Export Strategy for Cocoa Marketing Company Limited Ghana - Term Paper Example

Export Strategy for Cocoa Marketing Company limited Ghana CMC) Brief Synopsis of the Issue  The present economic crisis in the world continues to cripple many of the world’s leading markets continue to destroy the stability of the markets. In the Netherlands, the issue of demand of products and services that are unavailable is evidence of the economic situation. Despite the country being among the leading exporters of several horticultural and agricultural products, various sections of the market have an inadequate supply of trading inputs. Such is the chocolate and confectionery industry in the country. Several industries in the country manufacture chocolate among other cocoa products. These processing industries need huge supplies of cocoa, a factor that makes an opportunity for developing countries to explore the market. Consequently, with Ghana being among the leading world producers of Cocoa beans, this marks an opportunity for the exploration of international markets by local companies (Pinnamang & Armah, 2011, p 34). The Cocoa Marketing Company limited in Ghana is among the leading dealers in cocoa. Thus, the factor of discussion remains to establish international ties between the companies in the Netherlands and CMC to facilitate export of Cocoa to Netherlands. Recommendation(s) The international trade options of the company include venturing into the market through either direct or indirect exporting strategies. In an analysis of the temperament of the market in the Netherlands, in this case CMC should adopt the direct export strategy to allow it to engage the international market extensively. The Netherlands is a member of several trade organizations and it incorporates several free trade and movement regulations for exporters and importers, a factor that liberates the markets (Country Intelligence Report Netherlands, 2014, p 11). Therefore, with Ghana being a developing country CMC will benefit accordingly in engaging the market directly. The company should lay strategy on the contacts to establish and leading figures and offices in the Netherlands to ensure they engage the market extensively and reap the trade benefits in a leading world market. Background  Food processing is a leading industry in Netherlands. The foods that Netherlands processes originate from within and imported products. These industries incorporate the leading industries of processors of cocoa beans to produce various products. There are leading companies within the country, such including Cargill Cocoa & Chocolate company among others (Parker, 2010, p 17). Moreover, the country processes the Cocoa into powder among other products, creating a demand for the cocoa products in other markets. However, the trends in the country market of cocoa continue to depict an increasing demand for natural cocoa beans, a factor that Ghana as a leading producer of cocoa should exploit. CMC limited is a leading marketer of cocoa in Ghana, a factor that establishes it as a potential corresponded to the cocoa needs in the Netherlands. As an established local company, the company already exports to some few other countries; however, it is yet to venture into the Netherlands market. The factors of trade in the country, the Netherlands and Ghana are favourable for both countries to engage in trade. The regulations of export in Ghana and those in the Netherlands correlate, considering that they all operate under the world trade organization, among several other international trade-governing bodies. Thus, CMC being a company in a developing country, it is to the benefit of the company, to grow and exploit this market in line with the mission and objectives of this CMC limited. The import tax aspects of the Netherlands include that, goods brought into the country, from outside the European Union undergo custom tax. The tax charged is dependent on the country of origin and product type. These import taxes is the means that the country uses to protect the local market. There are import duties collected on behalf of the European Union by the country to protect and support agriculture in Europe. Therefore, with such regulations, it is essential to consider the export strategy to employ. Similarly, the export regulations in Ghana feature that the company must register with the Registrar-General’s Department and the Ghana Export Promotion Council to obtain a permit (Odularu, 2011, p 17). For the Cocoa beans, the company must acquire a certificate on Fumigation and Quality Assurance from the Control Division of Ghana Marketing Board, qualifications that CMC Ghana limited as a leading local company already. Research on the Assessment Topic  Exports and Imports in Ghana are under the regulation of the Ghanaian constitution, on exports and imports act, 1995(503). This act outlines the procedures for the company to export. In view of the market and opportunity at the present in the Netherlands, CMC has a clear chance to incorporate various aspects of trade that will facilitate the growth of revenues of the company. The cocoa industry in the Netherlands is dwindling consequent to the insufficient supply of the product in the market (Parker, 2010, p 31). Additionally, there are several factors including competition from other world markets that continue to create pressure for the processing industries in Netherlands to seek further supply of cocoa to remain competent. Thus, this demand for cocoa is the opportunity for CMC to capitalize on the market. Moreover, the market presents a clear opportunity as there are no political risks or social issues in the Netherlands; only economic challenges due to the increased trading costs across the globe. The trading regulations in the country are remarkably fair, despite the restrictions on tax imposed on goods from countries outside the European Union. The strategy of consideration for CMC limited is direct exporting. Direct exporting allows the company to have intermediaries from the foreign country. The company will also send representatives in