1. Final Report
MKTG 440 Export Management
April 20, 2016
Prepared by: Colby McGill, Howard Bolden, Michael Santos, and Jessica Kuna

2. Report 1 Begins here.
Background
Warwood Tool Company is an industrial grade tool company that was founded in 1854
by Henry Warwood. The company initially began in order to produce tools for the coal mining
industry within West Virginia. The tools produced by the company were also used in World War
I and II for digging trenches. Warwood Tool’s history with the U.S. Military dates back to the
Civil War. They are currently within the coal mining business, and any type of market that
utilizes industrial grade tools made from high quality materials. Warwoods Mission Statement
can be seen below:
“We eat, sleep, live, and breathe “Made in America”. We are hard people that make
hard products. By hand, we forge, bend, grind, and handle US steel to make the finest
industrial grade hand tools in the world. We depend on each other here; for growth, for
humor, for safety. For all the sledge swingers who believe in doing it right the first time,
for all the construction workers who rely on quality over quantity. We still make it like
they used to make it, because it’s the best way to make it. We are the Warwood Tool Co,
and we Earn It every day…How about you?”
Warwood’s mission statement emphasizes the product’s quality and the values that the
company holds dearly such as hard work, quality, and even safety. In addition, with a masculine
undertone, the statement appeals to hardworking men who are predominant consumers of the
products. In addition the the mission statement, Warwood uses it’s “Earn your Warwood” Slogan
often. During World War II, various Warwood tools were implemented in order to facilitate the
trench digging that was so common. A phrase came about due to the prevalence of improvisation
when the enemy was near that stemmed from using your tool handle to overpower the enemy.
After you experienced this it was said that you “earned your warwood”. This phrase is in use
today as you have to earn what you do, whether it is constructing a railroad, mining, or even just
working in your yard. Regardless of the application, Warwood tool is interested in how you
“earn it”.
Export Experience
Warwood tools currently have business in Chile, Peru, the Middle East, and North Africa.
This business makes up $250,000 of the $2 million in total sales. In addition to these countries,
the owners have actively sought out trades shows, even attending a show in China. The company
has had success from these trade shows, and recent advertisements in the international countries
listed above.In addition to the foreign markets, Warwood has established a strong presence in the
Canadian railroad market. However, due to the similarities to the domestic United States market,
it is not considered a major export.. Unfortunately, due to Canada being treated as domestic exact
sales are unknown, but estimated to consist of up to 15% of total sales. The Vancouver
warehouse serves as a hub to the canadian market in order to facilitate distribution. The company
has some experience exporting, but is researching and looking to us to gain knowledge on the
subject. Exporting is minimal, but expanding to international countries.
Existing Resources

3. Human Capital
Warwood currently houses 15 employees located at their headquarters in Wheeling, West
Virginia. Two of these employees are the owners, Logan Martle and Phillip Con. The 13 other
employees specialize in various tasks including manufacturing. They currently have three
warehouses in Utah, Seattle, and Vancouver. Their manufacturing facility in Wheeling is capable
of an upwards of 100 employees for production, which has occurred in the past due to market
demand. If demand increases, new employees may need to be brought on in order to increase
production. Assuming new hires will have steelworking experience, training time would be
miniscule. If the employees are not experienced, they can be assigned mundane tasks that the
skilled laborers typically have to do. This can include sanding, cleaning, etc. These tasks will
decrease production time because the laborers can focus on producing quality tools while new
employees perform the simple, repetitive tasks. Unfortunately, exact numbers on production per
employees are unknown as time depends on the tool demands.
Management
The owners of Warwood Tool have a strong background in business, and have been
researching to continue exporting their tools. Mr. Con has a background in marketing, and is in
charge of all affairs regarding the sales of the tools. Martle studied engineering, and is familiar
with the product building process. They both will travel on behalf of the company
internationally. They are the best representatives, having adequate experience and education to
export. Recently, they became familiar with exporting their tools from traveling internationally
to trade shows funded by the State of West Virginia. They both have strong knowledge when it
comes to developing their target markets, and understanding the different cultures in those
markets.
Production capabilities
Production capabilities include customization depending on client needs. However, to
customize the tools, processing times can take up to six weeks for products to be made, shipped,
and delivered. The processing time is due to buyer collaboration to ensure the exact need is met.
The handmade nature of the tools allow for the adaptation of product designs for the purchaser.
Depending on the alterations to the product, production times could vary. We have assumed two
weeks for production and design. Warwood strives to ensure the customer’s expectations are met
fully. Air freight can take up to 5 business days to deliver Internationally. However, if Warwood
uses an ocean carrier, up to a month can be expected for delivery. We have assumed six weeks of
order processing because of the international shipping length.
Export Plan
Warwood Tool is looking to export tools that can be sold to nations that currently have
large markets in mining and railroad. These industries require high grade tools to operate
effectively. Due to the quality of Warwood tools, these markets are suitable as they need tools
that will withstand the demands of repetitive use. In order to successfully export, Warwood must
utilize salesmen who will be tasked with developing relationships with the local industries. Since
the products are heavy, it is necessary to sign on large companies and mines rather than
individual buyers as the long distances and expensive weights make individual orders
impractical. Through careful planning and building of networks, Warwood hopes to boost bulk
sales internationally and grow their business.

