EASY FLAME

Understanding of international business strategies, required to investigate

and explain what factors would significantly impact on Marianos decision to
export internationally.



Submitted to: Submitted By:
Simon Cope Abhishek Ajitkumar


Submission Date:
04.04.2014








International Marketing (BG005) Abhishek Pathak - i132979
NEW ZEALAND SCHOOL OF EDUCATION Page 2 of 8
1) ISSUES OVERLOOKED:-
Mariano has compared Argentinian culture with Australian culture as per his prior experience
of living in both the countries. He thinks that he knows the preference, likes and dislikes of
his county but in reality everything changes as time passes including preference of people. He
just decided to export Easy Flame barbecue (BBQ) to Argentina without any proper research
and market survey which can be dangerous for his new business. Below mentioned is a list of
issues that Mariano has overlooked while deciding to export BBQ to Argentina from
Australia.
Entry options: Mariano has decided to enter in the Argentinian market with the
market entry option of Exporting BBQ to Argentina where as he can choose different
option to enter the market like Joint Venture, Foreign Direct Investment or Licencing.
Exporting has its own pros and cons but other options should also be taken into
consideration. Joint venture can give Mariano direct access in Argentina as he is
importing foreign product by partnership with a local business. Joint Venture with
existing company or distributor will give competitive advantage to Mariano as he will
not have to take much care about local business policy or distribution channel. He just
need to understand the legal constraint of joint venture. Foreign Direct Investment
(FDI) is always very much welcomed by Government as it bring very important
Foreign Exchange in the country but instable government and its policies or protest of
local businesses may affect the business form as the business is governed by Foreign
company. Another way to enter in the market is licensing in which Mariano can get
licence to sell Easy Flame BBQ to Argentinian Market. This form of business can
help further to Mariano by way of reduced risk and liability as he will not have to
invest more in business if he take official licence to be Argentinian Distributor of
Easy Flame BBQ. He just need to pay the caution deposit to acquire license to sell in
Argentinian region but it also requires great negotiation skills to negotiate with the
BBQ company as they have no plans to enter international market.
Market Research/ Marketing/Business plan layout/draft: Mariano has prepared an
informal business plan but nothing affirm. To enter in any market, market analysis is
very much important. PESTELC analysis, Market research, Consumer preference
survey etc. are vital to conduct before entering any market. Market research includes
getting some answers regarding things businesses have to know, for example, import
obligations, regulations, dispersion channels, business sector size and development,
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NEW ZEALAND SCHOOL OF EDUCATION Page 3 of 8
rivalry, demographics and neighbourhood processing so business can evaluate market
opportunities and the costs of capturing them (MARKET RESEARCH, 2014).
Mariano is an Argentinian but he lives in Australia and in recent years the consumer
preference might have been changed. Business plan is a tool to assure that market is
available to sell our product and consumers are interested in buying it.
Adaptation of product for specific market: Mariano has decided to sell Easy Flame
BBQ to Argentina from its manufacturers but some products needs to be changed
according to market preference. Easy Flame may follow best product standard and
Safety Standards as per Australian market but it still may require to follow certain
product standards as per Argentinian market. Easy Flame is an English name which is
not registered in Argentina. It means Mariano can use the name Easy Flame in
Argentina and register it as it is available offline as well as online (Control of
Homonymy, n.d.). The name is available does not mean that Mariano can use it as it
is, he needs to take permission of local government to use the name as it may not be
suitable for Argentina and the symbol of Easy Flame may be not suitable for
Argentina, too. He may require to change labelling of his product as per local market
customs and intellectual property rules. The name and symbol being used in Easy
Flame should be in a form to be accepted in Argentina (i.e. in Spanish) so that
Mariano can easily export BBQ in local market and people or government cannot be
in conflict with it. But Mariano may not change the name and symbol consistent with
Argentinian market as he is just an exporter and not a manufacturer and to change the
name and logo he needs to ask permission of BBQ Company.
Warranty and service issues: Mariano wants to sell BBQ to Argentina and as
Argentinians love BBQ it may be a grand success in Argentina but what if the BBQ
are defective or having some technical issues? Easy Flame is being manufactured in
Australia and being exported to Argentina. While exporting if BBQ are damaged then
what are the options left with Mariano? Should he send products back to manufacturer
in Australia? No he cant because manufacturer sold the products in Australia not in
Argentina so the product damaged while transit is not a responsibility of BBQ
Company and all risk is a responsibility of Mariano. Moreover, only sells will not
help Mariano to capture market he needs to provide after sales services to customers
which means he has to give warranty or guarantee on his product and customer
International Marketing (BG005) Abhishek Pathak - i132979
NEW ZEALAND SCHOOL OF EDUCATION Page 4 of 8
support to assist customers for using BBQ. To overcome this issue Mariano should
tie-up with local technician to offer warranty and technical assistance to customers.
2) CUSTOMER SEGMENTS:-

Customer Segments:- Mariano has identified three segments of potential customers as per
demographic factors of Argentina. As per purchasing power and buying behaviour of Argentinian
people Mariano has decided to introduce compact model, medium-sized model, and deluxe model in
Argentinian market.

