Krakowska Akademia im.

Andrzeja Frycza-Modrzewskiego w Krakowie

Enterprenuerial Managment
Group Project

Members: Manuel Joaquim Joao

Introduction.

Our team of students from Krakow with cooperation with a KUBOTA PILAR-TECH authorised dealer in Cracow, Poland, will work on a project with ractor Supply Co IN
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979 US Route 2 E, Wilton, ME 04294 Map (207) 778-5900 based on mutual export of goods. Kubota specializes in distribution of Tractor Dealers, Farm Equipment, Tractor Equipment & Parts

This company has a great experience in distribution of tractors around the world. Professional designers and specialists, who are based on designing and producing NEW TYPES OF TRACTORS AND DIFFERENTS AGRO FACILITY OR EQUIPMENT PRODUCTS, FOR BIG AND SMALLER FARMERS, where the products are very comfortable and very functional in the same time. Our products, Tractor Equipment & Parts, will perfectly fit the bill of mexican agriculture investment market, which constantly develops. There is a number of places which needs a good quality, modern and remarkable agriculture equipments. We are ready to answer for all those needs of our demanding clients. The general objectives of the project are as follows: y To prepare project approach y To prepare export plan analyzing the products y To prepare all needed cultural analysis of exporters and importers y To prepare market analysis of mechanisms supporting export activities in SMEs y To prepare analysis of distribution channels, package, labels y To prepare analysis of regulations, roles, customs y To prepare costs of sales and profits y Deciding the best logistic to do supply of goods y To decide the forms of payment y Deciding which is the best way of promoting our products The specific objectives of the project are as follows: y To decide, what the kind of products must be supplied, according to the culture and demand of the market analysis y find out the target for our products y prepare project scope and objectives y prepare expected outcomes of the project y analyze the market as a function of demand of the project and its cultural aspects y analyze mechanism in SMEs

y y y
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analyze the distribution channel - direct distribution present the product to final market prepare the regulations
agreement of payment forms (e.g. clean payment) promotion of the products (e.g. on display, advertisement (TV, Internet), samples of materials, special offers, trade promotions)

Expected outcome of our project is a successful cooperation with ractor Supply Co, mutual help and benefits. Mexican agriculture equipments analysis according to demand of the standards and cultural analysis of the market.

Demand is a desire for certain good s or services supported by the capacity to purchase it. Agribusiness Service provides unparalleled analysis of global agricultural markets and research on leading agribusiness producers and suppliers worldwide. The online service features daily news analysis; systematic country and commodity supply and demand assessments, with 5-year industry forecasts; analysis of latest industry trends; commodity price forecasts; and competitive intelligence on leading industry players. The service also includes a fully searchable and exportable database of key industry performance measures and a unique, industry-specific risk/reward investment comparison tool. The Agribusiness Service is designed to enable industry professionals, suppliers, downstream manufacturers, company analysts, consultants, industry and regulatory organizations to evaluate and manage risk and exploit business opportunities in global agricultural markets.
There is many cultural entities in mexico, they are in charge of the promotion and preservation of the state heritage and traditional artistic expressions, through exhibits, contests and festivals open to the general public.

Agriculture is a traditional activity, still practiced in the countrywide. The services sector, is second regarding contribution to the state's income with a 21%, followed by commerce, hotels and restaurants with 18%. Which shows us that agriculture sector is one of resources income for the big number of the Mexicam population in the country that improves, and gets richer. According to that we can assume that especially this sector needs a highly quality of equipments, and remarkable a tractors which are modern in a traditional ensemble, as the culture of the farm in the countrywide. Distribution Channels:

A path through which goods and services flow in one direction (from vendor to the consumer), and the payments generated by them that flow in the opposite direction (from consumer to the vendor). Distribution is one of the classic of the 4parts of the marketing ( i.e. product, promotion, price, placement a.k.a. distribution). It helps expand our reach and grow revenue.

Some factors that influence the choice of distribution channel by a business : Market Factors buyer behaviour is very important, how he wants to buy, how they prefer buying (retailers, locally, through mail order). Another important thing buyer's needs for product information, installation, servicing. Channels intermediaries are important too, some retailers invest a lot in properties, shop fitting. Last factor here is intermediary cost, they charge mark up or commision for participatin in a channel. Producer Factors wheter the producer has the resources to perform the functions of the channel, they have to have skills for distributing their products, channels intermediaries, control over price. Product Factors distribution intensity (intense distributions means s aturation coverage of the market by using all available outlets , selective distribution means that producer uses a limited number of outlets in a geographical area to sell products, exclusive distribution means selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area.

