Global Business Environment

• Market Entry Plan and Implementation• PESTEL• SWOT Analysis

COMPANY PROFILE

• Our company is “Green Harvest Pvt. Ltd.” which deals in agricultural business. It deals with agricultural products ,food processing, beverage processing ,packaging & agricultural machinery manufacturing . It has its base in Australia & has its presence worldwide. It is interested in expanding its business for which it has chose to operate in New Zealand which is heavily dependent on international trade, particularly in Agricultural products.

New Zealand (Background)

• Young and growing population and relatively high levels of inbound migration.

• Population of New Zealand: 42,86,500 (November 14, 2008)• Food processing, tourism, mining, textiles, machinery and

transportation equipment are some of the main industries in the country

• New Zealand has a modern, prosperous and developed market economy with an estimated gross domestic product (GDP) at purchasing power parity (PPP) per capita between US$27,420 and $US29,352.

New Zealand – Significant Factors• Ease Of Doing Business Index, ranked 2nd overall in 2008 out of 181

countries, 1st in the sub-category of Starting A Business.• Political freedom Ratings - Political rights and civil liberties both rated

1 .• GDP per capita - 28th highest, at $ 25,531.• Human Development Index - 20th highest, at 0.933.• Income Equality - 54th most equal, at 36.2 .• Literacy Rate - 17th equal at 99.0%.• Unemployment rate - 48th lowest, at 4.0%.• Global Peace Index - 1st at 1.202.• Corruption - Least corrupt, at 9.4 on Corruption Perceptions Index.• Economic Freedom - 5th freest, at 82 on Index of Economic Freedom.• Failed States Index, 171/177, being one of the few "sustainable"

states in the world.

Advantages of setting up a Business in New Zealand.

• In the World Bank ‘Doing Business in 2006’ study of more than 150 economies, New Zealand was ranked the number one place in the world for ease of doing business.

• Globally Competitive-The World Economic Forum’s ranked New Zealand 16th out of more than 100 economies. New Zealand’s public institutions ranked top of all countries in areas such as tax collection, judicial independence, property rights, and absence of corruption and organised crime.

• Ethical-According to Transparency International, New Zealand rated second equal with Finland, behind Iceland, in its 2005 Corruption Perceptions Index (CPI) of 159 countries.

• Stable Economy- A stable, open and competitive economy, a business-friendly government, competitive cost structures including a flexible labour market, low inflation policy and low corporate tax rates. New Zealand also has a working day that spans the afternoon on the West Coast of America and Asia to breakfast in Europe.

PESTEL ANALYSIS

POLITICAL ANALYSIS:

• New Zealand is a constitutional monarchy with a parliamentary democracy.

• Queen Elizabeth II is the Queen of New Zealand and the head of state.• The Queen and Governor-General powers are limited by constitutional

constraints and they normally can not be exercised without the advice of Cabinet.

• Government is responsible for legislation relevant to business operations. This includes legislation in areas such as land transfer, building and construction, land claims, resource management, competition laws, protection of intellectual property, industrial relations, accident compensation, taxation, banking and finance, migration, trade relations and foreign investment.

POLITICAL ANALYSIS (Cont--)

• Elections are held every 3 years in a mixed member proportional representation (MMP) system.

• Legal rule and regulations are not changed in short time unless very significant.

• Levels of social unrest are low, except for infrequent demonstrations by the Maori population.

• International tensions are few, although the country's strong anti-nuclear stance has periodically alienated allies.

ECONOMIC ANALYSIS• Highly dependent on international trade, mainly with Australia,

the European Union, the US, China and Japan.• New Zealand's economy is based on agricultural imports &

exports.• GDP (Current Prices, US Dollars) for New Zealand in year 2010 is

US$ 138.003 Billion.• No restrictions on inflow and outflow of capital.• No capital gains tax.• Research and development is 100% tax deductible.• Tax incentives for activities including motion picture and

petroleum exploration.• Raw materials may be imported tariff-free.

ECONOMIC ANALYSIS (Cont-----)

• The corporate tax rate in New Zealand is 30 %, for all companies, domestic and foreign.

• An indirect tax of 15 percent applies to all goods and services.• For the benefit of investors who take up residency in New

Zealand, credits are unilaterally provided to residents for foreign tax paid on income that is also subject to New Zealand tax.

• In addition, New Zealand has a network of 35 double tax agreements (DTAs) with our main trading and investment partners which eliminate certain forms of double taxation.

ECONOMIC ANALYSIS (Cont-----)

• As the first country to start each day, business has a jump start in New Zealand.

• Business day covers the afternoon on the USA west coast, much of Asia’s business day, the morning in Europe. This offers considerable benefits in managing global workflows and transactions.

• New Zealand offers close access to international markets through free trade and economic co-operation agreements with a number of countries including Australia, China, Singapore, Thailand, Chile and Brunei.

