MGT5STR | Strategic Management | Analysis Of The Plan For Expansion

Answer:

Discussion based on agribusiness industry of Australia

The agribusiness industry of Australia has been an important pillar for the development of different industries in the country. The increase in levels of attention in the industry is based on different market forces and local forces. The different changes have thereby been seen by the traders, retailers and processors in various markets. The growth based potential of the agribusiness industry of Australia has been able to develop optimism within the community in order to open up different job opportunities and the development of various new technologies. The fragmented approach of Australia towards the agribusiness and agriculture based opportunities is able to lead the different cultural, financial and the emotional loss (Albino Pimentel, 2015).

The agribusiness industry in Australia has been able to show huge levels of growth in the last few years. The organizations which operate in the agribusiness industry of Australia are thereby able to play a major role in the growth. The agribusiness industry of the country is thereby able to develop an effective place in the economy of Australia. The diverse climate and the patterns of rainfall in Australia play a major role in development of the agribusiness sector. The different advantages that have been gained by the sector include, geographic isolation, monitoring regime and leading quarantine. These factors are thereby able to affect the ways by which agribusiness sector of the country is able to grow (Alden & Nariswari, 2017).

About the company

Treasury Wine Estates is a winemaking based organizations which operates on a global level. The company distributes the wine based products in different parts of the world and the headquarters of Treasury Wine Estates is located in Melbourne, Australia. Treasury Wine Estates operated under the wine based division of the international brewing organization named Foster’s Group. Treasury Wine Estates was established in the 19^th century when a large number of wineries were started (Tweglobal.com., 2018).

The wine division was thereby started by the organization named Foster’s from the year 1995. Foster’s was able to develop the wine into one of the biggest wine making organizations in the world. Foster’s acquired another major wine making organization named Southcorp which led to the addition of different famous brands which include, Penfolds, Lindeman’s and Rosemount. The organization has been working with the company named Accolade Wines in order to promote the efficiency in different areas of the world (Tweglobal.com., 2018).

The report will be based on the analysis of the ways by which Treasury Wine Estates can expand its operations in other areas of the world excluding the areas in which the company already exists. The type of market entry which can be used by the company in order to enter the country will also be analysed in the report.

Identification of the international opportunities for the company

Treasury Wine Estates has been able to acquire the position of one of the biggest wine based producers in the world. The company also has a vision to develop its effective position in the industry and also to become a celebrated organization. The organization has thereby expanded its operations in different parts of the world with the help of its products. Treasury Wine Estates can use the international opportunities in order to increase its revenues and presence many other areas of the world. The country which can be selected by the company in order to expand its operations is Singapore. This will be helpful for the company to increase the levels of revenues in an effective manner (Boso, Hultman & Oghazi, 2016).

According to Casillas & Moreno-Menéndez, (2014), the change which has taken place in the trends in behaviour of the consumers is considered to be an important opportunity which can be explored by the company. The lower rates of shipping based costs have been able to affect the cost of production which has further increased the levels of opportunities for the company. The organization has been able to develop its position in the industry with the help of its long term operations. This will act as a major opportunity in order to expand its operations in other parts of the world. The organization further enjoys stable cash flows which has been able to act as a major strength and has provided Treasury Wine Estates with an opportunity to develop its operations effectively.

Discussion of different international strategies which can be used by the company

International business strategies mainly refer to the different plans which are able to guide the different commercial transactions which take place among the entities which operate in different countries. The actions and plans that are thereby undertaken by the private organizations are thereby helpful in increasing the profitability levels and revenues in an effective manner. The organization has aimed at developing a culture which is led by the consumers and the brand. The culture of the company has been transformed by the Global Chief Marketing Officer of Treasury Wine Estates in the year 2015 (Cavusgil et al., 2014).

