Expanding Into the Australian Market Essay Sample

As main Strategic Analyst for Kenyan based concern. Nakumatt. we have been given he task to look beyond our place market as Nakumatt Supermarkets prepares to spread out beyond the national market overseas into Australia. This study points out cardinal inside informations necessary for determination devising on the ventures feasibleness. Australia is known for fiscal stableness amongst it’s population even through the planetary economic crisis and the largely middle-class state relies on large retail mercantile establishments for mundane demands. The retail supply ironss have grown more common over the last one-fourth century and although Australia has two ruling supermarkets in topographic point. Nakumatt ( being a taking supermarket in Kenya ) may stand a opportunity at being successful overseas. The cot-competitive market could turn out to be an advantage for Nakumatt during market entry. This study outlines the legal duties involved in tapping the Australian market every bit good as the policies in topographic point. the skillset of the work force. a brief expression at the competition to be faced and a few schemes that may be of usage to Nakumatt. The study should be able to reason conditions or non the move is best at this clip.

Legal and Political Environment
“Under the Corporations Act 2001. every company in Australia has been issued with a alone. nine-digit figure. an Australian Company Number ( ACN ) . which must be shown on a scope of paperss. The intent of the ACN is to guarantee equal designation of companies when transacting concern. New companies are issued with Numberss by the Australian Securities & A ; Investments Commission ( ASIC ) upon enrollment. ” The statement above can be found at the terminal of every Australian Business Registration Form. which is officially issued by the Australian Securities and Investment Commission. Australian Business proprietors have been rather happy with the service of the ASIC because they find that their information is frequently easy accessible and at any clip ( ASIC. 2001 ) . The system is effectual and under changeless monitoring therefore the likeliness of loss of certification. fraud. and disproof of paperss is ne’er an issue. Business people in Australia have put complete trust in an effectual system. As a taking supermarket in Kenya. Nakumatt has saddle horses of paperwork and sensitive paperss. which require guardianship. The charges for new paperss are high and the procedures are boring and time-consuming. Another issue which can be worrying is the likeliness of private or implicating information falling into the incorrect custodies but this would non be an issue with the rigorous ordinances and Torahs on privateness and with the speedy easy entree but extremely unafraid system.

Fiscal Climate
Australia and the planetary fiscal crisis
The bing fiscal crisis nowadayss both challenges and chances for bing concern and new 1s seeking to tap into the Australian market. One advantage for a new concern is that the changeless rise and autumn of the Australian dollar has helped change over Australia into a cost competitory market… which was non the instance merely five or six old ages ago. As a Kenyan concern looking for new chances to make a new mark market. you can utilize low costs to entice your mark market in and include this in your selling message. New schemes. which are unable to take off in Kenya. can be an advantage in Australia. E-marketing and e-business are a large portion of the Australian market so a shopping web-page is another manner to increase gross revenues for Nakumatt by rising the easiness of shopping for clients. The Australian Trade Commission advices that it is best to. “Minimize your hazard with a balanced spread across a wide client base. without stretching your resources excessively far. ” ( ATC Annual Report. 2008 ) The easiness of this for a supermarket is that the mark market is clearly middle-class Australia. what we would name in Kenya “Wanainchi”

Managerial and Labour environment
Australia. being a developed state. has dependable systems in topographic point for staff seeking. occupation happening. and all the systems are readily available online. Sites such as Envirojobs and the Australian Government Department of Sustainability. Environment. Water and Community. let companies and concerns of all kinds to publicize their vacancies. On the other terminal. agents link Australian occupation appliers ( harmonizing to their makings ) to occupation handinesss. This creates easiness in happening a qualified undertaking force and even senior direction as opposed to the really common ‘poaching’ process used in Kenya. The sites besides work frailty versa… occupation searchers can open on-line profiles with the sites and concern proprietors will merely contract their hunt down to the specific makings necessary. Labour market policies in Australia have evolved in favor of the work force ( Miller 2003 ) and the authorities has done its best to guarantee that there is equity in employment in every organization… in footings of size of work force. hours worked per hebdomad. minimal rewards. and besides the employment of a certain per centum of handicapped employees per concern.

