Академический Документы
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Культура Документы
17-06-2016
BY GROUP 4: JONEAL DIRKSZ(453015);DAAN VAN DEN
EERENBEEMT(531677);BREANNE LENSINK (521966);STEVEN
TRUBENDORFFER (474110)
MINOR: LATIN AMERICAN BUSINESS STUDIES
SISAO | Jilotepec, Servicio Carmona located at 109 kilometers of the carr. Querétaro
Mexico at the height of San Martin.
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PREFACE
This project is part of the study program which is about getting a clear understanding on Latin American and
European markets. This will be achieved by combining theory and practice and getting hands on experience in
communication with Latin American partners. The aim of the project is to advice the client if or how the
organization is able to expand its business as profitable and sustainable towards the Netherlands. After
analyzing the Netherlands with market research, the advice will be laid out in an international marketing plan.
The goal of this report is to advice the client on its options and to describe all the risks in exporting to the
Netherlands. Also the cultural differences between Mexico and the Netherlands will be discussed.
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EXECUTIVE SUMMARY
Sisao is a company with five permanent employees who wants to provide their customers with high-quality
handmade products. Sisao concentrates on particular niche markets with their own unique needs of consumers
within it. Sisao has a few stores and they are located at touristic places. The focus in their own country lies on
tourists who like to try regional authentic products. Sisao is now only active in Mexico and sells around 6500
jars (370 grams) of Cajeta each month, but they are planning on reaching the international market due to
overproduction. The company is organized to export if the foreign market is profitable enough (Sisao, 2016).
Sisao’s biggest market opportunities for the Netherlands are the niche markets: international toko’s and ice
cream shops. One of the biggest toko franchise in the Netherlands is Amazing Oriental. Since the number of
foreigners in the Netherlands is growing, the international oriented toko’s are growing as well. The Netherlands
has also experienced an increase of Ice cream stores. In 2004 there were 430 ice-cream stores and now there
are 843 in the Netherlands.
The provinces with the highest population density and with the highest income are North and South Holland.
Based on the five forces model from Porter, the industry Sisao operates in is considered moderately
competitive. However, the Dutch market is growing steadily and the customers in the spread on industry are
loyal. Moreover, the market potential of the food and spread on industry is estimated to an amount of 70, 79
billion euros. This will increase to a total amount of 83, 70 billion euros in 2016!
With 51 points, the first option - create market share through toko’s - came best out of the SFA analysis test.
Therefore, certain strategies must be applied in order to begin exporting to the Netherlands. The strategic basis
for this strategic option will be product leadership. This strategic option was chosen because Sisao stands for
providing customers with high-quality products and Sisao is always looking for opportunities to innovate their
flavors (Sisao, 2016) (Kluin, 2014).
Looking at the grow strategies of Ansoff, it can be concluded that the strategic development will be ‘market
development’ (existing product + new market) (Frambach & Nijssen, 2013) (Business Case Studies, n.d.).
When focusing on the toko’s in the Dutch market, Sisao will have to differentiate the product in order to fit
within this specific foreign market. In this case a differentiation focus strategy is applicable by Sisao.
Furthermore, Sisao will have to concentrate on an Informational positioning because Cajeta is an existing
product in a new market. Sisao will have to position itself on concentrating in showing the functional properties
of the product. Sisao will continue using the cost-plus pricing strategy to determine the sales price. This is a
pretty straightforward way of determining the sales price because there only has to be a mark-up/(profit)
margin added to the cost of a product
To correctly implement the strategy, certain steps needs to be followed. A milestone plan has been made,
where there are certain achievements that should be achieved before a certain date in order for the strategic
option to be correctly implemented. To control that the strategy is going as planned, Sisao should use the PDCA
management model, as they will implement the plan control and act on any alterations that has to be done.
Product: the advice is that the label has to communicate with the Dutch market. Adaptions that should be done
to the product label:
1. Product name has to be changed.
2. A picture has to be set on the Label.
3. The label color will be changed.
Product package should be changed from a glass jar to a plastic bottle. This cuts down the costs because it is
cheaper to produce plastic bottles than glass bottles and it’s more environmental friendly.
Promotion: to sell in the Dutch Market is through sales promotion done by Sisao’s sales representative to the
Amazing Oriental. Sales promotion aims to better the distribution of the product, in the form of providing
Amazing Oriental with a 5% Discount.
The best ways to promote and to reach out to the target group is, by doing direct marketing, and this includes:
1. Little book with recipes;
2. Product sampling in stores;
3. Posters and booklets to distributor.
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For this advice a break even analysis was made. This analysis will give an understanding about how much Sisao
must sell in order to earn at least enough to cover all the costs.
𝑇𝑂𝑇𝐴𝐿 𝑅𝐸𝑉𝐸𝑁𝑈𝐸 (𝑠𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 ∗ 𝑥) = 𝑇𝑂𝑇𝐴𝐿 𝐶𝑂𝑆𝑇𝑆 ((𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡𝑠 ∗ 𝑥) + 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠)
The formula shows that in 4 years Sisao has to sell 21.402,08 products to cover all costs that occur in those 4
years. Sisao tends to sell 1.000 bottles each month which is a total of 48.000 in 4 years. The break-even point is
much lower which means that Sisao could sell half of the amount they want to and still cover all expenses.
Since selling to the Netherlands is profitable from the point where Sisao sells more than 21.402,08, the advice
is to try to sell at least 21.402,08 products and if possible many more. If Sisao can’t reach this number than it is
smarter to decide not to export and try to expand in Mexico.
Exporting Cajeta from Mexico to the Netherlands is a big operation with a lot of rules to be considered. In the
strategic option the packaging of Cajeta was analysed. This had to do with practical reasons. The packaging will
not only be lighter - if Sisao is going to use plastic instead of glass – but Sisao will also save money on shipment
and production costs. Furthermore it is advised to insure the cargo and use letter of credits with every
shipment. To build a healthy relationship with the customers in the Netherlands it would be smart to make use
of the CIF incoterm. All in all there are many different laws and rules that Sisao has to deal with. In order to
show the client that Sisao is a trustworthy company, some of the risks should be taken into account for Sisao.
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CONTENTS
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3.2.4 Technological factors ........................................................................................................................... 16
3.2.5 Ecological factors ................................................................................................................................. 16
3.2.6 Political factors .................................................................................................................................... 17
3.2.7 Trade barriers ...................................................................................................................................... 17
3.2.8 Social cultural distance ........................................................................................................................ 18
3.3 CUSTOMER ANALYSIS ................................................................................................................................. 18
3.3.1 Market potential & Sales growth rate ................................................................................................. 18
3.3.2 Target groups ...................................................................................................................................... 18
3.3.3 Buying process ..................................................................................................................................... 18
3.3.4 Segmentation ...................................................................................................................................... 18
3.4 Competition ................................................................................................................................................ 19
3.4.1 Porter’s five forces analysis ................................................................................................................. 19
3.4.2 Benchmark ............................................................................................................................................... 20
3.5 Distribution channels .................................................................................................................................. 20
3.5.1 Supply chain ........................................................................................................................................ 20
3.5.2 Channel width ..................................................................................................................................... 21
3.5.3 Channel length .................................................................................................................................... 21
3.5.4 Cajeta Channel Power: ........................................................................................................................ 22
3.5.5 Developments ..................................................................................................................................... 22
3.6 Conclusions: opportunities and threats ...................................................................................................... 22
Chapter 4: SWOT analysis ..................................................................................................................................... 23
4.1 SWOT analysis: ............................................................................................................................................ 23
4.2 Strategic issues ........................................................................................................................................... 23
4.3 Strategic options ......................................................................................................................................... 23
4.3.1 Strategic option 0: nothing will be changed ........................................................................................ 23
4.3.2 Strategic option 1: Create market share through Toko’s .................................................................... 24
4.3.3 Strategic option 2: adapting the product for ice-cream stores ........................................................... 25
4.4 SFA model: .................................................................................................................................................. 26
4.5 Strategic option choice: .............................................................................................................................. 26
4.6 Objectives: .................................................................................................................................................. 26
4.7 Strategies .................................................................................................................................................... 27
4.7.1 Entry Strategy ...................................................................................................................................... 27
4.7.2 Value Discipline Strategy ..................................................................................................................... 27
4.7.3 Generic Competitive Strategy ............................................................................................................. 27
4.7.4 Growth strategy................................................................................................................................... 27
4.7.5 Positioning strategy ............................................................................................................................. 27
Chapter 5 | Marketing program ............................................................................................................................ 28
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5.1 Product ....................................................................................................................................................... 28
5.1.1 Product adaptation.............................................................................................................................. 28
5.2 Price ............................................................................................................................................................ 28
5.3 Promotion ................................................................................................................................................... 29
5.3.1 Selling in to retailers ............................................................................................................................ 29
5.3.2 Selling out to Consumers ..................................................................................................................... 29
5.4 Place ............................................................................................................................................................ 29
Chapter 6 | Implementation and control.............................................................................................................. 31
6.1 Cultural impact ........................................................................................................................................... 31
6.2 Steps to be achieved. .................................................................................................................................. 31
6.3 Milestone Plan: ........................................................................................................................................... 31
Chapter 7 | Financial control ................................................................................................................................ 32
7.1 Potential sales ............................................................................................................................................. 32
7.2 Selling price ................................................................................................................................................. 33
7.3 Costs ........................................................................................................................................................... 33
7.4 Profit and loss statement ............................................................................................................................ 33
7.5 Exchange rate ............................................................................................................................................. 34
7.6 Ratio’s and breakeven analysis ................................................................................................................... 34
Chapter 8 | International law ............................................................................................................................... 36
8.1 CISG ............................................................................................................................................................. 36
8.2 Incoterms .................................................................................................................................................... 36
8.3 Delivery and payment terms ...................................................................................................................... 36
8.4 Guarantee of quality ................................................................................................................................... 37
8.5 Organizing export ....................................................................................................................................... 37
8.6 Importing in to the Netherlands ................................................................................................................. 38
Chapter 9 | Conclusions ........................................................................................................................................ 39
9.1 Answer main research question ................................................................................................................. 39
Bibliography .......................................................................................................................................................... 42
Appendix ............................................................................................................................................................... 52
Appendix 1: Action plan ............................................................................................................................... 52
Appendix 2: Results Field research ............................................................................................................... 61
Appendix 3: Population graph English please ................................................................................................ 1
Appendix 4: Spendable income ...................................................................................................................... 1
Appendix 5: Netherlands | Economic Indicators ........................................................................................... 0
Appendix 6: Exchange rate ............................................................................................................................. 7
Appendix 7: Complete analysis of the six dimensions of cultural differences by Hofstede ........................... 8
Appendix 8; Porter’s 5 forces Analysis ......................................................................................................... 10
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Appendix 8: Questions related to the Rustenburg Consultancy model Porter´s five forces: ....................... 11
Appendix 9: Revenue De Ruijter; ................................................................................................................. 12
Appendix 10: Benchmark Bebogeen and Cajeta .......................................................................................... 13
Appendix 11: Bebogeen v.s. Calvé pindakaas .............................................................................................. 13
Appendix 12: Hollensen channel width ........................................................................................................ 14
Appendix 13: Channel power ....................................................................................................................... 14
Appendix 14: Developments in distribution ................................................................................................. 15
Appendix 15: confrontation matrix .............................................................................................................. 15
Appendix 16: Hollensen export modes ........................................................................................................ 16
Appendix 17: Strategic window (Solberg) .................................................................................................... 16
Appendix 18: The SFA model of Rustenburg Consultancy (Rustenburg Consultancy, n.d.): ........................ 16
Appendix 18.1 sequel SFA analysis. .............................................................................................................. 17
Appendix 19: Domestic Sales Representative. Responsibilities of a Domestic Sales Representative. ....... 19
Appendix 20: organizational structure ......................................................................................................... 20
Appendix 21: Milestone timetable ............................................................................................................... 20
Appendix 21.1: Milestone plan .................................................................................................................... 22
Appendix 22: Costs ....................................................................................................................................... 23
Appendix 23: worst- and best case scenario ................................................................................................ 26
Appendix 24: CISG ........................................................................................................................................ 28
Appendix 25: Incoterms ............................................................................................................................... 28
Appendix 26: Payment methods .................................................................................................................. 31
Appendix 28; Indirect and direct exporting .................................................................................................. 35
Appendix 29; Aspects of importing to the Netherlands ............................................................................... 35
Appendix 30: Duties and Taxes .................................................................................................................... 36
Appendix 31: Contact information |Head of purchasing/purchasing manager of Amazing oriental: ......... 37
Appendix 32: Explanation on each factor of the VRIO framework .............................................................. 37
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CHAPTER 1 | INTRODUCTION
In this chapter the objectives of this report are formulated. Also the main- and sub questions, research
methods and limitations are explained.
The purpose of this research is to find out which strategies Sisao can use in order to enter the Dutch market.
Therefore the organization and the Dutch market are analyzed. This report will give an understanding about
the strengths, weaknesses, opportunities and threats. In order to avoid risks the legal and financial parts of
exporting will be discussed in this report as well.
Which strategies can Sisao implement in order to introduce Cajeta into the Dutch market?
To answer the main questions the following sub questions were formulated:
For this report two different research methods were used. These methods are Desk research and Field
research:
1. Desk research is to obtain and analyze secondary data. Secondary data is written in books or studies
that are available and which could be used for this project.
For this research the book ‘Global Marketing’ from Hollensen was often consulted.
2. Field research is where new information is obtained and analyzed. This information was obtained by
doing semi-structured face to face interviews.
Mostly employees of Amazing oriental and Ice cream stores were interviewed during this project.
In order to prevent blindness, all information was presented to the lecturers of the minor. It is important that
the research is transparent and traceable. All the sources that are used are mentioned in this plan. Secondary
sources were checked with the AAOCC criteria (Authority, Accuracy, Objectivity, Currency and Coverage).
Authority was checked by the authors, if they were qualified and credible. The sources were checked for
accuracy, reliability and errors. If the interpretations and implications were reasonable and the conclusions
were validated the source was considered accurate. The objectivity was checked on the purpose of the source.
All information had to be up to date and valid. Lastly the coverage was checked on relevancy and the intended
audience.
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1.5 VALIDATION OF FIELD RESEARCH
The prices of similar spread-on’s to Cajeta were observed in Albert Heijn Nijmegen and online shops. The prices
found were used to compare Cajeta with the spread on’s in the Dutch market. Also employees of Amazing
Oriental and ice-cream stores were contacted to give an opinion on Cajeta.
