Introduction
The prime market for exporting the high tech equipment manufactured and distributed by International Logistics Inc. is Cyprus. This region prioritizes high tech products, which means that the market expects that the niche value-added manufacturing activities can facilitate a renaissance in innovation as well as productivity. According to Stravos Pantzaris (2017), Cyprus is considered one of the markets that constitute innovative followers. Coupled with the fact that the region constitutes a sophisticated logistics and transport infrastructure, Cyprus offers a considerable number of advantages for a producer that is focused on expanding into new markets. Organizations that are interested in creating links with the region can benefit from its EU and euro-zone memberships, including the existing tax advantages. Businesses that are located in Cyprus are placed to supply the new as well as the existing markets in the region, which benefit from the island’s well-developed infrastructure as well as the highly skilled labor force.
The advantages and challenges of doing business in Cyprus
Apart from being a service-oriented economy, the Cyprus market is significantly dependent on imported goods. One of the primary reasons for doing business in Cyprus includes the fact that the culture and the legal system in the region are the same as those observed in the U.K. and the U.S (McCollum & McCollum, 2015). In this light, it is possible to posit that the products and technological development from the U.S. are well-regarded in Cyprus. On the other hand, the country has been a member of the European Union for more than a decade. In addition to the identified provisions, doing business in Cyprus is easy since it is located strategically regarding being at the crossroads of Africa, Europe, as well as Asia. Given that International Logistics Inc. focuses on the exportation of high-tech technology, the Cyprus market could be considered as a new export region because of its advanced infrastructure as well as its telecommunication network (McCollum & McCollum, 2015). An extensive network of the first-rate sea and air routes connectivity characterizes the market.
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The International Logistics Inc. can also benefit from the market regarding the available market opportunities. Different sectors that are inclusive of the health sector, technologies for the protection of the environment, financial services, as well as the development projects for tourism infrastructure depend on the technologies, brands, as well as the services from the United States (Pantzaris, 2017). On the other hand, Cyprus is drawing international attention, consequently growing to become an emerging destination for the growing hub of investing. According to Pantzaris (2017), some of the attributes of the success of Cyprus are inclusive of the market’s progressive legislation, its regulatory regime, as well as the existence of suitable financial and professional services providers. The government and the institutions in the country are committed to maintaining leadership in different fields that are inclusive of industry development. The institutions focus on the provision of access to high-growth markets, which support a company’s unique journey for growth.
In spite of the strategic location of the country, the educated workforce, the good tax system, and the sophisticated infrastructure, one of the challenges that the business can face relates to the complicated regulatory environment. The service-based, free-market, and modern economy of Cyprus provides investors with the opportunity to invest and grow. The tertiary sector of the services provided in the region could be regarded as the foundation of the economy. Conversely, the strong consumer market and the high income per capita can ensure business growth. However, the strong level of consumerism, as well as the country's healthy national GDP, has not affected the cost of doing business in the country. The Registrar of Companies has to approve of a business that might be starting up in the country, which is the initial navigational procedure for doing business in the region. Consequently, before starting a business, the company should prepare a memorandum as well as the articles of association, which should then be submitted to the companies section existing in the Department of Registrar of Companies as well as the Official Receiver prior to the registration of the company at the Ministry of Commerce (McCollum & McCollum, 2015). Registering at the Ministry of Commerce is vital for ensuring the company's compliance with tax requirements. Additionally, the company has to register with the Ministry of Finance for VAT, including the registration with the Ministry of Labor for the provision of social security contributions (McCollum & McCollum, 2015). The registration processes can consume a significant amount of time.
The other element that can consume a considerable amount of time includes dealing with the country’s construction permits. Acquiring property considerations consume a considerable amount of time and can be costly. For instance, getting construction permits can take more than 600 days, which is a provision that supersedes the average number of days it takes to acquire construction permits in OECD countries, Eastern Europe, as well as Central Asia (McCollum & McCollum, 2015). In spite of this provision, doing business in Cyprus can be beneficial to International Logistics Inc. primarily because of the region’s strategic location. Since the region is an island economy, the country has managed to keep the cost of international trade down. It takes a short period to import or export products, which is a provision that would be significantly beneficial to the company.
A Supply Chain Assessment
The fragmented value chain partners characterize the supply chain in the high-tech equipment industry. According to Cecere and Chase (2013), International Logistics Inc. has to be able to manage the growing technological innovation effectively to seize revenue opportunities and to sustain their customer base. For this reason, it is essential for the company to structure its supply chain capabilities in an appropriate manner, which is a vital consideration that can enable it to respond to the surge in demand for its products. On the other hand, the company has to have the operational maturity required for the absorption of short-term decline because of technological migration as well as the market downside.
In the high tech industry, capacity investment constitutes substantive cash expenditure, a volatile market demand, and changing supply or technological specifications. In most cases, the cost drivers are not related to material provisions but the depreciation of the equipment. This situation calls for the need to consider the utilization of resources as a valuable part of the supply chain. At the operational level, the definition of capacity planning support models is difficult. The applications can be made across the different manufacturing models. Additionally, justifying the models for making planning decisions can be based on the demand patterns in the new market, as well as cost-benefit analysis (Cecere & Chase, 2013). The capacity investment choices have to supersede the operational roadblocks, consequently inviting novel management issues for the primary process stakeholders involved in developing solutions to the emerging problems.
