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703SMGT Strategic Management Assignments Solution
International expansion is necessary to uplift profit margin and to take ample of growth opportunities globally. Without international expansion, the company cannot attain a competitive edge over the rivalries. Riverina is a agrifood Company who provides various agrifood products and services to customers across the globe. The firm is decided to explore its business in the Chinese market because China has highest population around the world thus, it can take enormous rivalries benefits. The paper further outlines the international business strategies that are adopted by the company when flourishing the business. International growth opportunities and suitable entry modes for Riverina also have been shown in the task successfully. A brief information about mission, corporate and culture and health business of Riverina also have been presented in the task. More detail of this paper is discussed below.
Australian food agribusiness sector
Riverina is an agricultural company which is established in 1927 in Australia (Riverina, 2018). The company operates and manages feed mills in Murgon, Warwick, Oakay,Casino, Brisbane, and Mackay. It is stated that Riverina has a strong and unique link with the farming society for the distribution and acquisition of agricultural produce. Employees are encouraged and motivated to focus on the needs and requirements of the customers which are excellent accommodated through cost, price and service. The association has guided in exploring and expanding markets within Australia and overseas. The company deals with producing of dry stock feeds, primarily supplements and dog foods. The organization also produces approx 200 tonnes of refined vegetables oil and 300 tonnes of vegetables protein meal per day for the dairy. poultry and animal feed industries. Riverina is one of the efficient and leading producers in Australia. The main mission of Riverina is to provide good quality of food to the clients across the globe with minimizing the cost or prices in the competitive market.
International opportunities for Riverina
It is stated that Riverina can take ample of opportunities while expanding and flourishing the business in the China. It has been reported from the various studies that China is the second biggest economy in the world by maintaining around 18% of the international economy (Agriculture and agri-food Canada, 2018). Furthermore, it is the biggest trading partners for seafood and agrifood products globally. It has been found that Chinese government is highly investing money to maximize agricultural production in the competitive market (ABACUSBIO, 2018). It is seen that Chinese government is improving and enhancing the agri food high technology in the competitive market (Lee, 2008).
Along with this, international cooperation in agricultural technology and science has also been enhanced and improved by the country. China is the third biggest retail market across the world, behind the Japan and United States and it further has built retail and agri food environment for gaining competitive benefits (Agriculture and agri-food Canada, 2014). In today’s era, the demand of the agri food in China is been increasing rapidly. Due to high trend of agri food products in China, Riverina could able to increase and enhance the profitability and revenue in the competitive market. The company can introduce its agri food products in the Chinese market to stand out over the competitors (Park, Sarkis and Wu, 2010). China is a country with wide range of target audience and few farming lands make an excellent achievement in agrifoood business. There is high demand of agrifood products in China this, Riverina could able to attract and retain maximum number of Chinese. The country also has an insatiable appetite for excellent quality of agri food products.
International strategies suitable for Riverina
If an organization is willing to expand and explore the business in the international market then various international strategies need to be considered in the competitive market (Hill, 2008). As the same way, Riverina needs to use ample of international strategies to compete with rivalries and further to boost profitability in the Chinese market. Some of the international strategies that can be chosen by the company have been detailed below.
1. International strategy: Implementing an international strategy or approach means identifying and analyzing exporting products and services to foreign market and importing products from other countries for domestic use. Riverina can use this international business strategy to stand out against the competitors internationally. Diversifying the market is one of the biggest benefits of international strategy that can be taken by Riverina while expanding business in China. This strategy also provides a major opportunity to learn and gain knowledge about the Chinese market (Verbeke, 2013).
2. Multi-domestic strategy: One of the fundamental strategies that can be used by Riverina is multi-domestic strategy. In this strategy, Riverina tries to understand and analyze the needs, preferences and choices of the customers in Chinese market. To expand and flourish the business in China, Riverina needs to understand and analyze the taste, preferences and requirements of the key target audience in the competitive market. It is reported that multi-domestic strategy is suitable for agri food organizations and adopted by these companies in a large extent. This strategy is used in a limited number of countries. By initiating this strategy, the company tries to attract and retain maximum number of customers by customizing agri-food products and marketing strategy to match the conditions of the Chinese market (Tamer, 2009).
3. Global strategy: This strategy can also be used by the company while flourishing the business in Chinese market. In an effort to explore customer base and to boost profitability, Riverina can follow a global strategy to augment their revenue and outcomes. With the help of this strategy, the company further can reduce costs and reach a global key target audience as possible. If a firm initiates this strategy then they do not need to make any changes in the agri-food products in the Chinese market (Grewal et al, 2011).
