Mission Statement Company Objectives Company Overview 1. Historical Outline 2.
Products and Services 3. Financial Statements SWOT Analysis § An analysis of
company’s strengths § An analysis of company’s weaknesses § An analysis of
company’s opportunities § An analysis of company’s threats Business
Strategy Marketing Mix § Product § Pricing § Place § Promotion Analysis of
Major Competitors in the Field § Kenmore § Whirlpool § Kirby § Maytag § GE
International Expansion 1. Hungary § External Environment § Industry Analysis
§ Recommended Entry Mode 2. Japan § External Environment § Industry Analysis
§ Expansion Strategy for the Future Five Years 4. Canada § External
Environment § Expansion Strategy for the Future Five Years 5. Mexico §
External Environment § Industry Analysis § Expansion Strategy for the Future
Five Years Growth Forecasts for Years 2000, 2001, 2002, 2003, 2004
Implementation The View Ahead Star Appliances Inc. Mission Statement Quality For
over thirty years, Star Appliances Inc. has been helping people to manage their
homes. Today, Star Appliances Inc. is one of the major competitors in the
household industry and one of the most selling brand in America. Star Appliances
Inc. Mission is to: § Achieve technology excellence in current and future
generations of products, processes, and services. § Develop innovations by
creating entirely new business opportunities. § Help solve critical technical
challenges. § Attract and develop new technical leaders. § Ensure leadership
technology in all departments of Star Appliances. § Drive corporate initiatives
across Star Appliances. § Expand its market by exploring a global economy
Satisfaction All Star Appliances products contain proper warranty information.
Each appliance comes with a pledge of Satisfaction Guaranteed or your money
back. Star Appliances offers maintenance agreements and annual check-ups to keep
your appliances running right. And should anything ever go wrong with your Star
appliance (and we hope it never does), we offer a nationwide network of service
technicians to make sure it gets fixed fast and fixed right. Value When you
compare feature-for-feature, you’ll find that Star Appliances offers more for
the money than any other brand. Maybe that’s why s leading consumer magazine
recently ranked Star’s washers, dryers, and vacuums NUMBER ONE in their
respective categories. Have questions or need more information about new Star
products? Call 1-888-1ST-STAR or speak to a Customer Service Representative For
service information or to schedule a service, call 1-800-4MY-STAR. Star
Appliances Inc. Company Objectives Integrity Integrity is an uncompromising
characteristic for all Star Appliances employees. It is an implicit factor in
customer relationships and the cornerstone of all Star Appliances business
activities. Along with the company's reputation for innovation, growth and
success, we value integrity among the essential and critical elements in our
employees. It is the baseline by which we measure everything else and from which
we never compromise. Creativity Star’s continued success is the result of its
employees’ creativity. Every day, teams of Star Appliances people push the
frontiers, developing new products and services to serve their customers.
Focusing on highly specialized financial services segments, our people develop a
unique understanding of customer requirements as they apply their collective
talents to solving industry challenges. Intellect At Star, we've never separated
ideas from actions—both are essential elements of the competitive equation.
Developing the most advanced financial product or innovative service is
meaningless if you don't move quickly to get it to market and delivered to
customers. The people from Star understand the importance of both ideas and
action to maintain the company's position as one of the leaders in the market.
Quality as a corporate objective: Company-wide Quality, as a corporate
objective, means attaining a level of overall performance and attitude that
makes Star Appliances the natural choice of customers and earns the respect of
all those affected by the Company's activities. Company-wide Quality, as an
individual objective, is achieved by employees who aspire to be better than the
best. Star Appliances is committed to providing flexibility in the design,
calibration, repair, and testing services to customers while maintaining a
consistent, optimum level of quality. The services we offer include standard
service packages as well as customized service capabilities to accommodate
unique customer requirements. Our business-wide commitment to meet the needs of
customers is the foundation for the Quality System. Star Appliances is dedicated
to maintaining close relationships with our suppliers. The overall objective is
to make certain that we exceed our customer's expectations. Company Profile q
Historical Outline Star Appliances Inc. designs, manufactures, sells and
supports a line of household appliances. The company was started in 1970 and has
grown steadily to its current size. Star Appliances has its head office in
Bridgeport, CT and about 8 domestic branch offices. The two major factories are
located in Iowa and Texas. Star Appliances Inc employs approximately 500
personnel. The company went public in 1984. Today, Star Appliances Inc has taken
around 15% of the U.S. household appliances industry. Star Appliances Inc. has
international markets, including Canada, Japan, and Mexico. v Focused Management
With premium business management teams, we can provide our customer better
service, sharpen our product focus and increase the efficiency of our own
personnel. v Accelerated Sales By consistently creating the leading products in
our respective markets, Star Appliances Inc. has developed valuable brand equity
and an enviable record of sales growth. The increased breadth of our product
line, the organization of our sales and marketing, the diversity of our
complementary markets and our refocused R&D all work to enhance Star’s
sales potential. v Scale Star Appliances Inc. has nearly doubled the number of
our facilities, greatly increasing our capacity and resources. We, a large size
company, enable us to successfully complete and fulfill significantly larger
orders, increase the comfort large customers have in doing business with us and
provide opportunities in the future further development of our company. q
Financial Statements SWOT Analysis Strengths § Complete product line§ Good
reputation§ Customer loyalty § Employees’ creativity§ Being in business
nearly thirty years.§ High quality products§ Excellent after-sale services§
Experienced management teams§ Experience in foreign exporting§ Excellent
performance in foreign markets § Sufficient capital resources to support
expansion.§ Sales increasing steadily § Well-trained repair technicians
Weaknesses § Unfamiliarity with foreign markets due to insufficient research§
Small market shares in the U.S.§ Infrequent participation in exhibitions, thus,
lack of exposure to potential buyers§ Minimal advertising and weak promotion §
Infrequent participation in exhibitions, thus, lack of exposure to potential
buyers Opportunities § International Expansion § Innovative R&D § Further
developments in unsaturated markets of Japan, Canada, and Mexico§ Developing
online interactions with customers in Japan, Canada, and Mexico§ Relatively
less American competitors in Hungary§ Hungarian standards of living are fast
growing Threats § Intense competitions§ New competitors in the same industry
Business Strategy Business Strategy § Product niche; § Price competitiveness;
§ Appropriate after-sales service; § Right Voltage (220 not 110) – Hungary
Marketing Mix § Product – Star Appliances produces complete lines of basic
and major household appliances. Household electrical appliances include
housekeeping appliances (washing machines, vacuum cleaners, electric irons),
cooking and kitchen appliances (refrigerators, microwaves ovens, toasters), air
conditioning equipment (air conditioners, fans, air purifiers). We are going to
promote three different categories of our products, which are washer, dryer, and
vacuum cleaner, in our new market Hungary. We select seven kinds of products
from those three categories to enter the foreign markets first. While in Mexico,
Japan, and Canada, which are our existing markets, Star Appliances, Inc will
keep the same product categories and introduce innovative small appliances to
those markets. By setting up the manufacturing plant in Mexico, Star Appliances,
Inc will manufacture the whole lines of household appliances. Total output will
depend on production capacity, demand forecast, quarterly financial planning and
other related cost. Output of each line of appliances will mainly depend on
estimated demand and inventory level. According to industrial needs and upon
customer’s request, Star Appliances, Inc will make certain customization while
maintain our quality standards. § Price – As of the Hungarian Market,
reliability and appropriate credit, guarantee and servicing terms are all those
factors which are taken into account by the Hungarian end-users and distributors
in the purchase decisions. Home delivery is an attracting factor used by many
retailers over a certain purchase value mostly above HUF 50,000 (USD 240) and
after-sales services are also essential because Star Appliances, Inc is
determined to establish a significant long-term presence in Hungary. Star
Appliances, Inc. will offer competitive prices compared to our competitors. Star
Appliances, Inc. provides two-year warranty for washing machines dryers, and
vacuum cleaners, which is double the warranty time than other suppliers. §
Place - Foreign brands distributors have either established their own
distribution operations and exclusive product showrooms in major Hungarian
cities or find it easier and more convenient to appoint a local agent /
distributor who acts on a commission basis while distributing their products.
