Documente Academic
Documente Profesional
Documente Cultură
(Section 2)
Final
Report
Topic:
Executive Summary
The report contains a detailed research of the country risk analysis of Philippines and the
feasibility of Kazi & Kazi Tea entering the Philippines market. From the research conducted, it
was found that there are indeed underlying political and legal risks of entering the nation. It takes
around a month on average to get a business started and there many bureaucratic obstacles
during startup. The elections are to be held on May, 2016, which is why business may be best
served if started after the elections take place. The Philippines is also ranked high in the
corruption index and has a weak judicial system.
The economy is showing positive signs. Unemployment has reduced and consumer spending is
rising along with their disposable incomes. A very important figure is that 45% of total
household spending is mainly done on food and beverages. This gives a positive vibe for KK tea
as it is looking to sell beverage in the foreign market. Consumers are also looking for healthy
alternatives and growth in organic tea market has risen 2% in the past year. There arent many
competitors in the organic tea industry but Lipton has a 32% market share. The Philippine people
have unique business cultures and are more relationship oriented people.
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The market entry strategy suggested is export, as this would not require too much investment.
The products manufactured would be sold directly to distributors and retailers in the Philippine
market. Promotional activities could be done through media like print advertising, online
promotion, public relations, etc. Any other form of entry would be highly risky due to the weak
legal framework. More intermediaries will slow down the process. The major challenge for KK
would be the higher demand for coffee against tea. However, due to the demand for chilled
drinks, the organic tea bags may actually be successful as Organic Ice Tea.
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Table of Contents
Topic
Page Number
Introduction
Political Analysis
Economic Analysis
Market Prospects
16
Cultural Analysis
22
25
Key Challenges
27
Conclusion
27
References
28
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Introduction
Kazi & Kazi Tea Estate Ltd. (KKTE) is a private limited company and a sister concern of
Jemcon Group, and the only organic garden located in Bangladesh. It situated at the district of
Panchagarh. Around 2,300 workers, mostly women, are employed at the huge Kazi and Kazi Tea
Estate (KKTE) at Tetulia. Kazi & Kazi Tea Estate Ltd. is the only internationally-certified
organic tea grower in Bangladesh and is inspired to produce high-quality organic teas to meet the
growing demands of both local and foreign markets. (Islam, 2012)
Company Analysis:
Kazi Kazi Tea products are currently available internationally under the Teatulia brand, mainly in
Singapore, USA and UK. Teatulia has become the first branded Bangladeshi organic tea for
international export. . The company has exported around 30,000 kg tea in the year 2008. The
prices of the brands are fixed at Tk 88 for 40 tea bags per packet (Daily Star, 2009)
Product Offerings:
KK tea has a range of organic tea flavors including black tea, jasmine green tea, ginger tea, tulsi
tea and green tea.
KK also has different packages with 40 single-flavored bags in each pack. They also introduced
a Medley pack which has an assortment of the different flavors.
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Weaknesses
Export certified
Global presence
Opportunities
Threats
New flavors
Online promotions
New entrants
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Philippines suffer from widespread corruption the corruption perception index showed that the
situation in the country has improved slightly but still remained serious. It ranked 85 in the list
out of 175 countries. (BMI Research, 2015)
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Philippine Peso
1.00 PHP =
US Dollar
0.022 USD
Bangladeshi Taka
1.69 BDT
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public school. In the schools, English is the main language of instruction. The literacy rate of the
adult population is about 94%. (Asianinfo, 2010)
Labor Force Participation Rate in Philippines remained unchanged at 63.30 percent in the first
quarter of 2016 staying constant at 63.30 percent in the fourth quarter of 2015. (Trading
economics, 2016)
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The negative growth of the external trade was due to the decrease of both inward and outward
trading of goods. Total imports decelerated by 2.3 percent.
Top Exports: Aggregate revenue of the top ten exports in 2015 amounted to $23.902 billion or
82.7 percent of total exports receipts. It decreased by 2.8 percent from $24.598 billion reported
in the same period of 2014 (Philippine Government Census, 2015)
The top five exports were Electric products, other manufactures, Machinery and Transport,
Furniture, and chemicals.
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Top Imports: The top ten imports for the first semester of 2015 accounted for 73.1 percent or
$22.467 billion of the total imports. It registered a negative growth of 4.8 percent from $23.590
billion during the first semester of 2014. (Philippine Government Census, 2015)
The top five imports were recorded as electronics, Mineral Fuels, Transport equipment,
Industrial Machinery, and other food and live animals.