4. Current Market
Consumer
Warwood Tool domestic customers are that of private labels. An example of these labels
would be GMP (General Machine Products), and other companies who are in need of a specific
tool. Warwood creates unique tools that can be customized in order to fulfill a client’s needs. The
customer decides on the product based on its quality. Since Warwood is a hands-on tool making
company they want their customers to value the tools. Customers can feel the difference with
their tools, and see their tools are better made for the job. They want a long lasting product that
can be used for years. Current industries that use these tools for jobs would be mining, railroads,
,and agriculture. The customer’s decision making process is that the tool allows the various
industries to complete the jobs at hand without worry of the tool breaking or falling apart.
Competition
Competitors of Warwood Tool are companies such as TAMCO, Dewalt, and Council
Tool. These three competitors each have a specific niche they compete in. TAMCO is a large
distributor in the railroad market, which poses a threat to Warwood Tool. Council Tool competes
in the Government contracting as well as the “American Made” market. Dewalt also competes in
the “American Made” market. However, their tools often contain parts, which were outsourced
by the company. This then leads the consumer to believe the tool is 100% American made,
giving Dewalt a competitive advantage since their products are costing them less to make.
Within the international market, China as a whole is a competitor because they sell tools
for extremely low prices. The only downfall for buyers is the tools are not forged with high
quality materials, giving them a shorter lifespan. Consequently, these tools will not withstand the
types of industrial jobs. Compared to these competitors, Warwood Tool has an advantage
because they have been producing high quality, American made tools for 161 years. Therefor,
they have been able to create long lasting relationships with their consumers. The reason
Warwood Tool has a small part of the market is because they are not a large international
manufacturer.
Warwood can easily implement its made in the U.S.A properties in order to increase
profits. Each part and component is made in the United States. Few companies are able to say
this as they source from different locations or assemble part of the products prior to completion.
American-Made carries its weight in foreign markets where our products are viewed with a
reputation of quality and durability, both attributes especially necessary in the tool industry. In
addition, Warwood has 161 years of manufacturing and tradition that comes with the name. In
foreign countries, particularly asian, tradition, heritage and experience is heavily valued. The
company can be trusted and respected as they have conducted and remained in business for such
an extended period of time.
Marketing Strategy
The tools are built with high quality materials that make up a true “Made in U.S.A.”
product. The company takes great pride in informing customers that their tools are above the rest
in the current market. When Warwood prices these tools, considerations are made upon the

5. weight of the steel necessary to make that tool, and how much the steel is per a pound. They also
have to consider what it costs in labor to cut, heat, forge, grind, and paint the handle of the tool.
Once they have an idea of the costs will be, they look for the typical cost of that tool in a specific
market. Consequently, Warwood can then obtain their profit margin versus the cost of producing
the product. Warwood tool company is looking to export the Brass Hammer, Mason Hammer,
and the Double Face Sledge. Where these products cost approximately 40 dollars more, ($30 for
cobalt vs. $70 for warwood), they make up for in quality and durability. More often than not, the
wooden handle holding the sledge breaks prior to any chipping observed on the sledgehammer.
In addition to the sledges, Warwood are looking to focus on customized tools, railway
track maintenance line of tool, and industrial level projects that rely on these tools. To distribute
the tools, sales representatives are placed around the nation to sell Warwood tools to
organizations, and other businesses. These salespeople are paid on salary with commission based
incentives to drive performance. It is these salesman's jobs to develop and maintain relationships
with the consumers. After the connections are made, orders are made and passed on to Warwood
who manufacture the tools to the consumers desire. These products are then shipped to the
consumer. Volume discounts are offered to the consumers with the option to hold onto the
products until they are needed. This gives consumers the opportunity to invest money into tools
that can be used in the future while also minimizing costs to hold onto the products. On occasion,
the company will also outsource parts of their tools to different companies within the market to
push growth and development.
The current marketing strategy is centered around a small town approach using mostly
word of mouth. Their website is well designed, and contains information that is crucial for
potential clients to make purchase decisions. Also, they have a Facebook page that is used
infrequently, but still keeps clients who are not within their headquarter region up to date. On
both of these mediums, the tool company has showcased two, 30 second commercials that
explain the one-of-a-kind products they are producing. The commercials are also used within the
already obtained target market chosen from the export analysis by the State of West Virginia.
Other than word of mouth, as well as the digital mediums, Warwood does not market or
advertise their products. The salesmen are expected to promote the product and drive sales.
Existing Financial Capabilities
Warwood tool is currently at $2 million in sales, and expecting growth upon successful
international sales. The products are currently positioned within high quality, high price, and
offer no warranty. As a company, Warwood is struggling to position its products in the market,
as they are not for the average tool user. Companies often make purchasing decisions for their
employees, and relay that to Warwood Tool, since the mining industry requires many tools.
Warwood currently offers a volume discount for their customers, as well as a stocking program.
This allows orders to be further engineered to the buyer’s preference.
Environmental variables
Warwood Tool has recently been impacted by the change in markets within the state of
West Virginia. Economic factors impacted the overall prosperity of the company because of
supply and demand. Within West Virginia, the coal industry has been declining in recent years,
as the oil and gas industry has taken over. Many power plants have begun to use natural gas

