Market Entry Research Paper

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Market Entry Research Paper

Table of Contents

Abstract:

Introduction

Entry option:

Product Information:

Life cycle of Almond:

Global usage

Global situation:

Competition:

Major markets/importers

Situation in India and Pakistan

Major Buyers:

Import Duties:

Rules and regulation:

Environmental analysis:

Political analysis:

Economic analysis:

Social analysis:

Technological factors:

Legal factors:

Conclusion

Abstract:

This market entry research paper is about the entry in Indian and Pakistani Market for the export of American almonds. Research is conducted to know about the demand and consumption of almonds in India and Pakistan. Besides this rules and regulations about import of almonds, import duties in India and Pakistan are also determined in this research paper. To know about the overall situation environmental analysis is conducted in which political, economic, social, technological and legal factors are analysed in context of India and Pakistan.

Introduction

Before entering any market it is necessary to know about its factors. These factors include environmental analysis, import duties in target market, rules and regulation regarding the imported product in target market. Environmental analysis includes political, economic, social, technological and legal aspects in target market. In the current study target market is India and Pakistan. The product to be exported is almonds. The reason of selecting India and Pakistan is explained below with facts.

Entry option:

The tactical entry option selected is direct export. The reason is it is most convenient and easily understandable and general idea of entering option. Other methods like foreign direct investment or joint venture are complex options. In exports normally costs are lower than of the other options. In direct exports there is more control over the transactions and business. In country like India direct export is better option because distribution channels are easily important at low cost.

Product Information:

Almonds are normally considered as nuts; in technical terms these are the seeds of fruit grow on almond trees. Almonds provide our body different nutrients like fats, carbohydrates, potassium, calcium, proteins and vitamins A, D and B-12. Due to its usefulness almonds have great demand in almost every country (Kamil, A & Chen, C. Y, 2012).

To do business it is necessary to understand the product in detail.

Life cycle of Almond:

Almond has different stages during its lifecycle, through which it passes and then becomes available to be consumed (Almond Board of California, 2013).

Down time

The period from November to February is downtime for almond trees. In this cold period almond trees get nutrients and store them for the next year’s crop.

Bloom:

Almond trees’ buds start to burst from February to March. Buds of almond trees turn into light pink or white blooms and get ready for pollination.

Pollination:

Pollination occurs during March. Some trees do not start pollination by their own so for these situations bees are used to start pollination.

Growing up:

After pollination almonds start to grow from march to June and get hard shell and kernel is formed.

Cracking open:

From July to early August almonds begin to crack and open revealing the almond shell and let the almonds to dry.

Harvest:

After cracking up the shells almonds trees are harvested through machines by shaking the trees.

Shelling and sizing:

After harvesting, to remove the shell or hull almonds are passed through a roller.

Storage:

After shelling and sizing, to maintain the quality almonds are transferred to storage facilities. These are stored there until these are further processed to make different variety or shipped.

Forms of Almond

Almonds are usually found in the different forms. These are used by different types of consumers and customers (California Almonds, 2013)

  • Slices/flakes
  • Sliver/halves
  • Diced/chopped
  • Meal/flour
  • Almond milk
  • Paste and butter
  • Almond oil
  • Green almonds

Global usage

Almonds are widely used in food and non-food items. Food items include energy bars, confectionary, marzipan, almond butter, sauce and thickener. Non-food items include moisturizer and cosmetics (Esfahlan, Jamei, R, & Esfahlan, R. J, 2010).

Global situation:

Total annual volume of almonds traded around 1.5 to 1.7 million tonnes in the recent years. Following are the countries which are producing almonds. According to the production in recent years their ranking is given too (Yada, S, Lapsley, K, & Huang, G, 2012).

Country

Ranking

Production (000)

United States

1

1410

Spain

2

220

Iran

3

160

Morocco

4

100

Italy

5

86

Syria

6

73

Tunisia

7

63

Turkey

8

55

Algeria

9

44

China

10

38

Competition:

On the basis of recent statistics major competitors will be the exporters in United States. The reason is all exporters will be facing almost same costs and other expenses like freight charges, duties etc.

Major markets/importers

According to demand and consumption major markets for almond exports are India, Japan and Turkey. From last many years India is still biggest export market for almonds. The reason is culture of India. Similarly Pakistan is also a potential market because the culture is almost same as in India (Blue Diamond, 2014).

