International Business Managenent - Meat Industry in New Zealand - Case Study Example

International business Students name: University affiliation: Table of Contents Executive summary Over the past years, the economy of developed and developing nation depended significantly on international and local trade. As such, the economy of New Zealand has gradually improve and has become a market economy. The setup of industries in the country has contributed a lot to the growth of its economy. The beef industry has emerged as a major booster to the economy of New Zealand. Consequentially, the beef industry businesses have flourished making it among the highest rewarding industry in the country (Lanciotti, & Lluch 2015). However, the industry is yet to tap into the opportunities in the global scene. This essay will discuss appropriate ways of venturing into new markets in the global scene in particular, this essay will discuss various ways of venturing into Californian market. The essay will also discuss the appropriate entry mode to be considered before venturing into the new market. These issues includes, political, technological, environmental, and economic as well as legal aspects that may affect the venture into the Californian market. Furthermore, the strengths and weaknesses of the beef industry in New Zealand will be discussed. The operational and organizational strategies of the business expansion will also be discussed. The essay will also reveal the capital commitments of the business in its quest to venture into the global market. Introduction In the recent past, agribusiness has played a crucial role in increasing the economic output of New Zealand. The fundamental reason for an increased rate of investment in the agribusiness sector is the fact that the industry provides vast opportunities that are yet to be exploited. Key among the ventures in the agribusiness sector in New Zealand is the beef business venture. More so, looking back historically to the beef industry, the availability of meat in the country was based on farming. Additionally, the meat in New Zealand comes from the export and the industry has tremendously improved as a number of entrepreneurs have made frantic efforts geared toward venturing into the opportunities that the venture provides. Increased demand in the domestic market has significantly increased the much-needed incentive to further venture into the industry. High demand for the beef products in the domestic market has made it easy for entrepreneurs in the beef industry to reap enough profits. Moreover, increased demand for the beef products in other external markets provides the much-needed opportunity to increase meat production (Clavijo et al, 2015). In particular, foreign demand gives entrepreneurs further opportunities to embrace new and appropriate strategies geared toward meeting the needs of external customers. As such, America is a ready market for meat due to its vast meat loving population. Some areas in America are open to new businesses such as the food industry. Mostly, the lifestyle for food shows have become very popular globally and are aired on American television. As a result, the American citizens are becoming obsessed with the food shows and the life style associate with cooking at home or dining out. The application of the safety measure is a very important part of the entrepreneurial activity of selling beef oversees. WHS is integral in every stage of the process from farming, slaughtering, processing, and packaging and transporting. Thus, a critical analysis of challenges, opportunities will provide an insight for NZ beef to venture into new external markets specifically California Preference for organic beef For a significant period, New Zealand has specialized in the production of organic meat. The fundamental reason for the production of the organic meat is due to its high quality health focused preference by customers. Also, the farming and slaughtering processes encourages the customers get attracted to buy organic meat. In New Zealand, the process of beef slaughtering is carried out by in-house killing whereby cows are put in the shed before slaughtering. The animals that are slaughtered for beef production are often free range and fed on pure grass and there meat is chemically free. In addition, the geographical location of the farm is a key factor in the production of beef in New Zealand. For instance, the north part of New Zealand has favorable weather conditions that play a major role in the high quality of the production of beef. Thus, the use of organic beef has significantly increased the customer base of customers in New Zealand. In particular, the measure of adopting organic meat has given the New Zealand beef industry a competitive advantage over other meat industries across the world. As increased customer base has led to an important increase in the profitability of the beef industry in New Zealand. Entry mode The specific entry mode in the beef market is by adapting trading of the organic market. The reason behind this technique of entering the market is because the business people will find it easy to adapt or rather imitate the already established beef businesses. The intended expansion of the operations of the business requires embracing effective approaches such as market share. It is evident that using organic meat will significantly aid in increasing more customers. It is important to ensure that customers’ needs in California are met to build and establish a business relationship and eventual profit. Another essential aspect that has played a vital role in the tremendous achievement in the beef industry is the selection of quality animal breeds for meat production (Hebert et al, 2015). In particular, the efforts made by the Australian agricultural institutions to invest in research to come up with the best breeds to use in meat production have yielded high results