Analyzing the problem

      Acquisition of Belarus tractors by the company’s partners helps to increase the volume of supplied spare parts for them. The most popular models of Belarus tractor are shown in Figure 2.7.

          

      Figure 2.7 - The most popular models of Belarus tractor 

      Also among strategic lines of the enterprise’s activities and its partners on the markets of non-CIS countries in 2011 is an increase the volume of supplied «Belarus» tractors by 20%, opening of assembly lines in Venezuela, China, Serbia and Algeria and sales growth of spare parts.

      In spite of the fact that the world’s economy has begun gradually to emerge from crisis in this year, working conditions remain stretching for the present. Besides, the objective has been set to promote “Belarus” tractors in Pakistan market, export of tractors to Pakistan in fiscal term is predicated at the rate of no less than USD 70 mln.

    Leading managers of the enterprise also have set the bar high with respect to sales of spare parts abroad. In 2011 their export should grow by 20—30%. 
 
 

2.3 Competition the company may meet

      In formulating business strategy, managers must consider the strategies of the firm's competitors. While in highly fragmented commodity industries the moves of any single competitor may be less important, in concentrated industries competitor analysis becomes a vital part of strategic planning.

      Competitor analysis has two primary activities:

      - obtaining information about important competitors;

      - using that information to predict competitor behavior.

       The goal of competitor analysis is to understand:

      - with which competitors to compete,

      - competitors' strategies and planned actions,

      - how rivals might react to a firm's actions,

      - how to influence competitor behavior to the firm's own advantage.

      Casual knowledge about competitors usually is insufficient in competitor analysis. Rather, competitors should be analyzed systematically; using organized competitor intelligence-gathering to compile a wide array of information so that well informed strategy decisions can be made.

     RUE “MTZ” is the only manufacturer of tractors in Belarusian market, but the company has the competitors in the foreign markets.

     The main competitors of the company are:

• John Deere (The USA);
• CNH-Group (The USA and Italy);
• YTO Group (China).

     John Deere is an American corporation based in Moline, Illinois, and the leading manufacturer of agricultural machinery in the world. In 2008, it was ranked as the 102nd in the Fortune 500. Deere and Company agricultural products, usually sold under the John Deere name, include tractors, combine harvesters, balers, planters/seeders and forestry equipment. The company is also a leading supplier of construction equipment, as well as equipment used in lawn, grounds and turf care, such as ride-on lawn mowers, string trimmers, chainsaws, snow throwers and for a short period, snowmobiles.

     As of 2009, Deere & Company employs approximately 52022 people in 27 countries worldwide, including the United States, Australia, Turkey, Canada, United Kingdom, China, France, Germany, Spain, Italy, India, Poland, Mexico, Morocco and South Africa, among many others. Inside the United States, the company's primary locations are its administrative center in Moline, Illinois, as well as various locations in the Midwest and southeastern United States.

     The structure of the company’s products supplied to the different regions of the world in 2009 is shown in Figure 2.8.

        Figure 2.8 - The structure of shipped products in different regions of the world in 2009. 

      Analyzing the data of Figure 2.8 it can be concluded that the majority of the products of the John Deere Company are bought by the USA farms and agricultural companies.

     CNH-Group is a world leader in the agricultural and construction equipment businesses. Created in 1999 through the merger of New Holland N.V. and Case Corporation, CNH today comprises the heritage and expertise of three agricultural brands (Case IH; New Holland Ag; and Steyr) and three construction equipment brands (Case Construction Equipment; New Holland Construction; and Kobelco).

     CNH employs approximately 30,000 people worldwide and has a network of 11,600 dealers in 170 countries. 

     Its 38 manufacturing facilities are located throughout Europe, North America, Latin America and Asia.

     CNH’s product offers encompass a full range of equipment to meet all needs in all regions; from its industry-leading tractors to specialty grape harvesters and massive combine harvesters in agriculture, as well as agile skid steer loaders and powerful hydraulic excavators in construction.

     In agricultural equipment, CNH is one of the leading global manufacturers of agricultural tractors and combines based on units sold and it has leading positions in hay and forage equipment and specialty harvesting equipment. For the year ended December 31, 2009, CNH sales of agricultural equipment represented 84% of net sales of equipment.

     The structure of the company’s products supplied to the different regions of the world in 2009 is shown in Figure 2.9.

        Figure 2.9 - The structure of shipped products in different regions of the world in 2009. 

      Analyzing the data of Figure 2.9 it can be concluded that the majority of the products of the CNH-Group are bought by the USA agricultural companies and then goes Eastern Europe farms.

      YTO Group Corporation is a leading agricultural machinery and construction machinery manufacturer in China. Operated since 1955, manufactures and supplies agricultural machinery, construction machinery, power machinery, vehicles, and parts. The company has a broad distribution network. Today, the YTO Group Corporation manufactures about 80 percent of China’s tractors. Its tractors include both wheeled tractors ranging from 70 to 200 horsepower and crawler tractors ranging from 70 to 150 horsepower. YTO supplies agricultural machinery in more than 100 countries and regions throughout the world.

      YTO Group Corporation employs approximately 22,000 people worldwide and has overseas representatives in 20 countries, assembly lines, and spare parts centers in Asia, America, and Europe.

