Challenges Faced by the Australia Local Firms in Marketing Their Products - Coursework Example

1.0 Challenges faced by the Australia local firms in marketing their products and services internationally Australia companies have identified large markets for their services and products, this can be attributed to the large population in countries such as India and china. Moreover, the purchasing power of businesses and consumers around the world is significant enough for the Australia companies to want to compete in the international market. However, international marketing does not without challenges and the Australia firms have made a great mistake by not first adequately researching on international market before they commit resources there, there are some of the challenges facing Australia local companies in today's world to market their products and services internationally 1.1 Identifying a true market need A key factor for a company to succeed is offering products and services for which consumers have a compelling need. A product or services is supposed provide a solution for the customer’s problems that needs to be solved in an effective way in that its benefits are not difficult to communicate. It is not easy for Australia local companies to identify the true needs of huge numbers of customer in a foreign country. Not having lived in the foreign countries to experience their day to day culture, Australia marketing executives tend to assume that the needs of foreign customers matches the needs of Australia customer. This has result to these company offering a product or services that does not solve the problem of foreign consumers 1.2 Culture Nuance Customers across the globe are influenced to buy products through marketing messages channeled through media including television adverts and print media such as newspapers. To get the consumers to pay attention, humor is used in these commercial messages. However, what is perceived funny in one culture can be considered as insulting or confusing in another. For a local company in Australia to produce an effective advertising in the intonation market it does not only require accurate translation of the message from the one language to another but also deep understanding of the customs, culture, morals, as well as religious views that predominate in that country. What motivates customers to purchase commodities varies from country to country and this has been very challenging for the Australia companies in the international market 1.3 Dilution of Brand-Name power As a result of the internet, movies and other for entertainment, Australia culture is well known across the globe. However, this does not mean that Australia products and services will be popular introduced in other countries since being aware of a brand is not same as preferring it. It is a very expensive and long process for Australia companies to gain the trust of foreign customer who are used to their local products and services. Moreover, there have be increased resentment towards the Australia companies as they are being perceived as attempting to take over positions long held by local companies in the foreign countries. 1.4 Finding Reliable Partners Foreign companies often establish relationship with distributors in the countries whose markets they are seeking to enter, they hire sales representatives based in these countries. To succeed in establish this relationships these firms may engage local public relations and marketing companies to help them. Australia local company lack prior experience in the foreign market hence finding workers who are competent and trustworthy may be a challenge 1.5 Distance and time Even with advanced technologies, executive in other countries would prefer to establish relationships on a personal level which means Australia local company would need a significant investment in travel costs as well as having key executive out of the office for extended periods. On the other hand, time zone differences may make difficult to coordinate projects where collaboration is required 2.0 Comparative advantage This refers to the ability of company to produce products or services at a lower opportunity cost than its competitors. This enables the company to sell its products and services at a lower price than its major competitors which will enable the company to realize strong sales margins. The principle of comparative advantage which was coined by David Ricardo is fundamental in the determination of the pattern of trade among nations. Opportunity cost is the benefit foregone for undertaking an activity and therefore if a country has a lesser value for its resources in the alternative use, it can most efficiently employ resources in this activity. A company’s entire focus can be shaped by having a comparative advantage or disadvantage. For instance, if a cruise firm discovered that it had a comparative advantage over its competitors as a result of its closer proximity to a port, it might encourage the latter to focus on other, more productive, aspects of the business 2.1 Absolute Advantage This refers to the ability of a company, region or individual to produces services or goods at a lower cost per unit as compared to any other entity producing those services or goods. A company with absolute advantage is able to produce goods or services using a more efficient process and/or using smaller units of inputs than another other company producing the same goods or services. The principle of absolute advantage was first described by Adam Smith in the content of international trade. Smith stated that it was impossible for all countries to get rich simultaneously by following mercantilism since exports of one country are imports of another country. According to Smith, countries can only gain simultaneously if they practiced free trade and specialize in accordance with their absolute advantage. therefore, this idea became the basis of international trade as everyone exports what they are best at and most nation were better off since they were able to produce and sell more as well as have access to lots of products and services other nations produce more efficiently than they do 2.2 Product life cycle theory This theory was first