• After successfully establishing business in New Zealand for at least two years, one can apply for residence under the Entrepreneur category based on the investment of a minimum of NZ$10 million for at least three years.

ECONOMIC ANALYSIS (Cont-----)

• Business here is supported by robust public infrastructure and world-class telecommunications, efficient ports, high capacity fibre-optic

cables and global airlines servicing 27 cities.• The Reserve Bank of New Zealand, whose main function is to

implement Government monetary policy according to annual directives, supervises New Zealand's banking system. It also registers and supervises other banks.

• Just under 88 percent of New Zealand exports by value are transported by sea. Four ports (Auckland, Tauranga, Port Chalmers, and Lyttleton) accounted for 64 percent of exports by value.

• Country has established a comprehensive network of roads (around 93,100 kms) and railways (4,000 kms) linked to ports and airports.

SOCIO-CULTURAL ANALYSIS

• Most of the 4 million New Zealanders are of British origin.• About 15% claim descent from the indigenous Maori

population, which is of Polynesian origin. • Ethnic groups - European 67.6%, Maori 14.6%, Asian 9.2%,

Pacific Peoples 6.9%, Other 1.7%, Other ethnicity – 11.2% (2006 census).

• Religions - No religion 31.1%, Anglican 13.3%, Catholic 12.2%, Presbyterian 9.3%, Methodist 2.8%, Hindu 1.5%, Baptist 1.3%, Buddhist 1.3%, (2006 census).

• 99.0 % of population is literate .

SOCIO-CULTURAL ANALYSIS

• Age structure-0-14 years: 21.5%15-64 years: 66.2%65 years and over: 12.3% (2006 Census).

• Life expectancy- Men: 77.9 yearsWomen: 81.9 years (2006 estimate).

• Languages - English (official), Maori (official).

TECHNOLOGICAL ANALYSIS

• Agricultural technology (agritech) developed in New Zealand has emerged as a key differentiator for the international farming industry. It is helping to deliver higher yields and greater consistency in farming outcomes around the globe.

• New Zealand’s agritech sector has created advances in soil testing, pasture species development, DNA testing, breeding and farm management technology.

• New Zealand was first in the world to offer genomic selection technology for use in identifying elite sires as yearlings.

• New Zealand is also widely regarded as leading the international farming community in animal welfare, traceability and food safety, and agricultural sustainability.

ENVIRONMENTAL ANALYSIS

• Temperate climate and fertile soil, making the country ideal for agricultural production.

• Waikato Region -The climate and soils make it one of the most productive grass growing regions in the world.

• Consistent year-round rainfall and volcanic soils.• The climate throughout the country is mild and

temperate, mainly maritime, with mean annual temperatures ranging from 10°C in the south to 16°C in the north.

LEGAL ANALYSIS

• Commerce Act: sets out the types of anti-competitive practices that are illegal. These include company mergers and takeovers which lead to a lack of competition.

• Companies Act: sets out the legal framework for forming and operating a company.

• Consumer Protection: the Fair Trading Act protects consumers from unfair and misleading practices.

• Employment Relations Act: emphasises good relations between employers and employees through the good faith obligation, and promotes collective bargaining, but retains voluntary unionism.

LEGAL ANALYSIS(Cont----)

• Securities Act: protects the investing public by requiring businesses to provide certain information to investors. Companies must register prospectuses when offering new securities to the public.

• The Commerce Commission is responsible for administering the Acts.

AGRICULTURE & FOOD PROCESSING INDUSTRY IN NEW ZEALAND

• New Zealand is one of the world’s most efficient agricultural economies, with a reputation for producing internationally significant research, agriculture practices and products.

• New Zealand has a temperate climate and fertile soil, making the country ideal for agricultural production. Together with its support and processing components, the agriculture industry regularly contributes almost a quarter of New Zealand’s Gross Domestic Product (GDP).

• New Zealand is widely regarded as leading the international farming community in food safety, and agricultural sustainability.

AGRICULTURE & FOOD PROCESSING INDUSTRY IN NEW ZEALAND(Cont--)

• Agriculture is one of New Zealand's largest industries, employing more than 114,000 people in full-time equivalent positions.

• New Zealand has developed world-leading expertise in food processing and packaging technology over many years of adding maximum value to primary sector produce.

• Food and beverage manufacturing is a major industry in New Zealand accounting for around one-third of exports and contributing just under 5 percent of GDP.

• Food processing is New Zealand’s largest manufacturing industry employer with nearly 75,000 people working in the industry in 2008.

OUR COMPANY EXPERTISE

• Agricultural Machinery.• Agricultural Products Cultivation.• Agricultural Food Processing.• Beverage Products Cultivation.• Beverage Products Processing.• Packaging of Agricultural Processed Goods.• World wide presence.• Strong distribution network all over the world.

SWOT ANALYSIS

• STRENGTHS:-i. Easiest place in the world to start a business.ii. Adult literacy rate is 17th equal at 99.0%.iii. Few restrictions on establishing, owning and

operating a business.iv. Stable political environment .v. Corruption is virtually unknown.vi. Long term international competitiveness.vii. Abundant availability of raw material.

