Export policy plan Vogel

Germany

Student: Astrid de Ridder Id-code: 1504310 Study: International Business and Languages, Hogeschool Utrecht Internship: Graduation assignment Company: Vogel Location: a!e "o#n, $outh%A&rica Company supervisors: 'ohn en "erri Vogel Internship supervisor: (# H)lda *ui!er Second examiner: +hr, Gert Li-.endi-. Date: August /000

Preface
1ith this I li.e to than. 'ohn and "erri Vogel &or o&&ering me an intern !osition in their com!an) Vogel, I had a reall) nice time during m) internshi! at Vogel and I a!!reciate their hel! and interest, I also #ould li.e to than. +un-a +ir.sen, Rolinde 2ierman, Anne Buurman and 'oeri 3an Helden &or the #onder&ul and instructi3e time I had #ith them during m) sta) in $outh%A&rica, All sta&& mem4ers o& the Hogeschool Utrecht #ho su!!orted and hel!ed us during our hard time #ith s#itching internshi!, I also li.e to than., In s!ecial H)lda *ui!er and Gert Li-.endi-., $!eciall), I #ould li.e to than. $a4ine $choon4rood &or ha3ing such a nice time in $outh%A&rica and in the o&&ice, 1e #ere not onl) colleagues during our internshi! at Vogel, 4ut #e 4ecome real good &riends,

a!le of content
1, /, 3, 4, 56cecuti3e summar) Introduction 7ro4lem de&inition and methodolog) (ision, Vision and mar.et de&enition

5, Internal anal)sis8 % Biography % Organization % Innovation % Production % Efficiency % International business skills % The business life cycle % Organization structure % Function structure % Goals % Products % Distribution structure % Financial analyse % arketing !i" 9, 56ternal anal)sis8 % Buyers analysis % Ger!an furniture !arket % Production % I!ports and e"ports % arket trends % Design !arket % Distribution structure :, om!etitor anal)sis % #o!petitor strategy

;, +istri4ution anal)sis % arket entry and distribution 0, $1<"% anal)sis 10, on&rontation matri6 11, $trategic o!tions % $nsoff !atri" 1/, 5ntr) anal)sis % 5ntr) strateg) 13, 14, 15, 19, 1:, 1;, 10, /0, /1, //, (ar.eting mi6 &or German) "rans!ort and logistic 'uridical and legal as!ects ultural as!ects Ris. and &easi4ilit) "ime ta4le and action !lan Budget onclusions Recommendations $ources

/3, A!!endi6 % Price list %ogel % Financial sheets

E"tra confrontation !atri"

"# Introduction Vogel is currentl) a &amil) 4usiness and is due to and registered as a , , = losed oo!eration>, "he com!an) Vogel has 4een grounded in /004, "he com!an) is currentl) a &amil) 4usiness, Vogel is a a!e "o#n 4ased design and !roduction com!an), s!eciali?ing in &urniture and home #are, "he main !roducts o& the com!an) are chairs, 4ecause this is the designer@s s!ecialt), Vogel e6!lores ne# and original a!!lications &or e6isting cra&t and technologies, "heir uniAueness is 4ased on originalit) o& design and maintaining a high Aualit), 'ohn Vogel is the designer and o#ner o& the com!an), "he #hole range consists o& his design, Vogel has its o#n !roduction #here his em!lo)ees !roduce the !roducts, "he #or. acti3ities are !roducing and selling A&rican design chairs and ta4les, Vogel is alread) acti3e on the A&rican mar.et, "he) mar.et and dis!atch their !roducts to retail outlets 4oth locall) and internationall), "he) also su!!l) interior decorators, architects and contract !rocurement com!anies in the industr), "he target grou! o& Vogel are !ersons #ho are interested in e6clusi3e, uniAue &urniture, "he !roducts are limited editions and not used &or standard !roduction, Because o& the decreasing orders and the u!coming reAuest o& his !roducts a4road, Vogel #ould li.e to see the o!!ortunities and chances to start #ith e6!ort to 5uro!e, I ha3e chosen German), 4ecause it has one o& the largest &urniture mar.ets o& the #orld, and it is the 4iggest o& 5uro!e, German) is o&ten seen as the doorste! o& the 5uro!ean mar.et, 7lus Vogel had a small !re&erence &or German), "he Germans using a lot o& #ood in their interior design, this is also a reasons &or the choose o& German), "here&ore, the main Auestion o& this e6!ort !lan is8 #hat are the o!!ortunities and chances &or Vogel to start e6!orting to German) and i& there is a mar.et, ho# to !enetrate on this mar.et, "he most im!ortant su4 Auestions areB 1ho are the largest com!etitors and ho# do the) characteri?e themsel3esC Ho# does the German) &urniture mar.et #or.s 1hich legal and -uridical reAuirements #ill Vogel ha3e #ith e6!orting Ho# has the #e4site ha3e to loo. li.e 1hat are the di&&erences in the 4usiness culture 1hat #ill the e6!ort costD reali?e 1hat are the di&&erent entr) strategies and #hich one is the most suita4le &or Vogel

I did a mainl) des. research and the e6!ort !lan #ill mainl) e6ist o& Aualitati3e research data, Eirstl), I loo.ed to the internal &acts and &igures o& Vogel descri4ed in an internal anal)sis, $econdl) I ha3e loo.ed to the e6ternal &acts and &igures o& Vogel descri4ed in the e6ternal anal)sis and trade anal)sis, I did a research to see #hat the com!etition #ill 4e in German) &ollo#ed 4) a com!etitor strateg), A&ter that )ou can read the mar.eting mi6 and the distri4ution anal)sis &or the !roducts o& Vogel, 2e6t to is )ou can see the $1<"%anal)sis &ollo#ed 4) the con&rontation matri6 and the #ritten result o& the matri6, B) the strategic o!tions )ou can see the used 7orter and Anso&& models, (oreo3er )ou can also &ind a trans!ort and logistics %, -uridical =an legal>%, and cultural anal)sis &or German), I also made a ris. and &easi4ilit) anal)sis and a time ta4le and action !lan, "his e6!ort !lan ends #ith the o3erall conclusions and recommendations &or Vogel,

$#Executive

summary

"he main &ocus o& this re!ort is to ans#er the main AuestionB &hat are the opportunities and chances for %ogel to start e"porting to Ger!any and if there is a !arket' ho& to penetrate on this !arket( A&ter a small countr) selection, #e ha3e chosen German) as a !otential start =together #ith Erance> #ith entering the 5uro!ean mar.et, Be&ore the international crisis, German) is one o& the most sta4le economies in the #orld, "he German &urniture st)le is similar to the !roducts that Vogel !roduces, German) has also one o& the largest num4er o& &airs and e6hi4itions, #hich is a good #a) o& !romoting the !roducts o& Vogel, German) is a central countr) #ithin 5uro!e and its &airs attract a lot o& &oreign 4usinesses as #ell, 7lus, the German mar.et #as the largest 5U mar.et &or domestic &urniture and #as 3alued at F 1;,9/0 million in /00:, Although German) is a !otential mar.et &or Vogel, there is a lot o& com!etition, on the German mar.et, )ou #ill &ind a list #ith the main !la)ers at the com!etitor anal)sis, "here&ore Vogel shouldB Handle a lo#er !rice than his most im!ortant com!etitors, Vogel should remain his to!%end mar.et !osition, 7oint out the his U$7@s, his !roducts are uniAue, timeless, o& good Aualit) etc, He should mention #hich a#ards he #on and in #hich =#orld &amous> maga?ines he had an article, Because o& the com!etition, Vogel should ma.e use o& the &ocusD segmentation strateg), Vogel is situated in an o!en mar.et, 2e# 4usiness can enter easil), "his means that Vogel can easil) enter the German mar.et, 4ut this also counts &or the com!etition, "he com!etition can arise 4ecause o& this, Gou can see this strateg) 4) strategic o!tions 1ith entering the German mar.et, Vogel uses the mar.et de3elo!ment strateg), "his means that the) are entering a ne# mar.et #ith an e6isting !roduct, Gou can &ind the !roduct%mar.et com4ination and the mar.et de3elo!ment strateg) 4) the strategic o!tions, Although the GermanD 5uro!ean mar.et is eas) to enter, Vogel still needs some hel! #ith entering this mar.et, "his 4ecause o& the lac. o& .no#ledge in the German 4usiness culture and the ine6!erience #ith e6!orting, "he) need some 4usiness or !erson #ho can hel! them #ith entering the German mar.et, "he) could thin. o& a commercial agent, Eor a &ull anal)sis o& entr) strateg) I re&er to the entr) !ossi4ilities and entr) strateg), Vogel has sho#n a 3ast im!ro3ement in !er&ormance &rom /00; to /000, )ou can &ind the &inancial anal)sis in the internal anal)sis and the 4alance sheets in the a!!endi6, "his has mainl) due to increased sales and a 4etter gross !ro&it margin, In /00; the) in3ested a lot in la4our costs8 the) hired ne# em!lo)ees and #or.ed o3ertime, "he ca!ital o#ned has im!ro3ed dramaticall) as #ell as the !ro&ita4ilit), "he com!an) has great !otential &or &urther gro#th #ith the right in3estment, 2e3ertheless, this does not mean that Vogel is read) &or a ma-or in3estment in e6!ort, It is e6tremel) hard to start #ith e6!ort the last )ears, $ince /00:, #e are li3ing in a #orld #ith a &inancial crisis, Im!ortant com!anies #ent 4an.ru!ted and small com!anies hardl) sur3i3e, "he trust in the &inancial #orld is gone, "his means that 4an.s and other &inancial in3estors are e6tremel) care&ul #ith gi3ing loans, mortgages and in3estments, Vogel still has not reached the end o& the $outh%A&rican mar.et )et, I thin. there are much more o!!ortunities on the home mar.et, than the) ha3e reached on this moment, At the moment that the end o& the $outh%A&rican mar.et is reached and the) cannot gro# an) &urther on the home mar.et, the) should thin. a4out e6!ending their !roducts to 2ami4ia and (o?am4iAue, "hose mar.ets are much more similar to the $outh%A&rican mar.et than German) is, It is closer, so the =&inancial> ris. #ill 4e lo#er and it is -ust easier to start #ith, 7lus the) #ill get more e6!erience #ith handling customers &rom another countries, #hich #ill ma.e it easier to e6!ort to other countries, 1hen the end o& those mar.ets are reached, the) could consider to go to German),

%#Pro!lem definition and methodology

+escri!tion o& the !ro4lems "hree main !ro4lemsB 1, Ho# does the com!an) get more 4rand a#areness in the mar.etC /, 1hich .ind o& sales strateg) can Vogel de3elo! to attract more customersC ="he !oint o& sale is not u!dated or com!lete> 3, Ho# can the com!an) can increase their mar.eting dri3e to com!ensate &or the glo4al &inancial climateC

"hose Auestion leads to one o& the main Auestions o& this re!ortB #hat are the o!!ortunities and chances &or Vogel to start e6!orting to German) and i& there is a mar.et, ho# to !enetrate on this mar.etC $u4 AuestionsB 1, 1hat are the characteristics o& the target grou!sC /, 1hat are the ma-or com!etitors and #hat are their s!ecialtiesC =direct and indirect> 3, 1hat #ill the 4udget 4e to &inance the ne# !lansC 4, Ho# does the 5uro!ean e6clusi3e &urniture mar.et com!areC 5, Ho# can #e &ill in the mar.eting mi6C =$1<", com!etitors anal)sis> 9, Ho# do #e de&ine a 4usiness strateg)C =Business Li&e )cleD(issionDVisionD$hort%(edium% Long term strateg)> :, 1hat #ill e6!ort costsC ;, 1hat #ill 4e the 4est strateg) to enter the ne# mar.etC 0, 1hat are the intercultural as!ects &or the chosen &oreign countriesC 10, 1hat is the 4est #a) to u!date the #e4site &or customers and !ros!ectsC 11, Ho# does the distri4ution net#or. &unctionC

"o ans#er all these Auestions, I made di&&erent .ind o& anal)ses and I made use o& the &ollo#ing modelsB $1<"%anal)sis on&rontation matri6 +5$"57%model Anso&&%model 7orter 5 &orces Hmodel 7orter H generic strateg)

&# 'ission(

Vision and mar)et definition

(issionB I1e stri3e to !roduce &inest high Aualit), cra&ted, imaginati3e and original $outh%A&rican &urniture &or 4es!o.e interior trade and leading contem!orar) design retails stores, 4oth locall) and #orld#ide,J VisionB "o !roduce &urniture, #hich creates a connection 4et#een nature and !eo!le, <ur 4usiness model is an e6am!le o& circular meta4olism, #hich #e #ould li.e to see 4ecome a industr) standard &or sustaina4ilit), 1hat 4usiness are #e inC Vogel !ro3ides the demand o& uniAue, timeless A&rican design &urniture, "he) mar.et and dis!atch their !roducts to the A&rican mar.et, "he) ha3e clients in Erance, anada and the United $tates, "he) #ould li.e to gro# a strong international mar.et 4ase &ocusing on their handcra&ted range o& !roducts,

*!ell model

Technology) - 7roducing o& !roducts that attract attention - +oing 4usiness #ith high%!rinci!led clients - +e3elo!ed high design s.ills

+e3elo!ed cra&t technolog) s.ills oo!eration #ith 2ature conser3ation &orest tree "he !roduction !rocess mainl) consist o& handcra&ted #or. "he) ma.e use o& #ood #ith character "he) #or. #ith high%grade materials A#arded in design e6cellence

#usto!ers) - Interior designersDdecorators - Hotel !ro-ects - +istri4utors - 1holesalers - $!eciali?ed retailers - 7ri3ate indi3iduals - BoutiAue hotels =lu6ur) hotels> - Guesthouses - Architects *eeds) House decoration reation o& a certain social status 4) means o& their e6clusi3e interior UniAue and essentiall) A&rican $t)le in their dKcor +esign originalit) 7roducts that loo. a 4it di&&erent 4ut the) are 3er) usa4le Handcra&ted designs $outh A&rican e6!erience in their dKcor High 3alue !roducts "imeless !roducts reati3it) UniAue gra!hic industrial design

Products) % 2gunia chair % Elo# cu4e chair % u4e 4ench % 2guni 4arstool % u4e co&&ee ta4le % Elo# cel lottoman % (antis lounger Gou can see that Vogel is selling his !roduct range to mainl) interior designers, e6clusi3e &urniture sho!s, !ri3ate customers and to =4outiAue> e6clusi3e hotels, His !osition is on the to!%end o& the mar.et,

+# Internal analysis
Biogra!h) 'ohn Vogel has a design 4ac.ground in architecture and graduated &rom the Uni3ersit) o& 7ort 5li?a4eth in 1000, +uring his stud) he started designing and ma.ing &urniture and headed his &irst com!an), His e6!ertise lies in design, !roduction, mar.eting and general management, 1or.ing #ith the !rete6t, that the state o& our consciousness is !ro!ortional to the Aualit) o& our relationshi! #ith nature, the &ocus o& his #or. is to create sim!le and imaginati3e !ieces #hich create connections 4et#een !eo!le and the natural #orld, His #or. is handcra&ted and em4odies a $outh A&rican 3ernacular, It is also 4eauti&ull) &inished &unctional and timeless, He designs, !rotot)!es and manu&actures in house, and his a!e "o#n #or.sho! is eAui!!ed to su!!l) Aualit) !roducts an)#here in the #orld, His 4usiness model is circular in meta4olism, tree !lanting is &unded &rom !roducts sold and in time more #ood is 4eing re!laced than used, His #or. has 4een a#arded #ith design e6cellence and some o& his clients include B,(,1,, Anglo Gold Ashanti, $a4i $a4i Game Lodge, Ara4ella 1estern a!e Hotel and $!a, "erri Vogel graduated &rom a!e "o#n ollege #ith a di!loma in interior decorating in 1004 and has #or.ed in the industr) on 4oth a design and mar.eting le3el, "he organi?ation Vogel is currentl) a &amil) 4usiness and is due to and registered as a , , = losed oo!eration>, "he com!an) Vogel has 4een grounded in /004, "he com!an) is currentl) a &amil) 4usiness, "he) started #ith one !ermanent #or.er en some occasionall) #or.ers #hen needed, "he) rented a !art o& the 4uilding located in "ide $treet, 1oodstoc., urrentl), the) e6!anded and rent the #hole 4uilding, Eirst the administration o&&ice #as at home, no# it is in the 4uilding, Vogel is a a!e "o#n 4ased design and !roduction com!an), s!eciali?ing in &urniture and home #are, "he main !roducts o& the com!an) are chairs, 4ecause this is the designer@s s!ecialt), Vogel e6!lores ne# and original a!!lications &or e6isting cra&t and technologies, "heir uniAueness is 4ased on originalit) o& design and maintaining a high Aualit), 'ohn Vogel is the designer and o#ner o& the com!an), "he #hole range consists o& his design, Vogel has its o#n !roduction #here his em!lo)ees !roduce the !roducts, "he #or. acti3ities are !roducing and selling A&rican design chairs and ta4les, Vogel is alread) acti3e on the A&rican mar.et and the) e6!ort alread) to anada, Austria and Erance, "he) #or. mainl) #ith three di&&erent A&rican #oods, glass and #ea3ing cord, "he) mar.et and dis!atch their !roducts to retail outlets 4oth locall) and internationall), "he) also su!!l) interior decorators, architects and contract !rocurement com!anies in the industr), "he target grou! o& Vogel are !ersons #ho are interested in e6clusi3e, uniAue &urniture, "he !roducts are limited editions and not used &or standard !roduction, Inno3ation Vogel has at the moment one esta4lishment #ith his o#n !roduction and o&&ice, 'ohn ma.es constantl) ne# designs that are demanded on the &ast gro#ing handcra&ted mar.et local and #orld#ide, 'ohn also uses his technolog) to design !roducts &or s!eci&ic demands o& customers, Eor e6am!le &urniture that &its in !articularl) interiors, 7roduction Production process and capacity) Vogel !roduces no stoc.8 the) !roduce a&ter !lacements o& orders, "he !roduction de!artment !roduces &our chairs a da), t#ent) a #ee., Inclusi3e #ea3ing the) !roduce t#o chairs a da), "he co&&ee ta4le can 4e !roduced #ithin three da)s, de!endent o& the glass com!an) deli3er), "he #or.ers don not #or. #hole da)s, this can 4e ste! u!, 1hen the) !roduce a higher amount the !roduction circle goes &aster, "he !roduction circle is as &ollo#ingB

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1. Machine

2. Assembly

4. Weaving

3. Finishing

"here is no standard mechanical !roduction line, 4ecause the !roducts are limited edition, Eor this reason the !roduction is &le6i4le, "he attitude to#ard #or. o& the em!lo)ees is 3er) high, "his 4ecause 'ohn is 3er) in3ol3ed into the !roduction and he trains their #or.ing s.ills, "he means o& !roduction are sim!le machiner) 4ut mainl) handcra&ted and hand #ea3ing #or., Order flo&) +ue to the international economical crisis, the orders o& Vogel dro!!ed #ith 50 !er cent, In the last month =(a)%'une /000>, suddenl) the orders came 4ac. in again and the) are o& a 4igger amount, A lot o& !ros!ects came in and the) also had some orders o& e6isting customers, "he general e6!ectation is that the orders o& Vogel #ill gro#, "his mainl) has to do #ith the ne# #e4site that #as launched and the mar.eting acti3ities &rom Vogel, Also, some &urniture maga?ines o&&eredDas.ed Vogel to #rite an article a4out 'ohn Vogel and inter3ie# him, 2ormall), the #inter season is reall) Auiet =notice that the #inter season is &rom Ee4ruar) till August in $outh%A&rica>, 5s!eciall) the 1estern a!e 7ro3ince = a!e "o#n> is 3er) seasonal, "he high season o& Vogel, #hen the most orders come in starts at the end o& August and ends in 'anuar), Be&ore the end o& the )ear and !eo!le go a#a) &or the hristmas 4rea., !eo!le li.e to &inish their #or. and all the =summer>houses has to 4e done #ith decorating, 5&&icienc) "he &le6i4ilit) o& the com!an) is good, "he) can change Auic.l) 4et#een the industrial !rocesses, Vogel has mainl) little and some 4ig orders, "his 4ecause the !roducts are not standard, the) are original and limited, "he !roduction line is not mechani?ed, "he attitude and moti3ation o& the !ersonnel is 3er) good, "he atmos!here is good and the) are ha3ing &un at their -o4s, "he reason &or this is that the #or.ers are in3ol3ed into the !roduction and 'ohn trains their #or.ing s.ills, (ost o& the em!lo)ees did not &inished education, "hrough their #or. the) de3elo!ed #or.ing s.ills and get good #or. e6!erience, "he e&&icienc) o& the !roduction could 4e 4etter, Vogel is de!endent o& his su!!lier LRare#oods@, "his com!an) co!ies some o& the com!onents o& the chairs, "his com!an) has 4esides its customer Vogel a lot o& other 4ig customers #ho !laces 4ig amounts o& orders &or standard !roducts, "his is easier &or them to ma.e, It #ould 4e 4etter &or Vogel i& the) !urchase that .ind o& machine LRare#oords@ uses, "he #or.sho! o& Vogel has a 4ig area #here the !roduction and mar.etingDadministration de!artments are, "here is enough s!ace to su!!l) stoc.s in &uture, "he) do not ha3e a sho#room 4ut on the administration and mar.eting de!artment the) ha3e dis!la)ed some !roducts, International 4usiness s.ills Vogel is alread) e6!erienced #ith e6!ort all o3er the #orld,

