Tyson Foods is planning to expand its business in Australian markets. In the era of Globalization, it is essential for the companies to expand globally. The objective of the report is to understand the various aspects of the international businesses. There are number of things which are required to be managed by the companies while entering into the overseas regions. The report will help in understanding the various characteristics and elements of international business.
Tyson Foods is a recognized MNC across the globe which is one of the well-known food and meat producing and processing brands. It is an American based organisation which is the largest manufacturer of chicken, beef and pork. It is one of the largest exporters across the world. In the year 1930, the organisation was established and has grown successfully with a rapid rate. There are almost 11,000 farmers who have their business and livelihood dependence on the company. Tyson Foods also supply the processed meats to some of eth well-known brands such as Dominos, KFC, etc. (Tysonfoods, 2017). There is innovative and efficient use of the technologies by the company by which it has continuous global expansion in several overseas countries. The company is planning to expand its business in Australia. It is one of the most favored destinations for the foreign investors. The lifestyles of Australian people are changing and they are getting more dependent upon the packed and processed meats. This helps the individuals in easy storage of such products. Thus for Tyson Foods it is one of the potential nations fir business expansion.
Australia ranks at 22nd position in the Global Competitive Report of World Economic Forum. This shows the competitiveness of the nation in comparison with other several nations based on several factors.
(Source: aigroup, 2017)
The first pillar is institutions. It has a direct association with the competence of the country. The institutions are required to be efficiently managed with possessing good corporate governance and ethics as well as comprising of adequate property rights and security. In this segment Australia ranks at 19th position which indicates that there are still rooms for improvement. There is a need that Australia must focus on the developments of its institutions. The second pillar is infrastructure. It includes competence related to communication, transport and electricity. The more efficient and superior these infrastructures are the greater is the productivity level of the country (Aigroup, 2016). Australia stands at 17th position which indicates that infrastructure is of improved quality but in comparison with other nations it lacks behind in several factors. The country is required to have increased investments in the infrastructure sector to attract more number of foreign investments. The third pillar is macroeconomic environment. It relates to the economic conditions, stability and economic development of the nation. Australia ranks at 23rd position which indicates that from the economic point of view the country has high interest rates which is comparatively unfavorable for the foreign companies. Australia is required to have more emphasis upon the economic factors to attain healthy monetary conditions (Aigroup, 2016).
The fourth pillar is health and primary education. It relates to the education level of the individuals and the health facilities offered to them. The more improved education and health facilities are offered to the individuals the more competent a nation is. Australia ranks at 10th position which indicates that there are adequate and efficient health services provided to the individuals. The education level is also high which is beneficial for the foreign companies as they get competent and skilled workforce which is a competitive advantage for Australia. The fifth pillar is higher education and training (Aigroup, 2016). It relates to the improved levels of education technical skills. Australia ranks at 9th position which indicates that the level of technical skills in the education is very high. There is offered high levels of on-the-job training to the individuals so that they can become more skilled. The greater the technical education of the workforce is the higher is the country’s competence level. Therefore, Australia is on a good level but still it can improve more. The sixth pillar is goods market efficiency. It relates to the openness of the goods to the foreign markets. Australia ranks at 27th position which indicates that the services and products of Australia do not have a wide reach i.e. to the overseas nations. This decreases the competitiveness of the country. The multinational organisations found it to be restricting that there product are not able to market in the outer regions.
The seventh pillar is labour market efficiency. It relates to the quality of the labour available in the country. It includes level of unemployment, gender parity, etc. Australia ranks at 28th position which indicates that there is inefficient labour market. The labour or the workforce available in Australia is inefficient. There is gender discrimination, as well as there is also unavailability of the competent labour. Thus, the foreign investors do not invest in the nation because of the incompetent labour market. The eighth pillar is financial market development. It relates to the financial and banking systems of the country and the way in which they support the organisations. Australia ranks at 6th position which indicates that the financial market is highly efficient and proficient (Aigroup, 2016). The Australian financial markets are highly credible, reliable, stable and efficient which is the attraction point for the foreign investors. The ninth pillar is technological readiness. It relates to the technological systems and updates. Australia ranks at 24th position which indicates that there is low level of technological advancements in the nation. This is a minus point for the country’s competitiveness as the multinational corporations restrict themselves from expanding in such nations which have low level of technological systems and development (Priede and Neuert, 2015).