Star Appliances, Inc will find a local distributor in the capital city,
Budapest, to distribute our products. The local partner should be capable of
waging promotional campaigns, maintaining spare parts and accessories and
carrying sufficient stocks. Reliability, timely deliveries and efficient,
low-cost, and after-sale service capabilities are key factors in Hungary. Since
Hungary is a sophisticated but relatively small market, it is advisable to
negotiate an exclusive distribution arrangement when the right company is
located. § Promotion – Star Appliances, Inc. wishes to market our household
appliances to Hungary and wants to appoint an exclusive local agent/distributor
who acts on a commission basis. The representative should be able to set up
promotional campaigns with the financial help of Star Appliances, Inc. and
maintain an extensive household appliance inventory carrying a large range of
stock kept in a bonded warehouse. There is a wide range of commercial
television, radio, newspapers and magazines advertisements as well as direct
mail services. We decide to use television advertising, because it can reach
more than 80 percent of Hungarians. A single showing of a 30-seconds commercial
in Hungarian costs between USD 5,000-8,000 depending upon program ratings and
timings. A 30-second radio advertising at a national commercial radio station
would cost around USD 600. We will also look into other promotional methods such
as participation in international trade fairs, exhibitions and business to
business promotions. Analysis of Major Competitors in Household Appliance
Industry § Kenmore - The Kenmore company has been on the market for over 70
years. Today, it is one of the best selling brands of home appliances in
America. Kenmore sells its products through Sears, a large appliance retail
chain. Every Kenmore appliance comes with Sears pledge of Satisfaction
Guaranteed or person’s money back. Sears offers maintenance agreements and
annual check-ups to keep the appliances running right. Sears offers a nationwide
network of technicians to make sure that their products get fixed fast and fixed
right. § Whirlpool - Whirlpool Corporation is the one of the world's leading
manufacturers and marketers of major home appliances. The company has principal
manufacturing operations and marketing activities in North and South America,
Europe, and Asia. Whirlpool's primary brand names -- KitchenAid, Roper,
Bauknecht, Ignis, Brastemp, Consul and its global Whirlpool brand -- are
marketed in more than 170 countries worldwide. In North America, Whirlpool is
the largest supplier of major appliances to Sears, Roebuck and Company under the
Kenmore brand. Whirlpool manufactures and markets a full line of appliances in
each market it serves worldwide: clothes, washers and dryers, refrigerators,
freezers, dishwashers, ranges, compactors, room air conditioners and microwaves,
together with portable appliances such as stand mixers, hand mixers and
blenders. § Kirby - The Kirby Company has been in the market for more than 85
years. As a Division of The Scott Fetzer Company, they have produced fine Home
Care System in the world. Kirby focuses on providing quality, reliability and
service. Although their prices are much higher than those of other vacuum
cleaner producers they have enjoyed a steady flow of new customers who are more
interested in quality. Kirby’s vacuum cleaners are designed for people who
have higher income and who appreciate cleanliness. Kirby products are only sold
though in-home demonstrations. Through their 85-year history, Kirby has shown
that the in-home demonstration allows potential customers the chance to see how
the system can meet their unique cleaning needs. § Maytag - Maytag was founded
in 1893. Maytag Corporation is a leading producer of home and commercial
appliances. Its products are sold to customers throughout North America and in
targeted international markets. Maytag also is the majority owner in a China
joint venture with Hefei Rongshida, a leading washing machine company that is
expanding into the refrigeration business. The company produces premium brand
major appliances such as washers, dryers, dishwashers, cooking appliances,
refrigerators, vacuum cleaners, extractors, commercial cooking, laundry, floor
care equipment, and vending machines. In 1999 the company increased its sales to
4.3 billion dollars from 4.07 billion dollars in 1998. As a result of this,
gross profits rose by 70 million. The company currently pays .72 dollars per
share to its shareholders. Net income rose by 48 million dollars. § GE - GE is
a diversified services, technology and manufacturing company with a commitment
to achieving customer success and worldwide leadership in each of its
businesses. GE operates in more than 100 countries and employs nearly 340,000
people worldwide, including 197,000 in the United States. John F. Welch has been
Chairman and Chief Executive Officer of GE since 1981. The Company traces its
beginnings to Thomas A. Edison, who established Edison Electric Light Company in
1878. In 1892, a merger of Edison General Electric Company and Thomson-Houston
Electric Company created General Electric Company. GE is the only company listed
in the Dow Jones Industrial Index today that was also included in the original
index in 1896. Revenues of the company for 1999 are $111.6 Billion. 1999 Net
Earnings are $10.7 Billion and the number of shareowners is about 2.1 Million
International Expansion 1. External Environment § Demographic – The
population was 10,208,127 (July 1998 est.) Age structure was as follows: 0-14
years: 18% (male 915,412; female 872,706) 15-64 years: 68% (male 3,413,170;
female 3,533,085) 65 years and over: 14% (male 550,974; female 922,780) (July
1998 est.) The population growth rate was -0.23% (1998 est.) Ethnic groups are
Hungarian 89.9%, Gypsy 4%, German 2.6%, Serb 2%, Slovak 0.8%, Romanian 0.7%.
