Export Plan (Assume That You Are Exporting Term Paper

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¶ … export plan (Assume that you are exporting from Australia to China)

Lanolin Cream to Australia

China and Australia represent two major global economies and they share a long trading history. In 2004, China was Australia's third major trade partner and the second largest merchandise export market (the Canberra Times). In 2005, the two countries commenced negotiations for the signing of a Free Trade Agreement that would eliminate the financial and non-financial barriers to trading. The number of cosmetic products traded between the countries has increased and a new possibility materializes in exporting lanolin-based cream from China to Australia.

Marketing Strategies

Before actually entering the Australian market, the exporting company has to consider certain features such as the establishing of its entry strategies, the forming of strategic alliances or the identification of the target market and the typical behaviour of the consumers.

The Chinese company would enter the Australian market through direct exports. This basically means that the lanolin creams would be manufactured and packed in China and than distributed in Australia. The exporter could also consider the possibility of opening a manufacturing plant within the foreign country, but the risks involved are too high and the alternative should only be considered after studying the sales results during export procedures.

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The final success of any business is based on the organization's activity to choose the most adequate partners who share similar goals and will support the company. In this order of ideas, the Chinese exporter will set the basis for strategic alliances with various cosmetics distributors across the country. These distributors will have to meet certain standards, such as increased presence across the country so to reach a wide customer base, a good reputation and beneficial results or even the possibility to negotiate contractual terms. The exporter could consider the Liberty Distributors or Carol Clifton.

Term Paper on Export Plan (Assume That You Are Exporting Assignment

The use of cosmetic products has increased in modern Australia, proving a greater care and interest towards beauty and wellness. However most cosmetic products address women, the new cream will target men and will offer them a superiorly qualitative facial care product. The primary target market is formed from men over the age of 25 who have embraced the concept of the metropolitan men, or the metrosexual men. These men are sexually straight and show an increased interest in their appearance and are likely to consume the product that will offer them additional benefits.

Product Strategies

The new lanoline cream to be manufactured in China and exported to Australia is based on an innovative concept. Lanoline has been used for decades by the cosmetic industry to make moisturisers and creams for the treatment of sore nipples due to breastfeeding, and the new product takes the concept one step ahead to create a shaving cream that reduces irritations and transforms the shaving experience into a pleasant daily routine.

The new lanoline-based shaving cream will contain several ingredients that create a moist texture, soften the facial hair to make it easier to shave and leave the man with a soft and silky skin. The items will be packed in cart boxes with modern designs. The picture on the box will consist of a freshly shaved man who is happy and of a woman smiling behind him, showing her contempt for the man's joy, but also for hers, so when kissing the man she will no longer be hurt by his facial hair. The instructions on using the shaving creme will be contained on a piece of paper introduced in the cart box. The instructions will be written in five languages, so to be best understood by most of the buyers: Chinese, English, French, Italian and Russian. The product will meet the highest standards of quality and will satisfy the needs of a wide customer palette.

Pricing Strategies

In order to ensure it successful entry on the Australian market, the Chinese exporter will start off by implementing a penetration pricing strategy. This basically means that the exporter will sell its product at lower prices than its competitors as to best capture the interest of the audience. The strategy is both useful, but if improperly implemented it could be risky. In this sense, if the company prolongs it too far, they could end their operations with financial losses. Also, if the sales drop at the end of the promotional pricing strategy and are not sustainable at a normal retail price, the company could go bankrupt.

Once the Chinese exporter has managed to successfully penetrate the Australian market, has created a favourable reputation and has formed a loyal customer, they will implement the variable pricing strategy. What this strategy implies is that the retail price to the end consumer is formed on the basis of the incurred costs. As a consequence, a modification in the manufacturing and operating behaviours (such as an increase in the wages paid to the employees, technological changes or the increase in the commodities) will materialize in a modification of the retail price.

2. Logistics

Given that the Chinese company has established it market strategies and has formed the necessary alliances, they will have to make the arrangements required by the logistics process. This basically refers to features such as storage, transportation, order processing, freight insurance, product availability, the selection of the most suitable method of transport or the editing of the necessary documents, alongside with the identification of the customer practices.

The safe transportation of the shaving creams from China to Australia will be ensured by the Australian manufacturer. Given that the two countries are located in different mainlands and are separated by water, road transportation is not a viable option. The remaining alternatives are water and air transportation; the company will ship its products. The distance between the two countries is of 4,641 miles, the equivalent of 4,033 nautical miles (Convert Units, 2008). When receiving an order from the Australian distributors, the Chinese company will process it and will deliver it within a specified amount of time, which makes the term of the contract between manufacturer and distributor. These timelines will be about seven days, with the possibility to delay it three more days. If the shipment fails to arrive during the ten days since the order was received by the producer, he will pay daily penalties. The packaging and safety of the shaving creams during transportation will also be ensured by the producer. In this particular instance, the items will be packed in wood boxes and will be protected by paper wrapping. The merchandise will be insured and the fee will be paid by the manufacturer, as according to the sixth INCOTERM - CIF (Cost, Insurance and Freight). This term states that the manufacturer will pay and ensure the warehousing storage and labour, the export packing, the loading charges, the inland and ocean freight, the terminal charges, the forwarder's fee and the loading on vessel, leaving the Australian distributor to only pay for the charges on arrival at the destination, the duty, taxes and custom clearance and the Delivery to destination. All these costs further increase the retail price to the end consumer, but the effect would be equal regardless of the partner to make the payment. In other words, the same amount of money have to be paid and the sharing of payments only manages a distribution of fees, with all charges still included in the retail price to the end buyer. For instance, if the two partners had chosen to operate on the third INCOTERM - FAS (Free Alongside Ship), the charges would be divided as follows:

Australian Seller: warehouse storage and labour, export packing, loading charges, inland freight and terminal charges

Chinese buyer: forwarder's fees, loading on vessel, ocean freight, charges on arrival at destination, duty, taxes and custom clearance and the final delivery to the destination (International Business… [END OF PREVIEW] . . . READ MORE

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