Marketing Assignment: International Market Entry Plan of Cullen Wines
Question
Task: There are two assessments which require you to progressively develop key scenarios of an international Market Entry Plan. There assessments are to be framed as reports to the senior management team of a firm seeking to internationalize or expand their international operations. Your Market Entry Plan is to be based on “A winery in Australia wanting to enter Vietnam, Indonesia or USA”.
For this marketing assignment, you need to complete the following tasks:
1) Evaluate and analyze the internal and external environments for internationalization opportunities.
2) Assess those specific countries, markets and industries in the assessment scenario you have chosen for internalization.
Answer
Introduction
The firm chosen for preparing this marketing assignment is Cullen Wines, an Australian winery that is situated in Wilyabrup, Margret River region in Western Australia (Brooks, 2017). The report will discuss the internationalizing plan of Cullen Wines to enter into the international market of Vietnam, Indonesia, or the USA. In order to develop an international market entry plan for Cullen Wines, the report will discuss the internal and external environment of Cullen Wines. This is because both the internal and external environment has a significant contribution to creating internationalization opportunities for Cullen Wines. It is essential to analyze both the internal and external environment of Cullen Wines for evaluating its success and failure rates of internationalization. The report will further make an assessment regarding the market and industries of Vietnam, Indonesia, and the USA in which Cullen Wines has planned to enter. This assessment will provide a vivid picture regarding the competition and market culture of foreign markets.
Evaluation and Analysis of Internal and External Environments for Internationalization Opportunities
Internal Environment for Internationalization Opportunities
The internal environment of an organization of form with the integration of elements present within the organization and these elements affect an organization's internationalization opportunity. Following are the internal environment that will affect the internationalization opportunity of Cullen Wines.
Corporate Culture: The first internal environment that will affect the internationalization opportunities of Cullen Wines is its corporate culture. Corporate culture is the values, behavior, and beliefs that guide an organization's overall business process and operations (Tarver, 2021). Corporate culture is not implemented, but it is developed over time through employees and management behavior. The success and failure of the internationalization of Cullen Wines depend on its corporate culture. This is because the corporate culture determines whether Cullen Wines is open to foreign interaction or not. It also determines the social adjustment capabilities of Cullen Wines, which is an important aspect of internationalization.
Business Policies: Management policies are the company's rules and regulations to manage its employees and business process (Leonard, 2018). This makes business policies the second internal environment that determines the internationalization opportunities of Cullen Wines. This is because when Cullen Wines enter an international market, then they need to make necessary changes in their old policies. If Cullen Wines are not able to change their business policies, then they can face some troublesome issues. To avoid difficult situations, Cullen Wines need to have flexible business policies that can be changed as per the requirement international market. Therefore, management policies are the internal environment of Cullen Wines that affects its internationalization opportunities.
Organizational Structure:A system that helps an organization to make a framework and guidelines that direct their activities towards the achievement of goals is called an organizational structure (Wedgwood, 2021). The organizational structure of Cullen Wines allows them to set a hierarchy in their organization and create a level to carry out different duties and responsibilities. In order to create an internationalization opportunity for Cullen Wine, its organizational structure should be such that it can efficiently create new departments and smoothly delegate responsibilities and authorities among different employees. Therefore, to enter into the international market, Cullen Wines need to first understand their organizational structure.
Employees: The core of any business is its workforce, without which most businesses will cease to exist. For a huge business like Cullen Wines, the large workforce is essential since wine production needs considerable manual labor in the field as well as efficient management, especially in its overseas markets. With the advent of globalization, the horizon for business opportunities has increased substantially, among which internationalization is one. Prior to globalization and internationalization, organizations usually had a conservative and homogeneous workforce in most respects as there were few opportunities for cross-border businesses. Globalization has introduced the idea of a diverse workforce within the organizational culture, and this concept is all the more relevant and prominent when it comes to the internationalization of a business and its overseas branches. Expanding a business outside of one's home country and market brings the company into contact with people of different and newer culture, language, and beliefs. This diversification of the workforce can have both a positive and a negative influence on the company (Rutihinda, 2011). The positive aspect of the diversification of the workforce is that the company will gain more variety in their outlook towards their business plans and strategies, and policies. The employees who are the citizens of the host country will be able to provide better insights into the habits and behaviors of the culture of the country or region as compared to a foreign employee working in an overseas branch, which can be very helpful, and, in some cases, crucial in the success of the business. The negative influence that this diversification can cause within the company is disharmony among the employees, especially between the residents and foreign employees, caused by a difference in language, culture, beliefs, etc. Racism is still one of the pressing issues and employee rights violations in the present work culture.
