Expanding Finnish fertilizer and soils market

Mission, aims and potential of company. Analysis of the opportunities and threats of international business. Description of the factors that characterize the business opportunities in Finland. The business plan of the penetration to market of Finland.

Рубрика Международные отношения и мировая экономика
Вид курсовая работа
Язык английский
Дата добавления 04.06.2013
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Санкт-Петербургский Государственный Политехнический Университет

Международная Школа Управления

Курсовая работа

На тему:

"Expanding Finnish fertilizer and soils market"

Выполнила:

студентка гр.4151/10 Черезова О.С.

Проверила:

доцент, к. э. н. Евсеева О.А.

Санкт-Петербург 2013

Content

  • Introduction
  • Chapter 1. Company's characteristics
  • 1.1 History
  • 1.2 Mission, aims, directs of development, resource potential
  • Chapter 2. Analysis of the potential opportunities and threats of international business
  • 2.1 Description of the factors that characterize the business opportunities in Finland
  • 2.2 Assessment of the potential company seeking to expand its operations
  • 2.3 Absolute and comparative advantages of entering Finnish market
  • 2.4 Analyses of risks due to entering Finnish market
  • Chapter 3. The business plan of the penetration Finnish market
  • 3.1 Production description
  • 3.2 The production plan
  • Conclusion
  • Resources

Introduction

Nowadays more and more companies see their way of development in entering new markets and as usual they are international. This happens because internal markets of regions inside country are saturated or this is not profitable to penetrate them. But at the same time international market could afford more perspectives for company to grow.

As a country for my research Finland was chosen. In 2012 Finland became "the most stable country in the world" according American fund "Fund for Peace”. Also, my choice was based on this fact that the boarder is close to Saint-Petersburg, the turnover between Russia and Finland is growing from year to year, and even on government level the business partnership between countries has a strategic direction for development. Many organizations were founded to help in creation contacts between Finnish and Russian business, for example Finnish-Russian Chamber of Commerce. Both countries are interested in development partnerships, so, I think that Finland is a good country for entering as an foreign market.

From other side, the population of country is not high, about 5 429 894 (according 2013 year), but according the UN estimation Finland is ranked 6th in the world for quality of life. To choose the sphere where my possible company could operate, I decided to found out some features are typical for local population to determine customers' needs. After looking through statistics characterized Finnish people, I found out that about 75% of residents in Finland are homeowners, and 64% owned an individual house with land. In the private property is 400 thousand apartments / houses, 240 thousand from them (60%) is owned by private individuals, so 64% from 240000 is about 153600 private houses with land http://rusnk.ru/news/housing/foreign/#5.

market finland business plan

Unlike Russia growing vegetables and maintenance vegetable gardens are not typical for local citizens, just for part of Russian immigrates, but breeding aesthetic plants, flowers and lawns are popular among householders.

That's why I chose the company which scope is fertilizer production. I decided to focus on middle size company with sufficiently diversified products which focus group is horticulturists and gardeners as amateurs and professionals.

ЗАО "МНПП "Фарт", which further in this work is named as "Phart" company, in my opinion fits these criteria.

So, the aims of this work are:

· characterize the company

· analyze Finnish fertilizer and soil market

· analyze factors influence on new market penetration

· develop a strategy of new market penetration

· work out recommendations

Chapter 1. Company's characteristics

1.1 History

"Phart" company was established in 1990 in Saint-Petersburg. First sales of bio-fertilizers were in February 1991. In 1994 was created new brand "Живая Земля”, which was made by a new technology and still stays the most favorite among Russian costumers. Then company continued to diversify products by creation new kinds of fertilizers with different content.

The company continued to grow. In 1996 - 1997 the company's sales significantly increased. In many ways, this was due to the fact that the "Phart" was the first manufacturer of organic fertilizers began to focus on the studying of the range and advertising. The company's products became in high demand throughout Russia. By 1999, the company embraced a dealer network all over the regions of the Russian Federation and achieved sales increasing in 2.5 times compared with 1998. The further growth of the company was because of expanding of the production base. New technology and equipment were bought in 2004.

In recent years, the marketing approach was the basis for the development of the company. Specialists of "Phart" constantly monitor the market, carry out various studies, working closely with customer reviews. The result was a new assortment policy of the company.

The quality of the products provided by the fact that at the time "Phart" is one of the most modern company in the industry: a fully renovated park peat technology, expanded manufacturing facilities and almost completely automated production of soils and fertilizers. http: //www.phart.ru/about/history/

Broad sales network was organized - five regional offices in the cities of Moscow, Perm, Novosibirsk, Krasnodar and Ulyanovsk and many large wholesale customers in all regions of the Russian Federation and foreign countries.