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Vogel has some contacts on the 5uro!ean mar.et &or e6am!le in Austria =Ha4ari H ###,ha4ari,at> and in Erance =###,4o?ea,com>, and Vogel had some !ri3ate customers in "he 2etherlands and $#eden, He also coo!erates #ith $#alaline, #hich is a $!anish mar.eting com!an) #hich !romoted Vogel on e6hi4itions, Although there are contacts, this does not mean that there are #ell .no# #ith the mar.et, "he) are not &amiliar #ith the di&&erent cultures and languages in 5uro!e, "he ma-or ad3antage that the) ha3e is that their mother tongue 5nglish is, Vogel com!etes regarding to internationalisation and is e6!erienced enough in his 4usiness s.ills to sell a4road, Vogel has to 4e a#are that the Erance 4usinessDsocial culture is di&&erent than the $outh%A&rican culture, (ore details o& this can 4e &ound in this e6!ort !olic), "he Business Li&e )cle

Vogel is into the Gro#th !haseD!eriod, "he) started u! their 4usiness and it is getting to gro# =national and a4road>, Because o& the international recession, the !roduction o& Vogel declined a 4it 4ut the &orecasts are !ositi3e,

<rgani?ation structureB An organi?ation structure is 4uild o& three su4 structuresB A &unction structure A !ersonnel structure <rganic structure Eunction structureB "he com!an) Vogel has a hori?ontal organisation structure, "his consists o& t#o de!artments, namel) the administrationDmar.eting de!artment and the !roduction de!artment, <n the administration and mar.eting de!artment "erri is managing sales, mar.eting and administration, "he da)%to%da) sales and orders #ill 4e ca!tured 4) "erri on their Muic. Boo.s !rogram, Ho#e3er 'ohn has the &inal res!onsi4ilit) in case o& decisions, <n the !roduction de!artment 'ohn is res!onsi4le &or !roduct de3elo!ment and !roduction, "he em!lo)ees o& the !roduction de!artment are trained and ha3e de3elo!ed s.ills, 'ohn trained these em!lo)ees, Vogel !ro3ides the o!!ortunit) &or s.ills de3elo!ment &or man) unem!lo)ed com!an), It is their dream to 4uild sel& esteem and an a3enue &or economic em!o#erment &or those #ho ha3e talent and the #ill to create #ith their hands, "he !roduction de!artment consists o& si6 em!lo)eesB "#o #ea3ers =Valencia N 5nthia>

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<ne mechanic, s.illed #or.er =Red#aan> <ne -oiner assem4l)D Eloor manager =$ean> "#o generalD&inisher, s.illed #or.er ="andi N <llie>

"he -oiner assem4l) $ean is the &loor manager on the !roduction de!artment, 1hen 'ohn is not around he is res!onsi4le &or the dail) #or., "he &inal decision is al#a)s made 4) 'ohn, He designs the !roducts and ma.es the sam!les in the &irst !lace, A&ter this he sho#s his em!lo)ees on the !roduction &loor ho# to !roduce it in di&&erent !arts, $outh A&ricaOs unit la4our costs are lo#er than those o& other .e) emerging mar.ets, "he unit la4our costs o& Vogel are also lo#8 the em!lo)ees ha3e an a3erage la4our salar) o& R/5 an hour, 7ersonnel structureB In total there are eight !eo!le acti3e at Vogel, "hese are di3ided into di&&erent &unctions and de!artments, In the organi?ation chart 4elo# )ou #ill see the !ersonnel com!lement,

<rganic structureB

J ohn & Terri Vogel

Administration/ Marketing

de!artment

Production department

%loor manager/ &oiner assem'l(

2 Weavers

1 Mechanist (skilled orkers!

1 "killed #inisher

2 $eneral orker (skilled orkers!

GoalsB Vogel distinguishes itsel& &rom other !roducts through its Aualit) o& design, Vogel !roducts are aimed at the to! end o& the &urniture design mar.et, Vogel !roducts &ul&il a gro#ing demand &or regionall) designed and cra&ted Aualit) !roducts #hich are uniAue in character, 1e are at the !rimar) stage o& launching our 4rand a#areness and #e see. to gro# this local and #orld#ide,

13

+hort,ter! goals In order to sur3i3e the &inancial crisis, Vogel #ants to 4ring u! his order to normal, "he orders dro!!ed last )ear #ith more than 50 !er cent, "he orders should 4e coming in soon, other#ise the) can 4ecome 4an.ru!t, Vogel #ould li.e to e6!and his 4rand a#areness through mar.eting acti3ities, "he) ha3e a client list, 4ut it needs to 4e u!dated, "he) also #ould start #ith sending a direct mail, -ong,ter! goals In terms o& 5 )ear, Vogel #ould li.e to see that his com!an) is a !ro&essional #ell running sta4le 4usiness, His 4rand a#areness o3er $outh%A&rica is high and his order &lo# is sta4le, +ue to a sta4le order &lo#, he is &inancial sta4le and a4le to gro#, He is a4le to do #hat he li.es mostB designing and ma.ing &urniture, He is a4le to design ne# !roducts and #or. on de #or.sho! #ith his em!lo)ees, "here&ore, his #i&e and his administration !ersonnel is running the administration, mar.etingDe6!ort and &inancial !art o& the 4usiness, "his means that he has to e6!and and hire ne# em!lo)ees &or his 4usiness, Line of products "he !roducts "he range o& !roducts that Vogel !roduces is A&rican design &urniture, designed 4) 'ohn Vogel himsel&, "he !roducts are handmade &urnitureB "a4les Benches hairs Loungers Vogel is s!eciali?ed in designing and !roducing chairs, "he main tim4ers that Vogel uses are *iaat, A&rican 1alnut and 1hite 1enge, 1hat are the strengths and #ea.nesses o& the !roductsC "he uniAueness o& the !roduct is one o& the ma-or strengths o& Vogel, All chairs and other &urniture are hand%#o3en, "he &urniture is o& high Aualit) &or a relati3e lo# !rice, Vogel has no massi3e !roduction line, e3er) !iece o& &urniture is uniAue and timeless, "his uniAue character can also 4e a #ea.ness, 4ecause o& the &act that the !roducts, designed 4) Vogel, ha3e no standard Aualit), Vogel does not li.e to ha3e a massi3e !roduction line, the !roducts ha3e to sta) uniAue and a limited edition, Besides this, no one acce!t &or 'ohn Vogel =and some s.illed #or.ers> .no#s ho# to !roduce the &urniture, "his means that he has to 4e around #hen the &urniture has 4een made, 1hich characteristics o& the !roduct !la)s an essential role in the decision ma.ing !rocessC "he !roducts are mostl) handmade and in =$outh>%A&rican st)le, "he customers demand an original and essentiall) $outh A&rican e6!erience in their dKcor, Also the uniAueness !la)s an im!ortant role in the decision ma.ing !rocess, ore !roduct "he core &unction o& the !roducts is to decorate )our interior, "he &urniture can 4e used as #ell, "he chairs and lounger are use to sitDlie on, "he ta4les can 4e used &or !utting things on, Actual !roduct "he &urniture is mostl) hand cra&ted in $outh%A&rican design, "he !roducts are uniAue and original, "he &urniture is nature 4ased, #hich means that the) are made o& #ood and mostl) other nature 4asic materials =li.e cotton and glass,>, "he sha!e o& the &urniture is mostl) round, sometimes sAuared, "he colours that are used areB oli3e green, litchen lime, granite gre), steel 4lue, oa., cuc.oo 4ro#n and dar. 4ro#n, "he !roducts are high 3alue !roducts, Augmented !roduct At this com!an) the customers ha3e a !ersonal contact #ith the designer, "he !roducts are custom made and there is no minimum in !urchases, Besides this Vogel designs, !rotot)!es and de3elo!s !roducts &or se3eral !ro-ects, &or e6am!le a game lodge, In the near4) &uture Vogel #ants to coo!erate #ith the organi?ation L2ature conser3ation &orest tree@, At this !ro-ect trees #ill 4e !lanted &or the 4ene&it

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o& #ood &or !roducing the &urniture, "his can 4e a uniAue selling !oint &or Vogel in the &uture to mar. his 4randing, UniAue $elling 7oints +e&initionB "he &actor or consideration !resented 4) a seller as the reason that one !roduct or ser3ice is di&&erent &rom and 4etter than that o& the com!etition, Vogel o!erates on the to! end mar.et #ith its &urniture Vogel has a strong re!utation and .no#s its com!etitors 3er) #ell lients can order customer demanded !roducts +esigner 'ohn Vogel has good design s.ills =a#arded in design e6cellence> Vogel has a good customer orientationD customer ser3ice "he !roducts are handcra&ted and em4odies a $outh A&rican 3ernacular "he !roducts are timeless and not according to the latest trends "he materials that he is using &or his !roducts are high Aualit) materials "he !roducts are uniAue and 3er) original

+istri4ution structure 1, +eli3er) o& the #ood 4) su!!liers Rare#oods P /, 7re !roduction and deli3er) 4) su!!lier L(oorges@ P 3, (ain !roduction and manu&acturing P 4, =1holesalers, sho!s, decorators, retailers, lu6ur) 4outiAues, guesthouses>D e6!ort or trans!ort com!an) P 5, Einal customers Vogel manu&actures his !roducts on reAuest, A customer =or #holesaler and similar> !laces an order, Vogel is de!endent o& his su!!lier called LRare#oods@, +esigner 'ohn ma.es one e6am!le o& an ottoman =this is one o& the legs o& the !roducts> and deli3ers this at com!an) LRare#oods@, "his com!an) has a s!ecial co!) machine #hich co!ies the s!ecial sha!es o& the !roducts, A&ter this deli3er) Vogel cra&t and manu&actures the !roducts &urther and deli3ers them at the customer, Vogel deli3ers his !roducts at the customers in the area o& a!e "o#n, In case o& e6!ort or 4ig distances #ithin $outh A&rica, Vogel deli3ers the items at the e6!ort or trans!ort com!an) #hich #ill shi! the !roducts, Vogel ma.es use o& an e6!orter =li.e *uehne 2agel, Atlantic Eor#arding and $A argo> #hich arrange e3er)thing, A de!osit o& 50Q is !aid 4e&ore the !roduct go on the shi!, 2ormall), 'ohn Vogel arranges #ith his &oreign customer that the) #ill !ic. u! or arrange the trans!ort in their o#n countr), 1hen Vogel has a customer #ithin $outh%A&rica #hich is located to &ar to deli3er the !roducts himsel&, Vogel ma.es use o& Grindrod #hich is also an international trans!ort com!an) and is s!eciali?ed in trans!orting &urniture, Vogel has s!ecial !rice arrangement #ith this com!an) It goes the same #ith international customers, A 50 !ercent de!osit has to 4e !aid 4e&ore the !roducts go into the truc., "he #a) o& distri4ution that Vogel uses no#, is the most !ro&ita4le &or him, Eor e6am!le to deli3er &rom door%to%door #ith a courier is cost &rom a!e "o#n to 'ohannes4urg R1/00, But #hen Vogel deli3ers his !roducts to a argo com!an)Dde!artment is onl) costs him R/:0 4ecause he has good !rice arrangement #ith the argo com!anies, ,inancial analysis +a) to da) &inancial management #ill 4e carried out 4) 'ohn and "erri, Accounting management #ill 4e done 4) L$hrand and 5c.ermans Accountants@,

15

A &inancial ratio anal)sis is essential to determine i& Vogel is a4le to enter the selected &oreign mar.ets, "his anal)sis concerns the &ollo#ing main num4ersB LiAuidit) #urrent .atio An indication o& a com!an)Os a4ilit) to meet short%term de4t o4ligations8 the higher the ratio, the more liAuid the com!an) is, EormulaB urrent assetsR urrent lia4ilities R10/,:03R R30,550R 9,3B 1

56!lanation resultB A good current ratio is /B1, Based on the &igures o& /000 com!an) Vogel is in a 3er) good !osition to !a) their short%term de4t o4ligations, Vogel do not ha3e stoc. in their #or.sho!, "his currentl) does not !resent a !ro4lem to their current ratio, "he) !roduce on reAuest, In the &uture #hen their cash &lo# is higher, the) #ould li.e to ha3e stoc. in their #or.sho!, "his #ill hel! to &urther im!ro3e the current ratio, /uick .atio An indication o& a com!an)Os a4ilit) to meet short%term de4t o4ligations #ith Auic. assets =cash N current de4tors>, EormulaB ash N Accounts Recei3a4leR urrent lia4ilities R100,9:0 NR ;3,033R 9,3 B 1 R30,550

56!lanation resultB A good current ratio is 1B1, Based on the &igures o& /000 com!an) Vogel is in a 3er) good !osition to !a) their short%term de4t o4ligations e3en #ithout stoc., #ash Flo& "his &ormula is not a!!lica4le on the om!an) Vogel 4ecause the) do not ha3e long loan ca!ital, "he) rent their #or.sho! 4uilding and the) do not ha3e a long term loan, *et &ork capital 1or.ing ca!ital measures ho# much in liAuid assets a com!an) has a3aila4le to 4uild its 4usiness, "he num4er can 4e !ositi3e or negati3e, de!ending on ho# much de4t the com!an) is carr)ing, In general, com!anies that ha3e a lot o& #or.ing ca!ital #ill 4e more success&ul since the) can e6!and and im!ro3e their o!erations, EormulaB urrent assets H $hort de4t ca!ital R R10/,:03 H R30,550 - R19/,153 56!lanation resultB Vogel has a !ositi3e result, "his means that the) ha3e !lent) o& &unds &or gro#th, "he) are a4le to e6!and their com!an) at the moment, $ol3enc) is the a4ilit) o& a 4usiness to ha3e enough assets to co3er its lia4ilities, $ol3enc) is o&ten con&used #ith liAuidit), 4ut it is not the same thing,

Debt .atio "o #hat e6tent the total assets is &inanced 4) 4orro#ed &unds, EormulaB "otal lia4ilities R R30,550 R 0,134 "otal eAuit) and lia4ilities R//:,:;: 56!lanation resultB "he norm 3alue is 0,:5, "his means that the loan ca!ital is allo#ed to 4e three Auarter o& the total ca!ital, I& this is less, then there is s!ace to attract more loan ca!ital, In this case Vogel has a result o& 0,134, #hich e&&ecti3el) means that Vogel has &inancial securit) to 4orro# &or e6!ansion, +olvency ratio

16

 <ne o& man) ratios used to measure a com!an)@s a4ilit) to meet long%term o4ligations, "he sol3enc) ratio measures the si?e o& a com!an)@s a&ter%ta6 income, e6cluding non%cash de!reciation e6!enses, as com!ared to the &irm@s total de4t o4ligations, It !ro3ides a measurement o& ho# li.el) a com!an) #ill 4e to continue meeting its de4t o4ligations, EormulaB A&ter ta6 net !ro&it N de!reciationR Long term lia4ilities N short term lia4ilities R5/1,::; N 11,0:4 6100R 1:44,/Q R30,550

56!lanation resultB A sol3enc) ratio o& /0Q is considered &inanciall) health), At 1:44,/Q Vogel had an e6ce!tional )ear, "he !ro&it is signi&icantl) greater than /00; 4ecause o& a change to !remium !roducts at 3irtuall) similar ra# material costs, 7ro&ita4ilit) Profitability o&n capital "o #hat e6tend the com!an) is !ro&ita4le, It sho#s the !ercentage !ro&it return on the o#ner@s eAuit) in the &inancial )ear, Eormula !ro&ita4ilit) 4e&ore ta6B 2et !ro&it 4e&ore ta6 6 100QR <#n ca!ital 5/1,::; 6 100 R /94,54. 10:,/3:

Eormula !ro&ita4ilit) a&ter ta6B 2et !ro&it a&ter ta6 6 100QR <#n ca!ital 2BB 2o ta6 is sho#n on the income statement,

5/1,::; 6 100QR /94,54Q 10:,/3:

56!lanation resultB A good !ro&ita4ilit) measure is an) !ercentage a4o3e local 4an.s in3estments rates, /94Q is a 3er) good !er&ormance and is due to the signi&icantl) higher !ro&it in /000 com!ared to /00;, Profitability total capital $ho#s !ro&ita4le o& the a3erage total ca!ital 4e&ore deduction o& the ta6, EormulaB !ro&it 4e&ore interest and ta6 6100QR R5/;,50: 6 100R :;9,09Q A3erage total ca!ital =10:,/3:N %9/,:9:> D / 56!lanation resultB A good !ro&ita4ilit) measure is an) !ercentage a4o3e local 4an.s in3estments rates, :;9,09Q is a 3er) good !er&ormance and is due to the signi&icantl) higher !ro&it in /000 com!ared to /00;, General conclusionB Vogel has sho#n a 3ast im!ro3ement in !er&ormance &rom /00; to /000 mainl) due to increased sales and a 4etter gross !ro&it margin, In /00; the) in3ested a lot in la4our costs8 the) hired ne# em!lo)ees and #or.ed o3ertime, "he ca!ital o#ned has im!ro3ed dramaticall) as #ell as the !ro&ita4ilit), "he com!an) has great !otential &or &urther gro#th #ith the right in3estment, Eor an com!lete o3er3ie# o& the 4alance sheets o& Vogel I #ould li.e to re&er to the enclosed a!!endi6es,

'ar)eting mix

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7roduct "he &urniture o& Vogel has high Aualit), 53er) !iece o& &urniture is uniAue and original, "he !roducts are mostl) handcra&ted, "he &urniture is in $outh%A&rican st)le and customer demanded, His !roduct line consists o& se3en !roducts, #hich are ta4les and chairs, "he !roducts contain di&&erent #oods and cotton cords, #hich the customer can choose, Gou can &ind the !roduct range its !rices in the added a!!endi6es, "he range o& !roducts that Vogel !roduces is A&rican design &urniture, designed 4) 'ohn Vogel himsel&, "he !roducts are handmade &urnitureB "a4les $ide ta4les hairs $o&t &urnishings Vogel is s!eciali?ed in designing and !roducing chairs, "he main tim4ers that Vogel uses are *iaat, A&rican 1alnut and 1hite 1enge, 7rice "he !roducts are !riced &or sale in the to! o& the end mar.et, Although the !roducts ha3e high Aualit) and mostl) handcra&ted, the) still ha3e a good !rice, "he !roducts o& Vogel are !riced &or sale in the to! end o& the mar.et, Vogel !ricing is a!!ro!riate to high 3alue added !roducts and &its com&orta4l) #ithin e6isting local 4all!ar. !rices, "he !rices o& the !roduct o& Vogel are 4et#een R/0:3,1/ and R10/;3,10, In the a!!endi6es )ou #ill &ind the current !ricelist o& the !roducts, Vogel as. his customers a 50Q de!osit o& the total amount !rice, 7romotion E"hibitions "o !romote the !roducts o& Vogel, the) sho# their !roducts on e6hi4itions, "he) too. !art at the +esign Inda4a 56hi4ition and the $outhern Gild e6hi4ition in a!e "o#n, "he +esign Inda4a is a national e6hi4ition and the $outhern Gild a glo4al e6hi4ition, In the !ast, the com!an) #or.ed together #ith a com!an) named L$#alaline@ &rom $!ain, "he) re!resented Vogel on the e6hi4itions, 0ebsite Another #a) o& !romoting !roducts is through the internet, Recentl), Vogel launched a ne# #e4site and it is 4ecoming a huge success, "hrough internet, interested customers can easil) search trough the !roducts and get more in&ormation a4out the !roducts, such as !ricelists, si?es, materials and detailed in&ormation and ne#s a4out the com!an), "here #ill 4e a !ossi4ilit) &or customers to !ut an order online on the #e4site, $dvertise!ents In the !ast Vogel ne3er ad3ertised in (aga?ines, 2o#ada)s, three maga?ines a!!roached Vogel to !ut !ro&essional !ictures o& their !roducts in their maga?ine, to ma.e it more attracti3e, Vogel is also as.ed to gi3e some inter3ie#s &or articles a4out his designs, An e6am!le o& a maga?ine is 5LL5 decoration $A, A ne# clientD contact list #ill 4e created, so the) can easil) in&orm !otential customers a4out ne# !roducts, 7laceDlocation Vogel manu&acture, !roduce and sells his !roduct all on the same !lace, Vogel sells directl) &rom its #or.sho!, It has not reall) a sho#room, ustomers can see !rotot)!es o& the &urniture in the #or.sho! or see !ictures &rom the ne# 4uild #e4site, "o attract ne# customers, Vogel sho#s his !roducts on e6hi4itions,

/#External analysis
0uyer1s analysis (ar.et segmentation "here are a num4er o& #a)s in #hich the &urniture mar.et can 4e segmented, Be&ore loo.ing more closel) at the most common method, #hich is 4) &urniture t)!e or &urniture usage, it is also #orth loo.ing at t#o other #a)s o& 3ie#ing the mar.etB