In appendix 1, the approved action plan can be found. In the beginning of the qualitative field research the
focus lied on B2C. The first plan was to do a field research that included an online survey that was held
amongst as many respondents as possible in order to create the highest possible level of reliability and
representatively. This survey was made in order to receive information about the needs and wishes of the
potential customers in the Netherlands.
Fortunately, due to the discovering of a miscommunication, the field research had to be continued as in B2B.
The results of the field research were conducted in the same matter as how it was done before with B2C.
Therefore, a qualitative field research supported with a face-2-face semi structured interview was held
amongst 6 employees/managers of toko stores and 5 employees/managers of ice-cream stores. For the B2B
field research the questions that were asked were not asked in a suggestive way in order to obtain the highest
possible reliable answers. The results and the list of questions of this field research can be found in Appendix 2.
Besides the field research, the sub questions were changed in order to obtain a clearer answer to the main
question, see paragraph 1.2 and Appendix 1.
1.7 LIMITATIONS
The first limitation is time. The first draft of this project has to be handed in by the 3d of June. The final report
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has to be done by the 17 of June. Besides that there was also a limited amount of time spend with the client.
The second limitation of this project is Communication. Since there is a seven hour time difference between
the group members and the client, communication has to be planned.
Lastly the budget for this project was a limitation, because there was a limited amount of possibilities for the
field research.
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CHAPTER 2 | INTERNAL ANALYSIS
This chapter is about the company facts, marketing program, target groups and the competitive advantages.
These facts are supported by the following literature: lectures of international marketing, internet sources,
book Global Marketing by Hollensen, and an online interview with the contact person of SISAO. At the end of
the internal analysis the strengths and weaknesses of Sisao are identified and the following sub question will be
answered: What does the internal structure of Sisao look like?
In this paragraph several aspects about the internal structure of Sisao are analysed. These internal aspects are
the mission, vision, firm size, sales figures, and international experience of Sisao are discussed. All these
aspects are stated below.
2.1.1 MISSION
We are a small family business dedicated to the artisan production of foods and drinks whose recipes are
combined with unusual ingredients, which gives our products that unique flavors. Artisan Sisao is aimed at
consumers with exquisite tastes and to people looking for innovation and quality in traditional foods originally.
Our recipes and packaging rescued classical elements, but providing them with a certain freshness. The most
important thing for us is the quality and innovation to meet the tastes of our consumers. Our products are
unique because we use fresh ingredients and we hold each process by hand. (Sisao, 2016).
2.1.2 VISION
Our goal is to expand our market through Mexico and we expect to venture into the international arena,
meeting the demands of our consumers. (Sisao, 2016).
In this paragraph several marketing aspects are analysed. These marketing aspects are objectives, strategies,
marketing mix (product, place, promotion, and price), and budget. All these aspects can be found below.
2.2.1 OBJECTIVE
The objective that Sisao has formulated is:
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Selling 1000 bottles of Cajeta of 250 grams in the Netherlands/Europe each month (Sisao, 2016).
2.2.2 STRATEGIES
Sisao uses differentiation focus as a generic competitive strategy. This means that they concentrate on
particular niche markets with their own unique needs of consumers within it. Furthermore, they try to
differentiate themselves with their competitors by adding value to their product. To achieve this differentiation
focus strategy, Sisao only produces a certain amount of high-end products and they are selective with the
partners/markets they choose to do business with (Frambach & Nijssen, 2013) (Sisao, 2016).
SISAO’s strategic basis is product leadership. Their products are handmade and they are of high-quality in
comparison with the standard commercial brands in Mexico. Furthermore, they are always looking to innovate
on flavour which also states that they are superior in their field of expertise (Kluin, 2014)(Sisao, 2016).
In this paragraph the marketing mix will be discussed. The marketing mix contains four P’s, these 4 p’s are;
product, price, place and promotion. In order to create the page of Sisao, information received by the contact
person and the Global Marketing book by Hollensen was marketing mix the website of Sisao the Facebook
used.
2.3.1 PRODUCT
Sisao produces authentic artisanal products (authentic-Strength 1) in the grasslands of the Valley of Mexico.
Sisao makes all different kinds of Mexican beverages, and, naturally, they sell sweet milk; better known as
‘Cajeta’.
Rompope - artesanal: Delicious Mexican drink with more than four hundred years of tradition. Sisao’s recipe
combines ingredients that give an exquisite flavor. They made it by hand with 100% fresh milk and eggs free
hen, no preservatives and no emulsifiers. ‘Rompope’ is available in 4 different kinds of flavours: pine seed,
pistachio, vanilla, and chocolate with mint (Sisao, 2016).
Cajeta – artesanal: Cajeta only comes in 1 flavour and it is a sweet milk spread which can be used in
combination with a lot of different products like bread, pancakes, ice-cream, etc (multiple functions-Strength
2). Cajeta is also made by hand with 100% fresh milk, and no preservatives or emulsifiers have been added.
Besides that, Cajeta has got a high durability; the product can be preserved up to one year in the refrigerator
and is available in two sizes: 370ml & 700 ml (high durability-Strength 3) (Sisao, 2016).
2.3.2 PLACE
SISAO currently sells their products in Jilotepec (where they produce), in Servicio Carmona located at 109
kilometers of the car. Querétaro Mexico at the height of San Martin. They also sell at the markets of artisan in
the ´Villa Coal´, and they sell cajeta in the ´CASART de Torres Bicentario´ store located in Paseo Tollocan esq.
Alfredo del Mazo (Sisao, 2016).
2.3.3 PROMOTION
Due to the lack of inside information about ‘promotion’, it is difficult to analyze this subject. At the moment
Sisao is not investing in promotion. Sisao only has a Facebook page where they are providing some information
about their products/events.
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2.3.4 PRICE
Sisao uses the cost-plus pricing strategy to determine the sales price. This is a pretty straightforward way of
determining the sales price because there only has to be a markup/(profit) margin added to the cost of a
product (Schofield , n.d.) (Sisao, 2016).
Cajeta is being sold in Mexico for ₱63,74 Mexican pesos which is about €3,10 for a 370 ml bottle(Sisao, 2016).
Unfortunately, there was not enough inside information available to continue analyzing this part of the
marketing mix.
2.4 BUDGET
Due to a lack of information, it is not possible to give an insight in the marketing budget.
Sisao’s stores are all located on touristic places. Therefore, Sisao focusses on tourists who like to come to visit
these places and who like to buy regional products. Besides that, locals who live nearby the stores also like to
visit the stores and buy Cajeta because they prefer artisanal cajeta more than industrial produced cajeta (Sisao,
2016).
The competitive advantage is analyzed by the VRIO framework. VRIO is an abbreviation for Value, Rarity,
Imitability and Organization. In paragraph 2.6.4 figure 1 the VRIO framework conclusion model is shown. For a
more elaborate explanation on each factor, see Appendix 32.
CONCLUSION MODEL
In order to formulate a conclusion the VRIO framework has been used. In this table the Green V means YES and
the red X means NO. The outcome of these Metrics are mentioned in the final column.
For Sisao, the result is a short-term competitive advantage, see figure 1. The company has got a valuable and
rare/unique product, plus they are organized to export if the Dutch market is profitable enough. On the other
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hand, the product is not hard to imitate because companies could easily find out how to make Cajeta by
looking up the recipe via informational resources.
Strengths:
1. Homemade authentic products (family company); see paragraph 2.3.1
2. Multiple functions for Cajeta; see paragraph 2.3.1
3. High durability; see paragraph 2.3.1
Weaknesses:
1. No experience in export; see paragraph 2.1.5
2. No marketing budget available for export (limited financial resources); see paragraph 2.4
3. No knowledge about the Dutch market. see paragraph 2.1.5
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CHAPTER 3 | EXTERNAL ANALYSIS
All the external factors for Sisao are analysed in this chapter. The external factors are: the market definition,
the macro environment, customers of Sisao, the competition and the distribution channels that Sisao could
use. The literature that has been used for this chapter is: the book Global Marketing of Hollensen, semi-
structured interviews with experts, PowerPoints of the lectures international marketing, interview with the
contact person of SISAO, and articles and researches on the internet. The sub question that will be answered in
this chapter is: How is the Dutch economy structured?
Sisao’s main markets for the Cajeta are special stores such as the oriental/international Toko’s, and ice cream
shops (Niche markets such as, Toko’s/ice-cream shops- Oppertunity1). All these stores all located throughout
the Netherlands. There are around 543 toko’s located throughout the Netherlands. The convenience oriental
chain store Oriental Holding Europe headquarters is located in Hoofddorp, Amsterdam. The store is located in
the richest province of the Netherlands, and with the highest purchasing power (Noord-Holland) (Gemiddeld
inkomen, n.d.). In addition, the biggest amount of ice-cream stores (95 ice-cream stores of 525 in total in 2013)
are also located in the province ‘North-Holland’ (Noord-Holland) (Van Spronsen & partners, 2013).
3.1.2 GEOGRAPHY
Looking at figures 2 & 3, it can be concluded that the people with the most income come from North and South
Holland and in the central of the Netherlands. This explain why the best stores are located in these areas
because the purchasing power per person is a lot higher and the population density as well, see figures 2 & 3.
Figure 2: income per inhabitant NLD Figure 3: population density per town NLD
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3.2 MACRO ENVIRONMENT
The following DESTEP- analysis gives insight about the demographic, economic, social-cultural, technological,
ecological and political information about the Netherlands (Frambach & Nijssen, 2013).
MEN VS WOMEN
There are roughly 8.5 million women and 8.4 million men of the 16.9 million inhabitants of the Netherlands
(CBS, 2016). The Netherlands has got a clock shape population pyramid which implies that there is ageing.
Ageing means that the proportion of older people increases in the total population, see appendix 3 for the
population pyramid (CBS, 2016). Furthermore, the Netherlands is a multicultural country; there are a lot of
different nationalities living together in this country. Nowadays there is war in diverse countries and more
people from other countries are coming to live in the Netherlands. The population is still growing in the
Netherlands, but the percentage is lowering.
SPENDABLE INCOME
The spendable income or also known as purchasing power parity of households in the Netherlands may vary,
but on average a 65.5% of all households ha an income of 18,000 euro or more (CBS, 2016), see appendix 4 for
the visual perspective. 52% of the women and 33% of the men living in the Netherlands are not economic
independent. A lot of women have a part-time job and earn less per hour than men. Therefore they are more
often depending on a partner or a benefit (CBS, 2016).
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spending, 2016)”, see appendix 5 for more information about this subject (Dutch economy is growing –
Opportunity 3).
EXCHANGE RATE
Nowadays the exchange rate means that 1 euro is 20,6 Mexican pesos. The exchange rate can be found in
appendix 6. (Oanda, 2016)
Some of these sandwich spread or fillings are: chocolate flakes, chocolate spread, caramel spread, peanut
spread, syrup (Nederlandse eetgewoonten, 2015) (Een typisch nederlands ontbijt, 2010).
DESSERTS:
Dutch people like to have something they call ‘vla’ as a dessert. Besides that they also like to have ice cream
after their dinners (most likely during summer season).
PANCAKES:
Pancakes are often eaten by Dutch people as supper. On these pancakes is often something sweet spread on as
well. (Typisch Nederlands eten en de eetgewoonten, 2011)
An interesting development is that more and more Dutch people buy products or groceries online. The local
supermarket reaches more people than before. The amount of Dutch people doing groceries online increased
heavily. In 2014 online groceries were bought for an amount of 450 million which is 55% more than a year
before. This makes the Dutch market the fastest growing market in Europe. (Betlem, 2015)
The total groceries market (not only online) is estimated at an amount of 33,8 billion euros and is dominated by
Albert Heijn and Jumbo. The online grocery shops are also dominated by these supermarkets. Ah.nl has a
market share of 53% which makes Albert Heijn the market leader. The competition is mainly from Jumbo. Only
1, 3% of the groceries is done online and is good for a revenue of 450 million euros. (Betlem, 2015)
The West European groceries market is estimated at an amount of 936 billion euros. The expectations are that
by 2018 about 8, 5% (80 billion) of the groceries will be sold online. (Betlem, 2015)
The Netherlands has the biggest harbor with the most transported goods in whole Europe and is therefore one
of the gateways to enter Europe.
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Dutch people like to recycle products. For example: almost at every parking place at every supermarket there
are glass disposals, where Dutch people can dispose glass which will be recycled. Besides that there are
disposals inside the supermarkets where plastic bottles and beer crates can be disposed as well. This makes it
easier for Dutch people to get rid of their (used) glass products and therefore more attractive to buy products
that are made of glass.
POLITICAL SYSTEM
The Kingdom of the Netherlands is a constitutional monarchy with a bicameral parliament. All adult (18+)
citizens have a right to vote directly in a system of proportional representation.
In this system a large number of parties can win seats in parliament, which means that no single party will have
an overall majority. For this reason, cabinets are always multiparty coalitions chaired by the prime minister.
The cabinet's duties include the day-to-day business of government, preparing legislation and putting it into
practice, and maintaining international relations. The monarchy symbolizes national unity and therefore has a
more ceremonial character.
There are three main moderate political tendencies: the social democrats, the Christian democrats and the
liberal parties. The smaller parties are generally less moderate variations on one of the three main lines.
For centuries, international trade has been a key element of the Dutch economic system. Because of its
location in the delta through which several major European rivers connect to the North Sea, Holland was ideally
situated to become a center of trade and transport for all of Western Europe.
INTERNATIONAL POLITICS
Depending on the product and country Dutch people pay import charges such as taxes.
Dutch people pay taxes over their imported products and services. In most cases there will be a tax percentage
of 0% on the invoice. That doesn’t mean Dutch people don’t pay taxes, because there has to be paid a tax to
the Dutch government instead. This is called intra-community acquisition. (Wetten en regels - Importeren,
2016)
When companies want to sell products in Europe they first have to go through the customs (douane). Based on
the registration of the sold goods the customs calculate the import charges. The customs also determine if
there are any requirements that should be applied, for example on the field of safety and environment. (CPB,
2016)
Products from countries with which the EU has concluded a “free trade agreement” are subject to import duty
at a reduced or zero rate (Free trade market – Opportunity 4). Under the Generalized System of Preferences,
some goods imported from developing countries are subject to import duty at a reduced or zero rate. To claim
the reduced or zero rate, it is usually necessary to be able to show a certificate of origin form or invoice
declaration. (Customs tariff, 2016)
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3.2.8 Social cultural distance
The Dutch culture is very different in comparison with the Mexican culture. In order to define the Dutch culture
and to show differences between the Dutch culture and the Mexican culture, the model of Hofstede is used
(Hofstede, nd).
