Question:
Discuss about the Voluntary Carbon Business Markets.
Puma Energy can be said as a mid and downstream Oil corporation where the major stakeholders are Trafigura and Angloan Sonagol Group. The organization operates in more than forty-five countries across the globe and the organization is engaged in supplying, refining, storing and distribution of oil and gas in general. Apart from that, the organization gets engaged in retailing some petroleum products. Currently, the organization holds and actively operates more than 2000 service stations and they have 7.9 millions of cubic meters or more than 50 barrels of oil storage infrastructure. The organization in today’s market has recruited over 7500 individuals to their workforce and the organization is head quartered in Singapore presently. The purpose of this report is to shed light on the fact that how the management of this organization can expand their business into the market of Africa and especially in the market of Ghana.
Puma Energy is an organization headquartered in Singapore, has a vision of expanding their business in the market of Africa and especially in the market of Ghana’s fuel market. It is a matter of fact that for the past ten years Puma Energy has been assisting the energy supply or fuel supply market of Ghana. Until today, Puma is operating in several Western, Southern and Central African nations like Mozambique, Malawi, Zambia and many more engaging in supplying commercial and airlines fuel supply, selling lubricants in more than 150 service stations scattered in parts of these countries[1]. In the year of 2010, the concern has merged with Castrol making an alliance for retailing lubricants in the market of Africa. Trafigura Group majorly owns the organization with 49% stake.
In recent times, the organization Puma Energy is totally equipped to provide some bitumen to the road construction organizations. As Ghana is a developing country many works on infrastructures are going on there at this moment. Thus the management of Puma Energy has decided to take the opportunity to make the most out of the lucrative business there and thus the organization wants to expand their business in the land of Ghana in a quite aggressive manner[2]. Puma Energy imports bitumen that satisfies the regional standards of the bitumen according to the qualitative factors. The organization is aiming to provide this bitumen by importing them in large carrier ships for retailing those to the contractors or the organizations who take the responsibility of constructing the roads. Bitumen is an essential ingredient for the construction works of roads and thus in the land of Ghana, selling Bitumen can become a lucrative business in no time[3]. The organization has introduced emulsion-manufacturing units throughout many of the bitumen facilities. The corporation manufactures emulsions for various types of application regarding road, pavements and maintenance reasons and apart from those, they assist in tack coating, prime coating ad surface dressing works. The organizations introduced the fact that cold applications of binders are more environment friendly, as there are no presence of toxic fumes and lesser chance of setting fire and that becomes a big matter of opportunity for the organization for expanding their business in the land of Ghana with providing bitumen for the constructional works in there.
For expanding business in a foreign market, an analysis of the market is very important and a detailed analysis is done on the various factors of market in the land of Ghana in this section.
Political – Puma Energy is an oil company based in Singapore, having their regional offices in places like Johannesburg, Brisbane, Geneva, San Juan and Tallinn. Now they are looking to launch their Bitumen terminals in Ghana. As the far as the political aspects are concerned, Ghana, with their stable political government provides a perfect platform with well set up democratic institutions to make sure there is good governance. Another important aspect is that the labour force of Ghana is extremely cost-effective and adaptable in nature[4]. Above all the Government is always keen to welcome investors from abroad and there are lot of incentives available to inspire entrepreneurs for starting their operations in their land[5].
Economic – Ghana’s Economic Recovery Program is framed to ensure economic productivity for a reduced cost to the Government and thereby lead to lowering of inflation through strict fiscal and monetary policies. The economic policies of Ghana ensure transparency and accountability for each operation. There is a participatory approach to the economic scenario that is aimed to focus on broad consultation and building consensus among the public. Therefore, the imperative thing for Puma Energy would be to abide by Ghana’s economic policies and carry out their operations in a smooth and secured manner to prevent hindrances from hampering their business[6].
Financial – Financially, Ghana provides ample of opportunities and benefits to the investors. Puma Energy needs to carefully analyze the financial aspects of Ghana by looking into the corporate tax rates applicable, which would always vary from the one, existing in their native region. There are various incentives related to the location, where the business gets set up, which Puma can avail for carrying out their operations in a free and fair manner. The tax percentages vary from one sector to another. For instance, 8% is applicable for income from exports in non-traditional sector, 25% is allotted for Hotels and 35% is applicable for all other sectors. To be particular about looking into the financial aspects, Puma Energy should do proper research by going through business journals and magazines so that they are acquainted with the rates prevalent for them[7]. Most importantly, the minimum capital, which needs to be invested for launching the business, would have to be taken care of in a systematic manner. This is where, the importance of launching a business in an appropriate location comes into play by taking into consideration the cost of living which would obviously help in determining the amount of money they can raise from the market[8].
Legal- A business is always bound a country’s legal rules and regulations, which get framed by the Government. The legal framework of Ghana ensures regulation of businesses and corporate bodies to be governed by the principles specified under the Companies Act, 1963. Legal registration of businesses is of utmost importance and organizations need to acquire the certificate of registration and a certificate to commence business, which would be issued by the regulatory body, The Registrar’s General Department, without which businesses, irrespective of their type, sole proprietorship, limited liability or an enterprise, would be considered as an illegal entity[9]. Puma Energy has to ensure legal compliance, which would extremely important for them to consider, before they look to establish themselves on the territories of Ghana. Maintaining the books of accounts, to give an idea of the shape that the business is in, whether they are making profit or incurring losses, is a necessity.