Hungarian is the major language. Other language speakers are only 1.8% of the
population. § Political/Legal - Country name in the conventional long form is
Republic of Hungary, and in conventional short form is Hungary. The local long
form is Magyar Koztarsasag and the local short form is Magyarorszag. The
Government type is republic. The national capital is Budapest. § Economic –
Hungary has consolidated its March 1995 stabilization program and undergone
enough restructuring to become an established market economy. Consequently,
Hungary's economy has been growing rapidly over the last six years. Hungary has
made significant progress in stabilizing inflation through effective
implementation of monetary policy. In the early 1990s, Hungary's economy
experienced high rates of inflation, reaching a peak of 30 percent in 1992-93.
With the help of market stabilizing efforts the inflation rate dropped to an
annual 12 percent by the end of 1998. The targeted rate for 1999 is to reach
single digits. The government's main economic priorities are to complete
structural reforms, particularly the implementation of the 1997 pension reform
act (the first in the region), taxation reform, and planning for comprehensive
health care, local government finance reform, and the reform of education at all
levels. Foreign investment has totaled more than $17 billion through 1997. In
recognition of Hungary's improved macro-economic situation, all major
credit-rating agencies listed the country's foreign currency debt issuances as
investment grade in 1996. The current IMF stand-by arrangement expired in
February 1998, and Budapest and the IMF agree that there is no need to renew it.
The OECD welcomed Hungary as a member in May 1996, and in December 1997 the EU
invited Hungary to begin the accession process. Forecasters expect 4%-5% growth
in 1998. GDP’s purchasing power parity is $73.2 billion (1997 est.) GDP’s
real growth rate is 4.4% (1997 est.) GDP per capita purchasing power parity is
$7,400 (1997 est.) Inflation rate--consumer price index is 18% (1997 est.)
Unemployment rate is 9% (1997 est.) As a small country with a relatively small
domestic market Hungary's economy is highly dependent on foreign trade.
International trade in goods and services amounted to approximately 80 percent
of the GDP during the last three years. § Sociocultural - English is regularly
used in business contexts. There are, of course, firms, especially smaller ones,
whose principals do not speak English. In these instances, an interpreter is
often made available. It is nonetheless prudent to ask in advance what
interpretation provisions have been made for a meeting. Hungarians address each
other by their family names first, followed by their given names (e.g., Smith
John). Business cards follow this convention unless printed in English. It is
always advantageous to learn basic greetings in Hungarian. Even the most minimal
efforts will be appreciated by Hungarian business partners. § Global – Real
wages especially in the private and banking sector are expected to increase 3-4
percent in 1999 and beyond during the following years. The recovery should
result in excess disposable household income and could stimulate further demand
for small household appliances such as toasters, sandwich makers, fryers etc.,
which were not typically a part of Hungarian households in the past.
Additionally, there is a developing and distinctly upwardly mobile
entrepreneurial class, which accounts for about 5 percent of the total
population. This segment of the population has more income to spend on luxury
goods and is less price-conscious. This group has easy access to household
appliances and it is the main purchaser of more upscale items such as automatic
dishwashers, washer-dryers, etc. Imports have increased as a result of CEFTA
liberalization of trade policies and the potential threshold membership with the
European Union. The free trade agreements called for elimination of all duties
on products with the exception of textile and steel products and have increased
business opportunities for European firms through liberalization of trade. U.S.
imports face a more difficult situation due to comparatively higher import
duties for imported American products. 2. Industry Analysis v Household
Appliances Industry Summary 1. The total market for household consumer goods in
Hungary was $589 million in 1998. Consumption is expected to grow slightly and
the total market for household appliances might reach $620 million by the end of
1999. 2. Since the beginning of the 1990s, there has been a much larger product
selection in the Hungarian market in household appliances - especially the white
goods - owing to increased imports and increased local manufacturing of Western
brands which has contributed to rising consumer demand. This development is
somewhat surprising due to an overall drop in real wages over the same period.
Further growth can be expected over the coming years as consumption levels began
to increase last year. Foreign and domestic brand competition has tightened, and
both quality and price now play an important role in consumers' decisions. 3.
The Hungarian market for household appliances relies on imports from a mix of
countries; among the most important ones are European Union countries (led by
Germany), Japan and the U.S. During 1997, the market for appliances in Hungary
grew by more than 8 percent over 1996. The total market is expected to continue
to grow at about an annual 4-5 percent over the next three years. Imports in
1998 were $320 million, representing a 7 percent increase over the previous
year. Imports from the U.S. amounted to $22 million, a slight 2 percent increase
over 1997 import level. Of the $22 million, $16 million were large appliances,
chiefly washers, dryers, dishwashers, refrigerators and freezers, and $6 million
were small appliances. Best prospects in this category are washing machines,
dryers, vacuum cleaners, hair dryers, HI-FI sets and VCRs. The Hungarian market
for household appliances has shown an overall improvement over the past three
years, and is considered to be a promising market for American products. 4.
Household appliances include the following: - Non-kitchen appliances, e.g.
