SuperGlue Export to Australia - Case Study Example

SuperGlue Export to Australia Name: Tutor: Course: Date: Cultural Analysis Introduction Developing an international business plan is crucial in enabling a company redirect it’s financial and human resources to a new market abroad. The essence of building a larger market share is to take advantage of competition, purchasing power of consumers and opportunities available in emerging and developed economies. Many companies are now eying Australia as a strategic market for industrial materials, energy, food, computer appliances and cosmetics (Hugo 2001). Understanding the political, environmental, technological, economic, and legal situation of Australia is important before any decision is made to export any item to this country. History of Australia Australia was initially inhabited by the Aborigines before being colonized by the British after previous unsuccessful conquests by Spain, Portugal and Dutch. Former prisoners and free settlers from Great Britain established six colonies in a span of a century from 1786. These colonies becames states and are as follows; New South Wales, Tasmania, Western and South Australia, Victoria and Queensland. Settlers were attracted by Gold rush and other minerals (Hugo 2001). The country incorporated both US federal traditions and British parliamentary system. By the end of 19th century, the country was under full control of European settlers. Much of Aboriginal Art was lost in the event of contact with the British. It is currently a multicultural nation known for free compulsory education, sickness and old age pensions, maternity allowances, secret ballot, womens suffrage and protected trade unions (Hugo 2001). Geographical Setting Australia comprises Tasmanian Island, mainland and numerous smaller islands. The neighbours are Papua New Guinea, East Timor, Indonesia, Vanuatu, New Caledonia, New Zealand and Solomon Islands (Hugo 2001). It has a landmass of 7.6 million square kilometres with Great Barrier Reef and the world’s longest monolith. The northeast has subtropical rainforests, mountain ranges towards the south east and dry deserts at the centre. Soils are least fertile exept in the south east and west with temperate climates influenced by ocean currents. The Great Dividing Range marks Eastern Australia, Victoria, New South Wales and Queensland. Nothern part of the country has tropical climate, gorges and sandstone cliffs (Hugo 2001). Social Institutions Over the 20th century, Australian families underwent huge shift in structure with many families living with unrelated people and extended kin. By 1950s, nuclear familes were common and based on parent child, couples and no extended members (Australian Bureau of Statistics 2009). Families with children are common though there is an increase in one-parent families. In couple families, parents share roles of bringing up the children equally (Gilding 2001). Courtship and marriage is based on mutual understanding of partners of at least 15 years. Social and economic trends have shifted prevalence on family types within the Australian society. Remarriage and divorce has changed the composition of step and blended families due to de facto partnering. Delayed childbearing has made couples to form longterm relationships going to old age (Pook 2003). Male and female roles have changed since World War II with men assuming more family roles in child rearing, household chores and counselling (Gilding 2001). Women have also entered the male domain in employment, social relations and governance. Education Australian literacy rates are high with 99% of the population able to read and write. The education system is classified as primary, secondary and tertiary and is compulsory between ages five and fifteen. Australian Qualification framework regulates the quality of schools, higher education and vocational education and training. Primary enrolment as at 2008 was 1.9million, secondary was 1.4million and tertiary at 1 million (Australian Bureau of Statistics 2011). Those with secondary diploma formed 75% and Post-secondary diplomas at 34%. Primary schools comprise Kindergarten for 3 to 4 year olds, Pre-school for 5 years and Grade/Year 1-7 for 6 to 13 year olds. Secondary is classified as Year 7 to 12 for 12 years to 18 year olds (Parham 2002). Political System Australia is governed through a Federal and parliamentary structure since 1830s headed by HM Queen Elizabeth II. The federal government has three branches; executive, legislature and judiciary. Political parties play a major role in state and federal parliaments (Australian Bureau of Statistics 2001). The parties are; Australian Labor party, Liberal Party, Australian Greens, Australian Democrats and The Nationals. The government is stable with a democratic system of electing leaders who provide all governments and opposition. Income taxes on individuals and not families are made at federal level on a progressive basis (Pook 2003). Those earning higher income pay at higher rates. Taxes are imposed on individuals in shares or trusts in each financial year. Other taxes are; corporate, goods and services, property, departure, excise, fuel and customs (Gilding 2001). The local government collects fees and charges from towns and city business for the purpose of providing