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Training Program: MBA

Subject: International Trade

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Name and Last name: Mark Espinoza

Email: mrkspnz@yahoo.com

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Important: Final Project Submission Guidelines

Please take a moment to thoroughly read these guidelines to ensure a smooth

submission process and to avoid potential issues. Your attention to these
details is essential.

Download the Exam Document:

 Download the final project document from Moodle.
 You must only use Microsoft Word or LibreOffice
(https://www.libreoffice.org/download/download-libreoffice) for your work.
 Do not alter any non-editable fields.

Writing Your Project:

 Ensure your content is original and solely your work.
 Utilize the tutors available to you for any queries.
 Submit the final version only, as no preliminary reviews will be
conducted.

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  In case you fail the first delivery you have a second opportunity. If you
fail twice, you will have to pay the corresponding fees in order to
resubmit your work.
Content Requirements:
 Do not insert images of any kind into your document.
 For diagrams or methodologies like a DAFO or others, use text and/or
tables to describe and illustrate.
Formatting Your Document:
 All editable fields on the cover page must be filled.
 The document should not exceed 18 pages, cover page, bibliography,
and appendix not included.
Naming Your File:
 Follow this format:
ddmmyyyy_Subject_YourLastNameandFirstName.doc
 For example: 11052024_SubjectName_ElsaMoore.doc
Uploading Your Project:
 Once completed, upload your document back to Moodle in either .doc
or .docx format.
Important Notes:
 Plagiarism or submission of work not your own is strictly prohibited.
Repeat violations may result in ineligibility to obtain your degree.
 Your ability to follow these instructions is crucial and reflects on your
overall performance. Please prioritize the accuracy of this process.
Submission Checklist:
 Have you downloaded the final project document from Moodle?
 Have you used only Microsoft Word or LibreOffice?
 Is all content original and individually created?
 Is the final version ready for submission?
 Is the file named correctly as per guidelines?
 Have you uploaded the document to Moodle in the correct format?

Take a moment to double-check your work against this checklist before

submitting. This ensures your project meets all the required standards and is
set for a successful evaluation. Good luck!

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Evaluation Guidelines

The final work will be evaluated based on the following criteria:

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 Acquired Knowledge (3 points): To receive the maximum score, the
work must demonstrate an exceptional and complete understanding of
the theoretical concepts relevant to the subject, applying this knowledge
effectively and accurately to the case analysis. The student is expected
to integrate theories, principles, and models studied during the program
in a way that significantly enriches their analysis and argumentation.

 Development of the Subject (3 points): The maximum score will be

awarded when the student performs a coherent and deeply analytical
analysis of the statement, offering clear, well-founded, and critical
interpretations of the presented case. The development of the statement
is expected to show an exceptional ability to identify and analyze key
issues, using logical reasoning and relevant evidence to construct solid
arguments.

 Final Outcome (3 points): To achieve the maximum score in this area,

the presented solution must be comprehensive, correct, and
exceptionally articulated, meeting all the established parameters for the
presentation. The final outcome is expected not only to effectively solve
the posed problem but also to be presented in a manner that
demonstrates a deep understanding and practical application of the
acquired knowledge.

 Added Value (0.5 points): The maximum score in added value is

achieved when the student contributes significant elements that enrich
the analysis beyond the basic requirements. This may include original
analyses, novel perspectives, innovative practical applications, or the
integration of theories or models not covered in class. Creativity and the
ability to connect the case with broader concepts or contexts are
particularly valued.

 Supplementary Bibliography (0.5 points): To receive the maximum

score in supplementary bibliography, the work must include a selection of
relevant and current sources that are properly cited according to APA
guidelines. These sources must support and significantly expand the
case analysis, demonstrating an effort to go beyond the material
provided in class and find additional information that adds depth and
context to the work.

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 BACKGROUND

The company "Señorío de Begué", originally from the province of Jaén (Spain),
is dedicated to the sale and distribution of olive oil. For the next year, it intends
to export its products outside of Spain.

Señorío de Begué (fictitious company), has a high quality product, very

prestigious and well known in Spain, as well as a good structure of production
and sale for national trade.

Although sales continue to increase in Spain, they have decided to make the
leap to the international market to continue this line of growth.

