A

COMPREHENSIVE Project Report

On
“A study on the factors influencing consumer’s purchase decision towards
foreign goods: In Veraval (Somnath)”

Submitted to

Institute Code: 817

Narandas Jethalal Sonecha Management & Technical Institute, Chanduvav
(Veraval)
Under the guidance of
Mr. Pradip Maheta
Mr. Bharat Barad
(Assistant professor)
In partial fulfilment of the requirement of the award of the degree of Master of
Business Administration (MBA)
Offered by

Gujarat Technological University

Ahemdabad

Prepared by:
Pampaniya Pritesh Naranbhai
Enrolment No. 218170592018
MBA (Semester-IV)
May 2023
 STUDENT’S DECLARATION

I hereby declare that the COMPREHENSIVE Project Report

titled “A study on the factors influencing consumer’s purchase decision
towards foreign goods: In Veraval (Somnath)” is a result of my own
work and my indebtedness to other work publications, references, if any,
has/have been duly acknowledged. If I am found guilty of copying from any
other report or published information and showing as my original work, or
extending plagiarism limit, I understand that I shall be liable and punishable
by the university, which may include ‘Fail’ in examination or any other
punishment that university may decide.

Enrollment no. Name Signature

218170592018 Pampaniya Pritesh Naranbhai

Place: Date:
Plagiarism Report
Institute Certificate
 CERTIFICATE OF EXAMINER

This is to certify that project work embodied in this report entitled “A study on the
factors influencing consumer’s purchase decision towards foreign goods: In
Veraval (Somnath)” was carried out by Pampaniya Pritesh Naranbhai and Enrolment
No. 218170592018 of Narandas Jethalal Sonecha Management and Technical Institute
Chanduvav, Veraval & Institute code: 817.
The report is approved / not approved.

Comments of External Examiner.

This report is for the partial fulfilment of the requirement of the award of the degree of
Master of Business Administration offered by Gujarat Technological University.

…………………...

(Examiner’s Sign)

Name of Examiner:
External Examiner’s Institute name:
External Examiner’s Institute Code:
Date:

Place:
 PREFACE

“KNOWLEDGE IS A POWER AND THE ONE WHO KNOW WHERE TO UTILIZE

THIS POWER BECOMES KING”.

As the sentence goes well, knowledge is power and the one who know where to utilize this
power becomes king.

So, for becoming a king it is must to know, where to utilize this POWER (KNOWLEDGE)!

By the means of SUMMER INTERNSHIP PROJECT, GTU has given us the opportunity to
know where to utilize our knowledge which we had through our theory classes.

It is very easy to gain knowledge but it will be somewhat difficult to implement it or utilizing
that knowledge in real situation, this training program helps a student to face real situation in
commercial world. During this practical training students learn and get practical knowledge,
which in not gained through classroom study.

Under this study every student are required to visit an organization for a time period of 4
weeks and has to collect relevant information by studying an organizations practices for
preparing their project report.

Being a student of an M.B.A, I have the honor of having my practical training at “Khimji
Ramdas India Private Limited” branch named Gandhidham, Kutch. On research problem ‘A
study on the brand loyalty of consumers towards Head & Shoulders’
 ACKNOWLEDGEMENT

Like a lake of water is being poured by many tiny drops and springs, same way we gain
expertise in particular field by the aid of many tiny drops and springs to form the lake of
knowledge, which can relieve the thirst of taking right decision on right time, and for the
formation of this lake of knowledge (to taking right decision on right time) many of my
faculty members, organizations’ executives, and colleagues played their role as a springs, and
many as drops (source of knowledge)

First of all I would like to express my gratitude towards our director Dr. K.C. Dwivedi Sir
whose suggestions has helped us patch this project and make it full success and their
instructions has served as the major contributor towards the completion of project.
I would like to thank my guide Mr. Pradip Maheta (Assistant Professor) for supporting me
on time during the period of my training session.