washing machines & dryers; - Small appliances, e.g. hair dryers, irons; -
Kitchen appliances, e.g. refrigerators, microwaves and dishwashers; - Household
electronics, e.g. TV sets, VCRs, HI-FI sets. 5. Market Highlights STATISTICAL
DATA (USD million) 1998 1999 2000 Import Market 320,2 339,2 359,5 Production
410,2 417,5 428,3 Exports 141,0 143,5 144,2 Market Size 589,4 613,2 643,6 US
Exports to Hungary 22 23,1 24,3 Exchange Rates 192 240 278 Source: Figures are
based on preliminary and partial data of the Central Statistical Office 1998
Publications, Budapest, Hungary, on "Foreign Trade Statistics" issued
by the Ministry of Economy, 1998 and "U.S.-Hungarian Statistics"
issued by Kopint-Datorg Market Research Company. Estimated Future Inflation
Rate: 10% Last Year's Import Market Share (Percent for Major Competitors and
US): Germany: 28%, France: 23% Japan: 21% Austria: 13% Italy: 9% U.S.: 6%
Estimated Future Inflation Rate: 10% or below USA: 8%, EU: 37%, Japan: 20%,
Korea: 17%, Others 12%. 6. According to market research, there is continued
demand for household appliances in Hungary. A reason for that is the wide
selection of internationally well known brands already available on the domestic
market. Previously, limited only to products produced by Hungarian manufacturers
("Energomat" washing machines or "Elekthermax" cookers), and
based on poor East-European quality, consumers are now confronted with thousands
of products -- from relatively inexpensive Hungarian and former Eastern brands (Vjatka
- Russian, Eta – former East-German) to the most expensive brands (Electrolux,
Whirlpool, Bosch etc.). 7. The total number of households in Hungary is 3.9
million. Hungarian households spent about an annual 6-7 percent of their annual
income on household consumer goods during the past three years. Most popular
items include: refrigerators, freezers, microwave ovens, washing machines,
spin-dryers, vacuum cleaners and sewing machines. 8. Household appliances are
typically products that are purchased approximately every 5-7 years and
Hungarian populations are considered to be potential customers for these
products. The only variation is that customers either purchase these products in
specialized retail shops and stores or sample "black" market products
in an attempt to try to save money. The black market continues to be significant
for household appliances. Consumers purchase small kitchen appliances (mixers,
coffee/tea makers, and irons) and even microwave ovens or TV sets and VCRs in
the black market. The price level of such products is much lower than of those
in legitimate stores but no warranty is offered on them. 9. Hungary's GDP growth
for 1999 is approximately 4 percent, with a USD 3,600 GDP per capita. Due to
import liberalization policies and Hungarian consumers' preferences for foreign
products, now is a good opportunity for European Union countries and American
firms to penetrate this market. The size of the Hungarian market for household
consumer goods reached $580 million in 1998, and is expected to grow to $600
million by the end of 1999. 10. Based on a marketing survey, only few homes have
electric razors for women or wet-dry vacuum cleaners. Hungarians prefer Braun;
Elin, Moulinex and Philips household appliance brands but Hungarian-made Hajdu/Energomat
hoovers and coffee makers produced in Szarvas (central Hungary) are also among
the top favorites. 11. Based on another public opinion poll, 6 percent of those
asked consider purchasing washing machines and microwave ovens for their
households. Only 3 percent is planning to buy deep-freezer, 2 percent is
planning to buy fryers and only 1 percent said they plan to buy a dishwasher. If
these plans are carried out, Hungarian households with microwave ovens will
reach 40 percent next year, while the ratio for washing machines will be 55
percent. There was a heavy increase in front-loading washing machines; while
only 8 percent of families had such washing machines in 1995 this number
increased to 14 percent by the end of 1998. The top-loading washing machines
have a 40-percent market share but most of the households still have the
traditional washing machines and spin-dryers. 12. End users for household
consumer goods include the following business and private entities: Ø
Importers/Distributors specializing in household consumer goods, Ø Retail
stores selling mixed product lines but representing one or few brands of
household appliances, Ø General Public, End Users and Ø Hotels and Hospitals.
v Competitive Analysis: 1. Domestic Production The major domestic producers are
Electrolux Lehel Hutogepgyar Kft., Hajdusagi Iparmuvek and Elekthermax Rt.
Electrolux Lehel Hutogepgyar Kft. Ø established in 1991 Ø over 3,600
employees. Ø Their manufacturing unit located in Jaszbereny (North-East
Hungary).Ø Electrolux-Lehel is the largest unit manufacturing Electrolux
appliances in Central-Eastern Europe. Ø It manufactures mainly refrigerators
with Zanussi and Electrolux brands. The vacuum cleaner production was taken over
by the Jaszbereny factory only in 1997 when the Italian Electrolux production
unit refused to work in two shifts. Ø More than 80 percent of the production
goes for exports providing good turnover for the company. Hajdu Hajdusagi
Iparmuvek Rt. Ø the oldest manufacturer of washing machines in Hungary. Ø
established in 1952 and transformed into Plc. in 1993. Ø more than 1,000
employees. Ø It has been manufacturing non-automatic washing machines since the
1970s but introduced the new automatic, oEnergomato branded top-load washing
machine in the middle of the 1980s. These brands have been popular in the market
for a long time as spare parts supply was always assured at a reasonable price
and the retail price of these items made them extremely competitive with the
better but more expensive Western brands. Ø Recently, the price level of
Energomat machines has reached the level of its Western competitors so the
number of consumers buying alternative products increased. Ø Hajdusagi
Iparmuvek manufactures not only washing machines but spin-dryers and other small
household machines as well in accordance with Western ISO 9001 standards.
Elekthermax Rt. Ø originally established in 1920 but was privatized in 1990. Ø
Currently, the Dutch Elekthermax Holding holds 97 percent of the shares and the
employees hold 3 percent.Ø around 800 employees Ø manufactures electric and
gas-operated owens, cookers and heaters as well as rost-free taps. Ø Most of
its exports are shipped to Germany, Poland and The Netherlands. Szarvasi Vas- es
Femipari Rt. Ø established in 1952 and transformed into a Plc. in 1997. Ø over
400 employees.Ø Its main activity is production of electric tea and coffee
makers, deep fat fryers and lighting appliances. Its main export markets are
Germany, Romania, Bulgaria, Slovakia and Sweden. 2. Foreign Competitors a)
Third-Country Competition Third-country competition for household appliances is
extremely significant. In general, European Union manufacturers have gained the
largest market shares in the past seven years. German, French, Dutch, Korean and
Italian companies' products are available in all shops and stores specializing
for household appliances. The product lines include refrigerators, washing
machines, vacuum cleaners, hair dryers, and kitchen appliances. Dutch and German
companies concentrate on offering a wide range of kitchen appliances, washing
machines, irons etc. The following European companies are active on the
Hungarian market: Company Source Country Available Products Bosch-Siemens
Germany kitchen appliances, vacuum cleaners, irons Braun Germany hair dryers,
irons, kitchen appliances AEG Germany washing and drying machines Samsung Korea
TV/video sets, microwave ovens Goldstar Korea TV/video sets, microwave ovens
Philips Netherlands kitchen appliances, HI-FI sets Hitachi Japan TV/video sets,
kitchen appliances Sharp Japan TV/video sets, HI-FI sets Panasonic Japan
TV/video sets, HI-FI sets Moulinex France kitchen appliances Candy Italy washing
and drying machines Philips: Philips is one of the major third-country
competitors in the household appliances market. Philips is not only selling but
also manufacturing many of its products in Hungary. It opened its household
appliance factory in Kaposvar (SW Hungary) in September 1998. The new factory
employs 300 people and by 2000, the plant expects to turn out two million home
appliances. Philips has invested about USD 100 million in Hungary through the
end of 1997 and will be investing another USD 75-100 million in 1998-1999.
Philips has a final assembly factory in Szekesfehervar (Central Hungary) where
it produces VCRs, stereo and combi TV sets. Philips has interests in other
ventures in Hungary such as in Philips Car Systems Kft., Philips Monitor Hungary
KFt., PolyGram Publishing KFt., Passive Components and Philips Key Modules
Hungary KFt. b) U.S. Market Position American brands such as Whirlpool and
Melissa Butler are becoming more popular on the Hungarian market although their
market shares are still low, approximately 8 percent. For example, many American
companies are exporting products to Hungary from their European subsidiaries and
warehouses. Whirlpool Hungary: Whirlpool Corporation established its Hungarian
headquarters Whirlpool Hungary in 1992, which is 100 percent owned by Whirlpool
Europe. Whirlpool Hungary is only involved in distribution, logistics and
marketing activities and products arrive in Hungary from the company's Western
European factories. Currently, Whirlpool Hungary has a nationwide partner and
servicing network. Whirlpool Hungary sold about 200 000 white goods in 1998,
which corresponds to a 30-percent increase compared with sales in 1997. The
annual turnover of the company was HUF 6.7 billion. Whirlpool is the market
leader with top-load washing machines and has a 34-percent market share in the
sales of microwave ovens. Whirlpool Hungary has around 300 trading partners in
Hungary that are wholesale, retail units and chain stores. Whirlpool products
are supplied to wholesalers such as Herta, Cash & Carry facilities such as
Cora, Auchan and Metro. Whirlpool Hungary opened its own brand-name show in the
downtown area. Every third household has at least one household appliance with
the Whirlpool brand. 3. Best Sales Prospects: Star Appliances, Inc. considers
the following product lines with good growth prospects: 1. Refrigerators 2.