Cultural – Any business, which looks to set up a branch on foreign soil, one of the most essential things they need to consider is the culture of that particular region. Culture is nothing but the mindset and traditions which people of a particular region possesses, through the habits developed over a long period of time. There are more than 100 ethnic groups, which reside in Ghana. Akan’s Ashanti Tribe is one of the largest tribes of Ghana. People in general share a very strong bonding among the families and for them, living their lives with honour, dignity and good reputation matter a lot[10]. Puma Energy should look to cash on and mould their employees in such a manner, so that they gel with the cultural aspects of Ghana. Conducting their business through clarity and transparency, with no hidden agendas, would go a long way in capturing people’s attention and thereby make their business profitable.
After building a loyal customer base in the domestic market, organizations tend to expand their business in the international market and for this reason the organizations needs to be aware of all the factors that can affect a productive business venture and the management thus has to act accordingly[11]. It is seen how Puma Energy has grown rapidly in the past few years and they have achieved the capability to expand their business in the market of Ghana for providing bitumen to their organizations or contractors for building roads and pavements. There are various factors that the business leaders must take into considerations regarding expanding business to a foreign market, for an example, it can be said that they have to think that whether they can build a loyal and potential customer base in the new market or not and how profitable their venture would be in an unknown market. Some factors that may pose issues for expanding business in a foreign country are provided in this section of this report[12].
Different cultural norms in different country can become an issue while expanding the business and it is seen how successful business organizations face obstacles regarding this issue while operating in a country where cultural differences plays a vital role in determining the profitability of the business[13].
Each country has different tax codes and for a successful expansion of business the management of the organizations needs to take into consideration that they need to learn the different tax codes and learn the business regulations and packaging standards of that country. Just like the tax codes, the packaging standards differs from country to country and it is seen how organizations needs to incorporate directions in various languages to ease the issue[14].
In some countries the business world moves in a very rapid manner and it is seen that in some cases business does not move maintaining the same growth rate. Thus before expanding their business to the market of Ghana, the management of Puma Energy needs to be aware of the fact that their business might now grow as rapidly as they have noticed earlier in their domestic market[15].
The management of the corporation must be aware of the fact that they have to build the reputation from nothing in the foreign market as they cannot carry the good will and reputation they have in their domestic market to the foreign market where they are trying to expand their business[16]. It is seen that there are some organizations whose reputation is wide spread and thus they do not have to be bothered about building a reputation in foreign market, but for most of the organizations to taste the success, has to build a good will or reputation for a steady growth of business in an unknown market. The management of the organization has to ensure that the products they are selling are of the highest quality than the goods people are getting from the domestic organizations. It is a matter of fat that if Puma Energy delivers the products of highest quality they can easily replace the domestic organizations and become a successful organization.
The organization needs to plan in a way so that they can share the amount of loss incurred or the share of profit with the stakeholders just to distribute the matters of concern. While expanding business globally, in most cases management of business organizations tends to merge their organization with a reputed brand hailing from that particular country, where the organization is attempting to expand their business[17]. It is a matter of fact that, if the organizations choose the right business partners they would surely become successful in lesser time and thus it has become a very popular idea to expand business with a partnership between two or more than two business organizations.
To operate business in a foreign market with efficiency, Puma Energy will e needing a strong market entry strategy and in the current scenario, choosing joint venture option would be perfect for an organization like Puma Energy[18]. In this context, Puma Energy is trying to expand their business to a foreign land where they want to provide bitumen for the construction of roads and pavements. Ion this scenario they must collaborate with an organization that has some reputation in that domestic market to earn the faith of the customers and in this manner in lesser time Puma Energy would be able to make a firm loyal customer base. There are some merits and demerits of joint venture and considering all those options it is seen that for an organization like Puma Energy, Joint venture would be the most suited option[19]. It is a matter of fact that there might be some issues of matter of conflicts between the partners while operating the business, but it would be wiser to try to eradicate all those issues and to look forward to build a strong relationship with that partner organization and take the path of glory and success working together on it. In the joint venture, the motive of the workforces of Puma Energy should be to maximize the advantage gained from the partnership and to maximize their own competitive position in the unknown market[20].
Conclusion
Thus to conclude, it can be said that, Puma Energy has a big brand value and if they want to expand their business in the market of Ghana by providing bitumen for construction of roads and pavements, it would be wiser to make a joint venture in an unknown market to share the liabilities. In short, analysing all the factors, it can be said that providing bitumen in a nation which is developing and the development growth is quite on the higher side it would be a great opportunity for the organization to expand their business in the land of Ghana.
References
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Bayon, Ricardo, Amanda Hawn, and Katherine Hamilton. Voluntary carbon markets: an international business guide to what they are and how they work. Routledge, 2012.
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