As discussed by Eckman et al. (2015), the culture was thereby transformed from a just a wine producing organization to a consumer-focussed business. The transformation of culture of the organization was a tough task, however, the CMO had aimed at making the transformation within a time period of 12 months to 18 months. The wine-making based culture of the company was mainly centred towards the vineyards and the ways by the products are manufactured. The transformation of culture involved the customers and the value which has been developed by the brand in the industry. The wants and needs of the consumers are analysed in order to detect the expectations which they have from the products of the company.

Treasury Wine Estates needs to implement the strategies which have been already developed after the transformation of the culture of the company. The organization needs to analyse the needs and demands of the customers in Singapore in order to enter the market. The revenues and profitability of the company is thereby based on the ways by which the customer base can be developed. The levels of engagement of the organization with the distributors and the customers will play a major role in the operations of Treasury Wine Estates in the new country (Gowers, Paj?k & Klusa, 2018).

According to Haapanen, Juntunen & Juntunen, (2016), the organization thereby needs to develop the communication based activities in order to maintain the diverse portfolio of the brand. The growth based strategy which has been implemented by Treasury Wine Estates was based on differentiating its products and operations from the other organizations in the industry. The company can aim at driving the growth in the new country with the help of increased supply of high-end wine. The two major parts of the growth strategy are based on supply perspective and the marketing perspective of Treasury Wine Estates.

Discussion of appropriate and inappropriate entry mode of the company

According to Hitt, Li and Xu, (2016), the entry of new organizations in new countries and market areas are based on the ways by which they are able to start their operations and increase profitability levels as well. The different market entry based modes which are used by modern organizations include, exporting, franchising, licensing, wholly owned subsidiaries, strategic alliances and joint ventures. The entry based modes which are used by the organizations are based on the levels of investment which are made by them in different areas of the market.

As argued by Hoffman, Munemo and Watson (2016), the market entry which can be used by Treasury Wine Estates in order to enter Singapore is strategic alliance. This entry mode will be helpful for the company in order to increase the profitability levels and presence of the organization in different parts of the world. Treasury Wine Estates can develop its operations in the country with the help of merging its operations with the organization named The Straits Wine Company. The Straits Wine Company has been operating in the country from the year 2006. The company has been able to become one of the leading importer of wine in entire South East Asia. The organization operates 9 retail wine based bars in different areas of the world which include, New Zealand, Australia, Italy, Spain, USA, Lebanon, India, Switzerland, Japan (Sleuwaegen & Onkelinx, 2014).

Treasury Wine Estates can aim at entering the wine market of Singapore with the help of merging the operations with The Straits Wine Company in order to increase the profitability levels. The entry of the company in the market with the help of strategic alliance will prove to be successful and profitable in nature (Sui & Baum, 2014). The alliance of Treasury Wine Company with The Straits Wine Company will thereby prove to be effective for the expansion based plans that have been made by the company. The market entry mode of strategic alliance will thereby be useful for the operations of Treasury Wine Estates in Singapore as the company has used this process in different areas with the help of this strategy (Reardon, Coe & Miller, 2015). The company has developed its effective position in the industry with the help of strategic alliance with the local organizations.

The market entry strategies which will be inappropriate for the entry of Treasury Wine Estates in Singapore are franchising and wholly owned subsidiaries. The two strategies are highly inappropriate for the expansion of the company as the implementation of the strategy of wholly owned subsidiaries requires high levels of investment (Wu & Chen, 2014). On the other hand, the implementation of the franchising based strategy will require the effective knowledge of the market in which it plans to enter. The lack of effective knowledge based on the market will play a major role in the success of franchising based market entry strategy. Treasury Wine Estates thereby needs to avoid these strategies in order to enter the wine market of Singapore (Zander, McDougall-Covin & Rose, 2015).