The company needs someone to take charge of this important new phase for
Señorío de Begué. In this case, you will be the chosen one to carry out the task.

FORMULATE

1. In the first place, you will have to carry out a study of the product and the
sector in Spain, as well as its compition.

2. Choose 3 countries to export and analyze the external situation in each one
of them. The countries should be:

- One of Europe.

- One from Latin America

- One from Southeast Asia.

3. Conduct a market study of each of these three countries regarding the oil
market. Find out what would be the product distribution in the country, taking
into account issues such as documents, agents, tariffs, etc.

4. From the study carried out, detail the advantages and disadvantages that
each of the countries has when marketing the product.

If you had to choose one of these countries to start the adventure towards
foreign trade, which would it be? Explain your answer.
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YOUR ANSWERS

Spain leads global olive oil production, contributing 1.24 million metric tones in
2018, which is about 38% of the world's total. Spain also produces more than
half of the world's olives. Jaen province in Spain, where our fictional company is
located, contributes over 20% of the world's olive oil supply, surpassing Italy.
Jaen alone produces about half of Spain's total olive oil. Our oil is distributed in
over 180 countries worldwide.

Comparing olive oil consumption, Greece consumes 20 liters per person

annually, while the USA consumes only 1.1 liters. Despite this, Greece
accounts for about 7% of global production, whereas the USA consumes 9%.
The price of olive oil depends on its grade.

 Extra Virgin Olive Oil (EVOO) stands out as the highest grade of olive oil,
renowned for its exceptional quality and distinct production process. To
create this premium oil, olives are carefully harvested, washed, and
ground into a paste. Unlike the traditional method of pressing, EVOO is
extracted using a centrifuge within 24 hours of harvesting, earning it the
title of "first cold-press." Despite its name, EVOO is not pressed but
rather spun in centrifugal machines to separate the oil from the olive
paste. This meticulous process results in a pure, unadulterated olive fruit
juice, known for its rich flavor and health benefits.

 In contrast, Virgin Olive Oil is processed similarly to EVOO but with a

slightly higher acidity level, reaching up to 2.0%. The key distinction
between Virgin and Extra Virgin Olive Oil lies in their acidity levels, with
EVOO required to have an acidity below 0.08%. This acidity difference is
influenced by various factors, including olive ripeness and sun exposure.
Notably, Lampante Virgin Olive Oil falls under the Virgin category but is

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 unfit for consumption, often produced from overripe or defective olives
and used for non-food purposes.

 Pure Olive Oil, also known as Olive Oil in the United States, is a blend of
Refined Olive Oil and either Extra Virgin or Virgin Olive Oil. This blend
typically consists of 70% to 99% Refined Olive Oil and 1% to 30% Extra
Virgin or Virgin Olive Oil, resulting in a product with a milder taste and
lighter color compared to pure EVOO or Virgin Olive Oil.

 Refined Olive Oil undergoes additional processing to create a milder,

lighter-tasting, and more stable oil. While this refining process enhances
the oil's shelf life and flavor neutrality, it also removes some of the health
benefits associated with Extra Virgin Olive Oil, a topic of ongoing debate
among experts.

 Olive Pomace Oil is a unique oil extracted from the pomace, the pulp left
after the olives have been crushed and the initial oil extracted. The
pomace, consisting of olive pits and squeezed olive fruit, undergoes
solvent extraction to remove any remaining oil. After the solvent is
removed, the extracted oil is refined, creating a product similar to seed
oils like Soybean and Canola.

 Blending Olive Oil with Soybean or Canola Oil offers a budget-friendly

alternative with a smoother flavor. These blends can be adjusted to meet
specific tastes, commonly mixing 75% Olive Oil with 25% Soybean or
Canola Oil, 85% to 15%, or 95% to 5%. The choice of blend ratio is
influenced by factors such as personal taste, affordability, and market
demand.

