Circle –E – Candles Export Business Plan

Circle –E – Candles Export Business Plan

Company Profile

                             Circle E Candle started making fragrance and textured based candles in 1994. Circle E Candles expertise in unique color and textured candles for special occasions by using pigments, oils and waxes. Circle E Candle is headquartered in Fredericksburg, from where it operates its business all across America.

The company operation is built around four core values – Speedy Delivery, Quality Products, Long Lasting Fragrance and Emphasis on Family Values (Circle E Candle Official Website 2006).

Speedy Delivery

                             The Company prides itself in speedy delivery of products to its customers. The company usually ships its products with in two business days through UPS.

Quality Products

                            Circle E Candles produces quality candles by innovating in new textures and designs. The candles are handcrafted and immense care is taken while manufacturing them.

Long Lasting Fragrance

                             The unique selling proposition (USP) of Circle E Candles products is its long lasting fragrance. The company attributes this feature to its preparation and exact ratio of cream and wax in the candle.

Emphasis on Family Experience

                              The company believes that it is not in the business of selling candles but delivering memorable experience to its customers. According to Company’s website the company is committed to infinite care and memorable experience for its customers.

Market and Product Overview

                          At present the total market size of candles is around $7 billion (Vinayak, 2006) and it is growing at the rate of 30 percent per annum.

The production of the candle is highly skill based and labor oriented work. It involves the mixture of fragrance and wax to deliver the correct result.

Other than fragrance, candle design is the single most influencing feature of the product. People use creatively designed candles in their home décor, churches, aromatherapy etc.

The median of company’s products are around 20 dollars.

Export Strategy

  After being relatively successful in America the company wants to export its products to foreign market. It has its eye on European Market, Japanese Market, Indian and Chinese markets.

After thorough research the company has decided upon India at first stage of its expansion, once established in India the company will look forward to make foray into European Union markets.

Why India

                             India today represents a massive economic opportunity, both as a global hub for manufacturers and as a domestic market. The Indian economy is growing at around 8% per annum and it is one of the fastest growing economies in the world along with China. The company is the largest democracy in the world with over 1 billion people and 640 million eligible voters. The median age of the country is 24 years and around 65 percent of the people are between the age group of 15 -64 years (CIA World Fact book, 2006).

The company is a secular democracy with trade related issues governed under the World Trade Agreement. The judiciary system in India is free from any political influence but has a very slow pace. At present the government is headed by Manmohan Singh, a former World Bank associate and Finance department is managed by P.Chidambaram, a Harvard Alumni.

Economic Reasons

                                       India took the liberalization path in 1991 and since then grown into a vibrant economy growing at around 8% a year. Indian Gross Domestic Product (GDP) is around $720 billion (CIA World Fact book, 2006) and in purchasing parity terms it is the forth largest economy in the world after United States, China, and Japan. The Indian economy is projected to be about 60 per cent of total US economy by 2025. The rapid growth in the country’s stock market over last two years, around 300% doesn’t belie these expectations.

Historically India is agrarian economy but it has all changed in the last decade. Today Industry and Services contributes around 81 percent to the total GDP by just employing 40 percent of the total population (CIA World Fact book, 2006). The boom in the information technology has massively helped the Indian economy to integrate with the global economy. Today India is one of the largest exporters of engineers to Silicon Valley. This group of well educated English speaking people is growing faster than their fathers’ generations and spending freely compare to earlier generations. If we look according to the wealth distribution, the top 10 percent of the people controls 35 percent of the wealth while bottom 10 percent only have 3.5 percent of the country’s total wealth (CIA World Fact book, 2006).

The interesting thing is that the only top 10 percent of the population in real numbers is around 100 million people, which exceed population of some of the big European countries.

Retail Market Structure

The Gift market all over the world depends upon the vibrant retail industry. In India the retail market is at nascent stage and only 2 percent of the total retailing industry comes under organized retailing, which is growing at 25 percent (MindBranch Market Research Report 2005) year on year basis and considered to be the next big thing in Indian economy after the Information Technology. The Indian retail industry is dominated by of small mom-pop stores and individually owned stores less than 500 square feet (MindBranch Market Research Report 2005). Due to it India has the largest number of retail outlets without having any size to gain from the economies of scale.

