Supply Chain Management Of Nescafe Marketing Essay

Supply Chain Management Of Nescafe Marketing Essay This report comprehensively discusses the distribution channel network which is used by Nestle to sell its Nescafe coffee brand in the market. The report discusses upon various channel partners involved in this process and the roles played by each channel partner in the whole distribution process. The report also discusses about how the smooth functioning of the distribution channel is ensured and who are designated with this task. Report also discusses about marketing and promotional techniques used by Nescafe, their pricing strategy. The report further discusses about physical distribution management, inventory management, storing and warehousing, transportation. Distribution costs involved, payment terms and debtor control, flow of information related to inventory, sales and payments have also been discussed. We have also focused on how communication flow takes place in between channel partners, how conflict management takes place in between the channel members. We have also focused on various aspects of demand and supply management strategies which are adopted within Nescafe. INTRODUCTION About Nestle India: Nestle is one the leading Nutrition, Health and Wellness company. It was founded in 1866 by Henri Nestle in Vevey, Switzerland, where its headquarters are still located. The company employs 2,80,000 employees and have factories and operations in almost every country in the world. Nestle sales for 2009 were CHF 108 bn. Nestle India was set up in 1961 at Moga (Punjab) was followed soon after by its second plant, set up at Choladi (Tamil Nadu), in 1967. Consequently, Nestlà © India set up factories in Nanjangud (Karnataka), in 1989, and Samalkha (Haryana), in 1993. This was succeeded by the commissioning of two more factories at Ponda and Bicholim, Goa, in 1995 and 1997 respectively. The seventh factory was set up at Pantnagar, Uttarakhand, in 2006. The 8th Factory was set up at Tahliwal, Himachal Pradesh, in 2012. The 4 branch offices in the country help facilitate the sales and marketing of its products. They are in Delhi, Mumbai, Chennai and Kolkata. The Nestlà © India head office is located in Gurgaon, Haryana. About Nescafe: Nescafe is a brand of instant coffee made by Nestle. Nescafe coffee comes in many different forms, flavors and sizes. After eight years into development, the coffee powder was first introduced on April 1st, 1938 in Switzerland. In the  United States, the Nescafe name was used on its products until the 1960s. Later, Nestlà © introduced a new brand in the US called Tasters Choice, which supplanted Nescafe for many years. Tasters Choice was also introduced into Canada at the same time, and continues to be sold as a separate product, branded as superior to Nescafe, and is higher priced. CHANNEL PARTICIPANTS AND CHANNEL STRUCTURE OF NESCAFE Channel Partners There are various channel partners involved in the distribution of Nescafe. Nestle has 8 factories in India. From these factories, Nescafe coffee passes on through several channel partners: DC (Distribution Centers): Nestlà ©s distribution centers are specialized buildings, with refrigeration and air conditioning where many Nestle products along with Nescafe are stored for distribution other channel members. It is one of the most basic parts of the order processing and fulfillment process. It can be said that these distribution centers are company owned warehouse. It is important to note that distribution centers can be of many types such: Retail Distribution Center- distributes goods to retail store Order Fulfillment Center distributes goods directly to consumers Cross-Dock facility doesnt not stock the products but distributes to other destinations Super Stockiest The Company keeps their stock with super stockiest to pass it on next channel members like wholesalers, retailers and consumers. Usually there is a separate super stockiest for every district. Wholesalers: They buy in bulk. The company usually provides them discounts on the bulk purchases. Wholesalers help the company break the bulk quantities by further selling the product to retailers in small quantities. Retailers: Retailers sell the coffee directly to consumers through retail shops. These retail shops can be traditional Kirana stores (also known as General Trade) or Supermarkets and Hypermarkets ( known as Modern Trade). E.g. Spar Hypermarket. Here it is important to note that because of the bulk purchases done by hypermarkets, the company may sell its product directly to such channel member engaged in modern trade, thereby reducing number of level of channel distribution and costs. NESTLE primarily uses two types of product channel distribution structures in order to deliver the NESCAFE COFFEE products from manufacturer to consumers. The channel structures are as follows: A B Consumers Retailer (Modern Trade) DC (Distribution Center) Consumers Retailer (General Trade) Wholesaler Cash Distributor (Super Stockiest) Manufacturer DC (Distribution Center) Manufacturer In the above diagram above, we can see that Nestle uses two kinds of channel structure to distribute Nescafe coffee to the consumers, depending on the area of operations and available resources in that area. In the structure A, we can see that from the factories, the product does to the distribution center (DC) where it is stocked for further distribution. From DC to product moves to super stockiest, who further supply it to wholesalers? From wholesalers the product moves to retailers. In structure A, these are traditional retailers having Kirana or traditional stores. Such structure is more successful in unorganized market. Nescafe coffee is then sold to end consumers through such stores, where it is put to display. In structure B, the coffee moves directly to retailers from distribution centers. From retailers the product is then sold to consumers. This structure