Outstanding Achievements in Modern Science and Technology of China - Essay Example

?Management Table of Contents Introduction 3 Country Brief 4 4 Situational Analysis: PEST Analysis 5 Political and Legal Environment 6 Economic Environment 6 Social Environment 7 Technological Environment 7 Recommended Strategies: Marketing Mix 8 Product 8 Price 8 Place 9 Promotion 9 Ethical Concerns 10 Conclusion 11 References 12 Introduction Company A is an Australian third generation wine producing family business set-up. It was formed in 1905 and currently operates with the employee strength of 100 people in various Australian locations. It has won at least 200 awards for its good quality of wine since its formation. It is worth mentioning that Company A is a privately owned, Australian based, producer of Red and White wine. The company was recently noted to have started transactions with the economy of Japan by offering the Japanese customers with regular and premium quality of wine. In its future expansion panning, Company A has selected the market of China owing to the opportunities and the threats presented by the Chinese wine industry in comparison to the other probable target markets including that of UK and USA (Department of Foreign Affairs and Trade, 2012). The core objective of this paper is to state the procedure of expansion of a wine company from Australia to the selected market of China explaining the reason for focusing on the Chinese market rather than USA and UK. With this concern, the study will emphasize on conducting a situational analysis in order to gain an in-depth understanding of the target market, based on which, particular strategies will be suggested to the company with regards to its expansion plan. Country Brief All the three prospective markets for Company A’s expansion planning, including China, USA and UK, are having good trade relationships with Australia. In the three countries the demand for wine is high and plays an influencing role for the wine producer or company. However, it is worth mentioning that a few differences made Company A to choose Chinese market for its expansion. With a substantial rise in the total population of China, demand in the wine industry have also been noted to increase at a significant rate as wine is considered to be an inseparable part of Chinese culture and lifestyle (Conley, 2007). On the other hand, the population of USA is increasing, but at a low pace. However, the demand for wine is increasing rapidly and has influenced many companies to expand their businesses in USA. It is in this context, the USA wine industry can be identified as majorly captured by the national companies which develop the industry to be a concentrated one with barriers for the foreign companies. Hence, while deciding upon expanding to the USA market, Company A might have to face various competitive factors which might restrict its sustainable growth (Colman & Paster, 2007). The Chinese wine market can further be regarded as more promising than the UK market based on various facts. For instance, UK has witnessed a significant fall in its overall consumption of alcohol due to increased taxation rate and other legal constraints. The recently recorded figure shows that the consumption of alcohol in UK fell by 11% in 2010 in comparison to that of 2004. Moreover, impositions of duty charges and other taxation limits also act as barrier to foreign wine companies to enter in the UK market. On the other hand, China has gradually developed as a leading purchaser of alcohol in the international market. Moreover, in the international context, China has also been observed to consume more quantity of wine than USA (The Wine and Spirit Trade Association, 2011). The growing population in China along with the subsequently increasing demands in the market plays a significant role as a vital attracting aspect to many foreign companies, especially in the current wine industry. Australia and China are interdependent on each other in terms of foreign trade through Free Trade Agreement (FTA). Subsequently Company A, being an Australian company, can enjoy various benefits in terms of reduced duty charges, political assurances and legal support from the Chinese market (Department of Foreign Affairs and Trade, 2012). Situational Analysis: PEST Analysis Situational analysis can be quite beneficial for a company to expand in a foreign market. The major factors, which are learnt to have considerable impacts on the company’s success in the foreign market, are mostly regarded as political, economical, social, technological, environmental and legal situations. Political and Legal Environment In this context, political background plays very significant role in China which consists of three levels. Three levels of government in China are central, state and local governments respectively (Jacques, 2006). The political status of China reveals that there is vast gap among the central, state and local government with regards to the applicable laws. This major factor can affect Company A to expand its business efficiently in China’s market. The conflicts among the China government leads to a fall in the rate of foreign trade and investment in the China’s market (Fogel, 2010). Economic Environment Similarly, economic situation of China is rapidly changing in a positive direction due to the liberalized trade policies. The GDP of China took a high growth in 2010, however, by the first half of 2012, it was assumed to fall to 8%. The fiscal policy was than introduced to strengthen the growth of GDP in China which in turn intended to facilitate foreign trade within the economy by a large extent emphasizing on the enhancement of Foreign Direct Investment (FDI) flows (EDC Economics, 2012). Notably, the rapid development of the economy in terms of GDP and trade liberalization policies can act as major facilitating factors toward the sustainable growth of Company A in the Chinese wine market. Social Environment Social culture of China has been widely observed to allow wine production and distribution from its historic ages (Communicaid, 2009). It is in this context that in festive seasons and also in varied family gatherings, wine is termed to be an essential alcoholic beverage for the family. The traditional acceptance of wine in the regular recipes and functions acts as a major encouraging factor for the Chinese people to grow a fascination