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S +eg!entation by style) German) is a large countr), and man) regional st)les still e6ist in di&&erent !arts o& the countr), "here is a #ide range o& di&&erent &urniture designs on the mar.et, According to a stud) on li3ing room trends 4) mar.et research s!ecialist "it?e in /00:D;, modern or contem!orar) &urniture #as the most !o!ular st)le #hen ma.ing a 4u)ing decision, !re&erred 4) :1Q o& consumers, "raditional st)les #ere still !o!ular #ith 44Q o& consumers, #hile /1Q o& consumers !re&erred highl) designed &urniture, "he countr) or colonial st)le #as mentioned 4) 1/Q o& consumers, #hile natural or romantic designs #ere most im!ortant &or 0Q o& consumers, S +eg!entation by age) G&.@s Eurniture 7anel !ro3ides &urther segmentation in&ormation on age in relation to the di&&erent t)!es o& &urniture that most interest di&&erent age segmentsB S +eg!entation by roo! "his is the most commonl) used means o& segmenting the mar.et, It is used #idel) in the trade, !artl) 4ecause &urniture retailers tend to !resent &urniture ranges in the conte6t o& #here the) #ill 4e used 4) 4uilding Lroom sets@ so that consumers #ill more easil) 3isualise ho# the item o& &urniture #ill a!!ear, om&orta4le u!holstered seating has traditionall) 4een a 3er) im!ortant !art o& a German home and most homes are &urnished accordingl), Although the st)les o& u!holstered seating ha3e 4een changing, these items still remain 3er) im!ortant, Germans also tend to s!end relati3el) more on their .itchens than man) other 5U countries, "he) tend to 4e Auite hi%tech and &itted #ith the latest gadgets, In terms o& 3alue, each segment is 3alued according to !ercentages outlined in Eigure 1,1, 4ased on the total mar.et si?e descri4ed in "a4le 1,1, Hence, u!holstered seating #as 3alued at F 5,/14 million8 dining and li3ing room &urniture #as F 4,/;/ million8 .itchen &urniture #as F 4,/;/ million8 4edroom &urniture #as F /,:03 million and other &urniture #as F /,04; million, "he reason that =&inal> customers or distri4utors #ill 4u) the &urniture is to decorate, "o ha3e an e6clusi3e decorated $outh%A&rican st)le interior, A sho! retailerD distri4utor #ill 4u) the &urniture to ha3e a #ider assortment o& e6clusi3e &urniture, "he &urniture o& Vogel #ill de&initel) add some good to one@s assortment, German Eurniture mar.et A&ter a small countr) selection, #e ha3e chosen German) as a !otential start =together #ith Erance> #ith entering the 5uro!ean mar.et, Be&ore the international crisis, German) is one o& the most sta4le economies in the #orld, "he German &urniture st)le is similar to the !roducts that Vogel !roduces, German) has also one o& the largest num4er o& &airs and e6hi4itions, #hich is a good #a) o& !romoting the !roducts o& Vogel, German) is a central countr) #ithin 5uro!e and its &airs attract a lot o& &oreign 4usinesses as #ell, German) is close to Austria en $#it?erland, #hich are also good !otential countries &or Vogel, "he) mainl) ma.e use o& #ooden &urniture, 1e ha3e to 4ear in mind that some &act 4elo# are 4e&ore the economical crises and can 4e lo#erD more negati3e at the moment, "otal mar.et si?e "he German mar.et #as the largest 5U mar.et &or domestic &urniture and #as 3alued at F 1;,9/0 million in /00:, "his re!resented a /,0Q decrease o3er /009 and an a3erage annual decrease o& 0,/Q since /003, German) #as the onl) 5U countr) that did not register sales gro#th o3er the !eriod, due !rimaril) to a 3er) !oor )ear in /00:, "he German mar.et #as 35Q larger than the ne6t countr), Ital), 7er ca!ita consum!tion o& F //9 is #ell ahead o& the 5U/: a3erage o& F 195, A&ter a !eriod o& slo# 4ut gradual gro#th since /003, the mar.et decreased in /00:, indicating the return o& uncertaint) and lac. o& con&idence 4) German consumers, As a conseAuence, and in addition to the #ider economic di&&iculties, it is unli.el) that the German &urniture mar.et #ill return to gro#th 4e&ore /010, $33% 1;,:50 a!le "#" Consumption of domestic furniture 2ermany( $33%-$334( 5 million $33& $33+ $33/ $334 *verage Populati per ann# . change on capita =million> in F 1;,03; 1;,;39 10,159 1;,9/0 %0,/ ;/,3 //9 6ccupa nts per h7h /,/ 8ouseholds =thousand> 30,1//

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A&ter a !eriod o& slo# 4ut gradual gro#th since /003, the mar.et decreased in /00:, indicating the return o& uncertaint) and lac. o& con&idence 4) German consumers, As a conseAuence, and in addition to the #ider economic di&&iculties, it is unli.el) that the German &urniture mar.et #ill return to gro#th 4e&ore /010, 7rice continues to 4e the most im!ortant determinant &or 4u)ing &urniture, although a recent stud) 4) mar.et research s!ecialist Hol?mann%Verlag suggests that consumers are returning to Aualit), "his !articularl) a!!lies to the o3er%50 consumer grou!, *itchens in !articular are 4ought on the 4asis o& Aualit), and 4rand names are 3er) im!ortant, <#ner occu!ation in German) is lo#er than the 5U a3erage, suggesting re!lacement rates &or ma-or &urniture !urchases are lo#er than else#here, Ho#e3er, !er ca!ita consum!tion o& &urniture in German) remains high des!ite the continual &ocus on !rice, "his suggests that 3olume !urchases o& &urniture are high, :Q o& all German dis!osa4le income is s!ent on the home, 7roduction Total production "he 3alue o& domestic &urniture !roduction in German) #as F 14,939 million in /00:, re!resenting an a3erage annual increase o& -ust 0,5Q since /003, Ho#e3er, this increase #as almost 5Q in /00:, indicating that German &urniture !roduction is catching u! its !osition #ithin the 5U, des!ite the signi&icant com!etiti3e !ressures &rom lo#er%!riced im!orts, German) #as the second largest !roducer in the 5U a&ter Ital), "hese t#o countries accounted &or almost 40Q o& all 5U domestic &urniture !roduction 4et#een them, $33% 14,35; a!le "#% Production of domestic furniture in 2ermany( $33%-$334( 5 million $33& $33+ $33/ $334 *verage 9um!er of companies ann#. change $33+ 13,001 13,05/ 13,040 14,939 0,5 4,500 9um!er of employees $33+ 100,000

"he German industr) continues to em!lo) a signi&icant num4er o& !eo!le des!ite technological de3elo!ments and contractions to ma.e the industr) more com!etiti3e, 7roduction is located !rimaril) in three areas =2orth Rhine%1est!halia, Ba3aria and Baden%1Trttem4urg>, "he industr) &aces man) challenges ahead, !articularl) as some o& its .e) e6!ort mar.ets are e6!eriencing economic di&&iculties, According to 5urostat, .itchen &urniture #as the largest segment o& German domestic &urniture !roduction, re!resenting a 35Q share, 3alued at F 5,1// million, &ollo#ed 4) &urniture !arts =F 3,;05 million or /9Q>8 4edroom &urniture =F /,105 million or 15Q>8 other &urniture =F 1,00/ million or 13Q>8 dining and li3ing room &urniture =F 1,31: million or 0Q>8 non%u!holstered &urniture =F /50 million or /Q> and rattan &urniture =F 140 million or 1Q>, In terms o& changing trends, .itchen &urniture !roduction and &urniture !arts ha3e seen the greatest increases in share, 5urostat does not !ro3ide in&ormation on u!holstered seating, 4ut this re!resented a!!ro6imatel) 0Q o& !roduction in /005, "he increase in !roduction e6!erienced in /00: is not e6!ected to continue into /00;, Eurther reductions in unit la4our costs are reAuired and &urther much%needed in3estments are reAuired 4e&ore &uture gro#th in the industr) can 4e con&identl) !redicted, Trends in production "he industr) has 4een &orced to 4e more &le6i4le to#ards the higher material costs and the increased !o#er o& the large retailers 4) e,g, su!!l)ing a !articular chair instead o& a #hole dining set or 4) &ast deli3er), $ome manu&acturers are 4ecoming more in3ol3ed in retailing in order to .ee! greater control o3er the &inal !rice at #hich their !roducts are sold, "here is a trend to increased e6!orts o& com!onents, #hich are assem4led a4road in eastern 5U countries or in Asia, (an) manu&acturers ha3e alread) relocated !roduction o3erseas, Greater em!hasis is 4eing !laced on design, Aualit) control and &inishing,

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1hile outsourcing is no# an im!ortant !art o& the industr), #ith much &urniture im!orted &rom eastern 5U countries and other !arts o& the #orld, high Aualit) standards are 4eing en&orced &rom the centre, "hese standards are also reAuired to 4e met 4) the outsourced !artners, (uch #or. is 4eing done in !roduct standardisation, es!eciall) &or sa&et) in use, "here has 4een an increase in !roducts using lighter hard#oods and a decline in !roducts using tro!ical hard#oods, "his has 4een dri3en 4) en3ironmental !ressures, as #ell as 4) consumer demand, Im!orts and 56!orts Total i!ports In /00:, German) im!orted domestic &urniture 3alued at F :,/1 4illion, or /,4;0 thousand tonnes, "his accounted &or /0Q o& all 5U im!orts 4) 3alue, or 10Q 4) 3olume, "his re!resented an a3erage annual increase in 3alue o& /Q since /003 &rom F 9,9: 4illion =/,;Q in 3olume &rom /,//3 thousand tonnes>, German) #as the largest im!orter o& domestic &urniture 4) 3alue and 3olume, In 3olume terms, their im!orts #ere close to the U*, "his gro#th in im!orts contrasted #ith a 0,/Q increase in e6!orts =0,5Q increase in 3olume>, Im!ort 3alues are 1/Q 4igger than e6!ort 3alues and 49Q 4igger than e6!ort 3olumes, A&ter &alling earlier this decade, !roduction 3alue in German) has 4een graduall) increasing, and re%e6!orting is not a ma-or &actor, At the same time, the consumer mar.et has 4een sho#ing an annual increase o3er the !eriod, Around //Q o& German im!orts 4) 3alue =F 1,5; 4illion> came &rom de3elo!ing countries and /4Q =5;: thousand tonnes> 4) 3olume, 7oland #as the largest su!!lier =/3Q o& total 3alue im!orts and /:Q o& total 3olume im!orts>, #ith su!!lies 3alued at F 1,9: 4illion or 9:/ thousand tonnes, "he ne6t largest su!!lier #as Ital) =0,:Q o& total 3alue im!orts and 10Q o& total 3olume im!orts>, #ith su!!lies 3alued at F 900 million or /4; thousand tonnes>, "he ne6t t#o largest su!!liers to German) #ere hina and the ?ech Re!u4lic, hina had su!!lies 3alued at F 940 million, or 314 thousand tonnes =0Q o& 3alue and 13Q o& 3olume>, "he ?ech Re!u4lic had su!!lies 3alued at F 504 million, or :; thousand tonnes =:Q o& 3alue and 3,1Q o& 3olume>, "he share o& su!!lies 4) de3elo!ing countries #as u! &rom 15Q in 3alue =F 004 million> in /003, and u! &rom 14Q in 3olume terms =&rom 305 thousand tonnes>, $u!!lies &rom hina, the leading de3elo!ing countr) su!!lier ha3e increased 4) an annual a3erage o& /4Q =/1Q 4) 3olume> o3er the !eriod &rom F /:; million =149 thousand tonnes>, #hile $outh A&rica@s su!!lies ha3e decreased 4) /,0Q !er annum 4) 3alue and 3,:Q 4) 3olume, $u!!lies &rom +enmar. #ere do#n in 3alue and 3olume, (ean#hile, su!!lies &rom Austria and $#it?erland #ere 4roadl) unchanged, #hile su!!lies &rom Vietnam in !articular and "ur.e) #ere u! in 4oth 3alue and 3olume, Total e"ports In /00:, German) e6!orted domestic &urniture 3alued at F 9,45 4illion, or 1,90; thousand tonnes, "his re!resented an increase in 3alue o& 0,/Q, and an a3erage annual increase o& 0,5Q in 3olume since /003, In /00:, German) #as the second largest e6!orter 4) 3alue, a&ter Ital), 4ut the third largest 4) 3olume, also a&ter 7oland, #hich #as the leading 3olume e6!orter, It #as #ell 4ehind Ital) in 3alue, 4ut 7oland is closing, It #as close to Ital) in 3olume, :5Q o& German e6!orts 4) 3alue #ere intra%5U =;/Q 4) 3olume>, the ma-orit) o& #hich #ent to the 2etherlands, Erance, Austria and $#it?erland, In terms o& !roduct grou!s, &urniture !arts accounted &or 3/Q 4) 3alue =F /,09 4illion or 4/0 thousand tonnes>, do#n &rom 34Q in /003, "he main destinations #ere Erance, the U*, the ?ech Re!u4lic, $lo3a.ia and 7oland, "he ne6t largest grou! o& e6!orts #as .itchen &urniture, #hich accounted &or /1Q o& all e6!orts =F 1,3; 4illion or 31: thousand tonnes>, u! &rom 1:Q in /003, "he 2etherlands and Erance #ere the main destinations, <ther &urniture re!resented 10Q o& all e6!orts =F 1,/5: million>, "his #as u! &rom 1:Q in /003, Erance, Austria, $#it?erland and the 2etherlands #ere the main destinations, U!holstered seating #as the ne6t largest !roduct grou! o& e6!orts at ;,0Q =F 5:5 million>, "he remaining grou!s o& e6!orts #ere as &ollo#sB 4edroom &urniture =F 5/3 million>, diningDli3ing room &urniture =F 390 million>, non%u!holstered seating =F /50 million> then rattan &urniture =F 55 million>, 'ar)et trends

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"rends #ithin the ta4les and chairs segment are strongl) in&luenced 4) trends in other home &urnishings and li&est)le sectors, "he .itchen, dining and li3ing room areas are increasingl) &lo#ing and merging into each other #ithout an) &orm o& !artitioning, Hence dining &urniture su!!liers no longer -ust ta.e account o& aesthetic inno3ations in .itchen &urniture, the) also need to see #hat is ha!!ening in li3ing rooms, "he li3ing room has 4ecome an entertainment s!ace, due to de3elo!ments in technolog) and communications, A multimedia centre is at the heart o& the modern li3ing room, Elat screens and +ol4) surround s!ea.ers are integrated into #all units, 'ust 10Q o& households o#ned a &lat screen "V in /004, 4ut that had increased to 9;Q 4) /00:, U!holstered so&as are no# multi%&unctional, #ith armrests, ad-usta4le 4ac.rests, rotating section &or a drin., com&orta4le rest &rom #hich to use a la!to!, Rooms are increasingl) characterised 4) their lightness, #ith hea3) cu!4oards 4eing re!laced 4) indi3idual elements tuned to the indi3idual reAuirements o& the homeo#ner, hanging trends in the 4edroom also ha3e im!lications &or &urniture, "he Aualit) o& a mattress has al#a)s 4een im!ortant, 4ut no# consumers are as.ing &or indi3iduall) made 4eds H longer or #ider, and other additional con3eniences such as 4uilt%in reading lights, integrated side ta4les, 1ardro4es no# ha3e 4uilt%in lights, illuminated clothes rods, !ull out shel3es, "he o3erall theme is #ell%4eing, 1hite u!holstered &urniture is still !o!ular, as it ma.es a room &eel 4igger and less cluttered, In German) there has also 4een a return to the design st)les o& the 10;0s, including chrome #ith 4lac. &urniture, <rganic sha!es, ultra thin ta4leto!s and L5+ lighting are -ust some other current trends that are !o!ular, Design mar)et urrentl) design 4elongs to the most success&ul su4 sector #ithin the creati3e industr), In German) the) distinguishes the &ollo#ing disci!linesB 7roduct designB industrial design' te"tile' furniture' 1e&el Visual communicationB graphic' photograph and ga!es design $!atial designB interior' gardens' landscape (ar.et si?e "he design mar.et is increasing, "his 4ecomes clear #hen )ou see the !ositi3e de3elo!ment in the turno3ers o& the design o&&ices and &rom the constantl) gro#ing num4er o& design o&&ices, #hich is 3alued on 30,000 in /009, a &i&tieth o& the #hole creati3e sector, "he design mar.et sho#ed a gro#th &rom almost 1/ !ercent, 4e&ore the economical crisis, In total, a!!ro6imatel) 1/0,000 !ersons are #or.ing in the design mar.et, three%Auarter o& them #or.s in the 3isual communication, "he sector e6ist mainl) &rom small o&&ices #ith less than ten em!lo)ees, (ar.et de3elo!ments, trend and chances "he disci!lines #ith the largest economical !otential are !roduct design and 3isual communication, <n the German mar.et, st)list ha3e to deal #ith on one side a !ositi3e mar.et de3elo!ment, 4ut on the other side also #ith a economical crisis situation, 7roduct design 4ecomes more international, In the &ield o& !roduct design, there is a lot o& com!etition &rom Ital), "he United *ingdom and $candina3ia, Almost one on the t#o consumers 4u) a#are design%related !roduct, And one is #illing to 4u) more design !roducts in the &uture, "he !ercentage o& consumers that #ill 4u) design !roducts #ill strongl) gro# in the coming )ears, currentl) it is 4: !ercent, "his has mainl) to do #ith the &act that design !roduct in de lo#%!rice segment #ill gro# and 4ecome more accessi4le &or the !u4lic, "he decorating 4ranch and &urniture 4ranch is also seen as a !otential mar.et, Interior design trends "raditional li&est)les are increasingl) disintegrating under the in&luence o& glo4alisation, the aging o& societ), and the desire &or greater inde!endence and indi3idualit) U in short, as a result o& social change, "his de3elo!ment is also e3ident in the home, 7eo!le no longer -ust li3e at home8 instead, home is the !lace #here #e can e6!ress our !ersonalit), "rend researchers call this de3elo!ment IhomingJ, a term that also re&ers to !eo!le@s tendenc) to seclude themsel3es #ithin their o#n &our #alls #here the) &eel cos) and com&orta4le, As a result, a ne# home%related mar.et has arisen in recent )ears, and this mar.et is set to de3elo! &urther in the &uture, Home accessories, &or e6am!le, ha3e

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4ecome more im!ortant, as the) can Auic.l) gi3e home interiors a distincti3e touch, 1hat used to 4e our Ihome s#eet homeJ #ill 4ecome a !lace &or &ul&illing indi3idual needs and reAuirements, "his ne# .ind o& ha4itat #ill 4e decorated in a 3er) conscious #a), But to do that, the sector needs lots o& ne# !roducts, ideas and ser3ices, In res!onse to this situation, &urniture manu&acturers are continuousl) e6!anding their range o& o&&erings, B) !ro3iding an e6tremel) di3erse range o& !roducts, the com!anies are #ell%eAui!!ed to meet the demand &or customi?ed !ieces o& &urniture that are almost uniAue items, "oda)@s so&a 4u)ers can choose 4et#een 3arious seating heights, hundreds o& di&&erent co3er &a4rics, 3arious #ood and metal legs, and lots more, 2ot onl) is there no# a gro#ing num4er o& di&&erent st)les8 design is 4ecoming 3astl) more im!ortant, Besides &urniture and cars, designers are no# e3en creating small consumer items such as tooth4rushes and 4read .ni3es, "oda), consumers are demanding good indi3idualised &urniture more o&ten than #as the case in the !ast, In addition, the increasing im!ortance o& the home is also re&lected in the large num4er o& "V sho#s !ro3iding in&ormation &or home%ma.ers and on ho# to choose good &urniture, ustomers@ demands on ne# &urniture are closel) lin.ed to their ada!ta4le li&est)les, 1hereas !eo!le used to 4u) 4uilt%in .itchens to last hal& a li&etime, the) no# !re&er modular ca4inets that can Auic.l) 4e ada!ted to ne# reAuirements, And instead o& a solid #all unit that remains stationar) &or 30 )ears, customers no# reAuest light#eight structures &or the eas) integration o& &lat%screen "Vs, "here is increased demand &or &urniture that is eas) to trans!ort, assem4le and disassem4le, And eas) trans!ort re&ers not onl) to mo3ing to a ne# &lat, 4ut also to mo3ing &urniture a4out in the home, 4ecause !eo!le change, redesign and redecorate their home interiors more and more o&ten, It there&ore comes as no sur!rise that the !orta4le 4ean4ag is e6!eriencing a come4ac., "oda) it is ta.en to #here3er the 4earer #ishes to sit do#n, Bac. in the 10:0s, !eo!le o#ned 4ean4ags 4ecause o& their organicall) modern design and loud colours, "oda), the &ocus is on their utilit), "his sim!le e6am!le sho#s that &urniture should !ro3ide solutions and not onl) ser3e as !roducts #hich !eo!le can use &or sitting, l)ing do#n or storage, "oda)@s &urniture is mostl) multi%&unctional, as it &ul&ils t#o or e3en three needs, $hoe cu!4oards come #ith mirrors on the 4ac., armchairs are eAui!!ed #ith a massage &unction, and so&as can 4e con3erted into 4eds #hen guests arri3e, 2ot onl) does modern &urniture need to 4e com&orta4le and attracti3e to loo. at8 it also has to 4e &unctional and e&&ecti3e, "he &uture can 4e 4right &or the &urniture and interior design sector, "he coming )ears #ill see tremendous gro#th in #orld#ide demand U and the need &or &urniture that ena4les consumers to ma.e their dream homes a realit), Distri!ution structure 1, +eli3er) o& the #ood 4) su!!liers Rare#oods P /, 7re !roduction and deli3er) 4) su!!lier L(oorges@ P /, (ain !roduction and manu&acturing in the #or.!lace located in 1oodstoc. a!e "o#n P 3, =1holesalers, sho!s, decorators, retailers, lu6ur) 4outiAues, guesthouses>D e6!ort or trans!ort com!an) % P 4, Einal customers Vogel manu&actures his !roducts on reAuest, A customer =or #holesaler and similar> !laces an order, Vogel is de!endent o& his su!!lier called LRare#oods@, +esigner 'ohn ma.es one e6am!le o& an ottoman =this is one o& the legs o& the !roducts> and deli3ers this at com!an) LRare#oods@, "his com!an) has a s!ecial co!) machine #hich co!ies the s!ecial sha!es o& the !roducts, A&ter this deli3er) Vogel cra&t and manu&actures the !roducts &urther and deli3ers them at the customer, Vogel deli3ers his !roducts at the customers in the area o& a!e "o#n, In case o& e6!ort or 4ig distances #ithin $outh A&rica, Vogel deli3ers the items at the e6!ort or trans!ort com!an) #hich #ill shi! the !roducts, Vogel ma.es use o& an e6!orter =li.e *uehne 2agel, Atlantic Eor#arding and $A argo> #hich arrange e3er)thing,