6. instead of coal. The coal industry decline created a ripple effect that directly impacted Warwood
Tool. The company is now looking to export internationally because of these environmental
factors that are out of their control.
Australia
Cultural characteristics
Australia’s culture is very unique and different in comparison to the United States.
Australians call each other by their first name, and show respect by looking people into the eye.
However, they do not stand close or have a lot of physical contact, except for a handshake with
their right hand. Warwood should be aware of Australia’s currency which is different from the
U.S. $1 U.S dollar is $1.28 Australian dollars. Majority of the people in Australia speak English
with a twist of humor and sarcasm, but there are a few more languages that may matter to
Warwood; Mandarin, Italian, Arabic, Cantonese, and Greek. Australians value time,and it would
be unacceptable to be late. For business dress, men wear black suits and ties; women may wear a
dress, or skirt.
Market
As a country, Australia has the fourth largest mineral production in the world after China,
the United States, and Russia. With the second largest Iron and Ferro-alloy production, Australia
has a significant market for durable, industrial grade tools. Australia operates over 400 mines
with 176 located in Western Australia alone (see below). Western Australia is known to be less
habitable due to animals and the environment. Due to the large amount of mines in harder to
reach locations, Railroads are also prevalent. With a country roughly the size of the United
States and a much smaller population, Australian runs on the mining that occurs in the lower
populated areas and relies on the railroads to transport the mined materials.

7. Warwood Tool should target the Mid-Tier 50 companies that can be found below. These
companies have been identified as the highest 50 market capitalization companies fewer than 5
billion dollars. These companies will be more approachable to a company of Warwood’s size.
Australians are looking for products within the mining industry that promote reliability, and
safety. Dependability is key when promoting mining tools within Australia. Where existing tools
such as mumme may be reliable, Warwood tool’s offer the customization and heritage that
cannot be matched. Where Mumme has been around for approximately 80 years, Warwood has
been making tools for 150. This experience Warwood has gained by going through the industrial
revolution and two world wars emphasizes the longevity of the company and its products.
Warwood Tool Company offers this advantage to potential buyers, as they offer high quality,
durable tools. When beginning to pursue these companies, it is important to remember that while
Australians are slightly more laid back, they are prudent businessmen much like you will find in
the United States. Australian’s do not find relationships as important and expect you to get to the
point quickly with little fluff. They may, however, consult with those under them prior to
decision making which may delay the process.
Competition
Warwood Tool Company has a lot of competitors in Australia; however here are three
competitors that could affect Warwood Tool Company. Those three companies are Die
Engineering PTY LTD Toolmakers and Precision Engineers, Vesper Tools, and LPR
Toolmakers. Each company has its own competitive advantage that sets them apart from their
competition. Die Engineering PTY LTD Toolmakers and Precision Engineers competitive
advantage is that they have one of the largest Cnc machining capabilities with full 3D capability.
They focus on the power and sturdiness of their tools that are mainly used for heavy duty work.
Vesper Tools competitive advantage is that they sell Environmentally Conscious Tools that
aren’t made from toxic, synthetic, and petroleum based material and you only need to buy it

8. once. Vesper Tool Company emphasize quality and time to make sure, they make the correct
tools needed for the job. LPR Toolmakers attention is on quality and service, as they try to serve
their customers the best tools at a fast rate. Other potential competitors include LHS Rocktools
Australia, GMT Groves Manufacturing & Tooling, and Design & Toolmaking. Warwood Tool Company
competitive advantage is that they offer hand forged tools made with the highest integrity with
carbon and alloy grade B steel; while focusing on having the best quality tools to stand out.
Export experience
Warwood’s owners are young professionals with a global outlook. Warwood has already
visited a trade show in China planned by West Virginia’s Commercial Service. During this
tradeshow, Warwood was able to meet with various reputable businesses. This experience
exposed them to the world of International business and prepared them to tackle Australia.
While Australia is more “Americanized” than China, it is still necessary for Warwood to hire a
sales representative in Australia. With 50 intermediate companies to initially target and over 400
mines, it is necessary to have someone in Australia. This salesman can not only increase revenue,
but also serve existing customers to further facilitate the logistics within the country. In addition,
if this employee is a Native Australian, he will prove an invaluable resource to Warwood as a
cultural consultant. This “man on the ground” in Australia will link together the American
business to exportation to Australia.
Marketing capabilities and changes
Product
There will be no need to change the products as they are universal. A sledgehammer is a
sledgehammer and a pry bar is a pry bar. Warwood has the ability to manufacture custom orders
if need be but the current line of products are designed to fit the industry standard. It is not
expected that Australia will demand different specifications on the products. However, Warwood
needs to understand that Australia uses the Metric system, while the U.S uses the Customary
system.
Price
Warwood’s products will need to increase in price as it is more costly to ship them to
Australia. In addition, minimum wage is over 17.29. After accounting for inflation, minimum
wage is 12.50, still higher than the United States. With a lower value of the dollar coupled with
higher income for minimum wage employees, Warwood can raise its prices with little or no
kickback. The increase in prices should be enough to offset the increased costs associated with
distribution from West Virginia to Australia. 1 pound is equal to 454 grams or 0.454 kilograms.
Warwood may have to rethink the weight of their products because their weight is taken into
account of how much to price the tool.
Promotion
Where the “Earn your Warwood” campaign may be effective in the United States, it may
be more effective to emphasize the benefits of Warwood products to potential customers.
Australia does not have gun rights like the United States and an underlying war theme may turn
potential Customers away. Focusing on the benefits and quality will suffice as Australians would
rather know what it is and what makes it better than what they are using. As a whole, Australians
are proud of their mining Industry and will want the best in order to maximize production.

