Global Marketing MGMT 6061

4T Business S.C
Export Business Plan

Prepared by:
Tehakelew Tefera: GSE/1221/13

Tesfaye Bezu: GSE/7048/13

Tekelewongel Kassaye: GSE/3729/13

Tesfastsion Dejene: GSE/3380/13

Submitted to: - Getie Andualem (Dr.)

July 2021

Addis Ababa

Ethiopia

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List of Tables

Table 1:- Management Team ............................................................................................................... 4

Table 2:-Total exports by all exporting countries............................................................................... 8
Table 3: Financial projection ............................................................................................................. 18
Table 4: Share of total coffee supply, consumption, and export estimate (metric tons) ................ 19
Table 5: Total forecast sales of coffee export (2015/16-2019/2020) .............................................. 20
Table 6: Costs of goods sold .............................................................................................................. 20
Table 7: Share of total coffee supply, consumption, and export estimate (metric tons) ................ 22

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List of Acronyms

ECX Ethiopian Commodity Exchange

ICO International Coffee Organization

ITC International Trade Center

MT Metric tones

S.C Share Company

USDA United States Department of Agriculture

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 Table of Contents
List of Tables ........................................................................................................................................... ii
List of Acronyms..................................................................................................................................... iii
Executive Summery................................................................................................................................ vii
1. Introduction........................................................................................................................................ 1
2. Background of the company ................................................................................................................ 3
2.1. Vision .......................................................................................................................................... 3
2.2. Mission ........................................................................................................................................ 3
2.3. Management Team ....................................................................................................................... 3
2.4. Personnel Plan.............................................................................................................................. 4
2.5. Organizational structure................................................................................................................ 4
2.6. Export team .................................................................................................................................. 5
2.7. Financial Plan............................................................................................................................... 5
2.8. Goal and objective of the company ............................................................................................... 5
2.7.1 Overall goal and objective of the company.................................................................................. 5
2.7.2 Export goals and objectives ......................................................................................................... 6
3. Country profile ................................................................................................................................... 6
3.1 Regulatory environment of Ethiopia ............................................................................................. 6
3.2 Infrastructures .............................................................................................................................. 7
3.2.1 Telecommunication .................................................................................................................... 7
3.2.2 Airports....................................................................................................................................... 7
3.2.3 Road network ............................................................................................................................. 7
3.2.4 Rail way ...................................................................................................................................... 7
3.2.5 Sea port ...................................................................................................................................... 8
3.2.6 Industrial parks ........................................................................................................................... 8
4. Industrial profile................................................................................................................................. 8
4.1 Consumers ................................................................................................................................... 8
4.2 Competitive condition .................................................................................................................. 9
4.3 SWOT analysis of Ethiopian coffee .............................................................................................. 9
4.3.1 Strength...................................................................................................................................... 9
4.3.2 Weakness ................................................................................................................................... 9
4.3.3 Opportunities ............................................................................................................................. 9

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4.3.4 Treats ……………………………………………………………………………………………………………………………………….10
4.4 Source of production and market channels .................................................................................. 10
5. Target Market identification selections ............................................................................................. 11
5.1 Target market identification ........................................................................................................ 11
5.2 Concentration and diversification ............................................................................................... 11
5.2.1 Market penetration: ................................................................................................................. 11
5.2.2 Market development ................................................................................................................ 11
6. Target customer profile..................................................................................................................... 12
6.1 Customer profile......................................................................................................................... 12
6.2 Demographics of consumer ........................................................................................................ 12
6.3 Purchasing decision maker ......................................................................................................... 12
6.4 End users.................................................................................................................................... 12
6.5 Total market size and future growth potential ............................................................................. 12
7. Product strategy ............................................................................................................................... 13
7.1 Competitive advantages.............................................................................................................. 13
7.2 Product and service selection of target market............................................................................. 13
7.3 Standardization vs. Adaptation ................................................................................................... 13
7.4 Product characteristics ................................................................................................................ 14
7.5 Quality characteristics ................................................................................................................ 14
7.6 Product specification standard .................................................................................................... 14
7.7 Seasonal and life cycle of product ............................................................................................... 14
7.8 Intellectual properties ................................................................................................................. 14
8. Pricing strategy ................................................................................................................................ 15
8.1 Export cost analysis .................................................................................................................... 15
8.2 Legislation ................................................................................................................................. 15
8.2.1 Anti-dumping legislation ........................................................................................................... 15
8.2.2 Price ceilings and price level reviews ......................................................................................... 15
8.3 Pricing and market penetration strategy ...................................................................................... 15
8.3.1 Pricing at a Premium ................................................................................................................. 16
8.3.2 Pricing for Market Penetration .................................................................................................. 16
8.3.3 Price Skimming ......................................................................................................................... 16
9. Logistics and Distribution strategy ................................................................................................... 16

