Murray Goulburn's Essay: Dairy Expansion In India.

Critical analysis of the most appropriate mode of entry with academic arguments to support(export and any alliance on week 8 lecture) this part worths 25% For question 5 about entry modes, this is to choose the appropriate mode of entry when we talk about export, we also need to talk about the liability of foreignness and alliances. For example, we suggest a non-equity mode to entry But non-equity modes have two types: exports and contractual agreements (also called alliance and contain franchising) and then we suggest export as the mode of entry and mention no strategic alliances.Also, before we suggest exports, we have said of liability of foreignness is high. If it is high, then we select alliances. And because it's not so we choose export.
 

Murray Goulburn: An Overview

Murray Goulburn as an agricultural company was formed in 1950 by groups of dairy farmers. Since then the company has been growing steadily and now it has become a giant in Australia where it is producing milk and milk products in large scale (Kobayashi, 2017). This company has opened various manufacturing branches in the region these branches are able to process above 35 percent of the milk consumed in the nation. The company supplies milk both domestically and internationally around the world. The company has approximately 2000 workers. It also has quite big number of suppliers who are stakeholders in the company. With this kind of business and workforce, the company makes a turnover of around A$2.4b annually (Abbas, 2018). This company has many opportunities for expansion which are constantly knocking the doors for novel investment strategies. Additionally, the company has robust strength of the ranges of products it manufactures which makes it easier to get ready markets throughout the world (Bah et al., 2016).

Indian dairy sector plays a significant part in the social and economic development of the country through constituting a significant section of the countryside economy. This industry gives a livelihood to almost all the people living in the upcountry. It also supplies milk plus its products to urban and rural dwellers. Due to the high demand for milk and the associated products, this industry has grown rapidly. As a result India has grown to be the largest producer of milk and it accounts for 17 percent of world’s milk production. In addition to that, India is the largest consumer of milk products and milk as well and this is associated with the high nutritional value found in milk and milk products. This high use of milk and milk products has made the ancillary markets to flourish (Arora, 2010).

India nation is highly populated and the population keeps on growing slowly but steadily and also is a developing country. This aspect makes India a suitable market for international expansion by companies which want to internationalize. In fact, India ranks second in the globe in terms of population, and therefore it provides a big customer market due to increase in per capita revenue as well as enlarged demand for the healthy food products. Likewise, dairy products are ranked number one commodities in Indian markets and their demand is projected to increase to 180m tonnes by 2022 (Nguyen, 2015). It has also been shown that the supply sector will require growth of around 5m tonnes every year for the next 15 years

The Importance of India's Dairy Industry

India has a promising economy as well as political and legal settings of the nation is similarly supportive. The socio-cultural atmosphere, is likewise good and supportive for spreading international businesses (Fernandes & Pinho, 2016).

Expansion prospects are achieved best in a highly populated country, because it easier to find new customers. Australian government and people value safety procedures and regulations while manufacturing food items for consumption by human beings. This makes food companies to observe and adhere to the appropriate ethics and standards while manufacturing food products (Hertel-Fernandez et al., 2016).

The government of India has some room for economy strategy which has some policy tactic to improve dairy products production consumption. Various organizations also facilitate the transference of milk and milk products. India has a high purchasing power of milk and milk products (Lynch & Jin, 2016).

India is therefore a giant in milk production and consumption. Due to the high population, it has access to cheap labour and therefore manufacturing costs are low thus can make huge returns.

Form this, it has been shown that India is a developing nation although it has very high for milk and it products. Its GNP and GDP are quite high and it has not reached the saturation point (Prokhorova et al., 2016).

Insights at the earnest ethnic levels may have ramifications on foreign publicizing. Cultural standards may be affected by factors for instance the higher rates and inadequate availability of retail space in India ((Kasemsap, 2018). 

India`s law may not be favorable for the creation of certain types of distributorship provisions. Levies laws, duty laws, importation limitations, company association and intervention or liability rules may all demonstrate to be noteworthy faltering hunks. Laws on foreign investment and technology transfer might force the dairy company to be basically a mutual project, when it was initially envisioned as a principal license or franchise (Demirbag et al., 2007).

India may not provide the same intensities of access to trained human labor that may be desirable to operate the dairy business. If the Murray Gourburn Company involves greatly competent food processing specialists, they may be forced to find these resources in a nation where sophisticated personnel are available ((Hussain & Ismail, 2015).

The India`s government may not be friendly to the dairy products investment generally as well as the type of distribution relations they would want to establish. The India`s past history of government restrictions, expropriation, high taxes and restrictions on bills deportation are among the critical elements in determining whether the charges of market infiltration is worth the prospective profits. It is important to evaluate the tax agreements between Australia and India. They could also seek governmental mediation ((Lynch & Jin, 2015)

Why India Is Suitable for Murray Goulburn's Expansion

This will include the analysis of the company’ overall mission, general vision, the strategic goals and the domestic and exterior environment. The company also needs to make decisions concerning how and where competition will occur along with the actions which will allow the strategy implementation. This will enable the company implement the strategies which will give it a higher competitive advantage oved its rivals and bring satisfaction to the customers and the stakeholders. The company also requires to study other successful companies and understand why they perform better. Mostly, companies possess a heterogeneity of capitals that distinguish them from each other, and the disproportionateness persist concerning resource apportionment. Moreover, the heterogeneity might persist through time, while the handover of capitals between companies is limited.

For Murray Gourburn to enter into the market in India, it is important to ascertain the targeted market and establish noble partners who are well conversant with the market locally and are entirely familiar with procedural matters. The dairy company must also search for market opportunities in India which may possibly include establishing joint ventures or subsidiary associations with companies based in India (Yuting, 2018).