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A de!osit o& 50Q is !aid 4e&ore the !roduct go on the shi!, 2ormall), 'ohn Vogel arrange #ith his &oreign customer that the) #ill !ic. u! or arrange the trans!ort in their o#n countr), 1hen Vogel has a customer #ithin $outh%A&rica #hich is located to &ar to deli3er the !roducts himsel&, Vogel ma.es use o& Grindrod #hich is also an international trans!ort com!an) and is s!eciali?ed in trans!orting &urniture, Vogel has s!ecial !rice arrangement #ith this com!an) It goes the same #ith international customers, A 50 !ercent de!osit has to 4e !aid 4e&ore the !roducts go into the truc., "he #a) o& distri4ution that Vogel uses no#, is the most !ro&ita4le &or him, Eor e6am!le to deli3er &rom door%to%door #ith a courier is cost &rom a!e "o#n to 'ohannes4urg R1/00, But #hen Vogel deli3ers his !roducts to a argo com!an)Dde!artment is onl) costs him R/:0 4ecause he has good !rice arrangement #ith the argo com!anies, rade analysis (A R<% &actors

DES EP analysis 2ermany As 5uro!eOs largest econom) and second most !o!ulous nation =a&ter Russia>, German) is a .e) mem4er o& the continentOs economic, !olitical, and de&ence organi?ations, 5uro!ean !o#er struggles immersed German) in t#o de3astating 1orld 1ars in the &irst hal& o& the /0th centur) and le&t the countr) occu!ied 4) the 3ictorious Allied !o#ers o& the U$, U*, Erance, and the $o3iet Union in 1045, 1ith the ad3ent o& the old 1ar, t#o German states #ere &ormed in 1040B the #estern Eederal Re!u4lic o& German) =ERG> and the eastern German +emocratic Re!u4lic =G+R>, "he democratic ERG em4edded itsel& in .e) 1estern economic and securit) organi?ations, the 5 , #hich 4ecame the 5U, and 2A"<, #hile the ommunist G+R #as on the &ront line o& the $o3iet%led 1arsa# 7act, "he decline o& the U$$R and the end o& the old 1ar allo#ed &or German uni&ication in 1000, $ince then, German) has e6!ended considera4le &unds to 4ring 5astern !roducti3it) and #ages u! to 1estern standards, In 'anuar) 1000, German) and 10 other 5U countries introduced a common 5uro!ean e6change currenc), the euro, +emogra!hic &actors "he Eederal Re!u4lic o& German) had a sur&ace o& 35:,0// sA .m, "he countr) lies in the middle o& entral%5uro!e, German) 4orders in the north to +enmar., in the east to 7oland and the ?ech Re!u4lic, in the south to Austria en $#it?erland and in the #est to Erance, Lu6em4ourg, Belgium and the 2etherlands, A!!ro6imatel) one third o& the !resent German territor) is &ormed 4) the &ormer ++R, "he ca!ital o& German) is mo3ed &rom Bonn to Berlin, German) has 19 states 2Baden,0uertte!berg' Bayern 2Bavaria3' Berlin' Brandenburg' Bre!en' 4a!burg' 4essen' ecklenburg,%orpo!!ern 2 ecklenburg,0estern Po!erania3' *iedersachsen 2-o&er +a"ony3' *ordrhein,0estfalen 2*orth .hine,0estphalia3' .heinland,Pfalz 2.hineland,Palatinate3' +aarland' +achsen 2+a"ony3' +achsen, $nhalt 2+a"ony,$nhalt3' +chles&ig,4olstein' Thueringen 2Thuringia35 note , Bayern' +achsen' and Thueringen refer to the!selves as free states3( German) is a #ide s!read countr) #ith a lot o& di&&erences 4et#een the di&&erent states, "o 4e succeeded on the German mar.et, it is #ise to select a &e# states rather than entering #hole German), 5conomical "he German econom) % the &i&th largest econom) in the #orld in 777 terms and 5uro!eOs largest % 4egan to contract in the second Auarter o& /00; as the strong euro, high oil !rices, tighter credit mar.ets, and slo#ing gro#th a4road too. their toll on German)Os e6!ort%de!endent econom), At 1,:Q in /00;, G+7 gro#th is e6!ected to 4e negati3e in /000, Recent stimulus and lender relie& e&&orts #ill ma.e demands on German)Os &ederal 4udget and undercut !lans to 4alance its 4udget 4) /011, $trong gro#th in /00: led unem!lo)ment in /00; to &all 4elo# ;Q, a ne# !ost%reuni&ication lo#, "his suggested the re&orms launched 4) the &ormer go3ernment o& hancellor Gerhard $ H<5+5R, deemed necessar) due to chronicall) high unem!lo)ment and lo# a3erage gro#th, and had had the desired e&&ect, "he current go3ernment o& hancellor Angela (5R*5L has initiated other re&orm measures, such as a gradual increase in the mandator) retirement age &rom 95 to 9: and measures to increase &emale !artici!ation in the la4our mar.et, German)Os aging !o!ulation, com4ined #ith high chronic unem!lo)ment, has !ushed social securit) outla)s to a le3el e6ceeding contri4utions, 4ut higher go3ernment re3enues &rom the c)clical u!turn in /009%0: and a 3Q rise in the 3alue%added ta6 cut

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German)Os 4udget de&icit to #ithin the 5UOs 3Q de4t limit, "he moderni?ation and integration o& the eastern German econom) % #here unem!lo)ment e6ceeds 30Q in some munici!alities % continues to 4e a costl) long%term !rocess, ho#e3er, #ith annual trans&ers &rom #est to east amounting to roughl) V;0 4illion, 1hile cor!orate restructuring and gro#ing ca!ital mar.ets ha3e set strong &oundations to hel! German) meet the longer%term challenges o& 5uro!ean economic integration and glo4ali?ation, German)Os e6!ort%oriented econom) has !ro3ed a disad3antage in the conte6t o& #ea. glo4al demand, 2ormall) s!o.en, German) has a standard and relia4le econom), 1ith the economical crisis, the econom) o& German is getting more #orse =the 4iggest economies had the su&&er the most>, "his mainl) has to do #ith the &alling car industr), $ocial &actors In general, German relations considered as 4eing !leasant and 3er) relia4le trading !artners, A detailed !lanning in a tight !eriod o& time characterises German 4usinesses, 1ith e6!orting goods )ou must !a) attention to the &act that the German consumer &inds Aualit) 3er) im!ortant, the) al#a)s #ant to ha3e the 4est Aualit), Germans are &riendl) and !olite 4ut 4eha3e distantl) and &ormal, "hreat )our 4usiness relations #ith res!ect, Although in general, &ull &irst names are mentioned on 4usiness cards, )ou cannot call )our German 4usiness !artners 4) &irst names, In con3ersations )ou al#a)s start #ith Herr =$ir> or Erau =(adam> &ollo#ed 4) the surname, 1hen someone had a title li.e +octor or 7ro&essor, )ou start #ith Herr +octor, Al#a)s lea3e )our 4usiness card 4ehind, also #hen the !erson #ith #ho )ou #anted to tal. #ith is not around, 7ersonal 4usiness a&&airs #ill not ha!!en 3er) Auic.l), German 4usiness !eo!le are reser3ed in ma.ing lunchD dinner a!!ointments and the #ill not tell a lot a4out their !ri3ate li&e, "he )oung generation is mostl) a 4it more in&ormal, Germans !re&er to s!ea. German, 4ut it is no !ro4lem to ha3e a con3ersation in 5nglish, es!eciall) #hen )ou come &rom a countr) o3erseas, 1hen )ou ha3e a meeting #ith German !eo!le, ma.e sure )ou are on time, Germans are #ell .no#n &or their !unctualit), In general, )ou German 4usiness !artner #ill 4e #ell !re!ared in a 4usiness meeting, Germans li.e to negotiate, All &actors ha3e to 4een chec.ed and the) li.e hard &igures and &acts, German 4usiness !eo!le are dressed &ormal and neat, It is recommenda4le to #ear &ormal clothes, "echnologies German) is characteri?ed 4) a high Aualit) technologic%economic in&rastructure, "he most im!ortant com!etences are at conce!tuali?ation techniAues, minimal inno3ati3e surger), o!tics, laser technologies, Belo# )ou can &ind some s!eci&ic technologies o& German), Industry German) is one o& #orld@s 4iggest and technologic highest de3elo!ed !roducers o& iron, steel, coals, cement, chemicals, machines, 3ehicles, machine !arts, electronics, dietar) !roducts and te6tile !roducts, Telephone syste!) German) has one o& the #orld@s highest de3elo!ed telecommunication s)stems, "his 4ecause o& the &act that German) made a lot o& ca!ital in3estments since the reuni&ication, the &ormer old%time tele!hone s)stem in the 5ast moderni?ed and integrated in the 1est, Inland) German) ta.es ad3antage o& an e6tensi3e s)stem o& automatic "ele!hone e6changes, connected through modern net#or.s o& glass &i4res, coa6 ca4les, micro#a3e and a o#n satellite s)stem, (o4ile tele!hone net#or.s are #ide s!read national and international into man) countries, German) is one o& the to! industr) and technological countries o& the #orld, But there are not reall) im!ortant &acts that Vogel has to .no# or that can threat Vogel, 5cological +e changes in climate and energ) su!!l) contri4ute that the concern o& rene#a4le D sustaina4le energ) sources increases, Because o& the international economical crisis, the rene#a4le energ) sector in German) remained and #ill gro# less, "he &inancing o& such !ro-ects is harder than the )ears 4e&ore, "he German !olic) stimulates the use o& rene#a4leD sustaina4le energ) sources, 56!ectations sa) that

25

the gro#th o& rene#a4le energ) #ill gro# in /010, "his &actor could 4e im!ort &or Vogel 4ecause he ma.es #ooden &urniture, He has to ma.e sure =and chec. regularl)> that his #ood is ecological en en3ironmentall) o., 7oliticalD-uridical &actors German) is a &ederal state, e6isting &rom si6teen states and a coordinating association go3ernment, At head o& the countr), de !resident stand, "he !resident is elected 4) the association council and !arliament &or &i3e )ears, "he !resident signs ne# la#s and has more a re!resentati3e &unction, $ince the &irst o& 'ul) /004 the &unction o& !resident is &ul&illed 4) Horst *Whler, In German), three !o#ers had 4een di3ided as &ollo#edB Legislati3eB Association ouncil and 7arliament 56ecuti3eB Association go3ernment and association chancellor 'udiciar)B Eederal constitution, ourt o& -ustice "he !arliament is chosen 4) the German !eo!le once in the &our )ears, "he most im!ortant tas.s o& the !arliament are the legislation, chec.ing the go3ernment and choosing the associations@ chancellor, "he !arliament counts 914 mem4ers, All o& those mem4ers ha3e the right to introduce a ne# 4ill in 7arliament, "he association chancellor com!oses the association go3ernment, "he chancellor is 7resident o& the go3ernment and has 4een chosen the mem4ers o& the ca4inet as #ell, (oreo3er the chancellor dots the directi3es &or the go3ernment !olic) &rom =Richtlinien.om!eten?>, as a result o& #hich he has large !o#er #ithin the ca4inet, At !resent, the go3ernment e6ists &rom the so%called large coalition o& +UD $U = hristian democrats> and $7+ =social democrats> under the guidance o& association chancellor Angela (er.el, "he highest -udiciar) !o#er in German) is the constitutional ourt o& 'ustice, the Bundes3er&assungsgericht, "his ourt o& 'ustice has 4een esta4lished since 1051 and has #atched concerning the constitution, It e6ists &rom t#o senates o& each eight -udges, "he -udges o& each senate are chosen &or the hal& 4) the association ouncil and &or the other hal& 4) the molar commission o& the !arliament, "he Bundes3er&assungsgericht ta.e decisions concerning com!laints concerning the inter!retation o& the constitution, dis!ute concerning the !o#ers o& constitutional and state agencies, concerning the agreement o& constitutions o& the states #ith the constitution o& com!lete German) and concerning raising a !olitical !art), 2ot onl) states can de!osit a com!laint at the ourt o& 'ustice, also indi3iduals can do that, "he !ronouncement is 4inding &or all state agencies, !arties and !ersons,

Porter + forces
(ichael 7orter has de3elo!ed a model, in #hich &i3e com!etition &orces and the 3alue chain o& a com!an) get con&ronted, "his results in a num4er o& com!etition strategies, "he &i3e com!etition strategies o& the model areB Bargaining !o#er o& customers "hreat o& ne# entrants "hreat o& su4stitute !roducts Bargaining !o#er o& su!!liers om!etiti3e ri3alr) #ithin an industr)

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"he threat o& ne# entrantsB Vogel is situated in an o!en mar.et, 2e# 4usiness can enter easil), "his means that Vogel can easil) enter the German mar.et, 4ut this also counts &or the com!etition, "he com!etition can arise 4ecause o& this, "here are no ma-or !ro4lems #ith e6!orting to German), I thin. a lot o& 4usiness could get some su4sidies &rom their go3ernment, "hreat o& su4stitute !roductsB "he &urniture that Vogel !roduces is timeless and not trend sensiti3e, Although there are di&&erent trends in &urniture, 4ut )ou can sa) that Lcolonial@ is a ne3er ending trend, Eor this reason Vogel has not to #orr) a4out trends in &urniture o& su4stitute !roducts, Bargaining !o#er o& su!!liersB Vogel has good contact #ith his su!!liers in $outh%A&rica, He is !artl) de!endent on them, 4ecause his main material #ood is deli3ered 4) them, "his #ood has to ha3e good Aualit) and so on, Vogel had ne3er !ro4lems #ith 4ad Aualit) o& #ood andDor the #ea3ing cotton materials, Vogel has to !ut attention that the #ood that he is using is legal, Bargaining !o#er o& customersB onsumers are im!ortant &or Vogel, A ne# 4rand and range o& !roducts can 4e attracti3e 4ut Vogel has to #or. on his 4rand a#areness, es!eciall) in the 4eginning o& entering the German mar.et, 1ith choosing the right su!!liers, Vogel can 4e success&ul on the German mar.et, "o choose the right su!!lier, the U$7@s o& 4oth should met, om!etiti3e ri3alr) #ithin an industr)B German) has the largest &urniture mar.et in 5uro!e, "here&ore it is no sur!rise that the com!etition is ruinous, "he num4er o& com!etition is high and the com!etition is di3erse, "he industr) #ill gro# #hen the econom) #ill 4e 4etter, "he t#o &orces in this model are the com!etiti3e ri3alr) and the 4argaining o& the customers, Because o& this, Vogel can 4etter start #ith a di&&erentiation &ocusDstrateg),

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/# Competitor analyse German) has one o& the largest &urniture distri4utors in 5uro!e, "his means that there are a lot o& com!etitors, I #ill discuss the most im!ortant !la)ers 4elo#, $till, #e ha3e to 4ear in mind that there are a lot o& small designers li.e 'ohn Vogel #ho are .no#n in the mar.et 4ut not tracea4le through the Internet and the contacts that #e ha3e, I ha3e selected the main !la)ers on the German mar.et =#hich are indirect com!etitors> and the main com!etitors =direct com!etitors> in $outh%A&rica #hich are also doing 4usiness in German)D 5uro!ean mar.et, "he main &urniture manu&acturers in German) areB Schieder 2ruppe $chieder Gru!!e is the largest German &urniture manu&acturer o& household &urniture #ith sales o& #ell o3er F 1 4illion, It is also the largest &urniture manu&acturer in 5uro!e =htt!BDD###,schieder,com>, It is a #hole di&&erent com!an) than Vogel 4ut the) sell the same things8 &urniture, $chider Gru!!e !roduces, manu&actures and sells all .inds o& &urniture, <!!ortunit)D threat &or Vogel8 "he) are #ell .no# in the German mar.et as #ell in the 5uro!ean mar.et, "he) ha3e a #ide range o& di&&erent !roducts and di&&erent st)les, "he) &ocussing on 3arious mar.et segments, Altough the) are a #ell .no#n mar.et !la)er in German) the) are not as e6clusi3e and uniAue as Vogel is, Also, their &urniture is not handcra&ted, "he !rice le3el is a4out the same as Vogel, "he di&&erence is that $chieder Gru!!e &ocuses on the #hole mar.et #hile Vogel &ocuses on smaller segments, 8uelstra

HTlsta started his com!an) in 1040, there are more than 90 )ear acti3e in the =German> &urniture mar.et, HTlsta is &ocused on !ersons #ho are at their middle ages #hich !re&er a high Aualit) standard, 1ith their ne# !roduction line no#X the) are &ocussing on the )ounger and more &le6i4le !eo!le, HTlstra !roduces, manu&actured and sells all .inds o& &urniture <!!ortunitiesD threats &or Vogel HTlstra &ocuses mainl) on the same segments as Vogel, "he) ha3e the same Aualit) standards, HTlstra is #ell .no#n on the German mar.et an has a lot o& sales8 the) are alread) success&ul on the GermanD5uro!ean mar.et, 8ol:mo!el

Hol?mo4el is a &urniture manu&actures #hich sells onl) &urniture o& #ood, It distri4uted through the Internet #ith their #e4!age ###,hol?mo4el,com, <!!utunitiesD "hreats &or VogelB Hol?mo4el onl) sells through the Internet, "his is a o!!ortunit) &or Vogel, Bu)ing through the Internet is 3er) !o!ular no#ada)s 4ut this trend #ill decrease, 1hen )ou are high in3ol3ed in decorating )our home =li.e the customers o& Vogel> )ou #ill not 4u) )our &urniture through the Internet, $till, Hol?mo4el is a com!etitor 4ecause the) sell onl) #ooden &urniture, li.e Vogel does the same, Hol?mo4el is not the 4iggest threat is #a)s o& com!etition on the German mar.et, "he main !la)ers in $outh%A&rica areB 8aldane 'artin ;<<<#haldanemartin#co#:a=

Haldane (artin is also a $outh A&rican &urniture designer and &ormer 4usiness !artner o& 'ohn Vogel, HAL+A25 (AR"I2 "( esta4lished in /00/, is a leading contem!orar) $outh A&rican &urniture design com!an) 4ased in a!e "o#n $outh A&rica, "he &urniture collection consists o& 31 uniAue, &urniture !roducts all originall) designed and !roduced in $outh A&rica, "he designs ha3e #on a num4er o& design a#ards, and ha3e 4een e6hi4ited in 2e# Gor.,

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London, 7aris, <slo, $toc.holm, 'ohannes4urg, a!e "o#n and +ur4an, "he &urniture has 4een &eatured e6tensi3el) in the local !ress and international ne#s!a!ers and design !u4lications, Haldane (artin !roduces &urniture 4) outsourcing com!onent manu&acturing to s!eciali?ed engineers and &urniture manu&acturers all o3er $outh A&rica, "he) manage the outsourcing, control Aualit), assem4l) and logistics &rom our studio D sho#room D #arehouse in 1oodstoc., a!e "o#n, "he !roducts that Haldane (artin sells areB ouches hairs =4arDo&&iceDtu4> Lights Benches "a4les $ide ta4les <!!ortunitiesD threats &or Vogel In com!arison to Vogel, Haldane (artin sells a #ider range o& !roducts than Vogel, "he) ha3e more 4rand a#areness national and internationall), He got his o#n sho#room located in 1oodstoc., Actuall), Haldane (artin can 4e seen as one o& the 4iggest threats o& Vogel 4ecause he is the most direct com!etitor o& Vogel, Althoug all #ritten a4o3e, the !roducts o& Vogel are still 3er) di&&erent &rom the !roducts o& Haldane (artin, Vogel and (artin ha3e a di&&erent st)le o& designing &urniture, !lus the !roducts o& Haldane (artin are much more e6!ensi3e than Vogel, onic design ;<<<#tonicdesign#co#:a=

Greg Gam4le and 7hilli!e 3an der (er#e are the designer o& "<2I , "he) !roduce, re!resents almost a decade at the &ore&ront o& the countr)@s design industr), 2o# sho#cased at their 7ar.to#n 2o33rth sho#room, the "<2I range consists o& 4oth 4es!o.e and limited%edition !ieces, alongside select im!orted series, As cham!ions o& the $outh A&rican design industr), the) also stoc. man) o& the most interesting local designs, "raditional cra&tsmanshi!, and the unorthodo6 use o& materials, are t#o enduring characteristics o& the #or. o& the studio, A re&ined, so!histicated, modern elegance is e6!lored in 3arious design%dri3en !ro-ects that range &rom cor!orate, and residential through to retail and hos!italit), "onic &ocuses on creating &urniture !ieces that stri3e &or sim!licit), #hile e6!loring ne# materials and creati3e a!!roaches to design, All &urniture items are manu&actured using onl) the highest Aualit) materials and the 4est o& local cra&tsmanshi!, "onic +esign is also a s!eciali?ed design &irm, &ocusing on original and creati3e !ro-ects ranging &rom domestic, retail, cor!orate and hos!italit) design,