4. Transnational strategy: One of the vital strategies that could be used by the company is transnational strategy when expanding and exploring the business internationally and could be seen as a combination of the multi-domestic and global strategies. This strategy is helpful in identifying and analyzing the excellent management tactics for attaining favorable economies of scale and maximized efficiency and effectiveness. Although, transnational strategy is quite typical than other strategies because pressures to minimize costs are combined with setting this strategy but Riverina can use this strategy to increase outcomes and effectiveness (Norwich university, 2018).
All these international strategies can be applied by Riverina while entering into the new market like China. By using all these strategies, the firm further would able to meet the long term needs, preferences and requirements of the business.
Appropriate and inappropriate mode of entry to the international market
It is stated that there are various entry modes that can be used by Riverina while entering into the Chinese market. Some of the appropriate entry modes are detailed below.
1. Exporting method: China is one of the growing and fastest economies in the world, thus the country is trying to attract maximum number of the companies in the competitive market. The company can use exporting method to enter into such market. There are two types of exporting such as direct exporting and indirect exporting (Meyer et al, 2009). The direct exporting refers to the exporting of products and services from one country to another country directly to the final customers. By using this method, the company can export agrifood products from Australia to China. On the other hand, indirect exporting could also be used by the company to expand business in Chinese market. In indirect exporting, the company sells its products through mediator and intermediary. This method is suitable for the company because it renders potential for high and effective profit margins in the international market. This method further protects the patent, trademark and copyrights of Riverina in the international market (Bbamantra, 2018).
2. Strategic alliance method: It is crucial entry mode which can be suitable for the firm when entering into the foreign market. Strategic alliance may be defined as a term that explains a whole series of various relationships between the organizations that market globally. This method can be used by Riverina to expand and explore the production capacity and increase market communication share globally (Demirbag, Tatoglu and Glaister, 2009). Alliances provide support in developing and improving new technologies, resources and utilizing brand image in the Chinese market. By implementing strategic alliance entry mode, Riverina can initiate new business activities and operations in Chinese market (Lee and Lieberman, 2010).
3. Greenfield investment method: It is a kind of foreign direct investment tool which helps the parent company to set business operations in foreign country. This method might be beneficial for Riverina to implement new business functions in China (Cui and Jiang, 2009). In this entry mode, Riverina can formulate new facilities and create employment in new country. If Riverina adopts this entry mode then it can take ample of tax benefits in Chinese market (Bbamantra, 2018).
The inappropriate entry modes for Riverina while entering into the China are discussed below.
1. Franchising method: It is an effective and dynamic system in which franchisees pays royalty and fees to a franchiser in return for the right to be measured and identified by its trademark, utilize business system and to sell its products. It is analyzed that franchise entry mode is not suitable for Riverina because franchisee can become a competitor in near future. Along with this, a wrong and ineffective franchise can ruin company’s goodwill, name and financial position (Bordonaba Juste, Lucia-Palacios and Polo-Redondo, 2009).
2. Joint venture: The joint venture may be defined as a business in which two or more parties make an agreement to share revenue, and risks to attain common objectives and goals. In joint venture, both the parties are accountable for losses, cost association, and profit margin. This is not suitable entry mode for Riverina because profit margin is shared in both the parties. It could create conflict and issues among the parties while conducting business in a large extent (Bbamantra, 2018).
Recommendations for the future strategic direction of Riverina
The recommendations for the future strategic direction of Riverina have been detailed below.
It is stated that Riverina should focus on the differentiation strategy to expand business in the Chinese market. The firm has decided to explore the business in China thus, the firm should focus on the differentiation strategy to distinguish its food products from the rivalries. It is further recommended that product diversification strategy shall be kept in mind by the company for expansion and development. This strategy would provide a better chance to strive and compete with rivalries internationally.
It has been recommended that Riverina should use lower pricing strategy to attract maximum number of customers in the China. With the help of lower pricing strategy, the company further would able to make an effective brand image in the competitive market.
Promotional and advertisement strategies shall be used to promote and enhance agri food products in the Chinese market. The social media channels and traditional channels shall be considered while initiating business in the foreign country.
At the end, Riverina should identify and focus on the target audience to augment profitability and further it must identify the choices, needs and requirements of the key target audience. It will help the firm to increase and enhance the sale of the food products in new and competitive market.
It concludes from the above mentioned discussion that Riverina is a one of the biggest and leading suppliers of the animal feed for the entire agriculture industry apart from this, it is a leading and fastest exporter of the grain meals and protein. For enhancing and boosting profitability, the company has decided to enter into the China. For this purpose, various international expansion strategies are used by the company across the globe. International growth opportunities in the context of China also have been discussed in the task briefly. The firm will also appropriate entry modes such strategic alliance, green field investment and direct exporting. These entry modes help the firm in setting new business activities and functions in China. At the end, some recommendations have been elaborated for strategic future direction of Riverina in the competitive market.
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