Arnotts Australian Organization - Essay Example

Individual Business Report Number Department Introduction Arnott’s Australia remains by far, the largest biscuits producer and the second largest supplier of snacks in Australia. Arnott’s history began in1865 when it operated in New South Wales home estates. Arnott’s manufactures its products by baking its products through the help of its staff and the use of the normal baking recipe and the machinery that the company possesses, and then selling the products to the market. The aim of this report is to determine the tenability of Arnott’s plans to penetrate Greece as a foreign market, by studying the socioeconomic, environmental and political dynamics which characterise Greece. Arnott’s seeks to expand its market by sourcing and manufacturing the entire product in Greece since biscuits and snacks are too peripheral to any country’s economic needs to feature saliently in import-export trade. Other alternatives to this mode of expansion is bound to expose Arnott’s to the government-imposed rigours of import-export trade, since the Greece government like any other, will seek to maintain a favourable balance of trade. Arnott’s need is the manufacturing plant. Arnott’s will need to have an efficient manufacturing plant to help maintain the quality of its biscuits, bakeries and other snacks. The report will discuss the feasibility of Arnott’s desire to go to Greece, in respect to Arnott’s current status and Greece’s socioeconomic, political, legal and environmental conditions. Parts 2.0- 6.0 of this report discuss Arnott’s prospects in light of the political, legal, economic, socio-cultural and technological conditions in Greece. Part 7.0 discusses Arnott’s prospects by using SWOT analysis. Part 8.0 is the recommendation section. Part 2.0 Greece’s political stability is underscored by it being a parliamentary republic, having the President as the head of the state and the Prime Minister as the head of the government. The constitution of Greece with its 120 articles allows for the separation of powers among the legislature, judiciary and the executive. This political stability will help Arnott’s to thrive. Likewise, taxation and regulation of trade will be carried adroitly, since separation of powers readily co-occurs with bureaucracy (Kizos and Iosifides, 2007, 66). Bârgãoanu, Negrea and Dascãlu (2010, 35) explain that Greece joined the European Union (EU) in 1981 and represents 41.5% of the EU’s deadweight tonnage. Greco-Australian relations are very close. This closeness dates back to World War I and II and the Korean War where Australia fought alongside Greece. Therefore, the Grecian government is naturally predisposed to encourage Greco-Australian trade (Vogiatzoglou, 2007, 53). Part 3.0 Arnott’s must sign articles of incorporation in the presence of a notary. The document signed must include details such as the name of the company, Arnott’s longevity, appointed auditors and shareholders and their rights. The statute must then be approved by the responsible prefecture, the department of commerce in Athens. Since Arnott’s is an Australian organization, it will be subjected to rules for non-EU business owners since Australia is not a member of the EU. Resultantly, Arnott’s will have to show the ability to: prove ownership of 300,000 Euros; create 10 new jobs, with at least 30% of Arnott’s jobs going to Greek citizens; and fulfil all the requirements for application with the Greek Ministry of Interior (Karamanos, 2003, 118). Since Arnott’s intends to create employment and engage in food business, it must obtain work and health permits. Apart from the need to apportion at least 30% of the jobs created, it is binding that working hours for its staff are restricted to 10 per day. Arnott’s will also have to adhere to the demands of occupational safety and health measures. The requirements above compel Arnott’s to use capital from the mother company in Australia. Arnott’s will also be constrained to go to Greece with no more than 69% of its staff in Australia. The flipside of this is that Arnott’s will have to train new recruits in Greece. Part 4.0 Currently, Greece’s long-term interest, exchange, deficit and public debts rates are favourable to the point of earning Greece entrance into the Economic and Monetary Union of the EU. Since 2009, due to local and international factors, Greece’s economy has been facing the most severe economic crisis since 1974. This has forced the government to revise its deficit from an approximated 6% to 12.8% of Greece’s GDP. Greece remains the world’s 34th largest economy in the world in terms of nominal gross domestic product. Its exchange rate is also favourable since on average, from 2001, Greece has been exchanging its 340.75 drachma for 1 Euro (Kakridis, 2009, 630). These developments promise a ready market for Arnott’s. In fact, Arnott’s relative economic soundness and persistent debts cannot adversely affect Arnott’s marketability since the product it will be producing is useful in both domestic and public settings. Part 5.0 Geert Hofstede’s model depicts a socially integrated Greece, in terms of individualism vs. collectivism. Greece has strong belief in familism instead of individuality. In terms of