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International Operations Management Individual Assignment
Export type and organization
Nature Harvest Mushroom (PVT) Ltd is directly export their product to the Malaysia because company can build good relationship with business people in Malaysia by dealing directly with them. Direct export will helps to identify the Malaysian market and can identify the opportunities and from them company can grab and grow their market to increase the sales. When company is directly exporting their product, it may take times to reach and expensive. Company need to find a good place where the large number of people are having and also company need to habits, behaviours and what kind of foods they like. This will much more important to attractive the peoples. And also company need pay attention to the changes of the people according to the need and wants of them and company also need to change according to that and need differentiate product characteristic to attract the customers. Company need to find best places to sell their products.
Nature Harvest Mushroom (PVT) Ltd is producing mushroom. There are many varieties in the button mushrooms. And people also like to experience varieties in foods so company need make product differentiate before exporting. Nature Harvest Mushroom (PVT) Ltd needs to have better control on their works and in their export. When having a better Control Company can do their business as they decided and also company able to increase their sales by building good relationships with the customers.
By using an indirect export company can’t identify the business opportunities in the Malaysia and can’t make what company can’t get what they expect. By using direct channel company able to promote their products in the Malaysia. So these are the reasons company is using direct export method.
When talking about the export, it’s not an easy thing. The company need to consider lots of things before starts to export their product to another country. Mainly company need to consider about the export contract. Contracts are doing with another other business people. When doing a business activities trust is an essential thing. So these contracts are building relationship with other business people. Nature Harvest Mushroom (PVT) Ltd is exporting their products to Malaysia to identify that are they having enough capability to export their products.
First of all company need to sign a contract with other party to do their business without any troubles. By making a contract company making a good relationship with other patry, company can do their export business successfully. Nature Harvest Mushroom (PVT) Ltd is doing their business deals with the written contract. Before the contract company is having some discussions with the other party to identify that what are their offers, clarifying with the doubts and comes to some agreements. When preparing the contract by the company, company is going to add integration clause by saying “This contract is the entire agreement between the parties, other agreements cannot be added later, This Agreement arranged only in a written document. By signing this written agreement two parties are not going to face any troubles.
When company going to export their product they need to take the responsibilities for their products because something happens while exporting also need to check whether there are having any damage items before export because responsibility comes to the company.
When preparing a contract spellings are very very important because some words are goes wrong it will show the wrong meanings and sometimes meanings will be change. Before signing the contract both parties need to recheck the contract. If company mention about the exact delivery time in the contract, they need to deliver it on time.
Company need to pay attention for the taxes and other rules and regulations giving by the government. They need to agree to the taxes and rules and regulations giving by the country when they are going to export the products. And prices also need to be mention in the contract.
When making a contract these are some main things Nature Harvest Mushroom (PVT) Ltd needs to be consider. By making a contract company can export their product in a successful way without any trouble.
Export risk and risk reduction
There are some risk facing by the Nature Harvest Mushroom (PVT) Ltd when they going to export their products. When exporting the goods, goods might get damage. When goods get damage buyer will not buy them and they will refuse it. Then that will be a huge loss for the company. This was the major risk company might face. This is mainly cause by the packaging system. Export the product without proper packaging. To do way with the risk company need to pack their product in a good packages and proper package system without being damages. From a proper package System Company can reduce the risk.
Another thing company can to reduce the rick while transport is to getting insurance to their products. Before export if something or damage happens to the goods insurance company will give money for that/ giving the compensation. This method also reduces the risk.
Two parties do their payments with the foreign currency. So Foreign exchange rate also a main risk company might be face. To reduce this risk company can use the foreign exchange hedge. This method is used for eliminate the foreign exchange rate that doing the payments by the foreign currency. There are three types of contracts in the hedging method those are forward contracts, options and spot.
- Forward contract is an agreement with company and the bank to buy or sell the money at a set exchange rate at a specific date in future.
- An option contract is sets an exchange rate which company may choose to exchange money. If the current exchange rate is better company not going for this contract
- Spot contract is an agreement which a company buy or sell one currency in exchange to another currency.
Nature Harvest Mushroom (PVT) Ltd is going to use spot contracts to reduce the risk.
Nature Harvest Mushroom (PVT) Ltd is export their good by the sea. Because shipping by sea is generally less expensive than transporting by air. But it takes some times to reaches to the destination than the air transportation. But company is mainly focusing to the coast reduction. When transporting goods sometimes goods will be damaged transporting by the water. So the company need to pack their goods in a proper and safe way. And also to reduce the risk company needs have insurance for goods. If something happens to goods company can get the compensation from the insurance company.
After exporting the good company needs to send the documents of that order to the buyer before the good reaches to the harbour. In that document clearly need to mansion about the order numbers, delivery date, payment term and other important things. Because buyers need this document to clear the goods from the harbour. In Sri Lanka goods are transport from company to the harbour by the company trucks.
Company thinks that transport their goods by sea is better than the transport good by air because company thinks they can save lots of money by the transport their goods by the sea.