"onic also o&&er a &ull interior design ser3ice &or domestic interiors, "his ranges &rom the su!!l) o& indi3idual items to turn.e) interior design !ro-ects, "he) also ha3e e6tensi3e e6!erience in cor!orate, retail and hos!italit) design % and o&&er their clients a !ro&essional design ser3ice &rom conce!t to e6ecution, "onic sellsB Beds a4inets hairs Bench =small> Boo.cases $o&as <!!ortunitiesD "hreats &or Vogel8 "onic had a #ider range o& !roducts, "his can 4e a threats as #ell as an o!!ortunit) &or Vogel, "he #ider ranger o& !roducts attracts more customers 4ut "onic is not s!eciali?ed in one !roducts as Vogel is in chairs, "he designs o& "onic are a 4i di&&erent and not #ooden or nature made, Although "onic is a com!etitor o& Vogel 4ecause o& the same segment o& customers and distri4utors, the !roducts are still di&&erent, Vogel has not to #orr) a4out "onic,

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Vogel@s UniAue selling !oints H com!etitors "he uniAue selling !oints o& Vogel areB Vogel o!erates on the to! end mar.et #ith its &urniture Vogel has a strong re!utation and .no#s its com!etitors 3er) #ell lients can order customer demanded !roducts +esigner 'ohn Vogel has good design s.ills =a#arded in design e6cellence> Vogel has a good customer orientationD customer ser3ice "he !roducts are handcra&ted and em4odies a $outh A&rican 3ernacular "he !roducts are timeless and not according to the latest trends "he materials that he is using &or his !roducts are high Aualit) materials "he !roducts are uniAue and 3er) original

"he uniAue selling !oint #here Vogel distinguish himsel& &rom the com!etitors are the !oints that he has a#ard #inning designing s.ills, 5s!eciall) the &act that he #on design a#ards is im!ortant &or the German customers, "hose customers also li.e his customers ser3ice, he is a4le to !roduce customer demanded, Large &urniture sho!s are not customer demanded at all, "he U$7@s that are related to the !roducts are the &acts that his !roducts are timeless, uniAue and 3er) original, 1ith this !oints he can also distinguish himsel& &rom the com!etition,

Competitor strategy
It is no secret that Vogel has a lot o& com!etitors on the German mar.et, "hough, the German mar.et si?e is 4ig enough to handle a lot o& &urniture designers, "his has also to the #ith the &act that es!eciall) in the $outhern !art o& German) , customers #ill 4u) 1ooden &urniture, "o com!ete #ith the e6isting com!etition Vogel shouldB Handle a lo#er !rice than his most im!ortant com!etitors, Vogel is un.no#n 4) the German customers and ne# on the mar.et, "o ha3e a lo#er !rice =#ith the same Aualit) as their com!etitors> Vogel #ill 4e more attracti3e &or its customers, "he !rices should not 4e to lo#, this can mean that he loses his to!%end mar.et !osition, 'ust ma.e sure that he sta)s under the com!etition #ith his !rices, A&ter succeeded on the German mar.et, he can increase his !rices, Vogel should remain his to!%end mar.et !osition, He has to ma.e sure that he does his !romotion and mar.eting acti3ities &or the right target grou! andDor mar.et segment, 7oint out the his U$7@s, his !roducts are uniAue, timeless, o& good Aualit) etc, Also he should continue his tree !lanting nature conser3ation !ro-ects, 5n3ironment and ecological com!anies are 3er) !o!ular at this moment, 1ith this s!ecial !ro-ects, Vogel attracts attention 4) the German customers, He should mention #hich a#ards he #on and in #hich =#orld &amous> maga?ines he had an article, German customers are sensiti3e &or this .ind o& &acts, !lus it distinguish Vogel &rom the com!etition Vogel has to u!date and chec. is com!etition o&ten, "he German mar.et is an eas) and !o!ular mar.et to enter, om!etition #ill rise and ne# !la)ers #ill enter o&ten,

30

Distri!ution analysis
'ar)et entry and distri!ution As a manu&acturer in a de3elo!ing countr) !re!aring to access German), )ou should 4e a#are o& the mar.et access reAuirements o& )our trading !artners and the German go3ernment, ReAuirements are demanded through legislation and through la4els, codes and management s)stems, "hese reAuirements are 4ased on en3ironmental, consumer health and sa&et) and social concerns, Gou need to com!l) #ith 5U legislation and ha3e to 4e a#are o& the additional non%legislati3e reAuirements that )our trading !artners in the 5U might reAuest, Mualit) reAuirements "here are Aualit) reAuirements i,e, the +I2 standards in German) &or man) &urniture items that can ser3e as an international 4enchmar., (ost o& the &unctional inno3ations and ergonomic im!ro3ements ha3e emerged &rom German manu&acturers, +ura4ilit) standards ha3e 4een esta4lished relating, &or e6am!le, to the resistance o& !roducts H sur&ace resistance to dr) heat, cold liAuids and contracting mo3ements, Mualit) standards e6ist &or #ood treatment #ith regards to !reser3ation and glueing, Gou can chec. at the +eutsches Institut &Tr 2ormung =htt!BDD###,din,de> i& there are standards &or )our !roduct, In contem!orar) or colonial st)le &urniture, 4u)ers e6!ect #oods o& an e6cellent Aualit) e,g, .iln dried, &ree &rom !est, crac.ing, s!litting and &rom &ull gro#n trees &rom #ell%managed &orests, In the case o& sel&%assem4l), the material o& the &ittings should 4e o& good Aualit) and 4e correctl) made so that all com!onents match and &it #ell, 7ac.aging, mar.ing and la4elling A!art &rom the sa&et) as!ects and !rotection against damage, the &ocus o& !ac.aging is on en3ironmentall) &riendl) trans!ort, +o#nload in&ormation on reAuirements on !ac.aging, mar.ing and la4elling in s!eci&ic 5U mar.ets &rom the BI #e4site, 1ith regard to la4elling &or retail sales o& &urniture, there are no legall) 4inding reAuirements and la4els are !rimaril) used as !romotional sales tools, In German), standard la4elling s)stems are 4eing introduced 4) the trade to ensure that consumers are correctl) in&ormed, "he ne# la4elling code set out 4) the German &urniture trade association +G( reAuires the &ollo#ing in&ormation to 4e &eatured on la4elsB 7roduct descri!tionDname8 (odelDt)!e8 onstructionDmaterials used8 A3aila4ilit) o& di&&erent models8 ")!e o& u!holster)8 are and cleaning ad3ice8 "reatmentsDtests carried out8 Guarantee, Additional in&ormation on !ac.aging can 4e &ound at the #e4site o& I" on e6!ort !ac.agingB htt!BDD###,intracen,orgDe!D!ac.it,htm, In&ormation on tari&&s and Auota can 4e &ound at htt!BDDe6!orthel!,euro!a,euD,

"rade channels &or mar.et entr) Trade channels "he German &urniture mar.et has a 3aried s)stem o& distri4ution and a #ide num4er o& commercial o!erators, including manu&acturers, #holesalers, retailers, agents and consumers, "he .e) distinction is 4et#een traditional and non%traditional channels, "raditional channels include direct im!orting and the retail trade, #hich includes s!ecialist retailers, technical s!ecialists =eg .itchen s!ecialists>, inde!endent retailers and large non%s!ecialists including +IG, h)!ermar.ets, de!artment stores and mail order, 2on%traditional channels include electronic commerce =either 4usiness to 4usiness H B/B, or 4usiness to consumer H B/ >, &actor) outlets, "V sho!!ing and direct sale 4) manu&acturers,

31

"he traditional channel dominates, accounting &or o3er three Auarters o& all distri4ution, Bu)ing grou!s in !articular are 3er) strong in the German &urniture mar.et, accounting &or o3er 90Q o& the mar.et, "he main 4u)ing grou!s are Begros #ith 0 4usinesses and 1/0 outlets, including YYYLut?, 7orta, <stermann, (W4el Ein.e, (W4el Billa, (W4elstadt $ommerlad and (W4el (artin =htt!BDD###,4egros,de>8 Garant #ith 1,300 outlets in German) and o3er 3,000 #orld#ide =htt!BDD###,garantmoe4el,de>8 Union #ith /; outlets =htt!BDD###,union%moe4el,de>8 5uro!a (oe4el Ver4und, #hich 4u)s on 4ehal& o& 15 se!arate trading com!anies =htt!BDD###,em3er4und,de>8 and V(5 #ith 3/0 outlets =htt!BDD###,3me% online,net>, <ther 4u)ing grou!s include Atlas =including $egmTller>, Alliance, der *reis, V*g, G&m% "rend%Regent 1ohngru!!e and (H*, $ome o& these 4u)ing grou!s re!resent !otential !ros!ects &or e6!orters &rom de3elo!ing countries, In addition, #holesalers and im!orters are im!ortant routes to reach the remaining inde!endent s!ecialist retailers that do not 4elong to a 4u)ing grou!, Eurniture agents are also im!ortant in the &urniture su!!l) chain, Gou can &ind agents at the Association o& ommercial Agents and Bro.ers =htt!BDD###,cdh,de>, Interesting #holesalers and im!orters includeB S $teinho&& is a com!an) that is associated #ith 3arious countries &or the sale o& &urniture and household goods, It@s also a manu&acturer and im!orter =htt!BDD###,steinho&&international,com>, S A#i 1ohndesign, located in Biele&eld, deals #ith tea. and rattan &urniture, "his com!an) #or.s s!eci&icall) #ith Indonesia =htt!BDD###,a#i%#ohndesign,de>, S "o! (o4el, located in Eran.&urt, deals #ith &urniture &rom India, hina or Indonesia =htt!BDD###,ali4a4a,comDmem4erDto!mo4elDa4outus,html>, S Lin.s to #holesalers and im!orters can also 4e &ound 3ia htt!BDD###,german&urniture,de, .etail trade "here are o3er 10,000 s!ecialist &urniture outlets in German), and 14,000 retail outlets in total #here &urniture is sold, "he mar.et is 3er) com!etiti3e and is characterised 4) a lot o& discounting and s!ecial o&&ers, as #ell as mergers, acAuisitions and 4an.ru!tcies, +istri4ution channels in German) "here is no rule or regulation #hich #ould limit &oreign su!!liers in their choice o& distri4ution channels, It is usuall) the nature o& the !roduct that hints to one #a) o& distri4ution or another, "he second as!ect to consider is the degree o& in3ol3ement, A large !ro!ortion o& consumer goods, te6tiles, &urniture and &oodstu&& are sold through 4ig #holesale and retail enter!rises, "he) ha3e their sourcing de!artments 4u)ing around the glo4e #ith re!resentations in man) countries, "hus, courting them is an o!tion in man) home%countries, In addition, there are trading houses or inde!endent sales agents, #ho manage the com!lete line o& distri4ution, i,e, the) 4u) the !roduct &rom the !roducer, &ind customers &or it and sell it to the end%user, "rading com!anies and sales agents are usuall) s!ecialised in !articular goods and ha3e a good o3er3ie# o& !otential customers, (an) industrial goods are sold indirectl), meaning an intermediate is in3ol3ed to catal)se or manage the sale, "he role o& this intermediate can 4e ta.en 4) an inde!endent sales agent, #hich usuall) reAuires 3er) little in3ol3ement and ris. &or the !roducer, as the sales agent 4u)s the !roduct and resells it to the &inal customer, An inde!endent distri4utor does the same -o4, 4ut ma.es his li3ing not &rom the margin 4ut on a commission 4asis, #hich indicates some additional ris. o& a non%!er&orming counter!art &or the !roducer, A sole distri4utor, #ho onl) distri4utes one com!an)Os !roducts, #ill usuall) demand higher commissions, "o #or. s)stematicall) the German mar.et, a Re!resentati3e <&&ice might 4e a 3ia4le o!tionB "he re!resentati3e acts on 4ehal& o& his mother com!an), Being 4ased in German), she or he can loo. dee!er into the German mar.et and can esta4lish longstanding relationshi!s #ith customers, $u!!ort is a3aila4le &rom the Eederation o& German 1holesale and Eoreign "rade, "o get in touch #ith sales agents s!eciali?ed in !articular !roducts, there is a data4ase a3aila4le &rom the 2ational Eederation o& German ommercial Agencies and +istri4ution, >ill the current <ay of distri!ution succeed in 2ermany? 1hen it comes to costs o& distri4ution and trans!ort, Vogel #or.s #ith Le6 #or.s@, 1hen Vogel decided to #or. on the #a) he =and the e6!ort com!an)> needs the &ollo#ing documentsB

32

"rans!ortation documentsB As goods are 4ought or sold in the &oreign countr), the trans!ort !la)s an im!ortant role the get the goods on the right !lace o& destination, "he e6!enses o& the trans!ortation and the #a) #hich the goods are trans!orted ha3e to 4e mentioned in the Auotation, I& the su!!lier !rescri4e in the Auotation that the) deli3er e6 #or. he must regulate the trans!ort and insurance,, +e!endent on the chosen manner o& trans!ortation =road trans!ort, rail#a) #ater H or air trans!ort> the im!orter or e6!ort com!an) has to ha3e the right international cargo letter, "he su4%di3ision is as &ollo#sB Road trans!ort "he international cargo letter (R = on3ention Relati3e au ontrat de "rans!ort Internationale des (archandises !ar Route> is used 4) international occu!ation goods trans!orted #ith road trans!ort, "he (R%cargo letters is not trans&era4le, that #ill sa) that the cargo letters is intended onl) &or the deli3er) o& the goods and not &or the trading or selling o& the goods, Railroad trans!orts Goods !er rail trac. has to go accom!anied 4) an international railroad cargo letter I( = on3ention Internationale concernant le "rans!ort des (archandises !ar hemin de Eer>, and an international e6!ress letter ="I56>, Goods loaded #ill go in large containers accom!anied #ith the trans&ers &orm "R, "hese three customs documents can ser3e as common customs document, "1% and "/%documents 1ith cargo trans!ortation, the trans!ortation get into account #ithin the 5U =communal trans!ort>, "his trans!ortation &inds !lace under co3er o& the "%document o& and to an 5U%countr), "here is made a di&&erence 4et#een "%1 and "%/ goods, "he trans!ortation o& goods &rom third countries =non released goods> do not go under accom!animent o& the "1%document, "he "/%document is used to sho# that goods are situated in the &reedom mo3ement ?one o& the 5U,

Air trans!ortation "he consignment noteDAir#a)%4ill is according to the IA"A%de&initions the !roo& o& a closed agreement 4et#een shi!!er and carrier, "he consignment noteDAir#a)%4ill co3ers the entire route &rom the air!ort o& de!arture till the air!ort o& arri3al, It also co3ers a !art o& the route o& road trans!ortation, Can Vogel use the same distri!ution? It is Auestiona4le i& Vogel can use the same distri4ution #a) Le6 #or.s@ in German), Usuall), German customers are not #illing to !a) in ad3ance, Vogel ma.es use o& a 50Q de!osit, !aid 4e&ore the !roduction !rocess is e3en started, Un&ortunatel) I cannot e6clude #hether Vogel can use his #a) o& distri4ution )es or no, "he ham4er o& ommerce could not gi3e an ans#er to this Auestion, "here&ore I #ill recommend to Vogel that the) ha3e to chec. 4e&ore e6!orting i& the) can use the Le6 #or.@ method and the) should thin. a4out another #a) o& distri4ution,

33

@# S<ot *nalysis

34

Strengthens +esign s.ills ra&t technolog) s.ills

>ea)nesses "he !roducts do not ha3e a standard Aualit), 2ot man) .no#ledge o& mar.eting strategies, 2ot 3er) &amiliar #ith the Erench 4usiness culture, 'ohn Vogel is the onl) one #ho .no#s e6actl) ho# the &urniture is made, "his means that he must 4e around on the #or. &loor all the time, <n this moment Vogel is not a4le to handle a lot o& orders, "he ma.e a3erage &our chairs a da), 1hen the orders #ill 4e rising, he has to hire more em!lo)ees, "he client list is not )et u!dated, Vogel has a lo# cash &lo#, "he 4rand a#areness national and international is lo#,

reati3it) "he !roducts o& Vogel are 3er) uniAue 1ood #ith character High%grade materials A#arded in design e6cellence "imeless !roducts Alread) man) customers on the $outh A&rica mar.et +esigner can ma.e customer demanded !roducts Vogel is alread) e6!erienced #ith e6!orting o3erseas, this means also that the) are &amiliar #ith doing 4usiness #ith other cultures, "he Aualit), !rice, mar.et and customers are alread) there, U!dated #e4site, #hich attracts a lot o& ne# customers to Vogel

6pportunities

hreats

German) is an interesting mar.et &or e6!orters &rom de3elo!ing countries, Local !roduction has 4een ada!ting to the glo4al econom), German) is a 4ig mar.et, and as such #ill al#a)s o&&er o!!ortunities des!ite a di&&icult trading en3ironment, Im!orts are an increasingl) im!ortant !art o& the mar.et, "he German mar.et continues to struggle, so the demand &or Aualit) &urniture at com!etiti3e !rices #ill remain one o& the most highl) demanded &urniture st)les,

"here are also man) &urniture !roducers on the doorste!, es!eciall) in 7oland and $lo3a.ia, #ho are tr)ing to &orge closer relationshi!s #ith German manu&acturers, +e3elo!ing countr) e6!orters need to 4e a4le to meet the high and e6acting standards o& German !roducers i& the) are chosen to &orm !artnershi!s in !re&erence to su!!liers 35 &rom 5astern 5uro!e, "he international &inancial crisis is still

36

"3# Confrontation

matrix

$trengthens H <!!ortunities In German) there is a continuous demand &or Aualit), German customers are &ocused on the 4est materials and the 4est Aualit), "he &act that Vogel #on a#ards #ith his !roducts is a !lus !oint in terms o& his com!etitors, German customers li.e to ha3e a sort o& !roo& =&acts and &igures> a4out the !roducts that there are 4u)ing, An a#ard #inning designer is a .ind o& !roo& that the) need, All the !roduct and design ca!acities =&or e6am!le cra&t s.ills, high%grade materials> that Vogel had are a huge o!!ortunit) &or Vogel, Vogel also ma.es customer demanded !roducts, "he German customers #ill li.e this, "his means that he is customer orientated, $trengthens H "hreats German) is an u!coming !o!ular countr) &or other countries to e6!ort to, 5s!eciall) the 5astern% 5uro!ean countries ha3e &ound German) 4ecause the anger and s!ite a4out the $econd 1orld 1ar is o3er, 5astern%5uro!ean countries are L&amous@ &or their lo# cost !roducts and their Aualit) standards are 4ecoming 4etter and 4etter, "o decrease this &act, Vogel has to 4e 4etter in his Aualit) and designing s.ills, #hich he has, He has to !oint out these !roduct%characteristics 4) selling his !roduct, Although #e still ha3e the &inancial crisis, &orecasts !redict that the econom) #ill 4e 4etter in /010, "his does not mean that the crisis is o3er, 4ut there are some !ositi3e rumours, "his also do not mean that Vogel has not to #orr) a4out it, 4ut I thin. #hene3er Vogel is read) to e6!ort to German), the &inancial crisis is mainl) o3er, Vogel is not .no#n on the German mar.et, and has no e6!erience #ith the German culture )et, 1hene3er Vogel is read) to e6!ort to German) the) could get some in&ormation a4out German) 4) the 5m4ass) or the Internet, 1ith doing some mar.eting, Vogel #ill 4e .no#n 4) his =ne#> customers, 1ea.nesses % <!!ortunities Vogel has to tr) to get some standard Aualit) &or the German mar.et, German customers are 3er) &ocused on this, "his does not mean that the) ha3e to get a standard Aualit) =and !roduction line> as I*5A has, 4ut the) ha3e to assure their customers o& a .ind o& Aualit), Vogel ma.e use o& high graded materials, he should !oint this out to his customers, He also has to !oint out that 4ecause o& the uniAueness and hand cra&ted #or., the !roducts cannot ha3e the same le3el o& Aualit), "he German mar.et is a !o!ular countr) to start their e6!ort on, 1ithout an) .no#ledge a4out German)DcustomersDmar.et the) should get a good ad3iserDcommercial agent, "his is some4od) that the) can hel! #ith the mar.eting acti3ities and increase the 4rand a#areness on the German mar.et, 1ea.nesses H "hreats Almost all the #ea.nesses that Vogel has, has to do #ith the Line6!erience@ in running an international 4usiness, 1ith ha3ing some training or reading some 4oo.s, Vogel can get a lot more in&ormation a4out doing mar.eting and di&&erent strategies, "his also counts &or the &act that the) are not &amiliar #ith the German =4usiness> culture, Although the &inancial anal)sis loo.s 3er) !ositi3e, Vogel still has !ro4lems #ith his cash &lo#, "he orders gro#th enormousl) in the last months, $o #ith getting more and more orders, their 4rand a#areness #ill gro# and their cash &lo# #ill 4e 4etter, ="his means that the) ha3e to continue #ith mar.eting acti3ities>, 1hen the cash &lo# #ill 4e 4etter and the orders are getting more and more, Vogel is also a4le to hire more sta&& and !roduce more &urniture, As mentioned 4e&ore8 #e still ha3e the &inancial crisis, 4ut &orecasts !redict that the econom) #ill 4e 4etter in /010, "his do not mean that the crisis is o3er, 4ut there are some !ositi3e rumours, "his also do not mean that Vogel has not to #orr) a4out it, 4ut I thin. #hene3er Vogel is read) to e6!ort to German), the &inancial crisis is mainl) o3er, 1ith a strong com!etitor strateg), #e can com!ete #ith the 5astern%5uro!e com!etitors,