Major Trading Partners: Philippines major exports were to Japan as of 21.4 % followed by
USA (15.3%) and China (10.6%). (Philippine Government Census, 2015)
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On the other hand, their majority of imports came from China (15%), USA (10.8%) then
followed by Japan (8.4%). (Philippine Government Census, 2015)
Enforcement of Contracts -
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Time and cost are tracked following the evolution of a sale of goods dispute, from the moment
the plaintiff files the lawsuit until actual payment. The Quality of Judicial Processes Index tracks
the availability of a series of good practices that promote quality and efficiency in the
commercial court system. (Doing Business, 2016)
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b. Organic Tea: The overall market for organic tea also looked strong. Health conscious
customers brought a rise in demand for organic tea flavors. Black tea, Green tea, and
other organic tea flavors with nutritional benefits that improve health have given a boost
for the market potential (The Freeman, 2015).The annual growth for organic tea flavors
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was at 2% for 2015 and is expected to remain constant in the following year. (Food
Editorial, 2016)
c. Milk Tea: Philippines milk tea shops have been doing good business in recent years.
Currently, there are a many tea shops around the nation; however demand does not seem
to be lessening. In fact, the small scale shops can are actually making most of the profits
by selling around 200-300 sold drinks per day on average. For example PHNI (Popular
Household Names Inc.), which is a popular supplier of bubble tea products in the country,
has also been enjoying a profitable venture (Valdez, 2014)
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Supermarkets
Shopping Centers
Example Robinsons
Local shops
Example 7 Eleven
Drugstores
Hypermarkets
Example Mercury
Drug
Hypermarket
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Most of the companies use the services of agents, distributors, and intermediaries for distribution
that are mainly located in Manila. Starting business in the Philippines requires going through a
broad network of subcontractors. Thus, the best way to enter the Philippine retail market is to
obtain a local partner. It can be a franchisee, distributor or an equity partner. Completely foreignowned retail businesses are also allowed under certain conditions. The business partnership
model can solve local administrative issues, build its brand and sell in the Philippines. The local
partner can also help in finding reliable distribution channels, formulate promotional strategies
for the local market and manage the product mix based on areas and seasons. (Santander Trade
Portal, 2016)
KK tea should look to enter the Philippines market using local distribution channels like
supermarkets, groceries or local shops mainly. As tea is a household product that is consumed on
a daily basis in most cases, it needs to have a wide reach on the target customer base.
Advertising Media
Brochures
TV Commercials
Flyers
Radio broadcasts
Digital Marketing
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KK tea can make use of a combination of these traditional methods along with supplementary
marketing techniques. These are needed for customer engagement, special promotions and
increasing online presence. (NetRev Marketing, 2015) Digital marketing methods are also
important media channels needed to be used to tap into the Philippines market. The table below
shows the methods best fit for KK Teas promotional campaigns.
Digital Marketing Methods
Email Marketing
Content Marketing
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The Philippines is going through a rapidly growing number of dual-income families. The
increasing level of income is forcing changes in consumer preferences and the want for a greater
choice of food products and beverages. Especially, young workers and affluent consumers are
ever more interested in high-quality foreign F&B (food and beverage) brands. Filipino customers
are open to new kinds of cuisines, food products and beverages. Due to the improving living
standards, health-consciousness is also on the rise. Most Filipino consumers are now demanding
healthier foods, like sugar-free and organic products. (HKTDC Research, 2014)
107 million
21.2 million
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2 million
KK tea will be targeting the population aged 15 and above. Most of the tea drinkers in the nation
fall under this age group. However, the whole population will not be drinking tea as they have
substitutes like Coffee. Again, the remaining segment can again be broken into people who
prefer Milk tea, Organic tea and Ready-to-drink tea.
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Ethnic group: The largest ethnic group in Philippines which is 28.1% of the country is the
Tagalog which is an Austronesian language. 13.1% belongs to Cebuano, Ilocano took 9% while
Bisaya with 7.6%. The rest is divided among Hiligaynon, Bikol and Waray with 7.5%, 6%, and
3.4% respectively. (Ethnic Groups of the Philippines)
Languages: The vast majority of Philippine people language is Filipino and English. Some
Philippine citizens still think of themselves first as British, French, Danish, Italian, etc., and are
not wary of giving up national culture. (Ethnologue)
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4.3 Major differences in beliefs, values, customs, and behaviors, role of family
The Filipino people are very rich in customs and traditions. There is a very strong connection
among the family members. They easily convert their business relationships into personal
relationships. However the foreign visitors are treated with the utmost respect. They prefer to
settle down in one place and be near family. The society is driven more by competition and
success. Philippines is described to be the nation of strong women. They are involved in every
sector of the country say it business or government or any agencies etc. (Gazi, Sarker, &
Hossain, 2015)
Business Meetings:
Plans, date and related materials must be convey to the participants well ahead of
a meeting.