       The structure of the company’s products supplied to the different regions of the world in 2009 is shown in Figure 2.10.

 

      Figure 2.10 - The structure of shipped products in different regions of the world in 2009. 

      According the data of Figure 2.10 it can be concluded that the majority of the products of the YTO Group Corporation are shipped within domestic market and then goes Asia and Oceania.

      Summing up and analyzing the data of Figures 2.8-2.10 it can be concluded that the main rivals of RUE “MTZ” have gained their market niche in each domestic market. But to assess the competitiveness of the products of the company take a tractor that has the greatest demand. There are the following most popular brands:

• “John Deere” (John Deere corporation),
• “New Holland” (CNH-Group),
• “YTO” (YTO Group Corporation),
• “Belarus” (RUE “MTZ”)

      According to a survey of the main consumers of products the industrial marketing team of RUE “MTZ” was allocated in the most powerful indicators that affect the competitiveness of the product:

• price policy (50%);
• quality (30%);
• after-sales service (10%);
• delivery terms (6%);
• terms of payment (4%).

 

     Assessment of the weight of the parameters of competitiveness is shown in Figure 2.11. 

      Figure 2.11 - The weight of the parameters of competitiveness.

      In order to evaluate the competitiveness of the tractor of different manufacturers use the Delphi method, interactive forecasting method, which relies on a panel of experts.

      Initial data for the analysis of competitiveness are presented in Table 2. Estimates in scores were given by respondents in the range of 1 to 10. According to the results of the analysis, the best brand will be chosen.

     Table 2.2 - Initial data for the analysis of competitiveness of the brand of RUE "MTZ"

     The indicators of competitiveness are calculated by the differential method. The unit rates of the enterprises are represented in Table 2.3. 

     Table 5 – The unit rates of the brand.

 

     The enterprises-manufacturers of agricultural machinery have generally high level of competitiveness.

     The lowest overall index of competitiveness of brand has YTO Group Corporation (0,58). This is primarily due to unattractive price policy and poor after-sales service.

     Thus, the most competitive brand is the brand of RUE “MTZ” because it has the highest total rates of competitiveness due to an attractive price policy and rather good after-sales service.

     The main advantages of the tractors “Belarus” are high quality, reliability, simplicity of maintenance, the wide assortment of accessories for agricultural and municipal works. 
 
 
 

 

3 Setting an assignment

      The enterprises-manufacturers of agricultural machinery have generally high level of competitiveness. Innovation has become a critical factor for commercial success especially in this sphere. Business can innovate in a number of different ways: by launching products with new features; by providing improvement in existing services; by introducing more effective business practices and by finding new markets and sources of supply. Taking into account these circumstances RUE “MTZ” has done enough research in potential markets for agricultural machinery and has come to conclusion that the most attractive market is located in North Africa. Also the state policy is oriented to improvement of the established close trade relationship with developing countries in this region, especially with Egypt. 

      Egypt's economy depends mainly on agriculture, which provides a stable growth of agricultural machinery on the farms of Egypt. There is no plant producing agricultural machinery and equipment here. Therefore the main aim of the state economy of this region is to meet needs of agricultural sector and to find the best supplier of agricultural machinery.

      At present, there are more than 100 tractor plants in the world. But only 8 of them supply with their production 96% of the total volume of the product market. Minsk Tractor Works is among them. 

      A very good relationship is being established between the Republic of Belarus and Egypt both in economic and political spheres. Making business in Egypt offers a large domestic market. That is why in 2009 the turnover between Belarus and Egypt reached USD 25,4 mln. with USD 22,7 mln. of this sum accounting for the Belarusian exports. The first five months of 2009 witnessed the mutual trade turnover at the level of USD 23 mln. There is an assembly production of the Belarusian tractors.

      Taking into account these trade relationships between Belarus and Egypt, RUE “MTZ” provides improvements to existing after-sales service by supplying spare parts during long period of running the tractor.

      RUE “MTZ” will deliver spare parts for tractors on FCA basis. This term is quiet favorable for buyer.  Free Carrier means that the seller fulfils his obligation to deliver when he has handed over the goods, cleared for export, into the charge of the carrier named by the buyer at the named place or point. This term may be used for any mode of transport, including multimodal transport. The seller will pay all the costs up to the name place, including export formalities and licenses. From this point the buyer takes the risks for the goods and transit. This term is used for any type or combination of types of transport. The terms of delivery, offered by RUE “MTZ” helps Egyptian companies save their money on freight costs.

      RUE “MTZ” has many advantages in comparison with other companies:

• the nearest location to Egypt that provides low cost delivery;

     - the best quality-price ratio;

     - less operational and maintenance costs;

     - “Belarus” tractors meet the qualities of worldwide and;

      - the spare parts for the period of running are supplied

     - high profitability of the plant;

     - best price per capacity;

     - long period of running, etc.

     Hereby, Egyptian company “Mahmoud Ibrahim Ibrahim Abouellezz” has took a correct decision to Republican Unitary Enterprise “Minsk Tractor Works” (RUE MTW) as a prospective partner. All business partnership entails business correspondence and negotiations. Thus, all the necessary correspondence and related documentation are to be worked out and presented in the subsequent chapter of the paper.