is more successful in modern trade where retailers sell the products through supermarkets and hypermarkets in an organized retail market. Eg. Big Bazaar, Spar Hypermarket, Reliance Fresh etc. Packaging Nestles Nescafe Coffee is packaged in sealed airtight containers made out of glass/plastic and even in sealed bags of varying size and quantities which are further enclosed in cardboard boxes. However glass is the preferred choice of packaging material as according to Nestle, it is a natural material composed mainly of sand. To make their packages aesthetically appealing, the company prefers glass as any shape and size can be give to it. Further, glass packaging is tamper resistant, inert, non-porous and impermeable to chemical interactions. It also protects from degradation of the coffee by moisture and oxygen. The coffee is sold in varying quantities varying from small sachets of a few grams to pack sizes of 1Kg. http://www.designbridge.com/media/23501/nescafe_original_copycat_Carousel.jpghttp://mams.rmit.edu.au/eprcok6x99ck.jpghttp://www.yowazzup.com/coffee/images/nescafe-canned-drinks-special-edition.jpg Logistics For the logistics and transportation purposes, the companys distribution centers maintain their own fleet of commercial vehicles. Due to nature and scale of its operations, Nestlà ©s own fleet of transport vehicles helps it reduce third party costs, delays and conflicts arising out of it. However, super stockiest use third party logistics support in order to further pass on the product to the next channel partner. A third party logistics provider helps much part of the operations such as transportation, distribution and warehousing. Marketing/Promotion For marketing its Nescafe coffee brand, Nestle uses 360 degree promotional activities like heavy advertisements on Television, newspapers, internet and social media, public relation activities, vending machines in colleges, offices, departmental stores and many places such places which have high foot fall. Nestle is known to spend almost 40% of the marketing budget allotted to promote Nescafe brand on Television advertisement by roping in well known Celebrities to promote their coffee. Regular advertisements are carried out in leading national and local newspapers, magazines, to promote the existing Nescafe products, or whenever a new flavor of Nescafe coffee is launched. These advertisement focuses on the supposed superiority and uniqueness of Nescafe coffee over other brands. CHANNEL CONFLICT MANAGMENT Sales officer, Brand manager and Nutritional officers are involved in managing the channel structure. They visit the market and channel distribution partners from time to time to weed out any conflicts, and at large, to make sure the smooth functioning of the channel. Sales officer ensure that the projected sales figures are being met through various partners. He assigns territories, quotas and monitors the members of his sales team. Sales manager directly acts upon the sales figures and quotas set my executive level. Any conflicts in channel structure will generally cause disruption in sales. Sales manager will therefore interact with various channel partners on a regular basis to diagnose and resolve any conflicts as quickly as possible. Nescafes brand managers are engaged to ensure successful implementation of the promotional and marketing activities as per the objectives of the management. They analyze the sales figures, prices and guide advertising campaigns. Nescafes brand managers even contact retailers directly to promote their coffee brand. Nutritional officers meet the doctors and inform them about the products of Nestle. The conduct seminars for doctors and arrange symposiums. They ensure recommendation of Nutrition Range by Health Care Professionals through Ethical Detailing, Scientific meetings and conferences in accordance with Head Office guidelines. Nutrition officers also monitor and track any recent development in the field of Nutrition and serve as a reliable source of information. Nutritional officers are also act as a reliable source of market intelligence in their respective territories. They are usually aware of stock levels, its freshness, prices of own and competitor products. Thus using their knowledge of the market dynamics, they also help in the functioning of the distribution channel structure for Nescafe. PRICING STRATEGY Pricing is one of the four elements of the marketing mix, along with product, place and promotion. Pricing strategy is important for companies who wish to achieve success by finding the price point where they can maximize sales and profits. Companies may use a variety of pricing strategies, depending on their own unique marketing goals and objectives. Nescafe basically uses three types of pricing strategy. They are as follows Comparative pricing General way of pricing Economic pricing Comparative pricing: For formulating pricing strategy the company uses comparative pricing which is dependent on return on investments put in by the company, future growth opportunities in the market and potential expansion options. Various types of costs are also taken into consideration when formulating a pricing strategy, like distribution costs, advertisement expenses and margin on the product. General Method: what they actually used to do is they already fixes the rate of discount on a certain amount of good, like if u will purchase 10 packets of Nescafe we will give you five percent discount on the overall cost associated in buying that 10 packets Nescafe, however these rules are flexible, and actually varies from product to product, because at last the main motto is to sell the product as well as customer satisfaction. Economy Pricing: Economy pricing is a familiar pricing strategy for organizations Companies like nestle which takes a very basic, low-cost approach to marketingnothing fancy, just the bare minimum to keep prices low and attract a specific segment of the