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Jasmine Rice Export Plan for the UK

by Suleman

Table of Contents

  • Abstract
  • Export Strategy
  • Product Strategy
  • Business Process Strategy
  • Operations Strategy
  • Financial Strategy
  • Attractiveness of United Kingdom as an export market in 2020
  • References


A business that wishes to reach the export sector has to undertake a number of feasibility tests, and to become a full success, it needs thorough preparation for the export venture. The first thing that an exporting corporation has to examine is whether or not the commodity it seeks to distribute has any particular selling points, since it is the only sure shot tactic in global markets for continued growth. This is more so because technical advancements have almost made the advent of replacements a commonplace affair. However, there are no imminent alternatives for jasmine rice and it will also not be necessary to develop any substitution for it in the near future. But it does not inherently guarantee performance, as proper and logical commodity strategy, market process strategy, operating strategy and financial strategy must be in effect to improve Jasmine rice’s specific selling point. This paper explores these methods at length and how they can be formulated in such a manner that progress is guaranteed. In comparison, this paper often aims to look into the future and aim to foresee whether the United Kingdom will still be as attractive as the export sector will be a decade back. After a substantive study of the British economy, the paper concludes that Jasmine rice will still maintain its unassailable place in British markets, while other rice varieties developed by Siam Rice Co. could face heavy competition from indigenous substitutes.

Jasmine Rice Export Plan for the UK

Strategy for Exports

Import is not the same as sale on the domestic market, since it requires not just foreign currencies, but also foreign market negotiation, global tastes and desires, foreign customs and, of course, foreign laws and regulations. Therefore, exports will only be competitive if an adequate export policy is in place and is successfully implemented.

It should start with a product’s chances of success in an export sector. If the commodity is popular in the domestic market is the thumb law for gauging the likelihood of success. If a product in the domestic market is popular, so there is a good probability that it would also be a hit in international markets. But the customs, tastes and desires present in international markets must be taken care of before automatically believing that domestic popularity is a loss to show that the commodity is indeed popular in foreign markets. As an example, Chicago beef is known worldwide for its flavour, but if a beef exporter thinks that they will be able to assault India’s non-vegetarian markets, they will be in for a rude shock as beef is a tabu for Hindus, who make up almost eighty-five percent of the Indian population. Similarly, though pork is an all-time favourite in China, in Muslim countries where it is a banned item, it has no demand. Therefore, to reliably calculate the demand value for the commodity they would want to sell, an exporter wants to conduct elaborate market analysis (Credit Research Foundation 2007).

However, before the export decision is to be reached, the organisation must, on no uncertain terms, assess what it is capable of gaining from exports and if it has adequate capital at its command to conduct the increased amounts of output that will have to be made in order to satisfy both the domestic and the export markets. The other concern that needs to be answered is whether the export-related expenses are smaller than the benefits the organisation hopes to gain from export operations. A business can only pursue export operations if any of these three problems have a positive response. Otherwise, transacting in domestic markets alone will be better off (World Export Development Forum 2007).

Product Strategy

The first measure of whether a commodity can be exported, as already mentioned, is whether it has a secure demand within the nation. Still, as was already the case, discussed, this rule has to be modified keeping in mind the tastes, preferences and food habits of foreign nationals if the product to be exported is an edible substance. The other way to determine the export potential of a product is to identify certain unique properties of a product that would not be possible to replicate elsewhere in the world (UNZ & Co. 2008). A case in point is Darjeeling tea which is supposed to be the best in the world. This product cannot be produced elsewhere in the world because it grows only in certain specific climatic and soil conditions that are available in Darjeeling only. Same is the case with Brazilian coffee or Cuban tobacco. As these products are unique and as there is no possibility of finding any substitutes anywhere else in the world, these products would always have a steady demand in international markets. In the current case, Jasmine rice is Thai Hom Mali Rice (Jasmine Rice) is a specialty of Thailand and cannot be grown elsewhere in the world. Therefore, this product has steady export potential.

Business Process Strategy

A business process is a series of well coordinated activities by both men and machines that lead to achievement of corporate goals of a business. Each business has a strategy to attain its corporate goals and how efficiently it can achieve its corporate goals at least cost. As the output is an agricultural product, exporting it requires a specific strategy to ensure that the venture becomes a success. The first issue that the firm has to solve is how much international sales experience the firm’s employees have and would there be any language barrier in transacting in a foreign market. In this case of course, the firm producing Jasmine rice is registered and based in Singapore which has a formidable tradition and expertise in trading. However, as the target country is United Kingdom the issues of cultural differences and language could be some sort of a problem. Language might not be that much of problem as English is a global language understood by all those that engage in international trade but cultural differences, especially food habits, might require some effort to overcome. So, the company must put in place a proper export department that should have adequate staffing and a senior responsible person must be made to head it. The company must also have in place adequate infrastructure in United Kingdom to ensure its export trade is carried on without any legal or administrative hindrance in that country. For that it must employ British consultants and staff so that any frictions arising from lack of knowledge of local laws or ignorance about cultural specifics do not go out of control (SearchCIO-Midmarket.com 2009).

