Australian Business and Economy - Case Study Example

Name: Institution: Title: Australian Business Research Report Tutor: Course : Date: Executive Summary The economy of Australia is among the most developed in the world with very favorable markets such that foreign investors are not faced with major hurdles when penetrating the market. A larger advantage is based on the fact that the government has made adequate measures to avail international markets through formation of trade blocks. The manufacturing industry as well as the service sector has benefited immensely from such deals as manufacturers are assured of a ready market for their products. Despite the low productivity in the service industry, Australia presents a competitive advantage that is unique to the country thus making it conducive for business. Introduction Australia is among the developed countries in the world with a gross domestic product of about US$1.2 trillion. This resulted into being named the 13th largest national economy in the world in terms of GDP in 2009 rankings. It is a favorite destination for 21% of the world’s total imports and exports hence making it a major player in the international market. Australia is a member of several trade organizations such as the world Trade Organization, G20 and APEC. It is also a member of several other free trade agreements and plans are underway to partner with New Zealand before 2015 to form a single economic market (Australian Government, 2011). The country’s economy is mainly driven by the service industry though agricultural and manufacturing are also robust. Similarly, the government with the aid of major economists has laid out certain strategies that guide consumers in carrying out their market choices. This has been used as a baseline by manufacturers towards producing goods and services which meet the needs of the consumers in Australia hence striking equilibrium among the two. The common currency is the Australian dollar while the Australian Securities Exchange plays a vital role in the stock exchange market. Australia presents a very attractive business environment for locals as well as international investors as described in this business research report (Australian Government, 2011). Discussion The Australian economy The free-market economy is practiced in Australia where the gross domestic product is maximized while reducing the poverty rate among the citizens. The country is ranked at number three in the world’s index of economic freedom as at 2010 after clinching the 13th position among the largest economies of the world. The GDP of Australia is way above that of France, Canada and the United States. These successes are attributed to the elevated quality of life in the country as well as better prosperity status. Similarly, formation of the Australian Securities Exchange enabled the individual companies to sell their stock in a bigger market hence extending their networking capabilities (Dixon & O'Mahoney, 2010). Over the last 15 years, Australia has posted an annual growth rate of 3.6% which is above the average stated by the OECD. Consequently, during the financial crisis of 2007-2009 Australia managed to withstand the heat as it was never affected by the recession. The county has maintained a high employment rate as more tan half of the entire population are engaged in gainful employment. Major sector that have supported such tremendous employment rates include the service sector where tourism, education and financial services are offered. Agriculture and natural resource extraction have also supported employment of a huge number of citizens. Australia mostly exports its products to Japan, China and New Zealand. All in all Australia faces a grave economic crisis as it lacks a stable export-oriented manufacturing sector. This is an area that has proved futile to establish as the local manufacturing firms rarely venture into the international market to sell their products (Denoon, 2000). The manufacturing industry in Australia The Australian manufacturing industry is composed of the textiles, food processing, and motor vehicle industries. The sector has received tremendous support from the federal government since the1960s as it employs a large percentage of the Australian population. Most of the raw materials used in this industry are obtained from the country as there are vast natural resources within its geographical boundaries (Australian Government, 2011). The table below shows the percentage production (for export) in each unit of the manufacturing sector in a span of 11 years; Table of individual percentage export for various sectors in the manufacturing industry Industry Percent in 1999 Percent in 2009 Percent in 2010 Food, beverages and tobacco 19 19 20 Textile, clothing and footwear 5 3 4 Wood and paper products 7 6 9 Printing, publishing and recorded media 10 10 13 Petroleum, coal and chemical products 15 14 17 Non-metal mineral products 4 5 6 Metal products 18 19 20 Machinery and equipment 17 19 20 Other manufacturing 4 4 5 (Kriesler, 1999) There is clear indication from the table that minimal or no growth has been attained in the manufacturing sector for the span of 10 years. However, since the reduction of tariffs on exported items, in 2010, robust growth in the production rate of export products. This is because manufacturers are able to reap substantial benefits from their undertakings hence motivating them to produce more goods. However, despite the incentives a larger percentage of the manufacturing activities are conducted in China though the companies may be based in Australia (Dixon, 2010). The food and beverage industry has always being the largest due to availability of raw materials especially those used in the manufacturing of wine. The meat and meat products sector also plays a great role in contributing towards higher export productivity. Process design for the manufacturing sector The process design in the manufacturing sector of Australia is rather complex based on the fact that there is need to establish high level