transport, sewerage, parking, parks and entertainment. Legal system Australian judiciary is based on the rule of law, judicial independence and justice. It is largely the English common law with the high court being the final court of appeal. Court systems and federal courts in each territory and state are separate. The law is upheld when it comes to protection of trademarks, patents, copyrights and wayleaves of local companies (Gilding 2001). Businesses are encouraged and registered for purposes of taxation and accountability. The business structure is commonly flat with no difference between the CEO or manager and emoployees. Marketing laws prohibit unhealthy competition among businesses or dishonesty advertisement and promotions. New laws regarding digital marketing and social networking are in the draft stage. The country also banned online advertising, sports sponsorships and TV advertising for tobacco and alcohol (Pook 2003). Social organizations Australians are social organized with dominance of parties, clubbing and hosting cocktails. The incomes are fairly distributed hence creating homogeneous social classes not divided along income and family stratas. The country is known for hosting Cricket and Rugby games with major competitors being Australians (Pook 2003). The country is predominantly English with the language being spoken in formal and informal settings. English is spoken by more than 81% of the population (Tran-Nam 2000). The English imigrants from Britain accounts for 84% of the population, Spanish 1.5%, Asian 12%, Dutch 1.7% and Portuguese at 1.2% (Australian Bureau of Statistics 2011). Business customs and practices Punctuality is the foundation of business ethics in Australia. The country is tolerant to people from other cultures and allows shared cultural practices and beliefs. People are friendly and open but get down working faster with minimum small talk. The idea of giving gifts is not a common practice in many Australian businesses. People are more individualistic (Pook 2003). Lower level employees always have considerable authority and power. Australians are informal in their business dealings. They shake hands then negotiations. Decision making is slow and extended (Macfarlane 2008). Religion and Aesthetics The dominant religion is Christianity. The country encourage religious tolerance and alows other faiths to practice. Many love decorations, paintings and other forms ofart. During Christmas, people exchange gifts wrapped in beautiful colors. People especially the old love folklore and rock music. Living Conditions Cereals are common food items in the Australian menu. Many people also prefer taking meat thus a centre piece in the Australian diet. Other items are milk, fish, eggs, vegetables and dietary products. There is a general trend towards organic foods, genetically modified and functional foods (Pook 2003). Malnutrition rates are low at 4%. Housing in Australia is fragile with wages remaining behind the cost of rent. Sydney is the most expensive in housing. Due to rising cost of housing, people have opted for government public housing which is cheaper. These are flats hosting many other families (Mulcaster 2009). Some few own villas and houses but majority live in high end apartments consisting of 7.1 million dwellings. Many desire for personal homes. Many Australians live close to the sea or beach which is usually hot. They may wear littleclothing but does not mean low moral standards. There are no rules or laws on clothing but certain work situations demand specificclothing. Many workplaces have dress codes (Pook 2003). Clothing is an individual choice outside work situation. Club and movie theatre patrons should be neat and clean. There is no national dress. Recreational, sports and leisure activities are prefered by all. Many love literature, graphic arts, and performance arts. More than 24% of the population above15 years play netball, cricket, field hockey, rugby league and union. Others also love tack cycling, swimming and rowing. Majority drink and smoke for leisure (Australian Bureau of Statistics 2011). Australia has invested heavily in Commonwealth Games and Summer Olympics. Social Security There is equity and equal access to any service for all citizens (Moncrieff 2004). The challenge is rising unemploymnet, poverty, remoteness and aging population in need of retirement benefits. The country has forty hours per week of work, entitlement to pension and a month holiday per year. About 2 million people still live below poverty line (Tran-Nam 2000). Healthcare The country has high expectancy rates after Japan, Iceland and Hong Kong. In 2010, the expectancy rates stood at 84 years for females and 80 years for males. The country is known for the highest skin cancer rates globally. 7.8% of disease and deaths is caused by cigarette smoking. Other killers are hypertension at 7.6% and obesity at 7.5%. 9.8% of the GDP goes to health. Universal healthcare (Medicare) was started in 1975. Medicare levy is surcharged on every citizen at 1.5%. Hospitals are managed by states while Pharmaceuticals Benefits Scheme is funded by the Commonwealth (Parham 2002). Language Despite having no official language, English is the de facto national language. Australian English is distinctive in lexicon and accent. 