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Consultant For Export Company

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Introduction to Export Company

The role of an entity has increased with the increasing market complexities as this created a lot of pressure on an entity in order to upgrade its trade practices. Asiatic mart Ltd has been selected for the given project which is a multinational organisation located in Singapore. This entity deals in offering export goods to other countries as customer satisfaction is the primary concern for this enterprise. Being a global entity its major role is to capture higher market share by enhancing its current skills and capabilities in order to handle higher complexities that may imposed on its business in the near future (Peeters, van Meggelen and Schepers, 2015). The greater emphasis of the employer lies on the actual business conditions.

Various challenges that need to be identified by the researcher in the current report include all the issues which are suppressing the current skills and the capabilities of the firm. The main aim of the business concern is to export all its goods or services from one place to another for which they are required to develop good trade relationships among all the businesses. Trade relationships are important in order to convey all important information from one end to another for the betterment of the business. This entity deals in procuring and offering grocery items that facilitate all the needs and expectations of all the users located in the external environment (Shim, 2013).

An export entity is required to follow all the rules regulations and licensing policies in order to transfer their product from one end to another as the wrong passage of goods will in turn affect the current performance of the business concern. EXIM policy will be used which is different for different countries as Singapore's economy will support the export from its country to another country increasing the foreign exchange reserves. The current economy of Singapore increases with all these proceedings as this enhances the current role of the firm in terms of generating higher sales and revenue all across the world.

Following all the regulations will benefit an entity in improving the existing business performance of an enterprise. Financial as well as non-financial status of an entity (Anokhin, Kuznetsov and Lachininskii, 2014). The experience of all the customers is regarded as important for an entity as all their actions need to be framed according to the higher expectations of all the external market users.

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Company selected

Asiatic Mart is an international firm that is located in Singapore but operates its business overseas. It was founded in the year 1996, it operates its business through networks of suppliers, distributors and shipping agencies. It has a strong network of suppliers and has more than 200 suppliers overseas. The company provides retail products such as bakery equipment, household products, and frozen items across the world. It is well known for its freight documentation and customs clearance which is why its transactions are \very smooth and clear.

External Environment Analysis

Porter's 5 forces
  • The threat of new entrance: Asiatic mart faces the new entry of firms which includes new government policy, changes in economies of scale etc.
  • Threat of substitutes: It includes all the potential factors like buyer's switching cost, standard products and availability of close substitutes that may affect the Asiatic mart in Singapore.
  • Bargaining power of customers: It includes prices which forcefully go down, customer value analysis, total amount of trading etc. are included in Asiatic Mart's operational policy.
  • Bargaining power of suppliers: Asiatic Mart in Singapore also faces factors like switching costs, degree of differentiation of inputs, presence of substitute inputs, employee solidarity etc. make a great impact on business goals and objectives.

Internal Environment Analysis

BCG Matrix

It is one of the great models that helps in analysing the internal situation of the organization.

Question mark

The factor products which have low market share and compete in high growth market are considered. Asiatic Mart is working well in the export business, its retail products have a high chance of getting high sales. But due to currency fluctuations company may fail as well. There is a high chance of becoming a star as well as dropping into the dong category.

Dongs

It is a product which has low market share and low growth. Export business has high growth options so Asiatic Mart does not come under this section.

Start

It indicates business units which have high market share and high growth. Asiatic Mart has the ability to sustain itself in this category, it can generate high cash in future.

Cash cow

It is considered for such business firms that have low growth rates but have large market share. Export products of Asiatic Mart are in demand so the cited firm has a great chance to generate high income through its export business.

Ansoff Matrix

It is another tool that supports identifying the internal working performance of the entity.

Market penetration

It is the growth strategy in which the company sells existing products in the existing market. Asiatic Mart is an export firm that wants to expand its business across the world. For that, this strategy will not be suitable for cited firms because it will limit it to Singapore only.

Market development

It is another growth strategy in which a company can enter into a new market. Asiatic Mart is operating in the export industry so it adopts this growth strategy, This helps the entity in growing well in the market.

Product development

His company introduces new products in the existing market. Asiatic Mart focuses on existing retail products but by developing its products it can gain a competitive advantage to a great extent.

Diversification

It can be defined as new products for the new market. It may be risky for the Asiatic Mart because it may be possible that new products will not be liked by importers and it may harm the image of the company as well. Asiatic Mart can use this strategy at a smaller level so that it can get to know the performance of new products in new markets.