One thing is for sure: Sisao needs to know what they are up against when doing business in the Netherlands. If
Sisao wishes to export their product to the Netherlands successfully, they need to learn the cultural differences
between the two countries. If Sisao doesn’t know anything about the Dutch culture and they are going to do
business with them, the risk of unintentionally insulting each other will be higher. Therefore, understanding the
Dutch culture is a key element for doing business successfully in the Netherlands. The six dimensions visualized
in figure 4 by Hofstede, is a good start for understanding the cultural differences between the two countries.
The six dimensions are: power distance, individualism, masculinity, uncertainty avoidance, long term
orientation and indulgence, see figure 4 (Hofstede, n.d.). For the complete cultural analysis of each dimension,
see appendix 7.
In this paragraph certain topics will be analysed in order to know more about the potential customers of Sisao
in the Netherlands. These certain topics are: the market potential, the sales growth rates, the target groups,
the buying behavior and the buying process. The literature that has been used is, articles/researches on the
internet,
The 543 toko’s in the Netherlands are also very popular. Especially for foreigners. In these toko’s they can buy
food and beverages they had back in their home country. Since the number of foreigners is growing, the
number of toko’s are growing to. A lot of Mexican people in the Netherlands are going to toko’s to buy their
home products. It is most likely that these people will also buy the Cajeta.
3.3.4 SEGMENTATION
Segmentation of customers is dividing customers into groups that are relevant for a particular business. The
potential segments for Sisao are the oriental stores (Toko’s) and the ice-cream shops in the Netherlands. In this
part, the market will be divided in to specific segments. Each segment is a group of characteristics that help
evaluate the market. These B-to-B characteristics are:
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TOKO’S
In the Netherlands there are around 543 toko’s all over the country (Tokogids, 2015). A Toko is a shop in the
Netherlands selling mainly Asian food products of which the owners are generally Indo-European, Indonesian,
Surinamese, Latin American, Caribbean, Chinese or Vietnamese. For a picture of a toko in the Netherlands.
3.4 COMPETITION
In this paragraph the competition of Sisao is discussed. This is done by Porter’s five forces model and a
benchmark. Porter’s five forces model is about the industry in which Sisao operates. The benchmark is about a
company with a comparable product.
CONCLUSION
All forces together make for a moderately competitive industry. This makes the industry not attractive nor
unattractive. See figure 5 for the results of Porter’s five forces.
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3.4.2 BENCHMARK
This benchmark is a comparison between the performances and methods of Sisao and a leading company in
the same industry. A short analysis on both firms will be followed by an analysis on both products that are
similar to one another.
DE RUIJTER
De Ruijter is a traditional Dutch brand which has produced varied bread toppings for many years. De Ruijter’s
product range has expanded considerably and has become a household name in the Netherlands. The average
Dutch person eats 1 kilo of chocolate bread toppings per year. Chocolate sprinkles are the most popular
condiment: Dutch people eat more than 600 million sandwiches with this topping every year (Well established
competition – Threat 1). (Ruijter, 2016) The revenue of De Ruijter is illustrated in appendix 9.
CAJETA:
Cajeta is an authentic homemade product. It is a milk caramel spread to put on bread, pancakes, ice-cream and
more. Talking about export, Sisao can only export 1500 jars of Cajeta per month. With this capacity it will be
hard to reach a large group of people, which makes supermarkets as a selling point less suitable.
For the strengths and weaknesses, see paragraph 2.6.5: Conclusions: strengths and weaknesses.
BEBOGEEN :
Bebogeen is a product from De Ruijter which is similar to Cajeta. It is a caramel spread to spread on bread. The
main difference between these two products is that Bebogeen is thicker and easier to spread on bread.
STRENGHTS:
- Experience with the Dutch market;
- Well established (Royal) brand in the Netherlands;
- Easy to use/spread on bread.
WEAKNESSES:
- Only used on bread.
A benchmark has been made to show the difference between Cajeta and Bebogeen. This can be found in
appendix 10;
In appendix 11 a picture of how the Bebogeen is presented in the shelves of Albert Heijn in the Netherlands. In
this picture you can see the popularity of Bebogeen.
The distribution channel is the whole path in which goods and services travel from the vendor to the consumer,
as well as the payments involved. Exporting from Mexico to the Netherlands has a few intermediaries. Each
intermediary receives the item at one pricing point and moves it to the next higher pricing point until it reaches
the final buyer. In this paragraph, these subjects will be discussed.
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analysed. This supply chain is applicable to the product Cajeta from SISAO. See figure 6 for the possible supply
chain for the Cajeta from SISAO.
Kuehne en Nagel is world’s number one sea freight provider. With Kuehne en Nagel companies could benefit
from optimal transit and tailor-made pricing. By contracting with multiple carriers, Kuehne en Nagel can
accommodate the unique sea freight needs, regardless of scheduling requirements. (Kuehne en Nagel, 2016)
Amazing Oriental is a Toko store in the Netherlands with several selling points. These Toko’s are accessible for
everybody who is living in the Netherlands, also the foreigners such as Mexican or Argentinian people. Toko’s
are stores with food from another origin like Japan or Mexico.
This is determined by the number of levels or different types of intermediaries. A country’s economic
development provides the need for more efficient channels, first lengthening as more intermediaries enter the
distribution system, but later shortening as the number of channel layers decreases, as a result of efficiencies
such as vertical integration (Yi, 2007). Longer channels, those with several intermediaries, tend to be associated
with convenience goods and mass distribution.
The length of the channel is very important. There are two options; the direct channel or the indirect channel.
In figure 7 the channel length is illustrated.
Supplier raw
Manufacturer Distributor Retailer Consumer
Materials
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3.5.4 CAJETA CHANNEL POWER :
The power of a business in the distribution channel is determined by the control of marketing variables of
another member in the channel at a different level of distribution. The power of SISAO in its distribution
channel is medium. The power in this situation with Cajeta rests with the retailer who can command major
concessions from their suppliers. This type of power is most prevalent when the retailer commands a
significant percentage of sales in the market they serve and others in the channel are dependent on the sales
generated by the retailer. Cajeta is manufactured by Sisao and is supplied by Alexport since; The Netherlands is
a new market for Cajeta the product itself has no power to enter the market. The power to enter the market
and stay in the market relies on the amount of products that will be sold through the retailers. In other words,
the amount of sales. For the definition of channel power, and for the visualized channel powers, see appendix
13 & figures 8 & 9 (Distribution decicions, 2015).
3.5.5 DEVELOPMENTS
One of the developments is the improvement of transportation by roads. Also the logistic volume is expected
to increase by 3, 5%.
E-commerce is a way of buying which is growing really fast. (Betlem, 2015)
More information about these developments can be found in appendix 14.
Opportunities and threats regarding the external analysis of Sisao are formulated below.
Opportunities:
Threats:
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CHAPTER 4: SWOT ANALYSIS
To get an understanding of the current state and future of Sisao a SWOT analysis is conducted. The strengths,
weaknesses, opportunities and threats are confronted in a matrix and analyzed from there. The final output of
this are strategic options which can be selected by means of a test on suitability, acceptability and feasibility.
This chapter is supported by the following literature: book of Hollensen Global Marketing, articles/case studies
on the internet, and PowerPoints/lectures of International marketing. This chapter will give answer to the
following sub question: What are the best strategic options for Sisao to implement?
The following confrontation matrix confronts all the elements stated in the SWOT analysis. This model
confronts the strengths with opportunities, strengths with threats, weaknesses with opportunities, and
weaknesses with threats. After confronting the SWOT elements with each other, strategic issues can be
formulated. Areas with a positive score (+/++) are positive issues and areas with a negative score (-/--) are
negative issues. For the visual perspective of the confrontation matrix, see appendix 15.
Strategic options should address the strategic issues of the confrontation analysis, whilst staying consistent
with the objective of Sisao. In addition, relevant strategic options have been formulated for Sisao in order to
find a way to export their product to the Netherlands (Frambach, R, E. Nijssen, 2009).
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4.3.2 STRATEGIC OPTION 1: CREATE MARKET SHARE THROUGH TOKO’S
With this strategic option the market share in the Netherlands will be created by selling the product directly to
the Toko’s/oriental stores.
The strategic basis for this strategic option will be ‘Product leadership’. This strategic option was chosen
because SISAO stands for providing customers with high-quality products and Sisao is always looking for
opportunities to innovate their flavors (Sisao, 2016) (Kluin, 2014).
The product will be introduced to the Dutch market through oriental stores. Only minor changes will be applied
to the product. Therefore the product will stay the same. Besides the product, the Toko’s are a new niche
market for Sisao. Looking at the grow strategies of Ansoff, it can be concluded that the strategic development
will be ‘market development’ (existing product + new market) (Frambach & Nijssen, 2013) (Business Case
Studies, n.d.).
The goal is to increase sales by penetrating new markets in the Netherlands with the same product delivered
with the same high quality as in the home country (Kluin, 2014).
PRODUCT:
The label of the package of Cajeta needs to undergo some changes. The package needs to be changed in to
plastic (PET). The label will need adjustments, such as: a new name ‘Dulce de leche’ | ‘Cajeta’, servingtips
/functions (how you can use the product), and the ingredients need to be translated into the Dutch language.
The product is already known by some people in the Netherlands and sold online as ‘Dulce de leche’.
MARKET:
Toko’s in the Netherlands (B2B). See chapter 3.3.4 ~ segmentation ~ for more details about this niche market.
DISTRIBUTION CHANNEL:
Toko’s (B2B).
ENTRY STRATEGY:
Figure 10, see appendix 16, shows that hierarchical would be the best option for the entry strategy. In this case
the hierarchical mode approach is needed (Hollensen S. , 2011).
The best hierarchical mode is by selling the product directly to the retailers. This method relies mainly on
domestic-based sales representatives who directly contact the Toko’s, although results may be accomplished
by mailing brochures, catalogs, and other literature (Liraz, n.d.). “A domestic-based sales representative is one
who resides in one country, often the homecountry of the employer, and travels abroad to perform the sales
function. As the sales representative is a company employee better control of sales activities can be achieved
than with independent intermediaries. Whereas a company has no control over the attention that an agent or
distributor gives to its products or the amount of market feedback provided, it can insist that various activities
be performed by its sales representatives. (Hollensen S. , 2011)”
“The direct mail approach has the benefits of eliminating commissions, reducing traveling expenses, and
reaching a broader audience. For best results, however, a firm that uses direct mail to reach foreign retailers
should support it with other marketing activities (Liraz, n.d.).”
POSITIONING:
The positioning of ‘Cajeta’ will be the same in the Netherlands as in Mexico, because the product will not
undergo a lot of changes. Moreover, the product is authentic and needs to keep this position in the brain of the
consumer.
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STRATEGIC WINDOW
The preparedness of Cajeta as an international product could be considered as immature, because it is not
known to the Dutch market and the packaging is not really suitable for the Dutch market see figure 11 in
appendix 17. Since Cajeta is already sold online on sites like amazon and Mexican oriented sites it could be
potentially global. Also there are special kind of stores (Toko’s) in the Netherlands that sell international
products. In conclusion, seeking niches in international markets (4) should be the strategic window in this case.
The focus of the strategic basis ‘customer Intimacy’ of Treacy & Wiersema lies within creating and sustaining a
good relationship with the customer (van der Stek, 2015). In other words, Sisao needs to adapt their product to
the needs and wishes of their customers. The product will be a new product for the Dutch market. Moreover,
the niche market ‘ice cream stores’ is a new market for Sisao. Therefore, the strategic development of Ansoff
will be diversification (new market + new product) (Business Case Studies, n.d.).
A company such as SISAO doesn’t believe in a one-way transaction, they strive for a long-term oriented
relationship. Besides that, Sisao does not have any experience with the Dutch market whatsoever. In order to
find a way in a vivid market such as the Dutch market, SISAO needs to grab and hold on to their customers.
MARKET:
Ice-cream stores. See chapter 3.3.4 segmentation for more details about this niche market.
DISTRIBUTION CHANNEL:
Ice-cream stores (B2B)
ENTRY STRATEGY:
Figure 10, see appendix 16, shows that hierarchical would be the best option for the entry strategy. In this case
the hierarchical mode approach is needed (Hollensen S. , 2011).
The best hierarchical mode is by selling the product directly to the retailers. This method relies mainly on
domestic-based sales representatives who directly contact the Toko’s, although results may be accomplished
by mailing brochures, catalogs, and other literature (Liraz, n.d.). “A domestic-based sales representative is one
who resides in one country, often the homecountry of the employer, and travels abroad to perform the sales
function. As the sales representative is a company employee better control of sales activities can be achieved
than with independent intermediaries. Whereas a company has no control over the attention that an agent or
distributor gives to its products or the amount of market feedback provided, it can insist that various activities
be performed by its sales representatives. (Hollensen S. , 2011)”
“The direct mail approach has the benefits of eliminating commissions, reducing traveling expenses, and
reaching a broader audience. For best results, however, a firm that uses direct mail to reach foreign retailers
should support it with other marketing activities (Liraz, n.d.).”
POSITIONING:
Naturally, adaptations to the product must be made in order to fulfill the Dutch people needs. Besides that, the
focus needs to lie on the customer. The customer is the central subject of the positioning. So by any means
necessary, listening to what the customer has to say is key, and the need to react positively on every chance
the customer gives is respected. In general, the positioning of Cajeta will be the same as in Mexico.
25
STRATEGIC WINDOW:
Seek niches in international markets (Cell 4), see figure 11 in appendix 17. The product is immature because it
is not known to the Dutch market and packaging is not up-to-date to the Dutch standards. Since Cajeta is
already sold online on sites like Amazon and Mexican oriented sites it could be potentially global. Besides that,
niches such as ice-cream stores and Toko’s are all great opportunities to start doing business with, and a good
way to introduce ‘Cajeta’ to the Dutch people (Hollensen S. , 2011).
For selecting strategic options the SFA model of the Rustenburg Consultancy has been used (Rustenburg
Consultancy, n.d.). SFA stands for Suitability, Feasibility and Acceptability. This model helps to choose the right
strategic options. In this model the numbers from 1 till 5 are used to grade every element of the SFA model. 1 is
the lowest score an element can get and 5 is the highest score an element can get. For more detailed
information about the SFA model, the strategic options and for the explanation on the metric system, see
appendices 18 & 18.1 (Frambach, R, Nijssen E., 2009).