power distance, Greece is more consultative and democratic since it has low power distance. Greece has a low uncertainty avoidance index (UAI) and is therefore less emotional or anxious to change. As for Long term orientation, Greece can be said to have a bias towards pragmatic values. Greece also attaches value to the qualitative than quantitative aspects of life and its reality. The forgoing will help Arnott’s succeed. Collectivism readily co-occurs with social interactions which promote market for Arnott’s products. The democratic and consultative mien will help Arnott’s publicity penetrate the market. Greece’s low UAI will help Arnott’s easily maintain a positive image even as it faces uncertainty which always characterise the formative stage of a brand’s tenure in the market. Similarly, Greece’s demand for quality will auger well with Arnott’s products since Arnott’s is known for its quality products and unique cuisine. Part 6.0 Greece is technologically advanced, being graced with baking machinery galore. Soft dough machinery, bakery machinery, biscuit baking oven, post baking machinery and spare parts to all these are readily found in Greece. Arnott’s will therefore, be able to source and manufacture the entire product in Greece. Greece has 100% digital IT networks and 35,000 kilometres of fibre optics that spread out nationally. Greece also has approximately 2,253,000 broadband connections, with 48% of the population being Internet-savvy. Cybercafés and 3G and Wi-Fi-enabled phones also abound therein. This development will readily help Arnott’s market its products and to run its business communication operations efficiently (Athanassiou, 2012, 158). Greece’s railway and road networks got modernised in 1980s. Railway connections link Greece with European countries while the dense road networks such as Attiki Odos and Athens Metro spread throughout the country. This will help Arnott’s effectively distribute its products throughout the country and to Europe. Part 7.0 Arnott’s has strengths such as a large pool of capital which enabled it to acquire Snack Foods Limited Menz Yo-yo and Brockhoff Salada. Arnott’s bakeries have always been of greater quality, thereby helping Arnott’s receive a positive reputation. The same products exist in many varieties such as Caramel Crowns, Choc Monte, Nice biscuits, Lemon Crisps and Quatro among others, and thereby helping Arnott’s diversify risks. Arnott’s weakness has been its inability to deal with a poison scare, following an extortionist’s attempt to poison Arnott’s Monte Carlo biscuits in Victoria and South Australia. The recalling of the Monte Carlo biscuits in Victoria and South Australia exposed Arnott’s to another weakness- a 22 million dollar loss. Greece’s openness to arts and entertainment presents opportunities for Arnott’s. Arnott’s snacks and bakeries readily co-occur with entertainment. Likewise, Europe (which Greece is a member of) does not have any cultural inhibitions which may undercut the consumption of Arnott’s products. Arnott’s products are greatly included in breakfast meals (Lobo, Wann and Fulmer Jr., 2010, 23). Unrelenting competition from well established companies such as Kraft Foods, United Biscuits Holdings and Britannia Biscuits is Arnott’s main threat. Part 8.0 Arnott’s should stick to quality, to curve itself a niche in the market. There are too many formidable competitors such as Kraft Foods, United Biscuits Holdings and Britannia Biscuits in the market, to allow Arnott’s to deal in mediocrity. Arnott’s should also fully adhere to Greece’s corporate law to help it make meaningful inroads in the new market and to cultivate a positive public/corporate image. When Arnott’s profit margin gets large enough, Arnott’s should go an extra mile to observe corporate social responsibility to help cultivate the positive public image and improve the status of the market and environment around it. Bibliography Athanassiou, E. 2012. “Household Debt and Domestic Demand: Greece versus other Euro zone Economies.” International Journal of Business & Social Science, 3 (9), 157-166. Bârgãoanu, A., Negrea, E. & Dascãlu, R. 2010. “Communicating the European (Lack of) Union. An Analysis of Greeces Financial Crisis in Communicative Terms.” Romanian Journal of Communication and Public Relations, 12 (1), 27-38. Kakridis, A. 2009. “Continuity and change: Mapping the community of economists in Greece (1944 to 1967).” European Journal of the History of Economic Thought, 16 (4), 625-664. Karamanos, T. 2003. “Market loses the pace.” Estates Gazette, 341, 118. Kizos, T. & Iosifides, T. 2007. “The Contradictions of Agrotourism Development in Greece: Evidence from Three Case Studies.” South European Society & Politics, 12 (1), 59-77. Lobo, B. J. Wann, C. & Fulmer Jr., J. G. 2010. “Greece: How Can Companies Manage New Risks?” Journal of Corporate Accounting & Finance (Wiley), 21 (6), 19-24. Nakos, G. E., Hajidimitriou, Y. A. 2009. “Conducting business in Greece: A brief for international managers.” Global Business & Organizational Excellence, 28 (5), 70-83. Vogiatzoglou, K. 2007. “Intra and Extra-EU Intra-industry Trade in Greece: Trends, Determinants, and Structural Adjustment.” Journal of Economic and Social Research, 9, (1), 19-54. Read More