SWOT ANALYSIS(Cont---)

• STRENGTHS(Cont----)

viii.Variety of business expertise to offer.ix. Wide international presence.x. Worldwide distribution network.xi. Financially stable.

SWOT ANALYSIS (Cont---)

• WEAKNESSES:-

i. Restricted range of export products. This dependence on the income from so few commodities makes the economy vulnerable to fluctuations in their world prices, and sharp drops in these prices, as have occurred periodically, inevitably result in the restriction of imports or a substantial trade deficit.

ii. Transportation costs to other parts of world.iii. Machinery costs bit high.

SWOT ANALYSIS (Cont---)

• OPPORTUNITIES:i. High potential of machinery import.ii. Ease of establishing one’s own business after

entering the country.iii. Establishment of both internal as well as external

player.iv. Establishment in new untapped areas.v. Stronghold in Oceania region.

SWOT ANALYSIS (Cont---)

• THREATS:

i. Entry of low cost competitors.ii. Economy vulnerable to fluctuations in their

world prices.iii. Short Government ruling duration of 3 years

which could lead to frequent change of policies sometimes.

SEGMENTATION

Geographic

•Agricultural lands•Rural

Demographic

•SEC R1•SEC R2

Psychographic

•Innovators•Experience•Thinkers

Behavioral

•Split•Shifting•Switchers

TARGETING

Crops Cultivating Industries

Raw Product Industries

Food Processing Industries

Third Party Contractual Business Partner

Local Food & Crop Market

POSITIONING

Healthy

Safe & Responsible

Lifestyle

Price

Low Operational costs

Low Maintenance

Services

Potential New Entrants(Mobility Threat)

Competitor (Segment Rivalry)

Substitutes(Threat of Substitutes)

Suppliers(Supplier Power)

Buyers(Buyer Power)

MICHAEL PORTER 5 FORCE MODEL

THREAT OF NEW COMPETITORS

• Agricultural industry in New Zealand is observing very good growth, hence large number of players want to enter in to this industry.

• Low Entry Barriers available.• Favourable Conditions for business set up.• Industry profitability.• Capital requirements are low.

INTENSITY OF COMPETITIVE RIVALRY

• Sustainable competitive advantage through innovation will be always there.

• Powerful competitive strategy will be adopted.

• Level of advertising expense.• Competition between online and offline

companies.

THREAT OF SUBSTITUTE PRODUCTS OR SERVICES

• Buyer propensity to substitute as various options available.

• Relative price performance of substitute product or company.

• Ease of substitution of products.• Number of substitute processed food

products, agricultural machinery etc. available in the market

BARGAINING POWER OF CUSTOMERS

• Bargaining leverage, particularly in agricultural industries with high fixed costs.

• Buyer information availability about the processed foods, machinery etc.

• Availability of existing substitute products.• Buyer price sensitivity.

BARGAINING POWER OF SUPPLIERS

• Supplier competition due to large agricultural industry.

• Supplier switching costs are not that high in this industry.

• Strength of distribution channel.• Supplier switching costs relative

to firm’s switching costs.

MARKET ENTRY STRATEGIES

• Buying an established business or certain franchises - Investing in a proven business model or an existing business with established customers and cash flow, will offer some advantages to start a business from scratch.

• Consulting Professional Advisor. -The major New Zealand law firms and accounting companies can provide the necessary legal and financial services. They may also have useful contacts and information on potential business dealings.

• Partnerships are most common in the farming industry. This can be an effective way to share business operation costs where, for example, several professional people operate out of a joint office.

MARKET ENTRY STRATEGIES(Cont--)

• Direct export: In this case market research, market contact, pricing, export documentation etc. are done by manufacture who actually exports.

• Publicly listed company- Generally, listed companies have been in business before listing on either the NZX or NZAX. When company decides to list, a specific NZX Listing Team will be appointed to work with company one on one, to ensure that the listing process runs smoothly and our business objectives for listing are met.

PROMOTION

• Print advertisement in all leading national & local newspapers.

• Ads in B2B dailies & magazines.• Direct marketing at various Industries for B2B

contact making.• Various Conferences for agricultural business

houses for our introduction & services we offer.• TV ads for specific period to get reach masses

just for awareness.

PROMOTION(Cont---)

• Online marketing .• Direct emails.• Sampling or product promotional events for

farmers.• Radio ads.• Trade shows for showing our products &

services.• Testimonials by our previous alliances & clients.

Distribution Channel

• Sales agent who could provide necessary information to our customers.

• A set of locations that store, ship, or receive materials (such as factories, warehouses, retail outlets).

• A set of routes (land, sea, air, satellite, cable, Internet) that connect these locations.

• Intermediates- Brokers, Wholesalers, Retailers.

THANK YOU

• Sahil Raina