81% of the population speaks English at home (Pook 2003). The minority dialects are; Asian (12%), Mandarin (1.7%), and Italian at 1.5% among others (Australian Bureau of Statistics 2011). Economic analysis The population of Australia according to 2013 estimates stands at 23 million in eastern urban states. Population growth rates and birth rates were is at 2.5% and 1.4% per year as at 2011 census respectively. 67.5% of the population is between 15 and 65 years. 18.2% are less than 14 years while 14.4% are over 65 years. Many people are living in the cities especially of eastern states such as Victoria, Queensland and New South Wales. Few live in the countryside (Pook 2003). About 1 million Australians live outside their home country. The ratio of male to female is 53% to 47% respectively (Australian Bureau of Statistics 2011). The net migration rate is 6.23 migrants in every a thousand people. Most migrants are destined to Perth and Melbourne (Wendy 2006). The Gross Domestic Product (GDP) is AUD$970billion and per capita income of AUD$42,000. Total debt is 20% of the GDP. Annual economic growth rates at 3.6% and negative balance of payments of over 7%. Average family income is AUD$150,000 per year. Income is distributed among high, middle and low class. The low net worth (43%) is AUD$400,000 per year while the middle class (52%) have AUD$513,000 (Pook 2003). Those earning more than AUD$555,000 are only 4%. The professional or entrepreneural class has earnings from private income of AUD$1.3million. Incomes distribution favors those in the mining, construction industry, and professional businesses (Australian Bureau of Statistics 2011). Minerals and resources include gold, nickel, uranium and zinc among others. These mineral resources are sufficient and boost the export sector into the foreseeable future. It also has first class technology in mining and telecommunications. Australia depends largely on road transport and spends greatly on fuel to cover many kilometres on the road. A faster light rail line is also connecting the cities. There are ports and harbours in Sydney, 53 merchant marine vessels in the port of Melbourne. Communication systems are internet, mobile telephone and postal addresses. They are readily available with internet usage rates of 89% while mobile telephone is 95%. Since the organizational structure is flat, relations between employees is good. Employees have a say in organizational decision making and receive good compensation of about AUD$50,000-$450,000 per year (Macfarlane 2008). Insurance and finance is a lead contributor to GDP at 11%, manufacturing (10%), Mining (8%), and construction at (7.5%). Foreign investment and opportunities are in insurance, mining, manufacturing and construction. Major exports are agricultural products (AUD $10billion per year) and natural resources (AUD$6billion) accounting for 70% of GDP (Australian Bureau of Statistics 2011). They are increasing and steady. Major imports on constant basis are farm machinery (AUD$3billion) and automobiles (AUD$2.5billion) annually (Wendy 2006). The country experiences deficit of more than 7% annually. There is stability in balance of payments. Current exchange rate with one US dollar is 0.95. The currency fluctuations were greater in 2012 and 2013 (Macfarlane 2008). The country promotes local industries especially milk and meat hence higher tariffs for imports. Import taxes accrue to all imports (Pook 2003). Licenses are provided by state government. Custom duties are imposed by federal government on major ports. There are neither goods offered for neither counter trade nor foreign aid from donors. Unemployment rate is 11.2% while the size of labour force is 9.2million. Inflation rate is 2%. The country is suave in technology using latest farm technology and tablets.6% of the GDP is invested in research and technology (Wendy 2006). Majority of the workforce have technical and higher education. Channels of distribution More than 25,000 retailers deal with SuperGlue of asset base of AUD$1.5million each. The markup is estimated at 15% for adhesives and paints. Sales are on cash involving smallscale basis. Chain stores distribute to retailers who inturn take it to consumers. There are no wholesales but import agents are based in Perth, Adelaide and Canberra. The go-downs receive the goods for road and rail dispatch to inland businessmen in Queensland, Victoria, New South Wales and South Australia (Macfarlane 2008). Radio, TV and social media are highly connected and less costly. TV is more costly to advertise than radio and print. ABC covers the entire Australia. 