9. Warwood also have two 30 seconds ads on their website; that could also be found YouTube.
There are possible trades shows available in Australia; specifically in Perth,Western Australia.
Perth is the location where most of the mining is done in Australia. Appearing in a trade show
would give Warwood a chance to promote their tools.
Distribution
Since Australia is a relatively distant location, it is expected that shipping costs will
increase significantly. Steel is a heavy material that is costly to ship. In order to reduce shipping
costs, Warwood needs to carefully plan exportation to get volume discounts for large shipments.
It is impractical to ship on a per unit basis when sending product as far as Australia. Upon
arrival, products may need to travel long distances in order to reach their final location.
Utilization of the railroads may be useful for large orders but smaller orders will require shipping
trucks. In order to ease the shipping burden and capitalize on volume discounts, it may be
beneficial for warwood to invest in a warehouse to store bulk shipments for rapid distribution in
Western Australia. This is a longer term option as sales would have to support such an
investment decision. Warwood could possible look to established a rapport with the ICRG
Logistics company which is located in Western Australia near the mining industry.
Financial Requirements
In order for Warwood Tool Company to begin exporting to Australia, they are required to
prepare and lodge financial reports with ASIC at the end of their financial year. Warwood would
need the approval to export their goods through the lodgement of export declaration if their
goods are more than AUD 1,000. Goods worth equal or less than AUD 1,000 have no duties,
taxes, or charges to pay. Warwood is not limited to exporting to Australia because of the Free
Trade Agreement (FTA). Tariffs that were 4.3 percent were eliminated on 99% of the tariff lines
for U.S manufactured goods exported.
Human capital
Pending significantly increased demand, Warwood will not need to add additional
employees. Warwood’s leadership has expressed its ability to increase production if need be.
This is variable and based on the number of orders coming in. It is not logical at this time to hire
more laborers to product tools as the demand is not there. It is, however, crucial to look at
laborers and demand monthly. What may have been enough employees a month prior could
leave the company severely understaffed if not monitored closely.
In terms of special expertise, Warwood will need to establish relationships in Australian
mining or Railroads. While culturally, Warwood will be able to interact relatively effortlessly,
business operations may be tough to come by without someone knowledgeable in the industry’s
environment. This “liaison” will help Warwood to navigate an enormous industry in order to find
companies that have a need Warwood can fill. Furthermore, as a local, this liaison will be able to
help Warwood navigate the legal environment that they may be unfamiliar with.
Environmental variables
There are a myriad of different variables that can impact Warwood Tool Company in
exporting their goods. Before exporting to Australia, the Department of Immigration and Border
protection has to clear the goods being exported. In Australia they make sure everybody is
treated fairly when conducting business; they have created the Australian Competition and

10. Consumer Commission law (ACCC). This is important for Warwood because this law protects
them against dishonesty and it creates a good relationship with Australia in being able to trust the
country when they export their goods. The ACCC enforce product safety, information standards,
and bans unsafe goods under the Competition and Consumer Act 2010 (CCA). This has a major
impact on Warwood because they create a countless number tools for construction and mining.
The tools they make maybe considered as a weapon or unsafe in Australia; Warwood would
have to reconsider the tools they want to export. Another important variable that can impact
Warwood is protecting their international intellectual property. After registering in Australia it is
recommended to apply for a trade mark, or a patent to make sure their product is safe. This also
can help Warwood in understanding what products are taken; so they do not violate the
intellectual property of other companies in that industry. Warwood could benefit from Free
Trade Agreements (FTAs). This is international agreements to remove or reduce trade and
investment barriers between countries. This gives Warwood more opportunities to be able to
export more tools and expand their business in Australia.
Potential Demand
As mentioned earlier, Australia produces the fourth most minerals in the world. Demand
for Industrial grade tools exists in the form of 400 operating mines and a railroad infrastructure
to transport minerals across an entire continent. In addition, the industry is so large that in order
to measure the trends, economists take the “mid-tier 50”, a sample of the top 50 mining
companies with a market capitalization under 5 billion. These companies range in market cap
from 139 million up to 4.7 billion. Any of these companies would be a potential customer for
Warwood as they look to sell large quantities of tools to corporations to use throughout their
mines.
In addition, Steel and iron products imported increased 31.1% in 2015. While not all
necessarily tools, this shows that growth in the industrial sector is growing. In turn, the demand
for products needed by the industry is growing as well. Steel and iron imports totaled $6.9 billion
dollars in 2015. If Warwood could even obtain a tiny portion of this, sales would increase
drastically. Furthermore, 2.6 billion of the 6.9 billion was obtained from China, an exporter
whose product’s quality is often questioned. Warwood should be able to cannibalize some of the
Chinese products with its emphasis on quality and longevity.
Chile
Cultural characteristics
Chilean culture differs immensely in that business is more personal than professional.
Chileans do not like their business meetings to be rushed. The culture is very close-knit. Shaking
hands with everyone at the meeting is customary. Although among Chileans, men kiss women on
the cheek upon meeting, U.S. businesspeople should shake hands until a more personal
relationship is established. Appearance also plays a major role in Chilean business. Businessmen
and women tend to dress formally.
Language is an extremely important factor regarding cultural differences in Chile. It is
even used as a way to decipher the differences between social classes. Those in a higher social
class tend to enunciate their words more clearly. Even the slightest difference in pronunciation
can “betray” social background. In other words, make sure your translator is of Chilean high
social class when doing business in Chile.