 Boosted by increasing income and changing lifestyles the organized retail industry projected to be around 4 percent of the total market.

Three of the major players in Indian Retail Sector

At present the direct entry into organized retail is not permitted, a foreign company must have a domestic partner and it can only hold maximum of 26 percent in the venture.

Pantaloons

Pantaloons is the biggest retail chain in the country with a sales revenue of around $300 million. It operates in both departmental store format through its chain Pantaloons and Discounter format through its chain called ‘Big Bazaar’. The discounter chains hold around 178000 SKU’s (Stock Keeping Units) and average footfall on weekend is around 12000 people (S.D. Naik 2005).

Shopper Stop

Shopper Stop is a home grown departmental store retail chain with over 15 stores and on an average 35000 square feet retailing area per square. It is present in almost all the major cities of India provides a lot of opportunities for shop-in-shop stores. The average walk-ins in these stores on a weekend is around 8000 people. The sales revenue of the company is around $100 million (S.D. Naik 2005).

LifeStyle

LifeStyle is the chain backed by Dubai based Indians and it is of almost the same size that of Shopper Stop. The company has 12 stores with over 50000 square feet per store. It is also a departmental store and has a revenue of around $120 million (S.D. Naik 2005).

Gift Industry Structure

                                         Gifting industry is growing steadily with the rising income but the exact number is hard to derive as most of the industry is unorganized and to there is no official record for total candle market in India.

Cultural Factors and How They will Drive Growth of Indian Gifting Industry

One of the important reasons why we choose Indian market is cultural reason. India large population consists of people following Hindu religion and the biggest festival in India equivalent to Christmas in west is ‘Diwali – Festival of Lights’.

On Diwali people lit up candles and lights at home as a symbol of victory of light over darkness. So culturally it is very natural for Indians to purchase and use candles.

Secondly as the young generation is getting into jobs earlier and earning more than the previous generation, the traditional family system is breaking up and more and more young people prefer to live in their own homes like here in America. This increasing demand in the housing sector will boost the demand for candles used as décor in the house.

Thirdly increasing income is fast changing the lifestyle of people and most beneficiary of it over the last few years are the hotels and dining industry. With increasing outside eating will lead to booming restaurant industry, which will further fuel the candle sales in the country.

Above all India is a very formal and close knit society with very few options of gifts at present; Creative Candles will add another dimension to the gifting industry.

Entry Strategy in the Country

Though the entry into organized retail chain is restricted, entry into product brand based stores is allowed. Circle E Candles can enter the Indian market through its own Shop-in-Shop concept in the major retail chains. Two of the factors which will help the company in getting Shop-in-Shop contracts with these established players are that at present they don’t really have enough quality in this section of the stores. One can get the best perfumes, cosmetics and jewelry in India but not creative gift like fragrance based candles. Secondly the gifting industry in India though is large but not very diverse so new ways of things people using for centuries will be highly appreciated.

The company can also enter through its standalone stores; it can open standalone stores to provide wide range to its products. The Company won’t face huge amount of competition as not many domestic producers are providing the quality of products people expects.

Promotion

The attitude towards the American products in the country is positive and with huge footfalls an in-store advertisement will be sure shot way to success. Other forms of promotion which a company can employ are –

Advertise in the cultural magazines and employment magazines.
Advertising on Internet –   To advertise on internet efficiently the company will focus on two core ways (Heather Conary, 2006) -.
Traditional Banner advertising with other websites. Its one of the earliest form of advertising on internet displaying a fixed message on particular spots. The company will try to advertise on all the cultural websites, gifting websites etc.
Pay per click contextual advertising – The Company will target customers through contextual banner advertising (Keyword specific advertising) on various search engines and relevant sites.
Direct Mailing – The potential customers will be sent direct mail regarding the products of the company, with information explaining how they can get the customized candle gifts for their dream homes.

