The Market of Petit Hunter Company - Case Study Example

International Business Insert name Insert institution Question one SWOT analysis for Jane’s ‘Petit Hunter Company’, its products and the market it wants to expand to (case study) SWOT is an acronym of Strengths Weaknesses Opportunities and Threats. A SWOT analysis looks at the strengths, the weaknesses, the opportunities and threats that are relevant to an organisation in a new venture. SWOT analysis allows the organisation to look at the direction that it is willing to move (Tuckwell, 2007). SWOT specifies the clear objectives, it identifies internal and eternal factors that may be helpful or not. Generally it is a simple useful tool that may be incorporporated into the organisations strategic planning model. Petit Hunter is a wine company planning to venture into a new global market (Boaz, 2010). This is because its local market is being threatened by bigger companies that come in with lower priced wine products. There are several small and medium sized wine producers in the market. This is a major threat to the wine producing companies which are on the growing trend. The company is worried about the few multinational companies that are overtaking the international market. The other threat is the increasing aggressive international competition from the European and US wine exporters who operate at lower prices. At an international wine symposium held in Sydney, Jane the CEO of petit hunter said that ‘Spanish and even California wines are now so cheap to buy in Australia that we will have difficulty in remaining competitive (Boaz, 2010).’ The problem of competing against multinationals that makes small and medium sized companies worried is the low cost that they operate in (Menon, 1999). The cost of production remains fairly low as the products increase in bog companies. This is because the fixed costs are catered for and other variable cost varies with the production. For small and medium sized companies like Petit Hunter, the fixed costs are likely to be higher or even equal to the variable cost. Since the production is fairly low the product has to carter for the cost of production thus the high price (Hill, 2006). Therefore, the main weakness of petit hunter remains to be its size against its competitors. On the other hand, the company has a strength that aids its vision of moving to the international level to beat overcome the threats. The major strength is the management willingness to take the risk and the support of the employees. Jane as the manager has a plan in mind to move to a new niche market that is large enough to sustain its further growth and development. The managers and employees are thinking globally (Boaz, 2010). The company has an opportunity of setting up a niche market in the US and China. Although SWOT analysis reveals that; the cost of entering a new market would be high and the competition would be strong, but the opportunities are more promising. The beer reputation of the company is the origins are undeniably impressive (Scott, 1982). The fortified wines of are famous around the world and this would give the company an upper hand against its competitors. China market provides exciting opportunities for wine exporters who are willing to stay in the market for long (Armstrong, 2006). The Chinese society is adopting the wine culture since they do not have one of their own. They are treating wine as a low cost traditional alternative drink to other imported drinks like Cognac. There is a growing international demand for Australian wine, and, four companies so far have contacted Petit Hunter to supply the growing international markets (Boaz, 2010). Question two Tactics that the company can use to take advantage of the opportunities and to overcome the barriers The company can incorporate the foreign direct investment (FDI) strategy. In this strategy the firm can opt to establish a physical presence in the destination market by acquiring an asset such as labour, plant or other that would be relevant to the company’s operation. The best alternative would be to acquire labour. This is because the Chinese government is willing to subsidize the entry cost into the market if the company in question is willing to train the local people in viticulture. The company would prefer the Chinese market to the US market because there are several advantages in the Chinese market and the company seems to have done a lot of research in china market than the US. This is evidenced by how much Jane prefers this market and what she says about it. The Chinese government is offering export assistance programs to wine companies seeking new opportunity in their market. The Access China Program is providing eligible wine growers office facilities and support staff; this is an opportunity the Petit Hunters should take advantage of. This can be achieved while these advantages still exist. In case Petit Hunters is willing to enter in the market with other partners, it would opt for the international collaborative venture tactic (JRC, 2011). The advantages of this tactic are that the company pools capital and is able to have a higher bargaining power in the market of operation. The cost of operation would also go low due to the increased output per unit. Still FDI remains to be the most advanced entry strategy to the market although a little complex. FDI would require substantial commitment of resources both financial and human resources. It has greater risks but the rewards are higher too. It is important for an Australian based company venturing in China to understand the culture of the new market. Since the company is planning to move to a new market, the principle of lingua franca may not apply during the initial stages of the establishment of the company in the new market (Chapman, 2011). The company will need to conform to the language and ways of life of the Chinese to be able to be successful in the market. Sales people and operators should be able to speak the Chinese language. The company should be able to understand how significant their product is to the culture of the local people and how it promotes it. References Armstrong, M. (2006). Handbook of Human Resource Management. London: Kogan Page. Boaz, B. C. (2010). Cases in International Business. The Australian Government; Wine and Brandy Association , 67-80. Chapman, A. (2010). SWOT analysis. Retrieved October 4, 2012, from http://www.businessballs.com/swotanalysisfreetemplate.htm Hill, T. W. (2006). SWOT Analysis: its time for a Product recall. Long Range Planning , 46 52. Menon, A. (1999). Antecedents and Consequences of marketing Strategy. Journal of Marketing , 18-40. JRC European Commission. (2010). SWOT (strengths weaknesses opportunities and threats) analysis. Re-trieved October 4, 2011, from http://forlearn.jrc.es/guide/2_design/meth_swot-analysis.htm Scott, J. A. (1982). The Value of Formal Planning for Strategic Decisions. Strategic Management Journal , 197-211. Tuckwell, K. (2007). Intergrated Marketing Communications. Strategic Planning Principles , 47-51. Read More