Situation in India and Pakistan

Almonds are considered to be important part of India’s and Pakistan’s cultural. Beside this almonds are also considered to be important for the growth of brain especially for children. Almonds are also widely used in foods like Mithai, Qulfa and many other sweet dishes.

As economic conditions in these countries are getting better special in India. Standard of living and per capita income is increasing so people are now more conscious about their health. In India mostly people are vegetarian so in the meatless environment almonds are best source of nutrients.

The rate of consumption of almonds is increasing in India. In the recent year it is observed to be increased by 20%. Aggregate demand for almonds is fulfilled through the imported almonds which are about 95%. Major supplier is California. Second major supplier is Australia. 80% of total imports in India are from California and rest is imported from Australia. The major cities in India where almonds are exported are New Delhi and Bombay. Then almonds are transported to other areas where there is demand for almonds (Almond Board, 2012).

Due to Indian festivals demand and consumption of almonds increase in September and remain high till December. Total imports of almonds in recent year were 80 thousand tonnes of almonds.

Demand for American almonds is high in India and Pakistan as well. Major imports in India and Pakistan are from California. That is why California is largest exporter of Almonds. In California Blue Diamond Growers Cooperative is world’s largest handler or controller of almond.

Major Buyers:

Satya Foods is major buyer of almonds in India. Its annual purchase volume is more than 300 Metric Ton. Pankaj & Distributors is second largest buyer of almonds in India. Its annual requirement is about 100 Metric Tonnes. Similarly in Pakistan major buyers of almonds are Higo Organic Private ltd and Sardar foods (Pvt) ltd.

Import Duties:

Following are the taxes and duties applicable on the almonds regarding export to India and Pakistan (Duty Calculator, 2014).

Country

MFN duty rate

Sales tax

Additional duties & taxes

India

30%

No sales tax

  • CESS (3% (Duty + Countervailing duty))
  • Countervailing duty (12% (CIFD + Landing charges))
  • Landing charges (1% CIF)
  • Additional Countervailing Duty (4% (Landing charges + CIFD + Countervailing duty + CESS))

Pakistan

30%

17%

Import regulatory duty (20% CIF

Rules and regulation:

Regarding exports of almonds in India following documents are required (USDA, 2013):

  1. Food Law/ Standard Certificate: Prevention of food adulteration Act (PFA)
  2. Health and Sanitary Certificate: Sanitary Certificate
  3. License from FSSAI
  • For all units that process fruits and vegetables
  • For irradiated food
  1. Import declaration disclosing the value of the imported goods in the approved Bill of Entry format
  2. Import License
  3. Certificate from the port health authority which declares that product follows the standard of Prevention of food adulteration Act (PFA)

Standards declaration

  1. Name and address of manufacturer/packer/importer
  2. Name/trade name/description of product
  3. Ingredients in descending order
  4. Net quantity (metric units)
  5. Month and year of manufacturing/packing
  6. County of origin
  7. Nutritional labelling
  8. Shelf life
  9. Pesticide residue and other contaminants
  10. Insecticide act 1986
  11. Registered pesticides use
  12. Packaging and container regulations
  13. All weights or measures in metric units
  14. Use of PVC not allowed in packaging
  15. Port of Entry Inspection
  16. The certificate of clearance for imported food products required by the Port Hath Authority.

Environmental analysis:

Political analysis:

In context of political analysis for the almond export to India the stability of the Indian economy is the significant most perspective. As the government of India has changed in the recent year so the concern about the governmental policies must be brought under consideration. The policies may include the one top correct the balance of trade or balance of payment. If any such policy is implemented in the Indian economy the export business may have a huge hit due to introduction of quota. But as India have been a friendly country of the United States and is under huge influence of US government, so business prospect consisted on export of almond to India is not much in danger. Also Pakistan is a stable state as per political perspective: political government completing their tenures, and also the political parties are more inclined towards to work out a sound bureaucracy throughout the regime. So, Pakistan is also a good market for the export of the Almond (Tokuoka, 2013).

Economic analysis:

Both the target countries are being recognized in the world as per their economic context as well. They are improving consistently whether talking about their GDP or standard of living. Also the recent slight improvement in the value of the currency of both the Indian and Pakistani Rupee, as compared to other currency, is empowering the individuals to demand more of the quantum of fruits and dry fruits as in the past. So this leads to the expending scope of the business in the recent future. If this improvement in the individuals in the target countries persists there will be improvement in per capita income and the demand of the Almonds and like fruits will expand at rapid pace rendering the business with more and more scope to cover.

