Case Study: Ecuador: A Rosy Export Future?
Week 4
1. Explain each of the trade theories that help to explain Ecuador’s competitive
position in exporting roses.
The production of roses and the climate that embodies Ecuador is a
competitive advantage in itself. The country is a biodiversity hotspot
due to the variety of the country and it’s location, thus, making it a
prime location to grow roses. Not only are there plenty of roses, there
are plenty of workers to harvest those roses too. The rose bushes are
even safeguarded by twenty foot high plastic sheeting and not to
mention the combined amount of sunlight, fertile soil and the high
altitude to make it the desired growing location. With a prime spot to
produce the beautiful flower it allows for a bigger head and the most
pulsating of colors. Becoming a premium rose has elevated it to
having superior price and being sold all throughout the world. The
trade theories that help explain Ecuador is the absolute advantage and
the factor proportions theory. These two theories touch on the
environmental advantage and the cost of production that can be found
among the country.
2. What trade theories do not help explain Ecuador’s competitive position in
exporting roses? Why do these theories fail to explain?
Some of the trade theories that do not explain Ecuador’s competitive
position are the comparative advantage and the country size theory.
Ecuador’s trade embodies many specialty products with their roses
being one of them. Many other countries also harvest roses but not to
the premium quality of Ecuador roses. Generally, we see small
countries have much of a dependence on large countries but it is the
opposite effect in in this market of roses. Ecuador is approximately
the size of Colorado and to know the capability it has when supplying
roses to the United States and the greater part of Europe is quite
remarkable.
3. Look back in Chapter 1 to the factors in increased globalization and explain
which factors have influenced the growth of world trade in cut roses and
why.
Flower contracts these days can be large an extensive due to the
demand for the product and over the years Ecuador has grown their
operations due to increasing sales and improved technology. The
expanding sales have grown the market of roses due to the demand
for the product. Not only have sales increased, but technology has
improved over time, having an effect on market globalization too.
Technology has improved many of the processes with the roses as the
supply chain and lean manufacturing has been targeted to eliminate
unnecessary waste in the process, thus lowering cost (Technology and
Globalization).
4. Think back to the external environmental conditions (cultural, legal-political,
and economic) discussed in Chapters 2 through 4 and discuss how these have
affected and might affect future demands for Ecuadoran cut roses.
The external environment has a large effect on everything from the
labor market to economic stance of the country. A few cultural factors
that come into play is the language and dialect when it comes to
communicating with other countries. Wealth of the nation and the
style of government also come into play when looking at the external
environment (Growth and Stability). The legal and political factors
will be anything from the social factors and ethics to the taxation that
can be put on the product itself. Ecuador is generally a poor country
so cost of exporting roses is fairly reasonable when comparing them
to out countries that grow the magnificent flower.
5. There are a number of ways that Ecuadoran growers might increase demand
for their cut roses. Among these (a) to try to get more consumers to move
up-market by buying premium roses, (b) to promote more rose demand for a
different special day, and (c) to promote sales in relatively untapped
markets, such as the Middle East. Compare these and any other alternatives
that you can think of.
In order for customers to move up-market by buying the premium
roses you must change consumer demand, and that is no easy task. A
way of going about this is to promote more “special” days throughout
the year. Valentine’s Day is fast approaching and it is the day that
calls for the most roses and an in-demand premium product. It is
hard to create more of these special days but if companies can
promote other days or special events it will increase demand for
Ecuador roses. Advertising can then be targeted through this process
and it would have to be more of a collaboration between business to
actually make a difference and set a day apart with its sales if they
want to be anywhere close to Valentine’s Day numbers. Ecuador
could also look to expand to other parts of the world. An area that I
would look to target would be the Middle East and the reason I would
target them is because of the cultural they have and their relation and
value of roses.
6. Some countries have had success by promoting the nationality of their
product, such as the Juan Valdez campaign for Colombian coffee and the “If
it’s Danish it’s good” campaign for Danish agricultural products. Discuss the
viability of the national campaign to promote Ecuadoran roses abroad.
Having a specialty product that embodies what your country is about
is a great marking tool. Building up the Ecuador roses will only bring
a higher price as more countries find out the premium quality that is
created due to the roses coming from Ecuador. There also tends to be
a lack of control from the growers. That and the ignorance of the
market that they partake in could hurt Ecuador if they don’t get a
grasp on their business to really understand the full potential it has.
Promoting the many natural resources in Ecuador can also be a
strength for the country since many parts of the world are looking for
more unique counterparts. Ecuador really should be proud of their
roses. There are several different angles this can go but it is in
Ecuador’s best benefit to market using its many strengths.
Works Cited
"Growth and Stability." External Environment. International Monetary Fund, n.d.
Web. 30 Jan. 2014.
"Technology and Globalization." Information Technology. Globalization 101, n.d.
Web. 28 Jan. 2014.
Wholesale Flower Variety Ready for Exporting." Rozen Valley, n.d. Web. 1 Feb. 2014.