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Topics to be covered:
Introduction. Background of International Trade. Trends in World Trade. Composition of World Trade. Direction of World Trade. World Trade Outlook. Composition of India‟s Trade. Direction of India‟s Trade. Key Issues in India‟s Exports Growth. Identifying Opportunities in International Markets : Strategies.
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EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS
Introduction: A marketing manager needs to develop a thorough understanding of the country‟s foreign trade so as to carry out a macro analysis for identifying marketing opportunities. The product-mix of exports and imports has undergone a significant change over the last four decades due to change in demand and competitiveness in international markets.
. to USA. Manufacturing sector share has increased from 45. etc.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Important Developments: Growth in International Trade and output – before World War. New opportunities in emerging Asian markets (other than China) have grown significantly. and other Asian countries. USSR. Shifts in India‟s exports from traditional markets of UK. Composition of products exported has changed (from Jute etc.3%.3% to 74. to gem and jewellary and textiles. OPEC. after WW. and in recent years.
Many developing countries adopting outward oriented policies of growth. Enormous impact of new Information Technologies on market integration.” – The World Bank. efficiency.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Background of International Trade: Rapid integration of economies. “ The countries that trade more grow faster. and industrial organizations. .
China led the developing countries in merchandise exports in 2002 followed by Mexico. Break out of SARS & its impact on trade of Middle East and Western Europe. Trade between developing countries – small but rising fast.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Trends in World Trade: Growth in World Merchandise trend 2002 onwards. . Sharp rise in intra-regional trade. Strong import demand in the developing countries. Growth rate of emerging Asia 7% (1970-2002) compared to 3% in OECD.
The factors responsible for the change in the composition of exports include policy reforms. The developments in the field of technology lowered transportation costs.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Composition of World Trade: Increase in world exports of manufactured goods & fuels. . structural changes in global production processes and global economic trends. Desire for new products and a search for new markets provided a strong incentive for lower trade barriers. and decline of food & agri products (1965-2001). improved communications and business practices and made it possible to build global networks.
especially China. but the share of developing countries rising faster. The annual average growth rate of exports declining for developed countries and increasing for developing countries. Emerging Asia. is becoming an important source of demand .EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Direction of World Trade: The world exports was primarily dominated by the developed countries.
EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS World Trade Outlook: World Trade volume is expected to grow at a higher rate. 50%) would occur in processed food. . clothing. The largest % increase in trade (approx. and footwear. The merchandise exports from developing countries are expected to rise faster than those of high income countries. Developing countries would witness an increase in their exports of textiles.
8%) in spite of increase in exports. .41 billion. The national commitment to exports manifested itself for the first time in the 1970 Export Policy Resolution. EXIM Bank etc.27 billion in 1950-51 to $ 52.g EOU. because growth of exports of other countries is much faster. New Export Promotion measures in 1981 e.72 billion in 2002-03. Emphasis on import substitution rather than export promotion. Imports $ 61. Devaluation in 1966 to improve export competitiveness. India‟s share in world merchandise exports (0.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS An Overview of India’s Foreign Trade: India‟s exports increased from $ 1.
a turnaround in exports of agricultural and allied products and manufacturing products. a surge in exports of ores and minerals. and continued robust growth in exports petroleum products. . Share of agricultural and allied products declined from 44.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Composition of India’s Trade: Exports Share of manufacturing goods increased from 45.8% in 2002-03.3% in 1960-61 to 78% in 2000-01. Important features of the export performance in 200203 included acceleration in exports of primary products.2% in 1960-61 to 12.
1% 0. Oil & Lubricants Fertilizers Cereals Edible Oil Capital Goods 6.2% (2000-01) 5.8% in 1980-81 5.3% 31.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Composition of India’s Trade: Imports. 1960-61 Petroleum.1% 16.4% in 1980-81 11.7% 1989-90 onwards 27.9% (2003-04) April-Jan.1% 1. .0% 0.
& The Netherlands.Countries 5. 11% in 1980-81 Comments Exports: OECD Countries EU UK USA 66.1% 14.5% 13.7% 20.1% 37.America Mainly because of imports fm UK Mainly due to imports from USA .9% 37.1% 36.2% 4.2% 13. France.1% 31.0% 21.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Direction of India’s Trade: 1960-61 2002-03 50.3% in 1970-71 Imports OECD EU N.0% 8.2% 26.9% 19.0% 3.7% But rise in exports to Belgium.9% 16.0% Japan OPEC L.5% 4.D.8% 78% 37.
and India‟s imports from China grew at 26. leather and leather products.6%.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Emerging Market Opportunities in China: With the largest export markets of China (namely the US. . and light machinery. and Korea) also being amongst India‟s key markets for exports.a. India is likely to face stiff competition from China in overseas exports markets for textiles. Japan.2% p. Between 1999-2000 and 2002-03 India‟s exports to China grew at 50. the EU. garments. Hong Kong.