regarding the products. Notably, the Chinese market is observed to have a considerable preference for red as well as white wine products since the traditional periods which have been mostly imported from foreign markets. It is worth mentioning in this context that the home producers of wine in the country are mostly noted to manufacture grape wine or rice wine; however, the requirement of the Chinese people with regards to the red wine and white wine are satisfied through imports by a large extent (China Culture, 2012; California Association of Winegrape Growers, 2005). This can certainly be regarded as a major contributing factor to the sustainability of Company A after its expansion in the Chinese market as it is also a renowned producer of Australian red as well as white wines. Technological Environment Technology growth in China can also be regarded as a major influencing factor towards the expansion planning of Company A. It not only assists in attaining the proper transportation and marketing facilities, but also tend to be helpful in indentifying the actual requirements of the targeted customers. The technological assistance provided by the country can thus be quite beneficial in reducing the costs incurred while shipping of goods in the international context. Owing to the technological benefits, Company A can also intend to execute research and development measures and thus aim at improving its product quality on a continuous basis (Lundin & et. al., 2006). Recommended Strategies: Marketing Mix Based on the situational analysis, the recommended strategies for Company A can be illustrated with the implementation of Marketing Mix model or 4Ps. Notably, the 4Ps in this framework represents the strategies applied in connection to products, prices, places and promotions. Product The product which will be marketed in China by Company A from Australia can be both the red as well as the white wine products. It is due to the reason that the current economic and social factors prevailing within the Chinese economy can be identified as quite favorable for marketing red and white wines as a growing fascination can be identified in this regard (New Zealand Trade and Enterprise, 2012). Hence, with the virtues of Company A’s experience in producing and marketing red as well as white wine products, this particular approach might prove to be quite advantageous for the company while expanding in the Chinese market. Price The Chinese market can be segmented in three categories based on the preferences of wine products in terms of quality and price. For instance, the niche market is likely to favor branded and top quality wines giving insignificant concern towards price. However, the middle income group and the lower income group customers are likely to render significant concern towards price rather than the quality (Lundin & et. al., 2006). Based on these segments, Company A can target the middle and higher income group customers, as it tends to serve quality products at comfortable price range which is affordable for both higher income group and middle income group in the economy. Place Preference for wine can be identified in almost every region of China. However, it will be beneficial for Company A to target the consumer markets with recorded consumption of red as well as white wines in its introductory phase. It is in this context that this can reward the organization with better growth prospects, once the product is accepted in the niche markets as with due course of time it shall grow its preferences in the relative markets rewarding the company with competitive advantages (Zhongguo Wine, 2010). It is worth mentioning in this context that Guangzhou can be regarded as a most promising market for the entrance of Company A as it is often exclaimed to be the doorway of China offering the preferences of a varied culture (CN Wine News, 2009). This in turn is quite likely to enhance the marketing prospects of Company A products, making it more acceptable in the Chinese market. Promotion Company A can make use of various promotional media in order to access the targeted markets in the niche and the middle income group customers. Moreover, as it has been recorded that in the Chinese market, it is largely the young generation people who tend to prefer wine products, the organization can take the advantage of internet media and television as well. It is due to the fact that these two media options are observed to be quite preferred amid the young generation customers offering a long lasting impression on their purchasing attitude. Attracting slogans and persuasive messages through advertising can be quite beneficial for the company to attract the targeted customers from the Chinese market. Ethical Concerns Owing to the reason that Company A is an Australian brand attempting to enter the Chinese market, the management is most likely to witness cultural conflicts by a large extent. In this regard, the company needs to consider acquiring a significant understanding of the cultural values and norms and avoid taking any strategies which depict any disregard for the aspect. This might not only make the brand unacceptable but also hamper the sustainability of the brand by a large extent. Moreover, strict environmental laws are followed in the Chinese economy which should also be taken into concern by Company A while expanding to the Australian market. Rendering concern towards these markets shall not only enhance the quality of the products served, but also reward the company with better customer loyalty in the Chinese market. Conclusion With regards to the above discussion, it can be stated that Company A should consider various factors while expanding to the market of China with its red as well as white wine products. Other than the micro and macro environmental factors including the political, social, economic as well as environmental elements, the organization also needs to emphasize on its strengths and weaknesses while expanding to the Chinese market. Efficient budgetary plans should also be considered by the company in order to make a sustainable start in the market. It is in this context that proper understanding of the foreign market shall not only reward the company with better competitive advantages in the country, but shall also enhance its future growth opportunities within the industry. 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