Social analysis:

This economic growth in the target markets escort to escalating health concerns of the individuals in the areas. The trend of enjoyment from the nature and natural food is augmenting. As a result they are more inclined towards the better consumption. So, to have such improvement in the lifestyle of the individuals the inclination of consumption of superior quality products is expanding, leading to the more opportunity for the likewise businesses. This fact incentivizes our business to operate in the target areas. In the future there seems to be a higher demand of Almonds due to the continuous improvement and developing taste for the almonds, along with the trends set in of eating hygiene food in comparison to the other families.

Technological factors:

The technological factors lead to a possible improvement in the cultivation of the almonds, due to introduction of beneficial chemicals for the growth of almond crop included in the fertilizers. As the demand by the various classes of customers is diversified from shelled and non-shelled to blenched, half cut to shredded / chopped, as well as almond milk and oil; so the more there is improvement in the technological improvement for execution of these demands of the customers, the more there is bright prospect for the business in future. The technology is contributing in every field of business from agriculture to industry, so the business will be better off in fulfilment of the customers’ needs. This will lead to more revenue as well as more profitability for the business (Tokuoka, 2013).

Legal factors:

The subject matter of the business is certainly legal and is highly demanded around the globe. Also this is not much of prone to illegal or illegitimate activities, unless the business exclusively is intended to operate such activities. So there are no matter of legal concerns which will be of assistance for the business to operate freely without any restrictions as long as it fulfils all the minimal requirements of the target countries, like import duties or other charges (Schaffer, Agusti, F, & Dhooge, L, 2014).

Conclusion

To make entry into any market either it is foreign or domestic, it is very important to do market research. This research includes the product information and statistics of the target market. These statistics include import duties, rules and regulations about product which is to be exported in the target market. It is also very important to know about the people and their culture so that demand of the product can be determined.

After research it can be concluded that India is very potential market for the export of almonds. The reason is high population with increasing awareness about health and increasing standard of life. That is why United States has become the largest exporter of almonds in the world.

Reference

Almond Board. (2012). AboutTheAlmondBoard/Documents. Retrieved 8 11, 2014, from almondboard: http://www.almondboard.com/AboutTheAlmondBoard/Documents/2012 Almond Almanac_FINAL.pdf

Almond Board of California. (2013). about almonds. Retrieved 8 5, 2014, from almonds: http://www.almonds.com/consumers/about-almonds/almond-lifecycle

Blue Diamond. (2014). Index. Retrieved 8 10, 2014, from bluediamond: http://www.bluediamond.com/index.cfm?navId=134

California Almonds. (2013). Forms of Almond. Retrieved 8 6, 2014, from California Almonds: http://www.almonds.com/consumers/about-almonds/almond-forms

Duty Calculator. (2014). Import duty & taxes for Almond. Retrieved 8 15, 2014, from DutyCalculator: http://www.dutycalculator.com/dc/161922408/health-beauty/supplements/raw-material-ingredient-for-food-supplements/import-duty-rate-for-importing-almond-shelled--from-united-states-to-india-is-30/

Esfahlan, A. J., Jamei, R, & Esfahlan, R. J. (2010). The importance of almond and its by-products. Food chemistry, 120(2), 349-360.

Kamil, A, & Chen, C. Y. (2012). Health benefits of almonds beyond cholesterol reduction. Journal of agricultural and food chemistry, 60(27), 6694-6702.

Schaffer, R., Agusti, F, & Dhooge, L. (2014). International business law and its environment. Cengage Learning.

Tokuoka, K. (2013). Does a better business environment stimulate corporate investment in India? Indian Growth and Development Review, 6(2), 6-16.

USDA. (2013, 1 4). Import Regulation. Retrieved 8 11, 2014, from agriexchange: http://agriexchange.apeda.gov.in/IR_Standards/Import_Regulation/FoodandAgriculturalImportRegulationsandStandards NarrativeNewDelhiIndia142013.pdf

Yada, S, Lapsley, K, & Huang, G. (2012). A review of composition studies of cultivated almonds: Macronutrients and micronutrients. Journal of Food Composition and Analysis, 24(4), 469-480.

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