Murray Gourburn should consider the following aspects of the market: they should understand the extensive market and policies for specific income cohorts and the diverse market. They should also craft the services in accordance with the targeted groups so as to get early approval. They need to take into consideration of the huge informal segment in their strategy even as they endeavour to approach the market with calculated consistence. It is also mandatory to obtain approvals and proper licencing to avoid problems with the government. The company should as well follow the right procedures for exports since it is a key issue in the Indian exports. This will facilitate smooth entrance of the dairy products in the market in India.

The dairy products together with competition in the nation, the company needs to also include the strategy of the transnational strategy (Abbas, 2018). For this, it needs to adopt a mixed approach which can consider the local requirements tastes and preferences and is it with the global strategy (Yuting, 2018). This would allow the company to progress with respect to the growing need of the market. As the Murray Goulburn is a global brand, it is most likely Indian people would prefer to use it (Yuting, 2018).

Mostly, companies that want to internationalize start their expansion through exporting. This applies for many businesses, since exporting is frequently the only alternate for vending their goods in markets in foreign countries (Soares, 2016).

Factors That Murray Goulburn Should Consider Before Expanding in India

This ensues when the company chooses to trade its goods and services in the overseas market by use of independent agents (Akande & Khadka, 2018). Here, export dealers will buy the company’s products outrightly and then re-trade them in the overseas markets, in this case India. Murray Gourburn will in this case work with exporting dealers who may specialize in specific products and specific geographical regions. These trading companies will act on behalf of the local manufacturers, and they may represent several non-competing producers. They will search for as well as negotiate for foreign procurements and in return, get some commission (Rocha et al., 2017). This will help Murray Gourburn to get appropriate market expertise in India since these indirect export dealers are usually very good professionals. They are competent in handling the entire details of processing exporting guidelines. They will also evaluate market prospects for the Murray Gourburn. These export dealers have competent experience in choosing distributors and agents and can efficiently manage network distribution. This helps to eliminate the risks. In general, Murray Gourburn will not require to commit major resources. This is because the exporting dealer’s profits depends on the success of their exportation and therefore they are obliged to do a very good job (Cumberland, 2006).

Here, Murray Gourburn will be required to set up its private exporting section and sell its goods through distributers situated in the overseas market. Immediately the potential of international trades becomes sizeable, direct exportations become more attractive than indirect exportations. The firm is in a position to carry out export duty, or it can choose to outsource to outsiders. Here, sales and profit are more significant in comparison to the indirect exports and this gives the mother company to build a comprehensive network for improved feedback in the foreign markets (Cumberland, 2006).

Murray Gourburn may opt to go for this type of exports if they are not willing to commit their resources in order to set up their private distribution outlets although they still desire to have some level of control in their operations in the foreign markets. Here, several companies may cooperate in order to produce the products. By having cooperating contracts the cooperative companies come up with wider product models and realize better markets. Here, all the cooperating firms share risks involved and decrease the selling and manufacturing costs (Yu Xie & Boggs, 2006).

This is where a company whose joint stock is fully owned by the parent company. This occurs mostly when lower threats and costs are needed or when it is impossible to acquire comprehensive or majority governing, the parent company may bring in an associate, affiliate company in which it would possess a lesser stock. The subsidiary in India will have its own senior administration structure, clients and services. This wholly owned subsidiary is likely to help Murray Gourburn sustain operations in diverse geographical regions and markets. These aspects help obstruct against changes in the geopolitical or market and deteriorations in industry segments and also trade practices (Zhang et al., 2007).

Strategies for Murray Goulburn's Expansion into India

Strategy on focus is also known as segmentation strategy and it deals with division of a huge aimed market into subgroups of businesses, consumers, or nations that either show, or are alleged to show, shared needs, priorities and interests, and this is followed by planning and executing policies to focus on them (Fayyaz & Lodhi, 2015). A successful marketing approach for greatly consumable products such as dairy products in India which markets focus on offer to the organizations providing these goods, an effective marketing opportunity to reach their consumers in a broader region (Mogeni, 2010).

So that the Murray Gourburn Company can achieve effective competitiveness, it ought to identify sections of parallel demand, aim at the sections of demand and improve precise marketing combinations for every targeted section. Focus strategy remains as an effective tool applied whenever a company aims at increasing its attention on particular market sections. The company yields improves returns if it focusses better. Literature has shown that market subdivision and pursuing a modest market, are important aspects of marketing strategies and need to be done by any organization. Further, it is advisable for companies to segment their markets in order to know their customers and the services and goods they need (Helms, 2011).

The company requires to form some alliances with dairy companies which procure milk using agents in the societies. Therefore, the amount of milk the agents can procure will depend on how the agents relates with the farmers producing the milk. Similarly, these farmers also deal with several agents, on the basis of the social structures (Swarupa, 2016). The Murray Gourburn Company will not directly deal with the dairy farmers but will use the agents. The company should aim to pay the farmers higher prices than what the cooperatives pay in order to compete successfully. The company should also consider giving loans to the farmers in order to establish some loyalty and compete better with other private companies as well as the cooperative societies (Sehrawala & Karaduman, 2015).

Conclusion consolidated business plan

The consumers of Australia value the safety standards and regulations in food production and this explains why food companies adhere to the set safety standards in food production. The company has robust strength of the ranges of products it manufactures which makes it easier to get ready markets throughout the world. This is an added advantage for Murray Goulburn to spread its horizons in a novel market such as India (Fernandes & Pinho, 2016). The economic aspects are also likewise worthwhile and are modest.

The inflation rates and the positive consumer index are also comparatively noteworthy. It is significant to put into consideration the legal, technological and government hurdles since these can halt the penetration of the company in India. The company should work with market parameter so as to thrive in cut throat competition and gain advantage over the rivals (Lynch & Jin, 2016).

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