1.2 Mission, aims, directs of development, resource potential

The work of the company is guided by the principle of "land health - the health of your family," and is committed by providing gardeners and florists natural organic fertilizers and soil-ground of the highest quality. All products are harmless to humans and the environment, production has the necessary certificates and included in the National Catalogue of pesticides and agricultural chemicals permitted for use in the Russian Federation.

On the company's front page the mission wasn't strongly defined, but from the description above I formulated it as "To provide costumers natural organic fertilizers and soil-ground of the highest quality, which are not harmless to human and the environment”.

Unfortunately, aims were not founded as well, so I formulated them as:

· Stay a leader at the Russian natural organic fertilizers' market

· Be social and environment responsible company

· Take stable growing niche on foreign market

These are global and general aims and concerning this project to take 5% of Finnish organic fertilizer market in 1 year operation.

And, in my opinion, company's values should be:

· Costumer's needs

· High professional qualification

· Economic profitability

One-third of the market of packaged organic fertilizers (capacity - 100 thousand tons per year) is controlled by the St. Petersburg company "Phart", producing soils is based on the life of the product Californian worms and peat. http: //www.kommersant.ru/doc/268273/printThe company is positioning itself as a leader on Russian fertilizer market. The company produces peat on deposit "Kaushtenskoe" an area of ??998 hectares. It registered the deposit, where there is complete cycle of bog-preparation work.

The company's production has really massive demand both in Russia and abroad, Belarus, Ukraine, Lithuania, Latvia, Estonia, Moldova and Kazakhstan. In some countries "Phart" has partners and retailers, with another works by export.

In my opinion, directs of development should be focused on expanding foreign markets, product range and production base.

As my work focus on Finnish market, so and company's future development I see in penetrating this market and in adopting production to special costumers' needs that could be different from usual for "Phart" clients.

Chapter 2. Analysis of the potential opportunities and threats of international business

2.1 Description of the factors that characterize the business opportunities in Finland

Finland belongs to the group of countries that effectively use boarder functions between the post-Soviet countries and Western Europe. Finland is the only member of the European Union, directly adjacent to the largest post-Soviet state - Russia. This allows the country to effectively manage its economy, being a member of one of the most powerful nowadays, economic and political associations and building a defined relationship with the equally influential northeastern neighbor. Thus, the geopolitical situation in Finland is quite profitable and creates diverse perspectives on the development and deepening of economic relations with various partners. The undeniable advantage of Finland is its stability, reliability, and advanced infrastructure of telecommunications, which provides a high level of interaction between economic entities.

In 2013 according World Bank list "Doing Business” Finland took 11 place as one of the most attractive countries in the world. http: //russian. doingbusiness.org/~/media/GIAWB/Doing%20Business/Documents/Annual-Reports/Foreign/DB13-Overview-Russian. pdf

Finland and its economy base on forest industry. Indeed, Finland has no other natural resources, forest - the main wealth of Finland. Finnish wood processing company UPM-Kymmene and Stora Enso - one of the largest in the world. By 2007, Finland accounted for 10% of world exports of wood and paper products, printing paper for its segment in world exports was 20%. Among the leading sectors of the Finnish economy are an information and telecommunications, metallurgical, energy, business services, health care, engineering, food processing, construction.

If we consider the social aspect, it is important to note the high educational level of the population in Finland, which in turn has a positive impact on the speed of learning innovation and ensuring the overall competitiveness of the state. The strong point of Finland is its human resources. According to the American Research Center "Conference Board", in 2006, Finland was ranked first in the world in the growth of labor productivity. According to the report of the United Nations "Human development", Finland is on the 8th place in the list of the world most comfortable for living. The main factors in this comparison are: average life expectancy, education and standard of living. Human Development Reports (режим доступа http: //hdr. undp.org/en/statistics/) Among the destructive tendencies is a characteristic for European countries depopulation.

Thus, we can state a favorable position of Finland in all aspects - political, geographical and social.

2.2 Assessment of the potential company seeking to expand its operations

As an any other market, fertilizer market has a segment division. In composition, fertilizers are divided into the following categories:

· Mineral

· Organic

· Organic and mineral

· Bacterial fertilizers. http: //megaresearch.ru/files/demo_file/10235. pdf

For "Phart" company the market segment is organic fertilizer.

