Gassel Consult
         
 
         
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PROBLEMS

  • Exchange rate fluctuations
  • U.S and EU competitive production
  • Emerging suppliers from China
  • U.S and EU market access requirements
  • Unknown or weak country reputation (unfamiliarity of Western buyers)
  • Shipping costs
  • U.S and EU recession reduces general purchasing power
  • Stringent and time-consuming selection process by buyers, with possible thorough process adaptation

The U.S and EU market will offer opportunities, but only to those companies that are fully committed to establish business relations based on partnership and that are able to keep up with the growing demands in the field of product innovation, production capacity and flexibility and technical requirements. The companies should also be able to show commitment by means of a substantial budget allocation.

Therefore, in order to be successful on the U.S and EU market we foresee that we will have to address the identified weaknesses as follows:

Change the routine mentality and ageing work force in our company into a creative, learning organization with a dynamic work force, attracting young professionals with a global outlook.

A budget reservation will have to be made for structural and systematic market research (including competitive benchmarking) and for setting up a market information system, as well as proactive product and process adaptation planning.

A multi-disciplinary U.S and EU task-force should be formed with sufficient time allocation and authority.

Inefficiencies in the production and logistical process, including its environmental impact, have to be tackled.

Our corporate short term objective is to have, under the leadership of our CEO, the introduction and implementation of a programme for change. The objective is to become an export fit company within 6 months. The task force will include the management of the marketing, production, finance and logistics department. Given the crucial aspect of product and process development in accordance with market requirements, we will introduce a standardized product and process development procedure, as well as a market information system, in order to quickly asses, absorb and realize U.S and EU buyers requirements.

In order to bring our production costs in line with international acceptable levels, we will introduce a cost saving programme aiming at identifying and turning around 1 cost saving action per month, the primary focus thereby will be on product issues. In the first year, the result should be savings in the production process of at least USD 100,000, whereby the needed investment will not exceed the amount to be saved. Besides on the first year’s result, the cost saving programme will be integrated in the Continuous Performance Improvement Programme. Our export marketing objective is to enter the industrial segment for Unrefined Shea Butter, and generate a first year sales of at least USD 75,000, growing by 50% each year thereafter. We aim at one lead customer in the market, with whom we intend to establish a long lasting business relationship, based on exclusivity.

Our product and process development objective is to bring our Unrefined Shea Butter assortment in line with Customer specifications and industry standards within 6 months, and to be able to launch together with our trade partner, 2 new Shea Butter products varieties each year.

Our medium and long term objective for our Unrefined Shea Butter is to apply the experience we develop with our trade partner in U.S, in three more European countries, and to look for similar trade partners in Scandinavia, The Netherlands, Belgium and Canada, to realize export sales equaling 40% of our total turnover within 5 years.

Our export marketing objective for Shea Butter products is to establish a relationship with a U.S and EU private label distributor who will market the products under his own brand name. We expect to select the distributor within 1 year and aim to ship under private label as of the second year at a minimum target of USD 300,000 in the first year of the distributor agreement. We aim for 15% growth per annum thereafter.

Quality, short time-to-market and continuous product innovation are key elements of our product strategy. Our pricing will be based on competitive pricing, while our distribution strategy will be based on indirect market entry through a private label marketer. Our promotion mix will be built around b2b activities including trade fairs and direct marketing.

Gassel Consult will position both its industrial and consumer range of Unrefined Shea Butter and Shea Butter products at the medium-high end of the market and will communicate a high value quality image. That means that Gassel Consult will stay away from the low end of the market and alternative trade channels. Both product ranges include attractive margins for the distribution chain, guaranteeing sales commitment. Thanks to these trade margins, distributors are able to add a relatively high degree of service level, which allows a position at the medium-high end of the market.

With regard to the multi-disciplinary nature needed for export preparation, we will make use of an Export Task Force. This task force will be headed by the CEO. It is his task to manage the non-routine activities of the company. The task force will include the production manager, finance manager, R&D manager and last but not least, the marketing & sales manager.

In the start-up phase the marketing & sales manager will be responsible for monitoring the market trends, initiating the market entry activities and setting up trade partner communciations. As soon as the export volume justifies such (anticipated within 2 years), a dedicated export department will be established, to be headed by an export marketing manager.

The export objectives, chosen strategies and budgets and incomes, will be reviewed against actuals on a quarterly basis. This will enable the company to operate on a flexible basis and to implement changes whenever needed.

The domestic market is considered to be (and remain) the main turf for Gassel Consult. The export venture should not jeopardize its position in the domestic market. Sufficient means should be available at all times to defend the company's domestic market position. Therefore, the claims on the resources and capacities will be monitored and compared with the available production and pre-finance capacity on a weekly basis once the export orders start off.

Critical control points (CCPs) on both financial and production capacities will be established by the Task Force. The finance manager will be responsible for reporting on the financial CCPs whereas the production manager will be responsible for the CCPs on production capacity.

In Gassel Consult, we have compiled an action plan for the first 2 years of the export venture. The activities listed in the action plan address the weaknesses that have been identified during the Strength-Weakness analysis as part of the company audit. Following the business improvement activities, we have incorporated market entry activities aiming to gain a foothold in the first priority market as well as doing some ground work in the second priority countries. The different activities have been budgeted and approved for the first year.

The activities scheduled for the second year are still tentative. The budget is not yet approved. The activities and budgets will depend on the performance in the first year.

In Gassel Consult, we have developed a set of planning spreadsheets that can be used for operational planning and budgeting. You can modify this budgeting & forecasting tool according to your own company situation.

The first worksheet (1) is the Budget - Fixed Costs planner. Of course you should give the ledger accounts the same code numbers and descriptions as used in your own administration. This will prove handy when you make a quarterly review based on the actual costs that have been realised.

In the second worksheet (2) Budget - Direct Costs - you should fill in your monthly Sales Forecast for the whole planning year. Also the estimated variable costs (which are the direct product-reated costs) should be filled in.

When you finally fill in the forecasted Ex-Work sales prices per unit in the last worksheet (3) Budget - Income Statement, your company budget and Profit & Loss Statement will be automatically generated. When you tune the variables in these sheets towards a realistic and prudent budget (do not forget to save each version with a different file name!), you will be able to choose the best business scenario whereby you will keep the investments in relation to the expected yield.
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