introduced by Raymond Vernon to explain the expected life cycle of a typical product from design to obsolescence. He divided this period into the phases of product introduction, product growth, maturity, and decline. The main aim of managing a product’s life cycle is to ensure profitability and value is maximized at each state. The four phases of a product life cycle entails. Stage 1: Introduction This is the stage where a product or service is conceptualized and first introduced to the market where the main goal of the new product is to meet consumers’ needs. The introduction stage is divided into five distinct parts Stage 2: Growth This stage occurs when a product has survived its introduction stage as well as being noticed by the consumers. It’s in the stage where a company can decide if it wants to go for increased profitability or increased market share. Stage 3: Maturity This stage is characterized by slow growth and is approaching the point where the inevitable decline will begin. During the maturity stage the key concern is defending market share, the marketing department have to spend more time on promotion to entice consumers to purchase the product Stage 4: Decline This is the last stage of product life cycle and occurs when the product peaks in the maturity stage and then begins a downward slide in sales. During the decline stage revenue will fall to a point where it is no longer economically viable to continue producing the product 2.3 Recommendation Based on the theories discussed above, absolute advantage theory is the best for the local Australia exporters. This is because it makes sense for the farmers to trade with other importers. For instance, if a farmer in Australia is able to produce fruits in one month while an individual in China needs two months to produce the same fruits, farmers in Australia have absolute advantage over China but the Chinese has absolute advantage over Australia farmers in producing tractors. If the Australia farmers and the Chinese firm specialize in the products they have absolute advantage in and buy the products they don't have an absolute advantage in from the other entity, they will both be better off 3.0 Australian political risks and how they could affect its international market 3.1 Political risk Political risk is the risk to business interests that occur as a result of political change or political instability of a country or a continent. Every country around the globe experiences political risk in varying magnitudes. Political risks are mainly caused by change in governmental policies or change in the controls imposed on exchange rates and interest rates by the government of a given country. Political risks may also result from government control on prices, control on outputs, remittance restrictions and control on currency. Moreover, other factors such as terrorism, war, revolution, extortion and labor strikes have been known to be among the major causes of political risk (Griffin, 2012). 3.2 Political risks in Australia Just like any other country in the globe, Australia faces political risks that are a potential threat to its international business operations. Some the major political risks in Australia include; the senate obstructionism, budget uncertainty, government by crisis in Victoria and double dissolution in elections (Dan, 2013) 3.2.1 Senate obstructionism The Abbott government faces the threat of encountering several barriers in passing its legislative agenda since the Labor and the Greens hold the highest number of the senate until the end of June 2014 and after which the small parties and the Independents will take charge of the senate. The Labor-Greens coalition is most likely to attempt to stop the repealing of the carbon and mining taxes by the government, also, in order for the government to be able to put its legislation through, it will have to table negotiations with the Palmer United Party and the Independents (Dan, 2013) 3.2.2 Budget uncertainty When the Labor and the Greens coalition loses its senate majority to the small parties and Independents in the following financial year, there is a very high chance of double resolution 3.2.3Government by crisis in Victoria There is no clearly defined parliamentary majority in Australia, an issue that gives very little certainty for international business markets (Michael, 2001). Also the Victoria elections will be held in November giving politicians more time to put the country in more chaos that will be a threat to tapping into the international markets. Most Australian firms have been exposed to a 6 month budgetary limbo since they cannot even predict the government’s budgetary strategy (Dan, 2013) 3.2.4 Double dissolution election The government is most likely to cut down on its spending and revise its tax rates so as to raise them; this is mainly because the government debt levels are on the rise. 3.3 How political risks could negatively affect international marketing activities Political risk has a great adverse influence on a country’s international business. These effects may include the right to import or export goods and services to a right to owning or operating a business (Michael, 2001). With the government raising taxes on goods most countries will shy away from importing or exporting their commodities to Australia. With the political climate uncertainty of Australia due to constant disagreements in matters of the legislation, international markets are most likely to be affected negatively, also with the long year political circus in the country that will go on until the elections are held in November, most international traders are most likely to hold back from transacting businesses with Australia either for fear of losing their commodities due to rioting or war or for fear of making loses due to citizens who are much focused on politics and not in the spending on the imported goods. 