We have choosen direct distribution to end users which means - we have a sales team that sells directly to companies. Our choice - We have used one or more distribution channels to grow our revenue and market share more quickly than we would have otherwise. Our end -users get the information and service they need before and after the sal e. If we reach our enduser through wholesalers, VARs or other channel partners, weve created many successful marketing programs to drive revenue through our channel and we are committed to their success.
Steps: y evaluate how end users want to buy ( the customer prefer buying indirectly through the shipment, they don't need any other products to be used alongside, the products don't need to be specially customized or installed, the product doesn't need to be serviced) y match end users needs to distribution strategy ( give all the information to the buyer, and deliver it directly through the sales force, if needed there can be built specialized set of consultants, resellers, the sail through wholesale or retail structure) y identify natural partners (If we want to grow beyond the direct model, look for companies that have relationships with your end -users, If consultants, wholesalers or retailers already reach your customer base, theyre natural partners ) y build your channel (Approach the potential channel partner , Establish goals, service requirements and reporting requirements, Deliver inventory (if necessary) and sales/support materials, Train the partner, Run promotions and programs to support the partner and help them increase sales) y minimize pricing conflicts (map out the price for each step in your channel and include a fair profit for each type of partner, Then compare the price that the

end-user will pay; if a customer can buy from one channel at a lower price than another, your partners will rightfully have concerns) drive revenue via the channel (Service your channel partners as youd service your best customers and work with them to drive revenue, run campaigns to generate leads and forward them to your par tners. )
Import/export regulations. Customs.

Negotiations for a free trade agreement between Mexico and the European Union (EU) began in October 1996. The agreement, formally called the Economic Partnership Political Co-ordination and Co-operation Agreement (also known as the Global Agreement), was signed in March 2000 and came into force on July 1, 2000. It was the first transatlantic FTA for the EU. The motivations for the agreement were to expand market access for exports from the EU to Mexico and attract more FDI from the EU to Mexico. On May 17, 2008, Mexico and the European Union agreed on a strategic association to further advance trade liberalization and to address climate change issues. The agreement includes provisions on national treatment and market access for goods and services; government procurement; IPR; investment; financial services; standards; telecommunications and information services; agriculture; dispute settlement; and other provisions. The agreement also includes chapters in which the parties agree to increase cooperation in a number of areas, including mining, energy, transportation, tourism, statistics, science and technology, environment, and other areas. On industrial goods, the EU agreed to eliminate tariffs on 82% of imports by value coming from Mexico on the date of entry into the agreement and to phase out remaining tariffs by January 1, 2003. Mexico agreed to eliminate tariffs on 47% of imports by value from the EU upon implementation of the agreement and to phase out the remaining tariffs by January 1, 2007. In agricultural products and fisheries, signatories agreed to phase out tariffs on 62% of trade within ten years.18 Tariff negotiations were deferred on certain sensitive products, including meat, dairy products, cereals, and bananas. Most non-tariff barriers, such as quotas and import/export licenses, were removed upon implementation of the agreement. Mexico agreed to phase out import restrictions of new automobiles from the EU by 2007. In government procurement, Mexico agreed to follow provisions similar to those under NAFTA to allow the EU to enter the Mexican market while the EU

agreed to follow WTO rules. In services trade, the agreement goes beyond the WTO General Agreement on Trade in Services (GATS). It imm ediately provided European service operators NAFTA-equivalent access to Mexico in a number of areas, including financial services, energy, telecommunications, and tourism.

The following is a brief description of the key steps related to import clearance in Mexico. First: A licensed customs broker must submit the customs declaration. This

broker must have a power of attorney from the importer.

Second:

Mexican goods are subject to an 8-digit tariff classification

system. This classification will determine the duty rate and establish any applicable non-tariff barriers such as quotas or other restrictions. Once the customs broker calculates the applicable duties and taxes, these are paid at the commercial banks located at the Mexican ports of entry.
Third: A company seeking to import goods into Mexico must have a tax

number and must also be registered as an importer. Persons who want to import certain sensitive goods are required to be registered in one of 30+ specific sectors (e.g., automotive goods, steel, tools, electronic appliances, bicycles, toys, textiles, apparel, footwear).

