In the year 2010, 5 business graduates of Southern Cross University came together to pursue their dream of starting a new business. They conducted a thorough analysis of the Australian market and found a growing demand for craft beers not only from local residents, but also from tourists from other countries. So they decided to start a small brewing company named ‘CHEERS’ on the Gold Coast with an initial start-up cost of $ 500,000 (each partner contributing $ 100,000) and brew 3 varieties of craft beer. The choice of craft beers was also to avoid competition with and differentiate from beers produced by larger and more established brands in the local market. The product was well received within this Australian niche market, and even with a slightly higher price (when compared to other mainstream beer brands), demand for CHEERS’ varieties did not seem to deter.
In the following 6 years, the business experienced significant growth. Turnover increased from $ 2.5 million in the financial year 2010-2011 to $ 30 million in the financial year 2015-2016. Number of employees also increased from 8 to 28 during the same period. However, growth of the business has somehow stalled since end of 2015, and the management team at CHEERS realised that they will need to look for overseas market to maintain the growth momentum. They looked into numerous potential target markets and shortlisted 2 countries – Brazil and India.
You, being a recent recruit as an International Operations Manager at CHEERS, have been asked to prepare a report for the company’s executive evaluating the risks and opportunities in each of these two countries and recommend the best destination for the company. As a part of this project, you have been also requested to suggest the most appropriate entry mode for the chosen country.