11. Etiquette is also something to take a look at when traveling to a foreign country for
business. Chileans commonly use the term “you” or “usted” to address people. The term “you”
or “tú” would be used for close friends or between children but it is avoided when speaking to
elders. Punctuality as in most countries is expected. Chileans don’t like to wait. It is also
considered rude to speak loudly in public places. When at a restaurant, waiters are called “sir” or
“señor” and are addressed as “usted”, the formal “you”.
Market
For Warwood Tool, the major market within Chile to target would be the mining
industry. Chile’s mining industry has been upheld for over 150 years with strong mining and
environmental regulations to follow. Chile focuses on metals and minerals within their northern
region such as gold, silver, copper, zinc, lead, iron, and manganese. Chile is currently the number
one producer of fine copper in the world. Currently, they supply 34% of the total global copper
production. Also, they rank 5th within gold and molybdenum production world wide. According
to the Central Bank of Chile, in 2009 GDP for the mining industry was the largest in the country
at 16%. Warwood Tool would be able to supply the major mining companies with high-quality
tools that would withstand years of mining.
These are the top mining companies within Chile that Warwood Tool should target:
These companies would have the most demand for specialized, industrial grade tools that
Warwood Tool produces. To target these companies, it would be most incremental to understand
the cultural differences listed above to ensure the utmost trust. Along with that, Chile business
professional expect a face to face interaction when conducting business decisions. The Chile
business markets strive for trust and security, which Warwood Tool promotes already within the
United States. Currently, there are very strong trade bonds between Chile and the United States

12. furthering full market potential. For these Chilean companies targeted, dependability is the most
influential factor they want. This factor also leads to many Chilean companies looking for
products of a higher price because that signifies high quality. Other factors that many companies
consider are quality, technology, availability, customer support, and durability are all considered.
Competition
Tramcom Ltda is based out of Santiago in Chile, they are related to the sale of machinery
and the advice of mining projects. The company was founded in 2007 and they currently give
advice to one of the top producers in gold mining, Goldfields mining company. This company's
annual sales range between 100 and 500 thousand US dollars and it’s employee total is between
1 and 5. Tramcom’s competitive advantage lies in the fact that it is based in chile and it also
specializes in not only producing tools, the company gives mining advice as well.
Servitork Limitada is a company based out of Chile which was established in 2010. This
company is different from Tamcom and Warwood in that its main focus is the production of
hydraulic tools. Its employee total is between 11 and 50 and it’s annual revenue is between 100
and 500 thousand US dollars. Like Tramcom Ltda, this company is relatively young compared to
Warwood..
Warwood Tool has been within the industrial strength tool industry for 161 years. For
Chileans, this will build trust to begin the timely sales process. The difference is that Warwood
Tool Co. specializes in creating high quality U.S. steel industrial strength tools. These tools are
handcrafted by skilled workers and are available for personalization depending on what the
buyer wants. Marketing the fact that we can produce specialized products to cater to specific
consumer needs gives Warwood Tool Co. a competitive advantage. In order to exploit this
advantage, we must offer mining companies in Chile the option to send in measurements and
have personalized tools created for the jobs they need accomplished.
Export experience
The management at Warwood Tool has experience exporting internationally to cultures
that are vastly different than that of the United States. The company would have very few issues
shifting their focus into a culture such as Chile’s. All materials used in terms of the sale need to
be in Spanish, which would require proper knowledge of that language to successfully relay
information.
Production capabilities
At the moment, production capabilities are not a problem. However, Warwood Tool Co.
is not currently selling internationally on a consistent basis. In the event that Warwood starts
consistently selling to Chile in large quantities, an increase in production capabilities might be
inevitable.
Marketing capabilities and changes

13. Product
The current product line that Warwood Tool offers would need to be altered to kilograms, and
also reflect the metric measurement. This does not directly change the tool itself, but changes the
way in which the tool is promoted and displayed in packaging. With the company offering a
customized line, it will only further their ability to sell within Chile. Warwood does follow the
industry standard in design, which will further their ability to sell tools internationally.
Price
According to export.gov, the formula to calculate cost is costs plus ship to warehouse
expenses, which is based off of the CIF value. Pricing the items should stand competitive in price
of imports from Asia or Brazil. As of right now, the Chilean Peso is down versus the U.S. dollar.
(691 Chilean Peso to 1 US Dollar) Warwood Tool would need to specifically research the
exchange rate between countries when selling these tools to Chile to determine their pricing.
When selling goods in Chile, companies must also take into account the Value Added Tax or
“IVA”. This is currently at 19%, which is most always paid by the importer versus the supplier.
The only exception to this tax is government entities. However, Warwood Tool would need to
address the shipping costs associated with distributing to Chile. There are various freight options
to consider in terms of ocean and/or air shipments as well as the carrier.
Promotion
Advertising within Chile is different than that of the United States because radio is
currently their one of their top trusted and used news source. There are 2,000 stations
nationwide, from AM to FM. The top national stations yielding the most listeners are Radio
Bíobío, Radio Cooperativa, Radio ADN, and Radio Agricultura. Another medium that Warwood
Tool could use is publishing with the mining monthly publication, Qué Pasa Minería, by Alvaro
Saieh group (Corp Group). Advertising within a publication could increase brand awareness, and
trust by allowing companies to view Warwood Tool in their home country. Even though radio
advertisement is one source of news, the internet is growing substantially Warwood Tool should
also look to become more involved on social media. Facebook, and Twitter are growing
platforms that Warwood Tool should be a part of. Also, it would be crucial to attend trade shows.
Distribution
Since Warwood Tool is a new-to-market company, it best suits them to appoint an agent
with industrial tool knowledge and rapport within the mining industry. This agent would sell
similar products as Warwood Tool to various mining companies within Chile. It would be
critical that this agent has access to the buyers in the major mining companies. In Chile, Santiago
is the major hub for trade activities, but Warwood Tool could place an agent within the Northern
region specifically based on the mining market region. The most crucial points of entry are
through Seaports. From the Seaport, land transportation in the form of trucks are used to
distribute the tools to the mining companies.
Financial requirements
The U.S.-Chile Free Trade Agreement (FTA) was passed in 2004 which makes 80
percent of U.S. consumer and industrial goods exports to Chile, duty free. On January 1, 2015,