There are no tariffs or quotas applied for agriculture equipments, but Mexican Customs authorities collect a value added tax (VAT) upon entry of the goods into Mexico. The VAT rate is normally 15% of the value of the goods. The VAT is 10% for goods staying in the border zone (the border zone typically extends up to 20 kilometers south of the U.S.-Mexico border). In addition, Mexican Customs charges a customs processing fee (DTA) of 0.8%. Both of them has to be include d in the final cost calculation as well as customs broker fee.

Analysis of possible costs of sales and profits.

The cost of purchasing equipment are as follows:

Model kubota 1
TRAKTOR, B 1220

type
ETVCS diesel/12KM/3100

Quantity
1

Net Worth USD

14 050,00

TRAKTOR, B 1220

ETVCS diesel/12KM/3100

10

130 500,00

TRAKTOR, B 162O

ETVCS diesel/16KM/2800

17 500,00

TRAKTOR, B 162O

ETVCS diesel/16KM/2800

10

170 000, 00

TRAKTOR, B 1820

ETVCS diesel/18/2800

19 000,00

TRAKTOR, B 1820

ETVCS diesel/18/2800

10

180 000, 00

THE COST OF TRACTORS OF THE FIRST SHIPPMENT

Before mentioned costs can be summed up: Transportation for one tractor = 700$ y Transportation costs via sea = 550$*30 UNITS =16 500$ y Transportation costs via roads = INCLUDED y Insurance for on unit = 100$ y Insurance = 2 500$ for 30 units y Customs for one unit = 35,00$ y Customs processing for 30 units = 1000,00 $ Which gives a sum of 14 885 $ for one TRAKTOR, B 1220 , to the port of (Mexico) Which gives a sum of 18 335 $ for one TRAKTOR, B 162O , to the port of (Mexico) Which gives a sum of 19 835 $ for one TRAKTOR, B 1820 , to the port of (Mexico) Which gives a sum of 150 500 $ for 30 units of TRAKTOR, B 1220 , to destination (Mexico) Which gives a sum of 190 000 $ for 30 units of TRAKTOR, B 162O , to destination (Mexico) Which gives a sum of 200 000$ for 30 units of TRAKTOR, B 1820 , to destination (Mexico) destination destination destination the port of the port of the port of

As we expect to sell the tractors with 10% profit for one piece of goods for each model.
Logistics of supply.

Initial transport consisting of 1 to 30 units 3types of tractors will be shipped to Mexico. Afterwards we plan to organize more shipments of tractors and we can suply others agriculture equipments needed .The tractors will be transported from KUBOTA distribution in Cracow to Polish port in Gdynia loaded on the ship and transported roro, free on board, via to the port of Altamira in Mexico, where it will be transported to shop/warehouse of ractor Supply Co, in 979 US Route 2 E, Wilton,
ME 04294.

Forms of payment for export and import:

There are 3 standard ways of payment methods in the export import trade international trade market:
Clean Payment ( advance payment, open account) Collection of Bills (documents against payment, documents against

acceptance)
Letters of Credit L/c ( revocable and irrevocable letter of credit, sight and

time letter of credit, confirmed letter of credit) We have choosen clean payment, advance payment when ordering for the first time, it means that exporter is trusted to ship the goods after recieving payment from the importer. When the customer wants to order again in the future we are capable of using clean payment but with open account, which means that importer is trusted to pay the exporter after reciept of goods. The thing here is that the exporter assumes all the risks while the importer get the advantage over the delay use of company's cash resources and is also not responsible for the risk associated with goods.
Product promotion proposal.

1. Background to the product and market situation as well as an explanation

of the sales promotion strategy that I will decide which is the most appropriate one to promote my product. Our tractors are one of the best crafted and fashionable. Kubota serves to the number of clients around the globe and always ends up with the success. There is a lot of other producers and sellers that offer our potential clients similar product and sometimes with amazingly low price. Certainly, They don't provide you with the most precise crafted wood and final product as we do, what we have prooved through the years.

How the our products will be of promoted

Advertising in the internet (pop up adverts), tv (adverts during the commercials blocks), radio (adverts during the commercials announcement), leaflets (distributed to different people in the cities, outskirts etc). By us ing different types of sales promotions and communicating methods, this product would be appropriate to carry out sales promotion case study on because it is an existing product which is doing really well within the market and it has the potential to do even better in the existi ng market all over the world.