External Environment for Internationalization Opportunities
It is essential to evaluate and analyze the external environments for internationalization opportunities. Since globalization and internationalization are maximizing in the present business environment, it becomes essential for individual businesses to retain the developments. However, the external environments to be evaluated for internationalization opportunities in a particular scenario, a winery in Australia, desires to enter Vietnam, Indonesia, or the USA. Several environmental factors directly influence the functioning of international organizations, such as political and legal factors and social conditions of a particular economy.
Demographic Environment- The demographic environment plays a significant role in the internationalization process. Cullen Wines must emphasize the manner in which governments can regulate the actions of foreign investors(Citeman.com, 2021). Income is regarded as one of the significant demographic variables that influence international businesses. Certain demographic factors such as the rate of population growth, level of income, size of the population also generate a major impact on international businesses(Belniak, 2021).
Political Environment- Several political factors consequently influence the international factors. Several political factors that may influence the functioning of an international firm, Cullen Wines, are the prescribed actions and policies of the government, regulations based on foreign trade, prescribed transformations in rates of tax, and the regulations associated with foreign trade. The absence of political stability in Australia will automatically affect the operations of Cullen Wines. Several government initiatives and prescribed tax policies obstruct the enhancement of operations in other countries(Nordmeyer, 2021). However, as per the researches, it has been reviewed that the efficient political environment of business affects the development of operations of the Cullen Wines.
Technological environment- It is also regarded as a significant element in the case of internationalization opportunities. At present, the rapid transformations in the external environment of business are mainly made due to the advancements in technology. Hence, the minimum level of technological progress of a prescribed country might emerge as a restriction for international businesses to expand(Chand, 2021). The natural environment also evaluates the probable costs involved in international activities.
Socio-cultural environment- The significant challenge in the case of internationalization is also evaluated by the socio-cultural environment. It has been reviewed that almost every culture affects the behavior of customers in the market; it is quite difficult for foreigners to grasp complex practical implications. Businesses in the international markets are impacted by significant cultural elements such as attitudes of foreign products, attributes of effective consumption.
Legal Environment-Different countries have different regulations and laws regarding different commodities introduced into their markets, and the companies introducing those products need to comply with the laws and regulations of the host countries to do business in those countries. Australian trade with Vietnam is ruled by the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) agreement (ASEAN-Australia-New Zealand FTA, 2021). Indonesia and Australia have also recently agreed, the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which facilitates excellent two-way trade between them. In a similar manner, Australia has established several agreements with the USA to facilitate corporations for its businesses in each country. These agreements between the countries provide both parties with opportunities for smooth trade in their corresponding partner markets. Apart from these agreements, individual countries' laws regarding minimum wage, employee rights, gender rights and laws imposed on importing certain commodities, and the customs law for international trade, etc. Importing wine, which is the main business of Cullen Wines, will have to comply with the individual country's laws and regulations of each country's consumer law for its importation and sale in that country.
Assessment of the Countries for Internationalization
Assessment of Vietnam
Vietnam is located in Southern Asia, and this country is famous for its rivers and beaches. The strategy of the country to move from a centrally planned economy to a market economy has changed the country. This strategy of Vietnam has transformed it from a poor country into a country with a lower-middle-income. There is an expectation that the country's economy shall develop in the coming future, which makes it an ideal destination for Cullen Wines for internationalization. The major factor the contributes to the economic growth of the country is its geostrategic location. The economic concept used by Vietnam to regulate and monitor its market is the sharing economy concept. The Vietnamese market is diverse because of its diversified landscape, and commercial activities happen at a large scale with markets in urban regions, streets, floating markets, and mobile shops.
