Develop an Export Strategy for an Organisation - Research Paper Example

BOARD PAPER Paper: [Insert of Paper: Export strategy for Keroche’s brands For End of Module Assessment …………………………………………………………………………………………………………………………………………………………………………………………………… Brief Synopsis of the Issue Keroche Breweries Limited was initiated on 24th October 2008. It has seen many years of hard work and patience being the first Kenyan wholly owned brewing company. Keroche Breweries speedily distinguished itself as the first, sole and lone brewer of high quality and Sugar free, healthy Natural beer winning the hearts of numerous Kenyans. So far, it is the sole producer of Summit Lager in addition to Summit Malt brands that are Sugar free, Natural and truly Kenyan beer brands. The aim of Keroche industries is to expand its international consumer base and as well to raise more expediency for domestic consumers by enlarging the extra stores and service centres inside the city. This paper points out the factors that are involved in global trade and suggests why exporting Keroche’s brands from Kenya to Norway would be an excellent plan for the company. This research will look at the theories of international trade, strategies for exporting, logistics, as well as ethics towards the recommendations. Moreover, it will explicate the reasons for the recommendation of the strategy and pinpoint the effectual benefits of implementation of the strategy. This paper has included the logistic and entry mode recommendations to Norway market. Recommendation The most appropriate strategy for the company would be to aim to export its products after a careful research of the industry and environment. Background The beer business in Kenya began 1922. This is when two brothers from England, Charles Hurst and George began brewing beer in Kenya (Evelyn and Margaret, 2005). They formally integrated their business as a private company with the name of Kenya Breweries Ltd. The first malted barley beer was brewed in 1929 and the opening batch delivered to the New Stanley Hotel where it was launched with mixed reactions. The first lager beer was brewed in 1930 and released into the market. By 1938 the business was known for its beer subsequent to it winning the first brewing award in a global competition. Only whites were allowed to consume bottled beer in postcolonial period until 1947 when Africans were permitted to drink recognized sector beer. In 1934, Kenya Breweries Ltd became a public limited company. The author provides the critical discussion and recommendations on the advantages and disadvantages in the section. Transport mode can be determined through the sum value of shipment. In addition, different logistic firms like DHL, UPS, and FedEx can be employed. It is recommended that that the products having costly values have to be shipped by air. On the other hand, the costs of airfreight are more expensive but it takes a short time to transport from Kenya to Norway. Prior to exporting beer to Norway by air, we must consider two critical factors: custom import and charges and duty for security. The exported beer should be shipped by air for the security purposes. In Norway, determination of import duties is by the restriction of import. Goods import depends on tax (“customs duty” or “tariff”) while the imported products’ value. The exporter is supposed to request the airway bill from the particular airline agency for security purposes. In addition, the Norway market has many competitors that also need government support; plan for the entry strategies with widespread business plan to be encouraged for the impediments and competition. This paper suggests for the use of Letters of credit - Appendix 1 Other crucial risk for this product comes from theft during the transporting from one place to another. By air, the firm should export in small quantities and moreover there should have the risk coverage insurance. Establish and enforce the policies for the barriers solution for instance on ethics. Essentially, we must keep the high quality standard of gems and jewelry at best for the firm to lasts in the industry. Research on the Assessment Topic Government policies and tools of free trade Governments of various nations employ policies that aim to protect an industry from the competition posed by free trade. The protection thus enables the industry to generate more incomes than if left in the free trade competition. According to Gordon, Spanogle, Fitzgerald and Van Alstine (2011), tools used by governments of the nation to protect an industry include subsidizing home producers, imposing taxes on imports, restricting the quantity of imports and state trading. The other reason for advocating protectionism is to protect the economy of a nation and the welfare of its citizens. Allowing free entrance of businesses can be detrimental as it can lead to the death of local industries that might not be in a position to sustain the competition presented by the foreign companies. The policies are sometimes applied to cushion the infant industry from the deadly competition from the well-established foreign industries (Muranda 2002). Protectionism gives the infant industries a chance to grow to the point where they can comfortably compete with the larger and well-established industries in the foreign nations. Without the protection, the infant industries will collapse before they reach maturity size where they can fairly compete in the international market. In addition, governments put in place protectionist policies in order to protect local employment and to promote the national interests of the country through sensitive industries like defense and to link trade policies with foreign policies. Logistics, transportation means and technology in information Logistics is a field in business that optimise the materials flow via the firms and other distribution channels and targets at a maximising value to clients. The factors in logistics determine the option of being agile and going lean relying mainly on the uncertainty level in the environment and the level of good complexity (Gorton & White 2009). A product with low