The SFA evaluation/assessment model of Rustenburg Consultancy (Rustenburg Consultancy, 2007) showed that
option 1 has scored the most points with 51 points. Option 0 – no changes of policy – scored 39 points, and
option 2 – adapting the product for ice-cream stores – has scored 41 points. This means that option 2 is the
second best after option 1. By means of this model it has been decided that Sisao is recommended to create
market share through Toko’s in the Netherlands. Therefore, option 1 will be further analyzed in order to give a
proper advice. For more detailed information about the SFA model, the strategic options and for the
explanation on the metric system, see appendix 18.1.
4.6 OBJECTIVES:
The following objectives are formulated for the first option and these need to be kept in mind for the next
upcoming 4 years. Chapter 7 Financial Control will give a clear overview of calculation used to reach objective
1.
Objective 1: gain at least a 20% growth rate of sales in total in the next 5 years after the introduction of Cajeta,
since the economy is growing, this is favorable for SISAO.
Objective 2: gain 10% in aided Brand Awareness per year after the first year of introduction since it is a new
product that is being introduced in to the market
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4.7 STRATEGIES
“The direct mail approach has the benefits of eliminating commissions, reducing traveling expenses, and
reaching a broader audience. For best results, however, a firm that uses direct mail to reach foreign retailers
should support it with other marketing activities (Liraz, n.d.).”
This will leave SISAO with 5 options, to contact retailers from Amazing oriental or get into contact with
Japanese/Koreans toko’s, that is from the market Chinese toko’s and other toko’s. The Amazing oriental toko’s
would be the best option since they import as wholesaler and have 20 stores around the Netherlands to sell
the product in.
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CHAPTER 5 | MARKETING PROGRAM
In this chapter, the 4 p’s (product, price, promotion, and place) of the marketing mix are analyzed for the new
situation of Sisao. In addition, the following sub question will be answered: what does the marketing program
look like for this situation? For this chapter the book Global Marketing by Hollensen, and articles/case studies
are used.
5.1 PRODUCT
Products are the goods and services that the business provides for sale to the target market. When developing
a product one should consider quality, design, features, packaging, customer service and any subsequent after-
sales service.
1. Product name has to be changed, Cajeta is not a name that the Dutch Market will understand it would be
wise to change the name on the label of the product to Caramel Spread.
2. The label must contain a picture of why the product is used for; this is for the consumer to have an
understanding of usage of the product.
3. The colour of the label has to be changed to a more appealing colour, a more appealing colour as for
example red would attract consumer’s eyes towards the products.
Second, the product is in a liquid state, the current glass container does not allow you to retrieve the product in
adequate way. It is wise to adapt the product container to a more suitable container that will allow the
consumer to adequately use the product. Suitable container is a plastic bottle as it will allow the consumer to
adequately use the product. The plastic bottle helps to get the product of the container easier to spread, with
no mess and will help storing the products longer period of time.
5.2 PRICE
Price concerns the amount of money that customers must pay in order to purchase the products. There are a
number of considerations in relation to price including price comparison competitors. During the field research
in the Netherlands it was concluded that the focus was to find similar product or products and compare
functions and prices. The results of the field research are mentioned in the sellingprice table 1: Prices are in
28
Euros. Price table 1: selling price competitors
As mentioned earlier in the marketing mix, Sisao can still continue using the cost-plus pricing strategy to
determine the sales price. This is a pretty straightforward way of determining the sales price because there
only has to be a mark-up/(profit) margin added to the cost of a product (Schofield , n.d.) (Sisao, 2016).
5.3 PROMOTION
Promotion is an act, event, or offer that helps marketers communicate or to provide information to different
agents in order to increase interest in or demand for something.
Promotion is mainly done by a sales representative. In order for the marketer to qualify as a sales
representative it must possess certain qualifications. Moreover, the domestic sales representative also has
responsibilities that it has to be taken into account to achieve the necessary sales objectives. These
responsibilities and qualifications are stated in appendix 19.
Provide Amazing Oriental with a 5% discount on the product price of every 1000 unit it orders from Sisao,
this ensures that Amazing Oriental can also provide is consumers with Sales actions.
Maintaining a close relationship with your distributor is a very important role in receiving feedback about
the sales of a product. Communication ensures that your distributor is always happy and up to date with
your product or any type of information that could be useful. Relationship building typically includes
regular visits - for example, inviting wholesalers to visit your factory, or meeting with sales agents to
discuss sales plans and any concerns they might have.
- First 100 bottles of the Product comes with a little book placed on to the label so the consumers can
see various recipes that Products could be used for.
- Use a stand for the Sampling of the product in Amazing Oriental to get feedback from customers
- Provide Amazing Oriental with posters and booklets every 3 months for the first year to place in
stores
5.4 PLACE
Refers to providing the product at a place, which is convenient for consumers to access. Various strategies such
as intensive distribution, selective distribution, exclusive distribution and franchising can be used by the
marketer to complement the other aspects of the marketing mix.
The place of where the Cajeta should be sold is already settled: in the oriental Toko stores. This paragraph will
show the Netherlands and where the Oriental stores are located.
29
There are 17 million people living in the Netherlands. Beneath you’ll find a list of the cities with the most
inhabitants. (Bevolkingteller, 2016)
According to the CBS, 5548 Mexican people are living in the Netherlands. Also another 5245 Argentinian. These
people know Cajeta and are likely to buy the Cajeta. Most of these people are living in big cities like:
Amsterdam, Den Haag, Arnhem, Eindhoven and Groningen. (Bevolking, 2015)
In figure 12, the oriental stores divided over the Netherlands are shown. As you can see the stores are spread
over the whole country and not all at one region. When you take a look at the city names you can see that
these are the cities where most of the Mexican and Argentinian people will be.
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CHAPTER 6 | IMPLEMENTATION AND CONTROL
The efficiency and effectiveness of a strategy implementation determines the results of the marketing plan. In
this chapter the focus will be on the implementation of the strategy and the control. The visualized
organizational structure can be found in appendix 20. Multiple sources for this part were used. The following
sub question will be answered: How is Sisao going to implement and control the advised strategies?
A domestic sales representative doing business in the Netherlands could face certain cultural differences and
complications. These cultural and complication can be seen on chapter 3.2.8 social cultural differences of the
Macro environment.
In order to overcome these differences and have a better communication, the Mexican Sales Representatives
will undergo an intercultural training. This intercultural training will serve for a better communication and in
order to be able to do business and cope with the differences in culture that may occur during meetings or
presentations.
To execute the strategic option there are a couple of steps that need to be achieved in order to implement this
strategy. The following steps need to be achieved before the strategy can be executed.
1. Hire a Mexican Sales Representative to have constant contact with Dutch Client.
2. Discuss terms of agreement and find agreement with the client, contact info of purchasing manager
can be found in Appendix 31;
3. Control and ship first shipment to the Netherlands
In order to manage the progress and the process, there is a timetable with objectives.
This timetable will determine if the progress is on schedule, see appendix 21+21.1 for the timetable.
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CHAPTER 7 | FINANCIAL CONTROL
This financial plan is about the expected consequences of exporting abroad. The group members discussed the
strategic option with the client and together was decided to change the package of Cajeta. Therefore this
financial plan is based on this strategic option which is about changing the package to make it more suitable for
buyers like Amazing Oriental. The first paragraph is about the sales. In the second paragraph the possible price
has been calculated. The third paragraph is about the costs that occur with exporting. All these numbers
together will show a profit and loss statement in paragraph four. In paragraph five the exchange rate will be
discussed. And the last paragraph is about the gross margin, profit margin, break- even analysis and return of
investment. An advice will be given in chapter 9, and sub question number 6 will be answered.
First important thing is that the actual sales depends on whether there is contact with a potential buyer in the
Netherlands. This contact will be via a domestic sales representative. When the potential buyer decides to buy
the product there are still many things to take into account. Does the buyer want to buy a lot or only a few?
When do I want to ship and when do I decide not to?
For this research the potential sales are calculated with the interviews with employees from the ice cream
stores and Amazing Oriental. There was contact with employees from Amazing oriental and random people to
ask what they think about the product.
Segmentation number of % amount of amount of amount number of sales per sales per sales
stores interested orders per boxes per per box point of point of year per
in product year order sales sales month
Amazing 20 60% 12 3 12 12 432 5.184 432
Oriental
Table 3: potential sales
Based on the strategic option the Amazing Oriental (toko’s) was chosen as a potential buyer. Amazing Oriental
has 20 stores spread over the country and is the largest toko selling point. Around 60% of the interviewees
would consider buying the product. This makes the total amount of possible interested stores 12. When each
store would buy 12 times a year, 3 boxes per order with 12 in a box: the total amount of sales would be 5.184 a
year.
The orders per year and the order amounts should be based on the objectives of the potential buyer. These
objectives are about the minimum amount of products they want to have and the maximum capacity of
storage. Since these amounts will be discussed in negotiations between the client and the potential buyer this
knowledge is not available. Therefore the field research is used. Albert Heijn shelves could consist of around 20
bottles of 360grams Bebogeen. Supposedly Albert Heijn would want to keep some products behind when the
demand is high. Also the amount of orders per year is based on assumptions.
Again: the amount of sales are based on assumptions and there will be no sales when there is no contact
between the two parties.
Based on the advised marketing plan the sales are expected to grow. In the third paragraph the costs that are
involved with this marketing plan can be found. The outcome is expected to be:
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Table 4: sales volume
The most marketing and advertisement will be done in the first year of selling abroad. After that only the sales
representative will be negotiating the sales. This is why the second year the largest increase in sales may occur
and the years after a steady 5% increase. This is based on an increase in people knowing about Cajeta.
To calculate the selling price some information from the client was acquired. Since the strategic options
advised to change the package this was a difficult part. The actual numbers may differ a bit, but the client will
get an idea about what the price approximately will be.
margin € 0,73
selling price excl. tax € 4,36
VAT € 0,26
selling price incl. tax € 4,62
Table 5: selling price incl. tax
The production cost of 370ml Cajeta is €1, 55. In the strategic option the bottle would change from 370ml to
250ml. This means that the production cost will be €1, 05 instead of €1, 55. The costs regarding the distribution
in Mexico were stated at €1, 03. More information about the shipment costs can be found in Appendix 22.
The selling price in Mexico is €3,10 and the costs are €2,58. These numbers were given and with these numbers
the margin can be calculated. There’s a margin of €0,52 over the costs per product. That is a margin of 20,16%.
When this percentage is used in this scenario the margin would be €0,73. The selling price without taxes would
then be €4,36 and with taxes €4,62. In the Netherlands a percentage of 6% is used on foods and beverages.
To get an idea of how low or high the price of €4.62 is, a similar product (that is sold online) is researched. On
Amazon a 400 gram bottle of Dulce de Leche is sold for $13,99. This translates to a 250ml bottle for €9,79. This
price is 111,9% higher. This means that the mark up percentage of Amazing Oriental could be incredibly high
and the price would still be in range of the similar products that are sold online.
7.3 COSTS
In this paragraph all the costs are divided per subject. In order to show the loss/profit per year all the costs
have to be calculated. These costs are production costs, logistic costs, sales & marketing costs and other
operational expenses. The explanation about these numbers can be found in Appendix 22.
The profit and loss statement is based on all previous paragraphs. When there are questions these paragraphs
should be examined.
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Normal scenario year 1 year 2 year 3 year 4
The revenue is based on the amount of sales multiplied by the calculated selling price. The first year there is a
loss, because of the high expenses on sales & marketing. These high expenses are expected to result in an
increasing amount of sales. As you can see after the first year the increase in sales will make selling to the
Netherlands profitable.
The upper left of table 11 shows it is about the normal scenario. In Appendix 23, the sales and profit- and loss
statement of the worst and best case scenarios can be found. These scenario’s will give an idea about the
change in profitability when the amount of sales changes. With these scenario’s it will be clear when to decide
not to export to the Netherlands.
Retailers in the Netherlands have a strong position when it comes to negotiating about sharing risks. It is very
unlikely they would want to share the risk of depreciating currencies.
The highest exchange rate in the last year was: 1 euro = 21,49 pesos. (Currency Converter, 2016)
The lowest exchange rate in the last year was: 1 euro = 16,88 pesos. (Currency Converter, 2016)
To get an idea how much of a difference this is in revenue in pesos in the first year:
$515.066,63 (highest rate);
$404.575,37 (lowest rate).
This is a difference of 27, 31% (based on the lowest rate).
If you compare these two exchange rates they are quite similar. It is very likely that the lowest and highest
exchange rates will balance each other out. Besides that the retailers in the Netherlands have a very strong
position and therefore actions to lower the risk won’t be necessary.
In this paragraph the ratios are discussed as well as the break-even analysis. The ratio’s are based on all the
numbers that are given in chapter 7. The breakeven analysis is a formula to determine at what amount of sales
Sisao should sell or not sell to the Netherlands.
The gross margin is the difference between the revenue and the cost of goods sold divided by the revenue. The
cost of goods sold changes equally to the revenue and therefore these percentages stay the same. The profit
margin is the profit divided by the revenue. Based on the marketing plan the expenses on marketing are higher
34
in the first year. This can be seen in the table below. The first year the profit margin is negative. Since there
isn’t really an investment in things like machinery the return of investment is based on the profit divided by the
costs. Like the profit margin the first year shows a negative percentage as well. And after that the return of
investment is increasing. Lastly the return of investment over 4 years was calculated. This was done by
summing all the profit numbers and dividing it by all costs over 4 years. This will result in a positive percentage
of 6%.
Ratio's:
gross margin% 77% 77% 77% 77%
profit margin -2% 8% 8% 9%
ROI (profit / cost) -2% 8% 9% 10%
ROI 4 years average (profit / 6%
cost)
The ratio’s show that expanding business can be profitable, because there is a positive return of investment
over 4 years. These numbers are based on expected sales which are partially based on assumptions. Therefore
these numbers shouldn’t be taken for granted. Since the actual amount of sales will most likely differ from
these calculations a breakeven analysis has been made. The breakeven analysis will show at what amount Sisao
should sell or not sell to the Netherlands.