Regulatory Environment
Certain procedures have encouraged the growing of supermarkets in Australia in the last one-fourth century. These procedures include globalisation and pro-corporate ordinances among others ( McMichael 2003 ) . International enlargements by supermarkets in foreign locations has allowed for significant net income additions. Globalization has. in recent old ages become apparent in the retail sector in Australia with Supermarkets from all over the universe fall ining the market. This entails big supermarket ironss interrupting from the parturiencies of a national ( limited ) parturiency base. As a effect of holding retail power in Australia. you will be a great finding factor in what is green goodss and in bend what people consume particularly in the nutrient sector ( Bourlakis. 2004 ) . This will of class require you to be in close contact or instead understanding with the policy-makers. husbandmans. manufacturers. consumers and industries in Australia’s ‘local’ market. ‘Own-brand’ ( e. g. the Nakumatt land nuts and Nakumatt bakeshop ) merchandises caused disturbance in Australia among other states. as they were supplying higher returns than established merchandises ( besides available in your shops in Kenya ) such as Nestle. Heinz and Uniliver. and below the belt acquiring more shelf infinite ( Burch. 2007 ) .

In Kenya the supermarket decides who gets shelf infinite. which in bend leads trade names to pay higher costs for shelf infinite. This system is considered illegal in Australia and such policies and ordinances have ensured just trading patterns. However. this makes the other trade names competition of your trade name and they retaliate through selling runs and developing niche market merchandises for wellness and health. The ordinances and criterions in supply ironss of perishable goods use a ‘technologies of audit’ system. which defines the regulative manner of administration for all retail merchants of any perishable in Australia ( Burch 2007 ) . This may impact how you box your ‘own brand’ merchandises in Australia. The system is such that all merchandises will hold to hold a elaborate list of ingredients every bit good as a short description for some e. g. Goods incorporating any signifier of dairy or nuts will hold to be clearly labeled ‘contains nuts’ or ‘contains dairy’ . This is to guarantee that consumers with wellness complications or allergic reactions to those merchandises are good cognizant of the dangers and can non implicate you in the tribunal of jurisprudence as holding been negligent.

Competition
Key facets of the retail industry
Food production in Australia is characterized by a big figure of comparatively little houses. It is estimated that in 2001-02 there were about 120 000 commercial ( preponderantly household based ) farm animal. cropping and horticultural farms. and about 5000 commercial fishing houses in the nutrient production industry ( DAFF 2005b ) . The nutrient processing sector is made up of 3400 assorted sized houses ( DAFF 2005b ) or 7774 ‘manufacturing direction units’ ( Australian Bureau of Statistics’ Business Register ) . However. the largest 20 nutrient processing houses are estimated to account for about half of entire industry turnover ( DFAT 2005 ) . Nevertheless. across different nutrient processing sectors the figure of providers varies well.

For illustration. in the poultry-meat processing sector there are three big processors accounting for most of the industry’s end product. while in the ruddy meat sector there are in surplus of 30 processors. The Major supermarket ironss dominate the food market channel. AC Nielsen estimation in their 2006 Grocery Report ( Food hebdomad 2006 ) that the major retail ironss hold about 78 per cent of the market portion of the food market channel. excepting liquor gross revenues. As nutrient retail foreign retain chair we would hold to see adjust our concern theoretical account and structures to take advantage of the growing chances in Australia. For each of the major ironss in the Australian retain market represent different fiscal consequences in different ways. this makes comparings of nutrient and drink gross revenues really different. Food and spirits gross revenues of the major concatenation retailer’s totaled $ 45 billion in 2005– 06. which sums to 74. 5 per centum of the reported ABS entire gross revenues through the supermarket channel.

Kales and Woolworths Supermarkets
The food-retailing sector in Australia is dominated by two major supermarkets. which are estimated to hold 62 per cent of entire Australian nutrient and spirits gross revenues in 2003-04 ( table 2 ; ABS 2004 ) . Presently the Australian nutrient retail market comprises five major supermarket ironss. which are Coles. Woolworths. Foodland. IGA and ALDI. Harmonizing to ACNielsen ( 2004 ) the largest two houses Coles and Woolworths had a market portion of 62per cent of the entire food market gross revenues in Australia. Coles and Woolworths push towards private label. or home-brand merchandises. a tendency. which industry experts say could spell problem for the nutrient fabrication industry. They’re worried consumers will be left with less pick on the shelves. while an ever-increasing sum of providers being forced out of concern will jack up monetary values. Bing a new participant in the Australia market we would hold to see Coles and Woolworths as our biggest rivals.