Bibliography

A.J. Vinayak (2006).   Indian candles light up US homes. Retrieved August 15, 2006, from http://www.thehindubusinessline.com/2006/07/17/stories/2006071703291500.htm

 Circle E Candle Official Website(2006).   Circle E Candle. Retrieved August 15, 2006, from http://www.circleecandles.com/Catalog/ProdDetail.asp?productid=71&plist=_4

CIA World Fact book (2006) . Retrieved August 15, 2006, from https://www.odci.gov/cia/publications/factbook/geos/in.html

 Economy Watch (2006).   Indian Economy Overview. Retrieved August 15, 2006, from http://www.economywatch.com/indianeconomy/indian-economy-overview.html

Heather Conary, 2006.  Top 7 Trends in Online Ad Design  [online], http://www.sitepoint.com/article/top-trends-online-ad-design [accessed August 11, 2006]

 Karishma Vaswani  (2006).  Growth gives hope to India’s poor. Retrieved August 15, 2006, from http://news.bbc.co.uk/2/hi/business/4918582.stm

MindBranch Market Research Report (2005).   Indian Organized Retail Industry (2005-2007). Retrieved August 15, 2006, from http://www.mindbranch.com/listing/product/R459-281.html

  Sangita Joshi (2004).    The issue of retail formats. Retrieved August 15, 2006, from http://www.thehindubusinessline.com/catalyst/2004/10/28/stories/2004102800180200.htm

S.D. Naik (2005). Retail boom: FDI can give the extra thrust. Retrieved August 15, 2006, from http://www.thehindubusinessline.com/2005/05/27/stories/2005052700220800.htm

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Global Business Plan for Yankee Candle Company

Mike Skittered sold his first candle to a neighbor for $1. 36, in 1969 and in 2005 Yankee Candle Company’s total sales were $601 , 180,000. Mike’s humble beginning in the family home has grown into a “wholesale customer network of 16,400 store locations, a growing base of Company owned and operated retail stores (390 located in 42 states… Direct mail catalogs, its website,… International distributors, and to a European wholesale network of approximately 2,200 store locations… ” (2006) Yankees passion for fragrance has become a profitable entity with visions of continued global expansion.

Yankee Candle Company has branded their product as long-lasting and strong in fragrance. Yankee has developed over 1 50 fragrances for their various candle products. Their product line includes Jars, votive, tarts, wax potpourri, pillars, tapers, and tea lights candles. Yankees design Is Innovative and their scents are pleasant, relaxing, and rejuvenating. Yankee Candle Company’s design department Is visionary in developing candles to accent modern d©core and fragrances that appeal to its customers.

Yankee will explore and introduce aromas that are common to the Greek culture as they expand into this new market. Yankee Candle will emulate their “passion for fragrance” and provide a wide variety of choices for its new customers in Greece. The Yankee Candle Company continues to build on the passion and creativity of Mike Skittered; driven by a mission to warm hearth and home with the fragrances of life through excellence, innovation, and passion. Yankee has been dedicated to excellence throughout their 37 year history.

A company spokesperson attributes their success to, “our vertically integrated business model, which enables us to control most every aspect of our business, from product development to manufacturing to striation to marketing and sales. This structure allows us to consistently provide high quality and innovative products… ” (2006) Yankees innovation is evident in their candles and accessory designs, which acclimate too various d©core preferences and the expanding variety of fragrances, which appeal to its customers.

Yankee Candle Company is driven by an intense passion to spread the fragrances of life around the world for all to enjoy. Their objectives. Yankee Candle Company will expand its fragrances to blend in with the cultures of new markets. Yankee will continue to develop partnerships with established Company owned retail stores as venues for their products to be sold. The candle company has already established Yankee Candle Europe with a 30,000 square foot distribution center in Bristol, England that provides Yankee products for approximately 2,200 stores.

This distribution center will be used to export Yankee products to be sold by retail stores in Greece. The Yankee Company has decided to expand their markets and head out to the Country of Greece. We will be exporting our candle line product from the United States to Greece. The product expansion into the Greek marketplace is another step awards reaching their objectives. Yankee Candle Company will expand its fragrances to blend in with the cultures of new markets. Yankee will continue to develop partnerships with established Company owned retail stores as venues for their products to be sold.

