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MGT5STR Strategic Management: Australia Agribusiness Sector

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This assessment focuses on your understanding and appreciation of Strategy Implementation. You are required to use the corporation selected for the assessment.

This report should include the following items:

  • Discussion of Australian Food focused Agribusiness sector.
  • Identify international opportunities for your chosen Food focused Agribusiness.
  • Discuss different international strategies suitable for your chosen Agribusiness.
  • Discuss the most appropriate and inappropriate mode of entry to the international market for your chosen agribusiness.
  • Make recommendations for the future strategic direction of the selected Food focused Agribusiness in the chosen international market.

Answer:

Introduction 

In the current era, the companies need to implement the strategies which are required to survive in the competitive market across the world. Moreover, these strategies are linked to the growth of the business across the world. The report is based on the Batlow Apples which was already taken in the previous assessment. The company has a huge presence in the market of Australia and customers can easily access the products through supermarkets and greengrocers (Batlow, 2018). This report will talk about the growth of Australia's agribusiness sector. This leads to the opportunities for the business in other markets across the worlds which are discussed with the international strategy that is implemented by the company. The entry modes that are appropriate or inappropriate are discussed with the future suggestion for the chosen market. The market where the opportunities for the company are available in India.


Australia Agribusiness sector

Agribusiness in Australia is and will always be working as the pillar support of the country. This sector is diverse which is evident as it involves agricultural services and products across the food supply chain. The sector is currently on the mature stage with a large number of companies who are dealing in this sector. This has been found that the value of the agribusiness sector is predicted to increase with the annualised of 2.5% in the coming 10 years which means 2022-23 (IBIS World, 2018). In addition, the food and agribusiness sector is an essential part of the economy of Australia as it is able to contribute to the economies of regional areas. This sector contributes with the help of employment, business and service opportunities that are present within the market (Australian Government, 2018). The sector of Australia agribusiness and food is considered as the iconic part of the identity. Accordingly, the industry is predicated as $256 billion dollars which are further expected to grow. Agribusiness is expanding their business operations in other markets. In the international rise, the major focus is in Asia in the middle class because it is growing in food and fibre demands. There are certain opportunities and challenges which have been found in 2017 for the Australian food and agribusiness sector.

  • Farms that are present in Australia produce enough food which helps in meeting the needs of 80 million. Further, they have the opportunity to export the agribusiness and food products in the overseas market (Minter Ellison, 2018).
  • Increase in regulations related to the food raises a concern related to the safety/purity which is important in this sector. This is the reason due to which it is considered as the fundamental value proposition for exporters of Australia.
  • Ag Tech is an essential part of Australian agribusiness directions in future which arise through GPS tracking, sensors and many others.

International opportunities for Batlow apples 

Over the last 95 years, Batlow has grown to become one of Australia's most elite producers of fresh and fruit-derived products. The company follows their rich heritage which is apple growing due to which the company still offer a delicious range of fresh apples that are grown in the farms of Australia (Batlow, 2018). The company is currently making their all the products available in Australia and with this company is exporting their products in 100 countries. Though, this is the fact that they don’t have the physical presence in these markets (Pedersen, 2017). Batlow apples have vast business opportunities for expanding their business operations in the countries of Asia. According to the analysis, this has been found that with the population of 132.42 crores there is the presence of the large and growing market of the food products in India. Accordingly, the market of India is appropriate for the Batlow (Rabo Equity, 2018). Some of the opportunities that are present in the market include: -

Demographic profile

The demographic profile of the country includes younger population, increase in the income, an increase in urbanisation with the changes in the lifestyles pattern of the country. Along with this, there are changes in the patterns of food consumption as people are steadily changing in favour of the branded and packed food with the easy kitchen solution and the health foods (Agribusiness Australia, 2018). This leads to the rise in the food and agribusiness with the rise in demand for healthy products which include apple, cherries, juice and cider which is suggested by every doctor.

Growth in agribusinesses

In the market of India, agribusinesses are predicated to contribute more than 30% to India’s gross domestic product. Moreover, the rise in the contribution leads to the several new opportunities which include the rise in employment of the workforce which is approx. 45.5% as per the recent survey that was conducted by the Labour Bureau (Iyer and Singhi, 2018). This shows that the economy of the country will increase which ultimately contribute to the growth of the agribusiness sector.