There are many other ways of promotion such as : y y y y y Price reduction ( buy KUBOTA PRODUCTS, you will get a discount) Special offers ( buy our PRODUCT and you will get something special for the garden) Free offers ( if you buy one you will get BONUSS) Free samples (set of the samples of the wood, some shaped parts and book with the KUBOTA collections) Trade promotions ( special advertisement to promote that TRACTORS AND OTHER PRODUCTS to the customer)

Strengths :

1. Our TRACTORS AND PRODUCTS are well known around the world for many years. The product already exists so further costs on advertising will not have to be made in order to get customers attention of the product.

2. Re-promoting will help attract new customers. We still need to promote an offer to help get consumer attention and therefore increase sales. 3. Our PRODUCTS are already at a stable position within the AGRICULTURE BUSINESS market, but by attracting new customers, sale will increase and help shorten the lead on other tractors market. 4. Due to its success over many years, money from sales is available to repromote the product.
When promoting the product, there are laws, which we will have to take into consideration:

1. The Sale Of Goods Act 1979 and Supp ly of Goods Act 1994 regulates contracts for sale of goods. They imply the following term:
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The seller must have the legal right to se ll the goods. The goods sold are as described The goods are of good quality and fit for the purpose.

2. The Trade Description Act says that th e product must be what it says it is. In this case then the tractor will have to reward the prize when found.
The trade description act states that it is a criminal:

1. To apply a false trade description to any good s, or to supply or offer to supply any goods to which a false trade description is applied. 2. To give a false indication as to price . 3. To make a false statement knowingly or recklessly as to the provision of a service. 4. To give a misleading induction tha t goods have been offered at a higher price, as in a shop sale, when this is not the case. 5. The Competition Act 1998 operates thro ugh the competition commission (which replaced the Monopolies and mergers commission). This body can now investigate any firm in a dominant market position to see if they are acting against; the public , whereby a firm tries to run competitors out of business by long term, sometimes loss making, prices, to establish a monopoly. We are in a very dominant position and are very well respected so it is important that we stick to the rules. This is for the safety of ourselves.

Requirements for future development.

Sustainable management of the resource is essential through actions that include the development of new tractor models for international use. Continuously product and market development and formation of effective business partnerships are needed. Institutional support structures and government -private sector coordination must be strengthened, including financing schemes for small and medium -sized enterprises. International tires for tractor makers in the consumer countries would be advantageous to help promote Kubota products worldwide. Technology adoption and commercialization need to be furthered, and institutional networking strengthened.
Implementation

Marketing Rattan TRACTORS manufacturers should have no problem when it comes to marketing their products as there are always markets for quality PRODUCTS, locally or abroad. There are various ways of hunting for potential FARMERS. Having a showroom to display the products is one method and is a good initial step. In advances of information technology, the showroom could be produced in virtual form, i.e. as an Internet web site. In the presence situation, the cost of developing a web site is very low, but the impact it might have highly valued on market potential without limit. Many international companies have their own web sites and are selling their products through the e-commerce mechanism. Another effective way of marketing is by participating in agriculture sectors fairs held by various organizations in the world. Braga , Portugal has been holding from 31/03 until 03/04/2011and the edition of the International FEIRA DE AGRICULTURA ALIMENTACAO E AGRO PECUARIA Fair (FIAPA) annually since early this decade and the effectiveness of the event is manifested in sharp rises of the AGRO export values in the last few years. Environmental AGRO manufacturing does not impose threats to the environment as significant as TRACTORS AND AGRO PRODUCTS manufacturing.
Cultural and Agriculture characteristics in Mexico

After the Mexican Revolution Mexico began an agrarian reform, based on the 27th article of the Mexican Constitution than included transfer of land and/or free land distribution to peasants and small farmers und er the concept of the ejido. This

