Country And Industry Analysis Of New Zealand For Boag's Brewery

This assignment creates a situation where you have to do research about a country– this is typically what an MNC has to do when considering whether to set up trade links with a foreign partner or invest in another country. Your company plans to export products or to invest (FDI) in New Zealand.

Would you recommend exporting/investing to this market? Why/why not? Highlight the pros and cons of exporting/investing to this market in your answer.

Your answer will be based around but not limited to the following:

• Identify the country and industry of your company.
• Identify goods/services that you are offering.
• What strategy in the 2x2 matrix of international strategies (pp.452-459), if any, best suits your
  company?
• What entry mode would you suggest for the company?
• Why this is the right country for you to export to, to invest in, or to work with?
• Should your firm adopt a concentrated or decentralized manufacturing strategy? What
  considerations should the firm have in choosing the location of its subsidiary(ies)? Why?
• What HR approach, if any, would you pursue, where do you find workforce, justify your choice.
  It is up to you to produce a professional business report .

Various industry, company, country reports available freely or at cost.

You will be assessed not only on the content, but structure, communication, writing excellence, professionalism.

In today’s competitive business environment, companies are looking for spreading its business operations and activities in larger and global context. The major reason behind this is that domestic market is unable to meet the demands and expectations of globalized people. Companies have emerged to ensure that it flourishes in globalization age. It helps the organizations to enhance their brand image across the world (Doz, 2017). To get succeed in competitive era, a multinational corporation is anticipated to comply with different laws and regulations, customer preferences and business practices. This report is focused on conducting a country research of New Zealand in relation to Boag’s Brewery.

Boag’s Brewery is an Australia based brewery organization that was established in the year 1883 by James Boag. The company is planning to make investment in New Zealander market for which it requires analyzing the external and competitive environment of country. This report describes about the country and industry of Boag’s Brewery. It includes the description about 2x2 matrixes of international strategies which may be most effective for chosen company. Furthermore, it recommends the market entry strategies which it should use while entering into New Zealand. Appropriateness of country is identified by using PEST analysis. Manufacturing strategy is recognized and an HR approach is suggested that can be used by Boag’s Brewery to get workforce in country.

Boag’s Brewery is operating its business in Australian beer industry. The facts and figures indicate that company is experiencing significant growth that is beneficial for the development of chosen company. In Australian beer industry, the current revenue amounts to US$11,621 million in the year 2018. The industry is estimated to enhance yearly by 4.9% in the duration of 2018-2021. As compared to global level, most of the revenues are produced in the United States i.e. US$76,916 million in the year 2018. In this nation, the average per capita consumption off beer stands at 71.6 litre in 2018 (Euromonitor International, 2018). There are various players in this industry which pose competition on Boag’s Brewery like Cascade Brewery, Kirin Company, Coca-Cola Amtil etc. In this country, the industry shows the market trend that customers are shifting from traditional beer to the craft beer and higher priced premium beers. By analyzing the industry, it can be stated that every Australian schooner of beer offered on pubs and other premises contributes $6.24 to Australian GDP. In this way, each Australian-brewed beer contributes $3.92 to the GDP of Australia. The tax rates are very high in the country. Excise on beer is more than twice the average of OECD nations (Kuehn & Parker, 2018).

Boag’s Brewery is an Australia based brewery firm that was established in the year 1883 by James Boag and his family. It was founded in Launceston, Tasmania, Australia. Now, the company is owned and operated by Lion, as Trans-Tasman subsidiary firm of Japanese beverage, Kirin. Most of the beers of Boag are manufactured in Launceston. After this acquisition, Lion has started to make changes so that it can enhance its brewing network. The top management of company stated that all the brands of Boag will be brewed in Launceston but many national brands will shift to interstate (The Tasmanian Beer Trail, 2015).

Company Description

Boag’s Brewery is engaged in offering a wide range of beers to its targeted customers. In the era of 1990s, it had introduced two new product lines of beer i.e. Premium Lager of James Boag in the year 1994 and Strongarm Bitter of Boag in the year 1997. Later in 2002, Boag’s Premium Light was introduced on national level and it had won the award of New Beer of the Year at Australian Liquor Industry Awards. Additionally, the company offers various brands of beer like Boag’s Draught, Boag’s Pure, Wizard Smith Ale, Draught Light, Boag’s Honey Porter etc. (The Tasmanian Beer Trail, 2015).