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9.1 Contract negotiation ................................................................................................................... 16
9.2 Distribution strategy ................................................................................................................... 16
9.3 Method of transport .................................................................................................................... 17
9.4 Intermediaries............................................................................................................................. 17
10. Sales and Promotion strategy......................................................................................................... 17
10.1 Sales methods............................................................................................................................. 17
10.2 Promotion method ...................................................................................................................... 17
10.3 Sales financing ........................................................................................................................... 17
11. International law ........................................................................................................................... 18
11.1 Law of contract .......................................................................................................................... 18
11.2 Method of payment .................................................................................................................... 18
12. Financial analysis.......................................................................................................................... 18
12.1 Facility and equipment ............................................................................................................... 18
12.2 Sales forecasts ............................................................................................................................ 19
12.3 Total forecast sales ..................................................................................................................... 20
12.4 Costs of goods sold..................................................................................................................... 20
13. Risk management ........................................................................................................................... 21
13.1 Country risk ............................................................................................................................... 21
13.2 Economic risk ............................................................................................................................ 21
13.3 Political risk ............................................................................................................................... 21
13.4 Currency risk.............................................................................................................................. 21
13.5 Commercial risks........................................................................................................................ 22
14. Background data and target market ............................................................................................... 22
14.1 Basic market statistics ................................................................................................................ 22
14.2 Competitive environments .......................................................................................................... 23
Reference

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Executive Summery

Ethiopia’s climate, along with its diverse agro ecology and varied and plentiful natural resources,
is suitable for pulses coffee production. Ethiopia which is considered as coffee’s birthplace
produces high-quality Arabica coffee for both the domestic and international markets.

Coffee is daily used commodity and the purchasing decision can be made routinely without any
conscious activity due to this world consumption of coffees is expected to increase from time to
time. Coffee plays a major role in Ethiopia’s economy and is deeply intertwined with cultural
traditions and day-to-day living. It plays a central role in Ethiopia’s economy and as the
country’s leading export is an important source of foreign exchange.

The international market must deal with differences in foreign environments from the
characteristics of domestic environments. These may involve, for example, differences in
consumer tastes, wants and needs, national cultures, economic and technologic levels, market
structures, ways of doing business, political stability, government policy, laws and regulations.
Each one of these factors may render a company’s international approach to marketing
ineffective and counterproductive in the foreign market. Also, these differences need a careful
and well planned approach to entering and expanding in international markets

Therefore, Coffee exports is an essential source of foreign exchange to our country and also
generate income for our 4T business S.C we prepares and develop business plan to success and
to penetrate the international market.

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1. Introduction

Coffee is the second most traded agricultural commodity in the world.. In the last 30 years, a
growing demand for coffee, has resulted in the expansion of coffee production and exports in the
world. Global coffee production (in volume) has increased by more than 60% since the 1990s.
Roughly 60% of the world’s coffee production is Arabica, while Robusta accounts for the
remaining 40%. The value of annual cross-border coffee exports (green, roasted, soluble) has
more than quadrupled from USD 8.4 billion in 1991 to USD 35.6 billion in 2018. However, the
growth in the earnings from its export has been less steady than that of volumes due to
significant fluctuations in international coffee prices over the past three decades (ICO, 2020).

The two main species of coffee that has a high economic importance are Coffea Robusta and
Coffea Arabica. According ICO (2020), the largest Arabica coffee producers are Brazil,
Colombia, Ethiopia, Honduras and Peru. Viet Nam, Brazil, Indonesia, Uganda and India are the
five largest producers of Robusta coffee. However, though there is considerable variation,
Arabica prices are roughly twice those of Robusta. Coffee from certain countries and regions
fetches a higher premium than others, mainly due to quality attributes arising from regional
differentiation in addition to quality attributes, even though the effect may still be relatively
small. In this case the Blue Mountain in Jamaica, and Sumatra in Indonesia Yirghacheffe in
Ethiopiaare the origion of cofee that frequently mentioned due to their quality.

Ethiopia is endowed with an ideal production environment for growing coffee with a
combination of appropriate altitude, temperature, rainfall, soil type and its PH value. In Ethiopia,
coffee is produced in forest, semi-forest, garden and plantation production methods. It is
estimated that these different production systems make up about forest (10%), semi-forest (35%),
garden coffee (50%), and plantation coffee (5 %) of the total coffee production in the country.
Plantation and cooperative coffee account for above 10% of the export volume and about 15% of
share by monetary value. It is estimated that smallholder farmers produce above 90 % of
Ethiopian coffee that is organically produced (EtBuna , 2020).

