Assignment on International Economics

Introduction

Rathna Producers Cinnamon Exports (PVT) Ltd. is a major exporter of Pure Ceylon Cinnamon, Cinnamon Powder, Cinnamon Leaves, Sesame Seeds, Sesame Oil, Citronella Oil, Black Pepper, Cloves, Garcinia Rings (Goraka) and Coffee, to major markets in the world. As the outcome of this activity to recognize the different types and mode of international business operations and also what are the motivations to go abroad (Proactive motives & Reactive motives)

Rathna Producers Cinnamon Exports (PVT) Ltd is one of the largest exporter of Cinnamon in Sri Lanka and is considered to be one of the major foreign exchange earners to the country. The company is now an internationally recognized exporter approved by the Board of Investments in Sri Lanka. In recognition of quality assurance in its manufacturing process, the ISO 22000:2005 standards certification for Plantation Management, Harvesting, Processing, Packaging and sale of Cinnamon was awarded to the company in the year 2008. While making a difference in the field as well as in Sri Lanka, helping in its social and economical development, the company contributes to uplift Cinnamon Exports trade in Sri Lanka. With a wealth of knowledge in the industry and the global market, The Managing Director, Prof. Piyatissa Runage holds membership in SAPPTA, The Spice Council, National Chamber of Commerce, Matara District Chamber of Commerce, Federation of Chamber of Commerce & Industries in Sri Lanka and Kamburupitiya United Trade Association, thereby actively involved in helping Sri Lankan exporters and traders to develop their businesses.

Major reasons to go abroad for Rathna Producers Cinnamon Exports (PVT) Ltd

Given the limited size of Sri Lanka's domestic market, targets set by the government on export growth cannot be met without a significant improvement in export performance. This difference draws the important distinction between whether the motivations to export are principally reactive or proactive motive. Both export product categories and destinations need to be diversified. One of the examples of reactive strategies are : Companies may seek new markets abroad to utilise their production facilities to their full capacity. In these circumstances companies may well embark on marginal pricing and sell at lower prices on the export markets, seeking only a contribution to their overall cost for their home base market. Folllowing reactive motives would be :

* circumstances in domestic market conditions

* the availability of production capacity

* the opportunity to increase the number of country markets and reduce the market-related risk

* requested orders from overseas customers

Proactive motives for exporting include market diversification. If a company sees only limited growth opportunities in the home market for a proven product it may well see market diversification as a mean of growth. This could lead to identify new market segments within a domestic market but it may well lead to geographic expansion in foreign markets. Thus companies try to spread risks and reduce their dependency on any one market. Equally the firm may identify