As Yankee Candle expands into new regions of the world, distribution centers will be built to service their wholesale store network. Where trade barriers, economical and political policies will allow. When expanding into new countries, Yankee Candle will establish an online shopping website to market and sell their products. Since 1994, the United States is part of the NONFAT organization between three countries. “The North American Free Trade Agreement, known usually as NONFAT, is a free trade agreement among Canada, the United States, and Mexico. NONFAT went into effect on January 1, 1994.

NONFAT is also used to refer to the tripartite trading bloc of North American countries. ” www. Wisped. Org. Since the inception of the Reopen Union in 1957 six countries were a part of this union. Nineteen further states have Joined in and created a successful union. Greece Joined the EX. January, 1981. The exchange and repatriation of funds risks the Euros exchange rate against the dollar, remains unstable. The low interest rates, increased competition in the banking industry, and continued growth in commercial bank lending; to raise bad debt and strong growth in consumer borrowing.

Economic growth is forecast to slow in 2006 and 2007. The consumer price inflation slowed dramatically in Greece before its entry into pre-economic and monetary union (MIMIC) in January 2001 and was helped by other temporary measures. The economy of the United States is stable made up of natural resource, labor and manufacturing, and investments. The United States” has the largest and one of the most technologically advanced national economies in the world, with a GAP of 13. 049 trillion dollars. ” www. Wisped. Org.

Consumers and producers have some decision- making that form the economy, but the government also has a powerful role on the effects of the economy. Policies in recent years. Greece remains a net importer of industrial and capital goods, foodstuffs, and petroleum. Leading exports are manufactured goods, food and beverages, petroleum products, cement, chemicals, and pharmaceuticals. ” www. Wisped. Org. Greece is global leader in shipping, which is the transportation of goods and cargo by land, air, or sea. Types of currency used through out the world vary from country to country and or by region.

The Unites States of America official currency is the dollar, symbol: USED also known to be abbreviated by $. The US currency was adopted in 1785 by the United States Congress. The United States dollar is also known as a world currency; in 1985 $300 billion dollars were in circulation, with two thirds being out side of the Untied States. Each year the amount of U. S dollars is being circulated around the world continues to increase. In comparison to the Untied States of America, Greece uses the Euro as denomination of currency type, symbol ?. Greece is part of the European Union also knows as the ELI.

What I found most interesting is the European Monetary Union has ceded control of monetary policy to the European Central Bank. Versus the Untied States taking control over their own currency. “The European Union has a large economy, probably slightly larger than that of the United States of America with a 2005 GAP of 12,865,602 million vs.. 1 1 million (USED figures) (using nominal US Dollar GAP) according to the International Monetary Fund. ” www. Wisped. Org. Grace’s relations with other countries in the region have been steadily improving. Greece is working with Turkey to resolve their disagreements, mainly with regard to Cyprus.

Failure to resolve the division of the island of Cyprus may increase tensions between Greece and Turkey as the latter finds its bid to Join the European Union partially dependent on success, but tensions rise sharply with Turkey over the issue of Cyprus. Greece is also assisting and improving relations with the economic development of the Balkans. The Balkans is now viewed by Greece as a greater threat o security than Turkey. Also, renewed instability in the Balkans leads to unrest in Greece and trade disruption. Political corruption is considered higher in Greece than many other European Union countries.

Politicians are dependent on media with strong ties to business interests. There is a politicized, anti-globalization environmental movement in Greece which is increasingly complicated in its use of the courts and the European Union to block large projects. United States culture is very diverse but due to the level of the American culture there are many integrated but exclusive subculture within the U. S. The subcultures differentiated by status, ethnic background, residence, religion or other factors that functionally combine the group and act Jointly on each subculture member.

The ethnic groups are White, Black, Asian, Meridian, Alaska native, native Hawaiian, and other Pacific islander. The various religion are Protestant, Roman, Catholic, Mormon, European, Asian, Pacific island and others. Let us not forget that the government type is constitution-based federal republic but strong democratic tradition. As a result, the subcultures have their own Joint set of customs, attitudes, and values. Greece is a diverse culture partial by its place at the crossroads between the East and the West and by the various occupations endured by the Greek people throughout history.