Ethiopia is the producer for the several renowned varieties of coffee including Sidama,
Yirgacheffe, jimma and Harar. Apart from these, there are several other famous varieties that
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Ethiopia produces. The Ethiopian coffee is processed in two ways, washed processing and the
sundried processing. Some varieties like the Yeirgacheffe and Sidama command considerable
premium in the International markets. Moreover, Ethiopia has been exporting several specialty
coffee types, such as, Sidama, Guji, Jimmma, Lekemti, Harrar, Yirgacheffe, Limmu, Teppi,
Ghimbi, Keffa forest, Gemadro, Bebeka, Godere, Bench Maji, Bale, Anderacha, Zege, Amaro,
Arsi, Kochere, Ayu, Gura Ferda, Shegitu, Wellega, Geisha, Gera, Yeki, and many more. Coffee
grown in Ethiopia is known all over the world for it excellent quality and flavor (EtBuna , 2020;
ICO, 2020).

In 2008, after a period of reorganization of the powers and duties of the institutions involved in
the coffee sector, the government abolished its national auction and set up the Ethiopian
Commodity Exchange market (ECX) with the aim to improve agricultural marketing and shoring
up producer prices. The formation of the market created an opportunity where buyers and sellers
meet to trade, while being assured of quality, quantity, payment, and delivery. The following the
establishment of the market, it compulsory for traders and exporters to go through the ECX, unless
they are certified cooperatives, producers, or export straight from their commercial plantations
(Handino et al, 2019; Aparisi, 2021).

Coffee plays a pivotal role in the socio-economy of Ethiopia. It employs above 20 percent of the
economically active population and contributes more than 25% of the country’s foreign
exchange earnings. Currently more than 5 million smallholder farmerslivelihood relay on cofee
production. Moreover, coffee is cultivated by over 4 million primarily smallholder farming
households who earn their income directly from coffee production and has created job
opportunity for many urban populations (EtBuna , 2020; Aparisi, 2021).

As specified in the ICO annual report 2020, Ethiopia is the region’s largest consumer and
producer of coffee. After a decrease of 19% to 5.56 million bags in 2010/11, production in
Ethiopia has grown steadily and is estimated to increase by 2.1% to 7.7 million bags in 2019/20,
due to beneficial weather and adequate rain. Around half of Ethiopia’s production is consumed
internally and local consumption is estimated to rise by 0.4% to 3.73 million bags in 2019/20
(ICO, 2020).

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Ethiopia is among the top largest cofee exporting countries. Coffee export is accounting about
one-third of the country’s commodity exports.

Currently, Ethiopia has a huge untapped potential for production and export of coffee that is
attractive for business to engage. Accordingly, in order to export variety of coffee beans to
different foreign market 4T Business S.C produces this export business plan.

2. Background of the company

4T Business S.C is a share company founded by a highly respected group of businessman who
are well interested in export trade Processes. The Company has its main offices in Addis Ababa,
Ethiopia.

2.1. Vision

To be a leading coffee exporter company in Ethiopia by 2030

2.2. Mission

It is the mission of 4T Business S.C to export Ethiopia high quality Arabica coffee to the global
market. It is our long-term goal to become the preferred company to export for the unique
specialty coffees of Ethiopia. Our philosophy is in creating a long-term relationship with clients.

2.3. Management Team

Mr.Ermias Atnafu the Managing Director and a shareholder of the company have rich experience
in different line of business for the past four years. Moreover, he is also is assisted by other
professional as well as experienced personnel in different lines of the business where their name,
position, qualification & Experience are tabulated here under.

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 Table 1:- Management Team

Name Qualification Position Experien

ce
Ermias Atnafu BA degree in accounting Managing Director 10 Years
Abebaw Getachew BA degree in accounting Finance and HR head 8 Years
Solomon Alemu MA in economics Marketing & sales head 8 Years

Mahelet Yared MA in International Business Planning and business 7 Years

development head
Sintayehu Mamo MA in logistic & supply Transport and logistic 8 years
management Head
Hirut Sileshi BA degree in marketing Sales 4 years

Hewan Siyoum BA degree in marketing Sales 1 years

Aster Lemma BA degree in marketing Sales 3 years

Senait Dawit BA degree in Statistics Data Collection 1 years

Such a team will be very useful when the company starts to witness growing pains, because it
shall be easily handled leading to future growth of the business venture.

2.4. Personnel Plan

The personnel plan requires an increase in recruit additional employees from 10-15 years within
the next three years. Additional employees will also be added to increase administrative and
accounting support. One additional employee will be added to the sales and marketing division.

2.5. Organizational structure

4T Business S.C starts business by collecting coffee product from the farm since as per current
coffee sector regulation a company can only export coffee that it produce at its plantation or
purchase from ECX and export to different countries in the world. Our intention to start coffee
export business is to build strong relationship with the customer and to generate hard currency
for the country.