market that is very price sensitive. Physical Distribution Management Who is responsible for designing and setting up channel? There are various authorities who are responsible for designing and setting up channel. The authorities are sales head, head of field operation, marketing head, area head and sales officer. How the ware housing is managed? Is there a CF agent? The warehouse varies from product to product in Nescafe. Any distributer who wants to take the authority of warehousing the product has to satisfy certain protocols which are assigned by Nestle. Like if anyone want to take warehousing they should have own their own building. That building is called as product zone which consists of wooden racks as well as refrigerated section for storage of products. Yes, there is a CF agent in the whole process of delivering the product from manufacturer to consumer in Nescafe. Like they have RD (Regional distributor) who used to distribute the products on the small scale over a certain region of a particular city. Logistics and its cost? Logistics means having the right thing at right place at right time in a right cost also. Logistics covers three sections. Inventory management Storage and ware housing Transportation 1. Inventory Management Nescafe uses the SAP (system application and products) software, inventory management software (highly confidential) the distributer, the branch manager, the area manager, the branch head, sales officer, CEO, BOD are connected with the link .Everybody have a separate user name and password, so that anybody at any instance of time can get all the information like the total number of sales within a particular region, total inventory within the particular region, the total number of goods that are under process. This software also helps in order to keep track of current status of the products, condition of product, shortage, excess, total number of specific product etc. in Nescafe basically what they used to do is they first see the total number of sales for a particular item in last 4-5 month, and on the basis of that data they predict the future sales for the upcoming 5month and then they on an average used to stock the product in advance so that it can suffice the requirement of cons umer at any instance of time. And due to this reason the product shortage chances becomes so less approximately zero. 2. Storage and Warehousing: The warehouse varies from product to product in Nescafe. Any distributer who wants to take the authority of warehousing the product has to satisfy certain protocols which are assigned by Nestle. Like if anyone want to take warehousing they should have own their own building. That building is called as product zone which consists of wooden racks as well as refrigerated section for storage of products. http://www.pioneervending.co.uk/userimages/013-2.jpghttp://hyperspaceportfolio.files.wordpress.com/2011/10/nescafe-led-animated-poster-2.jpg 3. Transportation For transportation in Nescafe the distributer basically has their own vehicles while the super stockiest generally hire the third party logistics which taking care of transfer of goods. As an example the Nescafe in UK had hired Aceme 3p logistics services for 5 years in order to serve their product. http://www.ermewa.de/catalogue/img_bandeau/12-ermewa-nescafe.jpg Distribution cost The distribution cost of Nescafe varies with respect to the intermediaries. The company itself has to bear the distribution cost in transferring the product from manufacturer to distribution centre as well as to cash distributer. From cash distributer to wholesaler, the cash distributer has to pay the distribution cost. When product moves from wholesaler to retailer the wholesaler has to bear the distribution cost similarly in next lever the retailer has to bear the distribution cost. Payment terms and Debater control In Nescafe there is no hard and fast rule but basically they adopt three strategies for payment terms and debater control. In the first strategy when the company is giving their product to distributer/customer they have to sign a cheque that agrees to pay the money within certain days (max 10 days). While in second strategy one has to make the payments within 6 to 15 days, if its needed then they can extend the policy. In third strategy the customer can take the product by paying 5% on the spot by agreeing that they will pay the balance after selling the products. But company used this strategy very rarely. The payment term basically depends on certain factors like regularity of the customers, also the amount of quantity they are taking, past record of the customer. Communication/Information flow Inventory Data Nescafe uses the SAP(system application and products) software, inventory management software(highly confidential) the distributer, the branch manager, the area manager, the branch head, sales officer, CEO, BOD are connected with the link . Everybody have a separate user name and password, so that anybody at any instance of time can get all the informations like the total number of sales within a particular region, total inventory within the particular region, the total number of goods that are under process. This software also helps in order to keep track of current status of the products, condition of product, shortage, excess, total number of specific product etc. in Nescafe basically what they used to do is they first see the total number of sales for a particular item in last 4-5 month, and on the basis of that data they predict the future sales for the upcoming 5month and then they on an average used to stock the product in advance so that it can suffice the requirement of cons umer at any instance of time. And due to this reason the product shortage chances becomes so less approximately zero. Sales Data Sales data basically comprises of order placement, total number of sales for a particular product in particular region, what are the quantities that