Further, I would like to thank Ms. Jessica Michael (Human Resource Manager) for giving
permission to me for the preparation of a Summer Internship Project at “Khimji Ramdas
India Private Limited.” Also, I would like to thank Mr. Devang Prajapati (Marketing
Executive) Who have given me full support and co-operated with me to carry out this
research work. I would also like to thank all staff members of the Khimji Ramdas India
Private Limited who have supported me by the means of any of their role to carry out this
study.

I would like to thank my parrents, friends, colleagues who have helped me with their valuable
suggestion and guidance that helped me in various points for the completion of the project.

I would heartily thank to GTU, As it has given me an opportunity to learn something

practical by the means of including this in MBA syllabus.

Thank You to All…

Pampaniya Pritesh Naranbhai

 SUBJECT INDEX

Sr. No. Particulars Page No.

Part I : General Information
1 Overview of International Trade

2 History of International Trade

3 Growth & development in International Trade

4 Major market player in International Trade

Part II : Information of Research Study

1 Background of the study

2 Review of Literature

3 Statement of the problem

4 Objective of the study

5 Research methodology

5.1 Hypothesis framing [Ho &Ha]

5.2 Research design

6 Data analysis & interpretation

7 Result & Finding

8 Suggestion & conclusion

9 Limitation of the study

10 Bibliography

11 Annexure
 Part I :
General Information
 OVERVIEW OF INTERNATIONAL TRADE

International trade is an exchange involving a good or service conducted between at least two
different countries. The exchanges can be imports or exports. An import refers to a good or
service brought into the domestic country. An export refers to a good or service sold to a
foreign country.

International trade is a method of economic interaction between international entities and is

an example of economic linkage.

Other forms of economic linkages include foreign financial investment. The growth in these
forms of economic linkages is known as globalization.

Why Does International Trade Occur?

International trade occurs because one country enjoys a comparative advantage in the
production of a certain good or service, specifically if the opportunity cost of producing that
good or service is lower for that country than any other country. If a country opts not to trade
with other countries, it is considered to be an autarky.

If we consider a two-country model, both countries can gain from specialization and trade.
Specialization and trade will allow each country to produce the product they possess a
comparative advantage in and then trade, and ultimately consume more of both goods.
Therefore, there are gains from trade.

Sources of Comparative Advantage

1. International differences in climate

International differences in climate play a significant role in international trade – for example,
tropical countries export products like coffee and sugar. In contrast, countries in more
temperate areas export wheat or corn. Trade is also driven by differences in seasons and
geography.
2. Differences in factor endowments

Differences in factor endowments imply that some countries are more resource-rich than
others in land, labor, capital, and human capital. According to the Heckscher-Ohlin model, a
country enjoys a comparative advantage in production if the resources are abundantly
available within the country; for example, Canada exhibits a comparative advantage in the
forestry industry. It is primarily driven because the opportunity cost is lower for a country
rich in the related resource.

3. Differences in technology

Differences in technology are most commonly observed in superior production processes

seen in different countries. For example, consider Japan in the 1970s – a country that is not
overly resource-rich yet enjoys a comparative advantage in automobile manufacturing. The
Japanese are able to produce more output with a given input than any other country, and it
comes down to superior Japanese technology.

Examples of International Trade Policies

Most economists favour free trade agreements because of the potential for gains from trade
and comparative advantage. This is because these economists believe that government
intervention will reduce the efficiency of the markets. Yet, many governments introduce
protectionist policies to protect domestic producers from foreign producers. There are two
major protectionist policies:

1. Tariffs

A tariff is an excise that is paid on the sale of imported goods. Tariffs are put in place to
discourage imports and protect domestic producers and are a source of government revenue.

A tariff raises the price received by domestic producers and the price paid by domestic
consumers. Tariffs generate deadweight losses because they increase inefficiencies, as some
mutually beneficial trades go unexecuted, and an economy’s resources are wasted on
inefficient production.
 2. Import quotas

An import quota refers to a legal limit on the quantity of a good that can be imported within a
country. Generally, import quotas are administered through licensing agreements. An import
quota leads to a similar result as a tariff; however, instead of generating tax revenue, the fees
are paid to the license holder as quota rent.