37

""# Strategic options

*nsoff 'atrix 1hen #e ta.e a loo. to the Anso&& (atri6 model, this #ill sho# us #hich !osition Vogel #ill ha3e on the 5uro!ean mar.et, (ar.et !enetrationB 1hen a com!an) enters a !resent mar.et #ith their !resent !roducts, (ar.et de3elo!mentB 1hen a com!an) enters a ne# mar.et #ith their !resent !roducts, 7roduct de3elo!mentB 1hen a com!an) enters a !resent mar.et #ith ne# !roducts, +i3ersi&icationB 1hen a com!an) enters a ne# mar.et #ith ne# !roducts, Product- 'ar)et com!ination 1hen #e a!!l) the Anso&&%matri6 to the com!an) Vogel, #e can sa) that in this case it concerns mar.et de3elo!ment, Vogel is alread) acti3e on the American, anadian and 5uro!ean mar.et, "he) #ant to e6!and to other 5uro!ean countries, "here are alread) lots o& su!!liers o& &urniture on the mar.et, so it is not a ne# conce!t, "he !roducts #hich Vogel is using &or e6!ort are not ne# &or the coma!n) Vogel as #ell as on the German mar.et, Ho#e3er, Vogel #ill enter a ne# mar.et8 the German mar.et #ith his alread) e6isting !roducts B) !ositioning o& a !roduct, the ad3antages o& the !roduct are an im!ortant, Vogel has to distinguish &rom her most im!ortant com!etitors, "here are &our !ossi4ilities o& !ositioningB % In&ormational !ositioning % "rans&orma4le !ositioning % "#o%sided !ositioning % Im!lementation !ositioning "he !roducts o& Vogel ha3e a trans&orma4le !ositioning, 7eo!le #ho #ill 4u) the &urniture o& Vogel are !ersons #ho are li.e to ha3e an uniAue interior, "he interior sa)s something a4out the occu!ant@s image, #hich the) li.e to associate #ith, "he) li.e to gi3e their interior a s!ecial .ind o& &la3our, Another reason #h) I ha3e chosen this trans&orma4le !ositioning is that there are alread) a lot o& com!etitors on the German mar.et, "his ma.es it &or Vogel di&&icult to distinguish itsel& &rom the other designers, not #ith his !roducts, 4ut #ith his com!an), "he interior is a !articular #a) o& li&est)le &or a lot o& !eo!le, that is #h) this !ositioning &its in this conte6t,

Porter- generic strategy

38

"he three o!tions that Vogel has areB ost leadershi! +i&&erentiation strateg) Eocus or segmentation strateg) "he &irst o!tion is, in m) 3ie#, not the 4est o!tion &or Vogel, 1ith the cost leadershi! strateg) the) #il ha3e the lo#est !rice, "he cost leadershi! -ust does not &it #ith Vogel, He designs uniAue en original handcra&ted &urniture, 1ith this strateg) Vogel can lose his 4uild%u! re!utation o& 4eing e6clusi3e, $econdl), he #ill not reach his target grou! #ith the cost leading strateg) and he #ill not 4e !ro&ita4le, "he second o!tion8 the di&&erentiation strateg) #ill &it Vogel more, 1ith this strateg) he can !oint out his uniAue selling !oints and distinguish himsel& &rom the com!etition, Although this strateg) can #or. &or Vogel, I thin. the com!etition #ill 4e too large &or Vogel on the German mar.et, It is a large mar.et and there are man) com!etiti3e com!anies and designers, "he last o!tion8 &ocusDsegmentation strateg) #ill &it the 4est &or Vogel, In this strateg) Vogel concentrates on a selected &e# target mar.ets, It is also called a niche strateg), 1ith &ocussing on one or t#o narro# mar.et segments, Vogel can 4etter meet the needs o& his target mar.et, "his strateg) is also most suita4le &or small com!anies, as Vogel is, Vogel !re&ers to .ee! his to!%end mar.et !osition as a uniAue and e6clusi3e &urniture designer, Segmentation German) is has a #ide mar.et, German) is one o& the largest countries #ithin 1estern%5uro!e and has man) di&&erences, "he di&&erences 4et#een the di&&erent &ederal states can 4e also huge, Eor e6am!le, the northernD eastern !art o& German) has less mone) to s!end than the #estern and southern !art o& German), Eor this reason Vogel has to di3ide the mar.et in di&&erent segments, Also as #ritten 4elo#, the &ocusD segmentation strateg) #ill &it Vogel 4etter, Gou can segment the mar.et on di&&erent le3els, 1hen #e ha3e a loo. to the di&&erent 3aria4les o& the target grou! o& Vogel, I thin. #e could di3ide the mar.et on 7s)chogra!hic 3aria4les. "he characteristics o& this segmentation grou! #ill match #ith the &ollo#ing 3aria4lesB 7ersonalit) Li&e st)le Value Attitude

Actuall), this is the e6act same segment #here Vogel is &ocussing on in $outh%A&rica, His target grou! are mostl) interior designers, e6clusi3e =4outiAue> hotels and e6clusi3e &urniture sho!s, 7eo!le #ho #ill 4u) Vogel &urniture are !ersons #ith a uniAue li&est)le and the) are #illing to !a) a lot &or their interior design, 7ersons #ith a s!ecial li&est)le do not #ant to decorate their li3ing room #ith ordinar) I*5A &urniture, "he) li.e to 4e cons!icuous #ith their interior, $uccess&ul segmentation reAuires the &ollo#ing homogeneit) #ithin the segment heterogeneit) 4et#een segments

39

segments are measura4le and su4stantial segments are di&&erentia4le segments are accessi4le and actiona4le target segment is large enough to 4e !ro&ita4le

Although Vogel &ocus on a small mar.et segment, I thin. this segment #ill 4e !ro&ita4le, 1hen the) &ocus on a #ider segment, the) #ill ha3e the ris. to lose their e6clusi3it) re!utation, Because o& the interest o& the segments in the !roducts o& Vogel =interior designers are interested in s!ecial &urniture>, Vogel is a4le to communicate #ell #ith his target grou!, 1hich !roductC Vogel does not ha3e a #ide assortment o& !roducts, "his means that he can use e3er) !iece o& his !roduct line &or e6!ort, "he &urniture o& Vogel loo. li.e each other and do not di&&er &rom st)le, Vogel is de!ended &rom the order o& the customers, 4ut it does not matter #hich !iece o& &urniture the) are ordering, I thin. Vogel #ould ta.e a huge ris. #ith choosing one or t#o !roducts to e6!ort 1hen he has to ma.e a decision #hich !roduct he has to choose, the 4est !roduct #ill 4e his chairs, 2ormall) the chairs en 4arstools are the most !o!ular and most common, Eor this reason I thin. Vogel can start #ith those three !roducts =2guni hair, Barstool en lounge stool>, hairs are is s!ecialt), 5s!eciall) hotels and restaurants order the chairs, those segments o&ten ma.e use o& an interior designer,

40

"$# Entry analysis

$uccess on the &oreign mar.et mainl) has to do #ith the choice o& the entr) strateg), "here is a di&&erence 4et#een direct and indirect e6!ort, Vogel is a small com!an) #ith a!!ro6imatel) ten em!lo)ees, "he) !roduce #hen the) ha3e an order8 the) are not a4le to ma.e an) stoc. )et, Vogel has e6!erience on the &oreign mar.et and in doing 4usiness #ith other cultures, "he !roducts are eas) to e6!ort, onl) the !ac.aging has to 4e done #ell, other#ise the e6!ort can damage the &urniture, Because o& the &act that Vogel is a small com!an) and not read) )et to handle a lot o& organisational things, I do not recommend direct e6!ort, "he) too small and the &inancial ris.s are too high, I thin. Vogel can 4etter choose one o& the indirect e6!ort strategies, also 4ecause the) alread) ma.e use o& an indirect e6!ort strateg), Belo# I #ill discuss the most common e6!ort strategies en the ones that are suita4le &or Vogel, The co!!ercial agent "his entr) strateg) &its 4est in the &irst stage o& e6!orting, A commercial agent .no#s the &oreign mar.et, culture and heDshe has its o#n net#or., "o select a commercial agent there are a &e# !oint #here Z, "he commercial agent has to 4e #ell%.no#n on the &oreign mar.et, has to ha3e sales e6!erience, enough &inancial .no#ledge and 4e an e6!ert in di&&erent #a)s o& !romotion, Vogel has to &ind out #hat .ind o& contact and net#or. the commercial agent has #ith hisDhers clients "he commercial agent has to .no# #ho the com!etitors are and their selling and !romotion acti3ities

Vogel has to coo!erate #ith the commercial agent, Vogel should !ro3ide the catalogues and !ricelist, 7ro3ide the commercial agent o& enough !romotion material and #or. together acti3e #ith the commercial agent #ith sales !romotion and !artici!ate on e6hi4itions, Ris.s o& a commercial agent 1hen )ou sto! #or.ing #ith )our commercial agent, )ou #ill loose all hisDhers clients too, Gou ha3e to ha3e a s!ecial Lclic.@ #ith )our commercial agent, 5s!eciall) &or Vogel, their selling e6clusi3e &urniture and the commercial agent has to sell the &urniture to the most e6clusi3e designers and so on, Eor Vogel, #or.ing #ith a commercial agent #ould 4e a good idea to start #ith, Vogel has to select an agent =or decorating com!an)> care&ull) and one that &it #ith their idea o& Vogel e6clusi3it), "he) ha3e to ma.e good en secure arrangement #ith the commercial agent to !re3ent an) trou4le, 0holesaler A #holesaler is o&ten use on a di&&erent mar.et =thin. o& the 'a!anese mar.et>, It is an eas) #a) to e6!ort, #ith lo# ris.s and lo# costs, "his strateg) #ill not #or. &or Vogel, "he German mar.et is not a di&&icult mar.et to enter, !lus Vogel has no control o3er the e6!ort, A #holesaler #ill ha3e a #ider assortment, +ue to this, the !roducts o& Vogel #ill not ha3e as much attention as the) needDdeser3e,

Piggyback "his #a) o& e6!orting consists o& t#o com!anies o& the home mar.et #hich cor!orate together #ith e6!ort, <ne com!an) =the rider> ma.es use o& the distri4utions channels and sales organisation o& the other com!an) =the carrier>, "he !roducts o& the rider are com!lementar) and not com!etiti3e to each other, "his com4ination #ill &orm a strong !osition to the customers on the &oreign mar.et, 1ith this strateg) 4oth com!anies #ill 4ene&it &rom each other, "he costs o& e6!orting #ill 4e lo#er and Vogel can 4ene&it &rom the mar.et .no#ledge o& the carrier, Also, Vogel can control his o#n e6!ort acti3ities =and get more e6!erienced in it>,

41

Vogel should de&initel) consider the &orm o& a !igg)4ac., Eor a small com!an) as Vogel, the costs and ris.s are lo# and the) #ill get more e6!erienced #ith e6!ort, Also, Vogel has a huge net#or. in a!e "o#nD $outh A&rica and &riends #ho are in the same mar.et as #ell, "he) #ill not ha3e an) !ro4lem #ith &inding a com!an), 6oint +elling A -oint selling can 4e seen as an international !igg)4ac., 1ith this strateg) com!anies ha3e to cor!orate more intensi3e #ith each other than #ith a !igg)4ac., Because o& the lost o& inde!endenc), I do not thin. a -oint selling #ill #or. &or Vogel, Vogel li.es to 4e e6clusi3e and #ith a limited !roduct range, E"port co!bination "he e6!ort com4ination is a coo!eration 4et#een se3eral 4usinesses #hich start together a central organ, "he) #or. together on mar.et sur3e)s, getting a net#or. and #ill thin. o& an e6!ort strateg), I thin. Vogel is not in a stage o& internationali?ing that the) can start #ith an e6!ort com4ination, "hough, .no#ing Vogel and his 4usiness &riend, the) al should consider an e6!ort com4ination in the &uture 4ecause the) can 4ene&it &rom each other, The international 1oint venture A -oint 3enture is a strategic alliance 4et#een t#o or more 4usiness &rom di&&erent countries, "here are se3eral reasons to start a -oint 3enture, Again, I do not thin. that Vogel is in a stage o& internationali?ing to start a -oint 3enture )et, -ocal selling office7 o&n production centre abroad Instead o& ma.ing use o& one o& the distri4ution channels #ritten a4o3e, Vogel can also decide to start their o#n local selling o&&ice or o#n !roduction centre on the &oreign mar.et, <n this moment and in the near &uture Vogel has not the e6!erience, time and &inancial #a)s to start this, (oreo3er, it is not in their strateg) as #ell to start or e6!and their 4usiness so much that the) can start a local selling o&&ice in 5uro!eD o3erseas,

Entry strategy
Vogel is not a4le to enter the mar.et #ithout an) hel!, "he) ha3e no .no#ledge o& the German mar.et, 4usiness culture and more im!ortant, the German languages, Eor this reason I thin. Vogel could 4etter #or. #ith a !erson on the German mar.et, I ha3e chosen &or a commercial agent 4ecause the costs #ill 4e lo#er than #or.ing #ith a distri4utor, A commercial agent #ill 4e an intermediar) !erson 4et#een Vogel and his customers, Vogel #ill get some more e6!eriences #ith e6!orting and more im!ortant, he #ill ha3e !ersonal contact #ith his customers in German), "he &urniture o& Vogel is original and e6clusi3e, +electing a suitable trading partner "his is a 3er) im!ortant !art o& the e6!ort !rocess, "he relationshi! and ra!!ort )ou can esta4lish 4et#een )oursel& and )our !artner is as im!ortant as &inding a contact that is suita4le &or )ou in terms o& the range o& !roducts that )ou can su!!l), "he essential element o& an) trading relationshi! is trust, Gou must satis&) )oursel& that )ou #ill 4e ha!!) to deal #ith the organisation in Auestion o3er a long !eriod, Gour o#n -udgement and instincts are most im!ortant in this res!ect, "he 4est #a) to &ind a trading !artner is usuall) to contact the main trade sources, "he German Association o& 1ood and Eurniture Industries and the Eurniture Industr) Association are im!ortant contacts, "he 4est !lace to meet !otential trading !artners is at a &urniture trade &air, 7artici!ation in trade &airs can 4e e6!ensi3e, so it #ould 4e 4etter to &irst 3isit an e6hi4ition a &e# times 4e&ore ma.ing a commitment, +uring a 3isit, )ou can ha3e a good loo. at the stands o& the main !la)ers and get a 4etter idea o& the latest trends, At trade sho#s, )ou ha3e an o!!ortunit) to tal. to !otential !artners on a &ace%to%&ace 4asis and 4etter -udge #hether )ou #ould li.e to #or. #ith them, Gou could also identi&) !otential !artners &rom the e6hi4ition #e4site 4e&orehand or &rom a catalogue, 1hen selecting them =e,g, im!orter or #holesaler> tr) to &ind outB S 1hat &urniture the) sell =&ocused on material, st)le or !rice>, S "o #hich target grou!s the) sell,

42

S In #hich areas o& German) the) are #ell re!resented, I& the) are e6!orting, to #hich other 5U countries the) sell, S "o #hom the) sell e,g, small or large retailers, de!artment stores, mail order etc, Gou could also &ind this out 4) loo.ing at their #e4site or tr) to &ind a com!an) !ro&ile through other hosted sites e,g, o& a local Business $u!!ort <rganisation =B$<> or trading !lat&orm, or 4) &inding their com!an) 4rochure, Gou can contact interesting trade !artners 4) mail or email and &ollo# u! 4) !hone a &e# #ee.s later, Although )ou ma) initiate a communication 4) !ost or email, it is recommended that there is some !ersonal communication 4e&ore a trading !artner is selected, 7ersonal communication is still the most im!ortant &orm o& communication, "his communication can include sending sam!les, in3iting them to see )our !roduction &acilities, and other meaning&ul #a)s o& gaining and maintaining their interest, Gou should also do a credit chec. o& )our !otential trade !artner, es!eciall) #hen an in3estment &rom )our side is reAuired, "his credit chec. could 4e carried out 4) a s!ecialist com!an) such as +un and Bradstreet =htt!BDD###,dn4,com>, A 4an. usuall) does not gi3e credit ratings o& its customers # In this regard, )ou could also contact Business $u!!ort <rganisations in German) or the commercial de!artment o& )our o#n em4ass) to see i& the) ha3e an) use&ul contacts, "he) ma) e3en ha3e some .no#ledge o& contacts )ou ma) ha3e made inde!endentl), "he Association o& Eurniture Retailers =htt!BDD###,moe4elhandel,org> could 4e a good source o& general ad3ice, "he Association o& German ham4ers o& Industr) and ommerce =htt!BDD###,diht,de> ma) also 4e #orth contacting, ommercial Agents German trade la# !ro3ides s!eci&ic regulations concerning commercial agents =[[ ;4 to 0/c HGB>, According to German la#, a commercial agent is sel&%em!lo)ed and inde!endent, His or her 4usiness sco!e is to mediate or enter contracts on 4ehal& o& the res!ecti3e !rinci!al, Although oral agenc) agreements are deemed 3alid, a #ritten contract is highl) ad3isa4le, "he \2ational Eederation o& German ommercial Agencies and +istri4ution\ = +H, entral3ereinigung +eutscher 1irtscha&ts3er4]nde &Tr Handels3ermittlung und Vertrie4> o&&ers a use&ul com!ilation on the role o& agencies &ree o& charge on its #e4%site, $ales ontracts General ci3il la# regulations =ci3il and commercial la#> are a!!lica4le &or all contracts 4et#een 4usiness !artners, "o chec. 4e&ore ma.ing a contractB !roo& o& identit) o& the com!an) credita4ilit), 7rocuration, 7lease chec. also, #hether an o4ligation 4) contract is reall) intended, (emorandum o& Understanding, Letter o& Intent 2egotiations usuall) !recede international contracts, "he results o& these negotiations are .e!t in documents #hich are nominated as \Letter o& Intent\ or \(emorandum o& Understanding\, "he commitment to enter into an o4ligation #ill re&er to the content, "here are three !ossi4ilities to a3oid un#anted o4ligationsB a3oid a legal #ording sa) that )ou are declaring a !ur!ose and no o4ligation clari&) this at the end o& the document hoice o& la# in international contracts di&&erent legal structures are in3ol3ed, As )ou are not &amiliar #ith di&&erent legal structures )ou should a3oid an un&amiliar legal s)stem, "he !arties o& a contract should integrate an agreement concerning the go3erning la#, $u4stanti3e la# and !lace o& -urisdiction should corres!ond, In general )ou are &ree to choose the su4stanti3e la#, "here are some restrictions in commercial la# e,g, consum!tion loan la#,

43

I& the contract includes no selection o& la#, the a!!ro!riated la# #ill &ollo# the con&licts o& la#, Eor German) is this the 5GBGB, "he la# at the sellerOs location is the la# a&ter #hich dis!utes ha3e to 4e decided, I& the !arties set &orth German la#, the I$G #ill a!!l), I$G I$G United 2ations on3ention on ontracts &or the international $ale o& goods, "he goal o& the I$G is to create one single la# &or international trade to sim!li&) the mo3ement o& goods, "he on3ention a!!lies to contracts o& sale 4et#een !arties #hose !laces o& 4usiness are in di&&erent states, $ales ha3e to 4e cross%4order, +omestic trade does not &all under the I$G, "he on3ention does not a!!l) to domestic trade, A contact to at least one mem4er state o& the I$G is reAuired, "he I$G is German la#, not international la#, 7lease chec. 4e&ore contractingB $hould the contract 4e under the I$GC I& not, the contracting !arties must e6!ressl) o!t out o& the

I$G,

Criteria of the commercial agent: He or she has to ha3e .no#ledge o& the German mar.et, 4usiness culture and German languages He has a&&init) #ith e6clusi3e &urniture, $outh%A&rican !roducts and culture He s!ea.s &luent 5nglish and is #ell .no# #ith the $outh%A&rican culture He has a net#or. #ithin the target grou!sD segments o& Vogel, "his means that he has a net#or. e6isting o& interior designers, e6clusi3e &urniture sho!s and e6clusi3e hotels, He is #illing to acti3el) coo!erate #ith 'ohn and "erri Vogel, and hel! them #ith e6!orting to German) He is #illing to start #ith some mar.eting acti3ities on the German mar.et &or Vogel,