"Branded" organic fertilizers characterized by low degree of consolidation, low volume (turnover less than 200 million euro in Russia in 2008), a growing market and is primarily a "business-to-consumer" - small package. Market entry requires significant marketing efforts. This is a regional niche market, but can be considered delivery to other regions / countries in a relatively small scale. http: //www.nefco.org/sites/nefco. viestinta.org/files/BPs%20for%20Manure%20Mgmt_Summary%20Report_%20Volume%20I_Ru_20111006. pdf

For the Russian market of organic fertilizers growth opportunity could increase significantly. In this area there are no large companies today. Only 7.5% are organic fertilizers that are made to fertilize the soil in the vast Russian. Thanks to the marketing survey, and then further analyzed the fertilizer market was found to be virtually no competition. None of manufacturers of organic fertilizers does not seek to consolidate; manufacturers prefer to work exclusively in their niche. All this is due to the very low volume of production of such fertilizers and even a small fraction of the total production of fertilizers in the other species.

As usual in Russia companies operating in this segment focus on holders vegetables and flowers gardens. As usual, big agricultural farmers prefer mineral and organic and mineral fertilizer.

For "Phart" focus group is holders vegetables and flowers gardens, as professional and not. A good developed product rang afford to cover a big sorts of flowers, fruits and vegetables. Also, in addition the company produces special protections for plants, what also has division due to kind of plant.

Organic fertilizer consumption per unit area Внесение минеральных и органических удобрений. http: //www.unece.org/fileadmin/DAM/stats/documents/ece/ces/ge. 33/2009/zip. 29. r. pdf

Organic fertilizer market in Russia shows signs of recovery after more than 15 years of decline. However, the market volume in the Leningrad region is small, so it is needed to organize sales in other regions / countries and make serious marketing efforts in this direction.

So, entering Finnish market must help to expand sales market. The focus group will be the same, but the product range will have more accent on fertilizer and protection for flowers than for vegetables, as first one are more spread among local people.

What about promotion and attraction costumers, the company presents production as high quality, ecological, not only save, but healthy for environment.company takes part in many competitions as local and international and have certificates as a winner, for example, "Phart" is awarded with Gold quality "Russian Brand", "GOLDEN AWARD FOR TECHNOLOGY AND QUALITY new millennium award" (Switzerland, Geneva, 2004), The American Golden Certificate of Quality. http: //www.phart.ru/about/awards/

Moreover, the company has a certified testing laboratory, which is equipped with modern equipment and controls the entire production process cycle for a particular program - from incoming inspection of raw materials and ingredients, manufacturing process control, before the release of the finished product. The staff of the laboratory has extensive experience of research work in the peat industry. The program of laboratory testing includes a complete quality control more than 60 kinds of products, performed more than 400 tests per month. Held constant research of soil and fertilizer on the market, allowing company to analyze competitors' products and make improvements to their own.

Also, to attract clients, company must make its product available. For this, it is needed to present product on shelves of big supermarket in department for garden as well as in specialize stores.

2.3 Absolute and comparative advantages of entering Finnish market

In the course of marketing research "Russian market of organic fertilizers: results of 2011, forecast for 2012-2013." Conducted by NeoAnalytics revealed that the main importers of organic fertilizers in the years 2007 and 2010 is Germany.

Overall in 2010, the import of organic fertilizers was 96 tons; in value terms, imports of organic fertilizers totaled 392.2 thousand dollars, which is 8.1 times more than in 2009.

Export of organic fertilizers in 2010 was 552 tons (4810.2 million dollars). In real terms, export growth was 17.4% and 97.3% in value compared to the previous year. Since 2005, there has been growth in the export of organic fertilizers (except for 2007). Growth in exports shows the popularity of using organic fertilizer as the most environmental friendly РБК. Исследование рынков. http: //marketing. rbc.ru/news_research/15/11/2012/562949985141082. shtml.

Russia currently exports organic fertilizer mainly to the countries of the CIS. The main export in 2010 - was to countries as Uzbekistan, Kazakhstan, Turkmenistan, which accounted for 77% of total exports of organic fertilizers. Also, organic fertilizers are exported to Ukraine, Kirghiz, India, etc.

In the short-term export potential of organic fertilizer market will also grow. It will be promoted environmental degradation of the land in the world, as soil degradation, desertification, increasing the salt level of agricultural land. Even now a high demand for organic fertilizers in countries with arid climate (Central Asia, the Middle East, Persian Gulf, etc.).