The Greeks are proud of their culture which is the definition of their national and ethnic belonging. The Greeks culture is made of their traditions, religion, music, language, food and wines. Some of the traditions and superstitions vary from one island to another. Many countries differ within a range of dimensions including social structure, language, religion, and traditions to name a few. The difference has important implications on marketing strategy of the product. The most cultural difference that has an impact would be traditions.

Candle scent preference may differ from one country to another. The company may encounter resistance to some of its different scents or wax. The organization must careful research Greece cultural norms and understanding the difference between US and Greece. Cross-cultural training (literacy) would be needed to make sure the company advertising or marketing strategy does not offend anyone in the other country. The candles should be affordable due to the employment rate within Greece; however the organization must make a profit consider the cost to export the candles within that country.

Yankee Candle is aware of the culture difference between the US and Greece, therefore staffing would be important to the organization. The organization would provide their US employees with language and cultural training. Yankee understands that one of their vendors Burlier has experience and knowledge in cross cultural and language training that would help assist the expatriates. Burlier offers a variety of programs and has been in the business for 128 years, more than 450 centers in over 0 countries.

Burlier offers online, adult, children and teen programs for cultural and language training including one-on-one sessions. The cultural and language training would be for the family as well. The cultural training would be for two days and 100 hours for language training, however if more hours are needed for language the company would approve this cost. The employees that are going on the international assignment would have other benefits including when they are expatriating back into the US. However, the expatriates will receive Just a h day of cultural training and language will not be necessary.

The US dollar is not equal to the same amount in most other countries. Hence, the company would pay an additional allowance to cover the difference. The cost of living may be higher in the other countries, as a result a housing allowance is provided to the employee. The company does consider the cost living in the US and then citizens. As a result, to the language barrier and cultural it may be very difficult for the employee’s children to attend the local school in the host country for that reason private schools or boarding school may be required.

Consequently the company is aware of this and therefore would provide tuition allowance. Due to the cultural and language difference there are going to be diversity issues, so human resource has provided an open door policy. The open door policy would allow employees to express him or she concerns and human resource will try to provide a solution to the problem, if possible. Supply chain management is an important role for the success of Yankee Candle Company to sell scented candles in Greece.

Supply chain is most effective for optimal resource use, minimum total cost, and maximum value to the customer. Decisions with in supply chain are to buy your product or make your own. Yankee Candle Company already produces its own scented candles and will be the same for candles being shipped overseas. The production will be manufactured in the Company’s 294,000 square foot facility in Whitely, Massachusetts. As a manufacturer, the Company is able to closely monitor product quality and control production costs, which ensures high quality products and maintains affordable pricing.

Information has been gathered from the Greece from the candle business industry. This data will assist in forecasting how much product is needed for a three months supply to meet the supply and demand in Greece. Lead time for the initiation of Yankee Candle Company to enter the Greece market is 10 months. In turn this will give enough time to meet the three month stock supply. The information gathered from the Greece candle market will support the types of scented candles that will be produced to ship overseas.

Lead time for the shipment to arrive at the distribution warehouse is three month’s; the life p of a candle is three years. Placing our product will be near or around the largest cities and ports in Greece. The largest and most important city in Greece is Athens, the capital with population based in 1991 of 748,110. The largest port in Greece is Thessalonians, with a population of 377,951. Also another large port is located on the North part of the Peloponnesus, is a major seaport, with 155,180 inhabitants. Other sizable cities include Alarms (113,426), Irrational (117,167), and V¶Los (76,463).

The ports and its population are important factors in knowing were to place the Yankee Candle Stores. These would be in areas in the region that have the most population and are easily accessible to Tourist from vacation boats that may doc on these ports. Promoting Yankee Candle Company in Greece would be similar as it is currently in the Untied States. Through its retail stores the Yankee Candle company would open in Greece, direct mail catalogs. To include a large market Yankee candle will also promote is U.

