North South University

School of Business and Economics

MBA Program

Course Name: International Business (BUS 685.5)

Fall 2022

Project Report

BUSINESS PROFILE OF BHUTAN & POSSIBLE

MARKET ENTRY STRATEGY OF PINATEX
Submitted to: Assistant Professor Dr Mehree Iqbal

Submitted by:
Irin Parveen Borsha (2016600660)
Hossain Mohammad Iqbal (2115366660)
Mehnaz Haq (2125245660)
Lamia Estela (2125280660)
Farabi Rahman (2125128660)

Date of Submission: December 21, 2022

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 EXECUTIVE SUMMARY

This report assigned to us was to prepare a comprehensive research from the perspective of Marketing
Manager of Ananas Anam about the political economy and cultural environmental variables that may
affect Ananas Anam’s business expansion strategy and market entry with product Piñatex™ in the
Kingdom of Bhutan, a small, land-locked nation in Asia.

The first chapter of the report contains brief overview on UK based company Ananas Anam and Piñatex™,
including a small introduction on Kingdom of Bhutan’s geographical area, population, political system,
religion, Eco friendliness etc. Moving on from Chapter 2 to Chapter 10, the report focuses on the physical
and social factors comprises of political policies and legal practices, cultural factors, economic forces,
trading partners, regional integrations, cross national cooperation, geographical influences, trade barriers
and other competitive factors such as: competitors in the market which can affect Ananas Anam’s business
in Bhutan.

In Chapter 11, there is a thorough analysis for market expansion strategy for Piñatex™ which justify our
recommended strategy to be followed by Ananas Anam. The Chapter 12, covers the leather footwear
export import statistics of Bhutan and the findings which justifies the recommended market entry approach
to be taken by Ananas Anam.

And the last chapter gives a finishing touch to an overview of Bhutan’s attractiveness and risk for
international business providing an idea of the worthiness to enter into this market with Ananas Anam’s
vegan leather product Piñatex™ with the help of an agent.

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 TABLE OF CONTENTS

CHAPTER 1. BACKGROUND INFORMATION 5

1.1. Introduction of Piñatex™ 5
1.2. Introduction of Bhutan 6

CHAPTER 2. POLITICAL ENVIRONMENT OF BHUTAN 7

2.1. Type of Political System 7

2.2. Democracy Index 7
2.3. Political Stability and Absence of Violence/Terrorism 7
2.4. Level of Corruption & Transparency 8

CHAPTER 3. ECONOMIC ENVIRONMENT OF BHUTAN 9

3.1. Nature and Structure of Economic System 9

3.2. Economic Freedom Score & Index 9
3.3. Balance of Payments (BoP) 9
3.4. GNI Per Capita & Adjusted GNI Per Capita 9
3.5. Unemployment Rate 10
3.6. HDI Index 11
3.7. Economic Growth 11
3.8. Inflation Rate 11
CHAPTER 4. LEGAL ENVIRONMENT OF BHUTAN 12
4.1. Type of Legal System in Bhutan 12
4.2. Legal Policies for Business Operation 12

CHAPTER 5. CULTURAL ENVIRONMENT OF BHUTAN 14

5.1. Bhutanese Cultural Environment for Globalization and Business 14
5.2. Hofstede’s Dimensions of Cultural Differences 14

CHAPTER 6. MAIN EXPORT/ IMPORT OF BHUTAN 15

CHAPTER 7. TRADING PARTNERS OF BHUTAN 16

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 TABLE OF CONTENTS

CHAPTER 8. GLOBAL INSTITUTIONAL ORGANISATION MEMBERSHIP 17

8.1. The World Trade Organization (WTO) 17
8.2. The International Monetary Fund (IMF) 17
8.3. World Bank Group 18
8.4. United Nations (UN) 18

CHAPTER 9. REGIONAL ECONOMIC INTEGRATION OF BHUTAN 19

9.1. South Asian Association for Regional Cooperation (SAARC) 19

9.2. South Asian Sub-Regional Economic Cooperation (SASEC) 19
9.3. South Asian Cooperative Environment Programme (SACEP) 19
9.4. United Nations Development Programme (UNDP) 19
9.5. Asian Development Bank (ADB) 19

