2. Objectives
Understand why agribusinesses may choose to seek out
international markets?
• Develop an understanding of the importance of
international markets
• Describe some of the challenges that agribusinesses
face when pursuing international markets
• Understand the elements of a society’s culture, and
how these elements shape the operating environment
for an international firm
• Identify the different methods that food and
agribusiness firms might use to enter international
markets
3. International Market
Why would an already successful domestic
agribusiness consider entering the more risky
international marketplace?
• Selling into unfamiliar international markets is full
of uncertainties.
• There are many reasons why a firm would want to
“go global.”
4. Reasons
• Food and agribusiness markets are approaching
Maturity or slow growth
• The markets in many other countries may growing
very fast or have the potential to grow fast
• For example, China is one of the fastest-growing
markets in the world. In 2010, USDA’s Foreign
Agricultural Service (FAS) cites China as the fourth
largest market for U.S. agricultural exports
5. • Competition in the domestic market
• Addition of foreign firms in this competition
The threat is clear: if a food or agribusiness
company doesn’t produce and sell it, someone else
in the world will!
So, why should an agribusiness manager be
interested in better understanding international
business?
6. Why does agribusiness need
international markets?
There are many reasons for agribusinesses, and the
country's economy, to be interested in the
international business arena
• The exporting of agricultural products boosts
employment within the economy
• In 2008, it was estimated that more than 8,000
jobs were created for every $1 billion In
agricultural exports (this is down from the 18,000
jobs estimated to be created by every $1 billion in
agricultural exports in 1998
7. Agricultural exports help boost rural economies
• Approximately one-third of those agricultural
export jobs were located in rural areas
• Although most of these rural jobs are in the
production of agricultural products
Any agribusiness in Pakistan Exporting agricultural
products??
8. Benefits from doing business
internationally
From a managerial standpoint, international markets
hold appeal for a number of reasons.
• Exports and sales
• Take advantage of scale economies
• Capture benefits of a global brand
• Reduce risk by diversifying across markets
• Lower costs of production
• Access lower-cost raw materials through international
sourcing
• Broaden access to credit
• Leverage experiences from operating in international
markets into domestic markets
9. • Name or brand recognition is another benefit a
company works toward in globalization efforts.
• Global recognition of logos and brands increases
both the efficiency and effectiveness of a
company’s advertising efforts.
For example,
in the 2010 soccer World Cup held in South Africa,
sponsor company logos were shown and/or
mentioned in more than 97 countries and in
numerous languages on both television, radio and
over the internet. Firms like Coca-Cola, PepsiCo, and
McDonald’s have brands that are recognized in
virtually every country in the world.
10. Opportunities for smaller firms
If you are unable to expand business locally, they
should try to go globally.
How to implement?
Use of technology
Internet
Newspapers
Latest researches
Use of relationships
11. A global market
A global perspective is a philosophy, an attitude,
and or an approach to conducting business abroad.
Global agribusiness management is guided by
concepts that view the world as one market. And
firms with a global perspective run their businesses
this way.
12. How is it possible to develop a global
marketing strategy for some products?
• Information technology
• Access to information, goods and services not
only in this country
• Our familiarity with the tastes, preferences,
attitudes, and cultures
13. International agribusiness trends
• U.S. food and agribusiness industries continue to
gain momentum in international markets even
though most food is consumed in the country in
which it is produced.
• According to a recent USDA Economic Research
Service report, the United States has a 24 percent
share of world commercial processed food sales
14. • The United States remains the world leader in
exports of agricultural commodities
• At the same time is an increasingly important
player in the exporting and importing of food
and food products.
15.
16. The growing population in the global
market
Food Security?
The Food and Agriculture Organization (FAO) of the
United Nations defines food security as the state of
affairs where all people at all times have access to
safe and nutritious food to maintain a healthy and
active life.
• Predictions of future populations put the global
population between 8 and 12 billion by 2050
• Increase in demand for food will depend on both
population growth and income growth.
17.
18. Bulk commodities, high-value products
Agricultural exports are composed of two categories
value-added products and
bulk commodities
Value-added or high-value products (HVPs ) are agricultural products that
have received additional processing or require special handling or shipping.
HVPs include unprocessed foods such as
• fresh fruit
• eggs, as well as
• processed and semi processed grains,
• oilseeds,
• animals and animal products,
• horticultural products,
• sugar
19. Bulk commodities, such as
• wheat,
• corn,
• soybeans,
• rice, and
• Tobacco
However, exports of value-added products
increasingly comprise a larger portion of total
agricultural exports.
20.
21. Entering international markets
• Modes of entry
Export
Licensing
Foreign production
• Exporting
1 Indirect exporting (trading company)
2 direct exporting
22. Challenges in international markets
Cultural differences
Communication and language
Dress and appearance
Food and eating habits
Relationships
• Product adaptations : Products may undergo modifications and/or
the way products are marketed may change.
• Individual : A manager who is overseas for the first time must learn
the local language and make adjustments in dealing with people.
• Institutional : Hiring practices and organizational structure often
must change when working in a new country. For example, an
agribusiness must take into different religions, or different tribes that
may require adjustments in hiring and placing people within an
organization.
Financial terms are often quite different — “inventory” in the United
States is “stocks” in the United Kingdom
23. 2 Exchange rate fluctuations
3 International law and property rights issues
4 Management challenges