in the beef industry. Thus, any initiative to expand the meat production to other new markets often requires increased use of high-quality meat production animals. Consequently, the effort to expand the beef industry to other new markets will significantly succeed. The adapting entry mode in the market is much advantageous than other entry mode because, the industry will be in position to enter in the market first. Also, the entry mode has low risk in relation to the industry operation. Additionally, comparing with other market entry techniques, adapting trade is not expensive as the costs of entry are relevantly low. Currently, America is the country that NZ already has a partnership with because of the market entry mode. In this case factors such as international relations, securities, and customer demand are considered before the meat is brought into any country. The meat producers in New Zealand need to consider factors such as competition, and trade tariffs before venturing into new markets in America. Different political aspects that often affect the trade relations between the two countries ought to be considered. Moreover, the socio-cultural factors affecting trading practices of both countries also need to be considered. Various microeconomic, as well as macroeconomic conditions of the two countries, need to be analyzed before making any move to expand meat production to new markets, especially to America. The fundamental reason for the need to emphasize these this variable is to ensure that all crucial elements that are required to increase the success rate of making the new market entry are considered. A critical analysis of each of these factors will help in having a better insight into the best approach to adopt while expanding the beef business not only to California, but also to other potential market destinations across the world. Political aspects and entry mode Various political aspects play a crucial role in determining the rate of success in the quest to expand NZ Beef industry to other global market destinations. It is chiefly through political activities that every business formulates appropriate strategies to embrace the expansion of business while making any changes in its operations, particularly through legislation and regulations. The New Zealand beef business often operates in a highly regulated political environment. A large number of these laws are often geared toward protecting the beef industry in New Zealand. For instance, these laws are often based on the protective mechanisms of the local industries. The law of import and export can be viewed as the main key player in enhancing the growth of the business in NZ. As such, the law of taxation in NZ acts as a major factor that the political people are using to improve trade. In this country, taxation on both export and import is collected and regulated at the national level by the NZ government. Also, a significant number of trade barriers have been introduced with an aim of regulating international trade in the country. A large number of the trade barriers are geared toward ensuring that the beef industry is protected from heavy competition from other equally aggressive industries. Vargas et al, 2015). The fact that America often exhibits an aggressive character in trade matters makes it difficult for New Zealand to penetrate the California market. However, the challenges can be resolved by embracing appropriate political strategies. For instance, enactment of a Free Trade Agreement between New Zealand and the USA (Ozturk et al, 2015). Economic aspects More often than not, various economic attributes often play a crucial role in determining the success of a business venture. In particular, both microeconomic and macroeconomic variables of a given industry contribute to the viability of that industry to expand its operations into new markets. The fundamental reason for this argument is the fact that economic aspects are the key contributors to all operations and transactions involved in a given business. Any export decisions often depend on the currency exchanges of the countries involved. The quest for New Zealand beef firms to expand its operations to California will heavily depend on the economic attributes of both countries. For instance, the exchange rates of each country’s currencies will play a significant role influencing the success of the new venture. Persistent appreciation of the dollar will significantly increase the beef exports to California. On the other hand, a depreciation of the dollar will reduce the exports of beef to California. The New Zealand beef firms should formulate appropriate strategies geared towards increasing the demand of beef in California. For instance, embracing an appropriate pricing policy will make it easier for the New Zealand firms to increase the demand for the beef products in California. Moreover, introducing friendly beef products will significantly enhance the demand for the beef products in California. On exportation and importing meat in NZ, the parties involved should share food principles on imported and exported food, so as to enhance the control measures & WHS practices that are designated to safeguard the public safety are at high level. Social aspects Social aspects often influence crucial decisions of a given business. Social activities and attributes of a given population determine their consumption behavior and this affects, while making crucial decisions touching on the business. Thus, any decision made by New Zealand beef firms should consider their consumers taste and lifestyle the social aspects. For instance, these firms should make a critical analysis of the behaviors of the California population. Various studies often conducted by (Ozturk, Joiner, & Cavusgil, 2015), argue that a significant number of the American population often embrace different consumption behaviors which change over time to suit