CHAPTER 10. TARIFFS & NON-TARIFF BARRIERS FOR INTL. TRADE 20

10.1. Tariff & Non-Tariff Environment of Bhutan 20

10.2. Trade Instruments 20
CHAPTER 11. ANANAS ANAM’S MARKET EXPANSION STRATEGY IN BHUTAN 22
11.1. Enterprise Valuation 22
11.2. Global Expansion 22

CHAPTER 12. ANANAS ANAM’S MARKET ENTRY MODE IN BHUTAN 24

12.1. Bhutan’s Standing on Leather Footwear Export & Import 24
12.2. Entry Mode 25

CHAPTER 13. CONCLUSION 26

REFERENCES 27

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 CHAPTER 1: BACKGROUND INFORMATION

1.1 Introduction of Piñatex™:

In a world where we would prefer to avoid plastic products as much as possible, it is pleasant to know that
someone has taken the time to use a recycling technique to introduce a new Vegan approved leather
alternative. Piñatex™ is the innovative product made by Ananas Anam which has been created from a
sustainable high performing natural textile made from plant fiber waste. Ananas Anam's HQ is in London,
UK, with subsidiaries in both the Philippines and Spain. It is in the Philippines where they create the
product out of pineapple leaf fibers, that after being finished can take on a similar texture and finish as
traditional leather. Carmen Hijosa founder of Ananas Anam Ltd. has spent the several years back in the
90’s perfecting her method which is when Piñatex™ was formed. This awesome new approach is going
to help support local farmers in a whole new way. Using a common waste product from pineapple farms
in these growing countries the products will be made without any extra need for fertilizer, water, land or
pesticides. Piñatex™ is a vegan product that is both natural and safe. What an incredible idea to use
something that is just being thrown away and instead craft it into a product we could use worldwide to
stop the needless killing of animals for their skin. These products could be easily used in upholstery at
home and in our cars, used for fashion accessories or clothing.

Figure: Pineapple fiber extraction, infographic process breakdown & finished product

Leather is not only starting to be recognized worldwide as unethical but it is also becoming more scarce
and expensive. This is unfortunately pushing the world towards the use of more plastic materials and we
all know that plastic is already a major issue worldwide. This is why the introduction of a sustainable
textile that is super versatile, is just in time to help us shift into a more conscious world.

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1.2 Introduction of Bhutan:
Bhutan, officially the Kingdom of Bhutan, is a landlocked country in South Asia situated in the Eastern
Himalayas, between China in the north and India in the south. The country has a population of over
727,145 and territory of 38,394 square kilometers (14,824 sq mi) and ranks 133rd in terms of land area and
160th in population. It is a very youth centric country having a median age of 29.1. The capital and largest
city is Thimphu. Bhutan's political system has recently changed from an absolute monarchy to a
constitutional monarchy with King as head of state and Prime Minister as head of government. Bhutan
experienced the spread of Buddhism which originated in the 7th century AD. The wildlife of Bhutan is
notable for its diversity. Although Bhutan's natural heritage is still largely intact, the government has said
that it cannot be taken for granted and that conservation of the natural environment must be considered
one of the challenges that will need to be addressed in the years ahead.

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 CHAPTER 2: POLITICAL ENVIRONMENT OF BHUTAN

2.1 Type of Political System: Bhutan practices collectivism where government of Bhutan defines
economic needs and priorities, and partners with business in major ways. Democratic Multi Party &
Constitutional Monarchy being practiced since 2008. There are 3 Branches- Executive- the king (head of
state), prime minister. Legislative- parliament consist of National Council (Upper House) & National
Assembly (lower house). Judicial- Supreme court & high court.

2.2 Democracy Index:

Bhutan’s democracy index is 5.71 and ranked 81 out of 167 countries. The Democracy Index is an index
compiled by the Economist Intelligence Unit (EIU), the research division of the Economist Group. Bhutan
also falls under Hybrid regimes. Nations under Hybrid regimes commonly have governments that apply
pressure on political opposition, non-independent judiciaries, widespread corruption, harassment and
pressure placed on the media, and more pronounced faults than flawed democracies in the realms of
underdeveloped political culture, low levels of participation in politics, and issues in the functioning of
governance.