The rise in expansion opportunities 

The expansion of Batlow apples in India will further lead to business opportunities in the region of Asia because the country will help in forming foreign contacts with other companies across Bangladesh, Pakistan and many others. The expansion in the country will help in generating the high revenue.  

International strategies

International strategies are the strategies which are used by the companies while dealing their operations in the international market. These strategies include Multi-domestic strategy, global strategy and transnational strategy (Rothaermel, 2015). The strategies which are used by the Batlow apples are discussed below: -

Multi-domestic strategy 

The strategy includes that the company attain the maximum response from the local customer by offering customized products to them. Batlow Company exports their products in the different market which is done by the company considering the needs of the importers (Grünig and Morschett, 2017). The importers evaluate their market and identify the needs of customers so that they can demand the right products at the right quantity.  

Global strategy 

The global strategy is one of the effective international strategies which show that organisation is offering their products and services beyond the borders. The strategy is applied by the company so that they can meet their objective of being the leading company and to earn a profit in the market (Holmes Jr, Hoskisson, Kim, Wan and Holcomb, 2018). Batlow Company follows this strategy as under this they export products in more than 100 countries across the world which means they have the presence in the international market. Furthermore, they have to make their products easily available in every departmental and supermarket across the world (Hitt, 2016).

Transnational strategy 

In this international strategy, the company sell their products in different countries across the world. The company doesn't consider the local needs of the customers as they focus on supplying their products in the market (Hitt, Li and Xu, 2016). Batlow Company makes use of this strategy as they export their products in many countries where the demand of the products is not clear due to which the company don’t consider the local demand of the people and export all the products that they have with them.

Mode of market entry 

Market entry mode is the way through which the company can enter to expand their business operations. There is the presence of different types of market entry mode that can be used by the company to enter the market. These modes include exporting, licensing, joint venture, franchising and many others (Hollender, Zapkau and Schwens, 2017). Batlow Company also enter into the market due to which the below-given discussion is related to the most appropriate and inappropriate mode of entry.  

Appropriate mode of entry- Exporting

Batlow is able to make their presence in countries outside Australia with the help of the exporting mode of entry. This shows that exporting mode of entry is the most appropriate mode of entry in which the company can sell their products in other markets according to their needs (Musso and Francioni, 2014). This mode of the method is better than the other mode of entry because the company is not supposed to expand the huge amount of taking a license or opening their stores in other countries (Shen, Puig and Paul, 2017). The mode of entry is advantageous for the company as it will enhance the sales, market share and profit of company which is an ultimate goal of Batlow. The company will get to know the needs of the other countries which will help them in diversifying their business operations (Stoian, Rialp and Dimitratos, 2017). This will lead to the growth and success of the business. The exporting mode of entry will allow the company to expand their life cycle related to the product which leads to the increase in the profit of the company.

Inappropriate mode of entry- Franchising 

Franchising is considered as a most inappropriate mode of entry because in this entry mode one party allow the other party right to use the trademark of the company (Ang, Benischke and Doh, 2015). Batlow Company is managing the business operations from Australia only and opening a franchise will not do because they supply fruits which need particular climate which will be available in some of the countries. Along with this, the Batlow Company needs to get into the formal agreement with the other party which include the legal proceeding. This leads to a rise in the risk factor and also the additional cost that is linked with it (Queensland Government, 2018). The bad performance by the other franchises can affect the reputation of the company which is the negative side of selecting this mode of entry. In addition to this, there are many other factors that can affect the working of the company if this mode of entry has been selected by them.

Recommendations

This section of the report includes the recommendation related to the future strategic direction of the Batlow Apples in the international market of India that has been selected for expansion.

  • This is suggested to the company to expand their business in the Indian market with the help of exporting because the products of the company are not available in India. This will help the company in generating the profit which is the ultimate motive of the company.
  • It is suggested to the company to fetch for the new opportunities in the Asian market. This will not only improve the image of the company in the market but will also enhance the possibilities of diversification and business expansion.
  • The company will get to know about the culture of the Asian countries which will help them in understanding the demands of Asian countries. Further, it is suggested to make use of this knowledge in their business operations.