Here are some of the important notes to take note:

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 1. The price of olive oil is determined by market dynamics, fluctuating
based on supply and demand.
2. As of November 27, 2020, prices are stated per liter in U.S. dollars, with
Organic Extra Virgin Olive Oil (OEVO) priced at approximately $5.60 per
liter and Pure Virgin Oil at $2.04 per liter.
3. New Entrants: There is a high probability of new players, including
supermarket chains and large corporations, entering the market.
4. Competitive Landscape: There is fierce competition both locally and
internationally, with Spain often exporting olive oil in bulk to countries
such as Italy.
5. Health Benefits: FDA endorsements indicating that daily olive oil
consumption may lower the risk of coronary heart disease have
contributed to increased consumption.
6. Buyer Influence: While consumers have a wide range of choices, large
retailers hold significant power, often selling olive oil under their own
brands.
7. Substitution Threat: Olive oil faces competition from cheaper alternatives
like canola, soybean, and coconut oils, despite maintaining its popularity.
8. Supplier Influence: The market is controlled by a few major producers,
leading to price competition among smaller producers and a lack of
collaboration.
9. Spain's Competitive Position: Spain holds a strong position in the olive oil
market, but further marketing efforts could enhance its global standing.

BRAZIL
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Senorio de Bergue aims to expand its market presence in Brazil, drawn by the
country's large population and growing middle class. This strategy outlines the
steps needed to enter and establish a strong foothold in the Brazilian olive oil
market.

Market Overview:
 Brazil has a population of over 210 million, with a middle class exceeding
104 million individuals.
 Spanish olive oil dominates the Brazilian market with a 52% share,
indicating a strong preference among consumers.
 Brazil imported approximately $837K worth of olive oil in 2018,
highlighting the market potential.

Market Entry Steps:

 Obtain an import license and an International Sanitary Certificate.
 Ensure compliance with local labeling laws, including product weight,
manufacturing date, expiry date, country of origin, and labeling in
Portuguese.
 Complete customs clearance and pay import duties and taxes, including
the Industrialized Product Tax (IPI) and the Merchandise and Service
Circulation Tax (ICMS).

Distribution Strategy:
 Select a distributor to warehouse and market Senorio de Bergue's
products in Brazil.
 Target sophisticated consumers who frequent local markets and gourmet
stores.
 Emphasize the superior quality of Senorio de Bergue's products
compared to Portuguese brands.

Conclusion:
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  Brazil offers a lucrative opportunity for Senorio de Bergue to expand its
olive oil business. By understanding the market dynamics, including
consumer preferences and competition, Senorio de Bergue can establish
a strong presence and capitalize on the growing demand for high-quality
olive oil in Brazil.

GERMANY

Senorio de Bergue is strategically targeting Germany, drawn by its status as a

global economic powerhouse and its stable and significant consumption of olive
oil. This strategy delineates the necessary steps to enter and establish a
prominent position in the German olive oil market.

Market Overview:
 Germany boasts the largest economy in Europe and ranks as the world's
fourth-largest economy by nominal GDP.
 Despite declining consumption trends in the rest of the EU, Germany
maintains a high and stable consumption of olive oil.
 Italy dominates the German olive oil market, capturing nearly 75% of the
market share.

Market Entry Steps:

 Ensure compliance with German and EU labeling regulations,
encompassing ingredient lists, net quantity, date of minimum durability,
and allergen declarations.
 Acquire essential import documentation, including a Certificate of
Analysis, Technical Data Sheet, and Certificate of Origin.
 Capitalize on the growing demand for premium olive oil varieties in
Germany, such as organic, infused, branded, fair-trade certified, or DOC
certified oils.

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Distribution Strategy:
 Target specialized retailers and delicatessens to showcase Senorio de
Bergue's superior product quality.
 Distinguish Senorio de Bergue's olive oil from lower-quality offerings
found in major retail chains like Aldi and Lidl.
 Highlight the authenticity and exceptional quality of Senorio de Bergue's
olive oil to appeal to discerning German consumers.

Conclusion:
 Germany presents a lucrative opportunity for Senorio de Bergue to
expand its olive oil business. By understanding and adhering to market
regulations and consumer preferences, Senorio de Bergue can establish
a formidable presence and capitalize on the increasing demand for
premium olive oil products in Germany.

MALAYSIA

Senorio de Begue aims to capture a larger market share in Malaysia's

expanding olive oil market. This strategy outlines the steps needed to import
olive oil into Malaysia and penetrate the market through key distribution
channels.