2.3 Political Stability and Absence of Violence/Terrorism: Percentile Rank in Bhutan was reported at
84.43 % in 2021, according to the World Bank collection of development indicators, compiled from
officially recognized sources where 0 corresponding to lowest rank, and 100 to highest rank.

Figure: Political Stability & Absence of Violence/Terrorism from 2012-2022

This means War, Crime, Social unrest, politically motivated violence are very less frequent in Bhutan.

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2.4 Level of Corruption & Transparency: Bhutan scored 68 points out of 100 on the 2021 Corruption
Perceptions Index reported by Transparency International where 0 corresponding to highly corrupt 100 to
very clean.

Figure: Bhutan Corruption Perceptions Index Trend from 2012-2021

Bhutan is the 25 least corrupt nation out of 180 countries and highest transparent country in South Asia.

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 CHAPTER 3: ECONOMIC ENVIRONMENT OF BHUTAN

3.1 Nature and Structure of Economic System: Bhutan has a mixed economy system (combines
both capitalism and socialism) and economy based on based on Agriculture and Forestry. Their industrial
sector consists of mostly cottage industry, Mining, Transport & Communication, Construction, Wholesale
& Retail trade. Each economic program takes into account the government's desire to protect country's
environment & cultural traditions.

3.2 Economic Freedom Score & Index: Economic freedom, or economic liberty, is the ability of people
of a society to take economic actions. According to world population review, Bhutan’s economic freedom
score is 6.82 in 2022 and ranked 98 out of 163 countries. This is the 2nd highest, after Nepal among South
Asian countries, and higher than Bangladesh, India, Pakistan, Myanmar, Sri Lanka. Moreover, according
to The Heritage Foundation’s 2022 Index of economic freedom, Bhutan scored 59.3 which is higher than
previous year and ranked 94 out of 177 countries. This is the highest score among the South Asian
countries. This economic freedom index is based on 12 quantitative and qualitative factors, grouped into
four broad categories, or pillars, of economic freedom which are in the following:

i. Rule of Law (property rights, government integrity, judicial effectiveness)

ii. Government Size (government spending, tax burden, fiscal health)
iii. Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
iv. Open Markets (trade freedom, investment freedom, financial freedom)

Each of the twelve economic freedoms within these categories is graded on a scale of 0 to 100.

3.3 Balance of Payments (BOP): Bhutan is a trade deficit country where Import is more than export. In
2020, Bhutan experienced a trade deficit of 250 M USD which is a 19.35% decrease from last year which
is an improvement. But their net Current Account was $-381.153 M which is negative & net Capital
Account was $144.012 M which is positive and a 15.58% increase from last year. Besides that, Bhutan’s
net Financial Account, FDI was $2.787 M in 2020 which tells us that, they have positive inflows in foreign
currency and growing FDI.

3.4 GNI Per Capita & Adjusted GNI Per Capita: GNI per capita is the gross national income, converted
to U.S. dollars using the World Bank Atlas method, divided by the midyear population. According to the

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World Bank, Bhutan’s GNI per capita in 2020 was $2,840 which is a 9.8% decrease from last year. This
makes them fall under lower-middle income country. Yet this is the highest among the South Asian
countries. But only GNI per capita does not show the real picture if it is not adjusted with the Purchasing
Power Parity (PPP). The GNI Per Capita, PPP $10,440 (2020) which is 3.68 times more than GNI per
Capita without PPP adjustment.

Figure: GNI Per Capita (USD) & GNI Per Capita, PPP (USD) from 1990-2021

3.5 Unemployment Rate: Bhutan’s unemployment rate is very low compared to other south Asian
countries. In 2021, the unemployment rate of Bhutan was 4.33% which is 0.68% lower from last year. Yet
this is the 2nd lowest after Myanmar among South Asian countries.

Figure: Unemployment rate and annual percentage change trend from 2012-2021

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3.6 HDI Index:

In 2021, Bhutan’s HDI Index score was 0.666 which is 1.25% higher than previous year and they ranked
127 out of 163 countries which falls under medium human development country category. This score
is higher than India & Bangladesh and it is still growing.

Figure: Comparison of Bhutan with India, Bangladesh & rest of the world as per HDI index

The Human Development Index (HDI) is a statistic composite index of life expectancy, education and per
capita income indicators, which is used to rank countries into four tiers of human development.