44

"%# 'ar)eting 'ix for 2ermany

Although Vogel is entering a ne# mar.et, the) can use a lot o& their mar.eting%mi6 in $outh A&rica, Vogel is located on the to!%end o& the &urniture mar.et #hich is a4solute suita4le &or the German mar.et, German customers are #ell .no#n &or their demand o& the 4est Aualit), e6!ensi3e goods, 7roduct "he &urniture o& Vogel has high Aualit), 53er) !iece o& &urniture is uniAue and original, "he !roducts are mostl) handcra&ted, "he &urniture is in $outh%A&rican st)le and customer demanded, His !roduct line consists o& se3en !roducts, #hich are ta4les and chairs, "he !roducts contain di&&erent #oods and cotton cords, #hich the customer can choose, Gou can &ind the !roduct range and its !rices in the added a!!endi6es, "he range o& !roducts that Vogel !roduces is A&rican design &urniture, designed 4) 'ohn Vogel himsel&, "he !roducts are handmade &urnitureB "a4les $ide ta4les hairs $o&t &urnishings Vogel is s!eciali?ed in designing and !roducing chairs, "he main tim4ers that Vogel uses are *iaat, A&rican 1alnut and 1hite 1enge, Vogel can start #ith e6!orting his #hole assortment to German), He has not al lot o& !roducts, all the !roducts can 4e sho#ed on e6hi4itions in his &older or #ith nice !hotos o& the !roducts, "o sho# some actual !roducts on e6hi4itions, he should start #ith his chairs, He is s!eciali?ed in chairs, and most o& his orders are chairs, A&ter 4eing introduced on the German mar.et, Vogel could thin. a4out designing a s!ecial !roduct line &or German)D 5uro!ean countries #hich consists &or e6am!le more colonial st)le &urniture, 7lace In $outh A&rica, Vogel is located on the to!%end o& the &urniture mar.et, Because o& the high Aualit) demand o& German customers, I thin. this location is also suita4le to enter the German mar.et, Vogel manu&acture, !roduce and sells his !roduct all on the same !lace, Vogel sells directl) &rom its #or.sho!, It has not reall) a sho#room, ustomers can see !rotot)!es o& the &urniture in the #or.sho! or see !ictures &rom the ne# 4uild #e4site, "o attract ne# customers, Vogel sho#s his !roducts on e6hi4itions, 1ith ha3ing a good commercial agent, Vogel can send some !roducts to German) so that the) can sho# the !roducts to !otential customers, Vogel !re&ers to ha3e a e6clusi3e !osition on the mar.et, "here&ore he li.es to ha3e a e6clusi3e !osition on the German mar.et as #ell, 7rice "he !roducts are !riced &or sale in the to! o& the end mar.et, Although the !roducts ha3e high Aualit) and mostl) handcra&ted, the) still ha3e a good !rice, "he !roducts o& Vogel are !riced &or sale in the to! end o& the mar.et, Vogel !ricing is a!!ro!riate to high 3alue added !roducts and &its com&orta4l) #ithin e6isting local 4all!ar. !rices, "he !rices o& the !roduct o& Vogel are 4et#een R/0:3,1/ and R10/;3,10, In the a!!endi6es )ou #ill &ind the current !ricelist o& the !roducts, Vogel as. his customers a 50Q de!osit o& the total amount !rice, In German), customers are #illing to !a) a lot &or good Aualit), "o start on the German mar.et, and to com!ete #ith his com!etitors, Vogel can use the !rices that he has no#, "he !rices are ma)4e a 4it lo#er than the com!etitors, 4ut he has to start on the German mar.et, At the moment that Vogel has a lot o& 4rand a#areness on the German mar.et, he can increase his !rice, 7romotion 1ith entering the German mar.et, Vogel can start #ith some small e6hi4itions and tr)ing to get some inter3ie#s in maga?ines, =Actuall) the same as he does in $outh%A&rica>,

45

Ad3ertising in trade maga?ines can sometimes 4e an e&&ecti3e means o& reaching a small target grou!, "he main trade !u4lications &or the &urniture industr) are the monthl) (W4elmar.t =htt!BDD###,moe4elmar.t,de>, (W4el.ultur and (W4el&ertigung, 4oth !u4lished 4) Hol?mann #ho also !u4lish &urniture mar.et re!orts =htt!BDD###,hol?mann,de> and Home Eurniture 56!orters, the maga?ine &or German Eurniture 56!orters, "his !u4lication, as #ell as (W4elmar.t, is !u4lished 4) Verlag (atthias Ritthammer, one o& the leading s!ecialist international &urniture !u4lishers =htt!BDD###,ritthammer%3erlag,de>, 5u#id (W4el is a #ee.l) ne#s%sheet re!orting on the international mar.ets in &urniture trading =htt!BDD###,eu#id%moe4el,de>, Trade fairs "he main trade &air &or the &urniture industr) in German) is the International Eurniture Eair and it ta.es !lace each 'anuar) in ologne =htt!BDD###,imm%cologne,de>, $ome o& the 4ig consumer goods &airs in Eran.&urt, such as Am4iente, +ecorate Li&e and "endence include some &urniture items =htt!BDD###,messe&ran.&urt,com>, 4aving a &ebsite Being online is &undamental, es!eciall) #hen ta.ing into account that trust and credi4ilit) are ma-or challenges &or + e6!orters, a good #e4site can o3ercome this issue, A #e4site o&&ering #ell%de&ined !roducts, com!etiti3e ad3antages =e,g, U$7, Aualit), cost reduction and deli3er) relia4ilit)> and a list o& other customers hel!s create a trusting en3ironment, Step-!y-step plan mar)eting activities "o start #ith e6!orting to the German mar.et Vogel should do the &ollo#ing thingsB "r) to reach some standard Aualit) o& the !roducts, Although the &urniture o& Vogel is e6clusi3e and handcra&ted, German customers #ant to ha3e some standard Aualit), "he) are Aualit) orientated, (a.e a !ricelist in 5uros, "he) could do this #ith hel! o& the commercial agent so the) ha3e a suita4le !rice in 5uros &or the German mar.et, (a.e a German !rice listD 4rochure #ith the) can e%mail or s!read to German customers $tart #ith !artici!ate in small e6clusi3e e6hi4itions to introduce the !roducts o& Vogel to the German customers, and see #hat the reaction #ill 4e AndDor start #ith a small ad3ertisementD inter3ie# in a =e6clusi3e> &urniture maga?ine =li.e the) had in $outh%A&rica> "he) can also search on the Internet &or suita4le interior designersD architects and tr) to get contact #ith them 4) sending them a !rice list, this is also good &or the 4rand a#areness in German)

"&# ransport and logistics

Road trans!ort "he truc. is one o& the most im!ortant #a) o& trans!ort in German)8 the) ha3e more than /,9 million truc.s, Road trans!ort is #ell .no#n &or its &ast and &le6i4le #a) o& trans!ort, "he German roads ha3e a length o& /31,350 .m #hich e6ists o& 1/,531 .m high#a), Eor more in&ormation )ou can chec. the &ollo#ing sitesB Bundesanstalt &Tr $trassen#esenB ###,4ast,de Bundes3er4and GTter.ra&t3er.ehr Logisti. und 5ntsorgungB ###,4gl%e3,de 7rohi4itions

46

<n $unda) and !u4lic holida)s 4et#een 0,00 and //,00 a!!lies a dri3ing 4an &orB tuc.s and trailer truc.s #ith a !ermitted total #eight =o#n #eight N loading ca!acit)> o& :,5 4arrel and more, "he dri3ing 4an a!!lies on all the roads in German), also &or 3ehicles #ithout an) cargo, Eurthermore, there is a night !ar.ing !rohi4ition in the 4uild%u! area 4et#een //,00 till 09,00, "ruc.s cannot !ar. 4et#een //,00 till 9,00, "his !ar. !rohi4ition also count on $unda) and !u4lic holida)s, Holida)s !rohi4ition At regulation o& 13 (a) 10;5 an annuall) returning holida) dri3ing 4an has 4een introduced in the !eriod o& 1 'ul) till the 1th o& $e!tem4er, "his dri3ing 4an a!!lies toB 3ehicles #ith a !ermitted total #eight o& :,5 4arrel and truc. trailer com4inations, irres!ecti3e o& the #eight, "his holida) dri3ing 4an is e&&ecti3e on $aturda)s &rom :,00 till /0,00, on certain !arts o& the high#a)s and some Bundesstra^en =!ro3incial #a)s). "oll s)stem $ince the 1th o& 'anuar) /005, German) has the L*1%(aut s)stem =high#a) toll s)stems>, "here is a .ilometre le3) &or truc.s #ith a total #eight o& 1/ tons, "he le3ies can 3ariet) 4et#een 0,10 to 15,5 eurocent, 5n3ironment areas $ince 1 'anuar) /00; the &irst cities in German) ha3e introduced an en3ironment area in the do#nto#n, OUm#elt?oneO, <nl) 3ehicles #hich come u! to certain standards &or the emission o& e6haust gases can ride into these es!eciall) designated en3ironment areas, Rail#a)sB totalB 40,;/9 .m, including at least 14,/53 .m electri&ied and 14,:9; .m dou4le% or multi!le%trac.ed =100;>

+eutsche Bahn =German Rail> is the ma-or German rail#a) in&rastructure and ser3ice o!erator, "hough +eutsche Bahn is a !ri3ate com!an), the go3ernment still holds all shares and there&ore +eutsche Bahn can still 4e called a state%o#ned com!an), $ince its !ri3ati?ation in 1004, +eutsche Bahn AG =+B AG> no longer !u4lishes details o& the trac.s it o#ns8 in addition to the +B AG s)stem there are a4out /;0 !ri3atel) or locall) o#ned rail#a) com!anies #hich o#n an a!!ro6imate 3,000 .m to 4,000 .m o& the total trac.s and use +B trac.s in open access, "here are signi&icant di&&erences 4et#een the &inancing o& long%distance and short%distance =or local> trains in German), 1hile long%distance trains can 4e run 4) an) rail#a) com!an), the com!anies also recei3e no su4sidies &rom the go3ernment8 instead, the long%distance trains recei3e no direct su43entions &or current o!erations, Local trains ho#e3er are su4sidised 4) the German states, #hich !a) the o!erating com!anies to run these trains, "his resulted in man) !ri3ate com!anies o&&ering to run local train ser3ices as the) can !ro3ide chea!er ser3ice than the state%o#ned +eutsche Bahn, "rac. construction is entirel) and trac. maintenance !artl) go3ernment &inanced 4oth &or long and short range trains, "he Inter it)56!ress or I 5 is a t)!e o& high%s!eed train o!erated 4) +eutsche Bahn in German) and large cities in neigh4ouring countries, such as _Trich, Vienna, 7aris, Amsterdam, Li`ge and Brussels, "he rail net#or. throughout German) is e6tensi3e and !ro3ides e6cellent ser3ices in most areas, >ater transport

47

1ater#a)s: :,500 .m 8 ma-or ri3ers include the Rhine and 5l4e8 *iel anal is an im!ortant connection 4et#een the Baltic $ea and 2orth $ea, the Rhine%(ain%+anu4e anal lin.s Rotterdam on the 2orth $ea #ith the Blac. $ea, 7orts and har4oursB Berlin, Bonn, Bra.e, Bremen, Bremerha3en, ologne, +ortmund, +resden, +uis4urg, 5mden, Ham4urg, *arlsruhe, *iel, LT4ec., (agde4urg, (annheim, <lden4urg, Rostoc., $tuttgart"he !ort o& Ham4urg is the largest sea%har4our in German) and ran.s third in 5uro!e, in total container tra&&ic, *ir transport Eran.&urt International Air!ort is a ma-or international air!ort and 5uro!ean trans!ortation hu4, Eran.&urt Air!ort ran.s among the #orldOs to! ten air!orts and ser3es 304 &light destinations in 110 countries, It is the air!ort #ith the largest num4er o& international destinations ser3ed #orld#ide, +e!ending on #hether total !assengers, &lights or cargo tra&&ic are used as a measure, it ran.s &irst, second or third in 5uro!e alongside London Heathro# Air!ort and 7aris harles de Gaulle Air!ort, German)Os second most im!ortant international air!ort is (unich, <ther ma-or air!orts are Berlin "egel, Berlin $chWne&eld, +Tsseldor&, Ham4urg, ologne%Bonn, Lei!?igDHalle and in the &uture Berlin Branden4urg International Air!ort, $hort distances and the e6tensi3e net#or. o& motor#a)s and rail#a)s ma.e air!lanes uncom!etiti3e &or tra3el #ithin German), <nl) a4out 1Q o& all distance tra3eled #as 4) !lane in /00/, But due to a decline in !rices #ith the introduction o& lo#%&ares airlines, domestic air tra3el is 4ecoming more attracti3e, "he national carrier is Lu&thansa,

48

"+# Auridical and legal aspects

1hen e6!orting to German), 3arious as!ects ha3e to 4e consideredB ustoms and ta6es, Aualit) and en3ironmental standards, trademar. and com!etition rules are -ust a &e# o& them, In general, the im!orter is res!onsi4le &or clearing the items to !ut the goods in circulation in German), 56!orters need to 4e in&ormed on !rereAuisites o& !enetrating the German mar.et, i& onl) &or !ricing !ur!oses, In re&erence to customs duties &or goods #hich are e6!orted to German), the goodsO countr) o& origin is o& utmost im!ortance, All industrial im!orts are su4-ect to an \Im!ort sales ta6\ o& 10Q, It is eAui3alent to the 3alue%added ta6 =VA"> #hich is le3ied on all domesticall) !roduced items, thus !lacing the same ta6 4urden on im!orted and domestic !roducts, "he im!ort turno3er ta6 is charged on the dut) !aid 3alue o& the im!ort article !lus a customs dut), A discounted ta6 o& :Q is le3ied on &ood !roducts, 4oo.s, ne#s!a!ers, !ieces o& art etc, 1ithin the $ingle 5uro!ean (ar.et, a communit)%#ide s)stem o& VA" collection is in !lace, 2ational VA" is le3ied on the !roduct at the !lace o& !roduction, Bu)ers can deduct it as in!ut ta6 in their home countr), !ro3ided that the su!!lier has got a 3alid 3alue added ta6 identi&ication num4er, ustoms dut) as #ell as ta6 is collected 4) the German customs authorities, Business%li&e in German) is 4ased on the !rinci!le o& com!etition, $till, the com!etiti3e mar.et en3ironment needs to 4e !rotected against un&air !ractices, "o control un&air mar.et 4eha3ior is #ithin the res!onsi4ilit) o& the Eederal artel <&&ice =Bundes.artellamt> in Bonn, "he legal 4asis o& its #or., the Act against Restraints o& om!etition, and other in&ormation on the #or. o& the o&&ice is a3aila4le online, Eair com!etition is also sa&eguarded 4) the Act Against Un&air om!etition =Geset? gegen unlauteren 1ett4e#er4, U1G>, It !rohi4its e6!licitl) misleading ad3ertising and go3erns com!arati3e ad3ertising as #ell as direct mar.eting acti3ities, It !ro3ides the 4asis &or legal claims against un&air 4eha3ior o& com!etitors, An introduction to the Act is a3aila4le &rom the \German La# Archi3e\, #hich has its origins in the Uni3ersit) o& <6&ord, "rademar.s and !atents en-o) strong !rotection in German), Eor sales into German), this means a t#o% &old challenge, Eirst, trademar.s or other intellectual !ro!ert) used in or on the merchandise must not in&ringe older rights that ha3e alread) 4een esta4lished in the German mar.et, $econd, an) intellectual !ro!ert) related to the merchandise can 4e legall) !rotected against counter&eiting 4) means o& registration, Eor German), the German 7atent% and "rademar. <&&ice =+eutsches 7atent% und (ar.enamt> is in charge o& these registrations, Eollo#ing the ongoing harmoni?ation and integration o& the $ingle 5uro!ean (ar.et, a harmoni?ed s)stem o& administering !atents and trademar.s has 4een esta4lished, too, ommunit) "rade (ar.s and ommunit) +esigns are administered 4) the <&&ice &or Harmoni?ation in the $ingle 5uro!ean (ar.et, ommunit) "rade (ar. and ommunit) +esign grant their !ro!rietor a uni&orm right #hich is 3alid in all mem4er states o& the 5uro!ean Union, (ore in&ormation on the !rotection o& intellectual !ro!ert) on the 5uro!ean le3el is a3aila4le &rom the <&&ice &or Harmoni?ation in the Internal (ar.et =<HI(>, International ontracts International trade and ser3ices in3ol3e a #ide 3ariet) o& trans%4order 4usiness models ranging &rom the cross%4order !ro3ision o& goods or ad3ice and the !osting o& em!lo)ees a4road to the esta4lishment o& !ermanent 4usiness enter!rises in German), It em4races 4oth 4usiness%to%4usiness and 4usiness%to% consumer transactions, "he 3ariet) o& the 4usiness acti3ities gi3es rise to a 3ariet) o& legal relationshi!s 4et#een the 4usiness !artners as #ell, Because the o4ligations 4et#een contracting !arties are al#a)s

49

go3erned 4) national la#, the choice o& the national legal s)stem !la)s a .e) role in the resolution o& legal dis!utes, 1here international contracts are concerned, the &irst issue to 4e addressed #hen legall) assessing cross%4order 4usiness relationshi!s isB #hich countr) has -urisdictionC "his is discussed in our section on the German -udicial s)stem, I& German) has -urisdiction, the legal s)stem go3erning the contractual relationshi! is !rimaril) determined !ursuant to the !ro3isions o& Art, /: et seA, o& the Introductor) Act to the German i3il ode =5in&Thrungsgeset? ?um BTrgerlichen Geset?4uch % 5GBGB>, "his act im!lements the terms o& the 5uro!ean on3ention on the La# A!!lica4le to ontractual <4ligations =Rome on3ention 10;0> into German la#, "he 4asic rule is that the contracting !arties are &ree to choose #hich national la# is to go3ern their contractual relationshi!s =Art, /: 5GBGB>, I& no choice is made, the contract #ill generall) 4e go3erned 4) the la# o& the countr) o& the ha4itual residence o& the de4tor, I& consumer !rotection rights are in3ol3ed, the contract is % 4) o!eration o& la# % go3erned 4) the la# o& the countr) o& the consumerOs ha4itual residence, #hich cannot 4e #ai3ed, 1here contracts o& sale are concerned, the contracting !arties ma) agree on the a!!lication o& the I$G =United 2ations on3ention on ontracts &or the International $ale o& Goods> in order to a3oid ha3ing to ma.e a choice o& la#, Although the !ro3isions o& the I$G ha3e 4een incor!orated into 3arious national la# regimes, the) are e6actl) the same in :/ countries and are there&ore li.el) to 4e acce!ta4le to 4oth !arties, Eor more in&ormation on this, !lease re&er to our site on International ontracts o& $ale, International $ales ontracts In the case o& international sales contracts, the contracting !artners ma) decide that the standardi?ed terms o& the I$G =United 2ations on3ention on ontracts &or the International $ale o& Goods> are to a!!l), "he con3ention esta4lishes uni&orm rules &or contracts o& sale #ith cross%4order e&&ects, "his sim!li&ies the mo3ement o& goods 4et#een countries, there4) !romoting international trade and minimi?ing dis!utes on the choice o& la#, "he I$G codi&ies trans%4order 4usiness%to%4usiness sales contracts &or mo3a4le goods, Its !ro3isions are o!tional and ma) 4e #ai3ed 4) se!arate agreement, "he I$G there&ore a&&ords a large degree o& &le6i4ilit) to contractual arrangements, $hould a contract &ail to !ro3ide &or a s!eci&ic matter, the !ro3isions o& the I$G &ill the ga! 4) !ro3iding internationall) acce!ted solutions, I& the contractual !arties #ish to #ai3e the I$G as a #hole, the) must do so e6!licitl), U!on its rati&ication 4) German), the I$G 4ecame a !art o& German ci3il la#, Because it incor!orates man) continental 5uro!ean !rinci!les o& contract la#, most o& the !ro3isions o& the I$G resem4le the t)!e o& !ro3isions on sales contracts &ound in the BGB, As o& +ecem4er 1, /00;, :/ countries ha3e ado!ted the I$G, "hese include most o& the 5U (em4er $tates =e6ce!t the United *ingdom>, the U$A, anada, hina, and Russia, A com!lete list o& the signator) countries is a3aila4le on the #e4site o& the United 2ations ommission &or International "rade La# =U2I I"RAL>,"he German ham4ers o& Industr) and ommerce are a3aila4le &or mediating dis!utes in con-unction #ith the non%!er&ormance o& either contractual !art)B in the case o& su!!liers #ho &ail to !er&orm their contractual o4ligations as #ell as 4u)ers #ho &ail to meet their !a)ment o4ligations, "he territorial sco!e o& -urisdiction o& the ham4ers o& Industr) and ommerce in German) is regional, Eurther in&ormation on alternati3e dis!ute resolution is a3aila4le in our section on the German -urisdiction, "he German -udiciar) has had a great deal o& e6!erience #ith the I$G and has de3elo!ed a #ell%&ounded e6!ertise on it, In &act, most -udgments on matters concerning the I$G #ere rendered 4) German courts !rior to entering into international contracts, a series o& negotiations usuall) ta.e !lace, "he outcome o& such negotiations is recorded in documents sometimes re&erred to as a \Letter o& Intent\ or a \(emorandum o& Understanding\, 1hether an o4ligation to enter into a contract

50

arises &rom such a document #ill de!end on the contents o& it, "here are three #a)s to a3oid ma.ing un#anted o4ligationsB a3oid using legal terminolog), state e6!licitl) that )ou are stating an intention and not declaring an o4ligation, and clari&) this at the end o& the document,