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 G/manager

Finance & Marketing & Planning and

Marketing & Human Sales Head
Sales Head Resource Head
Business
development Head

Sales Promotion
Accountant

Figure 1:- Organizational Structure

2.6. Export team

The export team is head by General Manager of the company who has ample experience in
export market and the rest staffs are strong capabilities in all aspects of trade relations, logistics,
contracting and selling.

2.7. Financial Plan

Taking the initiative to make a foothold in the export market requires high amount of capital.4T
business S.C apart from being a new business venture Start-up assets required include expenses
and cash needed to support operations until revenues reach an acceptable level. Most of the
company's liabilities will come from outside private investors and management investment;
however, our company has obtained current borrowing from Bank of Abyssinia the principal to
be paid off in two years and a long-term loan will be paid off in ten years.

2.8. Goal and objective of the company

2.7.1 Overall goal and objective of the company

The objectives and goal of 4T Company are:

 Establish strategic relationship with our esteemed customers

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  Increase sales volume of the export
 Increase gross margins from time to time
 Become prime exporter of the country

2.7.2 Export goals and objectives

It is well known that export business is one of the flourishing ideas as a way or step to achieve
higher profit in the international market. It helps to generate high amount of exchange rate for
the country.

3. Country profile

Ethiopia is Africa's oldest independent country and the second largest in terms of population.
Political instability will remain high in 2021, given the ongoing civil conflict in Tigray province
and the organization of much-delayed legislative elections. Increased security concerns will limit
foreign investment and constrain growth in the short term. Real GDP will recover in 2021, when
the economy is expected to grow by 4%. High levels of foreign investment and the government's
reform agenda will stimulate economic growth throughout 2022-25.

3.1 Regulatory environment of Ethiopia

Rising exports contributed to Ethiopia’s remarkable growth performance over the past decade.
Buoyed by favorable external conditions, exports also helped create jobs and earn much needed
foreign exchange. Under the current legal system the import and export trade is regulated in
accordance with several laws. According to Regulations, export trade in Ethiopia is available for
both domestic investors and foreign investors. A business person, who wants to export coffee, is
required to obtain an export permit to from the Coffee and Tea Development Center which is
under the Ministry of Agriculture and Natural Resource.

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3.2 Infrastructures

In Ethiopia rapid expanding infrastructure provide further investment incentives. Some of these are:

3.2.1 Telecommunication

Telecommunication is one of the prime support services needed for rapid growth and
modernization of the economy as well as for attracting investment, consequently the Ethiopian
government has made huge investments to improve service quality, coverage and institutional
capacity. As a result, the state-owned Ethio-Telecom, Ethiopia’s only and Africa’s second largest
telecom service provider has set ambitious targets to enhance customer acquisition, customer
satisfaction and provision of quality services to customers.

3.2.2 Airports

To meet the growing demand for air transportation, passenger and cargo, the Ethiopian aviation
sector expanded growth rate of the capacity.

3.2.3 Road network

A further expansion of the country’s road network and improved access to all-weather roads
comprising the completed express way connecting Addis Ababa to Adama, which is an
important route for the facilitation of import and export trade. And also the recently started
express way connecting Adama to Dire-Dawa is a good opportunity for accessing road network.

3.2.4 Rail way

The Ethiopian Railways Corporation replaces the old Franco-Ethiopian railway with a modern
nationwide railway network. A 656 kilometers railway network construction project linking the
capital Addis Ababa to the port of Djibouti began commercial operations in mid2018. This
railway reduced transport time from Djibouti to Modjo, a dry port city in proximity to Addis
Ababa.

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3.2.5 Sea port

As a landlocked country, Ethiopia has no direct access to seaports and the port of Djibouti serves
as the primary gateway for 90% to 95% of its internationally traded goods. However, the
reopening of diplomatic relations with the neighboring country Eritrea creates the potential for
operations via the Eritrean ports of Assab and Massaewa.

3.2.6 Industrial parks

The Government of Ethiopia invests in the development and expansion of specialized state-of-
the art industrial parks open for the domestic and foreign private sector. Ethiopia´s industrial
parks are equipped with dedicated power substations, maintaining high environmental standards,
and are well connected to the Djibouti port through the new electric railway and by road .

4. Industrial profile
4.1 Consumers

Coffee is the second traded agricultural commodity in the world. Coffee plays a pivotal role in
the socio-economy of Ethiopia. Ethiopia has since been known as an agricultural country with
leading export of variety coffees, but there is a new produce that is getting lots of attention-
specialty coffee. Accordingly Ethiopian coffee exported to different consumed country in the
world.