𝑇𝑂𝑇𝐴𝐿 𝑅𝐸𝑉𝐸𝑁𝑈𝐸 (𝑠𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 ∗ 𝑥) = 𝑇𝑂𝑇𝐴𝐿 𝐶𝑂𝑆𝑇𝑆 ((𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡𝑠 ∗ 𝑥) + 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠)
€3,57x = €76.405,43
x = 21.403
The formula shows that in 4 years Sisao has to sell 21.402,08 products to cover all costs that occur in those 4
years. Sisao tends to sell 1.000 bottles each month which is a total of 48.000 in 4 years. The break-even point is
much lower which means that Sisao could sell almost half of the amount they want to and still cover all
expenses. Since selling to the Netherlands is profitable from the point where Sisao sells more than 21.403 the
advice is to try to sell at least 21.403 products and if possible many more. If Sisao can’t reach this number than
it is smarter to decide not to export and try to expand in Mexico.
35
CHAPTER 8 | INTERNATIONAL LAW
When exporting from Mexico to the Netherlands, there will be a few subjects to take care of regarding the
Mexican and Dutch laws. As a supplier you want to make sure you get the money, and as a buyer you want to
make sure you get the goods. The goods need to be transported from Mexico to the Netherlands. All these
aspects need to be discussed with the parties who are participating in this process. In this chapter different
subjects are discussed which applies for SISAO. This is an advice which should be taken in consideration, but
these aren’t the only ways that must be followed. There are other methods and terms that can be chosen. The
following sub question will be answered: What are the legal implications of entering the Dutch market?
8.1 CISG
The abbreviation CISG is also known as international sale of goods. The purpose of the CISG is to provide a
modern, uniform and fair regime for contracts for the international sale of goods. Thus, the CISG contributes
significantly to introducing certainty in commercial exchanges and decreasing transaction costs. (Sale goods,
2016) More information about the CISG can be found in Appendix 24.
Both Mexico and the Netherlands are member of the CISG. SISAO should not make use of the CISG. The CISG is
strongly directing to remedy the damages in breach of contract. The supplier will apply only in specific cases,
ability to repair or replaces the defective product. Furthermore, the applicability of terms and conditions which
includes the conditions of sale, is difficult compared to the Dutch law. These disadvantages are too risky to
apply. SISAO is too inexperienced in order to take on this risk. Not using the CISG means that there will be an
extra contract needed. The following subjects needs to be handled in the sales contract. (Voordelen
leverancier, 2016)
8.2 INCOTERMS
Incoterms is short for ‘International Commercial Terms’ (Harlaar, Ouwehand, & de Leeuw, 2012). These terms
or regulations were formulated by the International Chamber of Commerce (ICC). The Incoterms were made to
avoid or to reduce any inconsistencies and uncertainties arising from the different interpretations of
contractual terms in different countries. Furthermore, the uniform guidelines of the Incoterms reduce the risk
of legal complications and misunderstandings resulting from different trading practices (Harlaar, Ouwehand, &
de Leeuw, 2012). You’ll find more information about the incoterms in Appendix 25.
The Incoterm that concern with the contract from SISAO to the buyer is the CIF (Cost, Insurance and Freight).
CIF is a maritime condition. The transport is in the hands of the seller. The seller also bears the transport risk. It
is an ‘on-water’ condition. (Incoterms, 2016) This because in order to build a relationship with customers in the
Netherlands, SISAO will have to ensure that the products reaches its destination safely. Also SISOA will have to
pay for insurance against the buyer’s risks of loss or damage of the goods during the carriage. This will end up
in a relationship built on trust. Cajeta is a liquid product in glass. This may cause problems during the export. If
these glasses break, everything is a waist. In order to continue with the strategy of SISAO to build trust with its
buyers SISAO has to make sure that the buyers investment is completely covered during its carriage. (Harlaar,
Ouwehand, & de Leeuw, 2012).
The second best choice is CIP (Carriage and Insurance Paid to). Within CIP the transport is in the hands of the
seller. However, the buyer bears the transportation risk. Using this incoterm you won’t have a big risk in
transporting, however the purpose of building a relationship will be less.
Delivery and payment terms are agreements with the buyer and the supplier about the delivery and payments
of the goods. In this part of the contract is said when you can expect the goods you ordered, when the
payment must be done and how the payment must be done. These terms are meant for both the buyer and
36
supplier, for the buyer to get his goods when he has purchased them. And for the supplier to get his money
when he has send his goods. When one party is not following these rules there will be consequences. (General
termst privacy policy, 2016). Different payment methods are further explained in Appendix 26.
The important delivery terms are already put together with the Incoterms, the payment terms are not. Using
the payment method letter of credits would be best for SISAO. This method is the safest method for both
parties, even though it is the most expensive method for new relationships between two parties, it will avoid a
lot of risks. Both parties will pay only if all terms of the deal are met. Since letters of credit is an expensive
payment method, both parties should be willing to change the method within time, when both parties trust
each other. You can choose a less strict and a less expensive method. (Trade finance guide, 2016) More
information about bank details for letters of credits can be found in Appendix 27.
The second best choice is using the documentary collections. This is a less expensive method, but both parties
need to trust each other already. The supplier needs to trust the bank for collecting the money for his sale, and
that the bank will send the documents the buyer needs. Then the buyer needs to pay the bank in exchange for
the document. Using this option there is more trust needed. (Trade finance guide, 2016). The big difference
between letter of credit and documentary collections is that letters of credit are opened by the issuing banks
with the request and authorization which they have received from the applicants. Applicant is the importer in a
commercial letter of credit. As a result letters of credit are initiated by the importers. On the other hand, cash
against documents or documentary collections as we called them in trade finance are initiated by the
exporters. (CAD vs LC, 2016)
Mexico is using the Mexican pesos and in the Netherlands they use the Euro. SISAO needs to choose which
currency they would like to use. The best option is to do business in Euro’s. At first because there are a lot of
countries who are using the euro. If SISAO wants to do business with other parts of Europe, then it is a plus that
they already use the euro. And second, the euro has become less worth in Mexico. You can say the Euro lands
are becoming cheaper and cheaper and that is positive for Mexican companies. (Mexico Peso, 2016). The
exchange rate from the past three years can be found in Appendix 6.
A quality guarantee is an assurance of quality and customer satisfaction issued by a company and offered
primarily to paying customers who have purchased products or services from the company. These guarantees
can take a number of different forms and functions, depending on the type of services or products provided by
a company, but can typically involve a partial or full refund of money paid, as well as a replacement of products
and providing the service again. A quality guarantee is typically handled by individual companies, and while
there is not necessarily a specific industry standard for what it might cover, the guarantee will usually be
posted or explained in detail for customers to be aware of before buying a product or service. (What is quality
guarantee, 2015)
SISAO should guarantee that the product won’t be damaged when it arrives at the buyer. This because SISAO
should choose for the CIF incoterm in which an insurance of undamaged goods is taken into account. Cajeta is a
homemade product produced in a family company. People in the Netherland like homemade product. This is a
quality which Dutch people like for their products. When SISAO can guarantee this quality, it is likely that more
people would like to buy the Cajeta.
There are two different ways of exporting, direct exporting and indirect exporting. The principal advantage of
indirect exporting for a smaller company is that it provides a way to penetrate foreign markets without the
complexities and risks of direct exporting. Several kinds of intermediary firms provide a range of export
services. Each type of firm offers distinct advantages for the company. The advantages and disadvantages of
direct exporting for a company is that it includes more control over the export process, potentially higher
profits, and a closer relationship to the overseas buyer and marketplace. These advantages do not come easily,
37
however, since the company needs to devote more time, personnel, and corporate resources than are needed
with indirect exporting. (Export, 2015) The advantages and disadvantages of direct and indirect exporting can
be found in Appendix 28.
As mentioned earlier, figure 10, see appendix 13, shows that hierarchical would be the best option for the
entry strategy. In this case the hierarchical mode approach is needed (Hollensen S. , 2011).
The best hierarchical mode is by selling the product directly to the retailers. This method relies mainly on
domestic-based sales representatives who directly contact the Toko’s, although results may be accomplished
by mailing brochures, catalogs, and other literature (Liraz, n.d.).
“A domestic-based sales representative is one who resides in one country, often the homecountry of the
employer, and travels abroad to perform the sales function. As the sales representative is a company employee
better control of sales activities can be achieved than with independent intermediaries. Whereas a company has
no control over the attention that an agent or distributor gives to its products or the amount of market
feedback provided, it can insist that various activities be performed by its sales representatives. (Hollensen S. ,
2011)”
When importing in to the Netherlands, there will be rules that the supplier have to take into account. These
rules are based on different subjects like ecology and economy. These are rules to keep the Netherlands a
clean country. There are sanctions for some countries, people or regions because of their politics (during war).
There will also be a check if the products are indeed what the documents state they are. There’s also a check
for dangerous ingredients. These elements need to be taken care of before arriving in the Netherlands.
When importing from Mexico in to the Dutch market, there will be a commodities act. The commodities act
makes sure that imported goods have the right label. Not only the right label but also that the product will do
no harm. The commodities act from the Netherlands should be consulted. In the commodities act all the
specifications and conditions which have to be met can be found. (Commodities act, 2016). When you don’t
follow the rules SISAO can get fines or SISAO needs to call all their products back. (Wat houd de warenwet in?,
2016)
There need to be arrangements with the supplier. This will be a product supply agreement. A product supply
agreement is an agreement between a two parties for supplying and purchasing products. The agreement
specifies the terms upon which the parties agree to supply and purchase products from each other. The
agreement makes the buyer and seller understand their responsibilities and obligations under the agreement.
The supplier supplies the products and the buyer purchases these products for business purposes according to
the terms agreed under the product supply agreement. (Product supply agreement, 2016). In appendix 29 a
checklist of subjects which can be discussed and applied in the product supply agreement is shown.
SISAO needs to have a product liability insurance. When something goes wrong in the production it has
influence on the people abroad. People can get sick which will cost the company a lot of money. (Producten
importeren, 2016)
More aspects about importing in to the Netherlands can be found in Appendix 30.
38
CHAPTER 9 | CONCLUSIONS
In this chapter the main question will be answered through answering the sub questions.
Main question: Which strategies can Sisao implement in order to introduce Cajeta into the Dutch market?
The provinces with the highest population density and with the highest income are North and South Holland.
Logically these are the provinces with the most foreign people and therefore the most toko stores.
Based on the five forces model from Porter, the industry Sisao operates in is considered moderately
competitive. The Dutch market is growing steadily and the customers in the spread on industry are loyal. The
market potential of the food and spread on industry is estimated to an amount of 70, 79 billion euros. This will
increase to a total amount of 83, 70 billion euros in 2016.
Looking at the grow strategies of Ansoff, it can be concluded that the strategic development will be ‘market
development’ (existing product + new market) (Frambach & Nijssen, 2013) (Business Case Studies, n.d.).
When focusing on the toko’s in the Dutch market, Sisao will have to differentiate the product in order to fit
with the abroad market. In this case a differentiation focus strategy is applicable by Sisao.
Sisao will also have to concentrate on an Informational positioning because Cajeta is an existing product in a
new market. SISAO will have to position itself on concentrating in showing the functional properties of the
product.
WHAT DOES THE MARKET ING PROGRAM LOOK LIKE FOR THIS SITUATION ?
To correctly implement the strategy, Sisao created steps that had to be achieved and a milestone plan where
there are certain achievements that will have to be achieved by a certain date in order for the strategic option
39
to be correctly implemented. To control that the strategy is going as planned Sisao will use the PDCA
management model, as they will implement the plan control and act on any alterations that have to be done.
Product: the advice label has to communicate with the Dutch market. Adaptions that must be done to the
product label:
Sisao will continue using the cost-plus pricing strategy to determine the sales price. This is a pretty
straightforward way of determining the sales price because there only has to be a mark-up/(profit) margin
added to the cost of a product
Promotion: to sell in the Dutch Market is through sales promotion done by Sisao Sales Representative to
Amazing oriental, Sales promotion aims to better the distribution of the product, in the form of Providing
Amazing oriental with a 5% Discount.
The best ways to promote and to reach out to the target group is, by doing direct marketing, and this includes:
The place of where the Cajeta should be sold is already settled: in the oriental Toko stores in the Netherlands.
𝑇𝑂𝑇𝐴𝐿 𝑅𝐸𝑉𝐸𝑁𝑈𝐸 (𝑠𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 ∗ 𝑥) = 𝑇𝑂𝑇𝐴𝐿 𝐶𝑂𝑆𝑇𝑆 ((𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡𝑠 ∗ 𝑥) + 𝑓𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠)
The formula shows that in 4 years Sisao has to sell 21.402,08 products to cover all costs that occur in those 4
years. Sisao tends to sell 1.000 bottles each month which is a total of 48.000 in 4 years. The break-even point is
much lower which means that Sisao could sell half of the amount they want to and still cover all expenses.
Since selling to the Netherlands is profitable from the point where Sisao sells more than 21.402,08, the advice
is to try to sell at least 21.402,08 products and if possible many more. If Sisao can’t reach this number than it is
smarter to decide not to export and try to expand in Mexico.
The calculated selling price is €4, 62 including taxes. The selling prices found on Amazon for example were
higher. On Amazon the selling price for a 250ml bottle of ‘Dulce de Leche’ was around €9,79. Selling to a
retailer like Amazing Oriental is different than selling to companies like Amazon. Amazing Oriental will care
more about the price than Amazon. Therefore the best thing to do is to try to keep the price as low as possible.
40
As said in paragraph ‘selling price’ of this financial plan the differences between the shipping companies in
prices are high. Therefore the advice is to contact different shipping companies and compare prices with one
another. This can save the company lots of money and may also lower the price. Kuehne & Nagel could be an
expensive company to ship with.
All the calculations together and especially the profit and loss statement has shown that exporting Cajeta to
the Netherlands has potential. It will all come down to negotiations between two parties and finding a buyer.
Therefore the domestic sales representative is an important link.
1. The Incoterm that concern with the contract from SISAO to the buyer is the CIF. This because in order
to build a relationship with our customers in the Netherlands, SISAO will have to ensure that the
products reaches its destination safely.
2. Payment terms: Delivery and payment terms are agreements with the buyer and the supplier about
the delivery and payments of the goods. In this part of the contract is said when you can expect the
goods you ordered, when the payment must be done and how the payment must be done.
3. Guarantee of quality: A quality guarantee is an assurance of quality and customer satisfaction issued
by a company and offered primarily to pay customers who have purchased products or services from
the company.
4. Dutch commodities :The commodities is an act which makes sure that imported goods have the right
label, the right making of the label but also is the product will do no harm to the people in the
Netherlands.
5. Export Taxes and Duties when importing goods into the EU, you normally have to pay import duties.
You pay the import duties on a 'basis of assessment'.