"/# Cultural analysis

Doing business in Ger!any +oing 4usiness a4road 4rings !eo!le &ace to &ace #ith di&&erent cultures and !ractices, 7rior to tra3elling to another countr) it is the norm not to consider &actors such as di&&erences in meeting etiAuette, negotiation st)les and 4usiness !rotocol, Ho#e3er, it is !recisel) these areas one should 4e addressing 4e&ore doing 4usiness a4road i& the success o& the tri! is to 4e gi3en a 4etter chance, A lac. o& cross cultural understanding leads those doing 4usiness a4road to &orm stereot)!es, ommon terms used to descri4e German) include humourless, aggressi3e, distant, stu44orn and o4sessed #ith details, "here are elements o& truth #ithin each, )et all emanate &rom our o#n cultural !rogramming, Eor e6am!le, in the U* it is acce!ta4le to s#a! -o.es and ha3e in&ormal chats at #or., 1hen a Britain is doing 4usiness in German) it is there&ore li.el) that the) #ill inter!ret the strict &ormalit) as dull and humourless, <n the other hand, a German doing 4usiness in the U* ma) inter!ret #or.ing !ractices in the U* as un!ro&essional and un!roducti3e, "his guide to doing 4usiness in German) is intended to highlight some im!ortant .e) areas that one ma) encounter in German), <rganisation Germans are o&ten uneas) #ith uncertaint), am4iguit) and unAuanti&ia4le ris., "his has 4ecome mani&est in 4oth social and 4usiness s!heres, $ociall), Germans lean to#ards conser3atism and con&ormism, 1hen doing 4usiness in German) it is !ossi4le to notice a hea3) em!hasis on care&ul !lanning, consideration, consultation and consensus, "his has de3elo!ed an a!!reciation &or detail, &acts and statistics, <rganisation is a means o& negating uncertaint) and a3erting ris., A3ersion to Ris. "he em!hasis on con&ormit) com4ined #ith a &ear o& the un.no#n ma.es Germans 3er) a!!rehensi3e a4out ris., $ecurit) is guaranteed through ris. anal)sis, "his is achie3ed through care&ul deli4eration and scrutin) 4ased u!on &actual e3idence as o!!osed to intuition or Ogut%&eelingO, 1ritten documentation is seen as the sa&est and most o4-ecti3e medium &or anal)sis, A !ainsta.ing re3ie# o& details ensures all rele3ant in&ormation has 4een ta.en into consideration, ommunication Germans 3alue their !ri3ac), (entall) there is a di3ide 4et#een !u4lic and !ri3ate li&e, As a result, Germans #ear a !rotecti3e shell #hen doing 4usiness, $ince intimac) is not &reel) gi3en, this ma) 4e inter!reted as coldness, Ho#e3er, this is not the case, A&ter a !eriod o& time #alls and 4arriers e3entuall) &all allo#ing &or more intimate relationshi!s to de3elo!, ommunication st)les in German) ma) 4e !ercei3ed as direct, short and to the !oint, Eormalit) dictates that emotions and unnecessar) content do not ha3e a !lace in con3ersation, (eeting a Greeting

51

Eirm, 4rie& handsha.es are the norm #hen doing 4usiness in German), 1hen se3eral !eo!le are 4eing introduced ta.e turns to greet each other rather than reaching o3er someone elseOs hands, A3oid sha.ing hands #ith one hand in )our !oc.et, 1hen #omen enter a room it is considered !olite &or men to stand, German etiAuette reAuires )ou to address someone using 4err =(r,> or Frau =(rsD(s> &ollo#ed 4) their surname, <nl) &amil) mem4ers and &riends use &irst names, 7ro&essional titles should also 4e used &or doctors, academics, etc, "r) and esta4lish !ro&essional titles !rior to an) meeting, 7unctualit) 1hen doing 4usiness in German), remem4er that !unctualit) is a serious issue, Business !eo!le #or. hard and are under a lot o& !ressure, Germans t)!icall) !lan their time 3er) care&ull), It is considered 4ad etiAuette to 4e late or earl) as it sho#s disres!ect &or !eo!lesO time, Humour A common misconce!tion is that the German sense o& !ro&essionalism and strict !rotocol #hen doing 4usiness lea3es no room &or humour, An element o& this true in that -o.es are not common!lace, Get Germans, -ust as much as an)one else, li.e to laugh and as long as it is a!!ro!riate, taste&ul and in conte6t then humour is acce!ta4le, (eetings and 2egotiations Germans !lan ahead, "here&ore, ensure )ou 4oo. meetings at least /%3 #ee.s in ad3ance, "his is also a!!lica4le i& )ou #ish to ha3e length) tele!hone con3ersations, (eetings are usuall) held 4et#een 11%1 !,m, and 3%5 !,m, A3oid Erida) a&ternoons, the holida) months o& 'ul), August and +ecem4er and an) regional &esti3als, (eetings are &unctional, &ormal and usuall) stic. to a set agenda including start and &inish times, "he !hrase OletOs get do#n to 4usinessO is de&initel) a!!ro!riate &or German 4usiness meetings as small tal. and relationshi! 4uilding is not !riorities, 1hen entering a room the most senior o& )ou should enter &irst, "he most senior German counter!art should 4e greeted initiall) 4e&ore an) others !resent, 1ait to 4e told #here to sit, "reat the #hole !rocess #ith great &ormalit), "he Germans #ill anal)se !ro!osals thoroughl), 5nsure the in&ormation )ou !ro3ide is in #ritten &ormat and !resented scienti&icall), Logical conclusions 4ased on em!irical e3idence #ill onl) normall) carr) an) #eight, Remem4er decisions #ill not 4e made on )our sales techniAue or charm 4ut on concrete &acts that demonstrate a sound o!!ortunit) #ith minimal ris., +ecisions are made slo#l) and methodicall), +o not tr) to rush !roceedings or a!!l) !ressure, I& an)thing, enAuire as to areas in #hich )ou ma) 4e a4le to &urnish them #ith additional or more s!eci&ic in&ormation, "r) and 4ac.%u! in&ormation #ith insight &rom !ersonal e6!erience or !ro&essional Auali&ications, <nce a decision has 4een reached minds are 3er) rarel) changed,

52

53

"4# Bis) *nalysis and ,easi!ility

"here are al lot o& ris. #ith e6!orting to a ne# mar.et and or countr), 1ith e6!orting to German) #e ha3e to ta.e some di&&erent ris. into consideration, "he anal)sis #ritten 4elo# is 4ased on ris.s #hich are im!ortant and e6!ected, 1e cannot ta.e an) une6!ected ris.s into consideration, this does not mean that the) do not e6ist, Einancial ris.B Vogel has a #ea. &inancial !osition, although their &inancial anal)sis turned out to 4e 3er) good, "he) ha3e not the a4ilit) to do a huge &inancial in3estment, Actuall) the) are not a4le to do an) =small> in3estments )et, this can lead to 4an.ru!tc), At this moment, #here #e li3e #ith a &inancial crisis, 4an.s are not #illing to gi3e a loan and com!anies are not #illing to in3est, "he stagnation o& the U$ dollar had lots o& in&luences on all 3acanc) all o3er the #orld !lus it has a lot o& negati3e in&luence on the e6!ort mar.et, 1ith a lo#er +ollarD5uro, a Rand is #orth more, "his can 4e !ositi3e &or Vogel 4ut also negati3e, An ad3antage is a stronger !osition o& the Rand, #hich can lead to a sta4le econom), A disad3antage is that a high Rand can lead to less orders &rom 5uro!e =the !roducts #ill 4e more e6!ensi3e>, 1ith re&erring to the German customers, the &inancial ris. is lo#, Generall), German de4tors !a) #ithin de !a)ment conditions, German customers are lo)al en relia4le trading !artners "rans!ort ris.B "here are stricter trans!ort rules in German) than in $outh%A&rica, Vogel has to 4ear in mind that the trans!ort costs can 4e a lot higher, "he) ha3e to get insurance &or damage and accidents, so the &inancial !art o& trans!ort ris.s #ill 4e co3ered, Generall), trans!ort is 3er) #ell arranged in German), (ar.et ris.B 1ith entering a ne# mar.et, there are al#a)s a lot o& ris.s, "he demand &or Vogel &urniture can 4e e6tremel) lo#, this #ill mean that Vogel #ill not 4e !ro&ita4le on the German mar.et, 1ith ha3ing the right entr) strateg), Vogel can decrease this ris., Vogel can also do a lot o& mar.eting acti3ities, to decrease this ris., "he le3el & com!etition can 4e too high &or Vogel in German), "his can mean that Vogel is not a4le to enter the mar.et at all, 4ecause o& the com!etition, "his ris. can also decrease #ith ha3ing the right entr) strateg) and doing the right methods o& mar.eting, A stagnation o& mar.et gro#th is also a ris. that #e ha3e to considerate, 1ith a &inancial status li.e no#ada)s, this ris. can 4e !ossi4le, Eorecast !redict that the econom) #ill 4e 4etter in /010, this means that the demand &or &urniture #ill rise, and the &urniture mar.et #ill gro#,

,easi!ility
I& #e ha3e a loo. !ure to the German mar.et, Vogel is mostl) sure to 4e succeeded, Although the &inancial crisis, the &urniture mar.et is still doing #ell, 1ith the right e6!ertise, mar.eting acti3ities and entr) strateg), Vogel #ill settle on the German mar.et 3er) eas) and 3er) Auic.l), $o the conclusion #ill 4e that the &easi4ilit) o& Vogel on the German mar.et is o.a), $till, i& #e ta.e a loo. to the e6!erience and !ro&essionalism o& Vogel the &easi4ilit) #ill 4e lo#er, Vogel is not read) )et to enter the German mar.et, "he com!an) is not read) to handle the demand o& the German mar.et, German customers are demanded and !unctual, this #ill not &it Vogel )et, 1ith this consideration it is di&&icult to -udge a4out the &easi4ilit), 1hene3er Vogel is read) to enter the German mar.et totall), the) #ill succeed i& the) ha3ing the right entr) and mar.eting strategies,

"C# ime ta!le and action plan

Vogel has to do the &ollo#ing thing to 4e succeeded in e6!ortingB Vogel has not enough .no#ledge and e6!ertise to start #ith e6!ort right a#a), Eirst the) should get their 4usiness running and get more .no#ledge a4out mar.eting strategies, 4usiness administration handling &inancial &acts, A&ter that the) should learn more a4out e6!ort and e6!ort strategies,

54

Vogel has to &ind a !erson or com!an) #ho can hel! them #ith entering the German mar.et, "he) ha3e to search &or a relia4le commercial agent or re!resentati3e !erson, "he &inancial !osition o& Vogel is to lo# to do an e6!ort in3estment, "he) should start #ith &inishing their 4usiness !lan, so the) can get some e6!ortD e6hi4itions &und &rom the Go3ernment =+e!artment o& "rade and Industr)>, Also #ith their u!dated and !ro&essional 4usiness !lan the) could get some mone) &or in3estments &rom 4an.s or other &inancial com!anies, Vogel has to orientate on re!resentati3es or commercial agents to enter the German mar.et, It is im!ortant to &ind someone #ho can cor!orate #ith Vogel !er&ectl), "he) could get some hel! #ith &inding an agentD re!resentati3e 4) getting into contact #ith the German em4ass), or the $outh%A&rican em4ass) in German), "he German mar.et is regarding to the com!etitions en !riceD Aualit) conditions demanding, "he conditions gi3en to the Aualit) o& the !roducts and the !unctual deli3er) our 4oundar), "hrough the di&&erentiation strateg), Vogel tries to distinguish itsel& &rom the com!etition, "here&ore, Vogel has to &ocus on his Aualit) standard, deli3er) conditions and mar.eting acti3ities, "ime ta4le 1, "o start #ith the action !lan, Vogel should hire some4od) =&or e6am!le a ne# intern> to &inish the e6!ort !lan to getD search &or some &und &rom the go3ernment andDor 4an., /, "he management o& Vogel should learn more a4out 4usiness administration and di&&erent mar.eting, e6!ort acti3ities, "he) also should continue the mar.eting acti3ities on the $outh A&rican mar.et, 3, A&ter this Vogel should &ocus on getting a standard Aualit) o& his !roducts and &ind #a)s ho# he can decrease his deli3er) conditions, 4, Vogel has to start &or loo.ing &or a commercial agent or re!resentati3e in German) #hich can hel! them &urther #ith entering the German mar.et, A&ter the) &ound a ne# intern, the) can start their action !lan, A ne# intern can start right a#a), "a.ing the !rocess o& getting interns into consideration, the) #ill ha3e a ne# intern !ro4a4l) in 'anuar) /010, "his means that the) #ill recei3e the &unds some#here hal& /010 and ho!e&ull) the) can start their e6!ort in /011, 1hen the) start #ith e6!ort in /011 or later, "he) should ma.e a ne# e6!ort !olic) !lan, Eacts and &igures o& this !lan can 4e out%dated, 2e# trends, com!etition and &inancial &igures #ill arise,

55

"@# 0udget
he costs of exporting for the first year 56!orting can 4e e6!ensi3e, and need a huge &inancial in3estment, Vogel #ill ha3e the &ollo#ing e6tra costs #ith e6!orting to German)B 7ersonnel costs =R;4000 a )ear N the costs o& R/3000 a month #hen the) hire a commercial agent> 56tra !ersonnel costs, #ith ha3ing more orders &rom German) Vogel need more em!lo)ers, 2ot onl) cra&t #or.ers =#hich earn R150 a da)> 4ut also !ersons &or =&inancial> administration =R/00 a da)> !lus the !ersons #ho is #or.ing on the German mar.et, Gou can ha3e some4od) #ho #ill #or. on commission8 the cost #ill 4e de!ended on ho# much he or she sells, I& )ou !a) salar) )ou ha3e to thin. a4out F1000 a month =sa) R/0000 a month> "rans!ort costs =not sure )et> Also the trans!ort costs #ithin German) ha3e to ta.e into consideration, It is not sure i& Vogel can #or. #ith Le6 #or.s@ "he costs o& mar.eting and !romotion acti3ities, =R40000> Eor e6am!le, to ha3e a stand on the e6hi4itions #ill cost F300 m/, ="his is a4out R3900>, $a) that )ou #ill !artici!ate on t#o e6hi4itions #ith a stand o& 5m/ it #ill cost R3/000, 7lus the other costs )ou #ill ha3e #ith &or e6am!le !rinting the =German> !rice lists, 56tra insurance costs =not sure )et> "he costs o& e6tra insurances that #ill 4e needed 4) e6!orting, #hich is de!endent on #hich #a) )ou #ill distri4ute )our goods, and #hat .ind o& insurance )ou ta.e,

7lus the e6tra time that Vogel #ill ha3e #ith #or.ing out this e6!ort !lan, 4ecause time is mone), 56!orting #ill cost Vogel the &irst )ear an amount a4out R394,000 =$a) F30,000> he profit of export Because o& the insecurit) a4out the amount o& orders Vogel #ill ha3e in German), I cannot gi3e a right ans#er to this, 1hen Vogel has 10 orders #ith an order o& &our chairs !er order =this means t#ent) chairs> the !ro&it #ill 4e a 4it lo#er than the !ro&it in $outh A&rica, "his 4ecause o& the &act that the) ha3e to !a) the commercial agent the arranged &ee,

56

$3# Conclusions
1e are still dealing #ith the &inancial crisis and German) has to su&&er a lot, "his means that not all &inancial data is u! to date, and #ill 4e more negati3e, "he &inancial &orecast &or /010 #ill 4e 4etter, In normal times, German) has a sta4le and strong econom), "here are not an) e6ternal ris.s #hen #e loo. to the trans!ortation and logistics, culture, legal and -uridical as!ects, German customers are lo)al and #ell .no#n a4out the relia4ilit) #ith !a)ments, Vogel has sho#n a 3ast im!ro3ement in !er&ormance &rom /00; to /000 mainl) due to increased sales and a 4etter gross !ro&it margin, In /00; the) in3ested a lot in la4our costs8 the) hired ne# em!lo)ees and #or.ed o3ertime, "he ca!ital o#ned has im!ro3ed dramaticall) as #ell as the !ro&ita4ilit), "he com!an) has great !otential &or &urther gro#th #ith the right in3estment, "he German mar.et #as the largest 5U mar.et &or domestic &urniture and #as 3alued at F 1;,9/0 million in /00:, 7rice continues to 4e the most im!ortant determinant &or 4u)ing &urniture, although a recent stud) 4) mar.et research s!ecialist Hol?mann%Verlag suggests that consumers are returning to Aualit), "his !articularl) a!!lies to the o3er%50 consumer grou! In /00:, German) im!orted domestic &urniture 3alued at F :,/1 4illion, or /,4;0 thousand tonnes, "his accounted &or /0Q o& all 5U im!orts 4) 3alue urrentl) design 4elongs to the most success&ul su4 sector #ithin the creati3e industr), Vogel #ill ha3e a lot o& com!etition on the German mar.et, In German) there is a continuous demand &or Aualit), German customers are &ocused on the 4est materials and the 4est Aualit), "he &act that Vogel #on a#ards #ith his !roducts is one o& the !lus !oints in terms o& his com!etitors, 1ith entering the German mar.et, Vogel #ill use the mar.et de3elo!ment strateg), Because the) are entering a ne# mar.et #ith an e6isting !roduct, Because o& the !roducts o& Vogel, the) should choose a trans&orma4le !ositioning, "he t#o &orces that are the ma-or threat &or Vogel are com!etiti3e ri3alr) and the 4argaining o& the customers, Vogel is situated in an o!en mar.et, 2e# 4usiness can enter easil), "his means that Vogel can easil) enter the German mar.et, 4ut this also counts &or the com!etition, "he com!etition can arise 4ecause o& this, "here&ore he has to ma.e use o& the &ocusD segmentation strateg), Although the GermanD 5uro!ean mar.et is eas) to enter, Vogel still needs some hel! #ith entering this mar.et, "his 4ecause o& the lac. o& .no#ledge in the German 4usiness culture and the ine6!erience #ith e6!orting, 1ith this &act, Vogel should thin. a4out a commercial agent, "he ris.s concerning to &inance, trans!ort and mar.et are lo#, I do not see an) !ro4lems there &or Vogel, Vogel needs to &ind out i& their current #a) o& distri4ution #ill #or. &or German customers and thin. a4out other #a)s to &inance their distri4ution to the German mar.et, 56!orting #ill cost Vogel a4out R394,000 &or the &irst )ear, "his #ill 4e around F30,000,

57

Conclusion It is e6tremel) hard to start #ith e6!ort the last )ears, $ince /00:, #e are li3ing in a #orld #ith a &inancial crisis, Im!ortant com!anies #ent 4an.ru!ted and small com!anies hardl) sur3i3e, "he trust in the &inancial #orld is gone, "his means that 4an.s and other &inancial in3estors are e6tremel) care&ul #ith gi3ing loans, mortgages and in3estments, Eor our com!an) this means that to start #ith e6!ort to 5uro!e can 4e enormousl) ris.), Although the German mar.et seems to ha3e a lot o& o!!ortunities &or Ru.ot3orine, it still has some di&&iculties, Gou can see German) as one o& the gates to 5uro!e, 4ut there are also some !it&alls, German) is among largest !roducers in the #orld so there com!etition is 3er) strong and com!an) need to 4e Auite inno3ati3e and di&&erent to succeed, 1e thin. that Bosnia and Her?ego3ina has a lot o& !otential and resources that are used on much lo#er le3el than it is desira4le to im!ro3e our trade 4alance,1e should !ut our &ocus on stimulating e6!orts es!eciall) e6!orts o& #ood and #ood !roducts,since #e are reall) among richest countries in 5uro!e #hen it comes to that resource, 1e as a com!an) are highl) moti3ated to s!read our 4usiness and to introduce our cultural heritage to consumers around the #orld, <ur !roducts are reall) uniAue and the) are not something that )ou can see e3er) da) in a sho!, each !art o& &urniture has its o#n stor), Because o& these &act #e are com!letel) sure that high Aualit) o& our !roducts #ill 4e recogni?ed and that it #ill #ind its #a) to consumer homes,

58

It #ill cost a lot o& mone) to e6!ort to German), German) is a demanding countr), "he mar.et &airl) di&&icult 4ecause o& the e6clusi3it) and the demand o& Vogel to sta) e6clusi3e, "he Germans also ha3e a di&&erent =4usiness culture> than $outh%A&rica, I thin. the main intercultural clashes #ill rise #ith the &act that the German culture is 3er) !unctual, Another !oint that should 4e ta.en into consideration is that Vogel cannot enter the German mar.et, the) need some hel! &rom a commercial agentDdistri4utor or re!resentati3e, "his #ill cost Vogel a lot o& mone) =in terms o& salar)>, I do not .no# i& Vogel is a4le to handle this costs, 1hen Vogel is read) &or e6!ort #ithin a &e# )ears, the) should ma.e a ne# e6!ort !olic) !lan,

Sources
###,south%guild,co,?a ###,dti,go3,?a ###,e3d,nl ###,c4i,eu htt!BDD###,hdh%e3,deDenglishD!rDdesigntrends,html htt!BDD###,.#intessential,co,u.DetiAuetteDdoing%4usiness%german),html htt!BDD###,german%4usiness%!ortal,in&o htt!BDDen,#i.i!edia,orgD#i.iD"rans!ortbinbGerman)cInternationalb&reightbtrains htt!BDDen,#i.i!edia,orgD#i.iDEileB7ortersb&i3eb&orces,72G

59

*ppendix
7ricelist o& Vogel !roducts

60

61

% Einancial &acts

62

on&rontation matri6

63

64