Table 2:-Total exports by all exporting countries

Country 2015/16 2016/17 2017/18 2018/19 2019/20

Share (%)
Brazil 37,473 33,491 30,783 37,870 40,511 0.29
Viet Nam 28,790 25,819 29,732 28,283 26,537 0.22
Colombia 12,302 13,488 12,725 13,502 12,639 0.10
Indonesia 7,985 6,891 7,761 4,718 6,627 0.05
Honduras 5,140 7,290 7,214 6,812 5,506 0.05
India 5,861 6,371 6,395 6,022 5,314 0.05
Uganda 3,316 4,605 4,359 4,454 5,355 0.04
Peru 3,064 3,973 4,029 4,001 3,588 0.03
Ethiopia 3,092 3,497 3,654 3,801 3,812 0.03
Guatemala 3,020 3,294 3,349 3,607 3,213 0.03
Others 12,816 13,041 13,585 14,880 13,861 0.11
Total 122,858 121,761 123,587 127,949 126,963 1.00

Source : Computed based on data obtained from International Coffee Organization report (2021)

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The main destination for Ethiopia’s coffee export are Germany, Saudi Arabia, Japan, the USA
and Belgium.

4.2 Competitive condition

The Company’s competitive edge comes from the advantage of having established relationships
with importers, and Ethiopian coffee growers, green coffee brokers and wholesalers. 4T Business
S.C strongly confirm that the demand of the coffee product in the international market for larger
product shipments.

4.3 SWOT analysis of Ethiopian coffee

A SWOT analysis is a compilation of your company's strengths, weaknesses, opportunities and

threats. The primary objective of a SWOT analysis is to help organizations develop a full
awareness of all the factors involved in making a business decision. Based on this the analysis is
as follows:

4.3.1 Strength

 Ethiopia is the birth place of coffee.

 The country has suitable altitude, ample rainfall, optimum temperatures, appropriate planting
materials, low labor costs and fertile soil.
 Good quality and 100% organic of Coffee Arabica produced in the country

4.3.2 Weakness

 Long supply chain from farm to port of discharge

 Difficulty in finding access to finance farmers?
 Low productivity, low returns for farmers and poor agricultural practices

4.3.3 Opportunities

 Coffee is one of the products that will always be used by people.

 It is well know that coffee is one of the biggest and most important commodities in the world
 Growing demand for Ethiopian organic Arabica coffee

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4.3.4 Treats

 Competition with the major coffee producing countries such as Brazil

 One of the biggest Treat of the coffee industry is the fact that it is greatly influenced by
the weather conditions in the producing countries.
 Depend on political and economic stability
 Problem of financial crisis in the world and
 Recurrent price fluctuation in the international market.

4.4 Source of production and market channels

Coffee, Ethiopia’s largest export crop is the backbone of the Ethiopian economy. Coffee is the
backbone of the Ethiopia economy in terms of source of foreign exchange earnings and source of
livelihood for millions of farmers. Over 4 million of small holder farmers are engaged in
growing and producing coffee in west and south west, southern, eastern, and central part of the
country. However, Ethiopia is yet to fully beneficial from coffee sector despite huge potential to
produce and export. Ethiopia has not yet fully exploited its position as the producer of some of
the best coffees in the world. Coffee is grown by over 4 million small holder farmers engaged in
growing and producing the main coffee producing areas in Ethiopia are west and south west,
southern, eastern, and central regions

It is a business structure of interdependent organizations that reach from the point of

product origin.

It is a market structure of a company that reaches from the point of product origin to the final
destinations of users. Under this main activity the sub tasks performed in processing the coffee
are pulping, washing coffee, drying, sorting, sacking/ packing, loading, and transporting to the
final destination.

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5. Target Market identification selections
5.1 Target market identification

Target market identification is the process of selecting the groups of customers to focus on in
firms targeting mix. Exporting companies should design their marketing strategy in order to
build sustainable competitive advantages. Accordingly our company target customers are:

 Coffee importer companies in different countries and

 Coffee vending machine operator.

We expect to gain a dominant market share within short period of time

5.2 Concentration and diversification

A diversification strategy is involves expansion into a related but distinct area where as
concentration involves expansion of current business. To this end our company uses the
following strategies in its efforts to excel within the market.

5.2.1 Market penetration:

It involves trying to gain additional share of a firm’s existing markets using existing products.
Our company will rely on targeted print media advertising to attract new customers within
existing markets.

5.2.2 Market development

It involves taking existing products and trying to sell them within new markets. One-way to
reach a new market is to enter a new retail channel due to this we have positioned ourselves as a
differentiated provider of the highest quality Arabica beans.

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6. Target customer profile
6.1 Customer profile

The target markets of our company are wholesalers and end users of Ethiopian Arabic coffee in
the main destination in Germany, Saudi Arabia, Japan, USA and Belgium. These market areas
are known for their huge potential in their annual consumption.

6.2 Demographics of consumer

Demographic known as a person’s in terms of age, race, size, density, age, gender, race,
occupation and other statistics. This may be important for the marketers to analyze the various
factors which influences consumers mind that effect to buying products or services. By
understanding the products to what demographics, our company can more correctly to identify
their advertisement to efforts and increasing our profit margins.

