Discuss about the Analysis of Devondale Murray Goulburn Dairy.
Company Background Information
Devondale Murray Goulburn is a company and a co-operative of Australian dairy farmers that deals with manufacturing of dairy foods in Australia. The company was formed by a group of dairy farmers and started to operate in 1950, and up to now, it is dairy farmer controlled. The company supports over 2,200 farming businesses in southeastern Australia, making it the Australia's leading producer of the best dairy foods, coming from fresh Australian milk from dairy cows (Devondale Murray Goulburn, n.d.).
The dairy products produced by the company include milk (daily pasteurized and long life milk), butter and spreads, cream and cheese which is of high quality. Apart from producing the dairy products, the company also ensures environmental sustainability as health is a major factor for every human being and animal. Every year the company prepares a report to know its achievements and financial status (Devondale Murray Goulburn, n.d.).
Devondale Murray Goulburn should consider overseas expansions. This will help this company to widen its market and get its products to consumers in other countries and continents. Since it produces very fresh and nutritious milk of high quality, this will be accepted by people that do not use it. Overseas expansion will also help the company learn of new marketing skills and even acquire other ingredients in making the products (Hollensen, 2014). To achieve this, Devondale Murray Goulburn needs to establish the consumers' behaviors outside Australia and even learn more of their competitors especially in the oversee country of interest.
Indonesia is one of the countries in the world that is experiencing a remarkable economic growth putting it in the 18th position of the largest economy in the world. It is a state that has the largest island. Its capital city is Jakarta, and the primary language is Indonesian. The country underwent an economic crisis in late ninety's and came back on track in the mid-2000s. It was usually overlooked over China and India, but now its development has made it hard for anyone to overlook it anymore, the foreign direct investments that are being created are noteworthy (World Population Prospects: The 2012 Revision, 2012).
Indonesia is the leading thermal coal, gold, silver, copper and tin exporter, these natural resources that the country has made it different from other nations. It has a population that is growing very fast giving it a significant number of consumers. The current population is mostly youthful showing that it is mainly increasing and the next few years it will be more than 240 people. It has undergone some political transformations making it strengthen its political structure for the good of the country and the citizens (Pramita, 2015).
The country operates on many retail companies that sell various products for consumption. The retail sector has undergone lots of transformations since the state picked up on the financial status. The small sized family shops no longer rule as they did. It aims at achieving sustained higher population growth and increase job opportunities and minimizes inequality in the next few years.
Economic analysis refers how wealthy and resourceful a country is. It defines how well a country manages its available resources. The Indonesian economy has widely grown to attract foreign direct investment (FDI).After Asia faced a financial crisis in 1997-1998, the country has tried his best to come out of it, and it is growing on a daily basis. The country has one of the essential elements which is domestic growth that has led to borrowing less and encouraging more investments. There are favorable demographic variables that promote a good economic stability or performance. The country is aiming at being in the top six largest global industrial countries by the year 2030.
Rapid urbanization and increased integration are associated with most people moving to cities and major towns. People of Indonesia move to urban areas because of the thought of higher income and productivity in those areas (Daniels et al., 2007). Urbanization leads to higher revenue and productivity if well dealt with and hence higher economic growth. The Indonesian economy has increased due to urbanization, and people can easily access markets, transaction costs are mostly lower making people spillover their knowledge and skills. As much as urbanization is a good thing, it needs a lot of attention and policies. Urbanization has lead to pollution, traffic congestion, unemployment and increased cost of living in Indonesia. Urbanization is an inevitable factor for the growth of any country (Daniels et al., 2014).
The employment opportunities have reduced poverty and improved status of middle-class people. It has increased its share in the domestic market and expanded national scales. As an economic factor, competition also affects products sale in Indonesia. Most of the Indonesian's products have weak competition because of the low level of connectivity and high costs of transport. International trade has been reduced because of poor roads hence poor transport. It is, therefore, important for foreign countries to come in and improve on this (Gram, 2007).
There exist many internal and external factors that influence the economic growth of Indonesia. These include financial and market fluctuations, foreign demand, prices of commodities and domestic conflicts. For this reason, the country should be able to maintain capital inflow so that investors are encouraged to stay and not move out (Mark, 2007). Devondale Murray Goulburn, therefore, needs to understand these factors that affect the economic state of Indonesia.
The Devondale Murray Goulburn dairy farm should go ahead to expand to Indonesia because it is clear that the economic status of the country is rising very fast which will lead to more profit. In Indonesia, entrepreneurs are allowed make investments with ease and are not charged a lot. The marketing mix used in Indonesia may cost less than the ones in Australia, for example in the advertisement section hence saving more (Mcdaniel, 2011). Urbanization is very high because of the increasing population, and this will help them interact with people that have other skills that can assist in the manufacturing of the dairy products. As most of the products have weak competition, it may build a healthy business environment for its operation.
Political and Legal Analysis
Politics is the way a country or state is governed. It involves conflict or debate between or among the individuals or parties wishing to get power. Indonesia is a secular country as it does not have a single state religion and therefore its political policies are not derived from religious teachings. (Kingsolver, 2008) Religion as much as the systems are not derived from it, it play a significant role in the country. Citizens adhere to all faiths apart from atheism as it is not allowed. The people enjoy political freedom and equality (Berger et al., 2010).