sold in particular region in previous times, billing order, profit for particular product or overall profit. Since we have discussed that Nescafe uses the inventory control software, in that software one block is there with the name reports. In that block one sub block is there with the name sales. By visiting that sub block we can gather all the information about sales. Payment Data It basically comprise of mode of payments like credit, cash, invoice. Same as like we gathered the sales data there is a sub block named payment options in which we will get all the information regarding the total payment for a particular region, total due, total canceled payment for particular region or overall. Critical Analysis Supply Chain Management: Supply chain management  (SCM) is the management of a network of interconnected  businesses  involved in the provision of  product and  Service packages required by the end customers in a  supply chain. Supply chain management spans all movement and storage of  raw materials work-in-process inventory, and finished goods from point of origin to point of consumption. Order Fulfilling Time The most important feature of Nescafe is that they have a very fast order fulfilling time. The average day for a particular product to be delivered from the day of order is 1-2 day. Nescafe can deliver the product on the same day in which they had got the order or on the very next day, and this variation basically depends on the transportation. Minimum Order Quantity There is no specific limitation for the minimum order quantity at Nescafe, but like others they love to take the bulk quantity order and serve them up to its best. Payment/Outstanding At Nescafe the period of payment basically depends on various factors. some of the factors like from what time you are associated with the company, you are a regular customer or a visiting type of customer, what is your total requirement, if you are an old customer then they might check your previous record in order to check that whether you are paying the payments on time or not. Generally the average payment time ranges from 6-15 days. DEMAND MANAGEMENT Nescafe uses the SAP(system application and products) software in order to keep track of current status of the products, condition of product, shortage, excess, total number of specific product etc. in Nescafe basically what they used to do is they first see the total number of sales for a particular item in last 4-5 month, and on the basis of that data they predict the future sales for the upcoming 5month and then they on an average used to stock the product in advance so that it can suffice the requirement of consumer at any instance of time. And due to this reason the product shortage chances becomes so less approximately zero. Speed of processing for complaint regarding supplies Nescafe trying to keep their trust trough all aspect of their services. Even in the case of sale if they are getting any complaint they will try to resolve it on the very same day they got that particular complaint or they will solve it within coming 24 hrs. CONCLUSION After scrapping up and intense analysis of data we reach out with important informations regarding the supply chain management of Nescafe. Our information clearly reveals that Nescafes supply chain management has both positive and negative faces. The positive aspects are like it has a very strong brand name backup of Nestle. Nescafes products are diversified in various flavors. They are making their products by keeping in mind that the products should be of nutritious values. Nescafe has a very great research and development team. In FMCG sector Nescafe is the only one company using software (highly confidential) for inventory management. They have a very strong strategy for conflict management. They are very fast in delivering products as well as taking suitable action on complaints regarding supplies. The customer can opt best payment option from companies payment terms and conditions. If we are pointing out the negatives then we can say Nescafe has no that much grip in rural areas. They are following price point portfolio system. Company always tries to emphasis the products science side than food side. RECOMANDATION It will be better for company if they reduce the price of products according to the areas they are serving. Also if they can extend the business for rural areas it will increase their profit.

Revelation Essay -- essays research papers

The creation of the earth and all that is within the earth is mysterious yet miraculous at the same time. Although there are probably hundreds of different accounts, they all seem to be different while almost identical in text. I will be comparing and contrasting between account one and account two in the book of Genesis. In the beginning, according to Genesis in the bible.   Ã‚  Ã‚  Ã‚  Ã‚  In the two creation accounts God is portrayed in two different ways. In the first account God is portrayed as an ultimate or Supreme Being that creates the world by fiat, which are divine spoken words. An example of this is found in Genesis 1:3, which says; â€Å"Then God said, â€Å"let there be light†; and there was light.† This is the fiat command that creates light in the first account of creation and demonstrates the supreme power of God. In the second Genesis account God is portrayed as a much more mortal being, a concept called anthropomorphism. In Genesis 2:7 God creates man, but it wasn’t done through fiat. It says, â€Å"Lord God formed man from the dust of the ground, and breathed into his nostrils the breath of life; and the man became a living being.† This account of God creating man is much different from the first account because God is physlically- taking part in creating man instead of using powers by way of fiat. Another instance that portrays God as more humanlike is found in Genesis 2:8 where it says God â€Å"planted† the garden in Eden. The use of the word â€Å"plan...