What about "Phart" company advantages, penetration of Finnish market opens a new sales market, what will be a push company to continue to grow. As was told earlier, Russian market just on its way of developing, beginning stable and in some regions even creation. Now, expanding new market, especially Finnish, where the costumer's playability is high afford company to grow, increase financial potential and fixed assets, what in future afford company to react on changes in domestic market and have enough recourse to increase production with domestic market growth.

So, absolute advantages for "Phart" are conditions for large-scale production, as well as its own laboratory for quality control and product development improvements.

And competitive advantages are difference in the standards of living and in comparison with Finland lower level of living minimum and a level of salaries as well afford produce more cheaper production.

2.4 Analyses of risks due to entering Finnish market

Political environment

Risks

decreases profit on. %

Weight

%*weight

Political environment

Form of government

0

0

0

Political stability

0

0

0

Foreign policy

10

0,1

1

State companies

10

0,1

1

Role of military

5

0,2

1

Level of terrorism

0

0

0

Restrictions on import

20

0,5

4

Total

7

Finland is democratic country and was one of the first countries equalized the rights of women and men, clearness of election afford to avoid political instability. Of cause, as many countries Finland has sectors of economy closed for foreign investors, but in general it is transparency and open. Also, there are some barriers on import, but most of them were created as a control system to provide a acceptable quality of import production.

Economic environment

Risks

decreases profit on. %

Weight

%*weight

Economic environment

Economic system

10

0,2

2

Stage of development

10

0,4

4

Ecomomic stability

10

0,2

2

GNP

0

0

0

International financial standing

10

0,1

1

Monetary policy

15

0,1

1,5

Foreign investment

0

0

0

Total

10,5

Finnish economy is stable, but in difference from Asia developing economies, the volume of growth is not so high. Economic environment risks are not high, with exception of those fact, that Finland is involved in Euro zone and is under the negative influence of its instability and has to take part in solving financial questions of problematic countries.

Regulatory environment

Risks

decreases profit on. %

Weight

%*weight

Regulatory Environment

Legal system

5

0,3

1,5

Prevailing international laws

0

0

0

Protectionist laws

5

0,2

1

Tax laws Appropriability

15

0,5

7,5

Role of contracts

0

0

0

Protection for proprietary property

0

0

0

Total

9

In this sphere, in my opinion, just very high level of taxes could be weighty problem for company to face with. Finland has one of heights taxes in the world, for example income tax 10-48% depending on salary.

Technological environment

Risks

decreases profit on. %

Weight

%*weight

Technological Environment

Level of technology

1

0,1

0,1

Availability of local technical skills

5

0,2

1

Technical requirements of country

0

0

0

Transfer of technology

2

0,5

1

Infrastructure

0

0

0

Environmental protection

5

0,2

1

Total

2,1

Finland is high developed, post-industrial country, where share of services is about 60-65% and technological risks are minimum as well.

Risks

decreases profit on. %

Weight

%*weight

Political environment

7

0,2

1,4

Economic environment

10,5

0,3

3,15

Regulatory Environment

9

0,3

2,7

Technological Environment

2,1

0,2

0,42

Total

7,67

So, from risks analyses point of view Finland is attractive company for doing business.

The next step is needed to analyze company's internal environment.

Production and logistic.

"Phart" has a high-tech production facilities, including only one in Russia fully automated line (the Netherlands) on the packing of soil from 20 to 80 liters up to 600 packages per hour, automatic lines (Denmark) for the production of kits for growing seedlings, automatic lines on the packing of soil capacity from 2 to 10 liters capacity of 1,500 bags per hour, the plot on the packing of bulk products and granular fertilizers on high-weigher automatic bottling line of liquid fertilizers. The company has developed logistics structure. Warehouse complex with private access roads allows loading and unloading of 12 carriage and four cars at the same time. http: //my-terra.com.ua/component/content/article/62-content/180-jsc-qmnppq-fart.html

Marketing

The company produces more than 70 kinds of fertilizers, soils and plant protection products, manufactured on the basis of biohumus, which is a natural organic substance that stimulates the growth and harmonious development of the plant.

Today "Phart" is a market leader in natural organic fertilizer, its products are available in most stores in Russia and the CIS countries.

The main way of marketing products are wholesale. The company always tries to find an individual approach to its wholesale customers, depending on their specialization, size and requests. Serious attention is paid to the development of the branch network, enabling ease the process of working with regional wholesalers. Representative offices are in five cities: Moscow, Perm, Novosibirsk, Krasnodar, Ulyanovsk. In all major cities there are large wholesale partners that have established long-term relationships. In addition, a special section deals with the development of sales in the near and far abroad.