coordination between the consumers and the suppliers. This will enable the manufacturers to identify the unique needs portrayed by the consumers then work on them to ensure that the products that are manufactured are able to meet these particular preferences (Tucker, 1999). Similarly, in the process design, the operations of the firm must be illustrated clearly so that all activities will be aimed at achieving the objectives. These operations rely on coordination so that the various departments in the sector can collaborate with relevant Australian authorities so as to ensure that all available resources are utilized as per the capacity of the manufacturing firm. Consequently, entrepreneurs in the manufacturing sector must remain up to date in terms of identifying the most efficient and appropriate technological system for any particular operation in the course of production (Macfarlane, 1998). Similarly, the resources used should increase product turnover while at the same time instilling quality assurance. The Australian economy has a way of determining the capability of a firm especially in the manufacturing sector how it is able to withstand the emerging pressures presented to the market based on consumer trends. Successful manufacturing firms are able to adjust their process design to suit the changing times such that consumers are satisfied at all times when their demands are met (Dixon, 2010). The service industry In the transport sector the rate of car ownership in Australia is so high that almost everyone owns a car in the country. This has led to a higher contribution of revenue from roads than in any other country in the world. Fuel consumption is equally high making the transport industry one of the most profitable sector in the country’s economy. The roads are well constructed with tunnels being built to ease congestion such that transport has never been a problem for business people in Australia (Tucker, 1999). Major cities are connected by trams which facilitate human and non-human transit. Air travel is also elaborate with each city boasting of an international airport with advanced technology being exhaustively applied. Sea transport is also efficient with the vast shoreline being dotted with reliable harbors to load and unload cargo to international destinations. Agricultural products and unprocessed metals are mostly transported via the waterways as it is deemed cheaper (Denoon, 2000). The transport industry in Australia is closely linked to the telecommunications sector where information is passed on to the public. Telephones and radios have been operational for a long period of time as well as free-to-air televisions. These televisions are state owned and those wishing to air their stories are not charged. The free-to-air televisions are considered the best platform when advertising as the message is capable of reaching a wider target population. The internet is also critical in today’s communication arena in Australian especially when a marketer wants to get the attention of formally employed customers. This is because a good number of the cities are connected by interstate networks that allow data passage to be more efficient (Kriesler, 1999). The tourism sector is quite active in Australia especially among the locals who have been engaging in domestic touring for a long period of time. Tourism in the country is made easier by presence of adequate infrastructure especially the transport industry thus making it easy to access even the remotest parts of the country. The diverse landscape has also been fundamental in promoting local and foreign tourism as most of the geographical features present are unique to Australia (Kriesler, 1999). The financial system has fully supported all the industries in Australia as they offer very attractive services ranging from credit to financial advice. The banks are either local or international and they have been able to open branches all over the Commonwealth of Australia thus enhancing chances of accessing finances. The most commendable aspect of the Australian banks is that all the finances are secured because customers are made to deposit substantial amounts of cash before operating any form of account. This guarantees the customer of total security in case of any misfortune in the financial sector. Similarly, payments involving money can be made in several ways in Australia such tat one is spoilt of choice. There are cash deposits, cheques, and electronic fund transfers; there is bpay and credit cards. All these are widely acceptable therefore minimizing money loss during transit (Dixon, 2010). Business etiquette and culture in Australia Australian business culture maintains the conservative attire with men in dark business suits coupled with a tie and women either a dress or skirt plus blouse. Individuality is regarded highly as well as privacy such that curiosity in ones activities may lead to presentation of a cold shoulder thus business secrets are rarely shared with non-partners. Similarly, a visitor is advised not to reveal so much about their self or their company (Penney, 2006). However, Australians are friendly and very open people who respect the opinion aired by the speaker. Punctuality especially in business meetings is highly regarded as any latecomers are considered as non-interested parties. In addition to business etiquette, the power distance between management and other employees is very low as Australian business professionals always engage in endless interactions with their subordinates. This creates a sense of mentorship such that the more experienced staff is able to pass on knowledge to those who are fresh in the organization (Kriesler, 1999). Achieving the competitive advantage in Australia There are various strategies that are employed in the Australian economy so that firms may sustain their relevance in terms of market share. These are not limited to manufacturing or service industries but to all profit making organizations that sell their products to consumers. However, the competitive