Deltoid Intramuscular Injection and Obesity Essay

Deltoid Intramuscular Injection and Obesity Introduction   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   According the World Health Organizations and Centers for Disease Control and prevention in United States, approximately one –third of adults are considered obese. This has raised the no of intramuscular injections with approximate rate of 16 billion per year. Despite complex skills in administering, IM injections into deltoid muscle for administering the vaccine is best considered. IM injections is injection in which the needle pierces the muscle at least by 5mm, Zayback (2007).This has raised a great concern to the health sector whether the standard needle of 25-38 mm used, is able to deposit the medication to the muscle of obese individual. For the last six years, this has pushed researchers to address the issue of IM needle length in obesity. Further, the research based its findings reached conclusion 1.5 inches needle is the best as opposed to 1-inch needle. Further, it was discovered that there is no commonly accepted method if IM injection for a person with high BMI (Plotkin, 2008). Implication on leadership and management   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The procedure for administering the vaccine by use of IM injections in obese individuals has not been an easy go to the leadership and management of health care in United States. With increased number of patients, the cases of incapability of vaccine causing a reaction(reactogenicity),wrong vaccine injection techniques and incorrect needle length used for IM injection in obese individuals has been of major concern. According to World Health Organization, the concerns have been associated to patient’s discomforts and increased cases of risks. It is therefore imperative to the leadership of medical-surgical nurses find an appropriate solution to the above raised concerns.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Also according to WHO (2009), administration of IM injection has for long been a complex challenge .Perhaps it has been found that the nurses when giving IM injections, use techniques that are little more ritualistic procedure but based on tradition ,which is passed from one nurse to another, generation to another. It is in great concern it has been addressed to the management and the leadership .This is because the skills not only requires dexterity in manipulating needle and syringe, but also knowledge in deciding the appropriate needle, syringe type and appropriate location of the injection ( Coco man & Murray 2008).   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Following this, timely reaction from management and leadership of health care in U.S is of great essence. This is because wrong IM injection technique and incorrect needle length can result to complications such, as are muscle fibrosis, abscess, gangrene, nerve injury and contracture. On the other side, unsafe injection technique may result in many of infections, such as HIV (6-8) and hepatitis B and C. According to Cocoman & Murray (2008), Detroid IM injection has resulted to permanent disability and in some cases to legal actions due to inappropriate injection techniques. In additional, this has problems to health care management in imparting proper knowledge to its nurses despite continued iatrogenic complications. Implications of issues for nursing practice   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Based from the questions, concerns, statistics and issues raised, there has been increased awareness to the nurses’ and other health care professionals carry out the appropriate techniques of intramuscular injections, appropriate vaccine and identification of appropriate needle length for injection in obese patients.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Following the effects of injecting vaccine into the subcutaneous tissue, complications such as granulomas and abscesses, injecting the vaccine into the deltoid muscle was more recommended .Further (Walters & Furyk, 2010) describes that although Obese patients still receive the injections into subcutaneous tissue there are more harm. This is because there is slower rate of absorption and medication efficiency can be compromised, resulting to vaccine failure.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   In determining the correct needle length, for the past six years the research based on issues of intramuscular needle –length in obesity begun. A research by Zaybak and colleagues (2007) was conducted to measure SCT in ventrogluteal and dorsogluteal sites to determine the optimum injections. In determining the optimum injection for IM injections, Weight was the key factor to the research whereby the BMI for extremely obese was greater than 35, for obese 30-30.5 and for overweight the BIM ranged 25 -29.9 in adults. Following the research, 16mm long needle in adolescents less than 60kg is recommended. It is acceptable for those adults weighing 60-70 kg when using flattened technique or bunch. However, it was agreed 1.5 inches needle to use as standard in Detroid IM injection of vaccine in obese patients. To the question of common method of Detroid IM injection, it was discovered that there is no commonly accepted method of IM injectio n for a person with high BMI. Strengthening of nursing practice   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   From above review, there are many discrepancies in the practice of IM administration. There is because there is no standard method of detroid IM injection and needle length as. This has further created gaps in nursing education as well as the nursing practice (Cook, 2006).There is therefore need to apply the above currently evidence –based research guideline to harmonize the practice and the nursing education in United states. References Cook, I.F., Williamson, M., & Pond, D. (2006).Definition of needle length required for intramuscular deltoid injection in elderlyadults: An ultrasonographic study.Voccine, 24(7), 937-940. Cocoman, A., & Murray, J. (2008). Intramuscularinjections: A review of bestpractice for mental liealtii nurses.Journalof Psychiatric & Mental Health Nursing,/ 5(5), 424-434. Zaybak.A., Gà ¼nes,Y.,Tamsel, S., Khorshid, L, &Eser, I. (2007). Does obesity prevent theneedle from reaching muscle in intramuscular injections? journal ofAdvanced Nursing, 58(6), 552-556 Plotkin, S., Orenstein, W, & Offit, P (2008).Vaccines (5* ed.). Philadelphia: SaundersElsevier. Source document