complexity level and steady environments would allow a lean, costly logistic system so as to be competitive. Moreover, studies connote that logistic models and strategies in the supply chain should fit in the firms strategy, depending on the whether the strategies is that of differentiation or cost leadership. Transportation is a very crucial factor in international logistics considering the distance that goods have to be moved to the consumers from the firm. The mainly available modes of transportation are rail, road transport, water carriage, air and pipelines. Examining the comparative disadvantage and advantage of the diverse means of transportation and the real nature, water transportation tend to be more connected to the lean approach to logistics and the management of supply chain. The other transportation factors that need to be considered include government control and deregulation of the industry and the availability of the transport infrastructure in the source and destination nations. The function of the legal system in implementing the environmental and safety considerations should be taken into account in the course of deciding the best means of international logistics (Kafle & Kennedy 2012). An electronic information exchange media such as the Electronic Data Interchange would be instrumental in removing the documentation and paperwork need. It also helps in automating the logistic process, mitigating the need for extra personnel intervention. Additionally, factors like open-system computer networks, wireless communication, and barcodes and GPS technology have tremendously changed logistics into an efficient system. Arguments against the Recommendation For several years, Norway has been a “dark market,”. This means that brewer­ies were not allowed to publicize their products in the mass media or in bars, shops or restaurants. as a result, the branding of beer was an interest­ing challenge. There is a fierce competition in Norway due to plenty of well-established breweries firms. The government of the country may implement protectionist policies to protect its home industries and reduces the effects of competitions. At this time, there are more than 40 microbreweries in Norway. This number is growing. Most of the breweries are very innovative, continually experimenting flavours in order to diverge from the conventional lager beers which ran the market in the past. There are as well approximated to be more than 10,000 home brewers in Norway; authorized stats are not obtainable on people that brew privately from home. The Norwegian government distinguishes the prospective of the Norwegian craft beer business has assisted citizens set up their own breweries – depending on the site of the brewery. The government promises to sponsor the setting up of a brewery if it would bring business as well as a focus to a rural area. Arguments in support of the Recommendation The firm should take advantage of the government incentives and take into account the local distribution networks. The incentives and the local distribution networks can be of utter importance to any business that sufficiently implements it. Being open for public use, the proposed strategy will be advantageous to the organization and its repercussions will fervently be realized. Just a few years ago it was not easy to find Norwegian craft beer in bars along with good restaurants. Fewer beer drinkers that had tried anything exciting than the yearly Christmas beers, nowadays you can nearly get a random pub everywhere in Norway. The capital, Oslo, offers 6 brewpubs, nearly 30 beer bars and many restaurants listed as excellent sites for craft beer on RateBeer. The new beer places draw a growing number of young beer surveyors, which assists in spreading the word to different groups of people. In addition, active bar owners import their own beer. The Vinmonopolet liquor stores imports as well as distributes more kind of beer than at first. This presents the average beer drinker with a more diverse choice of beer to select from, without travelling to beer destinations in other countries. Another good indicator that there is money to be made by selling beer in Norway is the recent accomplishment of Norwegian beer import corporation Beer Enthusiasts. Established in April 2012, they saw their business take off last year with a number of immense craft breweries in their collection, national and international, like Moor Beer Company, Sierra Nevada, St Feuillien, Midtfyns Bryghus, Chimay and Birra Baladin. Implementation of Recommendations After a thorough study of the industry through the porter’s five model penetration strategies need to be formulated and exploited. The porters five forces models investigates the consumer purchasing power, the influence of the supplier, substitutes threat, fresh entrants threats and prevailing market rivalry as well as the policies of the government. The brand positioning should be in line with the firm’s strategies of differentiation or leadership in costs. Improvement in productivity and advancement in the skill set of the employees and its intellectual base ought to be done to raise the opportunity in exporting. An SCP concept and the resource-oriented perspective should be balanced to earn a competitive edge. The target market should be known in terms of the demographic size and location and zeroing-in the network of the distributor. The logistics should be improved especially in the model of lean supply chain and utilizing the water mode of transportation with the appropriate information technology medium. Bibliography Eriotis, N. P., Frangouli, Z., &Ventoura-Neokosmides, Z. (2011). Profit margin and capital structure: an empirical relationship. Journal of Applied Business Research (JABR), 18(2). Folsom, R. H., Gordon, M. W., SpanogleJr, J. H., Fitzgerald, P. L., & Van Alstine, M. P. 2012, International Business Transactions: Trade and Economic Relations (Special Break-out edition). West. Gorton, M., & White, J. (2009). Export strategies and performance in the CIS: case study evidence from the dairy sector. 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