Recommendations for future operations

The major recommendations which can be made to Treasury Wine Estates in order to enter the wine market of Singapore are as follows,

• The organization needs to analyse the demands and needs of the customers in the new market area.
• The approach which had been used by the company in order to operate previously included the development of vineyards and production of wine as well. The new approach which can be used by the company in Singapore is based on needs and demands of the customers and brand value of the company as well.
• The organization can analyse the market and needs of customers with the help of the alliance which has been made with the organization named The Straits Wine Company. The local market and needs of local customers can be analysed effectively with the help of the organization which operates in Singapore for many years.
• The company can be recommended to develop the supply chain of the company and provide the products to customers within a short period of time.
• The effective cash flow based levels of the company can be used as an opportunity by Treasury Wine Estates in order to develop the operations in different new market areas.

Conclusion

The report can be concluded by stating that Treasury Wine Estates can increase the levels of its profitability in an effective manner with the help of strategic alliance. The strategic alliance of the company with the organization named The Straits Wine Company which has its operations in Singapore will play a major role in the ways by which the local market can be captured and revenues of the company can be increased further. The company will be able to increase the levels of its presence in the industry with the help of effective expansion in different parts of the world. The organization will be able to increase the revenues effectively in order to increase the presence of Treasury Wine Estates. The most important part of the expansion plan of the company is based on the ways by which it is able to fulfil needs of customers in different areas of the world.

References

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Alden, D. L., & Nariswari, A. (2017). Brand Positioning Strategies During Global Expansion: Managerial Perspectives from Emerging Market Firms. In The Customer is NOT Always Right? Marketing Orientationsin a Dynamic Business World (pp. 527-530). Springer, Cham.

Boso, N., Hultman, M., & Oghazi, P. (2016, July). THE IMPACT OF INTERNATIONAL ENTREPRENEURIAL-ORIENTED BEHAVIORS ON REGIONAL EXPANSION: EVIDENCE FROM A DEVELOPING ECONOMY. In 2016 Global Marketing Conference at Hong Kong (pp. 999-1000).

Casillas, J. C., & Moreno-Menéndez, A. M. (2014). Speed of the internationalization process: The role of diversity and depth in experiential learning. Journal of International Business Studies, 45(1), 85-101.

Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.

Eckman, M., Sakarya, S., Hyllegard, K., Borja, M. A. G., & Descals, A. M. (2015). Consumer receptiveness to international retail expansion: a cross-cultural study of perceptions of social and economic influence of foreign retailers. The International Review of Retail, Distribution and Consumer Research, 25(3), 260-275.

Gowers, R., Paj?k, A., & Klusa, E. (2018). Cultural Determinants and Perspectives of International Expansion of Enterprises from Economies in Transition. Central European Review of Economics & Finance, 25(3), 21-35.

Haapanen, L., Juntunen, M., & Juntunen, J. (2016). Firms' capability portfolios throughout international expansion: a latent class approach. Journal of Business Research, 69(12), 5578-5586.

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

Hoffman, R. C., Munemo, J., & Watson, S. (2016). International franchise expansion: the role of institutions and transaction costs. Journal of International Management, 22(2), 101-114.

Reardon, J., Coe, B., & Miller, C. (2015). Exploration of Expansion and Associated Timing Strategies for International Market Entry. In Proceedings of the 1996 Academy of Marketing Science (AMS) Annual Conference(pp. 26-30). Springer, Cham.

Sleuwaegen, L., & Onkelinx, J. (2014). International commitment, post-entry growth and survival of international new ventures. Journal of Business Venturing, 29(1), 106-120.

Sui, S., & Baum, M. (2014). Internationalization strategy, firm resources and the survival of SMEs in the export market. Journal of International Business Studies, 45(7), 821-841.

Tweglobal.com. (2018). About - Treasury Wine Estates. Retrieved from https://www.tweglobal.com/about

Wu, J., & Chen, X. (2014). Home country institutional environments and foreign expansion of emerging market firms. International Business Review, 23(5), 862-872.

Zander, I., McDougall-Covin, P., & Rose, E. L. (2015). Born globals and international business: Evolution of a field of research. Journal of International Business Studies, 46(1), 27-35.