3.7 Economic Growth: The Annual GDP per capita of Bhutan in 2020 was $2,421 M and GDP per capita
is $3,248 where both of these are 2.3% lower than previous year. After 1976, Bhutan never experienced
negative annual GDP growth except 2020, 2021 because of Covid 19.

3.8 Inflation Rate: In 2020, Bhutan’s inflation rate was 5.63 % which is the 2nd lowest after Maldives
among South Asian countries, comparatively low, stable and predictable inflation.

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 CHAPTER 4: LEGAL ENVIRONMENT OF BHUTAN

4.1 Type of Legal System in Bhutan: Bhutan has a mixed legal system combining both the common law
system with some elements of the civil law system. The judicial system of Bhutan is the purview of
the Royal Court of Justice, the judicial branch of the government of Bhutan under the Constitution of
2008.

4.2 Legal Policies for Business Operation

i. Corporate Law & Structure:

 Bhutan regulates corporations under the Companies Act of 2000.
 Corporations and other legal entities are overseen by the MTI and its various subsidiary agencies.
 Rules and regulations for establishment and operation of industrial and commercial ventures are
applicable to all licenses in the service industries, production and manufacturing industries within
Bhutan.

ii. Corporate Law & Structure:

 Bhutan has some of the strictest environmental conservation laws in the world. According to the
2008 constitution at least 60% of the country’s land must be covered by forest in perpetuity.

iii. Favorable FDI Condition:

 In 2015, the Government relaxed FDI regulations
 Foreign investors are now able to buy land and invest in Bhutan with a minimum stake of 10%. In
selected sectors, ownership is permitted up to 100%.
 A measure has also been introduced which makes it easier to exchange local currency into foreign
currencies.

iv. Country Comparison for Corporate Taxation:

The number of payments of taxes, total share of taxes (% of profit) per year in Bhutan is also very low
compared to South Asian countries or other developed countries which makes Bhutan a very attractive
country for FDI.

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 Figure: Country Comparison for Corporate Taxation in Bhutan

v. Business Setup Procedures

The Government of Bhutan has been among the most active in South Asia in terms of simplifying the
procedures necessary for business establishment.

Figure: Business Setup Procedures & Time in Bhutan

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 CHAPTER 5: CULTURAL ENVIRONMENT OF BHUTAN

5.1 Bhutanese Cultural Environment for Globalization and Business:

i. Cultural Traditions: The Bhutanese culture (and government) is dominantly influenced by the
major religion, Buddhism. In order to strengthen Bhutan’s cultural identity, Bhutanese law requires
citizens to wear Bhutan’s National Dress in public areas and as formal wear.
ii. High Context Culture & Polychronic People: Bhutanese prefer to solve problems by
collaborating with others, consider time commitments, prioritize long-term relationship, tend to
ask for help, change plan easily, modifying communication style and maintaining politeness.
iii. Work Culture: Bhutanese traditional code of conduct prescribes respect for authority like how to
send and receive gifts, speak to those in authority, serve and eat food at public occasions, and
dress. Men and women mix and converse freely, without the restrictions. The threat of changing
of their culture stops Bhutanese from stepping out.
iv. Business Culture: Bhutan follows a middle-path approach to development, probably in line with
the Buddha's teachings. Business community in Bhutan is young and friendly, yet traditional to
the core and formal.
v. Diffusion of Western Culture: The wave of modernization has an impact on the traditional values
of Bhutanese. Nowadays, People are working hard and buy things mainly under the influence of
western culture.

5.2 Hofstede’s Dimensions of Cultural Differences

Individualism: Bhutan has an intermediate score of 52 on this dimension. A score in the middle like this
does not indicate a strong preference to either end of the scale.

Power Distance: A very high score of 94 on this dimension indicates that Bhutan definitely has a
hierarchical society.

Feminine Society: Bhutan scored 32 on this dimension which means that Bhutan is considered a relatively
Feminine society. People value equality, solidarity. Conflicts are resolved by compromise and negotiation.
Incentives such as free time and flexibility are favored.

Uncertainty Avoidance: Bhutan has a score of 28 which reflects that; Bhutan is a fairly pragmatic culture
in terms of Uncertainty Avoidance. People are fairly relaxed and not averse to taking risk.