Dishwashers 3. Washing Machines 4. Microwaves 5. VCR 6. Dryers 7. Hair Dryers 8.
Vacuum Cleaners 4. Competitive Situation The Hungarian household appliances
market has been dominated by Korean, Japanese, Western-European and U.S.
products. Recently, U.S. market share has fluctuated around 6 percent of the
household appliances market. Imports of household appliances into Hungary
account for 55 percent of the total market. Leading suppliers to the Hungarian
market in 1998 were Japan: 24 percent, Europe (EU): 23 percent, Korea: 12
percent, USA: 8 percent, others 12 percent. Next to European and Japanese
products, U.S. products are also appealing to Hungarian consumers, particularly
large appliances, mostly washing machines, refrigerators enjoy good reputation.
Despite the fact that U.S. household appliance manufacturers enjoy a good
reputation in the Hungarian market, U.S. exporters should not be complacent in
assuming that it is an easy market to enter. Companies like GE, Whirlpool, which
have local offices, were able to adopt their product design to meet Hungarian
technical requirements. The fact that the EU has a membership agreement with
Hungary provides more competitive opportunities both in terms of import duties
and freight rates for products imported from Western Europe than for those from
the United States. Dominant brands of household appliances in the market are as
follows: Korea :Samsung, Goldstar and Daewoo; Japan Hitachi, Toshiba, Sanyo;
U.S. GE, Whirlpool; Netherlands Philips, Atag, Pelgrim Germany Thompson, Bosch-Siemens,
Braun, Miele, AEG Hungary Orion Sweden Electrolux Italy Merloni, Candy, Ariston,
Indesit, Nardi France Moulinex, DeLonghi Spain Fagor Market share by product
categories: Washing Machines U.S., German, Hungarian; Vacuum Cleaners German,
Korean, Japanese; Dryers U.S., Japanese, Korean. . Japanese, Korean and German
products dominate mostly the Hungarian household appliances market, except for
washing machines market that has been dominated by the U.S.
"Whirlpool" brand and refrigerators market dominated by the
Swedish-Hungarian brand "Zanussi-Lehel". 5. Product Name HS Code
Import Duty washing machines 8422 9.5 percent spin-dryers 8421 8.5 percent
vacuum cleaners 8509 10.6 percent The Value-added Tax is 25 percent in Hungary
for all these products. 6. Testing procedures: Household appliances must undergo
quality testing before they enter the official Hungarian trade channel. These
testings are done by the Commercial Quality Control (KERMI) and Quality Control
Institute (MEI). KERMI: The most important tasks of KERMI are the testing and
approving of the products as well as registering imported and domestically-made
consumer articles prior to entering the distribution channel. A large number of
consumer goods have to be tested according with Hungarian regulations. This
procedure is regulated by Decree 5/1994 issued by the former Ministry of
Industry and Trade. The most important task of KERMI is testing and approving
consumer products prior to putting them on the market. A large number of
consumer goods have to be tested according to rules. Products without quality
certification cannot be passed through the customs and are not allowed to be
sold. KERMI's activities include: technical testing and analysis, technical and
scientific research, market research and public opinion polls, professional
counseling etc. KERMI requires the following documentation for the registration
procedure: § exact name of the product, the producer and the country of origin,
§ draft of the label and the application instruction in Hungarian, § product
documentation, The information/documentation provided to KERMI should contain
the name of the product, name of the producer and its location, declaration
about the innocuity of the product, name and address of the issuing agency. The
applicant will also be required to submit samples for testing. The cost of the
procedure is between HUF 60,000 - 90,000 (USD 300-450) plus 25 percent VAT. The
exact fee is based on sample; an exact quotation price will be given to the
applicant. A twenty- percent discount can be given in case of serial tests.
Length of the test: 30 days upon the arrival of samples, documentation and the
quoted fee but additional fees will be charged to the client in the case of
urgent testing which can be reduced to 15 days. MEI MEEI Ltd. carries out type
tests to standard, safety tests, product follow-ups, factory inspections and
quality system audits, which serve as a basis for its conformity certifications.
The certification of products according to D1 is carried out against the
Hungarian national standards and/or other mandatory regulations, while in the
case of tests based on D2, the certification takes place against implemented
harmonized standards. The Hungarian national standards are generally identical
or equivalent in their technical contents to the EN/HD specifications or IEC
standards. MEEI Ltd. also undertakes to carry out full or partial type tests and
certifications to standards other than those mentioned above but for which it is
otherwise prepared. The assessment of the manufacturing process for the purpose
of issuing a Certificate for Factory Inspection, may be carried out as follows:
§ on the basis of an on-site assessment carried out by MEEI Ltd., or § on the
basis of audit report issued by an other inspection/certification body acting
upon commission of MEEI Ltd., or § on the basis of acceptance of factory
inspection reports in English (CENELEC MC-6, MC-7), issued by an other
inspection/certification body, recognized by MEEI Ltd., and performed
previously, or § on the basis of evaluation and acceptance of certificate and
audit report, if the manufacturer operates a quality system certified to ISO
9001 or ISO 9002, a filled-in CENELEC MC-6B Questionnaire, proofs on regular
checking of measuring-, testing- and monitoring equipment used during the
process of manufacture or control, in English. 3. Recommendation on Entry Mode
The key issues for consideration when entering Hungary are: Ø The main brands
competing in the market have already established a stable, permanent position;
Ø All main brands have local distributor that sells to retailers providing very
competitive pricing conditions; Ø Retail stores purchasing directly from the
brand representatives dominate the market, this should be taken into
consideration when bringing new products into Hungary. Recommended entry mode
--- Exporting Exporting - Star Appliances, Inc has had experience in exporting
to foreign countries. We have had excellent performance in those countries such
as Canada, Mexico, and Japan. Retail and wholesale distribution is developing
toward western standards in Hungary. In the past, large, state-owned monopolies
controlled distribution, which was largely supply driven. During the transition
period since 1989, the monopolistic state-controlled trading companies have been
privatized and/or broken up, but a smooth-working demand-driven system has not
fully developed and some inconsistencies remain. As a result, consumers cannot
count on a regular supply of goods -- all shoppers are familiar with the
"here today, gone tomorrow" nature of inventory, although the use of
newer technologies, such as electronic data interchange (EDI), is beginning to
improve delivery of goods. Large-scale wholesaling is still embryonic and it is
not unusual for retailing and wholesaling to be combined, sometimes even
together with manufacturing. Although Hungary's retail sector now includes some
larger department stores and supermarkets, small family-run stores are still
quite common. Examples of foreign chains with operations in Hungary include
Auchan (France), Metro (Germany), Michelfeit (Austria), Ikea (Sweden), Baumax
(Germany), Humanic (Austria), Julius Meinl (Austria), Penny Market (UK), Cora
(France), Marks & Spencer (UK), and Tesco (UK). A Hungarian corporation,
Fotex Holding Co., has made a significant impact on the retail sector. Fotex is
involved in such diversified market segments as optical, film developing, audio
media, household appliances/consumer electronics, cosmetics and furniture.