14. 100 percent of products exported from the U.S. to Chile became duty free. Products must meet
the rules of origin. Chile is atop the best countries to do business in due to their open economy
and strong democratic institutions. Therefor there is nothing to worry about when exporting tools
to Chile. All products may be sold in the country without having to pay export tariffs, making
Chile an extremely intriguing country financially.
Human capital
Warwood Tool currently carries the capacity to fully support national and international
sales of their tools. The company should carefully monitor the export of their tools. By monitor
the exports, it will allow them to carefully add employees to their business if an influx of orders
would occur. Internationally, an agent would help support the international sale of their tools
within Chile. Having an agent placed within the country will allow them to expand their business
further, and develop incremental business relationships with chilean mining companies.
Environmental variables
Overall, Chile is a strong business partner to do international business with. They have
zero tariffs, open market, democratic government (stable), and low corruption. The economy has
recently slowed, but it projected to increase in the coming years. We are currently number two in
imports to Chile, falling behind China. This could become an issue at hand if China started
producing high quality tools, but that is unlikely. Furthermore, Chile has recently issued a major
tax reform scheduled to begin in 2017. The corporate tax rate will increase from 20% to 27%,
affecting the amount of money available for businesses to spend. The VAT is not changed
through this tax reform.
Potential demand
http://www.kallman.com/shows/exponor_2015/pdfs/Mining%20Equipment%20(MIN)%20CHIL
E%20SEP%202013.pdf
According to the United States of America Department of Commerce, in 2014 Chile
imported 3,657 million dollars worth of mining equipment. This is a dramatic increase from the
1,928 million in imports from only 3 years earlier. With increases this steep, it gives off the
impression that Chile is only beginning to expand their import potential. Warwood Tool Co.
should act as soon as possible in order to gain the advantage of early entry in the market.

15. Warwood specializes in mining tools and there is a very large market demand for their products
in Chile. If given the opportunity to collaborate with a large mining company like Codelco,
Warwood Tool Co. can increase its sales tremendously.
Report 3 begins here.
Australia
Product modifications and requirements
The U.S uses the customary measurement system, while in Australia they use the metric
system. In order for Warwood to export their products they have to understand 1 pound is equal
to 454 grams or 0.454 kilograms when converting measurements from the U.S to Australia.This
measurement is important for pricing their tools in Australia because Warwood charges based
on the weight of their tools. Warwood may have to reconsider the weight of their products when
they are making tools. In order to lessen the price to ship large quantities, Warwood may have
to reduce the weight of their products as well.. The tools Warwood are looking to export would
have to change the specific measurement to metric instead of the United States Customary
System. While uneccessary, it may be cheaper for labeling purposes to shorten or lengthen
products slightly to avoid decimals when labeling to metric. In the end, a sledgehammer
performs the same whether it is seven inches or a slightly shorter 17 centimeters, .78
centimeters shorter than seven inches. These small changes can reduce weight drastically in
large orders and cheapen shipping costs and lessen material used per tool.
When it comes to labeling their products, Warwood has to make sure their label
complies with the Australian Competition and Consumer Act 2010, which states one can't give
false, deceptive or misleading information to customers. Warwood must comply to the National
Trade Measurement Regulation 2009 that states pre-design labels must include the position,
size and format of measurement information for articles packed in Australia, as wells as the
name and address of the packer. Warwood needs to have their country of origin label. If it's not
present, their product is prohibited in Australia. When packaging their products, Warwood has
to make sure their packaging is environmentally friendly eliminating waste In Australia they
have developed an Consultation Regulation Impact Statement which focuses on the
measurement of increasing packaging recovery and limiting packaging litter. Australia focuses
strongly on making sure companies don’t lose their packages in between exchanges and that
packaging doesn’t hurt their environment.
Warwood can get a patent protection which provides legal right to stop third parties from
manufacturing, using and/or selling an invention in Australia. Warwood could benefit from
Australia’s Design Protection which is a design application that can be filed containing multiple
designs, in relation to many products.
Warranties
Warwood Tool Company does not provide a warranty or guarantee to the accuracy of
their products, their life cycle, performance and completeness for the particular job. They are
also not liable for any errors or inaccuracies permitted by the law, and it is the consumer's

