Exporting Olive Oil From California's Central Valley To Mediterranean Countries Is An Essay.

Research Project

As members of a newly created global marketing and sales team for a Central Valley company, you have been tasked to develop an export strategy for a product made in the Central Valley of California.

According to Wikipedia, the Central Valley is “California's single most productive agricultural (Links to an external site.)Links to an external site. region and one of the most productive in the world, providing more than half of the fruits, vegetables and nuts grown in the United States.[3] (Links to an external site.)Links to an external site. More than 7 million acres (28,000 km2) of the valley are irrigated via an extensive system of reservoirs and canals.[4] (Links to an external site.)Links to an external site. The valley also has many major cities, including the state capital Sacramento (Links to an external site.)Links to an external site.; as well as Redding, Stockton, Modesto, Fresno and Bakersfield.

Your export plan will show how you will sell your selected product abroad, and how you will develop and grow sales in your selected country or countries. Your report should be 5-10 pages in length (double-spaced, 12 point font with one-inch margins on each side), and it should answer the following questions:

1.Which products are selected for export development, and what modifications, if any, must be made to adapt them for overseas markets?
2.Is an export license needed?
3.Which countries are targeted for sales development?
4.In each country, what are the basic customer profiles, and what marketing and distribution channels should be used to reach customers?
5.What special challenges pertain to each market (for example, competition, cultural differences, and import and export controls), and what is the strategy to address them?
6.How will your product’s export sales price be determined?
7.What specific operational steps must be taken and when?
8.What will be the time frame for implementing each element of the plan?
9.What personnel and company resources will be dedicated to exporting?
10.What will be the cost in time and money for each element?
11.How will results be evaluated and used to modify the plan?
 

Statistically, international trade accounts for 13% of America’s economic activities. Areas like Las Vegas and Detroit have experienced multiple consecutive years of economic growth and this can be attributed primarily to the expansion of exports (Piercy, 2014). Looking at California’s Central Valley, it can be described as America’s agricultural hub as it produces more than 360 products. Over 13 fruits, vegetables and nuts such as clingstone peaches, walnuts, olives, and sweet rice are produced in California (Morgan, Katsikeas & Vorhies, 2012). On the same note, California is regarded as the country’s biggest dairy producer accounting for 1/5th of America’s dairy.

The product that has been selected for this market plan is the olive, which is greatly produced in California’s Central Valley. Notably, California is responsible for 95% of all the olives produced in America (Nemkova, Souchon, Hughes & Micevski, 2015). To make the product adapt to the overseas market, it will be modified to olive oil which is associated with multiple functions including soap making, medicinal purposes, religious rituals, body care, and fuel in lamps. Having noted that the product is essential for all the aforementioned purposes, it will be much easier to sell the products in the new markets.

Prior to determining whether or not the product in question needs an export license, it is essential to comprehend the components of an export. In reference to the United States export regulations, an export is anything moved from the country to a foreign place, individual or organization. Bureau of Industry and Security (BIS) is tasked with the role of implementing and enforcing the Export Administration Regulations (EAR) (Saraswati, 2013). Notably, only those items that are listed in the Commerce Control List (CCL) require export licenses. In this case. Olive oil is not on the list, and therefore, the export license is not needed.

Olive oil market appears complex as it extends in the developing and developed countries. The market is recognized through various production systems and it is traded globally. Therefore, the targeted countries for sales development of olive oil are the Mediterranean countries. These countries include Algeria, France, Egypt, Greece, Syria, Slovenia, Spain, Libya, Morocco, Turkey, Tunisia, Malta, Lebanon, Israel, Albania, and Bosnia (Hajkowicz, Cook & Littleboy, 2012). The consumption of olive oil is developing in the Mediterranean countries, however, it differs with patterns based on quality and quantity.  Market segmentation matters as product qualities play great roles in consumption decisions within the countries.

Export Regulation and License

The basic customer profiles in the Mediterranean countries depends on the demographic size as well as per capita income. For instance, consumption in Spain, Greece, and Italy is targeted for elder individuals who have ample knowledge concerning olive oil. In addition, in countries such as France and Italy, olive oil is mostly consumed by persons between 13-14 individuals and especially rich families who can cope with the expenses of purchasing the products. Moreover, the traditional consumers especially females indicates high consumption rates as they are aware of qualities and benefits of olive oil such as beauty and medicinal purposes. Also, in Spain, the marketing and distribution channels used are the supermarkets and hypermarkets as there are most shoppers in the Mediterranean countries.