Recently, indoor shopping malls have arrived in Hungary. Star Appliances, Inc.
thinks that it is not feasible to establish a sales subsidiary in Hungary now,
because we would like the customers in Hungary to be familiar with our products
and our company first. We plan to use local agents and distributors, because
they are quite familiar with the Hungarian market. Exporting may minimize the
risk of dealing internationally by exporting domestically manufactured products
either by minimal response to inquires or by systematic development of demand in
foreign market. Exporting requires minimum capital and is easy to initiate.
Exporting is also a good way to gain experience in conducting business in
Hungary. FINANCING The Hungarian Forint (HUF) is fully convertible for business
purposes. Because of a worsening current account deficit, the government moved
to a crawling peg devaluation exchange rate policy in March 1995. Since then,
the HUF continues to be a managed currency with a set monthly devaluation rate.
Most import contracts are secured by an irrevocable letter of credit (L/C) bank
guarantee or involve a bank for remittance against documents. This practice is
appropriate and recommended when there is no past relationship and experience
with the buyer. The most common payment terms in this sector are 30, 60, and 90
days deferred payment depending on the product. Many U.S. commercial banks
provide financial services in Hungary for longtime corporate clients. The cost
of local financing tends to be high (around 25%). Among the major international
financial institutions, the European Bank for Reconstruction and Development (EBRD),
the International Finance Corporation (IFC) and the World Bank have various
project financing programs. Citibank and Bankers Trust are the only U.S.
commercial banks currently in Hungary in addition to several U.S. financial
service companies and consultants present in the market. Hungary is eligible for
all U.S. EXIMBank programs available to American equipment exporters.
Appendices: Market share for White Goods: Whirlpool+ Ignis ElectroluxGroup AEG
Siemens-Bosch Hajdu Gorenje Washing Machines 33% 26% 2% 14% 21% 4% Whirlpool+
Ignis ElectroluxGroup Siemens-Bosch Gorenje Goldstar Refrigerators 6% 74% 9% 7%
4% Whirlpool + Ignis Samsung Moulinex Goldstar Daewoo DeLonghi Microwave 28% 24%
7% 8% 18% 15% Total Market Size in pieces in 1998: Washing Machines (incl.
Fronload, 160,600 - 24% increase compared to 1997 Topload, Washer+Dryer)
Refrigerators: 182,700 - 22% increase compared to 1997 Microwaves: 184,600 - 21%
increase compared to 1997 Source: Figures are based on preliminary and partial
data of the Central Statistical Office 1998 Publications, Budapest, Hungary, on
"Foreign Trade Statistics" issued by the Ministry of Economy, 1998 and
"U.S.-Hungarian Statistics" issued by Kopint-Datorg Market Research
Company. 1. External Environment · Economic – Japan’s economic strengths
have been overshadowed by its difficulties for much of the 1990s. Recession has
brought a serious crisis since 1997. However, the overall economy continued to
grow, companies did not shed great amounts of labor, and research and
development sending went up. The government stepped in with a five-year economic
plan of infrastructure spending. The World GNP Ranking is 2. GNP Per Capita is
US$38160. · Global – There were 5.3 million Japanese Internet users in 1996.
The number is expected to rise to 31,950,000 in year 2000. While these are
mostly businessmen using “the net” in connection with work, the number of
household users is also increasing. 2. Industry Analysis 1. Market Highlights
& Best Prospects (Statistical Data) Unit: million of USD Estimated Annual
Growth Rate 1994 1995 1996 1996-1999 Import Market 962.7 1,520.2 1,640.4 20%
Production 26,624.5 31,201.1 27,022.0 1% Exports 3,256.9 3,187.2 2,701.8 -10%
Total Market 24,330.3 29,534.1 25,960.6 2% Source: JETRO U.S. imports: USD 73.8
million Exchange rates: 102 yen, 94, yen 109, yen/USD Future inflation rate
assumed: 1.3 percent 1996 import market share: U.S.: 4.5 pct, China: 19.4 pct,
Germany: 11.2 pct, Taiwan: 9.3 pct, Thailand, 7.1 pct 2. Imports - According to
JEMA, Japan imported USD 1,640.4 million of electrical home appliances an 8.0
percent increase over 1995 on a dollar basis (25.2 percent in yen terms).
According to JETRO's import data the major suppliers are as follows: Country
1996 Imports Percentage share (In USD million) China 317.7 19.4% Fr. Germany
183.7 11.2 Taiwan 152.3 12.3 R. Korea 125.7 9.3 Thailand 116.1 7.1 U.S.A. 73.8
4.5 Note: The above percentage shows shares of total imports of USD 1,640.4
million. The following tables show the breakdown of overseas suppliers of major
electrical home appliance, by category. 1995 % Share 1996 % Share % Growth
Electric Washing Machine China 13.8 17.4 23.9 29.4 73.1 Philippines 17.0 21.5
17.2 21.1 1.1 Italy 26.1 33.1 14.0 17.2 -46.5 R. Korea 3.6 4.1 10.3 12.7 217.5
Singapore 5.4 6.8 5.3 6.6 -0.2 USA (9th) 0.8 1.0 1.0 1.2 26.9 Other 12.3 16.1
9.5 11.8 --- Total 79.0 100.0 81.2 100.0 2.7 Drying Machine for Clothes USA 0.4
30.9 0.5 33.8 12.9 China 0.2 18.2 0.3 24.3 37.8 Fr Germany 0.3 22.2 0.2 16.5
-23.6 Denmark 0.1 7.6 0.2 14.2 92.5 Taiwan 0.1 10.4 0.1 3.3 -67.2 Other 0.2 10.7
0.1 7.9 --- Total 1.3 100.0 1.4 100.0 3.1 Vacuum Cleaner USA 57.5 50.3 35.2 34.0
-38.8 China 8.5 7.5 20.1 19.4 135.3 Taiwan 16.7 14.6 16.8 16.2 0.6 Malaysia 2.1
1.9 8.9 8.6 317.4 R. Korea 11.4 10.0 6.7 6.5 -40.9 Other 18.0 15.7 15.7 15.3 ---
Total 114.2 100.0 103.4 100.0 -9.4 Source: JETRO 3. Expansion Strategy for the
Future Five Years Star Appliances, Inc started exporting to Japan in 1990. Star
Appliances, Inc has built up good reputation in both product quality and full
after-sale services. According to our research, The market growth rate is
expected to be about 2 percent per year for the next two to three years.