The component logistics as applicable to the company is complicated primarily because of a large number of the needed components with long delivery-lead times as well as production. For instance, the lead-times might differ by several days, weeks or even months because of sea transportation. This situation can create bottlenecks or huge inventories in the supply network because the real demand and the time variances might not match with predetermined forecasts. For this reason, it would be vital to consider combining a push-based supply chain as well as a pull-based demand chain. The consideration can assist in synchronizing the production and the delivery of all the product parts that have huge lead-time gaps (Yang, 2011). The pull principle is applicable at the internal production steps and the delivery end, whereas the push principle applies to the supply end. The push principle will also assist in keeping inventories needed for absorbing the impact of an inaccurate forecast. For this reason, the demand-supply network has to have enough tolerance necessary for avoiding undesirable conditions such as production stops because of the lack of critical components in the supply chain.
A Transportation Plan
Getting the company’s products to the customers is also another vital exportation component. The transportation plan incorporates the element of exportation, which is one of the less complicated market entry methods. In this light, it is vital to consider using the services of a freight forwarder, who will assist in moving the shipments between the domestic location and the foreign market. To acquire the services of a suitable freight forwarder, the initial consideration would involve interviewing the potential freight forwarders in the market, who can assist in selecting the appropriate shipment procedure for the business and the overseas market. The freight forwarder should be well versed with the regulations in the U.S. market, the import regulations of the foreign market, the most suitable methods of shipping, and the documents utilized in foreign trade (Mason & Lalwani, 2007). The freight forwarder should be capable of assisting with the company's orders from the start by providing advice on the freight costs, consular fees, insurance, handling fees, and port charges. The information collected from the freight forwarder will assist in preparing price quotations. On the other hand, the cost for using their services should be a legitimate export cost that should be factored into the price charged to the consumer.
In preparing the company’s products for international transport, it is vital to consider the mode of transport to be used. The most appropriate transport method that can be used in this case is through sea transportation. The fundamental reason for considering this mode of transportation is based on the idea that maritime shipping is not as expensive as airfreight (Yujin & Zhiyong, 2013). Given the need to consider using maritime shipping, it will be vital to factor in the additional costs that characterize sea freight, which include surface transportation to the dock. Since the company’s products are not perishable, maritime shipping would be appropriate. For this reason, the time value of the funds used to ship the products is suitable.
The other element to be considered when transporting the products internationally is the aspect of documentation. Proper documentation, as well as appropriate packaging, is critical to the transportation process. One of the fundamental differences between selling products in the domestic market and exporting is the documentation required. Even though the paperwork needed in exporting might be costly or burdensome for the company, compared with the documentation required for domestic sales, the process should not deter the company because the benefits attached to exporting products outweighs the task demands. Even though the freight forwarders are responsible for filling most of the documentation, the company is responsible for ensuring the accuracy of the information. One of the most important documents that should be filled is the marine insurance. This document is vital for ensuring that the company receives compensation of the good transported to the new market in the event of a loss that the carrier cannot recover legally (Mason & Lalwani, 2007).
Recommendations for Implementing the Transport Plan
During the implementation of the identified transport plan, it is vital to consider following an integrated logistics approach. In this case, appropriate logistics practices require the implementation of a strategic approach when transporting goods from the parent company to the new market. For this reason, the initial consideration would be the creation and integration of different links in the company’s supply chain with a view of doing away with duplication of efforts. This elimination will also assist in minimizing transportation expenses. Strategic planning for transportation is essential for the establishment of an integrated supply chain network (Yujin & Zhiyong, 2013). In this light, it would be vital to use the services of a third-party logistics provider since it is an effective means of developing the most suitable transport strategy for the business.
Since the business focuses on the manufacture and sale of high tech equipment, it would be vital to consider using the services of a freight forwarder. A freight forwarder can be considered as an invaluable ally for the company in terms of negotiating the most efficient and cost-effective approaches that will be used to transport the products. Freight forwarders have global networks that can be used to handle cargo of any size and to any destination effectively (Mason & Lalwani, 2007). The ocean carriers can offer Full Container Loads (FCL) shipments at low costs, which can make it possible for the company to save on costs and time. For the company to establish itself in the new market, it will be vital to consider using ocean freight since it is a logical transportation solution, given the types of products being transported to the new market.
Conclusion
To conclude, it is vital to point out that Cyprus is one of the prime markets that International Logistics Inc. should consider for exporting the high tech equipment it manufactures and distributes. In spite of the challenges that the company might face when considering venturing into the new market, it can derive immense benefits given that Cyprus is a service-oriented economy and depends heavily on imported goods. The island is also strategically located, which means that doing business in the region will not be difficult. On the other hand, the government and other institutions in the country are committed to maintaining leadership in different fields, consequently focusing on providing the company with access to a high-growth market that can support International Logistics Inc. with the opportunity to grow. These are among the elements that should be considered when looking to invest in the new market.
References
Cecere, L. M., & Chase, C. W. (2013). Bricks matter: The role of supply chains in building market-driven differentiation . Hoboken, New Jersey: Wiley.
Mason, R. & Lalwani, C. (2007). Transport integration tools for supply chain management. International Journal of Logistics Research and Applications, 9 (1), 57-74.
McCollum, C. & McCollum, A. (2015). Doing Business in Cyprus. Retrieved from https://uk.practicallaw.thomsonreuters.com/9-500-3980?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1
Pantzaris, S. (2017). Doing business in Cyprus: Your strategic investment hub. Retrieved from https://www.ey.com/Publication/vwLUAssets/Doing_business_in_Cyprus_Your_strategic_investment_hub_eng/$FILE/Doing_business_Cypruslowres.pdf
Yang, D. (2011). Optimization of Product Change Process and Demand-Supply Chain in High Tech Environment. The University of Oulu.
Yujin, L. & Zhiyong, Z. (2013). Technical Methods of Comprehensive Transport Plans in the Airport Economic Zone. Procedia - Social and Behavioral Sciences, 96 , 182 – 187.