While Boag Brewery will be entering into New Zealand market, it will develop some strategies by utilizing 2x2 matrixes. This type of matrixes includes 4 options which help the organizations to make their important decisions (Stoian, Rialp & Dimitratos, 2017). Here, Ansoff matrix is taken into consideration as 2x2 matrixes. This matrix defines two different dimensions i.e. product and market. Ansoff strategies of Boag Brewery are stated below:

In the case of Boag Brewery, market development will be the most appropriate strategy in New Zealand country. By the use of this technique, the organization will be launching its well-known beers and other drinks among the targeted audiences of this country. In its domestic market, Boag Brewery offers various beer brands like Boag’s Premium Light, Premium Lager of James Boag, Strongarm Bitter of Boag etc. These are the major beverages which are the reason behind the growth and revenues of Boag Brewery. Under market development strategy, Boag Brewery can sell its famous beer products among targeted people by researching their demands and expectations towards alcoholic beverages (Tung, 2016). By doing this, the company will be able to connect with more people and attract a larger customer base. The company is using a unique brewing process which can entice more people. It will enhance the value or organization and its workplace.  

In addition to market development, the company can use diversification strategy that will be best fit to its operations in new market. Boag Brewery Company can emerge its business by launching new products in New Zealand. In this market, it is found that people are very concerned towards health and nutrition. The company can introduce a new brand line of dietary brand. It will enhance its brand presence among both national and international customers. This strategy will support the organization to increase its brand presence and customer base in New Zealand (Stoian, Rialp & Dimitratos, 2017).

In this way, these are the two strategies which are most suitable and which can be used by Boag Brewery for international expansion in New Zealand.

For any expanding organization, it is very important to determine a market entry mode through which it can enter into new market. It is the strategy which is used by a firm while entering in international market (Hill, Hult, Wickramasekera, Liesch & MacKenzie, 2017). In this global expansion process, Boag Brewery will choose the most suitable entry mode which will generate significant results for company’s growth.

Good and Service Offerings

For the chosen company, the suggested market entry mode is discussed below:

While making decision regarding entry mode, Boag Brewery can use exporting mode to enter into New Zealand market. Export is the process of offering goods and services which are manufactured in one nation to other nations. It is a function of international business expansion whereby products produced in one country are delivered to other nation for future trade. By using this mode, the company can transfer its downstream capabilities to New Zealand market because of its experience in foreign market (Laufs & Schwens, 2014). These capabilities are marketing and sales capabilities. These capabilities can be shifted to New Zealand to keep a focus on the distribution and to attain valuable customer and valuable insight. In order to transfer sales capabilities, it will have close tie up with importer in New Zealand. Moreover, it will establish the marketing division in center city of New Zealand from where it can market its beer products in different cities of country. In this country, it will tie up with the importing distributors and send its sales representatives. This will be very advantageous for the operations of Boag Brewer. The main advantage will be that it will not need to establish any premises in New Zealand that will reduce its expansion costs. Furthermore, this mode will help Boag to control over this new market and generate more sales and revenues (Howard, 2014).

In this way, it can be suggested that Boag’s Brewery should adopt exporting strategy to enter into market of New Zealand (Paul, Parthasarathy & Gupta, 2017).

Before this international expansion in New Zealand market, it is crucial to develop a market research and evaluate whether the market of this nation is right to make entry. Here, the rightness of this new market can be assesses by practicing a strategic analysis i.e. PEST analysis. For Boag Brewery, New Zealand’s market is evaluated below:

The government of New Zealand has figured out the alcohol abuse as one of the big issues among young generation in society. The government has imposed excise charges on beer and other alcoholic beverages. It can affect the business operations of Boag Brewery in New Zealand. In this country, the government has revised the excise charges due to which prices of brewed products increased. It may influence among country’s population (Crick & Lindsay, 2015).

In New Zealand, beer is very famous alcoholic beverage that accounts for 63% of alcohol for sale. The country is ranked 27^th international beer consumption per capita all over the world. Its economy is developing which can have positive effect on brewing business of Boag (Euromonitor International, 2018). There is an increase in the disposable income of country’s people so they can spend money on leisure and entertainment activities. Thus, economic position and popularity of beer will be profitable for the development of Boag in this new market.

There are various social factors which can have positive impacts on the business operations of Boag’s Brewery in New Zealand (Kelsey, 2015). The customers like to serve beer and other alcoholic beverages in their house parties. Recently, domestic industry has generated $2.2 billion in the economic activity that indicates that there is an increase in beer consumption among New Zealand’s population (NZ Herald, 2017). Moreover, Boag can attract more customers by offering dietary brands of beers. There are various sports events in the country like Rugby Match that provides flock of travellers that may increase sales of beers (Cody & Jackson, 2016).

2x2 Matrixes of International Strategies

Boag Brewery always follows both innovation and technology that assists it in brewing the beers and meeting the demands of customers. This country can provide advanced technologies to this business which will make its operations smoother. To export products and manage its operations in New Zealand, it is very important for Boag Brewery to use innovative technologies.