41
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51
APPENDIX
|ACTION PLAN|
|LA CAJETA|
Lecturers: Robin Zweedijk, Winny Goldman, Harriët van Munster, Edwin Vermeulen,
Tonnie van Haastrecht, Lucienne Wiskerke, Robert Westra
Date: 24-04-2015
52
FOREWORD
This project is part of the study program which is about getting a clear understanding on Latin
American and European markets. This will be achieved by combining theory and practice and getting
hands on experience in communication with Latin American partners. The aim of the project is to
advice the client if or how the organization is able to expand its business as profitable and sustainable
towards the Netherlands. After analyzing the Netherlands with market research, the advice will be laid
out in an international marketing plan. Midterm advances and final advice presentation will be
presented to the client.
The purpose of this Action plan is to outline the project activities and to have a clear picture of what
has to be done.
In this action plan first there will be a description of the reason why this project is carried out. After
that the definition of the problem will be discussed, which consists of the purpose, the main question
and the sub-questions. Also the method of research will be covered in this action plan. At the end
there will be some information about the planning of this project.
53
Table of Contents
54
ABOUT ALEXPORT - SISAO
Alexport is a big company which has different sub companies. One of these sub companies is Sisao
which group four is going to do business with. Alexport’s vision is to consolidate as an export consortium
on food and beverage sectors, promote and distribute innovative and safe products offering them to
national and international selective markets. They want to keep alert of legal requirements and are also
willing to get certificates to do business abroad.
Sisao is about a 2 hour drive away from Mexico city. It is a company which sells different food products.
One of these products is called Cajeta which is a milk-caramel spread. This is the product where the
research is about. The focus of selling this product is on business to consumer.
REASON
Cajeta is a successful product in Mexico and other countries in Latin America and may be appealing in the
Netherlands as well. To know if Cajeta is indeed appealing to Dutch people, research has to be done.
Useful information could be obtained by letting Dutch people taste Cajeta. Also information about the
Dutch market is necessary to know whether expanding business is a smart move.
Therefore the reason of this research is to obtain information about consumer behavior in the
Netherlands and the Dutch market, so a business plan can be created.
55
56
FORMULATION OF THE PROBLEM
Alexport has insufficient knowledge about the Dutch market. Alexport would like to gain and possess
more information about this subject, so they will have a clear overview of the opportunities and threats of
this matter. The main and sub-questions that have been formulated will, if they can be answered, provide
enough insight into this matter and thus provide new relevant knowledge for Alexport.
OBJECTIVES
Alexport want to sell Cajeta in the Netherlands. Group 4 will give insight in the Dutch market and an
advice about which entry strategy to use for exporting Cajeta to the Netherlands.
MAIN QUESTION
Which strategy can Alexport implement in order to introduce Cajeta in the Dutch market?
SUB-QUESTIONS
1. How does the Dutch public react to Cajeta?
2. How to get the Dutch people to know about Cajeta?
3. What is the best way to transport Cajeta to the Netherlands?
4. What are the legislations or restrictions when exporting Cajeta to the Netherlands?
5. What are the costs involved with exporting Cajeta to the Netherlands?
6. What will be the advantages or disadvantages of exporting Cajeta to the Netherlands?
Only the Netherlands will be investigated, because Alexport wants to know if their product Cajeta is
suitable for this market.
The semi-structured interviews will be held only amongst students at the HAN, people at supermarkets,
and amongst family/friends.
This document will be handed in at 29th of March 2016 (deadline).
57
METHOD OF RESEARCH
In this research the needs and wishes of the people living in the Netherlands will be comprehensively
investigated and mapped out. As previously described, in the formulation of the problem, the goal is to
give insights in this matter so Alexport and Sisao can eventually make a new strategy to export their
product successfully in to the Dutch market. This research will be carried out by means of desk research
and field research.
The AAOCC criteria will be applied for the desk research. Therefore only reliable sources will be used.
The field research includes an online survey that will be held amongst as many respondents as possible
to create the highest possible level of reliability and representatively. This survey will be made in order to
receive information about the needs and wishes of the potential customers in the Netherlands. This
information is new information that couldn’t be found with the desk research and because the data
wasn’t up to date. For the field research every method for the reliability and usefulness is used.
Moreover, it is assumed that this information will provide a sufficient amount of knowledge about the
Dutch market, and that it will eventually lead to the answer of the main question. The questions of the
survey will be made clearly for people to understand and the list of the questions will be short so people
can finish the survey within 5 minutes. Naturally, at the end of each survey respondents will be thanked
for their efforts.
58
POPULATION
Everyone with the age of 10 to 90 will be allowed to fill in the survey. The marketing resources that will
be used with the advertising of filling in the survey will go through face- to –face contact at locations
such as, the HAN in Arnhem, supermarkets, restaurants, family and through work. These people that will
fill in the survey will function like a focus-group for the rest of the Netherlands.
RESEARCH TECHNIQUE
Everyone in the population has the same amount of chance to get in the face- to –face survey.
Therefore, the sampling technique that will be used in this research is the independent identically
distributed random variables (a random sample).
PLANNING
The communication with the all the group members will go through phone (Whatsapp), e-mail and verbal
contact. Every week there will be a meeting to discuss the current situation. For a complete overview of
the planning, see below. For the structure of the project, see appendix.
Year 2016
Month March
Week 1 2 3 4 5 6 7 8
Activities concerning
Sisao
Discussing the current situation
Desk research
Compile a Survey
Field research
Processing information
Research evaluation
Finishing final report
BIBLIOGRAPHY
Rowe, C. (n.d.). Purposes of Research: Exploratory, Descriptive & Explanatory. Retrieved March 23, 2015, from
http://study.com/academy/lesson/purposes-of-research-exploratory-descriptive-explanatory.html
59
APPENDIX ACTION PLAN
60
APPENDIX 2: RESULTS FIELD RESEARCH
Field Research Results:
Field Research Table 1 shows what the visited stores thought about the taste of Cajeta.
do not like
26,67
nuetral
like
60 too sweet
60% of the 15 stores visited answered that they liked the Taste of Cajeta.
26.67% of the 15 stores visited answered nuetral/ did not care for the Taste of Cajeta.
13.33% of the 15 stores visited answered that they liked the Taste of Cajeta but, was too sweet.
0% of the 15 stores visited answered did not liked the Taste of Cajeta.
Field Research Table 2 shows with what other product Visited stores would combine Cajeta with.
Cake
33,33 Ice-cream
46,67
Pan-cakes
Crepes
13,33
Bread
6,67
46.67% of the 15 stores visited answered that they would use Cajeta with Bread.
33.33% of the 15 stores visited answered that they would make Ice cream out of Cajeta.
13.33% of the 15 stores visited answered that they would use it with Pancakes.
6.67% of the 15 stores visited answered that they would use Cajeta with Crepes.
0% of the 15 stores visited answered that they would use Cajeta for Cake.
61
Field Research Table 3 shows the procentage of how much Customer will pay for a jar of 370 grams of Cajeta.
Field Research Table 4 shows the procentage of what the Cajeta should improve.
taste
looks
20
Price
60
texture
62
Field Research Table 5 shows the procentage of what jar size would be the best size to sell the product in.
20 20
165 grams
370grams
20 500grams
1Liter
40
Field Research Table 6 shows the procentage of how many stores like the texture of Cajeta.
20
26,67 too liquid
perfect
Dense
Solid
53,33
Field Research Table 7 shows the procentage of stores visited that Would buy the product.
63
7. would you buy this product ?
40
no
yes
60
Balance of Trade 3111 EUR Million Dec/15 4168 -908 : 5248 Monthly
GDP Annual Growth Rate 1.6 % Dec/15 1.9 -4.9 : 6.1 Quarterly
GDP Constant Prices 163229 EUR Million Dec/15 162797 79960 : 163229 Quarterly
Gross National Product 156083 EUR Million Sep/15 165017 76625 : 173844 Quarterly
Gross Fixed Capital Formation 34869 EUR Million Dec/15 33528 15537 : 37064 Quarterly
GDP per capita 43141 USD Dec/14 42894 13162 : 45149 Yearly
GDP per capita PPP 45281 USD Dec/14 45021 32534 : 47388 Yearly
GDP From Agriculture 3290 EUR Million Dec/15 3216 1889 : 3290 Quarterly
GDP From Construction 7303 EUR Million Dec/15 6458 5717 : 9923 Quarterly
GDP From Manufacturing 17954 EUR Million Dec/15 17683 12626 : 18817 Quarterly
GDP From Mining 3396 EUR Million Dec/15 1590 1590 : 8463 Quarterly
0
Overview Last Reference Previous Range Frequency
GDP From Public Administration 10241 EUR Million Sep/15 11551 9212 : 11769 Quarterly
GDP From Services 31415 EUR Million Dec/15 30226 17494 : 31415 Quarterly
GDP From Transport 7308 EUR Million Sep/15 7064 4317 : 7491 Quarterly
GDP From Utilities 879 EUR Million Dec/15 913 542 : 968 Quarterly
Long Term Unemployment Rate 2.9 % Sep/15 3.1 0.9 : 4.3 Quarterly
Labour Costs 99.54 Index Points Sep/15 117 66.63 : 118 Quarterly
Wages in Manufacturing 109 Index Points Jan/16 108 59.1 : 109 Monthly
Full Time Employment 4092 Thousand Sep/15 4048 4016 : 4705 Quarterly
Labor Force Participation Rate 64.4 % Sep/15 64.5 61.7 : 67.1 Quarterly
1
Overview Last Reference Previous Range Frequency
Part Time Employment 4061 Thousand Sep/15 4073 2817 : 4073 Quarterly
Wages High Skilled 2800 EUR/Month Dec/15 2800 2760 : 2800 Quarterly
Wages Low Skilled 1300 EUR/Month Dec/15 1290 1250 : 1300 Quarterly
Consumer Price Index CPI 98.73 Index Points Jan/16 116 17.86 : 118 Monthly
Harmonised Consumer Prices 98.05 Index Points Jan/16 116 79.39 : 118 Monthly
Core Consumer Prices 117 Index Points Dec/15 117 90.85 : 118 Monthly
GDP Deflator 104 Index Points Dec/15 104 66.3 : 104 Quarterly
Producer Prices 98.7 Index Points Dec/15 101 29.3 : 115 Monthly
Export Prices 98.4 Index Points Dec/15 101 82.6 : 112 Monthly
Import Prices 98.4 Index Points Dec/15 99.9 85.1 : 113 Monthly
Money Supply M0 55621 EUR Million Dec/15 54441 8569 : 55621 Monthly
Money Supply M1 428275 EUR Million Dec/15 435285 35116 : 446158 Monthly
Money Supply M2 830962 EUR Million Dec/15 844463 102486 : 862555 Monthly
Money Supply M3 860664 EUR Million Dec/15 877625 102984 : 961626 Monthly
Banks Balance Sheet 2496495 EUR Million Dec/15 2558638 232201 : 2634372 Monthly
2
Overview Last Reference Previous Range Frequency
Foreign Exchange Reserves 36127 EUR Million Jan/16 35142 15694 : 44319 Monthly
Loans to Private Sector 303490 EUR Million Dec/15 320542 204145 : 355388 Monthly
Central Bank Balance Sheet 223534 EUR Million Dec/15 217289 23528 : 290658 Monthly
Balance of Trade 3111 EUR Million Dec/15 4168 -908 : 5248 Monthly
Current Account 12437 EUR Million Sep/15 16501 -2389 : 22482 Quarterly
External Debt 3701578 EUR Million Sep/15 3681871 1804699 : 3701578 Quarterly
Terms of Trade 100 Index Points Dec/15 101 92.5 : 104 Monthly
Capital Flows 9354 EUR Million Sep/15 -50601 -50601 : 21967 Quarterly
Foreign Direct Investment 228547 EUR Million Sep/15 44484 -55431 : 228547 Quarterly
Government Spending 41252 EUR Million Dec/15 41492 21215 : 41970 Quarterly
Government Debt 409446 EUR Million Sep/15 411766 198905 : 416493 Quarterly
3
Overview Last Reference Previous Range Frequency
Fiscal Expenditure 42.4 EUR Billion Sep/15 59.1 23.5 : 59.1 Quarterly
Government Budget Value 1.6 EUR Billion Sep/15 -9.2 -19 : 7.8 Quarterly
New Orders 120 Index Points Dec/13 103 55.6 : 127 Monthly
Changes in Inventories -706 EUR Million Dec/15 -767 -1605 : 2699 Quarterly
Steel Production 516 Thousand Tonnes Dec/15 552 236 : 687 Monthly
4
Overview Last Reference Previous Range Frequency
Consumer Spending 70058 EUR Million Dec/15 70116 40834 : 72136 Quarterly
Disposable Personal Income 296517 EUR Million Dec/14 291506 85986 : 296517 Yearly
Private Sector Credit 1129643 EUR Million Dec/15 1122321 188480 : 1153444 Quarterly
Consumer Credit 20102 EUR Million Sep/15 19726 12188 : 28719 Quarterly
Households Debt To Gdp 112 % of GDP Jun/15 112 44.7 : 119 Quarterly
Housing Index 89.5 Index points Dec/15 89.8 36.5 : 107 Monthly
Social Security Rate For 11.31 % Dec/14 10.15 10.15 : 12.5 Yearly
5
Overview Last Reference Previous Range Frequency
Companies
Social Security Rate For 31.15 % Dec/14 30.65 29.4 : 32.6 Yearly
Employees
6
APPENDIX 6 – EXCHANGE RATE
7
APPENDIX 7 COMPLETE ANALYSIS OF THE SIX DIMENSION S OF CULTURAL DIFFERENCES BY
HOFSTEDE
POWER DISTANCE
“Power Distance is defined as the extent to which the less powerful members of institutions and organisations
within a country expect and accept that power is distributed unequally. (Hofstede, n.d.)”
INDIVIDUALISM
“The fundamental issue addressed by this dimension is the degree of interdependence a society maintains
among its members. It has to do with whether people´s self-image is defined in terms of “I” or “We”. (Hofstede,
n.d.)”
MASCULINITY
“A high score (Masculine) on this dimension indicates that the society will be driven by competition,
achievement and success, with success being defined by the winner/best in field – a value system that starts in
school and continues throughout organizational life. A low score (Feminine) on the dimension means that the
dominant values in society are caring for others and quality of life. A Feminine society is one where quality of
life is the sign of success and standing out from the crowd is not admirable. The fundamental issue here is what
motivates people, wanting to be the best (Masculine) or liking what you do (Feminine). (Hofstede, n.d.)”