16. responsibility to make sure they purchase the correct tools needed for their job. In Australia,
there are many warranties that are available that could help Warwood make certain changes to
their policy that are allowed in Australia. One example of a warranty is the warranty against
defect, which in this case the company will repair, or replace the tool, or resupply the consumer
in the event of an issue. Common warranties also include the state of the product, which
focuses on the quality, characteristics, and how long it will last. Warwood should take these
types of warranties into consideration. These warranties are mandatory under the EU laws.
Warwood could be liable for tools that break easily and would be expected to replace them.
However, within the U.S they don't have to replace any tool or product. This will also increase
Warwood cost because if a tool is produced incorrectly, having minor mistakes in measurement,
Warwood would have to re-produce the tool and distribute it again.
Pricing Strategy Changes
Warwood’s products will need to increase in price because it is expensive to ship them
to Australia. Since the products are covering a larger distance than the United States, Prices
inevitably will be more expensive In addition, minimum wage is over 17.29. After accounting for
inflation, minimum wage is 12.50, still higher than the United States. In Australia $1 U.S dollar is
equal to $1.28 Australian dollar. Prices will need to increase to offset both distribution costs as
well inflation. Warwood Tool is looking to export the Brass Hammer, Mason Hammer, Double-
Faced Sledge, and the Spike Maul. These products will be sold for industrial use in mines and
railroads. Each product is priced based on its weight in pounds, and length in inches to make
the tool. Since Australia uses the Metric system, Warwood would need to adjust the weight and
length of the tools they produce, which will determine how much they will charge, and in turn
profit they can potentially gain in Australia. While only minor differences due to the changes,
prices should be changed to keep uniformity throughout the company.
Promotional strategy changes
Where the “Earn your Warwood” campaign may be effective in the United States, it may
be more effective to emphasize the benefits of Warwood products to potential customers.
Australia does not have gun rights like the United States. Focusing on an underlying war theme
may turn potential Customers away. Exemplifying the benefits and quality will suffice because
Australians would rather know what it is and what makes it better than what they are using. As a
whole, Australians are proud of their mining Industry and will want the best in order to maximize
production. Warwood also has two 30 second ads promoting how they hand forge their tools
with a voice-over. Warwood can also attend trade shows, which are held at Sydney Convention
and Exhibition Centre, as well as the Melbourne Convention and Exhibition Centre in Australia.
More importantly, in Australia they have specific trade shows for the mining industry and
engineering held in Perth, Australia. The trade show is held every two years, and is currently
hosting a trade show through 03/05/16 - 05/05/2016.
Distribution and logistic strategy changes from the domestic market:
Tariffs
Australia has a Free Trade Agreement with the U.S; which are international treaties that
reduce barriers to trade and invest. This would help Warwood because it limits the process they
have to go through in order to export their goods. Warwood expenses would be lower to export
to Australia because of the many agreements. This also improves competitive position for
Australian exports, more prospects for increased two-way investment, and it reduces import

17. costs for Australian businesses and consumers. Australia also has to worry about the Custom
Tariff Act of 1995. This act allows Warwood to self-assess the correct tariff classification for the
goods they export. Australians have to be worried because a company could illegally classify a
product that doesn’t belong in that classification and give deceptive information. Warwood will
be penalized for incorrect or misleading information based on their tools being exported. The
Department has a range of information and resources that will help Warwood classify their
goods, so they won't face any charges for wrong information. There are tariffs that offers advice
service, free of charge on goods Warwood intends to export. This helps Warwood gain more
insight and information about the product they are exporting.
Distribution
Since Australia is a relatively distant location, it is expected that shipping costs will increase
significantly. Steel is a heavy material that is costly to ship. In order to reduce shipping costs,
Warwood needs to carefully plan exportation to get volume discounts for large shipments. It is
impractical to ship on a per unit basis when sending products as far as Australia. Upon arrival,
products may need to travel long distances in order to reach their final destination. Utilization of
the railroads may be useful for large orders but smaller orders will require shipping trucks. In
order to ease the shipping burden and capitalize on volume discounts, it may be beneficial for
Warwood to invest in a warehouse to store bulk shipments for rapid distribution in Western
Australia. Warwood should look at a warehouse in Perth, Australia. In this city trade shows are
available for companies looking to get involved in the mining industry. This area also has a lot
Iron, Copper, and Nickel which are minerals that Warwood tools break down. Western Australia
is the area of focus because it is dominated by the mining industry and Warwood is looking to
export mining tools. In addition, these areas are less heavily populated and are likely to be
mined furthur going forward. This is a longer term option as sales would have to support such
an investment decision. Warwood would also like to ship its products through ocean vessels
which is 70% cheaper than air but takes a few weeks longer. They tend to do ocean most of the
time; if it is continental they switch to rail or freight trucking because it is cheaper for them.
Along with transportation and logistic company Warwood should look to establish a strong
relationship with CTI Logistics, Westlink Logistics, or ASCO transport and Logistics in
transporting their tools in Australia.
Chile
Product modifications or requirements
The current measurement Warwood uses is based off of the U.S. Standard System. To
ensure the products are correctly purchased, the company would need to keep the product itself
the same, but alter the measurement in which is shown on the product itself and labeling
(mentioned below) to Metric. This process is not costly considering it would not be any different
than what they currently implement. It would just be simply a change in language and numbers.
The word Warwood itself would be the same in Spanish. The current product names are
transcribable by English, but upon research is not easily related to Spanish. Warwood would
need to simplify their product names before creating any promotional material and packaging for
Chile. For example, the word axe in Spanish is hacha. Changing the product information to fit
the native language of the country would further build trust.
Pricing strategy changes

