Identify one Zimbabwean exporting company of your choice and discuss its operations

Zambezi Tanners pvt ltd company changed from PT Royal Ostrindo to the now Zambezi Tanners Pvt Ltd. PT Royal used to market mainly meat and it used to export it to the United States Of America but in November 2005, the Arian Influenza antibodies were detected in Zimbabwe which called for the ban of its exports, hence the losing of its major market in the USA. The tanner then diversified to a variety of exotics thus then changed the name to the Zambezi Tanners pvt ltd. Zambezi Tanners concentrates on all leather products. They turn skin from raw into finished. They have the skins which include crocodiles, elephants, hippopotamuses and the local skins like the cows, goats and the sheep skins. The company thereby exports all the leather products. The markets they are destined to include, the United States of America, Canada, Mexico, Brazil, Italy, Denmark, Japan, South Korea, China, Hong Kong and South Africa.

Zambezi Tanners Pvt Ltd uses the direct exporting. Direct exporting is a situation in which a company sells its products directly to customers in another country without using another person or an organization to make arrangements for them. Zambezi Tanners faces some benefits as well as some challenges when using this method of exporting.
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Benefits

The company benefits in terms of profits in the sense that, the potential profits are greater because they are eliminating intermediaries or because they simple cut the middleman which tend to reduce their profits as they would want to get paid. Furthermore, the company tends to have the direct contact with its customers. The customers feel more secure in doing business directly with the company which increases the loyalty of the customers, and of course the there’s better knowledge of the customers need through the direct contact.

More so, the other benefit is that as the seller, they do not face any complications when something goes wrong because the buyer would know whom to contact and be able to fix the problems. Unlike when using the middleman which complicates the whole process because when something goes wrong the buyer contacts the middleman who then contacts the seller which might complicate things in the process and taking long at the same time.

The company has the direct feedback from their buyers on their product and its performance in the market place. For example, if the product is not meeting its customer’s specifications, there’s then the direct feedback about that. This helps the company to always have the knowledge about how the product is doing and always strive to satisfy the customers and at the end they are able to push their sales.

However, Zambezi Tanners face some challenges when exporting its products to the foreign markets.

Challenges

The company face challenge of not being able to respond to customer communications as quickly as when the local agent is used, this create some untrustworthiness from the buyers in the foreign market because some of the information would be needed as soon as possible. There’s also lack of confidence from the locals.

The company also faces the stiff competition from other markets for example, the Asian market offer cheaper exports because they have generally lower production costs. This disadvantage the company because the foreign market  tend to prefer the cheaper exports from the Asian markets and shun their export because they charge a higher price due to the higher factor of production they encounter. There’s also competition from the locals as the company will be competing with some local companies who have the better knowledge and understanding of the customers, so being the foreign company, it becomes hard.

The Zambezi Tanners faces the shortage of raw materials which hinders them to satisfy the foreign demand. The crocodile skin has the highest demand in the past, so the company is not able to satisfy the foreign market due to shortage of raw materials which then hinders them to satisfy the foreign market demand.

There are sometimes some delay in transport due to the unforeseen reasons for example the ship delay so which means the merchandise will reach the destination late which then causes complications. More so, there is high cost of marketing and distribution which put some constraints on their financial position.

Zambezi Tanners has adapted its marketing mix so that it suit the markets it exports its product to. It basically looked or focused in the main four p’s which include product, price, promotion and place.

Price

The company charges the lower price in its home market which is being the Zimbabwe market. In its foreign markets the prices are higher and it has homogenous prices, in that the prices charged in Europe, Asia and in Africa but excluding Zimbabwe, the prices charged are the same that is they are standardized. They came with the uniform price having taken into consideration the cost of transport, tariffs, exchange fluctuations and the currency they wanted to be paid with. The best export price is the one that maximizes company profits, so this kind of pricing yields the highest profits.

However, this has created problems for them, as customers can easily view the global prices and purchase from the seller with the lower prices thereby the threat of losing the foreign market.

Product

The company is not differentiating its product from its foreign market. The products they exports are all the same throughout regardless of the market being served. For example, it turns the raw skins to finished and exports the same throughout the foreign market but of course it will depend with the color ordered by each of the foreign market but maintaining the same product. In terms of the brand name, Zambezi Tanners has successfully put their name out there and has been acceptable by the foreign market, all it does now is maintaining, protecting and enhancing their identity from competition, so that it always stay up there in the different foreign markets.

However, selling one unified product lacks uniqueness; thereby competition takes place because other players may tailor their products to meet a specific segment.

Promotion

Promotional mix is the total marketing communications program that comprises of five major promotional tools that include advertising, personal selling, direct marketing, sales promotion and public relations.

The company has used a number of tools to increase its awareness amongst the different markets that it serves. The Zambezi Tanners uses the newspaper to advertise locally, in that it uses the Chronicle and the Herald to advertise locally. The Chronicle does not go internationally so it then becomes difficult to use the same platform internationally. The company has adopted to use some brochures, magazines as well as catalogues. These are then distributed to the markets that they serve for the purpose of creating awareness.

The company have adapted the advertising messages in the countries it exports its products to due to language, cultural, and religious practice. The messages being made in the foreign market suit the market they export to. They create awareness in the foreign markets in the sense that the messages being conveyed about their brand as well as the products are understood by the different market they serve.

They have also used direct marketing for continued communication with their potential customers that they have met through trade shows like Trade Fairs and Agricultural shows, according to the company sales representative.

Place

This element of marketing mix involves distributing a product to the customer at the right place and at the right time. The company in study is having an exclusive distribution with the right partners which has given the company brand the best chance of gaining identity and market share. Zambezi Tanners deals directly with its customers, it does not encounter the problem of export diversion were a shipment does not reach the stated destination but sent elsewhere without the knowledge of the exporter.

The company uses the Free on Board as a term of sale. In this term, the risk, costs and the responsibilities are split fairly equally between the buyer and the seller of the goods. Zambezi Tanners is the one responsible for all the costs involved in the process up until the goods are on a vessel at the designated port. Once the goods have been loaded into the vessel the buyer then takes the responsibility for any costs and the risks involved in the onward shipment.

Generally the company prefers the Free on Board because the buyer is responsible for freight costs, port handling and destinations customs clearance at destination and delivery to their final location whereas the seller has to cover document fees, entry summary declarations which is the cost paid by the supplier when declaring the goods to the shipping line, the terminal handling charge, license fee and the customs declaration. This term of sale also is able to manage the costs without extras throughout the process which tend to be an advantage to the company as they would be able to cover the stated costs with the budget rather than stretching their budget to cater for the extras.

Using the Free on Board terms, all overseas responsibility belong to the shipper therefore if there is a customs inspection due to a wrongful declaration it will be billed to the guilty party rather than them being hit with this cost.

Zambezi Tanners uses the payment before shipment as its payment method. The company advises its buyers to make the payment before they ship their merchandise. As soon as the buyers make the payment, the company sends the invoice to its buyers and then ships the merchandise. This reduces the possibility of bad debts because the company wants the payment upfront before they ship the merchandise.

The company also uses an open account which is a 30 day account. This account is only valid to the existing customers in the sense that there are certain customers who use the 30 day account but the new customers coming on board are not allowed to use the 30 day but rather uses the payment before shipment. They offer this to their long standing customers mainly in Europe who have the excellent credit reputations.