Test Tube Thunderstorm Chemistry Demonstration

Test Tube Thunderstorm Chemistry Demonstration You can react chemicals to produce what looks like a thunderstorm in a test tube. This is a spectacular chemistry demonstration that is suitable for chemistry class or lab. Safety You must be careful with this demonstration and keep any students away from the setup. It involves corrosive acid, flammable alcohol or acetone, and a slight chance of glassware shattering as a result of the vigorous chemical reaction. The test tube thunderstorm demonstration should only be performed by qualified individuals, wearing full protective gear and using proper safety precautions. Materials 95% alcohol (any type) or acetonesulfuric acidpotassium permanganateglass pipettetest tube Perform the Demonstration Wear gloves, a face shield, and protective clothing. Pour some alcohol or acetone into a test tube.Use a glass pipette to introduce a layer of sulfuric acid below the alcohol or acetone. Avoid any mixing of the two liquids, since the demonstration wont work if too much mixing occurs. Do not handle the test tube beyond this point.Drop a few crystals of potassium permanganate into the test tube.Turn out the lights. The sulfuric acid and the permanganate react to form manganese heptoxide, which explodes when it comes into contact with the alcohol or acetone. The reaction looks a bit like a thunderstorm in a test tube.When the demonstration is concluded, inactivate the reaction by using metal tongs to place the test tube into a large container of water. Be very careful! There is a chance the test tube could shatter.

Influence of Changes in Exchange Rate on Imports and Exports

Influence of Changes in Exchange Rate on Imports and Exports Introduction The exchange rate refers to the â€Å"rate at which one nation’s currency can be exchanged for that of another† (Beardshaw 45). There are two types of exchange rates namely; the fixed exchange rate and the floating exchange rate. Under the floating exchange rate, the demand and supply forces determine the rate at which the currency of a country is exchanged with that of another country. The government usually determines the rate at which its currency can be exchanged with a foreign currency in the case of a fixed exchange rate.Advertising We will write a custom essay sample on Influence of Changes in Exchange Rate on Imports and Exports specifically for you for only $16.05 $11/page Learn More The factors that cause changes in exchange rate include â€Å"inflation, balance of trade and the real interest rate† (Beardshaw 46). The changes in exchange rate have both positive and negative impacts on economic activities. It partic ularly influences the level of import and export in a country. This paper will focus on the impact of changes in exchange rate on imports and exports in an international business. Impacts on Exports and Imports Prices of Commodities Changes in the exchange rate can result into either an increase or a decrease in the prices of imports and exports. In the context of exports, an appreciation of the local currency will result into an increase in the prices of the exports in the international market. This is because when the currency of the exporting country becomes stronger than that of the importing country, traders in the later purchase the currency of the former at a high rate in order to pay for the goods (Case and Fair 67). This means that the traders will be spending more on the goods even if their actual prices have not been increased. Thus an appreciation of the domestic currency will make the business’s products to be more expensive in the foreign market. However, a depr eciation of the domestic currency will make the exports cheaper (Lipsey and Hurbury 23). This is due to the fact that the customers will purchase the local currency at a low rate in order to pay for the products. An appreciation of the domestic currency will make the imported goods to be cheap. This is because the business will purchase the currency of the country from which the goods have been imported at a low rate (Thurbecke 113). This means that importers will spend less money to import the goods and this translates into low prices. On the other hand, a depreciation of the domestic currency will force the business to purchase the foreign currency at a high rate. Thus it will spend more in importing the goods and this translates into higher prices (Kwack 61). Demand and Supply The demand for the export products will be high if the domestic currency depreciates. This is due to the fact that the customers in the export market will spend less to import the goods and this translates into low prices. The low prices will increase the demand and supply of the export products (Mallick and Marques 770).Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More However, the demand for the export products will reduce if the local currency appreciates. This is due to the fact that such appreciation will translate into high prices as customers spend more in importing the goods. This leads to low demand and supply of the export products. The demand for imports will be low if the domestic currency becomes weak (Amor 113). This is because the business will spend more to import the goods as the cost of purchasing the foreign currency in order to pay for the goods increases. This leads to high prices and this translates into low demand and supply. However, the demand for imports will be high if the local currency appreciates since the favorable exchange rate will lower the costs of importing the goods. Marketing The marketing of both imports and exports is directly influenced by changes in the exchange rate. It particularly influences the marketing mix and segmentation process in regard to the exports and imports (Blinder and Baumol 134). A depreciation of the domestic currency results into high demand for the export products. Thus the business will focus on increasing distribution and identifying new segments in order to increase sales. However, an