S product through television commercials newspapers, bill board singes through out the larger cities of Greece, and through its own web page http:// introduced to all who wants to have special fragrances in their homes. Business will also be targeted to have fresh new fragrances for their offices. Candles are an excellent gift for all ages and for any special occasion. The middle class in Greece is the main target market Yankee Candle Company is promoting the scented U. S candle product. In 2005 the labor force in Greece was at 4. 72 million compared to unemployment rate of 10. % figures from whom. CIA. Gob. These figures give Yankee Candle Company the green light to proceed with international distribution into the Greece market. Pricing the candles will be 30% above the sale price of a U. S product. This will ensure the costs of having a U. S product of seas. Yankee Candle’s has successfully developed and market new products and earn enormous returns. We have success springs for the fact that it has a vertically integrated business model, with the in-house expertise required to design, develop, manufacture, distribute and sell our candle products.

Our vertically integrated business model acts as a powerful platform to support our product innovation initiatives. This business model included strong research and development activities, an experienced employee team, and a basis skill in test marketing our products. We collected these resources to research consumer interests and home decor buying trends, and then to create original candle designs, fragrances, accessories, gift sets, home fragrance merchandise, and personal care items that align with our findings.

We then release this merchandise into our distribution channels in a way that permits us to seek and track consumer feedback. This process positions us to fine- tune our new products from performance, to packaging, to labeling, to pricing helping to maximize the potential for each item we develop to have a successful launch and widespread acceptance. Together, these efforts helped to drive sales, attract new customers and extend the appeal of the Yankee Candle brand.

Once exporting was chosen as the mode of entry, Yankee Candle secured assistance from a company called, Export Trade of America; to learn about insurance, tariff, and ax laws involved in trading with Greece. Yankee Candle Company will face various legal challenges when exporting its candles into Greece, but the process will go much easier with the help of an export management company. Yankee will need to comply with employee laws and have knowledge about hiring, firing, and discipline regulations in Greece. They will need to be acquainted with their legal system and how those laws are enforced.

Greece is a parliamentary republic with a president, who is heads the executive administration, a prime minister, who is head of the government, and a 300 seat legislature. The Judicial includes a Supreme Court, regional districts, and prefectures to decide civil and criminal cases. There is a national police force as well as policing agencies from the European Union. As a member of the European Union, the EX. laws supersede those of the individual member nations. Yankee Candle Company will need to be aware of the EX. laws, enforcement, penalties, and necessary trade practices.

The European Union could cause legal complications as the union adds new members, arbitrates disagreements There has been a longstanding relationship between Greece and the United States of America. The two countries have diplomatic, intelligence, and law enforcement ties. Greece and the United States, recently signed treaties “covering extradition and mutual legal assistance, which further strengthened this cooperation. ” (2006) Trade between these two nations should proceed with success barring increased terrorism, war, or a terrific natural disaster that impacts the global economy.

It is important for any company to evaluate their strengths, weaknesses, opportunities, and threats. As Yankee Candle employees examines their organization they listed the following as company strengths; strong business model, long-lasting endless, well-branded product, variety of fragrances, adaptability of product to various cultures and d©core, strong financial backing, increasing profitability, expanding marketplace, efficient manufacturing and distribution process, and an innovative product development.

Yankee Candle Company’s weaknesses include; rising cost for manufacturing and distributions, technological skills, single manufacturing center, adapting products to various cultures and customs, and material shortages. There are several opportunities that must be pursued to maintain profitability; increase presence in the global marketplace, expanded online hopping options, adapt fragrance choices to new markets, build foreign manufacturing and distribution center, and add accessories to their product line.

There are many threats to the existence of Yankee Candle Company including; competition’s pricing and product differentiation, terrorism, natural disasters, exchange rate, rising costs for manufacturing and distribution, and the products life- cycle. The external environment strengths include; reduction in trade barriers, strong European Union, technological advancements, and utilization of websites. The external weaknesses are; trade blocs, closed economic and political policies that reverent or limit imports/exports, and the affects of terrorism.

External opportunities include; improving the economic levels of third world countries, utilizing the skills, resources, and expertise of various countries to lower costs and create an integrated economy, develop innovative products, and create a global network. Finally, the external threats include; terrorism, political instability, natural disasters, increased global competition, trade blocs that become fortresses against those outside their union, countries imposing regulations against outsiders who want to merger or acquire other foreign companies, conflict among existing trade bloc members, and inflation/deflation of the monitory systems.

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