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 CHAPTER 6: MAIN EXPORT/ IMPORT OF BHUTAN

Bhutan mostly imports

 Oil and fuels
 Base metals
 Machinery and electrical appliances
 Vehicles
 Wood and food items

Bhutan mostly exports

 Electricity to India (around 50 percent of total exports)
 Metals
 Chemical Products
 Food
 Wood and Rubber

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 CHAPTER 7: TRADING PARTNERS OF BHUTAN

Bhutan's main trading partner is India, accounting for 97 percent of foreign trade. Other partners include
the following:

 Bangladesh
 Italy
 Japan
 United Kingdom
 Hong Kong
 Thailand
 Singapore
 South Korea

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CHAPTER 8: GLOBAL INSTITUTIONAL ORGANISATION MEMBERSHIP OF
BHUTAN

8.1 The World Trade Organization (WTO): This is the only international organization dealing with the
global rules of trade. Its main function is to ensure that trade flows as smoothly, predictably and freely as
possible. Number of WTO member country is 164.

Bhutan was granted WTO Observer status in April, 1998. The purpose of observer status for international
intergovernmental organizations in the WTO is to enable these organizations to follow discussions therein
on matters of direct interest to them.

8.2 The International Monetary Fund (IMF): This is an international financial institution, works to
achieve sustainable growth and prosperity for all of its member countries. Number of IMF member country
is 190. Bhutan became a member of IMF in 1981.

External Debt (Int): Bhutan’s IMF Charges in 2018 was 0.008 M USD which is 50% higher than
previous year. From 1999 -2018 the average debt was 0.054 M USD.

Figure: Bhutan’s External Debt: INT: IMF Charges

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8.3 World Bank Group: This is one of the world's largest sources of funding and knowledge for
developing countries. Number of World Bank member country is 189. Bhutan became a member of World
Bank in 1981, IFC in 2003 & MIGA in 2014.

In Jun, 2022 World Bank approved $52.5 M financing to help the Bhutan strengthen the following:

 fiscal and financial sector stability,

 green and private sector-led growth.

8.4 United Nations (UN): UN is an intergovernmental organization whose stated purposes are to maintain
international peace and security, develop friendly relations among nations, achieve international
cooperation, and be a center for harmonizing the actions of nations. Number of United Nations member
country is 193. Bhutan became a member of the United Nations in 1971

The overall goal of the United Nations is to support Bhutan from 2019 to 2023 to achieve “A Just,
harmonious and sustainable Bhutan where no one is left behind”. UN aims to mobilize and invest in
Bhutan an estimated USD 120 million to achieve the results.

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 CHAPTER 9: REGIONAL ECONOMIC INTEGRATION OF BHUTAN

9.1 South Asian Association for Regional Cooperation (SAARC)

 Established on 8 December 1985

 To work together towards finding lasting solutions to their common problems in a spirit of
friendship and trust
 Bhutan hosted the 16th SAARC Summit in Thimphu in 2010.

9.2 South Asian Sub-Regional Economic Cooperation (SASEC)

 A project-based partnership between Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal, and
Sri Lanka.
 To promote regional prosperity, improve economic opportunities, and build a better quality of life
for the people of the sub region.
 Since 2003, Bhutan has signed numerous ADB-financed SASEC investment projects.

9.3 South Asian Cooperative Environment Programme (SACEP)

 Bhutan is an active member of SACEP since its inception in 1982

 Established by the South Asian governments to support protection, management & enhancement
of the environment in the region
 Member countries are Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri
Lanka.

9.4 United Nations Development Programme (UNDP)

 Started its assistance programme in Bhutan in 1973.

 A formal agreement was signed between the then Resident Representative of the UNDP in India
and the then Representative of Bhutan in India.

9.5 Asian Development Bank (ADB)

 Bhutan became a member of ADB in 1982.

 ADB’s partnership has been focused on programs and projects in energy, transport, finance, and
urban development.

