Describe the Report for Business Subsidiaries for Mr. Bean International Private Limited.
Product Service Factors
Mr. Bean is a provider of food and beverage with the goodness of Soya beans added to it. Their range of products are Soya Milk, Soya bean Curd, Soya bean ice creams, grass jelly bowl, grass jelly drink, Milkshakes and pancakes and the like. One cannot ignore the goodness of products made from soybeans. They are rich in fatty acids, fiber, proteins, vitamins and minerals. There are several health benefits of Soya beans such as improving lipid profile, it strengthens and protects blood vessels from lesions and hemorrhage due to its phyto-antioxidant contents. The low sugar content in soya milk as opposed to cow’s milk encourages weight loss. One cup of soy milk contains approximately 80 calories equivalent to skimmed milk. Mr. Bean provides a healthy package of benefits with their range of products.
Venture Mode: Wholly Owned Subsidiary
The company Mr. Bean can enter into the Australian market through the Venture mode, very often known and Wholly Owned Subsidiary (WOS). WOS allows greater control but involves more risk and a higher commitment with regard to resources. WOS offers better management efficiency as compared to other types of ventures. Furthermore, it provides better profits to the company; however, there is a risk from local companies who may see the MNC as a threat to their business.
Joint Venture on the other hand may not have adequate resources and may require additional resources to invest in the host country. The profits may need to be shared in times of risks or instability in host country. The firm may also require assistance with additional knowhow from the partner since the company may not have adequate experience to deal with the vulnerabilities of the host country or adequate understanding of the market in the host country.
Certain other types of ownership structures include mergers or acquisitions, licensing, franchising and alliances. Wholly Owned Subsidiary is regarded as the most profitable since other models may not give the company the kind of profits it wishes to get and the establishment of the brand may not be that powerful. Furthermore, the risks are not entirely shared in other modes of structuring since the communication and vision is not shared properly. Lastly, mergers and acquisitions often call for cultural differences and transitional cost and it is not applicable in this situation since the company wants to expand in Australia rather than engaging in mergers with existing companies.
In the following section we will look into the various conditions under which the firm may decide to invest through Wholly owned subsidiary.If the company owns particular products that have the potential to obtain higher amounts of profits. In case of Mr. Bean they have the potential to grow in the Australian market due to its high demand in the country.
A company may set up a WOS company if he is well versed and experienced in his field of business. With regards to Mr. Bean they have been in the market
The investment also depends upon the size of the company. If it is large it is more likely to set up a WOS.
Technology and the element of Advertising also plays a major role in the decision of setting up a WOS. Mr. Bean has an excellent marketing strategy and the plus point of WOS is that the profits need not be shared with anyone unlike in Joint Ventures there is a potential risk of the profits being shared with the opportunistic partners.
Investors also looks at the stability and the element of risk before setting up a WOS. In the case of Australia, it is a very good market for Soybean based products.
In conclusion, Mr. Bean may fare well given the favourable market in Australia for soybean products as well as the experience that Mr. Bean holds in the field.
Country Analysis of Melbourne, Australia
Australia has been trending in the new fad of healthy diet. According to reports, Australian consumers have switched to low- fat and low- sugar drinks and healthier food options. Aerated drinks, sugary juices and many such fatty drinks incurred huge losses in the year 2015, since people made healthy moves with regard to what they eat. According to a study conducted by IBISWorld on Confectionary and Beverage Wholesaling in Australia, Australia’s consumption of sports, energy and health drinks has been seeing a steep growth in the Australian market due to a more growing consciousness among its consumers.
Around the 1990’s the demand for soya bean based drinks and food were as low as 25%-30% and there were little or no exports of it at the time. However in recent times with growing awareness to healthy diets and the benefits of soya has enabled soya to create an impression in mainstream markets and has been added as an ingredient in many foods. Consumers are opting for soya milk, soya based drinks to replace many of their regular diet. Furthermore several nutritionist and health care organizations has linked soya to several health benefits such as reducing the risk of heart diseases.
Japan is a huge importer of tofu from Australia amounting to about half million tons every year. Australia’s edible soybeans products are in great demand among many Asian countries. Australia’s superior record in safety of food, their reputation of high quality, non-GM food products have contributed to its high export opportunity. Due to the expansion of GM food in different parts of the world, the market for Australian soybean products has seen considerable growth.
Soybean accounts to $2.5 billion oilseed industry in Australia and is an important industry for Australian farmers. It has also made a valuable contribution to economies of different regions and various other soya manufacturing companies, food manufacturers for soya bean its processing provisions in a number of urban cities and regions. Due to the ability to rotate crops in soybean production there are various benefits to farming and sustainability because it improves soil quality by making it fertile. Several places in Australia have adapted to soybeans such as darling downs and inland river valleys and coastal hinterland.
A greater part of Soybean industry is in Queensland and New South Wales, though there is a minimum level of crops grown in other states of Australia. There is a high demand for soy foods, beverages in Australia from different Asian countries such as tofu, soya drinks etc; According to statistics the market for soya has grown from 2.7 million consumers in 1993 to 3.5 million consumers in the year 2008. Migration of Asians, growth in tourism industry and a spread of food preference of Asians across Australia has contributed to such a growth. The demand for Asian food has given rise to the market value of such foods from $1 billion in 1993 to $2.4 billion in 2008. Australian food market has seen a growth due to the above growing statistics which has given rise to its imports.
Product Introduction to Australia
When it comes to introduction of products of Mr. Bean to Melbourne Australia, it would be preferable to introduce all the products to the country. Considering the demand of the products in the Australian Market, the company could draw larger profits if it is able to introduce all the products in the country. Variety is always appreciated and the products that Mr. Bean has to offer definitely have a special factor added to them. The uniqueness offered by the company will be much appreciated and welcomed in the country.
The investment method that the company must consider is that of Horizontal investment. A horizontal investment is one that is taken by an MNC in foreign operations from the perspective of production of the same goods as the company might be producing in the parent country. The investment strategy will help in showcasing the current profits collected by the company through the products and a proposal showcasing the increased profits that the company would be able to make in case it is able to manufacture the same goods and sell them to people of a new country who genuinely have interest in the products provided by the company.
Whenever a company manufactures products for its own country, the tastes are set to match up the customer requirements; however, when a company ventures into a new country, it is undoubtedly important to ensure that the tastes and likings of the people in the other country are also considered to ensure that the marketing is successful and the maximum sales are drawn out of the products to ensure a wealthy return on investment by the company. Since Soya is preferred product in the country already, the company might not have to change the base; however, flavors that are already successful from other companies should be considered. Some of these include, strawberry, mango, vanilla, blackcurrant, chocolate etc. The company already has the flavors in its bucket and hence producing them in Australia and selling them should not be much of a problem.
Competitive Advantage of Mr. Bean in Australia
Mr. Bean as a company definitely has a strong competitive advantage when it comes to Soy products in Australia. The wide range of products that the company is offering are certainly not available in the country as of now. Some of these include, non dairy soya frozen desserts, soya porridge, soya puddings, soya viet coffee, soya rice balls, soya pancakes, grass jelly bowl and more. Although a lot of Soya Beverages are available in the Australian market; however, products and flavors that Mr. Bean has to offer will take the market by a surprise and hence the demand for the products would rise immediately. To conclude, Mr. Bean as a company definitely has a competitive advantage and would be able to make excellent profits if it is able to venture into Australia with the wide range of Soya products that it has to offer.
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