Arguments for a Protectionist Trade Policy

The three major arguments for a protectionist trade policy are:

1. National security
2. Job creation
3. Protection of infant industries

Generally, tariffs or import quotas lead to gains for producers and losses for consumers.
Therefore, the imposition of tariffs or import quotas is generally created from the political
influence of the producers. (Team, 2022)
 HISTORY OF INTERNATIONAL TRADE

International trade has a rich history starting with barter system being replaced by
Mercantilism in the 16th and 17th Centuries. The 18th Century saw the shift towards
liberalism. It was in this period that Adam Smith, the father of Economics wrote the famous
book ‘The Wealth of Nations’ in 1776 where in he defined the importance of specialization in
production and brought International trade under the said scope. David Ricardo developed the
Comparative advantage principle, which stands true even today.

All these economic thoughts and principles have influenced the international trade policies of
each country. Though in the last few centuries, countries have entered into several pacts to
move towards free trade where the countries do not impose tariffs in terms of import duties
and allow trading of goods and services to go on freely.

The 19th century beginning saw the move towards professionalism, which petered down
by end of the century. Around 1913, the countries in the west say extensive move towards
economic liberty where in quantitative restrictions were done away with and customs duties
were reduced across countries. All currencies were freely convertible into Gold, which was
the international monetary currency of exchange. Establishing business anywhere and finding
employment was easy and one can say that trade was really free between countries around
this period.

The First World War changed the entire course of the world trade and countries built walls
around themselves with wartime controls. Post world war, as many as five years went into
dismantling of the wartime measures and getting back trade to normalcy. But then the
economic recession in 1920 changed the balance of world trade again and many countries
saw change of fortunes due to fluctuation of their currencies and depreciation creating
economic pressures on various Governments to adopt protective mechanisms by adopting to
raise customs duties and tariffs.

The need to reduce the pressures of economic conditions and ease international trade between
countries gave rise to the World Economic Conference in May 1927 organized by League of
Nations where in the most important industrial countries participated and led to drawing up of
Multilateral Trade Agreement. This was later followed with General Agreement of Tariffs
and Trade (GATT) in 1947.

However once again depression struck in 1930s disrupting the economies in all countries
leading to rise in import duties to be able to maintain favorable balance of payments and
import quotas or quantity restrictions including import prohibitions and licensing.

Slowly the countries began to grow familiar to the fact that the old school of thoughts were
no longer going to be practical and that they had to keep reviewing their international trade
policies on continuous basis and this interns lead to all countries agreeing to be guided by the
international organizations and trade agreements in terms of international trade.

Today the understanding of international trade and the factors influencing global trade is
much better understood. The context of global markets have been guided by the
understanding and theories developed by economists based on Natural resources available
with various countries which give them the comparative advantage, Economies of Scale of
large scale production, technology in terms of e-commerce as well as product life cycle
changes in tune with advancement of technology as well as the financial market structures.
(Juneja, 2023)
GROWTH & DEVELOPMENT IN INTERNATIONAL TRADE

Growth in Trade

 World trade volume today is roughly 43 times the level recorded in the early days of the
GATT (4300% growth from 1950 to 2021).
 World trade values today have increased by almost 347 times from 1950 levels.
 Volume and value graphs below show trade picking up steeply since 1995.
 As of 2021, world trade volume and value have expanded 4% and 6% respectively on
average since 1995, when the WTO was first established.

Evolution of world trade, 1950-2021

Volume index, 1950=100
5000

4500

4000

3500

3000

2500

2000

1500

1000

500

0
50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20
 Evolution of World Trade, 1950-2021
Values, Billion USD
25000

20000

15000

10000

5000

0
50 53 56 59 62 65 68 71 74 77 80 83 86 89 92 95 98 01 04 07 10 13 16 19
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20
 MAJOR MARKET PLAYER IN INTERNATIONAL TRADE

The three largest global players of international trade: China, EU and the USA
The EU, China, EU and the United States have been the three largest global players within
international trade (see Figure 1) since 2004 when China surpassed Japan. In 2021, the total
level of trade in goods (exports and imports) recorded for the China was €5112 billion, for
EU it was €4 299 billion (note this does not include intra-EU trade), and €3962 billion level
recorded for the United States.