Industry experts say that one key to future market expansion will be to present
electrical appliances which fill an actual need, offer unique but simple
functions, and have sophisticated designs which are not available in existing
products. This market's receptivity to our products is generally good. Our
suppliers of electrical home appliances are advised to note that Japanese
consumers are not generally interested in low priced, low quality products. They
demand reasonably priced, high quality electrical home appliances together with
full after-sale service. In many cases, imported products have to be designed or
modified to fit into the Japanese lifestyle and also to meet the Electrical Home
Appliance and Material Control Law. Best prospects/key success features:
Japanese consumers increasingly seek electrical appliances which allow them to
enjoy higher and more comfortable living standards. In particular, products that
fill obvious needs (e.g., products which offer great convenience, save time, and
offer healthier environments or tastier foods) have bright prospects. For
example: High-power vacuum cleaner - There has been a persistent concern in
Japan about children’s dust and pollen allergies. High-power vacuum cleaners
with advanced technology (especially the ability to deal with dust mites, or
dani in Japanese) are promising. Washing machine (drum-type)- Drum-type washing
machines are relatively new to Japan because the noise and vibration have not
suited Japanese-style housing. However, the first drum-type washing machines
manufactured jointly by a European manufacturer and Sharp Corporation were well
received, and other Japanese manufacturers have begun manufacturing similar
products. In the next five years, Star Appliances will focus on product
innovations and market penetration in our Japan market. We expect an increasing
in sales by 15% by the end of 2004. We are also planning on setting up a branch
office in Japan in 2003. This branch office is a wholly owned corporation by
Star Appliances, Inc. Setting up a wholly-owned subsidiary will involve more
time and expense, but it can offer an effective means to guarantee better
protection for proprietary information, obtain credit and penetrate markets
which have subtle but substantial barriers to imports. Moreover, there is a
perception in Japan that a company with subsidiaries is both more committed and
more substantial and this perception can serve as a powerful selling point for
that firm. A branch office of our company can engage in trading, manufacturing,
retailing, services, or other business. A branch office may take and fill orders
and carry out a full marketing program, including arranging for advertising,
recruiting a sales force and performing all necessary promotional activities. A
branch is liable for payment of Japanese taxes. The branch must appoint a
resident representative in Japan and must register with the Legal Affairs Bureau
of the Ministry of Justice. In addition, the establishment of a branch office is
considered a direct investment under the Foreign Exchange and Foreign Trade
Control Law requiring reporting to the Ministry of Finance through the Bank of
Japan within 15 days after the establishment of the branch office. Setting up a
branch is also for the preparation of entering China in the future. Star
Appliances, Inc thinks that China is a potential market for household
appliances. In order to target more Asian countries, a branch in Asia will be of
great help for local industry survey and trend analysis. We would like to
consider the branch in Japan as a bridge to more Asian markets. 1. External
Environment · Political/Legal - Canada is a young country, but it has a legal
system rich in tradition. Under Canada’s federal system of government, the
authority to make laws is divided between the Parliament of Canada and the
provincial legislatures. Common law, which is used in all provinces except
Quebec, is based on principles that were developed in medieval England. Canada
is also governed by the rules of international law, whether based on custom or
on treaty. The Canadian Dollar is a fully convertible currency, and exchange
rates are determined by supply and demand conditions in the exchange market.
There are no exchange control requirements imposed on export receipts, capital
receipts, or payments by residents or non-residents. Prices for most goods and
services are established by the market. The most important exceptions are
government services, services provided by regulated public service monopolies,
most medical services, and supply-managed and other agricultural products
(including wheat, eggs, poultry and dairy products). The principal sources of
federal tax revenue are corporate and personal income taxes and the Goods and
Services Tax (GST), a multi-stage seven percent value-added tax on consumption.
The personal and corporate income tax burden, combining federal and provincial
taxes and surcharges, is significantly higher than in the U.S. · U.S.-CANADA
Relations - The bilateral relationship between the United States and Canada is
perhaps the closest and most extensive in the world. It is reflected in the
staggering volume of trade -- over $1 billion a day -- and people -- over 200
million a year -- crossing the U.S.-Canadian border. Canada has an affluent,
advanced industrial economy that closely resembles that of the United States in
its per capita output, market-orientation, and pattern of production. Growth in
Canada's export sector should continue to be fueled by ongoing strength in the
U.S. economy and Canada's low dollar. Global disinflationary pressures have more
than offset the negative impact of the low Canadian dollar on import prices and
consumer price inflation. Consequently, Canada's inflation rate is at the lower
end of the Bank of Canada's one-to-three percent target band. Total two-way
merchandise trade between the United States and Canada was US$334 billion in
1998 (Statistics Canada reports the total as C$505 billion). When services and
investment income are included, total two-way trade was approximately US$365
billion, or US$1 billion per day in 1998. (Statistics Canada reports the number
at C$619 billion.) Regardless of which set of statistics are looked at, it is
important to realize the magnitude of the bilateral U.S.-Canada trading
relationship. Canada is the largest single-country export market for the United
States. In addition, total two-way merchandise trade between the United States
and Canada is larger than total U.S. merchandise trade with the entire European
Union, or total U.S. merchandise trade with Japan. 2. Expansion Strategy for the
Future Five Years Star Appliances, Inc has entered the Canadian market in 1980.
In the next five years, Star Appliances, Inc will keep exporting products to
Canada. By the end of year 2004, Star Appliances, Inc expects an increasing in
sales in Canada market by 15%. By establishing a manufacturing in Mexico in
2002, the labor cost and freight cost and overhead will be reduced. The cost of
goods sold will be reduced by 10%. 1. External Environment · Political / Legal
- With NAFTA's entry into force on January 1, 1994, Mexico lowered its tariffs
on U.S.- and Canadian-origin goods. Mexican tariffs on U.S. goods are between
five and 20 percent ad valorem, with the highest Mexican tariffs on agricultural
products and finished motor vehicles. Under NAFTA, tariffs on U.S. goods will be
phased out over a maximum period of ten years, varying by type of good. Sixty
percent of U.S. goods now enter Mexico duty-free. The North American Free Trade
Agreement (NAFTA) continues to be a key factor in boosting Mexican exports and
raising the overall level of economic activity. · Global - The Mexican market
is big: U.S. exports reached US$ sixty-seven billion for 1996. It is also young:
50% of the population is under twenty-five years old. Mexican consumers like
American products. They recognize most U.S. brand names and associate our
products with quality and value. The leading sectors for U.S. exporters are
heavily weighted toward intermediate goods and large infrastructure projects.