advantage is based on the consumer preferences with some consumers seeking particular products due to their low prices while others buy them due to their high quality. Hence a firm that wants to remain relevant in the competitive market has to meet one or both factors as a way of satisfying consumers (Peteraf & Barney, 2003). One of the strategies that are adopted by manufacturing and service industries is availing products at the lowest price in the market. This will in turn translate to voluminous sales as the low cost of the product will attract more customers. However, the strategy may not be effective in terms of profitability for a starting firm as chances of losing are very high. This is because there is always a single company with low priced goods and services while the rivals take the cue from the leader. This way, a firm that is just entering into a new market may be towered by the other leading firms thus it may not be the best for new firms. However, once the firm has curved its niche, then selling products at a low price is creates a stiff competitive edge over all the others (Coles & Mitchell, 2003). The other strategy is designed at enhancing the product quality such that customers will chose a particular brand or the services of a particular firm based on the quality. This is based on consumer preferences where a customer would rather spend a little more money as expected to obtain a product or service whose ability to meet the needs of the customer is assured. Utilizing this strategy entails redesigning the process involved in product manufacture which is more costly but then the manufacturer does not have to lower the price of the product as customer will be drawn to the product by the assured high quality (Flanagan & Smith, 2006). Time utility is yet another strategy that creates a wide divide between various rivals as customers who fail to see their favorite product in the market will opt for the next best available. Australians are great time keepers and latecomers are rarely forgiven hence as a manufacturer or service provider, it is significant that products should be present in the market at any given time. Failure to heed the time and space factor in product delivery may cost a firm loss of customers as they will be forced to choose products from rival companies (Dixon, 2010). The other equally achievable strategy in the manufacturing industry entails offering after sales support to customers. This may involve free servicing of machinery among other equipment as well as free installation. The manufacturing firm should develop an amicable network with existing customers who will act as support consultants for customers using products of the same company. Such an initiative is bound to help a foreign firm to penetrate the Australian market without wasting much time. This criterion will benefit any firm that wants to establish shorter channels of distribution as there will be only a single intermediary between the manufacturer and the customer (Porter, 2006). Another strategy that can be used by entrepreneurs in Australia to attain a competitive advantage is through utilization of readily available local resources so as to cut down on the cost of importation. This can be achieved in the manufacturing sector by purchasing raw materials from local producers as well as ensuring that they gain access to the source so as to ensure that these resources are readily available at any given time. The service sector can use local advertising firms to establish a client base locally before moving outside the country (Smith, 2005). Locally available resources also accommodate human capital such as labor both skilled and unskilled. The large number of immigrants in Australia is made up of casual laborers most of whom have developed hands-on skills in any one trade thus these can come in handy in the manufacturing sector (Fergus, 2003). Consequently, since Australia has a very high rate of literacy, this means that there are equally highly learned people as well as professionals in the country. Therefore, it would be cheaper to engage locals in various levels of production rather than outsource or import experts from foreign countries. Labor is a vital factor of production which can be costly thus making the end product expensive such that the firm may end up making loses. However, by incorporating the local human capital, entrepreneurs will be able to maximize on profits while reducing the overall cost of production (Jackson, Hitt and Angelo, 2003). Similarly, incorporating information technology in every part of production to aid in product design and research will create a competitive advantage as the firm will be able to develop products whose quality has been tested and the quality assured before going to the market. This way customer satisfaction will be attained and as loyalty will be created by the customers on the said product (Blackie, 2008). Conclusion Australia is very competitive in terms of entrepreneurial investments as one is assured of total support by the government. Entrepreneurs who wish to set up their business in Australia should first get to understand the consumer needs and preferences such that when they are planning the operational process design, they should establish them in line with meeting the demands of the market. However, the major hurdles that face any newcomer in a foreign market can be alleviated by utilizing marketing strategies that will enable a firm be have a competitive edge over other rivals. Similarly, the manufacturing sector as well as the service sector market is not fully exploited in Australia thus creating feasible projects for any related industry. In conclusion, Australia is an attractive country with a business environment that is sufficient for any business to thrive profitably. References Australian Government. Australian growth rate in figures. Retrieved on April 12, 2011 from: www.australiangovernment-bureauofstatistics.org Blackie, T., 2008, "Battle of the Brands". 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