Figure 1: Main players of international trade in goods, 2021 (€ billion)

Source: Eurostat (ext_lt_introeu27_2020) and UNCTAD

In 2021, the ratio of exports to imports (the cover ratio) was particularly high in favour of
exports to Russia and China (see Figure 2), which in absolute terms also had the largest
annual trade surpluses. The cover ratio was lowest for India, the United Kingdom and the
United States.
 Figure 2: Cover ratio of international trade in goods, 2011 and 2021(%)

Source: Eurostat (ext_lt_introeu27_2020) and UNCTAD

In 2021, the United States had the largest deficit (see Figure 3), continuing a pattern that has
been apparent over the whole of the last decade for which data are available, while China had
the biggest surplus.
 Figure 3: Trade balance of international trade in goods, 2011 and 2021
(€ billion)
Source: Eurostat (ext_lt_introeu27_2020) and UNCTAD

Looking at the flows of exports and imports, China had the largest share of global
exports(19%), the EU had the second largest share of global exports(14.6%) and US had third
largest share of imports of goods(10%) (see Figures 4 and 5) in 2021:

Figure 4: Shares in the world market for exports of goods, 2021 (% share of world exports)
Source: Eurostat (ext_lt_introeu27_2020) and UNCTAD

The United States had a larger share of world imports (16.2 %), China (14.9 %) and the EU
had (13.9 %) of world imports in 2021. (Data, 2021)
Figure 5: Shares in the world market for imports of goods, 2021 (% share of world imports)
Source: Eurostat (ext_lt_introeu27_2020) and UNCTAD.
 PART II :

INFORMATION OF
RESEARCH STUDY
 BACKGROUND OF THE STUDY

Any time you walk into a super market and pick up any stuff like a knife or a toy, chances are
that the item has been manufactured in China or assembled in Mexico. Pick up coffee packs
and you will see that they have been imported from Africa. When you shop for clothes, it is
quite likely that you will see ‘Made In China’ label.

We all know that international trade has been in vogue for centuries and all civilizations
carried on trade with other parts of the world. The need for trading exists due to the variations
in availability of resources and comparative advantage. In the present context where
technology and innovation in all fields have thrown open borders to globalization, no country
can afford to remain isolated and be self-sufficient.

So, when any businesses who want to expands its market and decide to enter foreign market,
it is must for them to carry market research. Which includes research like to know about the
factors that influencing consumer’s purchase decision towards foreign goods in particular
foreign market, by knowing this they can better analyze the possibility of success in that
particular market.

Like, normal goods there are many factors which influences the consumer’s purchase
decision towards foreign goods, some of which like country image, quality are more critical
in consumer’s purchase decision.

In this project report I will try to study about the same factors which influences the
consumer’s purchase decision, like the businesses do study while entering potential market.
The title of which is “A study on the factors influencing consumer’s purchase decision
towards foreign goods: In Veraval (Somnath)”
 REVIEW OF LITERATURE

Urandelger Gantulga, Munkhbayasgalan Ganbold (2022) Has conducted a study on the

subject ‘Factors Influencing Foreign Products Purchase Intention of Mongolian Consumers’
In their study they examines how ethnocentrism influences the relationship between country
image, product image, quality, and purchase intention for foreign goods. According to them it
is necessary to explore and analyze the connection between consumer ethnocentrism and
purchase intention to develop marketing strategies that influence consumers' purchasing
decisions. Accordingly, their study develops the research model to determine the impact of
specific product determinants on consumer purchase intention towards foreign products. An
online survey was carried out by them to reach the research objective. Four hundred effective
questionnaires were analyzed by them using SPSS 23 and Smart PLS 3.3. The results showed
that foreign product quality and image have a significant positive impact on consumers'
intentions to buy foreign goods. Furthermore, consumer ethnocentrism significantly
moderates product quality and purchase intention relationships.