18. In order to establish a solid competitive standpoint, currency will need to be changed
from the American Dollar to the Chilean Peso. Currently 1 American Dollar is equal to 673.79
Chilean Pesos. The Inflation rate in the US is 1%, and the inflation rate in Chile is 4.7%. This
inflation rate allows Warwood to achieve higher pricing margins. This would account for shipping
and logistics costs associated with international trade. For all imports into Chile, a Value Added
Tax is added to the price of goods and services. The current rate is 19%, with increases
expected within the next coming years. When pricing these products for Chile, we suggest
increasing the price to account for the exportation costs. The purchaser will be charged the
Value Added Tax upon final purchase.
Promotional strategy changes
For Warwood Tool to reach their target market within Chile, the company would need to
implement a few changes to their promotional strategy. We suggest that Logan and Phil
continue to participate in trade missions to Chile to promote the tools at expos, while building
their network. The recommended expo for Warwood Tool is the Expomin in Santiago, Chile,
from April 25th-29th. To register for this event, Mrs. Daniela F. Knoll is the main contact for the
United States. Booth prices range from $495 to upwards of $562. On their website it states that
over $80,000 mining professionals within Latin America visit this Expo each year. Chileans are
similar to Americans in regards to their purchasing decisions. They consider trust one of the
most important aspects of the buying process. By having representatives from a higher level of
Warwood Tool at the Expos, the mining companies could then build a relationship. When
traveling to Chile, Warwood should design promotional materials that are in Spanish, the native
language. These materials should include flyers or pamphlets that showcase their products with
prices based off of the current market in Chile. It would be in the best interest of Warwood to
hire a Spanish speaking professional to design these materials for them.
Another important promotional change would be to incorporate an international website
for Warwood’s customers. As of now, their website is geared towards English speaking
customers. If they create a separate landing page based off of the viewer's IP addresses, it
would ensure that each viewer had a personalized language experience without translation.
Warwood can test out the Chilean Market using Adwords, which is a free service. The service
ensures that Warwood is using the correct keywords in Spanish within their website. The
website should also be geared for mobile usage as well. If a viewer visits the site off of a cellular
device, it needs to be accessible. Since Chile is a new market, creating a Google Analytics
account would be key. This site allows Warwood to interpret their market online to see who is
viewing their websites.
Warwood Tool right now does not use social media to their advantage to promote their
business. They use Facebook currently to showcase their commercials in the United States.
However, they could use these free social networking sites such as Twitter and Facebook. With
the millennials entering the industry as mining professionals, it is key to concentrate on their
environment. Worldwide, Chile is currently the 5th highest user of social networking sites.
ComScore indicated that chileans spend almost one third of their time on social media
networking. Ninety percent of the population in Chile uses Facebook as their social media
outlet. This outlet is not only used to connect personally, but is also used to express opinions in
a forum. Another outlet that is the second most common within Chile, is Windows Live
messenger. They utilize this to communicate with each other. It would be in the best interest of
Warwood to create an account within Windows. Twitter is the third most common social media

19. outlet used to express opinions. This outlet is still developing. However, if Warwood creates a
strong presence now, they will be ahead of their competitors.
Distribution and logistics strategy changes from the domestic market
The best method of transportation for Warwood Tool would be a cargo ship from the US
to Chile due to the abundant ports since chile is made up of mostly coastline. Railroad within
Chile would then be used to transport the products to the mines. Since the country is a large
strip, the tools can easily be transported north and south via railroad then put into trucks to be
delivered to individual mines.
It would be in Warwood Tool’s best interest to partner up with a domestic transportation
and logistics company. These companies have more knowledge in transportation and logistics
in Chile than warwood does. Unless we establish a large quantity of sales, it will not be
profitable to do this in house. Here is a list of possible companies to partner up with in the
transportation and logistics business in chile: Agunsa, Alog, Andeslogistics (logistics only),
Leschaco, and V&M (logistics only)
Along with a transportation and logistics company, Warwood Tool should build a strong
relationship with an agent who would be on the ground and in contact with the major mining
companies in Chile. This is the best route to go about distributing tools since they are familiar
with the country and its customs. Employing Chilean natives is not only cost effective, but a
large asset in marketing and consumer relations due to the knowledge they possess of their
homeland. There are often cultural barriers one must need to overcome when doing business in
another country. Hiring agents who were born into and grew up with those customs is the best
way to go about ensuring less of a learning curve.
We plan on traveling to Chile multiple times throughout the fiscal year in order to create
a good relationship with the agent of our choice. With this agent’s presence on the ground and
everything else in place, we have an optimistic assumed profit of 15%. With these numbers, we
have large plans to grow in Chile being that everything runs as planned. In this case, Warwood
Tool would need to begin thinking about opening up warehousing as soon as it deems profitable
in order to ensure efficient, on time delivery of our products.
A great opportunity in Chile is in the city of Lota, due to the fact that the city has an
unemployment rate of 20%. Lota is located on the coast in the central region of the country
making it easy to receive shipments by boat and transport goods throughout the whole country.
Warwood could set up a warehouse here and offer jobs to those in need of them for low labor
costs. Minimum wage in chile is $2.02 and when accounting for inflation it is $2.83. This gives
Warwood Tool a huge advantage when looking for workers for the warehouse. The Lota
warehouse will in turn lower shipping costs and increase shipping speed, leading to higher
customer satisfaction and higher profits. On the other hand, Chileans will notice the efforts put
forth to help their economy and see it as a kind gesture which will help Warwood Tool’s public
image when competing with domestic companies.