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Impact of Shareholder

Every business totally depends on the shareholder's position. Asiatic Mart, includes three shareholders who make a great impact on business operations. It includes customers, employees and shipping agencies which affect the business activity. Shareholders make a great impact on business profits and short-term objectives. As per the result, the company's 23% share are taken by the shareholders so that they have a complete right to check the company's actual performance.

Financial Analysis

It is necessary for the organization to manage cash flow effectively otherwise it may create economic problems in the corporation. All firms face some financial challenges, if they handle it properly then they may sustain themselves in the market for a longer duration. Asiatic mart is facing some economic problems which are as follows

Cash flow issues

Asiatic Mart's cash flow management is not good because the company is unable to get funds on time. As it is working in the export field so many times due to currency fluctuation cited firm is unable to get payment on time. Bank formalities, shipping time takes too much time and that is why it does not get cash on time. That creates a problem for the cited firm and it becomes unable to conduct its operation smoothly. It can be commented that Asiatic Mart is facing a cash flow problem because many of its importers are not paying the entity payment on time. Due to this, there is an imbalance in cash flow.

Risk-averse funding

Asiatic Mart has to accept payment in foreign currency. If the value of currency goes down then the cited firm has to face a huge loss in this condition. Even in such type of situation, it becomes unable to say anything to the importer. Many times cited firm has faced the issues where value of the importer's country currency went down and the company received less payment when it exchanged the currency in Singapore currency. That has given a loss to the organization.

Huge investment

Asiatic Mart has to invest large amounts in its export business, because the cited firm has to pay shipping agencies, and banks and has to pay taxes as well. If it fails to get the return on it then it would face financial risk that may cause loss to the organization.

Identifying challenges

Challenges are evaluated by an entity owner in order to improve their existing business performance over a certain period. Challenges will inspire an individual in order to overcome all the problems currently faced by an enterprise in the external business environment. Problems are identified by them in order to enhance the existing skills and capabilities in order to target higher users in the external business environment (Makri, Theodosiou and Katsikea, 2016). The Asian market located in Singapore deals in providing outsourcing of various goods and services all across the world. It also exports goods from Singapore to outside countries for which various aspects need to be considered by them in order to create its unique position in the external business environment.

Internal as well as external factors are required to be analysed by an entity to evaluate the current market position of the entity. Selecting various strategic management strategies will mostly depend on the entire performance of an organisation in the external business environment (Farja, Gimmon and Greenberg, 2016). There are various challenges identified by a consultant who is evaluating the current position are given below

Difficulties in export licenses and documentation

Asiatic Mart facing this kind of issue as starting a business is not difficult in Singapore due to the flexible rules and regulations. It will facilitate all individuals in setting up their business easily which creates a high level of competition in the external business environment. Flexible laws and regulations in the country will attract a variety of countries in order to establish their business in Singapore (Ali and Perumal, 2016). Singapore's economy has increased with the passage of time as different countries get clubbed with the current economy of Singapore. With the increasing export business in Singapore, the rules or regulations of Export are required to be followed by all the users in the external business environment.

Asiatic Mart faces issues in getting export licenses in Singapore. Because the trade norms of the country are far different from any other nation, there are some necessary restrictions on trading thus, the company faces difficulty in running their business smoothly (Ayob, Ramlee and Rahman, 2015). Singapore is considered a small but wealthy city. It has an open and trade-driven economy which supports many firms in conducting their operations significantly. Export credit agency has made strict rules for exports that create problems for the cited firm and due to this, it has to make modifications in its process. Different intellectual property laws create challenges for the entity and due to this, it can face huge trouble.

Asiatic Mart needs to cope with contractual issues and lengthy paperwork. When a company has to export its goods then it has to make agreements with international firms. For that, it is essential to follow standard commercial practices (Nguyen, Nguyen and Bosch, 2015). Paperwork of international trade is more complicated and small mistakes can harm the brand image across the world. Bureaucratic rules and procedures of different countries create problems for the firm.

Foreign currency issue

It is another challenge that is faced by the Asiatic mart. In the export business company has to deal with foreign currency (Dai and et.al, 2014). The value of currency can be changed at any time, if at the time of exporting the goods it is high but after sending the material if prices get down then it can be a problematic situation for the cited firm. In this condition, the company has to face huge losses and also it can impact its operations as well.