Shapiro Philip Domie (2013) in his study on ‘Assessing The Factors Influencing Consumer
Switch From Local To Imported Products: A case study of Kasapreko Company Limited-
Ghana’ Both qualitative and quantitative method was employed by him in attempt to gain an
understanding of the research problems. A sample including 100 randomly selected
consumers was surveyed using a structured questionnaire. The findings of his study suggest
that country of origin is more important than product attributes and other price factors. The
Ghanaian consumer perceives alcoholic beverages made in the country is low regard relative
to foreign ones. Also the consumers’ taste and superior quality are the two most important
reasons for the Ghanaian consumers’ preference for foreign alcoholic beverages. Even though
there is some element of ethnocentrism in between respondents; it has been revealed that they
are not extremely ethnocentric. By his research he suggested that manufacturing firms in
Ghana are urged to augment the quality levels of their products, reduce their prices and make
available more products to have a competitive edge over imported ones and also enhancing
local consumption.

Zeenat Ismail et al.,(2012) has conducted research study on ‘Factors Affecting Consumer
Preference of International Brands over Local Brands’ The study was designed to find out the
buying behavior patterns of young Pakistani consumers, according to them consumer
evaluates products based on information cues, which are intrinsic and extrinsic, along with it
number of factors affect the consumer purchase decisions. The results suggest that most
important factors that influence a consumer’s final decision are the price and quality of the
product in question, the consumers usually associate the price of the brand with its quality, a
brand priced too low is generally perceived as a low quality product. Similarly, a product
priced too high may not be affordable by many. Other factors that have an impact on the
consumer preferences are: consumer ethnocentrism, country of origin, social status, price
relativity with the competing brands and family and friends. The research was conducted by
them in Karachi and the samples selected included 200 people of age 16-24. The data
collected for their research was through a questionnaire and was collected in two popular
shopping malls of the Karachi city and two universities and the targeted audience was largely
the youth.

Maryam Zarif Sagheb et al.,(2020)  Has conducted research study on ‘Factors affecting

purchase intention of foreign food products: An empirical study in the Iranian context’ which
has a quantitative approach, 384 people were selected as sample size. The obtained results
illustrate 13 factors as follows: corporate social responsibility, customer knowledge and
awareness, perceived risk, customer’s personality characteristics, social identity, product
features, attitude, country-of-origin, perceived value, subjective norm, loyalty and perceived
behavioral control.

Charles Makanyeza & Francois du Toit (2016) in his study on ‘Factors Influencing
Consumers' Choice of Imported Poultry Meat Products in a Developing Market: Lessons
from Zimbabwe’ used quantitative and qualitative methods to analyse data collected from a
sample of 305 consumers, Their study found that the factors that influences consumers’
choice of imported poultry meat products are price, health and safety issues, appearance,
taste, tenderness, product labelling, country of origin, packaging, production methods and
branding. Further they have classified these factors into three overlapping categories, namely
economic factors, quality and product attributes, and the firm’s marketing efforts. Economic
factors include price in relation to consumer disposable income. Quality and product
attributes include health and safety issues, appearance, taste, tenderness, packaging, country
of origin and production methods. The firm’s marketing efforts include price, product
labelling, packaging and branding.

Bruno Godey, Rahul Singh etal., (2012) conducted research study on ‘Brand and country-
of-origin effect on consumers' decision to purchase luxury products’ Their was research
aimed to consider the combined effect of brand and country of origin (CoO) on the
purchasing decision. Their study includes administering a questionnaire online in seven
countries (China, France, India, Italy, Japan, Russia, and the USA) to collect a total sample of
1102 respondents. In examining the purchasing decisions of consumers, they uses the
following criteria: brand, CoO, price, warranty, design, and advertising.