UNCERTAINTY AVOIDANCE
“The dimension Uncertainty Avoidance has to do with the way that a society deals with the fact that the future
can never be known: should we try to control the future or just let it happen? This ambiguity brings with it
anxiety and different cultures have learnt to deal with this anxiety in different ways. The extent to which the
members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and
institutions that try to avoid these is reflected in the score on Uncertainty Avoidance (Hofstede, n.d.).”
8
INDULGENCE
“One challenge that confronts humanity, now and in the past, is the degree to which small children are
socialized. Without socialization we do not become “human”. This dimension is defined as the extent to which
people try to control their desires and impulses, based on the way they were raised. Relatively weak control is
called “Indulgence” and relatively strong control is called “Restraint”. Cultures can, therefore, be described as
Indulgent or Restrained (Hofstede, n.d.).”
POWER DISTANCE
The Netherlands scores 38 points, which is rather low in comparison with Mexico (81). This means that the
Netherlands can be characterized as:
“Being independent, hierarchy for convenience only, equal rights, superiors accessible, coaching leader,
management facilitates and empowers. Power is decentralized and managers count on the experience of their
team members. Employees expect to be consulted. Control is disliked and attitude towards managers are
informal and on first name basis. Communication is direct and participative. (Hofstede, n.d.)”
So when Sisao is going to business with the Netherlands that should keep in mind that the Netherlands can be
very direct in communication and that power is decentralized and that managers count on the experience of
their team members, see figure 4 (Hofstede, n.d.).
INDIVIDUALISM
The Netherlands scores 80 points against 30 points of Mexico, see figure 4. This low score means that the
Netherlands is an individualistic society and that means that individuals are only taking care of themselves and
their direct families only. So they will not have a very tight social framework like Mexican people have
(Hofstede, n.d.).
MASCULINITY
As seen in the picture above, the Netherlands scores only 14 points on the masculinity dimension, see figure 4.
This means that the Netherlands is a feminine society. The Dutch people are known for their long discussions
until an agreement on both sides has been reached. Furthermore, it is important to know that the Netherlands
want to keep life and work in balance. The people in the Netherlands strive for equality, solidarity and quality
in their working lives. Last but not least, it is important to know when there is a conflict that this must be
resolved by compromise and negotiation (Hofstede, n.d.).
UNCERTAINTY AVOIDANCE
The Netherlands scores 53 points, which is 29 points lower than Mexico (82), see figure 4. This score implies
that the Netherlands has slightly got the preference to avoid uncertainty. In countries where there is a high
uncertainty avoidance, time is money. People in these countries tend to work hard and with precision. In the
Netherlands it is not tolerated to come late on an appointment, it is recommended to be 10 minutes earlier at
the agreed time and date than to come at the exact agreed time (Hofstede, n.d.).
INDULGENCE
The score of the Netherlands on Indulgence is 68, this states that the Netherlands has a relatively weak control,
or also known as indulgence (Hofstede, n.d.), see figure 4. Dutch people do what they want to do with their
money and leisure time and find this very important. They are optimistic and they have a positive attitude
9
towards others. Furthermore, Dutch people can’t contain their ‘urges’ or desires whenever they could increase
the quality of life with it (Hofstede, n.d.).
Do the customers of your market have access on information (high transparency) about
suppliers and their offerings?
Do customers have their own brands and access to international production sources?
Do retailers have much knowledge of the supply chain?
11
Do suppliers make a significant contribution to the quality / process / product innovation
within your market?
Are the providers of your market facing low margins?
Does the government also acts as a supplier?
Are suppliers innovative and do they have a lot of market knowledge?
Do suppliers provide strategic products or routine products?
12
APPENDIX 10; BENCHMARK BEBOGEEN AND CAJETA
Legenda:
1= Bad
2= Normal
3= Good
Brand awareness
Ecological
Package Design 1
Price
Usage 3
3 3
1 2
1
2 3
1
SISAO De Ruijter
13
APPENDIX 12; HOLLENSEN CHANNEL WIDTH
The circled with red terms are related to Bebogeen.
14
APPENDIX 14; DEVELOPMENTS IN DISTRIBUTION
Transport by roads improved
The domestic market in 2016 remains an important source of income. The growth in cargo volume is amounted
at 2.6% with a growth in revenue of 3.5%. Decreasing profitability has reached a turning point and will also
improve slightly in 2016 as expected. Growth in revenue is only possible if the rates are getting
higher. Internationally the distribution sector continues to lose market share, but in the circle of 300km the
demand of transportation grows. (Trends en ontwikkelingen transport en logistiek, 2015).
E-commerce
An interesting development is that more and more Dutch people buy products or groceries online. De local
supermarket reaches more people than before. The amount of Dutch people doing groceries online increased
heavily. In 2014 online groceries were bought for an amount of 450 million which is 55% more than a year
before. This makes the Dutch market the fastest growing market in Europe. (Betlem, 2015)
Oppertunities Threats
O1 O2 O3 T1 T2 T3
S1 + + + + 0 +
Strengths S2 ++ ++ + 0 0 0
S3 ++ ++ + + + -
15
W1 - - 0 -- -- -
Weaknesses W2 - - - -- -- -
W3 0 - 0 -- -- -
W4 0 -- 0 - -- -
APPENDIX 18: THE SFA MODEL OF R USTENBURG CONSULTANC Y (RUSTENBURG CONSULTA NCY,
N.D.):
16
APPENDIX 18.1 SEQUEL SFA ANALYSIS.
Factors
Fixing central problem:
4 points have been given because SISAO is entering the Netherlands.
Using strengths and opportunities:
4 points have been given because this strategic option is using most of the strengths and opportunities.
Minimalize weaknesses and threats:
4 points have been given because this strategic option is tackling some weaknesses and threats.
17
Feasibility
Financial:
2 points have been given because SISAO needs to invest a lot of money, and there is no certainty.
Organized:
4 points have been given because between Mexico and the Netherlands exists an free trade agreement. You
won’t have to organize much.
Economical:
5 points have been given because entering the Netherlands will help the economy.
Technical:
3 points have been given because SISAO needs to work different than it already did. There need to be more
products.
Social:
5 points have been given because a lot of Mexican and other people can get in touch with Cajeta.
Juristically:
2 points have been given because SISAO needs to arrange a lot with other wholesalers and the SISAO doesn’t
have that much knowledge of it.
Ecological:
4 point have been given because Cajeta is still homemade and ecological but there will be more export.
Acceptability
Expected Risk:
4 points have been given because the risk to export to Toko’s is not high.
Revenues:
5 points have been given because the retail in the Netherlands is growing (RTL Z, 2015).
Investments:
4 points have been given because investments will not be high for this niche market.
Option 2 Ice-cream stores | Adapting the product for ice cream stores:
Factors
Fixing central problem:
4 points have been given because SISAO is entering the Netherlands.
Using strengths and opportunities:
4 points have been given because this strategic option is using most of the strengths and opportunities.
Minimalize weaknesses and threats:
2 points have been given because the threats and weaknesses are still intact.
Feasibility
Financial:
Only 1 point has been given because SISAO will invest a lot with no certainty of getting it back.
Organized:
2 points have been given because there is much to organize. And possibly there will be an organizer needed.
Economical:
3 points have been given because SISAO is entering the Netherlands, but isn’t promoting its own brand. And
isn’t selling much.
Technical:
4 points have been given because there will be no difficulties in the technical part.
Social:
5 points have been given because SISAO will be listening to the costumer.
Juristically:
18
3 points have been given because there will be a few difficulties where SISAO won’t know much about.
Ecological:
2 points have been given because the Cajeta will be changed to a non-ecological product. Also the packaging of
the Cajeta will be from less ecological material.
Acceptability
Expected Risk:
4 points have been given because the expected risk for icecream stores is not high.
Revenues:
5 points have been given because sales of icecream stores in the Netherlands is growing due to the reason that
Dutch people like to eat ice-cream all year (impulsproduct), and not only during summer (Biojournaal, 2015).
Investments:
2 points have been given because investments will be a little bit higher because there are a lot of independent
ice-cream stores and each ice-cream store needs to be approached individually(time-consuming).
19
Self-confidence. Sales representatives must be confident and persuasive when making sales
presentations. In addition, making a call to a potential customer who is not expecting to be contacted,
or “cold calling,” requires confidence and composure.
Stamina. Sales representatives are often on their feet for long periods of time and may carry heavy
sample products.
CONTROL:
CRM system is Customer Relationship Management. A CRM system allows businesses to manage
business relationships and the data and information associated with them. This will be in the Form of
an Management Information System where the Domestic Sales Representative can work and few the
progress made with customers
Objective meeting to have a better understanding of the Sales Representative job and goals he/she is
aiming for, There will be a small objective meeting every 1 week of the month to discuss the past
Objective and to set new Objectives.
Performance appraisal is a method by which the job performance of an employee is documented and
evaluated. To ensure that the Sales Representative is reaching her goal
there will be a performance appraisal every 6 months.
CEO
Corporate Staff
Production
Sales/marketing
20
Step Responsible parties Milestones Achievement Date
1 Board Board meeting go or no 01-July-2016
go
2 SISAO Marketing 1st finish label and 30-july-2016
Department product
3 SISAO Retailer contact with Amazing 01-august-2016
Oriental Holding ( send
product/ product
demonstration)
4 SISAO Retailer meeting with amazing 10- august -2016
oriental Holding (sign
agreement)
5 SISAO Sales Department contact an logistics 15-august-2016
specialist (kuehne &
nagel or world freight)
6 SISAO Sales Department 1st order send to Sisao 01-november 2016
7 Logistics Department shipment out of Mexico 03-november-2016
to the Netherlands
8 Amazing Oriental Chain 20 di November 1st sale 20-november-2016
Store in oriental stores
Table 1: Milestone timetable
21
APPENDIX 21.1 MILESTONE
PLAN
Objectives: Sell 1000 cajeta’s amount to Dutch Market.
Objectives 2. Discuss terms of agreement and find agreement with the client
Product: 1. to gain at least a 20% growth rate of sales in the next 5 years, since
the Economy is growing, this is favourable for SISAO.
2. To gain at least €119.924,- in revenue in the next 5 years Since the Dutch
economy is growing it is favourable for SISAO.
Pricing: To come to an agreement with partner on the price the product should be
priced at in the Amazing Oriental stores.
Reward, Advice,
Promote and
Evaluate performance against standards Reward
22
APPENDIX 22: COSTS
SHIPMENT COSTS
For calculating the shipment costs different companies and websites were investigated. Knowing that Alexport
uses Kuehne & Nagel as a distributor this company was researched for their tariffs. A second tariff was found
by the website of ‘world freight rates’. Since the strategic option advices to use a different package the right
measurements had to be acquired. With the measurements of a bottle and knowing that there are 12 bottles in
a box the measurements of a box were calculated.
As you can see the total amounts differ a lot. Since Alexport uses Kuehne & Nagel and not knowing if there are
possibilities to use different companies for shipment, the price per bottle from Kuehne & Nagel is used.
PRODUCTION COSTS
The production costs, as shown in the second paragraph, are calculated on €1, 05 per bottle of 250ml. These
costs are variable and will change when the amount of products produced changes.
LOGISTIC COSTS
The logistic costs are based on the distribution costs in Mexico and the shipment costs to the Netherlands.
These costs were €1, 03 for the distribution in Mexico and €1,55 for the shipment costs.
These costs are variable. The costs of distribution in Mexico was a given and calculated per product. Therefore
these costs are variable. The costs concerning the shipment are calculated per product and will be included in
the selling price. The shipment costs are based on a fixed amount of products shipped. However this amount
could change and the shipment costs would change as well. Therefore the shipment costs are considered as
variable costs.
23
Logistics year 1 year 2 year 3 year 4
Sales representative
Sampling
euros per hour (16year amount of salary in euros points of sales total salary in
old) hours euros
3,32 26 345,28 3 1.035,84
amount of
weeks
24
4
Stance
euros per day amount of total euros point of sales total salary in
days euros
10 7 280 3 840
amount of months
4
For the expenses regarding letter of credit the Rabobank in the Netherlands was consulted. On the site of the
Rabobank the tariffs were given. Each time there is an order/ shipment an amount of €75 euro’s has to be paid.
In Appendix 26&27, and in the next upcoming chapter (8) there is more information about the letter of credit.
In chapter 8 of law there can also be found information about the Incoterms. The law items that have been
researched stated that Sisao should insure all shipping products. Two methods were investigated for the
expenses regarding insurance. This resulted in two different formulas:
𝐶𝑂𝐺𝑆
1. ( ) ∗ 1,40 (Freight Insurance Center, 2016)
100
0,60
2. ( ) ∗ 𝐶𝑂𝐺𝑆 (PWS, 2016)
100
The second formula was the cheapest and therefore the one that was chosen for further calculations.
25
APPENDIX 23: WORST- AND BEST CASE SCENARIO
WORST CASE SCENARIO: The worst case scenario is based on Amazing Oriental only selling Cajeta in
the big cities Rotterdam and Amsterdam where the most foreign people live. In Rotterdam and
Amsterdam there are a total of 4 Amazing Oriental stores which means 20% of all Amazing Oriental
stores.
Sales:
Segmentation number % amount of amount amount number sales per sales per sales per
of stores interested orders per of boxes per box of point point of year month
in product year per order of sales sales
Amazing 20 20% 12 3 12 4 432 1.728 144
Oriental
When Amazing Oriental only sells in the biggest cities there will be an estimated amount of 1.728
sales per year. This differs a lot from the normal case scenario as mentioned in chapter 7. Logically
this will have an impact on the profit and loss statement.
Profit/Loss:
The worst case scenario resulted in a negative profit in all 4 years. Therefore selling to the
Netherlands at 20% of the Amazing Oriental stores wouldn’t be profitable.
Ratio’s:
Ratio's
Gross margin% 77% 77% 77% 77%
Profit margin -49% -20% -18% -16%
ROI (profit / cost) -33% -17% -15% -14%
ROI 4 years average (profit / -20%
cost)
Just like the profit mentioned above the ratio’s turned out negative as well. In paragraph 6 of chapter
7 the ratio calculations are explained.
26
BEST CASE SCENARIO: The best case scenario is based on the fact that Amazing Oriental decides to
sell the product in every store in the Netherlands. Just like Albert Heijn sells Bebogeen in every Albert
Heijn XL.