Each country has its own currency and its rates are decided. Fluctuations in exchange rates can create additional risk for the Asiatic market. It may be possible that it may face huge losses due to down flow in the currency (Zhu, 2014). Singapore currency is a dollar, if it exports the products to the UK then the cited firm can face huge risks. One of the major issues in this respect is that in the remittance of money for payments firm has to wait for the payments. It takes time thus, sometimes becomes expensive for the exporter. The wide gap between the date of dispatch and receipt of payment can create a situation of bad debt for the company. In this duration, if exchange rates get changed then it would be a loss for the firm because it has accepted the payment sin other rates and now it will have to accept it at other rates (Rosnan, Saihani and Zakaria, 2015).

Unexpected movement in exchange rates can create major settlement problems for the Asiatic mart. In such conditions, the cited firm will have to expect the payments as per the present exchange rate (Janda, 2014). There are many firms that are aiming to export their products across the broader due to currency fluctuation risk entities think on this respect twice. If the corporations have a strong financial position and have loss-bearing capacity then they have to enter into the export business.

Customs problems

It is another problem that may be faced by the Asiatic mart to a great extent. To run its business across the world it is necessary for the organization to follow all norms and regulations strictly. Apart from this, they have to maintain standards as well. Custom problems are one of the major challenges for the cited firm because due to this its goods can be rejected by the government of the importer country and by the importer as well (Salman, 2016). Common problems that are related to the customs are such as misclassification, duties higher as compare to anticipated, labelling issues, inadequate documentation, packaging regulations etc. All these are risks for the entity and before making a trade agreement with any firm located in another nation it is essential for the Asiatic mart to look upon the customs problems and take care of these aspects (Sippel, 2016).

For example, if Asiatic Mart does not prepare the documents carefully then it may create huge trouble for the entity because in such conditions cited firm will not be able to get payment for its goods. Mistakes in the documentation can be an issue for the entity because due to this government can reject the entire material and can file a case against the exporter. It is the biggest challenge for the Asiatic mart because it can harm the overall image of the company to a great extent. Most shippers are fully responsible for the custom problems that are faced by customers of exporters (12 Major Risks and Solutions in Imports and Exports, 2016).

Goods rejection by the government is a very common problem that is associated with customs problems. For example, authorities have banned the importation of Chewing gum. Asiatic Mart needs to take care of this element of whether the product that is exported by the company is acceptable in the country or not. If there is any issue then the firm will have to pay huge penalties that would harm the financial and brand image of the corporation. Importers may also reject the goods, there are various reasons the same such as shipping of wrong goods, damaged products etc (5 Risks in Exporting Manufactured Goods and How to Avoid Them, 2011).

These are major challenges that can be faced by the Asiatic mart and it has to take care of these elements so that such type of issues can be avoided in the organization. Apart from this, frequent market changes, intense competition, difficulty in transportation and communication, risk in transit, language barriers, distance etc. all are associated challenges with the export business. In the absence of a lack of monitoring cited firm can face these problems and this may harm the overall operations of the corporation (Sippel, 2016).

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Conclusion

From the above report, it can be articulated that trade relationships are one of the essential elements of running the export business successfully. Asiatic Mart offers grocery items that facilitate customers who live in other countries. It has been found that the company wants to improve its export performance. For that, it is necessary for the entity to look at the challenges and minimize them by taking appropriate actions. Financial risk, foreign currency risk, and customs problems are major issues that can be faced by the organization. To reduce such problems cited firm should properly follow the rules and regulations and should monitor the economic condition of the import country effectively. In this way, it will be able to enhance its performance which will support in increasing the profitability of the corporation to a great extent.

References

  • Ali, N. N. K. and Perumal, I., 2016, January. Symptoms Versus Problems (SVP) Framework on Export Barriers to SME Led Electronic Products in Taiwan. InSHS Web of Conferences(Vol. 23). EDP Sciences.
  • Anokhin, A., Kuznetsov, S. and Lachininskii, S., 2014. A spatial study of geo-economic risk exposure of Russia’s arctic mono-towns with commodity export-based economy.Journal of Geography and Geology.6(1). pp.38.
  • Ayob, A. H., Ramlee, S. and Rahman, A. A., 2015. Financial factors and export behaviour of small and medium-sized enterprises in an emerging economy.Journal of International Entrepreneurship.13(1). pp.49.
  • Cavusgil, S. T. and et.al., 2014.International business. Pearson Australia.
  • Chvalkovská, J. G., MejstÅ™ík, M. and Urban, M., 2014. The Discriminate Analysis and Relevant Model for Mapping Export Potential.World Academy of Science, Engineering and Technology, International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering. 8(10). pp.3353-3357.
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