International marketing plan for Glide Shoes manufacturing in Costa Rica

International Marketing Plan

Although many countries have manufacturing facilities, each has benefits and drawbacks. When looking for a country to do business in, I considered costs related to manufacturing, transportation, export-import files, and tariffs. After choosing Costa Rica as my manufacturing provider, I further researched aspects of geographical, political, economic, and social nature in order to comfortably conduct business there. Lastly, I established my company, product, business, costs, revenues, and credit line in order to comfortably conduct business there.

Product manufacturing and distribution

Producing a product is not an easy task. There are many things to consider and decisions to make, such as cost, labor, and quality manufacturing. These questions, and other facets, need to be addressed, like the one which follow: Who will produce the product? What type of materials will be used to create the product. Where will this product be manufactured? Will the manufacturer be all inclusive with distribution and product exportation? That is, does the manufacturer have export/import distributor contacts in place? Since my company, Glide Shoes, must have a high-quality product to sell in the U.S. I insist on selecting a manufacturer that can meet my high-quality product standards. Such standards include enforceable contracts, reliable business policies and procedures, effective manufacturing operations, reasonable tariffs, efficient export/import handling, and manufacturers that provide transportation/distribution. When I researched a number of countries, such as Costa Rica, U.S., Japan, Taiwan, Hong Kong, Mexico, and Costa Rica. I found that Costa Rica could meet my manufacturing needs.

Although I found out that my main competitor produces its product in Mexico, Mexico did not meet all the requirements I found in Costa Rica After careful consideration, I have chosen to have my product produced in Costa Rica because I can save on labor, manufacturing, materials, and other costs. Also, from talking with other shoe manufacturers, I learned that the quality of product from Costa Rica is better than in Mexico This would enable me to charge competitive prices for my product in the U.S. My product will be produced by Costa Rican Imports because of their excellent manufacturing facilities, efficient distribution system, and expedient export/import procedures.

Where and why should the product or service be produced

The U.S. consumer is highly aware of quality goods at low prices. The label Made in U.S.A. carries a well respected name both in the U.S. And throughout the world. However, the U.S. has become service oriented, rather than manufacturing oriented. Therefore, producing my product here is costly. These high labor costs would be a huge percent of my selling price, so I rejected the U.S. As my manufacturing base. Because of this, I decided to look for cheaper labor in Latin Americ. I picked Costa Rica because of the low labor costs, high literacy levels, and the relative closeness to New York.

Geographical considerations of country chosen (not USA)

Costa Rica is a Central American success story: since the late 19th century, only two brief periods of violence have marred its democratic development. Although still a largely agricultural country, it has expanded its economy to include strong technology and tourism sectors. The standard of living is relatively high. Land ownership is widespread. Costa Rica is centrally located between two of the largest consumer markets in the world and, with all the neat, new technology, business can be done from here as easily as from Peoria, Illinois or Patagonia, Argentina.

Political concerns

Costa Rica is one of the most stable and robust democracies in Latin America. Costa Rica's has a healthy economic growth rate and some of the best social indicators on the continent. Costa Rica is one of the most vocal supporters of continental free trade, and already has its own agreement with Mexico and other countries of the region. Costa Rica's numerous free trade zones and tax holiday opportunities are extremely enticing. They offer benefits such as exemption from import duties on raw materials, capital goods, parts and components; unrestricted profit repatriation; tax exemption on profits for eight years and a 50% exemption for the following four years.

A study done recently for the Ministry of Foreign Trade (COMEX) projects that by the year 2005, Costa Rica's export earnings will amount to $15.7-billion, about four times the current figure. Intel will be leading the way; its exports, from the three manufacturing facilities the processing giant is building here, are expected to reach an annual $3.5-billion by the year 2001

Physical design

The product that that I am interested having manufactured in Costa Rica is a lightweight tennis shoe designed specifically for basketball and cross-country training. The name of my product is Glide shoes and the name of my company is Glide Shoes.

Product or Service Protection

After I investigated the company Costa Rica imports, I learned from the New York Chamber of Commerce that this is a reputable organziation without any prior history of disputes. I had several phone conversations with then before I decided to visit their's company executivies in Costa Rica (I made copies of my passport which I carried on my and ept the original passport in the hotel safe when I visited)

Business explorations

My friend, the shoemaker, advised to go to a manufacturer to speak with their marketing and sales and to arrange an appointment in order to meet with them. I contacted Costa Rica Imports whose manufacturing plant is located in San Jose, Costa Rica. The company has an office in New York. I arranged for an appointment to meet with their product-development advisors. We signed non-disclosure contracts stating that if I had something I spoke about they would not be accused ot taking my idea and vice versa.