4.1 Overall economic health of Australia We are going to determine Australia’s economic health using economic indicators. Economic indicators refer to the statistics about an economic activity. It allows the analysis of economic performance as well as predictions of the future performance. Australia as a continent has a very prosperous westernized economy that is very prosperous and characterized by capitalism. To assess the overall economic health of Australia were are going to use 3 economic indicators which include; 4.1.1 GDP Growth Rate This refers to the monetary values of all finished products and services within a country’s borders with a range of time. The graph below show’s Australia’s GDP for the last 5 years 4.1.2GDP per Capital This refers to a measure the total output a country by dividing GDP with the number of people in the county. Per capital GDP is useful when comparing performance of a country to another where a rise in per capital GDP signals growth in the economy and trends to translated as an increase in productivity. The graph below show’s Australia’s per capital GDP in the past 5 years From the graph, were can conclude that Australia’s per capital GDP has increased consistently for the past 5 year which signals growth in the economy and trends to translated as an increase in productivity 4.1.3 Balance of trade Between 2010 and 2011, Australia reported a consistent trade surplus as a result of high price of goods and services but in 2012 and 2013 the trade balance went back to deficit due to rising capital imports and sharp in value of exports Australia is a major exporter of commodities since its rich in natural resources. Metals such as gold and iron-ore account for 28% of the country’s total exports, coal for 18%, and gas and oil for 9%. Manufacturing goods accounts for 33% of Australia’s total export with metal products, food, machinery and equipment taking the biggest share. For Agricultural products mainly wool and wheat make up 5% of the total exports. Australia’s largest export markets in 2013 include Country AUD “000” Percentage China 8080700.10 27 Japan 3831472.58 17 South Korea 1398505.77 7 India 771408.26 6 European Countries 9919.86 5 5. 0 Samsung galaxy S4 is a product of a South Korean company called Samsung. The product was launched in the Australian market in 2013 with various cultural adaptations that has enabled marketing of this product very successful. The features of the Samsung galaxy S4 are highly adaptable by the very high population of Australia due to its vast features, simplicity and care for personal health. Samsung galaxy S4 has two cameras that enable it to make dual shots when taking photos, this makes it very convenient for the Australian community that is fun loving to take photos that are kept for future reference on the past events. Samsung S4 camera is also very powerful and can take very clear pictures from a long distance (Paul, 2007). Again, the Samsung galaxy S4 has a feature that enables it to record sound while taking the photos, these enables the highly modernized and technologically Australians to easily keep record of what was said during the photo shoot. With the largest Australian population being the youngsters who are very active and very keen about nature and what is going on around them, the Samsung galaxy S4 has a drama shot feature that enables one to take a series of pictures of a moving object so that one can have a detailed action merged together to one very dynamic picture. With the very outgoing Australian population, the phone has an adapt display feature with 7 automatic modes and 4 manual modes that provides the users with optimal viewing experience (Paul, 2007). Australia has a very solid culture of togetherness and unity and the group play feature of the Samsung galaxy S4 makes it very easy for the communities in the continent to do many things together using the technology in order to promote continuity in the spirit of togetherness; the feature allows many people to wirelessly connect several Samsung S4’s and share games, movies, music, and other documents. The Australian people love sports very much and are quite often out there watching and playing sports in the fields, the product has a story album feature that creates and organizes photo albums based on specific events, and this enables the population to conveniently store photos of the various sports events (John, 2012). Internet is widely used in Australian culture ranging from communication to transacting businesses; the Samsung galaxy S4 has a feature that enables its users to shop online from the Samsung hub from one place which is an integrated store for online shoppers. The product has a very effective translator that enables the buyer to say or write whatever in the language they understand and then the translator software translates the content into one’s preferred language; this makes communication very easy among the people of Australia who come from different speaking languages across the globe (Frank, 2014). With the Australian people very keen on their health, the Samsung galaxy S4 has a feature that promotes their health very effectively, the feature tracks one’s workouts, daily food intake and one’s reached weight. It shows an individual’s required level in terms of temperature and humidity at specific places (Frank, 2004). Australian people love entertainment, the Samsung S4 comes with a feature called watchON, when connected to the home entertainment system, it is able to list TV programs based on one’s preference and also provide TV program schedules; The phone also has a feature called Samsung home sync which is a personal cloud device that sores hundreds of pictures and videos. The phone also has a unique feature called the air gesture; the feature allows the Australian young and technology savvy population to control their gadget by just a waving their hand on the screen of the phone. The air gesture also enables the users to respond very fast to phone calls through the waving of hand on the screen of the phone whenever there is a caller (John, 2012). References Frank B. (2014) International Marketing Strategy New Jersey: Financial Times/ Prentice Hall John L. (2012) International Marketing New Jersey: McGraw Hill/Irwin Paul A. (2007) Handbook of Cross Cultural Marketing London: Routledge Dan G. (2013) Risk: The Science and Politics of Fear. London: Virgin Books. Griffin W. (2005). International Business. USA: Pearson Prentice hall. Michael R. (2001). International Marketing. USA: Harcourt College Publishers Read More