Vietnam is a consumer market that imports goods from the foreign county. Among the goods imported from foreign countries, one of the products that have increasing import is wine. This is because there are many hotels, restaurants, and retailers that sell wines. The market imports 65% of red wines, 25% of white wines, and 10% of sparkling wines (Zaca, 2015). Apart from Italy, France, the USA, and Chile, Australia is also one of the major countries from where Vietnam imports wine. This makes entry into the Vietnamese market easier for Cullen Wines because it is an Australian firm. The biggest importers of wines are T.K. Distribution Corp, Da Loc Fine Wines and Spirits, Vinifera and Sola Hung Thinh. Along with that, in Vietnam, there is a rising trend in the number of wine consumers. Despite being a male-dominated area, there is an increasing number of female wine consumers in Vietnam. This increases the demand for wine in the Vietnamese market, which makes it a suitable destination for the industrialization of Cullen Wines.
Assessment of Indonesia
Indonesia is regarded as one of the leading economies in Southeast Asia, and wine is regarded as a luxury in Indonesia. The history of viticulture in Indonesia commenced in the 18th century when the locals assisted Dutch explorers in expanding the initial vines of the country in Kupang.The wine sector in Indonesia is led by the wine category in volume as well as in value in 2018. As per the researches, it has been reviewed that the sparkling wine category is estimated to register adequate value and growth of volume during the year 2018-2023. The only applied pack material in the sector is glass. The leading market players in the wine sector of Indonesia are Orang Tua Group, Hatten Wines, and lastly, the LVMH Moet Hennessy. According to the report of Global Data's Country Profile on the wine sector of Indonesia, information has been gathered based on trends in the application of package materials, data on category level channel of distribution, market share of brands, and high growth categories to target.
Consumers in Indonesia have started to prefer wine for benefits associated with health in contrast to alcoholic beverages. As wine is regarded as a luxury in Indonesia, the efficient markets to target are the foreign tourists, upper-middle-class, and upper class. Wine is usually associated with celebrations and festivities, hence promoting products in holiday seasons is one of the effective ways to maximize sales(Judith, 2021). As per the researches, the maximum numbers of internet users in the world are in Indonesia. Promotion through social media is considered as one of the reliable ways to promote wine since the promotion of alcoholic beverages through TV advertisements is banned. During the last few centuries, the production of wine has remained quite limited. Moreover, this has not stopped Indonesia from emerging as a significant importer of wine. The current economic surge of the country has changed the manner in which the Indonesians viewed consumption of wine.
Assessment of the USA
The world’s most developed economy is the USA economy and is one of the strongest countries in the world. The economic system of the USA is well developed, and it derives strength for the manufacturing and service sectors. There is a winery in every state of the USA, and it contributes significantly to the overall wine production of the world. The 2018 report of The National Association of American Wineries showed that the world consumer 6.5 billion gallons of out of which the USA had consumed 872 million gallons (Clark, 2020). This shows that there is a massive demand for wine in the USA, and there is a great scope for a winery in the USA. However, entering into the USA winery sector can be difficult for Cullen Wines because there are already many wineries in the USA. There are well-developed wineries like Duckhorn Vineyard and Scribe Winery in the USA that can be a tough competition for Cullen Wines. It is necessary for Cullen Wines to assess the competing firms so that they can enter the USA wine market.
The United States is the largest economy in the world after China. It is regarded as a highly industrialized country with adequate degrees of productivity and application of advanced technologies. The USA is regarded as the leading wine market in the world with the maximum amount of imported wine and the maximum population of regular wine drinkers. Though the market of US is considered attractive, it is challenging as well as a difficult market. The significant factors mainly comprise a decreased number of wine customers, complex and regulated system of distribution, and maximum competition in alcoholic beverages. The wine market of the USA is the largest due to the maximum population and maximum disposable earnings. Since the customers of the United States prefer nutrition-packed beverages, there is the probability of the wine market to progress in the USA due to its mature nature. The wine market in the USA is segregated with the presence of domestic as well as global players.
Conclusion
In the assessment of logistics and supply chain management, the key sections of an international Market Entry Plan have been developed. The Market Entry Plan had to be developed based on one of the scenarios. The scenario that has been selected is a winery in Australia desiring to enter Vietnam, Indonesia, or the USA. In the initial section, the internal and external environments for internationalization opportunities have been analyzed and evaluated for the chosen international organization, Cullen Wines. In the next section, an assessment has been done of the specified countries, industries, and markets that had been selected for internationalization. A market entry plan is considered a crucial constituent for the development of international markets. In order to maintain sustainable, profitable growth in competitive markets, effective strategies are required to retain adequate business connections in the long term.
References
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