Business firms struggle to remain global in scope and these organizations are faced with several challenges in there contemporary business dealings and there is a requirement for such firms to struggle for there continued existence. Research indicates that business environment keeps on varying as these organizations endeavour to sustain their market share as well as provide quality products/services to there clientele. Business environment entails both internal and external features that may influence upon the expansion and general performance of the business.
Contemporary firms are required to construct economic and political links that typically take the structure of transfer of goods, finances and populace across national boundaries. This phase of relationships has in the process witnessed combined sharing of information and philosophies that has led to enhancement in the swiftness of change, ambiguity, uncertainty, and impulsiveness in day to day business undertakings (Lee and Carter, 2005).
This paper will therefore examine Australian business environment and particularly examine the current political, economic, social-cultural, technological and legal environmental factors that impacts business entry to Australia. It will further examines the concept of globalization with relevance to Pounder Bicycle Company’s competitors, overall market size, marketing strategies, market entry strategies, project costs and the benefits that the company will attain if it will succeed in Australia.
Australia Environmental Analysis Political Political factors may have a direct and indirect effect on the performance of the Pounder Bicycle Company. Some of the decisions made by the Australian government may impact negatively on the operations of Pounder Bicycle. For instance, the decision to minimize the production and marketing of high performance bicycles to countries believed to be a threat to Australian local industries. This will definitely have huge implications to the company particularly in the marketing of bicycles in Australia. Economic Every business organization including Pounder Bicycle Company is affected by economic factors.
Fiscal policy rates, inflation, interest rate policy, cash exchange rates, monetary policy and consumer factors among other economic factors set forth in Australia may have an impact on the company’s undertakings in Australia. Research indicates that the Australian climate of the economy dictates how the consumer behaves in the economy. Australian economy is reported to be in a boom thus there is increased speculation that the company’s customers can obtain the bicycles comfortably i. e. comfortable with the prices of the array of bicycles.
Opportunities for the company however exist since Australia government opts cycling of tourists meaning there is market for the bicycles because it supports the economic growth of Australia (Austroads, 1999). Social-Cultural Forces within the Australian community such as family, friends and media will have an impact on how Pounder’s Bicycles will perform in the market. Research reveals that in Australia, many customers have been misinformed to believe that bicycles from Australia only are of quality and of high quality thus those coming from outside Australia may be of low quality.
Such social factors affect the customer’s attitude, opinions and interests on how they will approach the Pounder’s bicycles in Australian market. Technological The way Pounder Bicycle Company will operate its business will also depend on technology changes. The internet will boost the company’s chances to meet new markets in Australia and extend its global outreach. However, it can be noted that the company will not require high technological inventions since it will manufacture traditional bicycles and market the bicycles in Australia.
Legal The way the company will operate in terms of operating rules of law in Australia will matter a lot. The company will be engaged in legal business practice of marketing bicycles which is permitted by Australian law. Therefore Pounder Company will not be against the Australian law thus it will be an ideal opportunity for the company to market its bicycles in its new market i. e. Oceania Australia (Cycling Promotion Fund, 2006). Industry Analysis Australia is one of the most powerful nations in the world boasting of a well-built society, politics, customs and economy.
It has contributed significantly to the entire economy of Europe and the entire world today over the past. Right from the beginning of European incorporation, it has been a main contributor to the expansion of the European Union and it is looked upon as one of the pillars of the continent and the European Union at large. Australia is vigorously concerned in almost every phase of the European Union and the most outstanding ones are; provision of political leadership, military relations, economies, diplomacy and policy making.
Sale of bicycles in Australia is a popular market since many of the individuals living in Oceania use bicycles to travel to workplaces and learning institutions among other places. Research indicates that bicycles in Australia are popular means of transport since many people believe that the use of such bicycles are of great benefits particularly health benefits i. e. by riding bicycles to various places it is a way of exercise thus individuals have no need to go to gyms for further practise.
The growth of bicycle industry can be traced back to 17th century in Australia which by then bicycles were the most popular and convenient way of transport in the country. Good economy, stable exchange rates, flexible import duties, better trade tariffs and more importantly, the single currency used by the two countries are factors that promotes international marketing. Europeanization has directly affected the governments of the member states; this means that the developments that Australia has gained so far in culturally and domestically are linked to the European Union’s progress (Hill, 2005).
The comments by the Minister of Transport of Australia and Regional Services Mr. John Anderson that the enhancement of the total of secure cycling in Australia will improve the Australian well being automatically indicates that the bicycle industry in Australia is popular and therefore Pounder Bicycle Company has the opportunity to utilize such ready markets in Australia. The minister further believes that a raise in cycling will advance transportation access for lots of the local people in Australia, amplify levels of personal health and also trim down the greenhouse emanations, air contamination and traffic jams.
Further more, cyclists and non-cyclists will gain from lesser health expenditure in the society, a smaller amount of traffic on Australian infrastructure and more importantly enjoy cleaner air (Cycling Promotion Fund, 2006). Therefore with such reasons and intentions by the Australian government it implies that cycling is more encouraged and thus Pounder Bicycle Company can venture in Australia since it will face no hostility or lack of market for the bicycles since the government of Australia encourages individuals to use bicycles in their day to day activities.
Further, the size of bicycle market in Australia is reportedly to be approximately over a billion dollars at retail level per year; adults in this case are highest buyers or owners of the bicycles as compared to children. Also there are a variety of bicycles being sold by different companies who manufacture bicycles in Australia; many have emphasized on the comfort and speed of such bikes. Therefore with such industry trends in Australia Pounder Bicycle Company will have the opportunity of selling traditional bicycles to Australians since research indicates that such types of bicycles are on the decline (Cycling Promotion Fund, 2006).