the market trend. For instance, the American population often makes frantic efforts to adopt different dieting thus leading to different patterns of beef consumption. The New Zealand beef firms need to understand these patterns to make it assist for them to formulate appropriate strategies that are geared toward capturing the needs of the customers. Furthermore, the American population often has a preference for natural foods. The fact that New Zealand beef products are produced opportunity and naturally offers an opportunity for expansion and meeting high demand (Vargas & Vázquez, 2015). Understanding the demographic consumption attributes of the American population will also aid in formulating appropriate strategies to embrace in the quest to venture into California market. The fact that nearly 87 % of the US population consumes meat implies that there is a ready market for the New Zealand beef products (Ozturk, Joiner, & Cavusgil, 2015). Technological aspects In the recent past, technological aspects have been influential in the business world. Every firm that seeks to make an impact in the global business often embraces appropriate technology to enable it have a competitive advantage over other firms. The quest to venture into California will be enhanced by technological attributes of the destined market, as USA has advanced in technology capacity. This attribute offers our beef industry the much-needed opportunity to venture into the market due to better production methods. Further, it will be easier for our firms to embrace better methods of treating beef. Moreover, business transactions will heavily rely on technological devices thus increasing the productivity of the beef industry. For instance, it will be easy to understand the consumer needs by use of high-tech devices. Further, technological improvements like grassland breeding and animal interbreeding will significantly enhance the production of beef. Thus, California is an appropriate destination for the beef industry. Scope of expansion Meat industry in New Zealand has been facing a number of challenges emanating from a series of draught and famine, low profitability of sheep meat and beef as well as unpredictable prices for various commodities of the meat product. Owing to this fact, many people have perceived the industry as steadily underperforming. Research done on the meat industry played a critical role in the scope of expansion for the industry for the next 10-15 years as the questions obtained were geared towards answering questions on success of sheep meat and beef on overall, vigorous research in the sector, developing, expanding and sustaining new markets in the meat sector. Environmental aspects The changes in climatic conditions often influence the decision made by different businesses across the world. In the recent past, significant initiatives have been taken to reduce adverse environmental changes in America. In NZ, animals are not sent while alive, first the animals are cuts, packaged and sent to the America so as to eliminate animal cruelty. However, in the future, the NZ may decide to venture out to inter breeding live stocking the US. This effort to improve the environment In America plays a major role in increasing the desirability of California as a destination for our beef industry. The efforts will ensure that the efforts are environmental conditions in America are almost similar to the ones in New Zealand thus making it easy for the New Zealand beef industry to thrive in California (Vargas et al, 2015). The industry will be compatible with the American Agricultural sector thus increasing the chances of the venture success. Legal aspects The legal framework will also contribute to the success of the drive to venture into California. For instance, America has rules and regulations that govern the export and import of products. Any company that seeks to export its produce to America should have a shipping company that meets the qualifications set by the laws of America. The shipping company should ensure that the customs in America clear the cargo. Furthermore, the American legal system gives businesses opportunity to verify its products thus making it easy possible for allocation of trade permits in America. Moreover, every business is required to remit taxes to relevant authorities America. The process of taxation is automated thus making it easy for all businesses to pay taxes efficiently (Vargas et al, 2015). The legal framework in America will significantly help New Zealand firms to venture into California. In particular, it will legitimize the operations of the beef industry in California. Strength In our quest to venture into California, the beef industry in New Zealand exhibits some strength. In particular, the industry has a vast experience in the trade of meat. This vast experience will significantly contribute to the success of the intended venture into California market. Moreover, the fact that NZ beef industry emphasizes the production of quality free range meat gives it a competitive advantage over other beef industries. Furthermore, specialization in the production of organic beef has significantly contributed to the success of our beef industry. A continued production of organic meat will greatly help in increasing the competitive advantage in the market. The fact that a significant number of beef consumers in California prefer organic meat gives our industry a better chance to succeed. The diversification approach also offers a significantly help in meeting the needs and demands of the customers in California and will significantly increase profitability of the business. Thus, the strength and success of the New Zealand beef industry is based on the quality and health focus of its products and its marketing strategies. These will help in venture into California successfully. Weakness There are various weaknesses that the New Zealand beef industry