India‟s trade deficit increased from US $ 4 million in 1950-51 to US $ 13682 million in 2003-04. .EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Balance of Trade: It refers to the difference between the value of exports and imports. India had positive trade balance only during 1972-73 ($ 134 million) and 1976-77 ($ 77 million).
The ratio of price index of its exports to the price index of its imports is known as terms of trade. .EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Gains From International Markets: The terms of trade is a measure of relative changes in import and export prices of a nation. This ratio is usually multiplied by 100 in order to express the terms of trade in %.
Gross terms of trade: It implies volume index of imports expresses as a % of volume index of exports. Income terms of trade: It implies the product of net terms of trade and volume index of exports expressed as a %.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS 1. 2. Types of Terms of Trade: Net terms of trade: It implies unit value index of exports expressed as a % of unit value index of imports. 3. .
. The government had taken a number of steps to facilitate exports: Setting up of SEZs and EOUs. Exemption of export profits from taxes.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Key Issues in India’s Exports Growth: Shift of focus from import substitution and self sufficiency to promoting international trade. Provision of bank finance at lower rate of interest. Removal of quantitative restrictions.
9. 12. Simplification of Procedures. Encouraging SMEs. Developing a positive approach to international trade. 4. 5. 6. Strategy for promoting services exports. Encouraging large scale manufacturers. 13. 7. 3. Promoting Competitiveness. Abolition of indirect taxes for certain sectors. Entrepreneurship facilitation. Devolution of power to states. Strengthening SEZs. Infrastructure development. Reducing transaction costs. 10.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Steps to Promote Exports initiated in India: 1. 11. 8. . 2. Promoting FDIs.
Growth share matrix of exports. Product country matrix strategy. 2. . Market focus strategies. 3. 4. 1.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Identifying Opportunities in International Markets: Strategies. Extreme focus product strategy.
export competitiveness. 1992: Ministry of Commerce identified 35 products as extreme focus products . and world trade growth. the items of high potential in international markets are identified.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Extreme Focus Product (EFP) Strategy: Based on the production capacity available in India. . The marketing efforts are focused on promotion of such identified products.growth of 30% volume/value in the medium term and further stabilized growth. Growth was higher in case of focus products than non-focus products. The export performance of total and EFP showed improvement but not matching targets. Value of EFP grew from $ 8 billion in 1993-94 to $ 16.4 billion in 200001.
It helped India to focus on the importance of a few commodities and a few destinations in India‟s export performance.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Product Country Matrix Strategy: Previous trade statistics is analyzed to identify the major markets and major products. 1995 study by GOI revealed 15 countries and 15 commodities accounted for around 75-80% of India‟s exports. . based on which a suitable marketing strategy is developed.
25 countries and 220 export commodities matrix for special focus. The key strategic policies and issues which will impact India‟s ability to effectively adopt these product-market strategies in the new world trade order. Identification of focus items based on promoting items with high potential in world demand. Indicative sector-wise strategies for identified potential sectors. Emphasis on Services exports. Ministry of Commerce – analysis of both demand and supply sides – import and export to ascertain focus markets and focus products. .EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Medium-term Export Strategy:2002-07.
6. & Japan to US. Top 3 countries changed US. & UAE.3%. UK. and accessories. Saudi Arabia replaces Indonesia in 15 markets but ranks of countries changed. . Revelations of 15 x 15 Matrix of 2001: Decline in share of top 15 x 15 in total exports -71% to 66%. Significant change in „15 commodities basket. 3.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS 1. 7. 2. 4. India‟s exports to Japan for top 15 products slumped from 9% to 6. Need for modification in the marketing strategy on a continuous basis. RMG cotton. 5. HK.‟ Top 3 items remain the same – gems and jewellary.
High Share). Similar to BCG Matrix with 4 quadrants HGHS (High Growth. different market strategies need to be formulated and adapted. and LGLS. HGLS. For each of the product groups under the growth share matrix.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Growth Share Matrix of Exports: The products are segmented on the basis of their share in World market and rate of growth so as to identify the thrust products and formulate marketing strategy. LGHS. .
. Strategies for increasing exports to the identified markets are formulated . 2003 – „Focus CIS‟ was launched.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS Market Focus Strategies: They are formulated on the basis of market potential.1997 launch of „Focus LAC‟ (Latin American Region) – identification of areas of bilateral trade and investments. GDP. Determining market potential on regional basis and identifying major product groups to be focused. April 1. 2002 – „Focus Africa‟ was launched. Criteria for identifying major markets could be market share in imports. & trade deficits. Nov. April 1. GDP growth. growth rate.
Export Credit Guarantee Corporation. 6. Indian Missions abroad.EMERGING OPPORTUNITIES IN INTERNATIONAL MARKETS The strategy of integrated efforts to promote Indian exports included: ITPO – India Trade Promotion Organization. EPCs – Export Promotion Councils. 3. 5. Apex Chambers of Commerce and Industries. 4. 2. EXIM Bank. . 1.
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