Among the leading sectors are: Electrical Power Generation Systems, Electronic
Components, Telecommunications Equipment and Services, Automotive Parts and
Service Equipment, Pollution Control Equipment, Building Products, Management
Consulting Services, and Mining Equipment. 2. Industry Analysis Analysis of
major competitors Washer and Dryers Kenmore - Kenmore has almost 7,000 sales
agents in Europe and the United States. It sells products to 106 nations and
regions. With ambitions to become a “famous global brand like Japan’s Matsu*censored*a,”
It also sells clothes washers to Japan and Mexico. Having chalked up 1996 sales
of $747 million, Kenmore is some distance behind other global appliance brands.
Part of its growth will come from foreign operations. A Mexican plant makes
refrigerators and washers. A Philippine factory is to begin production this
year. Kenmore has built a domestic reputation for quality through the use of
borrowed foreign technology. It is now relying on in-house research, allocating
4% of projected income (equaling almost $50 million) in 1998 and aiming to spend
7-8% of income for research by the end of 2000. Kenmore is developing
environmentally based technology which, Kenmore hopes it will be the “green”
appliance manufacturer. Kenmore also will be turning out new versions of
products tailored to Mexico’s needs, such as a mini-washer that cleans a small
load with little water. Another cornerstone of Kenmore’s operations is
service. It has 2,500 sales and service outlets and a toll-free hotline, and
promises delivery or repair of appliances within 24 hours. Maytag - Founded in
Mexico City in 1947, is nowadays the leading enterprise in appliance sales and
production, as well as in motors and compressors. Maytag operates various
plants, located in Mexico City and four other Latin American countries. Besides
Maytag’s end products, they manufacture their own plastic components, presses,
compressors, transmissions and motors. For more than three decades, Maytag has
refurbished its export industry, making it possible for their products to reach
more than 40 countries in America, Europe and Asia.. With its rounded shapes and
exclusive washing system, Maytag ´s automatic washers offer maximum cleaning
without mistreating the fabric. Its basket, with 6,8 or 10 kilo capacity, is
made with indestructible materials. They have also integrated multiple
independent functions and an innovative ecological cycle that avoids unnecessary
waste of water. All of this supported by a 5-year warranty. General Electric -
From electric appliances, to medical equipment, GE with its multiple divisions,
has a great penetration in international markets, always reflecting its great
innovative spirit. In 1987, with Latin America as a goal and then the rest of
the world, General Electric has established a joint venture with Mabe to
manufacture various GE appliances, like the Hotpoint line of washers and dryers.
GE with a re-known international brand that is well established along with MABE,
the first Mexican appliance manufacturer to be internationally sold shall be
able to capture a great portion of the Mexican appliance industry. Whirlpool -
In Mexico, Whirlpool is dedicated to the manufacturing and selling of ranges,
washer/dryers and refrigerators. With the final goal of making a concept.
Oriented towards young couples, in 1992 the brand made substantial changes in
its products’ aesthetics. Two years later, Whirlpool focused its efforts as a
full-line appliance brand that offers the best security for investment, with
products that last longer for the best price. Under this slogan, a modern, safe,
dynamic, friendly and enduring image is projected. The brand is recognized for
maintaining a durable line of products, with basic features and the best price.
Today, Whirlpool has a complete line of refrigerators of one and two doors,
stoves, ranges, extractors and compact washers with one or two baskets,
automatic and semiautomatic. All of these products are certified under
international quality norms Vacuum Cleaners In Mexico, there is not a single
manufacturer of vacuum cleaners. The reason is that in Mexico there is that a
small, but growing number of the total population that is beginning to modernize
their homes by purchasing tile, hardwood and carpeting for their floors. Most of
the Vacuum cleaners in the market are imported from the United States, Japan and
Korea. 3. Expansion Strategy for the Future Five Years Star Appliances, Inc is
going to directly invest in Mexico in 2002. We are going to set up one factory
in Mexico to be our first foreign production plant. Even though this type of
investment is the costliest of all the modes of into Mexico, Star Appliances
will have enough financial support and enough human resources for this
manufacturing facility. Since our products have entered Mexico in 1985, star
Appliances, Inc has built up a good reputation in terms of product quality and
service packages. Our increasing market share in Mexico has demonstrated that
Mexico will be one of our long-term markets. Labor costs, freight costs, etc.
will be greatly reduced due to a much cheaper Mexican labor force, if Star
Appliances, Inc sets up a manufacturing facility in Mexico. Growth Forecasts for
Years 2000, 2001, 2002, 2003, 2004 Please see attached charts. § Projected
Total Domestic And Foreign Sales § Projected Sales By Country Implementation ·
Contact the Commercial Service of the U.S. Embassy for seeking an agent or
distributor in Hungary through its Agent/Distributor Service (ADS) or Gold Key
program. Further information can be obtained by contacting Department of
Commerce District Offices in major cities in the United States or the Commercial
Service in Budapest. · Need for a local attorney/accountant. As a standard
practice, legal counsel should be retained when engaging in business in Hungary.
All legal work in Hungary must be conducted by an attorney accredited to work as
a lawyer in Hungary. Many contracts require notarization as well. Several
leading U.S. law firms maintain representational offices in Hungary and provide
a wide range of services for their clients. An experienced accounting firm
should be consulted as well. · Consult the Commercial Service in Mexico for
manufacturing information and restrictions. The View Ahead Under the five-year
international expansion marketing plan, Star Appliances Inc. will have better
performance in foreign and domestic markets. Our great achievements will be new
milestones in the history of our company. One of the most important things that
our company has to consider is gaining more markets in Asia. The branch office
in Japan will supply us with insights and valuable information in dealing with
household appliance industry in Asia. The future plans of our company will focus
on dealing with intense competition. The Hungarian market will provide us with
opportunities in exploring other countries in Eastern Europe and Central Europe.
Our integrity, creativity, intellect, and quality will aid us to achieve the
goal that annual sales in Japan, Canada, and Mexico will increase by 15%.
Following our mission statement and company objectives, our company will become
one of the leaders in household appliance industry and the international
expansion marketing plan will be of great importance and benefit to grow our
company internationally. Star Appliances Inc. is looking forward to entering the
new millennium with innovative products and providing outstanding services to
our global customers.