Prior to this, I hired a patent attorney who accompanied me to the meeting. After I exaplained and showed them a prototype of my shoe, they designed a professional prototype so that I could show salespeople the product in order to obtain sale orders. I tested the product for a while. I made additional modifications and the gave me a new porotype, until I was satisfied with the final product.

When the product was to my liking, we discussed different prices and different quantitities. They explained to me their system of manufacturing which included purchase and delivery of the raw materials to the factory. In order to protect my product, my lawyer suggested that we sign a contactual agreement stating that I owned the design of this product and theat they were commissioned to They estimated that I had options for production which included purchase and delivery of raw materials and they were commissioned to manufacture the ten samples in order to me to show others that I could obtain orders. They would later become the sole manufacturer of this product. My lawyer had me contact another lawyer in Costa Rica, who knew the business laws of both countries. When my two lawyers were satisfied with that contract, I agreed to it.

As far as manufacturing goes, we discussed the procurement of low-cost quality raw materials that could be used to create my product. They estimated that I had options for production which included cost of freight and insurance taxes, and delivery to my warehouse in New York, New York. As a courtesy, they offered to contact their delivery and export professionals from OOCL, who would pick the product from their manufacturing plant, place it on a truck, and then deliver it to a ship bound to the U.S. They placed it in the appropriate containers and filled out the necessary documents and forms, following all export standards and procedures for inspection, etc. It was to shipped via barge form Costa Rica to the U.S. After the cargo wen through customs, meetinga lall the shipping procedurs and requirements, OOCL arranged for truck delivery. Because of the relationship between Costa Rica imports and OOCL, my cartons were mailed to my warehouse and all the prices were given by Costa Rica Imports on one itemized invoice.

The tables brlow are inclusive of costs oin manufacturing and shipping to my warehouse. This system is in place in order to help expedit my orders. After much research on independent transporation and delivery, I was satisfied that I choose this manufacturer with its pre-established distibution system.

The following costs through joint agreemtn include all cots incurred from manufacturing to delivery in N.Y. The company made that the delivery schedules were on time. They sent to a nearby port.

Cost Unit Breakdown -- Wholesale

Quantity

Wholesale

Total Cost

Cost/Freight/Ins.

Total Unit Cost

Total Cost

10,000

7.00

70,000

7.50

75,000

20,000

6.90

138,000

7.45

149,000

30,000

6.80

204, 000 PRODUCT ()

.30

7.10

210,000

40,000

6.70

268,000

.20

6.90

276, 000

50,000

6.60

330, 000

.18

6.78

339, 000

Cost Unit Breakdown -- Reatail

Wholesale Cost

Retail costs

Retail Selling Price

5.00

70.00

75.00

Then, I took my prototype and cost structure to the buyers of Shoe Barn, Playless Shoes, Wal-Mart, and CVC -- Home Shopping Network. After I have met with above mentioned parties, the following companies gave me letters with intent to purchase

Orders and Revenues from Retailers

Buyers

Units

Retail Cost

My Revenue

Shoe Barn

70.0

210, 000

Statement of cash flows

Cash flows from operating activitites

Net Incone

0

Net Cash flows form operations

210,000

Less cash flows form operating activities

75,000

Less net cash flow used for financing activities

50,000

Increase in cash

85,000

Line of Credit

With the pre-order letter of intent tht I received from the retail companies and the manufacturers, I went to Washington Mutual to obtain a line of credit. I have done business with Washington Mutual for 15 years. Since my wareshouse receipts were not enough to assure them that they would get their money back, the bank told me that I could use my 401(k) of $300,000 as collateral towards obtaining a line of credit for my business. The bank agreed to lend me $50,000 to use for my business. Because this is a new small business and I have a good credit rating and relationship with them as a personal customer, they agreed to low rate of interest.

Finding a manufacturer to produce my product was not an easy task. After eveluating foreign manufacturers, in order to save on labor costs and get the benefits of a literate workforce, I decided to use Costa Rica. Further research about Costa Rica's geographical, political, economic, and social climate enabled me to learn enough enformation in order to sucessfully contact business there. Establishing my company and considering all of the costs involved in production and distribution resulted in a lightweight, well-price tennis shoe ideal for basketball and cross-country training. During my production run, I made 8$5,000 profit. I anticiapte increasing my profits as I become more experienced with the process.