Marketing of olive oil is associated with various challenges. For instance, competition from other exporters such as Portugal. Therefore, the Mediterranean countries have to consider the tastes and preferences of consumers to keep up with the quality and quantity production of olive oil as expected. The challenge of competition can be addressed if the exporting countries develop effective pricing strategies. Cultural differences are associated with changes in consumption among the countries. The challenge can be addressed if consumers of olive oil are informed about qualities and benefits of olive oil. Finally, imports and exports control such as tariffs and quotas should also be addressed (Serra, Pointon & Abdou, 2012). Duty-free imports should be allowed to overcome the issue.

Four essential factors must be present for the export sales to make good profits. These elements include an excellent pricing of the olive oil, issuing an accurate and complete quotation, identifying the sale terms, and choosing a payment method. Of the four aforementioned elements, pricing can prove to be more problematic as a consequence of the different pricing structures and market forces evident across the globe. Therefore, when setting the price, the crucial factors to consider will be competition, market demand, the objectives of the company in the foreign markets, and costs related to the product. Besides this, the factors of insurance, financing, transportation, duties, and taxes. 

There are several operation steps that must be taken, each having its specific timeframe. The first step will involve conducting an assessment to determine the company’s readiness for exports. The U.S. Commercial Service offers a helpful and comprehensive questionnaire to gauge a company’s readiness for exports. The second step will involve developing an export plan which shows commitment to exporting, unites everyone in the company, and can be used as a tool for success and progress evaluation (Fujita & Thisse, 2013). Third, the company will identify the target market, prepare the market, and sell to the market. The fourth step will entail going online or what is commonly referred to as E-Commerce. An e-business strategy is essential as many international businesses are using it and it also increases productivity, minimizes costs, and boosts sales (Leeflang, Verhoef, Dahlström & Freundt, 2014). The final steps entail getting paid and establishing a logistical support. A logistical support is needed because the company has to define a method of transporting products as thus the need for documentation, labeling, packing, and shipping details for export purposes.

Target Market and Customer Profile

The implementation of the entire plan is proposed to take a maximum of two years. Some of the key elements notable in this plan include selection and modification of the product, identifying the target market, identifying the customer profiles and marketing distribution, setting an accurate price, and evaluation of results. Statistically, all the elements are projected to take a timeframe of 3 months at maximum except the evaluation of results which will require a maximum of 12 months to establish accurate and reliable results.

The company’s management, as well as the employees, will be equally dedicated to the realization of the plan. There will have to be an in-house international expertise, an export department, and time allocated by the senior management will be put into consideration. Also, the company will have to set aside a budget for production, transportation, salaries marketing, and other operations.

The time and money allocation will be based on the five key elements which include selection and modification of the product, identifying the target market, identifying the customer profiles and marketing distribution, setting an accurate price, and evaluation of results

Bearing in mind that the current business world is highly competitive, there will need to conduct an evaluation for modification purposes. In this case, the Performance Measurement Evaluation Matrix (PMEX) will be essential as it enables managers to assess performance measurement systems which are currently in use, so as to pinpoint the areas that need modifications (Mishra & Sharma, 2014). Results generated by the PMEX give performance measurements in regards to time, quality, and cost. Therefore, this tool will be of the great essence as depending on the given results, the proper modifications will be made to the plan. 

References

Fujita, M., & Thisse, J. F. (2013). Economics of agglomeration: cities, industrial location, and globalization. Cambridge university press.

Hajkowicz, S. A., Cook, H., & Littleboy, A. (2012). Our Future World: Global megatrends that will change the way we live. The 2012 Revision. CSIRO, Australia.

Leeflang, P. S., Verhoef, P. C., Dahlström, P., & Freundt, T. (2014). Challenges and solutions for marketing in a digital era. European management journal, 32(1), 1-12.

Mishra, P., & Sharma, P. (2014). Green marketing: Challenges and opportunities for business. BVIMR Management Edge, 7(1).

Morgan, N. A., Katsikeas, C. S., & Vorhies, D. W. (2012). Export marketing strategy implementation, export marketing capabilities, and export venture performance. Journal of the Academy of Marketing Science, 40(2), 271-289.

Nemkova, E., Souchon, A. L., & Hughes, P. (2012). Export decision-making orientation: an exploratory study. International Marketing Review, 29(4), 349-378.

Nemkova, E., Souchon, A. L., Hughes, P., & Micevski, M. (2015). Does improvisation help or hinder planning in determining export success? Decision theory applied to exporting. Journal of International Marketing, 23(3), 41-65.

Piercy, N. (2014). Export Strategy: Markets and Competition (RLE Marketing). Routledge.

Saraswati, J. (2013). A National Export-Led Growth Plan. Economic & Political Weekly, 48(7), 21.

Serra, F., Pointon, J., & Abdou, H. (2012). Factors influencing the propensity to export: A study of UK and Portuguese textile firms. International Business Review, 21(2), 210-224