6.3 Purchasing decision maker

The decision maker is the individual or company representative who has final authority over the
purchasing decision. While our company navigating the sales process, it is important to sell to
the right prospect.

6.4 End users

Consumer is most important person for the marketer because the marketer takes in to
consideration on the taste of the consumer as well as produces the goods and services
accordingly consumers in different age can be the end users.

6.5 Total market size and future growth potential

4T Business S.C Growth is anticipated to rise at a considerable rate during the coming years with
the rising adoption of strategies. The market landscape and its growth prospects over the coming
years.

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7. Product strategy
7.1 Competitive advantages

In order to differentiate our product, coffee, which is a commodity, from the product offering of
competitors, guaranteed fresh and are shipped within seven days of preparation. In addition to
this, all of the farms from which 4T Business Share Company purchases coffee adhere to
environmentally sound farming practices and avoid the use of pesticides and chemicals in crop
production and also increasing improvements to our marketing efforts will further separate us
from the larger market and from our close competitors.

7.2 Product and service selection of target market

Many different factors need to be considered in assessing international market. Specifically, the
political, regulatory and economic conditions of the destination of our product country need to be
looked at closely to ascertain the potential risks and rewards of 4T Business S.C doing business
there.

4T Business S.C should design their marketing strategy in order to build sustainable competitive
advantages. Consequently all our company activities must be devoted to finding out what the
customers want, and a useful approach marketing strategy is undertaking to keep satisfaction of
the consumer and target market via Product Segmentation, Product Diversification Strategy,
Productivity & Quality, Packaging and Branding.

7.3 Standardization vs. Adaptation

In order to drive a successful product standardization and adaptation, first we research the new
market and determine how different it is from the current market. This involves learning the
needs, attitudes, cultural believes, and desires of the consumers in the new market. In addition to
this our companies take the following two adaptations

 Promotional adaptation – this involves changing methods and types of advertising as well as

the media of choice.

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 Price adaptation – a company adopting this type of adaptation has to change size or quantity

of their product so as to account for the changed this is because a new market may not be
willing or able to spend as much money on a certain product as others.

7.4 Product characteristics

4T Business S.C will take into consideration for unique characteristics of product because this
characteristic differentiates from other product in the market. Characteristics of a product also
help to set or determine the price. Because of this our company takes care of for packing,
labeling and branding.

7.5 Quality characteristics

Each of exporting country usually has its own set of standards developed around its particular
coffee industry. Though, our company strongly follow minimum requirement of quality
characteristics certificate of origin, international standard measurement of exporting coffee and
also we select origin of coffee place like sidamo, yirgacheffee, keffa.

7.6 Product specification standard

Food safety is an important focus in prevention of contamination. Therefore our company takes
the necessary precaution regarding to avoid from contamination of pesticides that harms human
being and risk of health. So we strongly care for storage and packing materials.

7.7 Seasonal and life cycle of product

Coffee is seasonal crop and harvests per year due to this our company takes care of stock the
product.

7.8 Intellectual properties

4T Business S.C has their own logo, trade name and trade mark which is registered as per the
rule and regulation of the country law.

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8. Pricing strategy
8.1 Export cost analysis

To ensure our company business deal make money, it is mandatory to manage risk properly,
clearly identify export costs, foreign exchange risk or the price that should be negotiated

8.2 Legislation

It is one of the most critical aspects as part of any international marketing strategy and affects
everything from the preparation of quality, to where your brand stacks up next to competition.
Pricing our product appropriately can make or break our success in a new market. Understanding
main pricing constraints of business could face will ensure to set a pricing strategy that is
competitive, legal and most of profitable. Some of these are:

8.2.1 Anti-dumping legislation

4T business S.C try to keep a foreign market price that is not selling price below in both its home
country and foreign market.

8.2.2 Price ceilings and price level reviews

Export countries use reviews and ceilings to protect the local economy from exorbitant price
increases in times of wage and price controls. Excessive price increases are often outlawed.
Because of this 4T business S.C strictly adhere to the law of international trade market.

8.3 Pricing and market penetration strategy

Penetration strategies aim to attract buyers by offering lower price on good and services. Pricing
strategy helps our company to determine the price point at which most effective to penetrate the
market. 4T business S.C as a new entrant to the business to penetrate the market and to capture
market share, create brand loyalty and to switch customers from competitors we apply for
pricing strategy. Here are some of the various strategies that 4T Business S.C implement when
setting prices on our products to penetrate the market.

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8.3.1 Pricing at a Premium

Premium pricing is often most effective in the early days of a product’s life cycle, and ideal for
our businesses that sell unique goods. Because customers need to perceive products as being
worth the higher price tag, a business must work hard to create a value perception.