In other OECD states. comparable market portions of 50–70 per cent are typically merely reached when the gross revenues of the five largest nutrient retail merchants are aggregated. For illustration. the five largest nutrient retail merchants account for 80 per cent of entire retail nutrient gross revenues in France. 64 per cent in the United Kingdom. 62 per cent in Germany. 58 per cent in Spain and merely 32 per cent in the United States ( Soler 2005 ) . Even though Coles and Woolworths have such a big market portion. our company can still do a profitable impact due to the fact that there are no barriers to entry to the Australian nutrient retail sector. New entrants like us can supply effectual competition to the large supermarket ironss. German based planetary nutrient retail concatenation ( ALDI ) is a good illustration of foreign supermarkets can last and thrive in the Australian market. ALDI has been able to add competitory force per unit area on other Australian supermarket ironss through a low cost. no frills concern theoretical account. based around a limited scope of basic nutrient points. Costss of in-store staff. merchandise storage. handling and presentation are minimized and the merchandises. while non traditional family trade name names. are by and large of a high quality.

Key issues and challenges
Be an foreign Company we have to take an in-depth expression into the cardinal issues that affect supermarket. and the nutrient processing and retail sectors in peculiar. we broke it down into good defined set emerges ( AEGIS 2001 ; Allen Consulting Group 2004 ; DAFF 2002. 2005b ; David Milstein and Associates 2004 ; Mellentin 2005 ; Sleep 2005 ) . These include:

* The adequateness of investing in invention and research and development ( R & A ; D ) ; * The extent of competition within the nutrient industry. and peculiarly in the proviso of retail and sweeping services ; * Concerns about rapid industry rationalisation and integrating across the supply concatenation and the impact that these developments might hold on little manufacturers and processors ; * Concerns about the impact that ‘private labels’ may hold on trade name competition and the allotment of shelf infinite ;

Challenges and Schemes
As an international retail house come ining into the Australian nutrient industry. we have to measure the compression signifier other emerging companies and local manufacturers. processors and retail merchants. all these participants exists within the planetary economic nutrient market. The outgrowth of China over the past few old ages as a planetary rival in the processed nutrient markets. in Australia and elsewhere. has non changed the nature of the retail market ; manufacturers and processors still finally compete on delivered costs and quality. However. the outgrowth of China and other exporting states like China has increased the strength of competition. As an international retail house we would hold to accomplish farther betterments productiveness and happen a manner to cut down cost to remain completive.

As an international retail merchant we will seek and vie on many different planes. for consumer trueness. Whilst ‘sales’ . ‘specials’ and ‘lowest monetary values across the store’ are the usual selling tools used. we will seek and implement a non-price scheme based on a combination of service. quality goods and convenience. As a international retail ironss we will offer the convenience of a one-stop store for all our nutrient and food market lines. this will do us as Nakumatt to be more competitory as a retail concatenation.

Trade policy
Trade policy developments in Australia are a large factor to see when puting in the retail market. In add-on to prosecuting many-sided trade reform through the protections of the World Trade Organization. Australia is prosecuting bilateral trade reform agendas with a figure of cardinal trading spouses ( McDonald. Nair. Rodriguez and Buetre 2005 ) . Free trade agreements have already been signed with Australian. Thailand and the United States. Malaysia and the ASEAN group as a whole. These understandings have the possible to present benefits to the Kenyan nutrient exporters through discriminatory or expeditious trade agreements. However. being a Kenyan company we can take advantage of these understandings and supply competition to domestic merchandises in Australia.

Generic house branded
In Australia. the major supermarket ironss tend to advance more place trade name. which causes alterations to the handiness of shelf infinite for foreign trade names. Shoebridge and Whyte ( 2005 ) reported that the supermarket ironss are forcing to significantly increase the figure of local branded merchandises in their shops. Coles has programs to raise the proportion of house branded merchandises from 13 per cent to 30 per cent by late 2007. Bing an international retail we would greatly profit for selling more of our local Kenyan merchandises at a cheaper monetary value. While generic trade name merchandises sell for 5–20 per cent less than foreign trade names. the border that a retail merchant makes on a local trade name is estimated to be about 2 per centum higher than what they earn on foreign trade names ( Shoebridge and Whyte 2005 ) .

One cardinal issue for us is if some of our local merchandises will be may be the deficiency credence in the Australian market. From the information we have gathered Australian branded merchandises have been successful when it comes to merchandises limited to merchandise distinction. like sugar and flour.

