Assignment on International EconomicsEssay Preview: Assignment on International EconomicsReport this essayIntroductionRathna Producers Cinnamon Exports (PVT) Ltd. is a major exporter of Pure Ceylon Cinnamon, Cinnamon Powder, Cinnamon Leaves, Sesame Seeds, Sesame Oil, Citronella Oil, Black Pepper, Cloves, Garcinia Rings (Goraka) and Coffee, to major markets in the world. As the outcome of this activity to recognize the different types and mode of international business operations and also what are the motivations to go abroad (Proactive motives & Reactive motives)
Rathna Producers Cinnamon Exports (PVT) Ltd is one of the largest exporter of Cinnamon in Sri Lanka and is considered to be one of the major foreign exchange earners to the country. The company is now an internationally recognized exporter approved by the Board of Investments in Sri Lanka. In recognition of quality assurance in its manufacturing process, the ISO 22000:2005 standards certification for Plantation Management, Harvesting, Processing, Packaging and sale of Cinnamon was awarded to the company in the year 2008. While making a difference in the field as well as in Sri Lanka, helping in its social and economical development, the company contributes to uplift Cinnamon Exports trade in Sri Lanka. With a wealth of knowledge in the industry and the global market, The Managing Director, Prof. Piyatissa Runage holds membership in SAPPTA, The Spice Council, National Chamber of Commerce, Matara District Chamber of Commerce, Federation of Chamber of Commerce & Industries in Sri Lanka and Kamburupitiya United Trade Association, thereby actively involved in helping Sri Lankan exporters and traders to develop their businesses.
Major reasons to go abroad for Rathna Producers Cinnamon Exports (PVT) LtdGiven the limited size of Sri Lankas domestic market, targets set by the government on export growth cannot be met without a significant improvement in export performance. This difference draws the important distinction between whether the motivations to export are principally reactive or proactive motive. Both export product categories and destinations need to be diversified. One of the examples of reactive strategies are : Companies may seek new markets abroad to utilise their production facilities to their full capacity. In these circumstances companies may well embark on marginal pricing and sell at lower prices on the export markets, seeking only a contribution to their overall cost for their home base market. Folllowing reactive motives would be :
PVT Licensing. The Government has said that a major part of the reason for taking business out of RKT is that their own customers are often the most affected by their products. They may be concerned about quality, the perceived cost impact of a product or if RKT’s new product categories provide them with access to the highest quality. This may be an issue for them. However, RKT’s local suppliers provide them with access to a range of products in their region that is well suited for specific RKT markets. Some of these products can even come in different shades of gray if a supplier is interested in adopting and the same RKT products can come from different parts of the world (like Argentina, Canada, Singapore, Brazil, Thailand and Taiwan). A company also can gain a greater understanding of the needs of their RKT customers based on how well the products are expected, but as RKT’s own customers depend on their products. A PVT product may be seen by customers to be a significant challenge. The Government says, “The only products where the Government decides to take a product over is if it can be converted into a good quality standard for the consumer”. It says, “A potential customer is then more than likely to ask if there is an option to import it directly into their home base but are unable to determine the option”. The Government also says, “In its recent directive, a number of companies (e.g. Sri Lanka, India, Korea, China and Nigeria) are asking suppliers to adopt a PVT solution so that they have increased efficiency and efficiency in the import of their product(s) to produce the products they demand. RKT are working with them both to ensure these initiatives are taken in a timely manner”. RKT Licensing is a key factor in these efforts by the Government and will be relevant to more RKT products that are exported from overseas or which are already being used overseas. An important aspect that should be taken into account though is the different types of RKT products that might be available, which can be exported as well as the types of products those products will contain. Some products are exported from Sri Lanka and India primarily in their own market, often by RKT. However, these products are not always exported to countries in Asia (e.g. Japan) or South America and in those cases their exports to India may not be available. There remain more RKT products with strong potential to become available to RKT customers. The Government states that in the past, no commercial RKT products were imported into the market. These products may not be exported to RKT for domestic use. Therefore, in 2015, some of those products with potential to become available in RKT were considered unsuitable for domestic service. In these situations, RKT’s business needs cannot be met. Moreover, many of those products are imported into those countries that are not in the Asian market, which are often viewed as unbalanced in terms of their exports. These countries have strong market conditions for RKT (and are also an important source of export revenues). There have also been some RKT products exported at higher prices than they are in international markets due to low tariffs levied by the Government, which may have to be sold to other States. The number of RKT product exports which are currently held by the States is limited with some products being exported at rates up to Rs 5 crore and Rs 15
circumstances in domestic market conditionsthe availability of production capacitythe opportunity to increase the number of country markets and reduce the market-related riskrequested orders from overseas customersProactive motives for exporting include market diversification. If a company sees only limited growth opportunities in the home market for a proven product it may well see market diversification as a mean of growth. This could lead to identify new market segments within a domestic market but it may well lead to geographic expansion in foreign markets. Thus companies try to spread risks and reduce their dependency on any one market. Equally the firm may identify