HR management

In the research center specialists are involved of the agricultural sector as well as the establishment of partnerships with scientists from agricultural institutions for staff development and expansion of the spectrum of research.

To work in automated lines as career advancement will be involved more low-skilled workers from the manufacturing stage after succefull completing the education course.

Also on the production work can be attracted college graduates, as well as providing students with a changing schedule.

Chapter 3. The business plan of the penetration Finnish market

3.1 Production description

Benefits of vermicompost and peat:

· Vermicompost manure and compost exceeds the content of humus in the 4-8 times

· The presence of growth hormones, development, multivitamins

· Large water capacity

· Increases the yield by 30-40%100% natural fertilizer

It does not contain pathogenic organisms

The soils are made of a mixture of peat with the addition of high-quality natural structuring components of complex mineral fertilizers and natural growth promoters - humic substances.

The soils are divided on 3 groups, but on Finnish market just 2 kinds will be sold: soils for gardens and for houseplants. Each group has around 18-21 sorts depending on plant it will be used for. The package volume is 5 litters, expiration date - 3years.

Also, fertilizers that contain a complete set of essential nutrients, trace elements and growth stimulants, special complexes useful natural soil organisms. Fertilizers have the same division as and soil. The package volume for dry fertilizer - 2,4, 10 litters, for liquid - 0,25 and 0,5 litter. Expiration date is 3 years.

3.2 The production plan

Market prospects of organic farming:

· In the EU, the number of organic farms in the past 15 years has increased more than 20 times.

· The global market for organic products is estimated in 2011 at U. S. $ 39-41 billion

The main consumers of vermicompost:

· landscape companies and nurseries

· trading networks

· farmers

· small wholesale

Manufacturing plan for export to Finland for the first year

· 70 tones of soils

· 20 tones dry fertilizer

· 10 tons liquid fertilizer

Sources of financing - own funds.

As for the overall strategy, all actions related to the company's growth strategy. There are three types of strategies: the strategy of concentrated growth strategy and integrated growth strategy and diversified growth strategy. Классификация базовых стратегий. http: //humeur.ru/page/klassifikacija-bazovyh-strategij

For "Phart" concentrated growth strategy is the most suitable one. According this market development strategy of seeking new markets for the product is already manufactured is implemented. Here we have domestic market, product range is created and the company just needs new sales markets for expanding.

What about competitive strategy on the domestic market, as "Phart is a leader company so strategies for leader are needed. The first one is based on activities that make potential competitors' attacks impossible or significantly weaken them, such as anticipating the emergence of a new competitor in the market, the company can lower the price on its products. And the second strategy is based on expanding new sales market to increase company's size, fixed assets, strengthening the image and brand. And as the result the potential significance of the leader makes attacks from competitors unpromising.

As the expanding strategy I think the most suitable is unlike its competitors, a significant expansion of modifications of the product and at the same time sharp expansion the price range. Here the company will focus on a narrow specialization of their soils and fertilizers for the different species of plants, meanwhile offering a series of universal ones.

Functional strategies reflect both general and competitive strategies can be implemented.

· Opting for wholesale (contracts for the supply of large wholesalers)

· Conducting laboratory tests on their own

· Own production, to be a production company

· The innovations implementation

· Automated production

· Electronic document

· Staff Development Strategy

· Closing the company to outside investors

· Focus on the capitalization

Conclusion

The description of company showed its possibility to do international business company already has had foreign sales markets and shows stable growth. The second chapter shows us that Finland is attractive country for penetration, risks were found as minimum.

Then focus group and production were determined. According these, manufacturing plan and strategic were developed.

What about recommendation, I think that "Phart" should invest into wholesales partnership development, it could be a discount depending on the volume of purchases, as well as installment benefits, but for company the best way is to attract.

Resources

1. http://rusnk.ru/news/housing/foreign/#5

2. http://www.phart.ru/about/history/

3. http://www.kommersant.ru/doc/268273/print

4. Human Development Reports (режим доступа http://hdr. undp.org/en/statistics/)

5. http://megaresearch.ru/files/demo_file/10235. pdf

6. Внесение минеральных и органических удобрений. http://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/ge.33/2009/zip.29. r. pdf

7. РБК. Исследование рынков. http://marketing. rbc.ru/news_research/15/11/2012/562949985141082. shtml

8. http://megaresearch.ru/files/demo_file/10235. pdf

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