Market Overview:
 Malaysia, with a population of over 32 million, offers significant market
potential.
 GDP per capita, based on purchasing power parity, is $27,282.
 Spain is the largest supplier of olive oil to Malaysia, followed by Italy.
 Malaysian olive oil imports have increased threefold over the last 12
years.

Market Entry Steps:

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  Obtain an import license from the Ministry of International Trade and
Industry (MITI).
 Obtain an International Sanitary Certificate to certify the product's safety.
 The Royal Malaysian Customs Department (RMC) handles document
verification and duty collection.
 Pay the Simplified Malaysian Sales Tax (SST) of 5%, which replaced the
6% GST in 2018.
 No import excise tax is due on olive oil.
 Establish a warehouse for offloading merchandise.

Distribution Strategy:
 The retail market is saturated with super and hypermarkets such as
Aeon, Giant, Tesco, etc.
 Initial market entry may require partnering with a distributor to access
these channels.
 Distributors may require a commission for handling the product.
 Long-term strategy involves establishing direct distribution channels.

Conclusion:
 Entering the Malaysian market requires careful planning and compliance
with local regulations. Senorio de Begue can leverage its superior
product and market knowledge to gain a strong foothold in Malaysia's
olive oil market.

Germany offers several advantages for olive oil market entry. As the largest
country in the EU with the strongest economy and the fourth-largest economy
globally, Germany boasts high income levels and a significant affluent and
middle-class clientele. Being part of the EU trading block simplifies the import
process. Additionally, the market for olive oil is growing, presenting a lucrative
opportunity for expansion. Germany's proximity to Spain also ensures quick and
cost-effective transportation.

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However, there are challenges to consider. Germany lacks large hypermarket
chains, with discounters like Aldi and Lidl controlling over 66% of olive oil sales.
Moreover, there are numerous health and welfare labeling and regulatory
hurdles, as well as challenges related to traceability and product origin. These
factors should be carefully navigated to successfully penetrate the German olive
oil market.

Brazil presents several advantages for olive oil market entry. Spanish olive oil
holds the second position in the market, indicating consumer acceptance and
potential for growth. Brazil also boasts a large and rising middle class, which is
increasingly open to experimenting with and purchasing upscale products.

However, there are challenges to consider. Corruption is a prevalent issue in

Brazil, which can complicate business operations. Import requirements can be
cumbersome, and the need for a distributor to market products can lead to
lower profit margins. Additionally, transportation costs are higher, and the
distribution network is fragmented. There are also trade barriers for Spanish
olive oil, which need to be addressed when entering the Brazilian market.

Malaysia offers several advantages for olive oil market entry. With a high GDP,
the market presents strong purchasing power. Spanish olive oil holds a
significant 36% market share, indicating consumer acceptance. The market is
also concentrated in urban centers, making it easy to market and distribute
products. Additionally, hypermarkets are prevalent, providing ample
opportunities for marketing and sales.

However, there are challenges to consider. The volume of sales is relatively

low, which may impact revenue potential. Transportation costs to Malaysia are
high, and transportation time can be substantial, potentially affecting product
quality. To ensure product quality, temperature-controlled shipping may be

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necessary, adding to costs. These challenges should be carefully addressed
when entering the Malaysian market.

Since I am Asia, I would be biased to choose MALAYSIA considering the

following factors.

 Market Potential: Malaysia's high GDP and the significant market share
of Spanish olive oil indicate a market with strong purchasing power and a
growing interest in olive oil products.
 Distribution Channels: The concentration of the market in urban centers
and the prevalence of hypermarkets provide relatively easy access to
distribution channels, especially compared to countries with more
dispersed populations.
 Marketing Strategy: Targeting urban areas and hypermarkets could be a
key strategy, focusing on convenience and accessibility for consumers.
 Challenges: However, you'll need to address challenges such as the low
volume of sales, which could impact initial revenue, and the high
transportation costs, which may require careful logistics planning to
manage.
 Product Quality: Ensuring product quality during transportation,
especially in a sea container without temperature control, will be crucial
to maintaining customer satisfaction and reputation.
 Regulatory Compliance: Additionally, navigating regulatory requirements
for imports, including documentation and labeling, will be essential for
market entry and success in Malaysia.

Overall, Malaysia offers a combination of market potential, distribution

convenience, and manageable challenges, making it an attractive choice for
starting a foreign trade adventure.

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