Case Study 2 - Market Entry Strategy - Opportunity or Challenge

IBS 806 Inc. has been breeding bass and trout fish locally in Muskoka. The breeding serves two purposes. The success of the company for the past 10 years is based upon breeding for re-populating the lakes around the region. The more recent venture dealt with the large surplus that was produced. Partnering with a fish processing plant IBS 806 has locally successfully produced and sold frozen filets. The partner suggested that they also distribute the frozen fish products in Sweden, under a major product label. Their partner has suggested that they process the filets here in Muskoka and package, label with the Swedish company brand. that can distribute it in Sweden. Your partner knows the processed frozen filets is of higher quality then is sold in Sweden, and could be exported abroad quite profitably. IBS 806 Inc has contacted the Canadian government and enrolled in small business export initiatives. This has enabled the company to attend aquaculture conferences abroad and offered the opportunity to network, ultimately leading to contact with Gsta Fish & Seafood AB, a Swedish wholesaler

Gsta Fish & Seafood AB (Gosat) was eager to negotiate a contract for two tonnes of both bass and trout to distribute to clientele throughout the country. Gosat's preferred method of payment is a Letter of Credit. The documents required were a commercial invoice, the insurance policy, a marine bill of lading and a certificate of quality. Goata has arranged to have its fish inspected by a nationally accredited standards organization. Both parties agreed in their contract that IBS806, will pay freight to port Copenhagen and will also insure the shipment.

The Canadian Food Inspection Agency (CFIA) reports that the fish to be exported is of superior quality, with a fat content of 11 percent. The certificate of quality includes a code for superior quality and states a colour code that is standard to the DSM SalmoFan. Colour coding is a common practice in the fish industry and provides a method of standardization for something as subjective as colour. Both in production and sales, colour is the most important

Buyers can request information on the colour of a delivered lot in the form of a number corresponding to a colour number on the SalmoFan.

IBS806 submitted all of the requested documentation to its local bank, which was acting as the advising bank for the Letter of Credit. The documents were forwarded to the issuing bank in Sweden but rejected because the certificate of quality was vague, and it could not ascertain whether the shipment had passed its quality certification.

Quality Questions

Although IBS806 attempted to get the certificate of quality amended, it was unable to get the document changed. So, the Letter of Credit expired, and payment was not released. At IBS806 request, the documents were then sent directly to the buyer for payment. Gosat then insists on inspecting the shipment upon arrival. Gosat is not an experienced bass/trout importer, and usually deals with Spanish bluefish and Irish Arctic char. The importer is not in disagreement that the shipment has passed quality inspection. Upon Gosat inspection, it claims that the fat content of the stock is much higher than claimed in the quality inspection. It rejects the sale and will indicate that it accepts substitute goods but is claiming damages for loss of profit. IBS806 management wonders if it needs to rethink its exporting strategy.

QUESTIONS

2. Which shipping vessels would be most appropriate for IBS806 to ship their product to Copenhagen? Explain your choices.

4. Would IBS806 have benefited from employing a freight forwarder? Explain.