to India.

Opportunities

Lastly, the government of India has in the past supported partnerships, direct investment as well as licensing between the Indian and the Americans. This excellent political atmosphere might work to the advantage of the company it could partner with local investors in the exportation activates. This will make it even easier for marketing of the coffee. For example the company could sell the coffee under established local brand names popularly known as co-branding.