8.3.2 Pricing for Market Penetration

Penetration strategies aim to attract buyers by offering lower prices on goods and services. While
many new companies use this technique to draw attention away from their competition, though
we take this penetration pricing to sufficiently control the market.

8.3.3 Price Skimming

Price skimming involves setting rates high during the introductory phase. The company then
lowers prices gradually as competitor goods appear on the market. Our company approach price
skimming is that it allows businesses to maximize profits on early adopters before dropping
prices to attract more price-sensitive consumers.

9. Logistics and Distribution strategy

9.1 Contract negotiation

4T Business S.C gets an agreement from their business partner abroad and in domestic market
according to the law of the country.

9.2 Distribution strategy

To get distribution chain 4T Business SC setting up department that represent our company and
by sharing our vision, practices, and resources with partners to create a link of trust that could
harmonize mutual benefits. Distribution charges are assumed by our company up to the arrival of
the shipments in importers country assume responsibility, as detailed in contract, of the shipment
and additional distribution charges

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9.3 Method of transport

4T Business S.C uses different means of transport modality like air cargo, shipping to reach to
the destination country.

9.4 Intermediaries

4T Business S.C setting up international departments that helps our brand directly to enter into
destination countries market and this gives us complete control on distribution of our product.

10. Sales and Promotion strategy

10.1 Sales methods

4T Business S.C focuses on meeting the increased demand from importers with whom we have
established relationships and we will focus on increasing the volume to maintaining the
percentage of sales market.

10.2 Promotion method

Our main strategy is to communicate the unique and desired attributes of our coffee to larger
segments of the importer country markets. To do this Personal selling which includes phone
expenses, travel to importer country will remain our most important means of promotion.In
addition to this we promote our product via print advertising, online and web developing
systems.

When we are advertising to the market we take care of the destination country culture, lifestyle
and religious.

10.3 Sales financing

Our target is to penetrate the market and to increase sales volume. For this case finance play a
vital role for the development of the company and in turn to maximize our profit due to this our
bank facilitate financial support through loan credit scheme.

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11. International law
11.1 Law of contract

Our company inter an agreement which binds all parties within the frame work of the
international law and as well as the rule and regulation of the country. Both of us agree to take
English language as medium of communication.

11.2 Method of payment

Although, it is well known that different clients prefer different payment option but our company
ensure that we abide by the financial rule and regulation of our country. Because of this 4T
Business Share Company makes payment available to our clients via bank transfer.

12. Financial analysis

12.1 Facility and equipment

Financing is a core business element and without a proper financial management a business
cannot be created. 4T Business S.C wants to finance growth through a combination of long-term
debt and cash flow. Purchase of the larger facility and equipment will require high amount of
cash and also technology will be primarily financed with cash-flow. Following is the projected
financial plan for the company.

Table 3: Financial projection

Initial investment
Item Amount
Telephone, communications hardware and software, etc. 200,000.00
Marketing expenses; business cards, advertising, etc. 800,000.00
Investments, total 1,000,000.00
Need for capital
Expenses for the first months of operations 100,000.00
Required cash assets 700,000.00
Need for working capital, total 800,000.00
Cash reserve 250,000.00

Need for capital, total 1,050,000.00

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 Financing
Own cash investments 350,000.00
Financing, total 1,500,000.00
Loans
working capital loan 1,000,000.00
Pre shipment loan 2,500,000.00
Available financing, total 3,500,000.00

12.2 Sales forecasts

Ethiopia is the region’s largest producer and consumer of coffee. Coffee production in Ethiopia
has grown steadily over the past three years and, with suitable growing conditions, is forecasted
to reach to 7.62 million bags (457,200 MT) in 2021/22. 50-55% of Ethiopia’s production is
consumed domestically.

Local consumption is estimated to increase to 3.55 million bags in MY 2020/21. Based on export
performance during the first half of MY 2020/21, we predict total exports to reach only 4 million
bags (240,200 MT), lower from the official USDA estimate of 4.15 million bags. The anticipated
decrease is mainly due to low interest of some exporters to the revised government policy on
minimum export price fixation to avoid under invoicing by exporters and security situation in
some parts of coffee growing regions. MY 2019/20 coffee export reached to 248,129 MT valued
at USD 821,140.

Table 4: Share of total coffee supply, consumption, and export estimate (metric tons)

Item 2018/19 2019/20 2020/21 2021/22

Total coffee supply ('000MT 442.6 463.2 468.6 471.6
Export ('000MT 250.4 248 250.2 250.8
Consumption ('000MT) 192.2 215.2 218.4 220.8
% export 56 53 53 53

Source: USDA

The retail price of standard coffee in Addis Ababa is around USD 3.5 to 4.5 compared to the
International Coffee Organization which has the Arabica price range between USD 2.2 to 2.8 per
kg. This price variation results in competitive tension between local sales and coffee exports.

