export project : sugar
DESCRIPTION
A case study from CMMU class.TRANSCRIPT
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Export Project - SUGARSUGARGroup 1 – MS15CMGMG557 Strategy and Global CompetitionCollege of Management Mahidol University
Instructor : Aj.Karuna Aksaravut
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ContentsContents-Introduction-Opportunity for Thailand- Example : KSL Group-Five Forces Analysis-Market Target-Channel Selection-Costing-Pricing
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Introduction
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- Sugar as sweeteners commonly used widely in the food industry and drinks.
- Commercially produced from Sugar Cane, Sugar Palm, Coconut Palm, Sugar Maple and Beets.
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- Cane vs Beat
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- Sugar Production
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- Global Sugar Production and Consumption
World sugar consumption (mm tons, source: Illovo Ltd)
World sugar production (mm tons, source: Illovo Ltd)
Top sugar exporters (mm tons, source: Illovo Ltd)
http://soberlook.com/2012/12/brazil-flooding-world-with-cheap-sugar.htmlhttp://www.mslimalicious.com/2012/04/white-raw-brown-sugar-what-are.html
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- Global Sugar Production and Consumption
Foreign Agricultural Service, United States Department of Agriculture, November 2013
Global Production Is Estimated To Outpace Consumption Although at Lower Rate
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- Global Sugar Production and Consumption
Foreign Agricultural Service, United States Department of Agriculture, November 2013
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- Global Sugar Exporters
Foreign Agricultural Service, United States Department of Agriculture, November 2013
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- Sugar Futures
Raw sugar - New york (“ICE”)
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- Sugar Futures
White sugar - London (“Euronext”)
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Opportunityfor Thailand
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Sugar Industry …Sugar Industry …
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Sugar Industry …Sugar Industry …-An important agricultural industry for the country.-Brown sugar organized in tariff line 1701, both import and export.
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หน่�วย : ล้�าน่ตั�น่ Raw value)
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Example : KSL Group
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KSL Group-Standard : SQF 2000, ISO 9001:2000, HACCP
-Product : Raw Sugar, High Polarization Sugar, White
Sugar, Refined Sugar
-70% of revenue comes from the sale of sugar.
-Major customer is industries.
-The fourth largest sugar exporter of Thailand.
-Quota of sugar exports is 4.8 million bags in 2012.
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Five Forces Analysis
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1. Rivalry Among Current Competitors (Moderate force)- Competitors from the same country.- Competitors from other countries.
2. Bargaining Power of Suppliers (Weak force)- Production uncertainty, depending on the season.- Each company has a group of farmers who delivered cane by
agreement.
3. Bargaining Power of Customers (Strong force)- Imported from other countries, such as Brazil, Cuba, Indonesia.- Not import sugar for domestic consumption only. It is a hub of
import and export.
4. Threat of Substitute Products or Services (Weak force)- Health issues.- Property is not equivalent with natural sugar.- Almost demand come from industry.
5. Threat of New Entrance- Foreign investors see potential of business.
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Market Target
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Where is the potential market ?
Point to ConsumptionThe biggest Halal market.
Point to ProductionManufacturing base and big food industry.
Point to ConsumptionThe most consumption.
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Market Target : China
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Market Target : China- Ranked 4th of world sugar production. - Source of production concentrated in Shandong, Guangdong,
Guangxi and Hainan and Xinjiang.- Guangxi produces the most sugar, accounted for 67 percent.- Sugar output will increase in the first 2-3 years and decrease in next 2-3 years.- Domestic sugar prices higher than import prices.
Import- Consumption 12-15 million tonnes, Production 10-12 million tonnes per year.- Import quota for sugar trade around 1-2 million tonnes per year. (70 percent for enterprises)- Import tariff for internal quota is 15 percent and external is 50 percent.
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Market Target : China
Industrial Consumption 70% Household consumption 30%
China : 9.6 Kg per year, per person(20 Kg within year 2020)
World : 18.6 Kg per year, per person
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China's sugar imports from overseas.
Market Target : China
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Total consumption and production of sugar in China.
Market Target : China
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Market Target : ChinaTrade Liberalization- Normal Products- Sensitive Products - Highly Sensitive Products (Including sugar)
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Market Target : China
TransportationTruck / Train / Freight ship / Container ship
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Channel Selection
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Distribution channelsIndustry / Modern Trade / Trader
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Tops Ranking Of China's Biggest Chain Stores 2011
1. Bailian Group, 118 billion yuan2. Suning Appliances, 110 billion yuan3. Gome Electrical Appliances, 110 billion yuan4. China Resources Vanguard, 82.7 billion yuan5. RT-Mart International, 61.6 billion yuan 6. Chongqing General Trading Group, 47.8 billion yuan7. Carrefour China, 45.2 billion yuan8. Yum! Restaurants (China) Investment, 43.3 billion yuan9. Walmart China, 43 billion yuan10.Wumart Stores, 41.1 billion yuan
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2011 Greenpeace Supermarket Ranking in China
1. Carrefour2. Auchan3. Shanghai City4. Chaoshifa5. Huapu6. Ito Beijing7. Walmart
8. Lianhua (Hualian, Century Mart)9. Wumart10. Nonggongshang11. Lotus12. Vanguard13. Aeon (North), Jusco (South), PARKnSHOP, Jingkelong, Rtmart, Suguo14. Ito Yokado, Chengdu, Tesco
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Costing
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CostingFactors
Types
Production CostTransportation Cost
Exporting Cost
CapacityLocationProcess
Production Time
Costs and Expense
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Average sugar production cost is 2,315 baht / tonnes, with a standard deviation of 1,377 baht.
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Freight Surcharge Basic-Weight Ton-Dimension Measurement
Freight shipping rates comparison
1.V (Ad Valorem Goods)2.Special freight
- Surcharge- Terminal Handling Charge : THC - Bunker Adjustment Factor : BAF - Currency Adjustment Factor : CAF- Congestion Surcharge - Bill of Lading Charge : B/L Charge - AMSC : Advance Manifest Security Charge
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Pricing
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PricingFactors
Types
Fixed PriceSeller’s Executable Order (S.E.O)
CostsSupply
DemandMarket
Pricing Methods
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- Thailand – Fixed Price
- SEO (Seller Executable Order) to New York Futures Exchange (NYFE:NY#11) Pricing of raw sugar exports for Quota B (ข)
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Sugar prices of domestic and import
China sugar (Wholesale price) 5,491 Yuan/tonnes
Raw sugar from Brazil (CIF) 4,329 Yuan/tonnes
Raw sugar from Thailand (CIF) 4,406 Yuan/tonnes
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THANK YOUWongnaphak Lertwanit ID 5600002Chutima Lertvitchaboon ID 5550414Thanakrit Lersmethasakul ID 5550470Netnapa Techasukkasemsanran ID 5550471Supaporn Rattanajitbunjong ID 5550483Suwimon Mongkolchat ID 5550484Onravin Latthayaporn ID 5550486