Conclusion 

In the end, it can be said that Batlow Company needs to implement the strategies in the competitive market. The report reflects that the sector of agribusiness of Australia is predicted to increase in the coming years due to which there are opportunities for the companies to expand the business in the overseas market. Further, the report includes the opportunities for Batlow apples in the market of India where they can export their products. The need for healthy food is increasing in the market of India due to which the companies can get the benefit of the high amount of sales which ultimately leads to a rise in the profit of the company. The discussion related to the international strategies that reflect that the company follow multi-domestic strategy, transnational strategy and global strategy in the overseas market. Along with these strategies, the company need to decide the market entry mode which is selected by them for entering into the market. This has been found that an appropriate mode of entry for the company is exporting with this the most inappropriate mode of entry for the company is franchising. In the end, the suggestions have been shared with the company related to the strategic future actions that are required to be taken by the company for future growth.

References 

Agribusiness Australia (2018) Agribusiness Australia [Online]. Available from: https://www.agribusiness.asn.au/about-us/overview [Accessed on 14th October 2018]

Ang, S.H., Benischke, M.H. and Doh, J.P. (2015) The interactions of institutions on foreign market entry mode. Strategic Management Journal, 36(10), pp.1536-1553.

Australian Government (2018) Food and Agribusiness Industry [Online]. Available from: https://archive.industry.gov.au/industry/IndustrySectors/FoodManufacturingIndustry/Pages/default.aspx [Accessed on 14th October 2018]

Batlow (2018) About [Online]. Available from: https://batlow.com.au/about/ [Accessed on 14th October 2018]

Batlow (2018) Contact us [Online]. Available from: https://batlow.com.au/contact-us/  [Accessed on 14th October 2018]

Batlow (2018) Home [Online]. Available from: https://batlow.com.au/ [Accessed on 14th October 2018]

Grünig, R. and Morschett, D. (2017) Developing international strategies. New York: Springer Berlin Heidelberg.

Hitt, M.A. (2016) International strategy and institutional environments. Cross Cultural & Strategic Management, 23(2), pp.206-215.

Hitt, M.A., Li, D. and Xu, K. (2016) International strategy: From local to global and beyond. Journal of World Business, 51(1), pp.58-73.

Hollender, L., Zapkau, F.B. and Schwens, C. (2017) SME foreign market entry mode choice and foreign venture performance: The moderating effect of international experience and product adaptation. International Business Review, 26(2), pp.250-263.

Holmes Jr, R.M., Hoskisson, R.E., Kim, H., Wan, W.P. and Holcomb, T.R. (2018) International strategy and business groups: A review and future research agenda. Journal of world business, 53(2), pp.134-150.

IBIS World (2018) Agribusiness - Australia Market Research Report [Online]. Available from: https://www.ibisworld.com.au/industry-trends/market-research-reports/thematic-reports/agribusiness.html [Accessed on 14th October 2018]

Iyer, A. and Singhi, A. (2018) Indian Agribusiness [Online]. Available from: https://media-publications.bcg.com/Indian-Agribusiness.pdf [Accessed on 14th October 2018]

Minter Ellison (2018) Australian food and agribusiness 2017 key themes [Online]. Available from: https://www.minterellison.com/articles/australian-food-and-agribusiness-2017-key-themes [Accessed on 14th October 2018]

Musso, F. and Francioni, B. (2014) International strategy for SMEs: criteria for foreign markets and entry modes selection. Journal of Small Business and Enterprise Development, 21(2), pp.301-312.

Pedersen, D. (2017) A fundamental shift for Batlow Apples [Online]. Available from: https://www.theland.com.au/story/4662796/batlow-apple-growers-hand-over-the-reins/ [Accessed on 14th October 2018]

Queensland Government (2018) Advantages and disadvantages of buying a franchise [Online]. Available from: https://www.business.qld.gov.au/starting-business/buying-business/buying-franchise/advantages-disadvantages [Accessed on 14th October 2018]

Rabo Equity (2018) Food and Agribusiness [Online]. Available from: https://www.raboequity.com/food_and_agribusiness.php [Accessed on 14th October 2018]

Rothaermel, F.T. (2015) Strategic management. New York: McGraw-Hill Education.

Shen, Z., Puig, F. and Paul, J. (2017) Foreign market entry mode research: A review and research agenda. The International Trade Journal, 31(5), pp.429-456.

Stoian, M.C., Rialp, J. and Dimitratos, P. (2017) SME networks and international performance: Unveiling the significance of foreign market entry mode. Journal of Small Business Management, 55(1), pp.128-148.

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