Thailand has just reclaimed our throne as the number 1 rice exporter from India in Q3 2014 thanks to the cancellation of the rice deposit scheme that allows Thai rice prices to float naturally. But before this, many Thai rice exporters almost died from unrealistically high rice prices. From this situation, it could be seen that most Thai rice exporters rely solely on price.
Since different rice markets have different conditions, Africa market was selected from the highest Thai rice import region. Factor analysis was done and came up with 2 main criteria that extremely influence the buyer selection criteria for Thai rice exporters. The results of this study really gave a new insight and will be really useful for Thai rice exporters to win in the global field.
In order to free Thai rice exporters from this price war trap, the author would like to find out important factors that influence the supplier selection criteria of rice buyers that are not simply the lowest price. As different markets may have different preferences, the author chose to look at the African market, which is the largest importing region for Thai rice according to statistics compiled by the Thai Rice Exporters Association (Thai Rice Exporters Association , 2014) in Figure 1.2.
Background of Thai rice exporting business
LITERATURE REVIEW
Supplier Selection Criteria
The results show that the most important supplier selection criteria are still 'product quality' and 'delivery compliance', while 'price' is in third place. Hogg, A., Kalafatis, S.P., & Blankson, C., conducted studies to understand the importance of 16 variables in the customer-supplier relationship in the British rice trade. The important variables that customers used to consider their rice suppliers in Britain are listed in Table 2.2.
These attributes are the main issues to be negotiated in Thai rice trade contracts and should not be overlooked as they affect buyers' supplier choices. From the studies mentioned above, the author chose the widely cited supplier selection criteria and some interesting variables to study in this thematic paper to see how these criteria affect the selection of Thai rice exporter for the African market and to identify criteria that may override the lowest price criterion.
Conceptual Framework
- Payment Terms
- Freight Terms
- Product Quality
- Delivery Reliability
- Production Capability
- Financial Stability
- E-Transaction Capability
- Trustworthiness
- Service
- Flexibility
In this study, the author focuses on the normal price situation when Thai rice prices fluctuate based on market supply and demand and competitors. The choice of payment terms is agreed upon based on the trust and risk aversion of buyers and sellers. Since rice trading in Africa requires international shipment, the terms of the goods, such as Ex-work, CIF and FOB, are one of the key issues that must be specified even before quoting to determine the ownership of the goods, the responsibility of buyers and sellers during transportation and total costs to sellers.
Since the word "reliability" is quite broad, the author focused on reliability in the delivery of goods in order to be more concrete and avoid different interpretations. Delivery, albeit with different formulations in different studies, has often been found to be among the top three most important criteria for supplier selection, so this criterion should not be overlooked but carefully examined in this different context. In order to avoid business disruptions and certain risks, buyers also consider the financial stability of suppliers, especially when large amounts of money are involved before receiving the goods, such as advance payment.
This factor was also considered as one of the essential important criteria in the selection of suppliers in previous studies. This makes it an interesting factor that we should try to prove in Thai rice trading context. Although the African market usually focuses on low price, the author would like to investigate how much importance buyers place on credibility, compared to the UK rice market.
Service is usually one of the features that create value addition to the business and get more margin, so the author would like to find out how the service works in this commodity business. Service in this context will cover various packaging solutions for customers, documentation service, response to customers. Flexibility, in this case, means the ability to serve what customers request beyond companies' standard procedure and adjust companies' process to be in line with customers' requirements.
Flexibility can lead to more complexity for the company, so the author would like to check whether it really pays to give Thai rice exporters more flexibility in the business process and how important it is to buyers.
METHODOLOGY
Sampling Size and Qualifications
Data Collection Method
To look at deeper details of each variable, mean scores of each variable were also examined and discussed.
RESEARCH FINDINGS
Results and Analysis
Based on this result, building company profile and trust with new customers was the first priority that Thai rice exporters should focus on instead of just offering a remarkably low price to attract customers, as it is actually the main concern of almost all buyers to the African market. From this result, we can identify the space for Thai rice exporters to add value to their products and services. Thai rice exporters will have to change their perception and focus more on the quality of the rice to increase their competitive advantage in the market instead of simply cutting the price and slimming their own revenues and profits that can actually be raised.
Services" and "Flexibility" are another important criteria that should concern Thai rice exporters more as these criteria have a lot of influence on buyers' selection criteria, much higher than price, judging from their average scores on high at 9.5 and 9.33 compared to the average scores of "Low Price" at 7.83. However, from the significant difference that the results have shown, it is worthwhile for exporters to start changing their personnel attitude and form the organization at a higher level. high for the development of the export future of Thai rice in the global market. It is also important that Thai rice exporters show their financial stability and present their ability in managing cargo readiness and reliable delivery time, such as promised new customers, convincing new customers who enter their door even more relaxed and reinforce buyers to sign a contract with rice exporters are more secure.
This shows the tremendous impact of “authenticity” on buyers' selection criteria for Thai rice exporters. This finding really provided a new insight, as the general understanding of the low-price market was that price should be the most important factor for buyers. Exporters usually let their fortunes flow with the ups and downs of rice prices and surrender to competitors who can offer a more competitive price in the hope that the price of Thai rice will drop and become competitive again. However, this result showed otherwise with a high level of importance of "authenticity" in selecting Thai rice exporters for the African market.
With this high weight, it is a must that Thai rice exporters work harder to build credibility for their own business as a first priority, push up their credibility as an opening value proposition to their customers, and build their company name as a guarantee brand that foreign buyers can trust . This value creation will increase the Thai rice market from a perfectly competitive or commodity market, and polish the Thai rice market to a higher level above competitors in India and Vietnam. "Flexible services" is also a high significant factor in selecting Thai rice exporters, which should not be missed in exporters' strategy.
Thai rice exporters should look at their service level as another priority or along with building.
DISCUSSION & CONCLUSION
Conclusion
Recommendation
- Building company name
- Increasing service level and flexibility
The marketing department should focus on promoting company names as names that customers can trust worldwide, turning company names into guaranteed logos for credibility and reliability. However, it takes many years to achieve this through continuous promotion through exhibitions, creating greater brand awareness and credibility of the companies' long-term services in the global market. The stakeholders involved in this phase, in addition to sales and marketing, are the customer service department, which takes care of the operation and documentation process.
All the sales representatives and customer service agents must ensure that everything they promise can be delivered on time and take reliability and professionalism as their value proposition to their customers. This will help maintain companies' credibility with customers in the long term, which is very important for building companies' credibility as happy customers can be other references to build companies' fame. Being responsive, service-oriented, friendly and empathetic is also very important to provide good and flexible services.
These qualifications can be formed as unique and selling points of Thai rice exporters, different from exporters in other countries. The company should start taking action on tangible activities that can be effective immediately first such as offering more sizes and types of packages, different modes of transportation, good documentation services. For the intangible factor such as responsiveness, service mindedness, friendliness and empathy, this is the value that the management team must create in the organization, which may take some time to result, depending on the employees.
All these actions are very essential for Thai rice exporters to grow into recognized rice exporters in the market, allowing Thai companies to differentiate themselves from other increasingly competitive competitors. This will help to lift the Thai rice exporter out of the perfectly competitive market and provide a value-added proposition to the commodity market that has been using pricing strategies all this time, as the results of this article have shown that 'credibility' and 'flexible services' are much more important than the competition. more important to the selection criteria of Thai rice exporters for the African market than “Product Price”.
Limitations