Analysis of the Australian Market
To better understand If Nakumatt would be a successful concern in Australia we obtained some overzealous information on how international retail ironss are executing against the local retail ironss.

Figure 1. Costss of making concern and gross net income. three old ages. % of gross revenues

Our ironss operate with higher costs and mark borders than other big leagues due to the nature of this retail market.

Abbreviations
WW Woolworths
Wmart Wal-Mart – a United States supermarket concatenation Wmart Int. Wal-Mart operations outside the United States
Kr Kroger – a United States supermarket concatenation Alb Albertsons – a United States supermarket concatenation Car Carrefour – a Gallic hypermarket and supermarket concatenation CML Coles Myer

Figure 2. Dayss in stock
Kales do non describe their investing in stocks but Woolworths is executing better than other big leagues in this index.

Figure 3. Net incomes before involvement and revenue enhancement. last three old ages. % of gross revenues Australian retail merchants operate on lower overall borders than most major European Union and United States retail merchants.

Australian retail merchants are runing competitively in footings of the productiveness of floor infinite despite the lower population concentration. These Numberss vary nevertheless due to comparative currency values.

Figure 3. Gross saless per annum per square pes. US $ ’000

Beginnings: Whitehall Associates’ analysis of fiscal statements ( Price Determination in the Australian Food Industry A Report )

From the above information we can see that the local retail ironss perform much better than the international retail trade name. but the international retail ironss besides make a really large net income. As an international retail this information shows that with the right selling scheme and market place. us a Nakumatt can come in into the Australian retail market. nevertheless the sum of capital to put in such a undertaking would be excessively much.

Mentions

DAFF ( Department of Agriculture. Fisheries and Forestry ) 2002. National Food Industry Strategy: An Action Agenda for the Australian Food Industry. Commonwealth of Australia. Canberra.

White. L. 2005. ‘Savagery on the shelves’ . Food Week. no. 1775. 18 March. p. 1

ABS ( Australian Bureau of Statistics ) 2004. Retail Trade. cat no. 8501. 0. Canberra

ACNielsen 2004. ACNielsen Grocery Report 2004. ACNielsen Australia. Macquarie Park. Sydney ( World Wide Web. acnielsen. com. gold )

Bazoche. P. . Giraud-Heraud. E. and Soler. L. G. 2005. ‘Premium private labels. supply contracts. market segregation. and topographic point prices’ . Journal of Agricultural and Food Industrial Organisation. vol. 3. no. 2. article 7 ( World Wide Web. bpress. com/jafi o/vol3/iss2/art7 )

AEGIS ( Australian Expert Group in Industry Studies ) 2001. The Processed Food Product System in Australia. University of Western Sydney.

Allen Consulting Group 2004. Environmental Sustainability in the Australian Food Industry: The Commercial Opportunities. Report to the National Food Industry Strategy Limited. Canberra.

David Milstein and Associates 2004. What’s Hot in Food? A Review of Trends
and Issues Affecting Food Consumption in Australia and Globally. Melbourne

Mellentin. J. 2005. A Tipping Point for Health and a Turning Point for Functional Foods: Ten Key Trends for 2005. New Nutrition Business. London.

Sleep. C. 2005. Identify Food and Health Trends for 2005. Aroc Limited. Worcestershire. England.

McDonald. D. . Nair. R. . Rodriguez. G. and Buetre. B. 2005. Trade fl ows between Australian and China. ABARE paper presented at the 49th Conference of the Australian Agricultural and Resource Economics Society. Coffs Harbour. New South Wales. 9–11 February.

Shoebridge. N. and Whyte. J. 2005. ‘‘No names’ winning conflict of the brands’ . Australian Financial Review. 7 April. pp. 1. 60. Sleep. C. 2005. Identify Food and Health Trends for 2005. Aroc Limited. Worcestershire. England.

Bourlakis. C. and M. Bourlakis ( 2004 ) the hereafter of nutrient supply concatenation direction in M. Bourakis and P. Weightman ( eds. ) nutrient supply concatenation direction Oxford Blackwell: P 221-230

Miller. W. P. & A ; Neo. M. L. ( 2003 ) . Econimic Record: Vol. 4 Issue 246. Labour Market Flexibility and Immigrant Adjustment p. 336-358 Burch. D & A ; Lawrence. G. ( 2007 ) Supermarkets and Agri-food Supply Chains: Tranformations in the production and ingestion of nutrients Official site of Australian Securities & A ; Investments Commission ( ASIC ) -Author unknown