This document summarizes a study conducted by Kathmandu University School of Management on the prospects of expanding exports of handmade carpets produced by Mero Rug to Australia. It provides background on Nepal's carpet industry and Mero Rug. A SWOT analysis and cultural analysis of Australia identifies opportunities for growth. Export potential is analyzed using trade maps and standards. The document recommends Mero Rug utilize indirect exporting and a multi-domestic strategy to enter Australia, focusing on marketing, employee retention and training to capitalize on the opportunity.

1. STUDY OF INTERNATIONAL BUSINESS
PROSPECTS FOR MERO RUG
Kathmandu University School Of Management (KUSOM)
Subject: International Business Management
Term/Trimester: MBA Third Term
Year: 2018
GROUP 5
Sweta Bhattarai (17304)
Dipesh Raj Pandey (17321)
Monika Rajbhandary (17325)
Shishir Sharma (17329)
Srijana Sharma (17330)
Laxman Subedi (17334)
Roshani Pakhrin Tamang (17335)

2. NEPALI CARPET INDUSTRY
•1960s by Tibetan refugees
•First export in 1964
• Export value in 1990s: 142 billion USD
•Export value in 2016: 75 million (2nd)
•Nepal 4th largest exporter in the world
•Major Importers: America, United Kingdom
and Germany as the top three importers.

3. COMPANY PROFILE
 Established in 2012
 Sister company of 27 year old Paramount
Carpets
 Specializes in handmade luxury carpets
 Major clients in Germany, USA, and a few
African countries

4. PRODUCT INFORMATION
 HS Code: 570110
 Product Name: Carpets and other textile floor coverings, of wool or fine animal hair,
knotted, whether or not made up
 HS code National Level: 5701.10.00
 Local Product Name: Hand knotted Carpet
 Country of Origin: Nepal
 Composition: Wool, silk, hemp, bamboo silk, jute and many other natural raw
materials
 Use: Used as decorative at homes, offices and the like.

5. STRENGTHS
•Backup from parent company
•High production capacity
•Premium quality handmade carpets
•Good Weave certified
WEAKNESSES
•Imported raw materials
•High labor cost
•High delivery cost
•Time consuming production process
OPPORTUNITIES
•Demand for customized carpets
•High per capita income
•Avid online shoppers
THREATS
•Cheaper Chinese carpets
•Depletion of skilled labor
•Lack of support from the government

6. COUNTRY OF INTEREST

7. WHY AUSTRALIA?
 Highly developed and mixed market
economy
 GDP per Capita is $51593
 Growth rate is 2.8%
 High standard of living
 Avid online shoppers
 Purchasing power grown by 43% in 15
years

8. TRADE MAP ANALYSIS

9. Importers
Select your indicators
Value
exported
in 2016
(USD
thousand)
Trade
balance
2016
(USD
thousand)
Share in
Nepal's
exports
(%)
Quantity
exported in
2016
Unit value
(USD/unit)
Growth in
exported
value
between
2012-
2016 (%,
p.a.)
Growth in
exported value
between 2015-
2016 (%, p.a.)
Concentration
of all
supplying
countries of
partner
countries
Average
tariff
(estimated)
faced by
Nepal (%)
Ease of
doing
business
ranking
Number of
non-tariff
requirement
s faced by
Nepal
Total 63197 63154 100 0 -4 3
United
States of
America 32956 32953 52.1 591 55763 5 16 0.28 1.1 8
Germany 7322 7322 11.6 250 29288 -21 -30 0.22 0 17 3
United
Kingdom 5749 5747 9.1 103 55816 1 -12 0.2 0 7 3
Canada 3168 3168 5 92 34435 -8 5 0.3 0 22
Italy 2334 2334 3.7 48 48625 11 0 0.13 0 50 3
Australia 1458 1458 2.3 29 50276 -4 2 0.26 0 15
Switzerlan
d 1433 1430 2.3 22 65136 -3 -10 0.19 0 31 5

11. MARKET ACCESS MAP ANALYSIS

12. STANDARD MAP ANALYSIS
 The Good weave Standard
 Fairtrade Textile Standard
 OEKO-TEX Standard 100

13. CULTURAL DIMENSIONS

14. POWER DISTANCE
36
90
61
51
21
71
65
30
40 40
Power Distance Individualism Masculinity Uncertainty
Avoidance
Long Term
Orientation
Indulgence
Australia
Nepal

15. INDIVIDUALISM
36
90
61
51
21
71
65
30
40 40
Power Distance Individualism Masculinity Uncertainty
Avoidance
Long Term
Orientation
Indulgence
Australia
Nepal

16. MASCULINITY
36
90
61
51
21
71
65
30
40 40
Power Distance Individualism Masculinity Uncertainty
Avoidance
Long Term
Orientation
Indulgence
Australia
Nepal

17. UNCERTAINTY AVOIDANCE
36
90
61
51
21
71
65
30
40 40
Power Distance Individualism Masculinity Uncertainty
Avoidance
Long Term
Orientation
Indulgence
Australia
Nepal

18. LONG TERM ORIENTATION
36
90
61
51
21
71
65
30
40 40
Power Distance Individualism Masculinity Uncertainty
Avoidance
Long Term
Orientation
Indulgence
Australia
Nepal

19. INDULGENCE
36
90
61
51
21
71
65
30
40 40
Power Distance Individualism Masculinity Uncertainty
Avoidance
Long Term
Orientation
Indulgence
Australia
Nepal

20. BUSINESS LEVEL STRATEGY
MeroRug

21. CORPORATE LEVEL STRATEGY
Australia

22. INTERNATIONALIZATION STRATEGY
Global
Multi-domestic Simple export
Complex Export
Configuration of activities
Co-ordination
of activities
high
centralized
low
Dispersed
Mero rug
has
appointed
Everest
De Cargo
Pvt. Ltd.

23. MODES OF ENTRY
Mero rug

24. MODES OF ENTRY
INDIRECT EXPORT DIRECT EXPORT

25. ORGANIZATION STRUCTURE
Production of carpets using:
 Galaincha software
 Own designer team
 In-house production facility with over
300 looms
 Yarn coloring system and ARS coloring
system

26. ORGANIZATION STRUCTURE
 Horizontal Differentiation
 Functional Organizational Structure
CEO
(Mr. Darshan
Bhattarai)
Design Department
Production
Department
Finance and
Accounting
Department
Marketing and
Delivery Department
Administration
Department

27. ORGANIZATION STRUCTURE
 Everest De Cargo Pvt. Ltd. is also an important component of the
organizational structure of Mero Rug as it is responsible for delivering the
carpets of Mero Rug to foreign customers.

28. CENTRALIZATION AND INTEGRATING MECHANISM
 Major decisions are taken by the single authority/CEO of the company
 Uses a very simple integrating mechanism
 Uses “Direct Contact” integrating mechanism

29. RECOMMENDATION
To Mero rug carpet:
 Marketing
 Employee retention
 Training and development
 Investment in new and efficient looms

30. THANK
YOU