Finance: Molok Case Two - Weebly249226729991763903.weebly.com/uploads/1/5/5/...financ… · Web viewFinance: Molok Case Two. 2011. ... The lifting bag is composed of a tough textile

Finance: Molok Case Two

International Trade Finance: Molok Case TwoNovember 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 Revenue

Municipalities 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.

*Based on availability of information, need for Molok product modification in Texas is unknown*

Price

Molok will offer products to customers at a flexible price. There is a large difference

between the cost to produce and suggested retail price to justify this decision. Molok believes

that volume sales are important when entering into a new international market, and will

therefore offer a flexible price. Molok’s target market will mainly include municipalities,

state institutions, and state parks and recreation. Customers are mainly state and federally

funded with the potential of offering Molok high volume orders. A flexible pricing strategy

will allow Molok to work with these customers, maximizing potential. Molok’s price is on

average higher than the competition. Because Molok will be using a flexible cost strategy,

cost calculations will be done on an individual order basis by marginal cost pricing.


Place

Molok will face a number of shipping issues surrounding the shipment of their

product. First, water transportation will be needed to ship the Molok product across the

Atlantic Ocean and into the United States. Molok products will leave from Finland and arrive

at the port in Galveston, Texas. From Galveston, the product will be loaded onto a large

transport and shipped to the required destination. The shipping terms will depend on the

agreement between Molok and buyer. Molok will try and arrange CPT (Carriage Paid To)

where Molok pays for the shipment, but risks transfer to the buyer upon handling the goods

over to the first carrier. Molok will need warehouse space throughout Texas (depending on

location of demand) to store products. Molok also must ensure that their packaging and

labelling adhere to American packaging and labelling standards for waste containers.

Molok’s methods of transportation will be different from that of the domestic competition.

The domestic competition will have pre-existing, and established warehouse space and

distribution networks. Molok’s distribution systems will be dependent on customer demand

and volume and where they are located within Texas.

Promotion

Molok’s first methods of promotion will be through hired agents and word of mouth.

However upon entry in to the Texas market Molok will conduct promotions within specific

waste disposal print and online associations. For example, Molok would seek promotional

space in the Special Waste Disposal Texas website. Molok could also promote their product

in the Texas Municipal Waste Associations website. The cost of such promotions is

unknown. For potential customers interested in the Molok product, most information

regarding Molok and its product can be found on the Molok website. This promotional

strategy is the most viable for Molok in Texas. An agent, with a vested interest in selling


product, will be the best promoter of the product. And instead of spending on television and

radio advertisements, Molok should look to industry specific advertisements.

People

Molok customers will be environmentally conscious and understanding of the

potential cost-saving benefits the Molok product offers. The Molok customer will want a

good quality product which is also athletically pleasing. Molok customers will have a

relatively high budget. Most Molok customers will be municipalities, and state institutions.

They will be located throughout Texas and the quantity of customers is dependent on product

demand. Previously, we estimated that upon entry into the Texas market, that Molok would

receive business from between 10 and 20 percent of potential customers. For example, there

are approximately 1,200 municipalities in Texas. Based on our estimations Molok would

receive business from between 120 and 240 municipalities. Molok would like to do business

with municipalities and state institutions because purchasing criteria and purchasing methods

are established. They are likely to make payment for goods received.

After Sales Service

Molok does not directly handle after sales service within North American markets. It

provides parts for replacement; however, subcontracts the replacement service. As for the

collection of waste, Molok subcontracts waste collection from their bins and does not provide

this after-sales service.

According to the Molok North American Ltd. Warranty Certificate,

“Molok warrants that the MOLOK Product is free from manufacturer defects in material and workmanship under normal use. WARRANTY PERIOD: The warranty period is


(2) years for the lifting bag and lid, and 10 years for the main well, effective date and delivery.” (Molok North American, Warranty Certificate, 2011).

Sources:

International Trade Administration, Retrieved Nov 6, 2011 from:


http://trade.gov/

Texas Courts 2005, Retrieved Nov 5, 2011 from:

http://www.courts.state.tx.us/oca/pdf/JudSysPam0604.pdf

Molok Ltd Website, Retrieved Nov 4, 2011 from:

http://www.molok.fi/eng/article_page.php?loc_id=44&show_article=24

Texas Commission on Environmental Quality 2011, Retrieved Nov 6, 2011 from:

http://www.tceq.texas.gov/permitting/waste_permits/waste_mgmt.html

Office of the Governor: Texas, 2011, Retrieved Nov 6, 2011 from:

http://governor.state.tx.us/

United States Patent and Trademark Office, Retrieved Nov 6, 2011 from:

http://www.uspto.gov/ip/global/trade/index.jsp

Texas Waste Disposal, 2006, Retrieved Nov 6, 2011 from:

http://www.tceq.texas.gov/assets/public/comm_exec/pubs/as/187_11.pdf

Texas Wide Open for Business 2010, Retrieved Nov 6, 2011 from:

http://www.texaswideopenforbusiness.com/

Ars Technia website 2011, Retrieved Nov 6, 2011 from:

http://arstechnica.com/telecom/news/2010/03/wireless-survey-91-of-americans-have-cell-phones.ars

Waste Management Website, Retrieved Nov 6, 2011 from:

http://www.wm.com/residential.jsp

Republic/ Allied Services, Retrieved Nov 5, 2011 from:

http://www.alliedwaste.com/

Progressive Waste Solutions, Retrieved Nov 4, 2011 from:

http://www.bficanada.com/

State Environmental Law, Affecting Texas Agriculture, Retrieved Nov, 6 2011 from:

http://www.nasda.org/nasda/nasda/Foundation/state/Texas.pdf

Molok North America Ltd. Warranty Certificate, Retrieved Nov, 8 2011 from:

http://www.nasda.org/nasda/nasda/Foundation/state/Texas.pdf

http://www.alliedwaste.com/

http://www.wm.com/residential.jsp



http://www.texaswideopenforbusiness.com/

http://www.uspto.gov/ip/global/trade/index.jsp

http://governor.state.tx.us/

http://www.tceq.texas.gov/permitting/waste_permits/waste_mgmt.html

http://www.molok.fi/eng/article_page.php?loc_id=44&show_article=24

http://www.courts.state.tx.us/oca/pdf/JudSysPam0604.pdf

http://trade.gov/


http://www.molokna.com/downloads/Certificates/Warranty-all-en.pdf

http://www.molokna.com/downloads/Certificates/Warranty-all-en.pdf

Documents

Finance: Molok Case Two - Weebly249226729991763903.weebly.com/uploads/1/5/5/...financ… · Web viewFinance: Molok Case Two. 2011. ... The lifting bag is composed of a tough textile