International Trade Finance: Molok Case Two
November 13, 2011
Section 1: Environmental Scan
Environmental Scan: Competitors Direct/Indirect
Indirect competitors in Texas: Waste Management, Republic/Allied Waste, and Progressive Waste Solutions
Waste Management:
· Waste Management is North America’s largest waste disposal provider
· Over fifty locations in throughout the state of Texas (Waste Management, 2011)
· The company offers a range of services: residential, industrial services and commercial
· Waste Management is an industry leader an innovator in recyclables
Republic Services / Allied Waste
· Republic Services acquired Allied Waste Services in 2008
· Republic Services have a large stake in waste disposal in Texas.
· Republic Services/Allied Waste provides disposal, recycling and collection services for over sixty of the states towns and municipalities. (Republic/Allied Waste, 2011)
Progressive Waste Solutions
· Progressive Waste Solutions - third largest solid waste management firm in North America
· Progressive Waste Solutions offers: residential, commercial and industrial services
· Firm has twenty six locations throughout the state of Texas. (Progressive Waste, 2011).
Environmental Scan: Business Climate/Political Stability
Texas is politically stable. Government officials are democratically elected through the state legislature and Texas congressional delegation. Currently, the Republican Party holds majority control. The State of Texas has established and maintains strict environmental waste regulations. For example: the document, “State Environmental, Law Affecting Texas Agriculture” explains Texas Laws and Regulations on: Water Quality, Water Standards, Texas Pollutant Discharge Standards, Groundwater, Air Quality, Solid Waste and Hazardous Material Laws and Regulations, Bio Solids, Pesticides and Chemigation, Protection of Wildlife, and Enforcement of Texas Environmental Law (State Environmental Laws, 2011).
Legal System
The legal system in Texas is broken into three branches: The Legislative, Executive,
and Judicial. The judicial branch is responsible for interpretation of the law and resolving disputes. There are two types of cases heard in Texas, criminal and civil. In Texas criminal cases are defined as, “those in which someone is charged in court with having violated certain laws, called criminal or penal statutes.” (Courts Texas, 2005) Civil cases are defined as, “disputes between two or more parties (usually persons or businesses) and which are not criminal in nature.” (Courts Texas, 2005)
Legal Permits
In order to operate legally in Texas, Molok would need to acquire a series of Solid Waste Management Permits and Registrations. Examples include: Hazardous and Industrial Waste Permit, Medical Waste Permit, Municipal Solid Waste Permits and Sludge Permits and Registrations (Texas Commission on Environmental Quality, 2011).
Protection of Intellectual Property
Intellectual property is protected in the United States by the United States Patent and Trademark Office: An Agency of the Department of Commerce. The USPTO both develops and strengths, domestic and international property protection (trademarks, copyrights, patents protection). Within the USPTO, The Office of the Administrator for Policy and External Affairs – Trade will be important for Molok. The Trade group is responsible for international standards and intellectual property covered by the World Trade Organisation’s Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS Agreement). In the United States, intellectual property cases are filed in the dispute jurisdiction civil court. Molok intellectual property disputes within Texas would therefore be filed under Texas Civil Law.
General Economic Information/Statistics: Texas
· According to the U.S. Bureau of Labour Statistics Texas added 230, 000 jobs in 2010. More than any other state in The United States.
· 2010-2011 expected growth of 2.3 percent
· Population: 25, 145, 561 million. (2010 Census)
· 2nd largest state population behind California
· Fastest growing state in United States
· By 2015 Hispanics are expected to become the majority population at 37.5 percent
· Annual Income per capita: $37, 706 (BEA indicate)
· Texas has the second largest total state personal income of $1.01 trillion
· Texas universities are a leader’s in Research and Development in many industries (including bio-technological, advanced materials and energy)
· 2010, 7,618 patents issued in Texas
· 2010, Texas homes had a median price of $139, 100 well above national median
Economic Information Related to Waste Management
According to Texas Waste Disposal, Texas disposed of 30, 045 million tons of solid waste disposed in 2006 (Texas Waste Disposal, 2006). In 2010 Landfill operators in Texas charge customers a tipping fee based on the weight of volume and the type of waste delivered. Landfill operators charged on average, $30.10 per ton of waste (Texas Waste Disposal, 2006). In 2006, total landfill revenues from solid waste disposal totalled nearly 780 million dollars. Total landfill space in 2010 totalled 1.81 cubic yards which, at current disposal rates, would last the state of Texas for the next forty years (Texas Waste Disposal, 2010).