Sales:
Segmentation number of % amount of amount amount number sales per sales sales per
stores interested orders per of boxes per box of point point of per year month
in product year per order of sales sales
Amazing 20 100% 12 3 12 20 432 8.640 720
Oriental
When Amazing Oriental sells in every store in the Netherlands the sales per year will increase by a
lot. The estimated amount of sales would be a total of 8.640 products per year.
Profit/ Loss:
Unlike the normal case scenario, all years are profitable in the best case scenario.
Ratio’s:
Ratio's
Gross margin% 77% 77% 77% 77%
Profit margin 7% 13% 14% 14%
ROI (profit / cost) 8% 15% 16% 16%
ROI 4 years average (profit / cost) 14%
The return of investment is the highest of all three scenario’s. Therefore the more Sisao sells, the
more profit they make.
Concluding: all three scenario’s point out that the more Sisao sells the more profit they will make.
27
APPENDIX 24; CISG
If wanting to use the CISG, the countries need to be a member of the CISG. Another one is that the CISG governs
contracts for the international sales of goods between private businesses, but excluding sales to consumers and sales
of services, as well as sales of certain specified types of goods. The CISG applies only to international transactions and
avoids the recourse to rules of private international law for those contracts falling under its scope of application.
International contracts falling outside the scope of application of the CISG, as well as contracts subject to a valid
choice of other law, would not be affected by the CISG. Purely domestic sale contracts are not affected by the CISG
and remain regulated by domestic law. (Sale and goods, 2016).
Decomposition:
A decomposition is only possible if there is a real shortcoming. This means that a buyer didn’t got what he was
expecting to receive. This is very complicated to define. The Dutch rights are saying that you can decomposition if it’s
just not what you expected. When it cannot be decompositioned, than the seller doesn’t have to pay for
transportation costs or storage costs.
International judges:
At first, some judges aren’t well known with the CISG. This may be related to the content of the CISG, but also on the
fact that international judges can be consulted. There is no one who checks if the information who is said was the
right information.
Incoterms is short for ‘International Commercial Terms’ (Harlaar, Ouwehand, & de Leeuw, 2012). These terms
or regulations were formulated by the International Chamber of Commerce (ICC). The Incoterms were made to
avoid or to reduce any inconsistencies and uncertainties arising from the different interpretations of
contractual terms in different countries. Furthermore, the uniform guidelines of the Incoterms reduce the risk
28
of legal complications and misunderstandings resulting from different trading practices (Harlaar, Ouwehand, &
de Leeuw, 2012).
“Costs, risks and obligations for both (all) parties involved in the transaction are dealt with in four main
categories, each defined by a single letter:
E (Ex) category;
F (Free) category;
C (Cost) category;
D (Delivered) category (Harlaar, Ouwehand, & de Leeuw, 2012)”.
“E category
EXW (named place, for example: the Netherlands) (Ex Works). Here ‘works means premises,: ‘ex’ is Latin for
‘out of’ of ‘from’): For all modes of transport, Appointed place (no specification).
This represents the minimum risk and cost for the seller and the maximum risk and cost for the buyer. The
seller’s only responsibility is to make the goods available at the named place at the agreed time. He is not
responsible for loading the goods on the vehicle provided by the buyer, unless otherwise agreed (Harlaar,
Ouwehand, & de Leeuw, 2012).
The seller must place the goods at the disposal of the buyer at the seller’s premises or another named place
not cleared for export. The seller has no obligation to load the goods onto any vehicle. The buyer will collect
the goods and pays for the loading, transport and unloading (Harlaar, Ouwehand, & de Leeuw, 2012).”
“F category
This category deals with the place of delivery for goods cleared for export. FCA (seller’s premises) (Free
Carrier): Free of transportation cost to carrier, For all modes of transport, Appointed place (seller’s premises or
warehouse under seller’s control).
The seller places the goods at the disposal of the buyer, cleared for export, loaded onto the means of transport
at the named place. In this case, the seller’s premises means that the place of loading is controlled by the seller
and can therefore be the own factory or a warehouse under the seller’s control. (Harlaar, Ouwehand, & de
Leeuw, 2012)”
FCA (Nominated Carrier) (terminal) (Free carrier): For all types of transport; Appointed place (nominated
carrier).
The seller must deliver the goods, cleared for export, tot the carrier nominated by the buyer at the named
place. The seller pays the costs of transport to the carrier.
FAS (Free Alongside Ship): The seller brings the goods to the ship but does not load them: Only for ocean and
inland transport; Named port of shipment.
The seller must place the goods, cleared for export, alongside the vessel at the named port of shipment. The
seller fulfills his obligation to deliver when the goods have been placed alongside the vessel on the quay or in
the lighters at the named port of shipment. This means that the buyer has to bear all costs and risks of loss or
of damage to the goods from that moment. When using the FAS, the seller is required to clear the goods for
export. NB: FAS is a maritime term. This means that the point of delivery and the place where the goods are
transported to are both harbors.
FOB (Free On Board): Seller brings the goods on board of the ship: Only for ocean and inland water transport;
Named port of shipment.
29
The seller delivers the goods, cleared for export, when they are loaded on board a ship at the named port of
shipment. The seller fulfills his obligation to deliver when the goods have been loaded on board a ship at the
named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the
goods from that point. NB: FOB is a maritime term. This means that the point of delivery and the place where
the goods are transported to are both harbors (Harlaar, Ouwehand, & de Leeuw, 2012).”
“C category
CFR means that the seller delivers the goods on board the vessel. The risk of loss or of damage the goods
passes when the goods are loaded on board the vessel. The seller must contract for and pay the costs and
freight necessary to bring the goods to the named port of destination.
The seller must pay the costs and freight necessary to bring the goods to the named port of destination. The
risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the goods
have been delivered on board the vessel is transferred from the seller to the buyer when the goods are loaded
on board in the port of shipment. When using the CFR, the seller is required to clear the goods for export. NB:
CFR is a maritime term. This means that the point of delivery and the place where the goods are transported to
are both harbors.
CIF (Cost, Insurance and Freight) CFR plus ocean transport insurance: Only ocean and inland water transport;
Named port of destination.
The seller has the same obligations as under CFR but with the addition that he has to procure marine insurance
against the buyer’s risk of loss of or damage of the goods during the carriage. The seller contracts for insurance
and pays the insurance premium. The buyer should note that under the CIF term the seller is only required to
obtain insurance on minimum coverage. When using the CIF, the seller is required to clear the goods for
export.
NB: CIF is a maritime term. This means that the point of delivery and the place where the goods are
transported to are both harbors.
CPT (Carriage Paid To) The seller pays the transport cost for transport of the goods to a in the agreement
mentioned destination: For all types of transport; Named place of destination.
CPT means that the seller delivers the goods loaded on means of transport. The risk of loss or of damage to the
goods passes when the goods are loaded. The seller must contract for and pay the costs and freight necessary
to bring the goods to the named destination.
CIP (Carriage and Insurance Paid To): CPT plus transport insurance: For all types of transport; Named place of
destination.
The seller has the same obligations as under CPT but with the addition that he has to procure cargo insurance
against the buyer’s risk of loss of or damage to the goods during the carriage. The seller contracts for insurance
and pays for the insurance premium. The buyer should note that under the CIP term the seller is only required
to obtain insurance on minimum coverage (Harlaar, Ouwehand, & de Leeuw, 2012).”
“D category
DAT (Delivered at terminal) Buyer clears the goods: For all types of transport; Determined terminal of
destination.
30
The seller fulfills his obligation to deliver when he has made the goods available to the buyer at the named
terminal of destination, not cleared for importation. The seller fulfills his obligation to deliver when he has
made the goods available to the buyer in the terminal of destination unloaded and not cleared for importation.
The seller has to bear all costs and risks involved bringing the goods to the named terminal of destination and
discharging the goods in the terminal. The buyer has to clear the goods for import and to pay for all formalities,
duties, taxes and other charges upon import.
DAP (Delivered at Place): Buyer pays duties: All modes of transport; Named place of destination.
The seller fulfills his obligation to deliver when the goods have been made available at the named place in the
country of importation. The seller has to bear the costs and risks involved in bringing the goods thereto
(excluding duties, taxes, and other official charges payable upon importation as well as the costs and risks
carrying out customs formalities). The buyer has to pay any additional costs and to bear any risks caused by his
failure to clear the goods for import in time.
DDP (Delivered Duty Paid): Maximum obligation for seller: All modes of transport; Named place of destination.
The seller fulfills his obligation to deliver when the goods have been made available at the named place in the
country of importation. The seller has to bear the risks and costs, including duties, taxes, and other charges of
delivering the goods thereto, cleared for importation. Whilst the EXW term represents the minimum obligation
for the seller, DDP represents the maximum (Harlaar, Ouwehand, & de Leeuw, 2012).”
Cash-in-Advance
With cash-in-advance payment terms, an exporter can avoid credit risk because payment is received before the
ownership of the goods is transferred. For international sales, wire transfers and credit cards are the most
commonly used cash-in-advance options available to exporters. With the advancement of the Internet, escrow
services are becoming another cash-in-advance option for small export transactions. However, requiring
payment in advance is the least attractive option for the buyer, because it creates unfavorable cash flow.
Foreign buyers are also concerned that the goods may not be sent if payment is made in advance. Thus,
exporters who insist on this payment method as their sole manner of doing business may lose to competitors
who offer more attractive payment terms. (Payment terms, 2016)
Letters of Credit
Letters of credit (LCs) are one of the most secure instruments available to international traders. An LC is a
commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that the
terms and conditions stated in the LC have been met, as verified through the presentation of all required
documents. The buyer establishes credit and pays his or her bank to render this service. An LC is useful when
reliable credit information about a foreign buyer is difficult to obtain, but the exporter is satisfied with the
31
creditworthiness of the buyer’s foreign bank. An LC also protects the buyer since no payment obligation arises
until the goods have been shipped as promised. (Payment terms, 2016)
Documentary Collections
A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of the payment
for a sale to its bank (remitting bank), which sends the documents that its buyer needs to the importer’s bank
(collecting bank), with instructions to release the documents to the buyer for payment. Funds are received
from the importer and remitted to the exporter through the banks involved in the collection in exchange for
those documents. D/Cs involve using a draft that requires the importer to pay the face amount either at sight
(document against payment) or on a specified date (document against acceptance). The collection letter gives
instructions that specify the documents required for the transfer of title to the goods. Although banks do act as
facilitators for their clients, D/Cs offer no verification process and limited recourse in the event of non-
payment. D/Cs are generally less expensive than LCs. (Payment terms, 2016)
Open Account
An open account transaction is a sale where the goods are shipped and delivered before payment is due, which
in international sales is typically in 30, 60 or 90 days. Obviously, this is one of the most advantageous options to
the importer in terms of cash flow and cost, but it is consequently one of the highest risk options for an
exporter. Because of intense competition in export markets, foreign buyers often press exporters for open
account terms since the extension of credit by the seller to the buyer is more common abroad. Therefore,
exporters who are reluctant to extend credit may lose a sale to their competitors. Exporters can offer
competitive open account terms while substantially mitigating the risk of non-payment by using one or more of
the appropriate trade finance techniques covered later in this Guide. When offering open account terms, the
exporter can seek extra protection using export credit insurance. (Payment terms, 2016)
Consignment
Consignment in international trade is a variation of open account in which payment is sent to the exporter only
after the goods have been sold by the foreign distributor to the end customer. An international consignment
transaction is based on a contractual arrangement in which the foreign distributor receives, manages, and sells
the goods for the exporter who retains title to the goods until they are sold. Clearly, exporting on consignment
is very risky as the exporter is not guaranteed any payment and its goods are in a foreign country in the hands
of an independent distributor or agent. Consignment helps exporters become more competitive on the basis of
better availability and faster delivery of goods. Selling on consignment can also help exporters reduce the
direct costs of storing and managing inventory. The key to success in exporting on consignment is to partner
with a reputable and trustworthy foreign distributor or a third-party logistics provider. Appropriate insurance
should be in place to cover consigned goods in transit or in possession of a foreign distributor as well as to
mitigate the risk of non-payment. (Payment terms, 2016)
32
APPENDIX 27; BANK DETAILS, LETTER OF CREDITS
33
34
(Letters of credits, 2016)
35
Mexico isn’t a member of the EER, this means that goods from Mexico can’t be imported without checking. It
needs to be checked on safety, healthy, economy and environment. Looking at the law, Cajeta is an safe
product and can be imported in the Netherlands. You won’t need a license. (Import and export, 2016)
The EU is allowed to have sanctions against third countries. Against a country, part of a country, government,
entities or even individuals. It is a preventive instrument which allows the EU to respond swiftly to political
challenges and developments. In the consolidated list of sanctions is nothing found about Sisao. (Sanctions,
2016)
36
APPENDIX 31: CONTACT INFORMATION |HEAD OF PURCHASING/PURCHASING MANAGER OF
AMAZING ORIENTAL:
Wendy Ma: purchasing manager
wendy@orientalgroup.nl
No personal number available.
Number of headquarters: +31 026 311 5161
VALUE
Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?
Nowadays everything is getting automated and fabricated in factories for the mass. SISAO, however, is a small
family business which are experienced in homemade authentic products. In addition, Sisao has the possibility
to create flavours and add them to their product line. Therefore, they can adapt their products to different
markets if they desire it. These points clarify that Sisao is able to exploit an opportunity in the Netherlands.
However, Sisao would still need to neutralize external threats, such as: threats of entry in the Netherlands,
threats of rivalry, and the threats of substitutes (there are a lot of different products which are cheaper and/or
have different flavours than Cajeta). These threats will be analysed in the external analysis.
RARITY
Is control of the resource/capability in the hands of a relative few?
Like mentioned above, Cajeta is a homemade authentic product made out of 100% milk and natural products.
This is a unique/rare advantage for the Dutch market because a lot of products are genetically modified (GMO)
and/or automated/fabricated in factories. In addition, Cajeta is only sold online.
IMITABILITY
Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or
duplicate the resource/capability?
Due to the fact that Cajeta is an authentic homemade product with its own recipe and production process, it
could be difficult for others to imitate the product. However, the product is only made out of milk and sugar, so
it will only take some time for other companies to find out how to produce it.
ORGANIZATION
Is the firm organized, ready and able to exploit the resource/capability? Is the firm organized to capture value?
If there is demand for the product, and if the exportation is profitable, Sisao could sell their product abroad.
The question which comes after this one should be: how can Sisao export their product to the Netherlands and
how can Sisao organize this? The answers to these questions will follow in the next chapters.
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