Market Pounder Bicycle Company should not concentrate on the Australian bicycle market but instead should identify particular market segments which will record high sales of traditional markets. Therefore the company will have not to compete in the entire market but rather identify its strongest segments that will ensure success of the company in Australia. Pounder Bicycle Company should utilize encirclement strategies for winning the competitors in Australian bicycle market.
Such a strategy is also referred to as envelopment strategy and it is considered subtle, moderate and a bit non-offensive but dangerous way of offending the rival. Pounder Bicycle Company can utilize two ways using his approach. First, the company can introduce broad range of bicycles that are alike to the competitor’s bicycles and each of these bicycles will get a share of the same market the competitor is currently in. In the long term, the rival will be demoralized, undermined and depressed thus the competitor at large may opt to give up the market.
Such technique will ensure that full scale confrontation is avoided between the company and the target competitors in Australia (Brassington and Pettitt, 2000). The second approach that the company may utilize is that approach of market niches rather than concentrating on bicycles themselves. In this approach, the market share is liberated from the target competitor via the expansion of market niches that surround it. With such strategies therefore the company can achieve substantial market share which will eventually leads to success of the company in the long-run (Brassington and Pettitt, 2000).
Market Entry Since Pounder Bicycle Company has opted to go international i. e. enter Australian market several market entry strategies are available to the company to utilize. However, such entry strategies differ with cost, risk and the degree of control which can be put into effect over them with particular regards to security of markets i. e. whether it will be successful. Pounder Bicycle Company should utilize the indirect method of entry to Australian market:
Under indirect exporting market entry strategy, an exporter can access foreign market free from risks of doing it directly. It will involve Pounder Bicycle Company using independent organizations within the Australia’s domestic markets. The company can do this through various ways; for example, a domestic based export merchants, who will take the title of the bicycles and sells them in Australia, domestic based export agents who sell and market the bicycles on behalf of the company and co-operative organizations who act on behalf of the company.
Pounder Bicycle Company should utilize such strategy by either choosing to use one of the above methods of indirect exporting because of the following advantages; communication is very much easy because the exporting company is domestically based and the risks of investing are much lower than coming up with full market in the host country i. e. in Australia (Kotler, Armstrong, Saunders, and Wong, 1999). Project Costs and Financing The whole project of entering the Australian market will require Pounder Bicycle Company to have substantial amount of resources in order to ensure the success of the firm in its business endeavours.
The cost of entering the market for instance may be high thus necessitating the company to look for alternative way of sourcing funds. Further the cost of materials to manufacture enough bicycles to be sold in Australia may be high. The company therefore can utilize its own resources i. e. its savings although it should not exhaust all the financial resources in such venture because business entails risk taking. Therefore, the company should opt for loans from financial institutions in order to combine such funds with the internal financial resources that it has.
Clear financial forecasting as well as financial cash budgets should be prepared by the company’s management in order to spend the financial resources effectively and wisely. HR Issues and Organization Structure Pounder Bicycle Company will be faced by issue of workforce diversity which is the spread of human labor across the entire globe irrespective of their area of specialization and skills entailed. The existence of the globalization concept have been realized when diverse patterns in workforce are put into consideration.
Pounder Bicycle Company will also employ people from the host country i. e. Australia thus the firm will have to adhere to rules and regulations set forth for businesses in Australia regarding employer-employee relationships (Hoyer, 2001). The most excellent means Pounder Bicycle Company can openly develop its financial performance in the industry is to employ, choose and train the right personnel. The most excellent strategic exercise to realize this goal is to carry out what is usually termed as job-fit practice.
Such practice is practical to the company since the workforce to be recruited will not be required to undertake further extensive training but carry out their responsibilities right away applying their skills gained somewhere else. Organizational effectiveness can only be achieved if the management of the company is be able to incorporate good leadership, motivation, a well defined organizational structure, forming group dynamics and setting up good structures for communicating in the workplace.
Pounder Bicycle Company should formulate a flexible organization structure in the sense that they should be ready to cope with change without affecting their productivity especially when it intends to go international (Cullen and Parboteeah, 2005). Strategic Benefits to Pounder Bicycle Company An analysis of business environment will help the company to know of all the strengths, weaknesses, opportunities and threats that the company will face in there quest to expand to Australian market.
Therefore the company will be able to consider the following factors: The speed of entering the Oceania market, flexibility/free and exit barriers, the costs to be incurred when entering Oceania market, the risks inherent in the course of entering the market, period of payback/how quick the firm can start earning the returns or proceeds from such investments and the company’s long run goals among other factors will be clearly known in advance.
With ascertainment of the above factors therefore, Pounder Bicycle Company will be able to identify its strategic benefits form any opportunities that exist in the Australian market. For instance, the company will benefit from large market share since there is high demand of bicycles in Australia thus the company will realize substantial revenues because of high sales. The company will also strategize well in Australia thus being able to compete effectively with its both local and international competitors (Lovelock, 2006).
Conclusion Business environment keeps on changing because of globalization and the concept of international businesses. Businesses therefore are faced with a lot of threats as well as have a lot of opportunities brought about by such aspects of business world. To attain greater investments and better market opportunities in the international market, it is necessary that primary and secondary market research is done (Cullen and Parboteeah, 2005).