A. Lower Class: A compact model comes with a limited range of features for limited use of
BBQ. Those who do not want to spend more money on BBQ and just want basic BBQ
functions can buy this compact model. Mariano also feels that the compact model might be
suitable for middle-class people living in apartments with small terraces or balconies in big
cities like Buenos Aires, Cordoba and Rosario. The compact model costs 399 Australian
Dollars.

B. Middle Class: A medium-sized model comes with a greater range of features but a few
less features than deluxe model of Easy Flame BBQ. Medium sized model is for those who
want some more features than a basic BBQ at a competitive price. Majority of population
(43.77%) in Argentina falls under middle class and the medium-sized model might appeal to
middle-class people living in suburban houses where people have open land or balcony to use
BBQ. And middle sized model costs 550 Australian Dollars (Middle class in Latin America
economically vulnerable, 2010).

C. Upper Class: A deluxe model comes with a full range of features for upper class people
who has got some disposable income to spend in BBQ model which has great features. A
deluxe model is also very useful for those who wants to use barbecue for commercial use. In
Argentina 32.54% people falls under category of Affluent which indicates very high
proportion people. Mariano can target these customers for deluxe model as these people are
having more disposable income and they do a lot of home entertaining. The deluxe model
costs 899 Australian Dollars (Middle class in Latin America economically vulnerable, 2010).


International Marketing (BG005) Abhishek Pathak - i132979
NEW ZEALAND SCHOOL OF EDUCATION Page 5 of 8



3) UNCONTROLLABLE FACTORS AND MISSING SKILLS:-
(A) Uncontrollable Factors:-
Mariano is not having any experience of exporting or international trade so he may need to
focus more on the uncontrollable factors as they may directly affect the business brutally.
Political/ Legal Factors: Political factors are very vital for international trade. To enter any
country business should focus on Political and legal factors of the country. Political factors
such as Political Instability, Government Influence on international trade strategy, balance of
trade (more import than export), relation between importing and exporting country and legal
factors such as new legal compliance, Tariffs, Duties and Taxes, Health and Safety laws etc.
are flexible and can be changed at any point of time. So before or after entering into any
country these factors can affect the chances of success for any business. For an example if
government of Argentina increases tariff on exports of luxury item (i.e. BBQ) than Mariano
will have to increase price of BBQ in Argentina which may also result in low sells. Argentina
is active participants in many international organizations such as United Nations,
International Atomic Energy Agency, the G-20, and the World Trade Organization. But in
future because of any conflict with any country they may change their rules for international
business. In this case Mariano can enter in a serious problem.
Economic Factors: Economic factors refers to the factors which affects economy of any
country such as recession, Inflation, Cost cutting, Unemployment rate, Poverty line,
purchasing power, GDP, return on investment, etc. Profiting from rich common assets, a
highly literate population, an export-oriented agricultural sector and a diversified industrial
base, the economy of Argentina is Latin America's third-biggest economy. It has a "high"
evaluating on the Human Development Index and a moderately high GDP per capita, with an
impressive internal business sector size and growing share of the high-tech sector. But
History says Argentinian economy has been very uneven. It has faced recessions, income
misdistribution and increasing poverty (Argentina, 2014). This all economic factors can turn
any business down. After 2008 recession every economy has faced some problems and in
Argentina Economic growth rates have been extremely low, Inflation rates have been
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NEW ZEALAND SCHOOL OF EDUCATION Page 6 of 8
increased, unemployment rates have been high, many middle-class and wealthy people have
lost their savings in a banking collapse. If this kind of situation arises in future than Mariano
may face a very big problem as with slow economy, income level of Argentinians will also
suffer which will results into decreased purchasing power of Argentinians.
Competition: Currently, Mariano may not have any existing competition in Argentina for
Gas BBQ but in future they may face problems because of local competitors. Local
Government normally helps local business rather than exporter. Argentinian people use
traditional Brick and Mortar BBQ to enjoy barbecue their food. This existing method of BBQ
can also give tough competition to Easy Flame as they may not be interested in using gas
BBQ. Moreover, the local organizations can learn to manufacture BBQ can be distributor for
Argentina and as they are local they can sell BBQ at cheaper rate than exported one. In this
case Mariano cannot reduce much price as he is exporting BBQ to Argentina and he may not
sustain in the competition. Competitive position of competitors i.e. power to influence
customers and price can destroy Easy Flame in Argentina.
Natural Disaster/Man-made Disaster: Natural disaster are an act of god which cannot be
controlled by humans. Earthquake, Cyclone, Tsunami, Floods etc. are examples are natural
disasters. Companies can insure themselves against risk of natural disasters but it still
damages the company and to recover itself from loss Mariano should have contingency plan.
Man-made disasters are mainly done by humans and in certain cases they can be controlled.
Examples of man-made disasters are Riots, Strike, Terrorist Attack, Fire, etc. They are not
planned and occur unexpectedly but whenever strikes its very hazardous for business. To
consider natural disaster is very important as various volcanoes are spotted on the outskirt of
Argentina and Chile. Seismic action could happen at whenever. Flooding, especially in the
northern regions of Argentina, is occasional and may disturb nearby transport and the
procurement of crucial administrations. Heavy rains may cause occasional flash floods in
other areas, for example, the region of Buenos Aires (Natural disasters, severe weather and
climate, n.d.).