program was further extended during President Crdenas' administration during the 1930s and continued into the 1960s at varying rates. The cooperative agrarian reform, which guaranteed small farmers a means of subsistence livelihood, also caused land fragmentation and lack of capital investment, since commonly held land could not be used as collateral. In an effort to raise rural productivity and living standards, this constitutional article was amended in 1992 to allow for the transfer of property rights of the communal lands to farmers cultivating it. With the ability to rent or sell it, a way was open for the creation of larger farms and the advantages of economies of scale. Large mechanized farms are now operating in some northwestern states (mainly in Sinaloa). However, privatization of ejido s continues to be very slow in the central and southern states where the great majority of peasants produce only for subsistence. Up until the 1990s, the government encouraged the production of basic crops (mainly corn and beans) by maintaining support pr ices and controlling imports through the National Company for Popular Subsistence (CONASUPO). With trade liberalization, however, CONASUPO was to be gradually dismantled and two new mechanisms were implemented: Alianza and Procampo. Alianza provides income payments and incentives for mechanization and advanced irrigation systems. Procampo is an income transfer subsidy to farmers. This support program provides 3.5 million farmers who produce basic commodities (mostly corn), and which represent 64% of all farmers, with a fixed income transfer payment per unit of area of cropland. This subsidy increased substantially during president Fox's administration, mainly to white corn producers in order to reduce the amount of imports from the United States. This program has been successful, and in 2004, roughly only 15% of corn imports are white corn the one used for human consumption and the type that is mostly grown in Mexico as opposed to 85% of yellow and crashed corn the one use for feeding livestock, and which is barely produced in Mexico.

Importance of agriculture to Mexico's economy

Agriculture, as a percentage of GDP, has been steadily declining, and now resembles that of developed nations, in that it plays a smaller role in the economy. In 2006, agriculture accounted for only 3.9% of GDP, down from 7% in 1980, and 25% in 1970. Nonetheless, given the historic structure of ejidos, it still employs a

considerably high percentage of the work force: 18% in 2003, mostly of which grows basic crops for subsistence, compared to 25% in developed nation s in which production is highly mechanized.
Crops In spite of being a staple in the Mexican diet, Mexico's comparative advantage in agriculture is not in corn, but in horticulture, tropical fruits, and vegetables. Negotiators of NAFTA expected that through liberalization and mechanization of agriculture two-thirds of Mexican corn producers would naturally shift from corn production to horticultural and other labor-intensive crops such as fruits, nuts, vegetables, coffee and sugar cane. While horticultural trade has drastically increased due to NAFTA, it has not absorbed displaced workers from corn production (estimated at around 600,000). Moreover, corn production has remained stable (at 20 million metric tons), arguably, as a result of income support to farmers, or a reluctance to abandon a millenarian tradition in Mexico: not only have peasants grown corn for millennia, corn originated in Mexico. Even today, Mexico is still the fourth largest corn producer in the world.

Potatoes The area dedicated to potatoes has changed little since 1980 and average yields have almost tripled since 1961. Production reached a record 1.7 million tonnes in 2003. Per capita consumption of potato in Mexico stands at 17 kg a year, very low compared to its maize intake of 400 kg. On average, potato farms in Mexico are larger than those devoted to more basic food crops. Potato production in Mexico is mostly for commercial purposes; the production for household consumption is very small.

Sugar cane Approximately 160,000 small- and medium-sized farmers grow sugar cane in 15 Mexican states; currently there are 54 sugar mills around the country that produced 4.96 million tons of sugar in the 2009 crop, compared to 5.8 million tons in 2005. Mexico's sugar industry is characterized by high production costs and lack of investment. Mexico produces more sugar than it consumes. Sugar cane is grown on 700,000 farms in Mexico with a yield of 72 metric tons per farm. Agriculture and food production Product Avocados Onions and chayote Limes and lemons Sunflower seed Dry fruits Papaya Chillies and peppers Quantity (Tm) 1,040,390 1,130,660 1,824,890 212,765 95,150 955,694 1,853,610 World Rank1 1 1 1 1 2 2 2

Whole beans Oranges Anise, badian, fennel Chicken meat Asparagus Mangoes Corn

93 000 3,969,810 32 500 2,245,000 67,247 1.503.010 20,000,000

3 3 3 3 4 4 4

Source: Food and Agriculture Organization (FAO)

References Economics, Adam Smith, Michael Parkin , Melanie Powell, Kent Matthews, Edinburg 2008 Eeconomics for professional examination, Baker, 2004 http://www.kubota.com/ http://www.yellowpages.com/wilton -me/mip/tractor-supply-co462890731?lid=462890731 Tratado de Libre Comercio Mxico-Unin Europea (TLCUE) / Tratado de Libre Comercio Mxico Asociacin Europea de Libre Comercio (TLCAELC) http://en.wikipedia.org/wiki/Food_and_Agriculture_Organization

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