has. Key among them is technological constraints. The New Zealand beef industry is yet to invest in technology. Thus, the cost of meat production is higher compared to other meat firms in America. The high costs often reduce the profits of the industry thus providing a challenge in its quest to venture into California. However, inferior competition such as inadequate employees and unskilled workers will give the New Zealand firms a competitive disadvantage in the beef business. Consequently, the productivity and profitability of the industry will be adversely affected. However, frantic efforts are made to embrace new technology thus increasing the competitive advantage in the global scene. Some of the inferior companies includes the Latin American beef industry (Lanciotti, & Lluch, 2015). Operational strategy The main objective of the organization is to expand the global market share in the beef industry. Measured and considered efforts will be made to adopt appropriate strategies geared toward achieving this objective. We intend to slaughter animals in New Zealand and export beef to California to reduce operational costs. We intend to adopt an indirect export method where the beef will be exported with the help of an agent based in California. The agent will significantly help us to mitigate risks associated with the new market entry. Moreover, the agent understands the dynamics of the beef industry in America. Consequently, it will be easier for us to enter California market with ease. The agent will also help in marketing the beef products. Furthermore, the agent will secure the license for export to California market. Consequently, the operational costs will significantly reduce thus increasing the success rate in America. Organizational strategy In the quest to venture into California market, we intend to restructure our organizational structure. We intend to set up a head office in California that will help in coordinating all activities in America. The head office will play a crucial role coordinating, distributing and marketing of the beef products in California with the help of the export agency. The head office in California will liaise with the local offices in New Zealand to ensure that the needs of customers are met. One of the major strategy will be future plan of the NZ beef industry. The plan is to interbreed livestock from NZ with that of the US. Another, strategy that may be applied in the beef industry may include distributing meat product to the NZ franchises. Capital Commitments The financial estimates for the entry strategy are quite affordable. The total budget requirements average at $97,000. This budget will cater for legal requirements, purchase of equipment and other miscellaneous expenses. We intend to use the reserves of the business to finance our expansion operations. We intend to borrow some funds from the lending institutions to hedge any extra capital requirements. The budget is affordable thus making the venture viable. More so, farmers find it much easier in entering to the beef business because the NZ government offers some subsidies to the farmer. This may include, cattle treatments, fertilizations among others. Staffing policy Staffing refers to the process of recruiting employees in an organization based on qualifications required by the hiring institution. Policy on the other hand implies to a plan of action that is applicable when performing official duties. Various sources of employees that can be hired within any local and international organization are grouped into three categories. Firstly, the company can utilize the local workers, the expatriates, or make use of the natives who are nationals of the country. Additionally, the company can also take into service labor provided by staff that has brain-drained from other countries. However, in the long when the company expands, technicalities in managerial and financial departments are required. Therefore, the company opts to hire experts from other international bodies who are skilled in such posts while others employ both combinations of home and international staff. Conclusion Conclusively, therefore, it is evident that the New Zealand beef industry has experienced tremendous growth in the recent past. The industry’s strengths have played a crucial role in its success in the competitive industry. On the other hand, factors such as competition may negatively affect the growth of the beef industry. However, a critical analysis of these factors in the industry reveals that the industry has a better chance of succeeding in its entry strategy to Californian market. The industry needs to sustain its business model based on quality and diversification to increase the likelihood of succeeding in California. References Clavijo, A., Sanchez‐Vazquez, M. J., Buzanovsky, L. P., Martini, M., Pompei, J. C., & Cosivi, O. (2015). Current Status and Future Prospects to Achieve Foot‐and‐Mouth Disease Eradication in South America. Transboundary and emerging diseases. Hebert, P., Clare, G., Chung, Y., Slevitch, L., & Leong, J. Effects of Experimental Conditions on Consumer Perceptions of Ground Beef: An Interdisciplinary Study. Lanciotti, N. S., & Lluch, A. (2015). Investing in growing markets: opportunities and challenges for multinationals in Argentina, 1900–1960. Management & Organizational History, (ahead-of-print), 1-17. Lluch, A. Politics of regulation on natural resources and food commodities in Latin America: the beef export trade and meat packing industry in Argentina (c1890-1939). Ozturk, A., Joiner, E., & Cavusgil, S. T. (2015). Delineating Foreign Market Potential: A Tool for International Market Selection. Thunderbird International Business Review, 57(2), 119-141. Vargas-Hernández, J. G., & Vázquez Vázquez, E. E. (2015, January). Latin American Multinational Companies Growth. In XIV International Business and Economy Conference Bangkok, Thailand. Read More