Group 12

Jainish Korant Pooja Garg

Vignessvar U Saakshi Malhotra
Shaunak Pathak Prateek Ranjan
Sheetabh Tiwari

Case Study: Ecuador: A Rosy Export

Future?
1. Explain each of the trade theories that help to explain Ecuador’s
competitive position in exporting roses.

Theory of Absolute advantage

Natural advantage due to favorable climatic conditions combined
amount of sunlight, fertile soil and the high altitude to make it the
desired growing location.

Theory of comparative advantage

Some of its trading partners have it is cheaper to purchase roses than to
produce them locally in places such as US & Japan

Theory of Factor-Proportions advantage

Vast land size, minimally populated available for cultivation and
agriculture. It has agreeable labor rates, specialization ability

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.