Export Case Study free essay sample

Company was founded in 1970 in Moscow, and executes government’s assignments on export of precious stones and metals such as platinum group metals, emeralds, amber, diamonds (rough and polished), silverware, nuggets and jewelry. Company imports consist of primary of pearls and special equipment. According to Russia National Classification of Economic Activities (RNCEA), company is registered under following activities: 1. Wholesale trade and commission trade, except of motor vehicles and motorcycles 2. Wholesale trade through agents (for a fee or contract basis) 3. Agents involved in the sale of fuels, ores, metals and industrial chemicals 4. Agents involved in the sale of ores and metals 5. Agents involved in the sale of precious metals â€Å"Almazjuvelirexport is a shareholder of precious stones cutting factories and trading companies in Russia, Western Europe and the U. S. , controlling 80% of â€Å"RussAlmaz† in Antwerp as well as participates at major jewelry exhibitions across Russia and abroad. â€Å"The markets of these goods are extremely complicated and strongly monopolized, thats why highly rofessional specialists are needed to work on them as well as reliable, long-standing contacts with foreign partners and a good knowledge of the market situation, and all these qualities characterize experts of Almazjuvelirexport. Company has a strong reputation of a reliable partner† Russia is full participant in the global diamond and jewellery industry. Country is the worlds first largest producer of diamonds by weight, and the second in the world by cost. Russia is on the third place by polished diamonds cost and quality of polishing has been a leader for decades. Traditionally, significant jewelry manufacturing in recent years feels unprecedented growth, driven by consumer boom. Russias position is unique in the sense that all other countries are part of a single diamond pipeline, and involved either in diamond mining, or diamond polishing, or in the production or the consumption of finished jewelry. Russia is not just characterized by commodity orientation; it has all the elements of the diamond pipeline, from the richest diamond reserves in the ground and to a multitude of existing and potential customers. To sum up, in 2010 the Russian market is estimated as $ 3 billion on raw materials, $ 1. 2 billion on diamonds and $3 billion on ready precious jewelry. SITUATION ANALYSIS STREIGHTS| * VTB Bank and Almazjuvelirexport are connected by long history of cooperation, due to the mutual interest of the parties in comprehensive future development; strategic partnership agreement between bank and company took place. Implementation of the agreement requires the involvement of VTB as one of the main credit agencies for an integrated banking group and its subsidiaries. VTB is one of the major and most trustfully banks. * In 2011. Russia’s Gokhram foreign association has allocated to Almazyuvelirexport about 24 tons of metal palladium for export sales. * Official income statement is under secret and forbidden for public use. However, the worse sales established as $10,7millions in 2008. Company exports 6% of Russia’s precious items. * 3. Convenient European location, developed infrastructure, distribution. | WEAKNESES| The major weakness of the company is the lack of equipment, there is no national producer of enquired machines. Technological aspect overall is slightly weaker comparing to worlds standards. | OPPORTUNITIES| * EXTERNAL MARKET1. Liberalization of the markets for platinum group metals. Integrate an action plan for the gradual liberalizationof the PGM market by establishing alliance international trading company with major producer such as† Norilsk Nickel† ( world’s largest producer of nickel and palladium ) or â€Å"Polyus Gold† ( Greatest national gold producer). Such actions might do dramaticallychange not only for Russian market, as well as increase in price for exports. * INTERNAL MARKET2. Cooperation with more national banks. Capital increase, strategic agreements. | THREATSTHREATS| * EXTERNAL MARKET:1. Decline in production and distribution of rough diamonds. Due to depletion of the mineral resources for rough diamonds. However, company engages in the field operations with lower quantity of diamonds and is building four underground mines to offset dwindling production levels. Accordingly, in the medium term is not expected to reduce the volume of production achieved today in natural rough diamonds (by weight) and in value terms, as evidenced by The main directions of the ALROSA Group by 2018. 2. Market growth of substitute natural diamonds (synthetic diamonds)Production of synthetic diamonds and gems is highly valued but the volume is still relatively small. Natural diamonds retain their high symbolic value, as well as an aura of authenticity and rarity in the eyes of consumers. Therefore, risk of being eliminated from the market by synthetic diamond producer is estimated to be insignificant. * INTERNAL MARKET3. High import tax for special equipment. Due to most of special equipment imported from foreign producers, constant changes in custom regulations and duties among with weakling position of Russian Ruble , may carry a certain risk associated with increase in price for acquired assets. However, from other side recent involvement in WTO might low import tax. | Bibliography 1. The Golden Book of Moscow Businesses, part 1. 2. Www. Almaz. ru GENERAL INFORMATION 3. http://www. diamanters. ru/about_RAiB. htm INFORMATION ABOUT RUSSIAN DIAMOND MARKET 4. http://kommersant. ru/doc/272410 COMMERSANT MAGAZINE, COMPANY NEWS 5. http://www. vtb. com/group/press/news/releases/84805/ VTB BANK AGREEMENT INFORMATION 6. http://www. jewellerynews. ru/process/news. html? action=keywordamp;keyword=%C0%EB%EC%E0%E7%FE%E2%E5%EB%E8%F0%FD%EA%F1%EF%EE%F0%F2 NUMBERS 7. http://en. wikipedia. org/wiki/ALROSA RESEARCH -THANK YOU- [ 2 ]. The Golden Book of Moscow Businesses, part 1.