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 CHAPTER 10: TARIFFS & NON-TARIFF BARRIERS/ GOVERNMENT
POLICIES FOR INTERNATIONAL TRADE IN BHUTAN

10.1 Tariff & Non-Tariff Environment of Bhutan:

 Supports open trade policy

 The tariff is the Bhutan’s main trade policy instrument
 Has the least number of tariff lines among the LDC member states

10.2 Trade Instruments

i. Tarrifs:
 The Bhutan's tariff contains specific rate tariff (e.g. tourist tariff) and ad valorem tariff (e.g. Sales
Tax: Cement 5%).
 Visitors from outside South Asia will need to pay a $200 daily tax to visit the country.

Anti-Dumping and Countervailing Duties

 No specific laws or regulations dealing with anti-dumping and countervailing duties in

Bhutan

ii. Non-Tariff Barriers:

 Bhutan has Vehicle import quota for maintaining the number of personal vehicles to reduce
traffic jam and air pollution, maintain foreign reserves and promote sustainable eco-
tourism.
 No other specific non-tariff barriers such as: Export Subsidy, Voluntary Export Restraints,
Local Content Requirements, imposed Embargos or Sanctions in or against Bhutan.

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iii. Import & Export Regulations:
 Free Imports: Such as 2 Cartons of Cigarettes, 1 bottle of perfume up to 2 ounces, 50 grams of
Gold, 1 kilo of Silver.
 Prohibited: Such as Guns, explosives & ammunition, Knives & deadly weapons, Meat / meat
products, Pets and animals etc.
 Restricted: Such as Wireless and remote sensing telecommunications equipment will need a
permit from the Ministry of Communication.

Because of limited local leather production Bhutan imports leather from other foreign countries to meet
the demand. According tothe trade policy, Bhutan give 4.5% duty free to the imports of Leather &
Footwear made from the Most Favored Nation (MFN) countries who are also part of WTO.

Exporting the Piñatex™ leather to Bhutan can be an option for Ananas Anam because of low tariff
imposition from Bhutan.

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 CHAPTER 11: ANANAS ANAM’S MARKET EXPANSION STRATEGY IN
BHUTAN

Strategies are actions that managers take to attain the goals of the firm. Ananas Anam need to pursue
strategies that increase their profitability and profit growth.

11.1 Enterprise Valuation:

a. Profitability: Ananas Anam should add value & raise prices to increase the rate of
return on the invested capital as a whole in their business.
b. Profit Growth: They should also enter new markets to increase percentage in net
profits over time.

11.2 Global Expansion:

Ananas Anam already realized location economies in Philippines by dispersing their value creation
activities to Philippines where they can be performed most efficiently and effectively. Ms. Hijosa
(Founder and Chief Innovation Officer) believes she landed in the right place - the Philippines,
being the third largest supplier of pineapple in the world. Now they need to realize greater cost
economies from experience effects to serve an expanded global market from a central location.

The market expansion strategy to be followed by Ananas Anam is the International Strategy for
entering into Bhutan market with their Piñatex™ product. According to this strategy, a company
take products first produced for the domestic market and sell them internationally with only
minimal local customization.

But while entering into Bhutan, Ananas Anam which is competing in the global marketplace may
face two conflicting types of competitive pressures in the following:
 Pressures for cost reductions which force the firm to lower unit costs.
 Pressures to be locally responsive which require the firm to adapt its product to meet
local demands in each market. But, this strategy can raise costs.

Pressures for cost reductions are greatest where consumers are powerful and face low switching
costs due to plenty of similar or alternative goods. In the case of Ananas Anam, they will face very
low pressure for cost reductions as it is already a unique solution which is 30% cheaper than animal

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 leathers. Also there is no better vegan leather alternative currently available in Bhutan which is
competitive to normal leather.

On the other hand, pressures for local responsiveness arise from differences in consumer tastes
and preferences, traditional practices and infrastructure, distribution channels and Host
government demands. None of this holds for Piñatex™. Because Bhutan people have already
embraced a very popular sustainable vegan fashion brand named CDK clothing. CDK is an ethical
fashion label that supports women's empowerment and sustainability goals is a priority. Therefore,
there is low pressure for local responsiveness as well.