Indonesia as a country is not an Islamic state, but the Islamic principles play a bigger role in the decision-making of political issues. Decision making is highly affected by the religious context like for example; pork businesses are burnt in some areas mostly occupied by Muslims while in Christian regions the rule seems to be impossible. The Islam people are not dominant therefore they can be considered as moderate. Islamic law (Sharia) cannot be allowed in the country (Burhanudin et al., 2013). This is one of the few countries that have had a woman president without much opposition. This, therefore, shows that the country encourages gender equality.
The executive branch of Indonesia is made up by the president, the vice president and the cabinet. The vice president and the president are elected and run as an inseparable pair. They run the country for five years and can be re-elected for another term. A political leader enjoys support from the people according to the position he/she has been in the society before joining politics (Svante & Goran, 2009). Indonesian people from the army are given an upper hand as they are more trusted and considered credible.
The legislation is the Indonesians Consultative Assembly as it contains citizens' representatives. It has the power to impeach the president and can amend or set a new constitution. It is the one that oversees political affairs and comes up with the countries budget. The legislation has a regional representative that deals with laws and region matters. These are also elected for a five-year term. The judiciary has the highest court which is the independent Supreme Court.This court also tackles disputes among lower courts. The country also has Constitutional Court that monitors decisions made by the parliament. Most cases are handled by public courts, religious courts, the military courts, and administrative courts. The judiciary, therefore, tries to ensure honor, dignity and good behavior is maintained among the judges (Puglisi & Snyder, 2011).
The disadvantage of this political system is that corruption which is a virus that affects most influential people is not fully out of the system. This is mostly experienced in the legislation sector. Another thing is that the president appoints their cabinet which mostly consists of their allies. A particular group of people gets more privileges when the president running the country is from the group whether majority or minority ( Henisz & Zelner, 2010). Corruption is, therefore, a factor that the investor needs to put in mind in their endeavor since it has effects on business operation and therefore the business needs to take an appropriate strategy to succeed in the environment.
The Devondale Murray Goulburn dairy farm should, therefore, consider expansion to Indonesia as the country protects the business as it is a way of earning income for the country. The citizens themselves are guaranteed in the country's law, therefore, making the ordinary person enjoy the more (Joshi, 2009). Indonesia has a lot of opportunities that are open to anyone, and this will be good for the business.
Culture and Ethics
Both religion and ethics are key components when carrying out a business. These two elements will help a person in knowing how to relate with people from different cultural backgrounds. Culture entails the values and norms perceived by a particular group, and they are not embarrassed about practicing them (Mindeli et al., 2007). In this, one knows their behavior, how they do their things, how they even talk and why they do what they do without looking down on them. Ethics is having good morals and is closely associated with culture. Tabalujan (2008) came up with a concept of culture and said that culture involves one's language, art, and sciences, thoughts, one's spiritual beliefs, the way they act socially and their interactions with other people.
This two concepts the political, economic development and how people relate to business. For a business to succeed in today's world, how it treats employees and the kind of attitude given to customers, competitors and the general environment matters. Life can only be sustained by a healthy attitude and behavior and learning to accommodate other people in life; this can only be achieved by individuals understood the importance of ethics in businesses. According to Schermenhorn (2008) ethics is a set of moral principles that differentiates between good or bad, right or wrong in someone's behavior. The world has different people from different ethnic backgrounds and therefore different opinions on what is ethical.
Indonesia has people from different ethical groups, people with different religions and cultural influences. The national motto of Indonesia says there is unity in diversity. According to people of Indonesia, money is brought by peace and harmony and not time. Good relationships are created by communication and in this country information is not spilled in black and white, but one has to read in between the lines. They do not like rushing into conclusion but rather involve family members especially if it is a business issue. Patience and flexibility can earn trust and leads to the successful business (Witiger, 2012).
In this environment, people who consider time as a factor may be highly disadvantaged as they are slow in decision making. A person has to understand the expressions and gestures to interpret the message well as they do not communicate directly. For one to establish rapport a lot of time is required to learn the people and understand their norms and cultural values (Anand et al., 2008).
Carrying out a business in Indonesia will be a lovely experience for a dairy products company. The business people will understand why the Indonesians do the things the way they do. Many companies in the country do not produce lots of milk products, and therefore it will be an excellent opportunity for Devondale Murray Goulburn. As people are careful on how they interact and speak, getting along will be easy (Luthans & Doh, 2015).
Therefore these five sections which are economic, political, legal, cultural and ethical are very important when considering expansion of a business or organization to other countries. They act as an eye opener for businesses considering expansion so that they know what they are getting into. The environment where an organization is established matters a lot and can tell one if customers are available for the product or not.
The Indonesian's economic status brings out information to how the economy of this country will be of benefit to the Devondale Murray Goulburn's business operation. The analysis can help to establish on how to manage available resources carefully. The company understands the resources and the wealth a country owns that are of contributing to the business operation. The political and legal status of Indonesia will help Devondale Murray Goulburn understood how the state operates so that one does not collide with other people or businesses over legal issues. They get to understand the procedures followed to establish a business venture and how it can affect business.
The culture and ethics will help Devondale Murray Goulburn know how they should relate to other people or businesses while carrying out their businesses. It gets to understand that how Indonesians behave differently because of different cultures in the world. This is important because when the business gives the right attitude a customer and the society as a whole on will attract more consumers and therefore acquire more. Treating people the right way can even make one have an upper hand on his/her competitors. Even the little things people over look should be considered when dealing with a customer or consumer to get bigger market share.
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