Country-Of-Origin Effect (COE)
The country-of-origin effect (COE), also known as the made-in image and the nationality
bias, is a psychological effect describing how consumers' attitudes, perceptions and
purchasing decisions are influenced by products' country of origin labeling, which may refer
to where: a brand is based, a product is designed or manufactured, or other forms of value-
creation aligned to a country. (Wikipedia, 2022)

Ethnocentrism

The tendency of customers' preference to their local brands over the foreign ones is known as
consumer ethnocentrism. Ethnocentric customers think it is improper to buy foreign goods
because doing so hurts the local economy. These customers would believe buying imported
goods was immoral because it would result in loss of employment. Customer ethnocentrism
influences consumer perceptions toward foreign goods. (Shimp, 1987)
 STATEMENT OF THE PROBLEM

1. What influence the consumers’ decision to purchase a foreign goods ?

2. Which factors is dominant in consumers’ purchase decision on foreign goods?
3. Which factors is submissive in consumers’ purchase decision on foreign goods?
 OBJECTIVE OF THE STUDY

The research is being conducted to search the knowledge which is unknown before, through
the systematic approach to gain new information.

The purpose of research is to fulfil the stated objectives.

 To know about the factors that influence consumers’ decision to purchase a foreign goods
 To know about the dominance of particular factor in consumers’ purchase decision on
foreign goods
 To know about the submissive factor in consumers’ purchase decision on foreign goods
G
L
D
O
T
M
H
C
R
A
S
E
Y RESEARCH METHODOLOGY

Research methodology is a way which explains how a researcher intends to carry out the
research. It's a systematic and logical plan to resolve a research problem. A methodology
details about a researcher's approaches to the research to ensure valid and reliable results that
address the objectives and aims of researcher.

In our study here in further steps we will represent the ways which explains our process of
research, or we can say that we will represent the logical plan in a step by step manner to
reach at the conclusion of our research.

The present study is descriptive research based on questionnaire administered on non random
respondents, the questionnaire mainly contains closed ended questions which further use for
the analysis of the study.
 HYPOTHESIS FRAMING [Ho &Ha]

Ho1: There is no significant relationship between the influence of Country of Origin (CoO)
and Product quality.

Ha1: There is significant relationship between the influence of Country of Origin (CoO) and
Product quality.

Ho1: There is no significant relationship between the respondents’ ethnocentrism and their
residence.

Ha1: There is significant relationship between the respondents’ ethnocentrism and their
residence.
 RESEARCH DESIGN

“It is the plan, structure and strategy of investigation, conceived so as to obtain answer to
research questions and to control variance”. (Kerlinger)

“It is a blue-print for the collection, measurement and analysis of data”. (Philips)

A Research Design is simply a structural framework of various research methods as well as

techniques that are utilized by a researcher.

Research design is needed because it facilitates the smooth sailing of the various research
operations, thereby making research efficient as possible, yielding maximal information with
minimal expenditure of effort, time and money.

Research design stands for advance planning of the methods to be adopted for collecting the
relevant data and the techniques to be used in their analysis, keeping in view the objective of
the research.

SR. NO. PARTICULARS TYPES

1 Research Design Descriptive

2 Research Method Qualitative

3 Types of data Interval

4 Source of data Primary, Secondary

5 Data Collection Digital Questionnaire(Google

Form)

6 Data analysis tool Pie, Bar Chart, MS excel

7 Sample size ( accepted for study)

8 Population People of Veraval (Somnath)

9 Statistical test Chi-square test of Indipendence

DATA ANALYSIS & INTERPRETATION
RESULT & FINDING
SUGGESTION & CONCLUSION
 LIMITATION OF THE STUDY

 Due to time constraints, it is not possible to apply more data collection tools which are
more trustworthy.
 Responses collected through questionnaire are more likely to respondent biases, which
may sometimes create some unidentified error in research study.
 Peoples now-a-days more concerned about time and requiring them to fill a survey
questionnaire takes a lot to complete a job.
 Due to average knowledge of statistical softwares the treatment of data collected may be
not as much accurate.
 All tools & techniques used in conducting this study has their own limitations.
 Respondents knowledge, Past experiences, Preconceiveness etc. also has impact on their
response.
BIBLIOGRAPHY
ANNEXURE