Economic International Trade
· In 2010, Texas ranked 1st in the United States in terms of international export revenue dollars. Exports totalled $206.4 billion up 27.2 percent from 2009.
· Texas’ largest export partners are NAFTA (Canada and Mexico) which imported $91.08 billion
· Texas imports 2010 imports totalled $302.49 billion increase of 28 percent from 2009.
Transportation
According to the website, Texaswideopenforbusiness, “Texas’ central location facilitates timely access to national and international markets via, air, rail, roads and water. Ease of product transportation is important for Molok once the product arrives at port. Texas has 307, 000 thousand miles of highway, more than any other state in United States. It ranks 2nd in railroad transportation, rails covering 104, 000 miles. Texas also has 13 deep water ports along the Gulf coast (Texas Wide Open for Business, 2010).
Communications
The State of Texas maintains strong communication lines, which are necessary for the proper integration of the Molok product.
· Over ninety-one percent of the US population is uses a cell phone (Ars Technia, 2011).
· 78.1 percent of Texans have use the internet (Public Data, 2011)
· 74 percent of Texans have access/use telephone landline (Public Data, 2011)
Cultural/Ethnic Business Variations in Texas
According to the Office of the Governor, 2007 Economic Development and Tourism report on business in Texas:
· Women owned business = 610, 162
· Hispanic owned firms = 447, 556
· Black owned firms = 152, 873
· Native Hawaiian owned firms = 1,974
· Asian owned firms = 114, 593
Language
· Over 2/3rds of the population speak English in Texas
· 29 percent of people speak Spanish in Texas.
Attitude toward foreign investment
The state of Texas welcomes and encourages foreign investment. In 2010, foreign owned and controlled firms employed 441 thousands Texas workers (International Trade Administration, 2010). Overall, foreign investment in Texas totalled 5.1 percent of Texas’ total private industry employment (International Trade Administration, 2010). Most foreign investment in Texas comes from Canada, France, United Kingdom and Germany.
Tax System
The Texas tax system mainly collects revenues from taxes on: corporations, individual income, energy consumption, motor vehicles, and individual sales. As of February 2010, Texas no longer has a state corporate income tax.
Section 2: Target Market
Molok has developed a group of products which attract different customer wants and needs. The Molok product is will help customers reduce overall waste disposal costs, with a dependable, and atheistically pleasing product. Molok Ltd’s customer profile will have a large range. Customers will either be environmentally conscious of Molok’s product advantage or will be interested in Molok product cost savings. In Texas customers may include: municipalities, state run institutions (schools, colleges, Universities), state parks and recreation centres, highway waste stops, developers and businesses. Target clients will be distributed throughout the state of Texas; however, the first implementation of Molok products in Texas will most likely be to large cities like Houston, where the Waste Management head office is located. Clients will use bank issued and approved letters of credit to ensure client payment of purchased Molok products. Seasonality will not affect Molok purchases. The weather in Texas is conducive to yearlong purchase and installation.
As previously stated, Molok has no direct competition in Texas. The Molok product is functionally different from current products offered by Molok’s biggest indirect competition. Unlike competition that sells “above” surface waste disposal bins, the majority of Molok deep collection space is located below the surface. This allows for collection of more disposed materials before servicing. Because Molok containers do not need to be serviced as often, Molok can pass servicing savings on to the customer eventually reducing their costs.
Quantification of Target Clients/ Potential Revenue
Customer / Number (State Wide) / Potential RevenueMunicipalities / 1,200(.1)=120 / $1.2 million (120*10,000)
State Run Institutions / 1000(.1)= 100 / $800,000 (100*8,000)
State Parks/Recreation / 93(.4) = 37 / $222,000 (37*6,000)
Highway Waste Stops / 2000(.05) = 100 / $215,000 (100*2,150)
Developers/Businesses / 50(.2) = 10 / $850,000 (10*8,500)
Total Interest State Wide / =(120+100+37+100+10)
=367 / =$3,287,000 total potential revenue
Municipality Calculation Example = Assumption: 10 percent of municipalities will be interested in Molok product. Based on this assumption, we also assume that municipalities will be interested on average in the purchase of $10, 000 dollars in Molok products.
There are approximately 1200 municipalities in Texas.
Therefore: 1,200*.1 = 120
Total Municipal Revenues = 120*(10,000) =$1,200,000.