appreciation of domestic currency lowers the demand for the export products. Thus the focus of marketing will shift to promotion and segmentation. Promotional activities will be emphasized in order to increase sales. Besides, only products whose demands are not price elastic will be distributed. As the demand for the imports increases due to the appreciation of the domestic currency, the marketing team will focus on increasing distribution and identifying new segments in order to increase sales (Ito, Isard and Bayo umi 23). However, as the demand for the imports reduces due to the depreciation of the domestic currency, the marketing team will focus on promotion and selective distribution in order to increase the sales of the imported goods. Sources of the Imports Changes in exchange rate will influence the diversification of the sources of import goods. In order to avoid the risks associated with fluctuations in exchange rate, businesses usually diversify their sources of import goods. This means that they import the same product from different countries. They will always import from countries whose currencies are depreciating or are weaker as compared to that of their country (Thorbecke 509). This enables them to take advantage of the low cost of purchasing the foreign currency in order to pay for the imports. This leads to low prices and high demand for the products.Advertising We will write a custom essay sample on Influence of Changes in Exchange Rate on Imports and Exports specifi cally for you for only $16.05 $11/page Learn More Currency Selection and Payment Contracts Since countries use different currencies, an export and import business must decide its preferred currency for accepting payments or making payments. As discussed above, the fluctuations in the exchange rate has a direct impact on prices and demand for both imports and exports. Thus in order to avoid or to reduce the risks associated with exchange rate flactuations, international businesses always focus on sharing such risks with their partners (Blinder and Baumol 79). This has always been done by choosing a currency that is relatively stable. The selected currency must be accepted by both the exporter and the importer. For example, the US dollar is commonly used in international trade due to its stability. Thus changes in exchange rate determines the currency for paying for the imports and exports. Returns on Exports and Imports The changes in exchange rate have a direct imp act on the profits that accrue from both import and export trade. A depreciation of the local currency will increase the demand for the export goods. This leads to high sales and an increase in profit margins (Case and Fair 75). However, an appreciation of the local currency leads to a reduction in sales and profit margins as the products become more expensive in the export market. In the case of imports, an appreciation of the local currency leads to high demand and this translates into high sales and profits. However, the depreciation of the local currency will negatively affect sales as prices increase due to the high cost of purchasing foreign currency in order to pay for the imports. As the sales reduce, the profits also reduce. Product Development A stable exchange rate will enable the business to sustain the desired level of revenue. This is because the demand and supply as well as sales will not be adversely affected by the fluctuations in exchange rate as discussed above. T hus the company will be able to obtain the funds that are needed for research and development in order to produce the goods and services that meet the expectations of the customers. However, fluctuations in the exchange rate undermine the financial performance of an import and export business (Kwack 62). This forces international companies to direct a high percentage of their revenue towards the implementation of strategies that enables them to survive the negative effects of exchange rate fluctuations. Such strategies include sales campaign and sharing the costs of importation or exportation with the customers. Consequently, very little funds are allocated for research and development and this undermines the process of product development.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Conclusion The above discussion shows that the exchange rate has a great influence on import and export businesses. The businesses gain when the exchange rate is favorable as discussed above. However, they lose when the exchange rate is unfavorable. The undesired effects of changes in exchange rate on exports and imports include increase in prices and reduction in demand and profit margins (Case and Fair 58). Changes in the exchange rate can also lead to a reduction in prices and an increase in demand and profits. Thus it is upon the business owners to understand the dynamics of the exchange rate in the market in order to avoid the risks associated with exchange rate fluctuations. Amor, Thouraya. Financial integration and real exchange rate volatility. International Journal of Business and Management 3 (2007): 112-115. Beardshaw, John. Economics. New Delhi: Pearson Education, 2001. Print. Blinder, Alan and William Baumol. Economics: principles and policy. New York: Cengage, 2009. P rint. Case, Karl and Ray Fair. Principles of economics. New York: Prentice Hall, 2004. Print. Ito, Takatoshi, Peter Isard and Tumim Bayoumi. Exchange rate movements and their impact on trade and investment . Washington DC: International Monetary Fund, 1996. Print. Kwack, Sung. Exchange rate and monetory regime options for regional cooperation. Journal of the Japanese and International Economics 16 (2008): 503-517. Lipsey, Richard and Colin Hurbury. First principles of economics . London: Oxford University Press, 1992. Print. Mallick, Suschanta and Helena Marques. Passthrough of exchange rate and tariffs into prices of India. Review of International Economics 16 (2008): 765-782. Thorbecke, Willem. Global imbalances, triangular trading patterns and the yen/dollar exchange rate. Journal of the Japanese and International Economics 22 (2008): 503-517. Thurbecke, Willem. Investigating the effects of exchange rate chnages on Chinas processed exports. Journal of Japanese and International E conomics 10 (2010): 101-126.

