PART A
Conclusion 1: Population
The ultimate goal for Australian Char is to be able to invest in the most lucrative market of the two available. One of the strongest indicator for an investor to consider is the population size, since the business would need to continue growing even in the wake of new competition. Chile has a very small population of only 17.8 million. In contrast, Mexico has well over six and a half times the population of Chile at 120 million. Mexico would be the preferred investment destination based on its large population size that provides an opportunity for the company to grow.
Conclusion 2: GDP per capital PPP
The GDP per capita PPP is selected as an important business indicator because it, “converts GDP to international
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A high inflation rate would influence the operating cost on a year-over-year basis. Similarly, a high inflation rate would mean that people are able to buy less for an equivalent dollar, which is bad for a business enterprise (Viorica, Jemna, Pintilescu, & Asandului, 2014). A lower inflation rate, on the other hand, would be a welcome outcome because the operating cost will be lower. Furthermore, consumers will have more money to spend buying additional products. It is apparent from the case study that Chile has a high inflation rate of 4.4% while Mexico has 2.8%. Thus, Mexico is a better investment destination of the two …show more content…
First, the company is able to capture the demand in the new market. Australian Char will be able to capture the barbeque market thereby gaining a competitive edge over new entrants into that market. Secondly, the firm will be able to build a strong sales volume by taking advantage of the experience curve to break even in the shortest time possible. The company can reduce the cost of operations that include expensive advertisement costs to increase sales. Thirdly, the company has the advantage of being able to build a strong brand name. Many customers will likely associate the products and services of Australian Char barbeque to the company (Hill, Cronk, & Wickramasekera, 2014). Any new market entrant seeking to gain a competitive edge over the first mover like Australian Char, will experience sharp resistance from
...s. Products in Mexico have to be much lower in cost for the general public to purchase compared to the US. This is where market share and sales volume come in to play.
In January 1994, the United States, Mexico, and Canada implemented the North American Free Trade Agreement (NAFTA), forming the largest free trade zone in the world. The goal of NAFTA is to create better trading conditions through tariff reduction, removal of investment barriers, and improvement of intellectual property protection. NAFTA continues to gradually reduce tariffs on set dates and aims to eliminate all tariffs by the year 2004. Before NAFTA was established, investing in Mexico was a difficult process. Investors needed the Mexican Government's approval and were also required to meet specific investment guidelines. These requirements necessitated investors to export a set level of goods and services, utilize domestic goods and services, and transfer technology to competitors. Under NAFTA, investors no longer need government approval to invest and are treated as domestic investors. NAFTA has also increased intellectual property rights and allowed companies to obtain patents in Mexico and Canada. In the past, companies were hesitant to export research and development intensive goods; with increased intellectual property protection, however, exports of these goods have shown a definite increase. As a result of better trading conditions, exports and imports of most other goods have increased along with the research and development intensive goods. In Mexico, the elimination of investment barriers has allowed investment to expand. Increased trading and investment has then created many jobs, raised the Gross Domestic Product, and lowered consumer prices.
“GDP is the most important concept of national income is Gross Domestic Product. Gross domestic product is the money value of all final goods and services produced within the domestic territory of a country during a year.” (Thapa.R)
Experience in this industry does help firms to lower costs and improve performance. The major brands run on economies of scale, and have experienced the highs and low of the industry and overcome them. New entrants can learn from the first entrants history but do not have first hand experience.
A business expanding into foreign markets is becoming a common occurrence in the world. A.G.Barr’s has proven itself to be successful in its own market, from its figures it shows it is the largest soft drink supplier in Scotland. The company offers a unique twist into the soft drink industry and so is looking into a country which already bolsters a big soft drink consumer base. After already expanding into the Russian and Australian market the best option for the company appears to be Brazil. This is due to the large tourist influx which is expected and also the already large consumer base
-Vulnerable to China (30% of Australian exports went to China in 2012. Although they profited from the fast growing Chinese market, they are also vulnerable for export volumes and pricing negotiations)
Gross Domestic Product (GDP) is an Economic Barometer which has being widely used around global to determine whether the country’s economy is under recession or expanding. It is a great tool for the government in aiding on making critical economy decision whether to input more money or remain in constant.
Australia has had one of the most outstanding economies of the world in recent years - competitive, open and vibrant. The nation’s high economic performance stems from effective economic management and ongoing structural reform. Australia has a competitive and dynamic private sector and a skilled, flexible workforce. It also has a comprehensive economic policy framework in place. The economy is globally competitive and remains an attractive destination for investment. Australia has a sound, stable and modern institutional structure that provides certainty to businesses. For long time, Australia is a stable democratic country with strong growth, low inflation and low interest rate.(Ning)
Breaking into new markets helps the company grow and brings in new customers, which leads to higher profit margins.
The barbeque to Argentina two ways trade relatively limited skills in international marketing is lot of identified products and organizing their shipment. He decides to focus on exporting products to Argentina and distribution in various markets places.
Both countries are politically stable democracies and recognise the rights of the individual, freedom of the press, value free enterprise, have trustworthy governments free of corruption, and independent judiciaries. They both welcome foreign investment. The Australian legal system is similar to the legal system in NZ, where business contracts are protected by the rule of law. Domestic and foreign companies are treated equally before the law. SkillPower can undertake business in Australia as a sole trader, in a joint venture, register as a new company, or procure a shelf company. Australia’s stable political and legal systems is another positive reason for selecting Australia for SkillPower’s expansion
Inflation is one of the most important economic issues in the world. It can be defined as the price of goods and services rising over monthly or yearly. Inflation leads to a decline in the value of money, it means that we cannot buy something at a price that same as before. This situation will increase our cost of living.
Why: to keep the market leadership in that region deeper coverage to its natural market. It will strengthen the company - and prepare it to expand or to win market shares in The Caribbean and South America. First it must strengthen its financial situation in order to have the resources to expand in other regions (it will need to put emphasis on marketing and to develop products that correspond to customer needs in the other regions especially regarding stoves).
Business Environment – The firm is considered a coffee giant company that is a big brand in the business being able to expand aggressively in the market worldwide before it entered in New Zealand. But the business environment of this country is quite unimaginable for a US based company for it to venture without having a thorough marketing analysis covering all the risks in the venture considering the distance and the traditions which differs a lot in many countries thus making it very unique and incomparable. It is only when the company is able to come up with the correct strategy in entering the business that will make it thriving. Starbucks New Zealand entered the Kiwi market by way of franchise and joint ventures. They partnered with a very stable local business partner called The Restaurant Brands New Zealand Ltd. In this case, the company is able to hurdle the market barriers including business laws, taxation, physical set up, traditional and cultural differences that may come along the way. (Starbucks, 2012)
However, more goes into controlling inflation than just the interest rate. A big factor in Brazil’s inflation rate is their infrastructure. When domestic production grows, Brazil faces transportation issues which causes the offer to stagnate. Once it stagnates the demand grows and puts an upward pressure on prices and therefore increasing inflation. In order for Brazil to control their inflation there needs to be a significant and constant development in infrastructure. Infrastructure plays big role because Brazil is one of the largest countries in the world in terms of area and population. A higher population leads to higher demand for certain goods and puts a lot of pressure on the inflation rates and contributes to why inflation historically