(B) FOUR SKILL AREAS THAT MARIANO LACK:- Mariano has got post-graduation degree
with a subject of International Marketing but it does not mean that he possesses all the skills required
for international trade. Below mentioned is a list of skills that Mariano lack.
International Marketing (BG005) Abhishek Pathak - i132979
NEW ZEALAND SCHOOL OF EDUCATION Page 7 of 8
Prior Experience in International Marketing:- Mariano has studied international
marketing five years ago but he actually is not having any actual experience in
international marketing. Without practical knowledge it is difficult to work in diverse
environment. Mariano has done his post-graduation in Australia that means he might
not have worked in Argentina at all so he may not have any kind of experience of
working in Argentina which may not be good for his business.
Negotiation Skills:- Negotiation skills are very important for any international
business. As an exporter Mariano have to deal with manufacturer of Barbecue,
Shipping Company, Local wholesaler, Retailer, Distributors in Argentina. If Mariano
learn how to negotiate with all of them then he can earn reasonable advantage as he
can get discount from manufacturer and sell products to distributors with higher
margins. With Negotiation skills Mariano requires interpersonal skills, Professional
Skills and communication skills to deal with manufacturers and distributors.
Managerial skills:- To run business Mariano is not having any managerial skills.
Managerial skills refers to, and. Mariano has studied a few subjects but has never
experienced anything practically. Managerial skills are not only required to run the
business in international market but also to understand business in-depth. Managerial
skills include Creativity, Leadership skills, Technical skills, Human skills, Conceptual
skills as well as Management or Administrative skills. Managerial skill gives
entrepreneurs ability to learn new thing and apply this knowledge for advancement of
organization.
Ability to recover from failed venture:- Mariano has decided to export Easy
Flame BBQ to Argentina but he should have some skills to recover from failure of
this venture. He can succeed in the venture and gain high profits but this can turn
against him too if his venture fails. Mariano should have ability to think about backup
plan or alternate strategy to come out of the failure. If he is not having any alternative
strategy then he should have ability to absorb loss and to start the new venture or new
job with confidence in future.
CONCLUSION
Mariano has ignored a few factors and lack a few abilities but still his plan is quite good to
initiate. He cannot completely mitigate the risk associated with this venture but he can still try
to reduce it. For an example, to fight against natural disaster/man-made disaster Mariano
should focus on proper Insurance policy and to sustain against any political/legal change he
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NEW ZEALAND SCHOOL OF EDUCATION Page 8 of 8
should be very proactive and make strategies in accordance with any future change. Business
works with entrepreneurs and with or without some skills one should never stop trying.
Mariano might lack some skills and be unaware of some factors but he should try to capture
market with full commitment towards it and by focusing on unforeseen factors which may
arise in future. Mariano also should research his market first before entering into market.
BIBLIOGRAPHY

Argentina. (2014). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Argentina
Control of Homonymy. (n.d.). Retrieved from IGJ: https://www2.jus.gov.ar/igj-
homonimia/Principal.aspx
MARKET RESEARCH. (2014). Retrieved from Australian Trade Commission:
http://www.austrade.gov.au/Export/About-Exporting/Market-research
Middle class in Latin America economically vulnerable. (2010). Retrieved from OECD:
http://www.oecd.org/countries/argentina/middleclassinlatinamericaeconomicallyvulnerabl
e.htm
Natural disasters, severe weather and climate. (n.d.). Retrieved from Australian Department of
Foreign Affairs and Trade: http://smartraveller.gov.au/zw-cgi/view/Advice/Argentina