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12.3 Total forecast sales
An important component of our business is to forecast the sales of coffee business. Ethiopia has
shown a significant growth in the exports of coffee over the last years. The following table
shows the forecast of Ethiopian coffee export.

Table 5: Total forecast sales of coffee export (2015/16-2019/2020)

Item 2015/16 2016/17 2017/18 2018/19 2019/20

Coffee exports 0.722 0.897 0.767 0.789 0.82
Coffee exports share of total agricultural
exports (%) 31 38 32 34 0.42
Coffee exports share of total exports (%) 27 31 27 29 31

Source: USDA

12.4 Costs of goods sold

Table 6: Costs of goods sold

Items Total
1.Product costs
Coffee production 2,000,000.00
Labor 380,000.00
Administration 80,000.00
Domestic financing fees 180,000.00
less taxes 45,000.00
Total domestic cost 135,000.00
2. Cost of sales and promotion
Promotion expense 500,000.00
travel expense 90,000.00
Commissions 55,000.00
3.Preparation for transport
Labeling 195,000.00
Packing 205,000.00
4.other costs of preparation for transport
consular invoices 35,000.00
Insurance 41,000.00
freight forwarding 75,000.00
other documents 25,000.00
Total cost 175,000.00

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13. Risk management

The purpose of risk management is to reduce to the most favorable level the risks faced by a
company. This enables the company to pursue a policy of only engaging in export business
ventures if the accompanying risks are less than the expected opportunities. It can view its risk
exposure as a whole and adopt a position whereby the risks in the export business taken as a
whole are not permitted to be higher than the opportunities, or it can limit itself to export
business which does not threaten the livelihood of the company. It is true that risk management
is an important aspect of an export plan to protect the business from uncertainty. Because of this
4T business company analysis the following risk situation.

13.1 Country risk

This refers to the economic, political and business risks that are unique to a specific country, and
that might result in unexpected investment losses but we are examine and analyzed so that our
clients country are safe associated to uncertainty.

13.2 Economic risk

Most of our business partner country economic situation is strong and they have stable finance.
Therefore they have an ability to pay back their debt and also the purchasing power of the
society is in a good condition.

13.3 Political risk

We are also analyzing the political situation of the destination country because the unrest of
political condition might result in an unanticipated loss to our company.

13.4 Currency risk

These occur if the currency in the home market strengthens in comparison with the currencies in
the target markets, which reduces the value of earnings from foreign business. But in our country
this situation is not occur.

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13.5 Commercial risks

This refers to refers to the firm’s potential loss or failure from poorly developed or executed
business strategies, tactics, or procedures. Accordingly 4T Business S.C take a strategy by
selection of business partners, timing of market entry, pricing, creation of product features, and
promotional themes not to failure the business.

14. Background data and target market

14.1 Basic market statistics

In 2021/22 coffee exports projected at 4.1 million bags (246,000 MT), assuming that a complete
worldwide recovery from COVID-19 pandemic crises and improved security situation in the
country.

Based on export performance during the first half of In 2020/21, we predict total exports to reach
only 4 million bags (240,200 MT), lower from the official USDA estimate of 4.15 million bags.
The anticipated decrease is mainly due to low interest of some exporters to the revised
government policy on minimum export price fixation to avoid under invoicing by exporters and
security situation in some parts of coffee growing regions. In 2019/20 coffee export reached to
248,129 MT valued at USD 821,140

Table 7: Share of total coffee supply, consumption, and export estimate (metric tons)

Item 2018/19 2019/20 2020/21 2021/22

Total coffee supply ('000MT) 442.6 463.2 468.6 471.6
Export ('000MT) 250.4 248 250.2 250.8
Consumption ('000MT) 192.2 215.2 218.4 220.8
% export 56 53 53 53

Source USDA

Ethiopia Coffee Market is projected to grow at 5.5% during the forecast period (2020 - 2025).

 Arabica coffee has its origin in Ethiopia. Ethiopia is the largest coffee producer in Africa and
the fifth-largest producer in the world.

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 Ethiopians are among the largest coffee consumers in Africa and the coffee consumption
trend in Ethiopia is growing at a steady pace. Almost 50% of the country’s coffee production
is consumed domestically.

14.2 Competitive environments

Some of the major players in the Ethiopia coffee market are Cooper's Cask Coffee Company,
Forest Coffee, Ethiopian Yirgacheffe Coffee, Square One Coffee among others. Major players,
such as Starbucks have mainly focused on partnerships and collaborations with other emerging
players in the market and new product launches. Major Players Starbucks Corporation, Cooper's
Cask Coffee Company, Forest CoffeeKlatch Coffee., a

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