Westfarmers Curragh Pty Ltd Assignment Example | Topics and Well Written Essays - 1250 words

Westfarmers Curragh Pty Ltd - Assignment Example Curragh falls under the category of largest independent producer of coal mines and Curragh mission is to deliver and create sustained, outstanding growth for shareholders value and return by way of delivering quality products to the customers as per their requirements. The key mining products of Curragh includes hard coking coal, steam coal and PCI coal (Curragh, 2011). Advantage for Curragh to enter the Chinese coal market would be since China is the second largest importer of coal and it imports mostly from Australia and Indonesia making room for Curragh to enter China and export coal reserve. Several factors have contributed to China’s sudden entrance in the coal import sector such as environmental as well as safety consideration, transportation bottleneck, and economic factors along with concerns with respect to depleting coal reserve. Based on the above several factors it would wise to export coal to china Analysis of external environment External environment includes industry factor and the general environmental factors and starts with an analysis of the political factors, economic, social, technological factors, environmental and legal factors which are also referred to as PESTEL analysis. Thus if Westfarmers Curragh l wants to entry China it should analyze the external environment of China through PESTEL. ... Safety with coal production has been significant focus for the Chinese government and as result deaths per million tons of coal produced has decreased by 85% in between 2000 and 2009 (World Coal Association, 2011). China has been suffering from imbalance transportation which means coal needs to be transported through long distance through roads, railways and water bodies. Thus from the perspective of the Chinese government import of coal has been encouraged and can be regarded as a way to ease the deteriorating bottleneck of transportation in China. Curragh coal can benefit through this policy as it will get assistance from the Chinese government to export coal in China which in return will enhance the brand name and value of Westfarmers, it can avail to all the rights and regulation and enter the Chinese market. Economical Coal imports in China accounts for more than half of the global production and contributes to the economy of China. Over the years China has become the second lar gest coal reserve globally next to US. China is the largest energy consumer and the economy which has grown at an average rate of 10% is the key driver in consumption of energy both in China and also on international grounds. China GDP grew to 7.8% as estimated in the first half of 2012 (EIA, 2012). China is said to be the biggest producer of coal for the past 2000 years and is the third largest coal reserves with 114billion tones and in any economic environment would make it to the top coal producer. In an environment of rapid growth of economy, China production of coal has grown up drastically and in between 2000 and 2010 the coal production has tripled (World Coal Association, 2011). Exporting Curragh Coal in China will also boost

Gas Pipeline Essay Example | Topics and Well Written Essays - 1000 words

Gas Pipeline - Essay Example The ability of suppliers to supply gas have been drastically reduced resulted in a shift in the supply curve to the left as can be seen on graph 2 below. This resulted in the equilibrium point moving left from E1 to a new point E2 on the graph on the intersection point of the supply and demand curves . Another fact that can be derived from the above graph is that a small shift in the supply of gas will result in a larger shift in price. The reason for this is that gas is not a luxury but a essential product for most people and businesses, and this is indicated on the graph by a much steeper demand curve than normal, meaning the demand curve for gas is less elastic. Even so a increase in price will result in a marginal decrease in demand as people restrict driving for essential reasons only, such as going to work to conserve gas. It would not have resulted in a shift of the demand curve as there was nothing really forcing a increase or decrease in the demand for gas, except the increase in price. Additionally the drop in gas supply and the resulting increase in price would also have effected many other market contributors. The distribution of products onto the market is done by a transport system, and a large part of this system is fueled by gas, such as trucks and delivery vans. The suppliers of these products would have paid more to be able to distribute their products to shops and malls, so the price of these commodities would have also gone up, negatively influencing their demand. The above can be seen as the behavior of a open market influenced by buyers and sellers naturally driving the market towards a equilibrium. When prices are above the equilibrium point and there is a surplus of goods, it will cause market prices to fall (Mankiw, Gregory, 2004). In the above case study we had a price below the equilibrium point as there was a decrease in supply, causing market prices to rise. Cited Page 1. Pump Price Graphs. ArizonaGasPrices.com. 2003 - 2006. Accessed 29 March 2006. www.ArizonaGasPrices.com/retail_price_chart.aspx 2. Arizona Gas Prices. Gas Price Comparisons. Accessed 29 March 2006 http://www.arizonagasprices.com/ 3. Mankiw, Gregory. Principles of Economics.