So, the International Strategy makes sense because there are:

 low pressure for cost reductions
 low pressures for local responsiveness

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 CHAPTER 12: ANANAS ANAM’S MARKET ENTRY MODE IN BHUTAN

Bhutan is one of the most vegan-friendly countries on earth. In fact, vegetarianism in Bhutan is so
entrenched that there are no slaughterhouses in the whole country. Some people eat meat imported from
India, but for most citizens of Bhutan, being vegetarian is the default position, rather than being the odd
one out. As a result, Bhutan is a country with leather deficit. Ananas Anam can take this as an advantage
to meet the leather demand of Bhutan people through their vegan and sustainable leather product
Piñatex™. Ananas Anam’s goal is to provide not only natural product but it should have a positive impact
on the world without disrupting the overall environmental balance which is also aligned with Bhutan’s
environmental objective. As Piñatex™ is a sustainably sourced textile which uses less water and does no
use harmful chemicals therefore there is high probability that it will be accepted by the mass people of
Bhutan because of Bhutan’s ecofriendly prestige all over the world.

12.1 Bhutan’s Standing on Leather Footwear Export & Import: In 2020, Bhutan exported $422 in
Leather Footwear, making it the 202nd largest exporter of Leather Footwear in the world. The main
destination of Leather Footwear exports from Bhutan are: Thailand ($348) and China ($74). On the other
hand, in 2020, Bhutan imported $1.04 M in Leather Footwear, becoming the 172nd largest importer of
Leather Footwear in the world. Bhutan imports Leather Footwear primarily from: India ($849k), Italy
($123k), China ($56.7k), Poland ($2.74k), and United Kingdom ($2.36k). According to Bhutan’s Country
wise Import Ranking Order, Bhutan imported 2.3 M USD valued products/services/ goods from UK
leaving it on 12th position out of 42 imported countries. This implies that, Bhutan has already a trade
relation with UK which is a good news for UK based company Ananas Anam.

Based on the discussed information above, we can realize that it is high time to enter into Bhutan’s market
with Piñatex™ because of:

 Favorable market condition (politically & economically stable, higher FDI)

 Possessing Common Goal of Environment friendly actions
 Increased market demand

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12.2 Entry Mode: Direct exporting in Bhutan through A Big Indian Story (ABIS) Indian agent. In
this entry mode the firm itself contact the buyer in international market and either sells direct to the end
user or arranges for firms in the target market to act as agents and/or distributors for their products. In this
case Ananas Anam already has an agent in India called A Big Indian Story (ABIS) which is also a reputed
vegan brand in India selling not only Piñatex™ product but also Apple leather, Desserto (Cactus vegan
leather), Silicone leather etc. ABIS’s headquarter is in Pune, Maharashtra, India. Through exporting to
Bhutan Ananas Anam can avoid the costs of establishing local manufacturing operations and achieve
economies of scale. As Bhutan already imports leather from India, therefore Piñatex™ can be exported
from India to Bhutan instead of U.K to Bhutan minimizing the overall transportation costs.

The following entry modes can’t be an option for Ananas Anam in Bhutan:
 Licensing/Franchising: No existing brand in Bhutan having a technology to produce vegan
leather product made of pineapple.
 Joint Ventures or Wholly Owned Subsidiary: Bhutan’s market is very small and niche, FDI
won’t be justified in terms ROI.

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 CHAPTER 13: CONCLUSION

Leather is not only starting to be recognized worldwide as unethical but it is also becoming more scarce
and expensive. This is pushing the world towards the use of more plastic materials. Introducing a
sustainable textile that is super versatile, is just in time to help us shift into a more conscious world. This
is where Ananas Anam played their role. They came up with a sustainable product named Piñatex™ which
is a vegan leather that is created out of pineapple leaf fibers. Ananas Anam's HQ is in London, UK, with
subsidiaries in both the Philippines and Spain has already realized location economies in Philippines by
dispersing their value creation activities to Philippines where they can be performed most efficiently and
effectively. Now they need to realize greater cost economies from experience effects to serve an expanded
global market from a central location. For which Bhutan can be a better choice as it is one of the least
corrupt and most transparent countries in South Asia. They are business friendly community but traditional
to core values. Better HDI index score, low corporate taxation and easy business setup procedure
compared to other South Asian countries make Bhutan a better choice for FDI or any other international
business. Ananas Anam should follow the International Strategy and Direct Exporting (through their
existing Indian agent ABIS) as the market entry mode for entering into Bhutan market with their Piñatex™
product.

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