96% of the population is accessible to information through various media (Schooler & Wildt 2008). Market Audit and Competitive market analysis SuperGlue is stronger in bonding than ordinary glue or adhesives. It is compatible with a range of office and industrial uses though strong and inflammable. It is potential for market trial and observable within one trading year. The product has a range of uses and is highly acceptable (Moutinho & Chien 2007). SuperGlue is to be transportedby road and rail for sale in Adelaide, Darwin, Canberra, Sydney and Perth. Purcahsing power is very high for farmers and office solutions (Wendy 2006). SuperGlue is highly effective for adequate and strong bonding. Chainstores and shops are the major outlets bought directly by consumers. TV and print advertising is most appropriate based on promotions like coupons and flyers (Schooler & Wildt 2008). Customray markups are 15% of the purchase price with a discount of 2% of selling price for every 20 pieces purchased. Major competitor brands are Henkel Corporation, Elmer’s products and 3M Company selling Parceal and Bondini brands. The sealants and adhesives are package in 50ml narrow stripped plastics. The pricing of SuperGlue is AUD$0.40 for 50ml while competitors sell at AUD$0.45. Competitors use the TV, radio and print media to advertise while opting for Business to business distribution channels. The market Size is 40,000 consumers per month in Australia selling at least AUD$200million in 2014 from sale of 520,000 dozen cartons per year (Tran-Nam 2000). The agents are DHL, and department of trade. Operating licenses are obtained from local authorities (Schooler & Wildt 2008). Preliminary Marketing Plan The target market is wood and plastic industries. The expected sales for 2013 is AUD$ 200million with expected profits of AUD$20million. The market penetration is 75% in NSW, QLD, SA and VIC. The core component of the product is industrial and home sealant or adhesive packaged in plastic tubes. Support services include after sales, discounts and offers. Advertising on internet, TV, print and electronic is to acquire the market share by 15% in 2013. The message is ‘SuperGlue for quality bonding’ Advertising costs are ussually 15% of the total marketing expenditure. Sales promotions include offers and discounts to raise market awareness by 20% in 2013-14 through sale of coupons. Premiums are gained from swaping customers who account for 10% of the sales. The Cost of promotions is 10% of the marketing expenditure. Personal selling and online sales contribute to 25% of the sales (Tran-Nam 2000). Goods dock at the port of Melbourne and are transported along the coastline by road to Canberra, Perth, and Adelaide ports (Parham 2002). Railroad is preferable in covering large urban and rural areas quickly. Air carriers are suitable for intercity distribution. Ocean carriers are appropriate for importation purposes. SuperGlue is packed in plastic tubes, labelled as SuperGlue and placed Cartons. The documentaion required are; Bill of lading, Dock receipt, Air bill, Commercial invoice, and statement of origin. Insurance claims happens incase of damage or loss (Macfarlane 2008). Retail stores are generally SMEs with about 10 employees totalling about 25,000 with 15% markup for each tube sold. Cash sales are encouraged. Import agents are based at the port of Melbourne and Perth where large Go Downs house the goods. The ultimate retail price of SuperGlue is determined by cost of shipment, transportation by air or road, handling charges, custom duties, insurance, import taxes, retail markups and company’s gross margins (Schooler & Wildt 2008). The terms of sales is based on FOB and CIF. Methods of payment are letters of credit, consignment sales and cash in advance. The marketing budget is AUD$8million for; selling expense, product cost, distribution, advertising and promotion. The anticipated profit for first year is AUD$12million through AUD$23million in the fifth year (Tran-Nam 2000). The resource requirement is AUD$50million, skilled workforce and production efficiency of 85% producing 1500 cartons per day of SuperGlue (Umberger & Loureiro 2003). Reference list Australian Bureau of Statistics 2009, Marriages and Divorces, Australia 2000, cat. no. 3310.0, ABS, Canberra. Australian Bureau of Statistics 2011, Economy: Labor and employment, Australia ABS, Canberra. Gilding, M 2001, Changing Families in Australia, 1901-2001', Family Matters, No. 60, pp. 6-11. Hugo, G 2001, A century of population change in Australia in Australian Bureau of Statistics 2001, Year Book Australia, 2001, cat. no. 1301.0, ABS, Canberra. Macfarlane, I J 2008, Australian Monetary Policy in the Last Quarter of the Twentieth Century, Reserve Bank of Australia Bulletin. Melbourne. Moore, M H 2005, Creating Public Value: Strategic Management in Government, Cambridge: Harvard University Press. Moncrieff, J 2004, Is strategy making a difference? Long Range Planning Review, vol 32, no2, pp273–276. Moutinho, L & Chien C S 2007, Problems in Marketing: Applying Key Concepts and Techniques. London: Sage Publications. Mulcaster, W R 2009, Three Strategic Frameworks, Business Strategy Series, Vol 10, No 1, pp 68-75. Parham, D 2002, Microeconomic reforms and the revival in Australia's growth in productivity and living standards, Conference of Economists . Adelaide.  Pook, H 2003, Windows on our Past; Constructing Australian History. p. 195 Oxford University Press, Melbourne. Tran-Nam, B 2000, The Implementation Costs of the GST in Australia: Concepts, Preliminary Estimates and Implications, JlATax 23; (2000) 3(5)". Journal of Australian Taxation 331 Schooler, R D, & Wildt, A R 2008, Elasticity of product bias, Journal of Marketing Research, 5, 78-81. Umberger W J & Loureiro M L 2003, Estimating Consumer Willingness to Pay for country-of-Origin Labeling. Journal of Agricultural and Resource Economics, Western Agricultural Economics Association. 28(2):287-301 Wendy, L 2006, Events that Shaped Australia. New Holland. p. 19. Read More