Operations Strategy

Every organization produces goods and services so that they can be sold to intended customers. Operations strategy is a series of decisions that decide long term productive capabilities of an organization and matching it with market demand, resources at the disposal of the company and overall corporate goals (Slack and Lewis 2001). In the current case, the product that is being discussed is Jasmine rice that grows in Thailand. The country is not very advanced and its agriculture is basically labor intensive. Therefore, producing the extra quantity that would be exported would not require investment in any form of machinery. All that would be required is additional labor which is in abundant supply in that country. So, availability of labor would not be an issue but availability of another factor of production – land which is crucial in this case might pose some problems as the company would need to have the extra piece of land near its main base of operation as getting a suitable piece of land at a considerable distance would frustrate all attempts at proper management and control of the production process. Therefore, as the company firms up its export plans it must first solve the issue of suitable land where it would be able to grow Jasmine rice as much as would be necessary to satisfy the demands in British markets. Another reason for scouting for land near its main operational base is Jasmine rice meant for export must be packed properly so that it does not deteriorate in quality during long sea voyages or prolonged storage. This sort of advanced packing cannot be arranged for in distant agricultural fields and it would entail multiple transportation, and consequent loss in transit, if the company fails to locate fertile agricultural fields for growing jasmine rice for the purpose of export. This also brings into sharper focus the additional requirement of an advanced packing unit that the company would do well to procure and set up for its exclusive use. Though outsourcing packing might seem to be an attractive option, one must remember that agricultural products are not produced in systematic phased manner where daily output can be controlled. Agricultural output is seasonal in nature and the entire quantity is produced during harvesting season. If the company does not have a dedicated packing unit, it might face a lot of problems during harvesting season especially if there is a bumper crop.

Financial Strategy

Any business requires finance and this is more appropriate for export trade. An exporter needs to have an effective financial strategy that would allow it to expand its trade volume without causing any undue stress on the financial liquidity or stability of the firm (Pavlíček 2009). At this stage one must realize that export trade is generally associated with elaborate banking formalities and any new foreign trader must be willing to offer longer credits than is the market norm if it wants to create a niche in overseas markets. Moreover, the exporter must also be prepared to lock more capital in inventory as higher stocks have to be maintained in order to cater to demand in foreign markets. The costs of maintaining a foreign office and fees that needs to be paid to foreign consultants should also be added to the total costs of export. Transportation will also be one of the major cost factors linked to export as the distance between Singapore and United Kingdom is substantial. Advertisement and promotion that would be necessary for letting prospective customers know that Jasmine rice is now available in local British markets would also be another major cost item. All these costs have to be financed by the company either through its internal resources or by borrowing from external sources. Singapore is one of the major trading hubs of the world where funds to finance exports are comparatively easier to obtain. So, it would be advisable for the company to go for external sources of funds, at least initially as it prepares to launch its exports in United Kingdom. Though internal sources would be without any cost and financial burdens generally associated with any form of loan, it would be prudent not to overstretch the financial reserves that the company has because a single bad crop or a climatic frailty might put the existence of the entire firm in jeopardy (bizmanuals 2008).

Attractiveness as an Export Sector for the United Kingdom in 2020

A decade is long time in export business and world economy as technological advancements are sweeping the world in such a manner that what is efficient today becomes completely obsolete tomorrow. Moreover, advent of substitutes has become such a regular feature that a commodity that has no substitutes today becomes completely irrelevant the day after. A case in point is jute which was the prime raw material in packing industry. Thus manufacturers of jute, an agricultural product, enjoyed monopoly for decades together. The major export of East Pakistan (now Bangladesh) had been jute and the country enjoyed a healthy balance of trade on account of it being the largest grower of jute in the world.

So, there can always be a lingering doubt whether Jasmine rice would also be faced with competition from a substitute in near future or not. The doubt becomes stronger since food habits of British do not include rice as a staple diet. Instead British staple diet includes meat, fish, potatoes, flour, butter and eggs. So, looking ahead by a decade one might feel that the demand for Jasmine rice might simply dwindle and fade away. But, one must never forget that United Kingdom is essentially a cosmopolitan country where people from all corners of Commonwealth have come and settled down. Thus rice has gradually made its place in British menu and will be there in the foreseeable future. In fact, a survey conducted by Kingston Business School in 1993, showed that rice consumption in the UK was increasing at the rate of 5% per annum. A paper “The rice market in the EEC” published in 1994 indicated that the UK was importing some 247 000 tons of rice a year (Yap 1994). However, demand for other varieties of rice produced by Siam Rice Co. namely, White Rice, Black and White Glutinous Rice, Broken Rice, Cargo and Red Cargo Rice, Parboil Rice and Organic Rice might never take off as British customers have enough disposable income and would not settle for anything other than the very best.

Though it might not be necessary but it may be mentioned that United Kingdom has one of most stable societies where democracy has been firmly entrenched for decades (Barrow 2010). So, chances of any social or political upheaval leading to disruptions in trade and commerce can be completely ruled out. Moreover, London is one of the financial hubs of the world and UK economy is very sound as it ranks sixth in the world in terms of export of commodities and services (EconomyWatch 2010). Thus the attractiveness of United Kingdom as an export destination will remain as strong as it is now even in 2020.

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