New comers are treated absolutely formally.
(Hamlett, C.)
Time and Decision makings:
Time is strictly maintained, late arrivals are considered rude.
Elders are to speak first whether by organisation hierarchy-wise or age-wise.
(Center for Intercultural learning, 2012)
Conversations:
Asking about social activities like marital status, childrens name is considered to
be an act of fostering warm relationship rather than considering rude.
Raising voice, anger, deconstructive debates are considered shameful.
(Hamlett, C.)
Business relationships:
Its customary to offer business cards in initial personal introduction.
After receiving a card sparing a few moments on it is a good gesture.
Address individuals by full names in the initial meetings.
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Power Distance: Philippines scored 94 which indicate that there is a really high emphasis
dominated.
Uncertainty Avoidance: Philippines scored 44 which indicate that a bit more people have
the ability to speak the unwanted truth than the people who do not.
(Geert Hofstede, 2015)
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for manufacturing and producing it in Philippines. Exporting can be profitable for businesses of
all sizes as it usually leads to a faster growth in sales. Direct export requires the use of
intermediaries which can be less of a hassle. A network of retail distributors need to be used to
place the product in the market. By exporting, KK tea will be able to diversify their portfolio.
5.2 Distribution
The KK products will be distributed in major groceries and retail shopsall over Philippines. KK
will enter the market with various existing tea flavors in Philippines and will also introduce some
new extra flavors for the local market, according to their taste and preference. Many
supermarkets and retail stores in Philippines have encouraged and established definite sections
selling organic and natural products where KK can have a good share. The supermarkets,
hypermarkets, grocery stores and retail stores are the major distributer and seller of packages
goods where half of these goods are from credible and reliable importers.
5.3 Food Market and Campaigns
Any food company will be willing to invest in the Philippine market due to its competitive and
open nature, basically welcoming foreign goods and retailers. Some well renowned and famous
packaged food brands such as Unilever, Kraftand Nestl have been in Philippines for a long time.
They have used a more family oriented marketing strategy to capture the market. They focused
more the need for family, relationships and togetherness and encouraging the young ones to take
part in the family get-together. Another advantageous move could be to concentrate on health
benefits. AS KK tea has tons of health benefits it would be easy for us to portray the benefits. All
together the country is racing its way towards urbanization leading to a fast development of the
food and beverage market.
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way of serving, and mostly because of its popularity increasing gradually, it expanded in 2014,
with the opening of a branch at SM Megamall in Philippines. Dimsum quickly become an
intriguing adventure worldwide,and the fascination of doing something like this is always
something Filipinos love to do.The market entry of such a wholesale name was through opening
a branch of it in the SM Megamall since then it has increased its popularity amongst Filipinos.
Lipton: Unilevers very own brand, Lipton, has maintained the lead in tea value sales with a
whooping market share of 32% in 2015. Lipton is one of the worlds greatest refreshment brands.
It is the worlds best selling tea brand ,and It has since been established for 126 years as off
now.It is now proudly available in more than 100 countries .With time ,comes the need for
different taste, Lipton now offers a different variety of tea-based drinks-from leaf tea to tea bags.
Liptons market entry to Philippines through exporting was a blessing for the tea lovers,as before
they had joined, there werent many of the charts brands. With Unilever leading by a mile, its
product portfolio spans a variety of tea products such as instant tea, fruit, and herbal tea has been
a USP for them in the Philippine market.
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Conclusion
Thus, entering Philippines may prove to be a risky bet for KK tea in terms of political and legal
risk factors as well as the overwhelming demand for coffee that exists in the market. However,
entering the Philippines market after the elections may lower any political risks involved. Many
other Asian food and beverage businesses have located in Philippines in recent years and are
enjoying success. Given, that Philippine consumers are now more health conscious and require
chilled drinks due to the warm climate, KK tea may find a reasonable market for their organic tea
products.
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