Customers Fit/Molok Product
Municipalities – are a good fit for the Molok product. Municipalities need: recycling, waste diversion, good looking product, mixed wastes and cost savings.
State Run Institutions – are a good fit for Molok product. State Run Institutions need: recycling, waste diversion, good looking product, mixed wastes and cost savings.
State Parks and Recreations – are a good fit for the Molok product. State Parks and Recreation need: recycling, waste diversion, fewer services, mix wastes and cost savings.
Highway Waste Stops – are a good fit for the Molok product. Highway waste stops need: recycling, waste diversion, fewer services, mixed waste and cost savings.
Businesses / Developers – are a good fit for the Molok product. Businesses/ Developers need: recycling, waste diversion, fewer services, mixed waste solutions and cost savings.
Section 3
Market Entry and Marketing Strategy
Molok Ltd will enter the Texas market by means of an agent. Molok has chosen to enter the Texas market with an agent for a number of reasons. First, an agent will be able to attain relevant market information which would be otherwise difficult to find. Communication with the agent will allow Molok insight into market trends, market stability/instability, and certain barriers to entry. Second, an agent does not take title of “goods”. An agent is usually paid on by a percentage of sales. Therefore, the agent has a vested interest in making commission based on Molok sales. Finally, an agent will act as an intermediary securing contracts and payment between Molok and client. Molok intends on finding an agent by contacting the International Trade Administration. According to the website, The International Trade Administration offers local export assistance and can provide agent information. An agent will be chosen by Molok based on related experience, and background.
Marketing Strategy
Product
Basic Containers are the original Molok product. The cover is made of a strong but lightweight, polyethylene. The lifting bag is composed of a tough textile material and is normally double layered. Molok Basic Containers are available in 7 colours: aluminium, red, gold, wood green, wood, black, and composite. Molok Basic Containers are available in five models: 300L, 800L, 1,3m, 3.0m, and 5.0m. This product is different than the competition. Currently, there are no deep collection container systems in Texas.
Lifting containers are constructed of a two piece polyethylene main cylinder. The special double bottom system allows liquids to separate to the lower liquid collection compartment. Lifting containers are safe and easy to trigger system opening the container with a light-weight rope. Molok Lifting Containers are offered in three sizes: 1.3m, 3.0m, and 5.0m. Lifting containers offer two special benefits. They collect and separate liquids as well as glass and metal waste. The competition offers no comparable product in Texas.
The BioSystem is a hygienic and efficient method for collecting organic waste. It is installed inside the Molok containers. The BioSystem offers a separate liquid container where fluid from organic waste is drained through a perforated plate. The use of a compostable bag in the BioSystem container keeps the system clean. The system is much safer and cleaner than other systems. The BioSystem is offered in two sizes: 1300mm/800l and 800mm/500l. The BioSystem offers the buyer a dynamic and environmentally friendly product. The competition does not offer a comparable product in Texas.
The Molok CityScape is a litter bin for parks and streets of the modern city environment. According to Molok, its “...overall design including its shape and size and materials has been engineered to offer superior waste handling capability within a city environment.” (Molok, 2011) The CityScape is offered in one size and three different colours. This product offers the buyer a clean look, with the stability and functionality needed for the city environment. The Molok CityScape offers the buy a modern, high quality product. Functionally, the CityScape is similar to the competition.
Molok Domino is a deep collection container designed to withstand heavy use and vandalism. The Molok Domino is a modern design intended for city streets. Unlike all other Molok products the Molok Domino is made of concrete and is square shaped. The Molok Domino is suitable for many different environments including: demanding construction areas, demanding architectural environments, high ground areas, and flood risk areas. The product has a 10 year guarantee and it completely liquid proof. The Molok Domino is constructed differently than the similar products of the competition.
Battery Box is a made of polyethylene and is shockproof and waterproof. Features include: colour light grey, installs on the side of the Molok container, quick and easy to empty, capacity of 15 litres, and equipped with a lock. The Battery Box attaches to Molok containers. The Battery Box will benefit the buyer allowing users easy disposal of batteries. Battery boxes sold by the competition in Texas do not attach to existing models.
Locking Lid System increases the fire safety for containers and enables customers to lock containers close to buildings. The locking system also restricts unwanted users from using Molok containers. The Locking System Lid offers buyers a secure and safe locking system. The competition in Texas does not use the same technology to secure their waste bins.