The above analysis found that the market of New Zealand offers both pros and cons to the business of Boag Brewery. From the analysis, it is recognized that one of main pros of this business expansion is that it provides a strong economy and positive economic aspects to Boag Company. Social factors are also positive for this company as they can increase the sales and revenues of Boag Brewery. The people in this nation like to consume beer in parties and occasionally. They serve beer and other alcoholic beverages in their in-house parties. It is the positive sign for the growth of Boag in New Zealand (Kelsey, 2015). By using effective strategies, the company can diversify its product range and entice more customers.

Moreover, the major cons are its political and legal environments. The government has imposed various rules and regulations on beer businesses. It is identified that taxes and excise charges are very high in the country’s beer sector. Due to this, the company will need to sell the beer on increased prices. It may have adverse impact on the growth and business of Boag Brewery Company in New Zealand.

By gaining the understanding about the operations of Boag Brewery, it will be right to state that the company will go with the centralized manufacturing strategy. It should set up a single premise which will brew the beer and alcoholic beverages. As mentioned above, the company is spreading its business using exporting, so in the beginning there is no need to set up any manufacturing unit. After some time, it can establish its units and premises in the country. By doing this, the company will be able to enhance its revenues and sales in New Zealand market. Boag is entering in New Zealand by using export mode, so there is no need to find the location for subsidiaries. It needs to focus on its marketing and promotional activities so that it can approach a larger population in country.

In addition to above entry modes and strategies, Boag Brewery Company will use the most appropriate human resource approach which will enable it to get workforce in New Zealand market (Brewster, Houldsworth, Sparrow & Vernon, 2016). However, the company is using exporting technique so it will need a few people in its staff like sales representatives, marketing team, quality management team, marketing executives etc. It will use an effective approach of recruitment and selection like online sources and internet. It will post the job advertisements on online job portals and different sites where people can connect with the company as per their skills and capabilities (Bratton & Gold, 2017). Through this approach, it will be able to get appropriately skilled employees for the right position at Boag.

Conclusion 

In the limelight of above discussion, it can be concluded that the external environment of New Zealand country is profitable for the business growth of Boag Brewery. In this country, beer industry is very strong and there is an increase in beer consumption that will be beneficial for Boag’s business. It is hereby recommended that it should spread its business in this country as it will be able to increase its sales and revenues. There are some factors which are positive for future development for company. It will have various business opportunities which will assist to overcome different cons in new international market.

References 

Bratton, J., & Gold, J. (2017). Human resource management: theory and practice. Palgrave.

Brewster, C., Houldsworth, E., Sparrow, P., & Vernon, G. (2016). International human resource management. Kogan Page Publishers.

Cody, K., & Jackson, S. (2016). The contested terrain of alcohol sponsorship of sport in New Zealand. International Review for the Sociology of Sport, 51(4), 375-393.

Crick, D., & Lindsay, V. (2015). Service and service-intensive New Zealand internationalising SMEs: Managers’ perceptions of government assistance. Marketing Intelligence & Planning, 33(3), 366-393.

Doz, Y. L. (2017). Strategic management in multinational companies. In International Business (pp. 229-248). Routledge.

Euromonitor International. (2018). Beer in Australia. Retrieved from https://www.euromonitor.com/beer-in-australia/report 

Euromonitor International. (2018). Beer in New Zealand. Retrieved from https://www.euromonitor.com/beer-in-new-zealand/report

Hill, C., Hult, T., Wickramasekera, R., Liesch, P., & MacKenzie, K. (2017). Global Business Today Asia-Pacific Perspective. McGraw-Hill Education.

Howard, P. H. (2014). Too big to ale? Globalization and consolidation in the beer industry. In The Geography of Beer(pp. 155-165). Springer, Dordrecht.

Kelsey, J. (2015). Reclaiming the future: New Zealand and the global economy. Bridget Williams Books.

Kelsey, J. (2015). The New Zealand experiment: A world model for structural adjustment?. Bridget Williams Books.

Kuehn, K. M., & Parker, S. (2018). One of the blokes: Brewsters, branding and gender (in) visibility in New Zealand’s craft beer industry. Journal of Consumer Culture, 1469540518806956.

Laufs, K., & Schwens, C. (2014). Foreign market entry mode choice of small and medium-sized enterprises: A systematic review and future research agenda. International Business Review, 23(6), 1109-1126.

NZ Herald. (2017). Beer industry generates $2.2b in economic activity. Retrieved from https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11898568

Paul, J., Parthasarathy, S., & Gupta, P. (2017). Exporting challenges of SMEs: A review and future research agenda. Journal of world business, 52(3), 327-342.

Stoian, M. C., Rialp, J., & Dimitratos, P. (2017). SME networks and international performance: Unveiling the significance of foreign market entry mode. Journal of Small Business Management, 55(1), 128-148.

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Tung, R. L. (2016). New perspectives on human resource management in a global context. Journal of World Business, 51(1), 142-152.