the country to carry out the trade procedures in the country. The role of the representatives that CMC limited sends to the foreign market and intermediaries in contracts will be to establish and handle marketing, physical distribution, promotion and customer service activities in foreign market. The company will also require to institute a sales office and subsidiaries in the Netherlands for its distribution processes and marketing. In an aspect, since the company will be responsible for handling its research, foreign distribution and logistics of transport of the exports, it stands to gain several benefits and earn better revenues. Arguments against the Recommendation(s)  In view of the procedures and processes involved in, direct exporting, and the demands for the product in the market, a few differing arguments pose to the recommendation. Such arguments include that, the procedure require more people, take time, energy and money that the company may not will to invest (Direct Exporting, 2012, p 76). Secondly, servicing the trade demands increased responsibility from each level of organization of the company. Additionally, there is no buffer in case of losses or trade failing. The logistics of the transaction may prove strenuous to the business processes. These factors contribute several features of the risks involved in the trade decisions. Nonetheless, the recommendation remains most viable for the company, since it already uses it within the local trading relations it has with the neighbouring countries in Africa. Arguments in support of the Recommendation(s) In the event that the CMC limited adopts the recommendation it stands to gain the following benefits. First, direct exporting eliminates intermediaries, thus, increasing potential profits for the company (Direct Exporting, 2012, p 34). Considering this is an international trade, the profits will be considerably high. Secondly, the company will have control over its transactions; it will know its customers and their needs thus addressing them effectively, while getting their feedback immediately unlike in indirect exporting. Moreover, the success tips of the business become efficient due to the direct involvement with the customer, and the company develops a better understanding of the marketplace, which may present more opportunities in future. Additionally, as the business stabilizes in the foreign market, the company will develop higher flexibility and improve on its marketing efforts. Thus, the trade option presents the exceptional opportunity for CMC limited to engage the opportunity. Moreover, the trade pact is consistent with the objectives of the company, as it aims to venture into the European foreign markets among others in its effort to become the world-leading distributor of cocoa. Therefore, with all these factors and the opportunity open in Netherlands, it is up to CMC limited to engage the gears and adopt the recommendations. Implementation of Recommendation The company should adopt the procedure of marketing since it already has the exporting rights from the local relevant offices. The management should now conduct an overall assessment of the readiness of the company to engage the international market in the Netherlands. In assessing the market, it should create the contact with the prospective customers such as the processing industries in the Netherlands to start marketing its products. The first procedure is to conduct a feasibility of the foreign market to create an overview of the involvement the company and its resources, and acquire the transport and entry permits into the Netherlands. After getting the permits, it should then select and equip the staff expected, get legal representatives among other competency skills required for the export operations to begin in the Netherlands (Direct Exporting, 2012, p 51). Once the relevant offices are in place, in foreign market, CMC limited, the management then initiates the marketing communications, pricing and support in the foreign markets as trade begins. The company offices in the Netherlands will handle aspects of freight of the goods and reception, as well as, marketing and distributing these products to the prospective customers in the marketplace. It may cost time to implement this procedure, but once the process is in action, CMC limited will succeed in Netherlands. Consistency with Company’s strategic objectives The core objectives of CMC limited remain to become the leading marketer and distributor of cocoa beans in the world. The company holds the vision of establishing trade relations in leading markets of its products to have an overwhelming presence. Therefore, in line with these objectives, I believe employing the marketing strategy suggested engaging the foreign market in the Netherlands is milestone towards meeting all objectives of the company. The procedures of exports are consistent with the continuing trade operations that the company engages in other countries thus, expanding operations to the Netherlands is adding to the success of Cocoa Marketing Company Limited, Ghana. Bibliography ‘Country Intelligence Report Netherlands’ 2014, Netherlands Country Monitor, pp. 1-20, Business Source Complete, EBSCOhot, viewed 29 March 2014. Odularu, G 2011, ‘The Role of Standards in Influencing Ghana’s Access to Global Market for Cocoa’, International Journal of Afro-Asian Studies, Vol.2, No.2, p. 17, Publisher provided Full Text Searching File, EBSCOhost, viewed 29 March 2014 Parker, PM 2010, ‘The 2011 Import and Export Market for Cocoa Butter, Cocoa Fat, or Cocoa Oil in the Netherlands’, Country Trade Reports, p. N. PAG, Publisher Provided Full Text Searching File, EBSCOhost, viewed 29 Macrh 2014. Pinnamang-Tutu, A, & Armah, S 2011, ‘An Empirical Investigation into the Costs and Benefits from Moving up the Supply Chain The Case of Ghana Cocoa’, Journal of Marketing & Management, 2, 1, pp. 27-50, Business Source Complete, EBSCOhost, viewed 29 March 2014. Direct Exporting 2012, n.p. Cengage Learning EMEA, Gale Virtual Reference Library EBSCOhost, viewed 29 march 2014. Read More