The tenth pillar is market size. The larger the market size is the greater is the country’s growth and competence. Australia ranks at 22nd position which indicates that the market size is medium i.e. it is not so large to attract high number of investments but also not so low that restricts FDIs. There is a need that the markets of Australia must extend its reach and have a global presence. Australia possesses good domestic as well as international market reach but still it can be improved further. The eleventh pillar is business sophistication. It relates to the business practices of the organisations. There is a need to maintain sophistication level in the business approaches (Aigroup, 2016). Australia ranks at 28th position which indicates that there is very low level of business sophistication in the country that does not attract the ethical corporations to have business expansion in such nations. The twelfth pillar is innovation. It is one of the most competent afctors to attain high level of competitive benefits by the countries. Australia ranks at 26th position which indicates that there are technological innovations but at a slow rate. The organisations take use of less innovative technologies in comparison with other nations (Sala-i-Martin, et al., 2013).
The growth rate of Australia is 1.1 percent which indicates that shows that the economy of the country is rising with an effective and efficient rate. It is one of the primary reason because of which the foreign companies plan to have an expansion in the country. As per the CAGE framework, Australia has high cultural distance as there are several minority groups. Therefore, there is increased cultural distance. As per the administrative distance, there are several political factors and legal associations that impact the working of the organisations. As per the geographical distance factor, it can be analyzed that there is good transportation facilities, technological advancements and internet technologies that facilitates the business operations and ensures the smooth functioning of the organisations (Hasan, Ibrahim and Uddin, 2015). As per the economic distance, there is medium level of economic distance which shows that there is both equal as well as unequal distribution of wealth. At some regions, the purchasing power is very high and at some places there is extremely decreased purchasing power of the individuals. Thus from the overall analysis, it can be conclude that Australia has several potential opportunities and competitive benefits which attracts the foreign investors but there are also some of the areas where there is a need of development and improvement.
The aim and goal of Tyson Foods is to extend its business reach and have expanded global operations in the regions of Australia. For expanding successfully the company will take use of several strategies which can help the organisation in attaining a significant market share and to achieve long time market sustainability.
To sustain the market competition in Australia, Tyson Foods will take use of cost leadership as well as differentiation strategy both. Through cost leadership strategy, the company will offer the processed food products at a comparatively low price so that it can become easy for the organisation to attract the potential customers. Through low price range products, the customers give the products a try that helps in building a strong customer base in future. The next strategy used by Tyson Foods is the differentiation strategy (Teece, 2010). By differentiation strategy, the company has various few innovative ways by which it can differentiate its products from other competitive brands. The key difference is that being packed and processed, there are very less proteins left in the food products. But the organisation will take use of more bio and organic ways so that the level of proteins can be maintained as well as less preservatives are used. The other key difference is the variety of the food products. Tyson Foods will offer an extensive range of products which are not easily available in the market in the processed form (Rothaermel, 2015).
Tyson Foods will take use of transnational strategy for operating in the market of Australia. The primary reason for taking use of this strategy is to attain the benefits of low cost by the means of differentiation, economies of scale and other factors. To achieve recognition in the overseas geographical market, Tyson Foods will incorporate transnational strategy so that it can attract the foreign individuals by providing them products as per their taste and preferences (Martin, 2013).
For entering into the markets of Australia, Tyson Foods will use direct exporting as its market entry strategy. Exporting is explained as selling the products directly in the selected regions (Cavusgil, et al., 2014). Initially the company will sell the goods by its own resources and once it can establish there will be taken use of distributors and agents. There are numerous benefits of taking use of exporting as a market entry strategy such as increasing the sales, rising profits, balancing growth, decreasing risk, lowering the unit cost, achieving economies of scale and improving product efficiency (Albornoz, et al., 2012).
The products will be offered with modification and changes so that the local customers can be attracted and their needs can be met. There will be changes in the packaging types, flavors, etc. so that there can be increased customer base.
The company will take use of effective distribution channels as Tyson Foods will offer its products to the retailers, wholesalers as well as the supermarket chains. The retailers help in targeting the local and regional customers. The wholesalers help in offering these products to big companies and renowned fast food companies. And the supermarket chains are also a most lucrative distribution channel as it helps in targeting the most extended customer base as individuals have a buying habit from these supermarket stores. Thus availability of products at these stores helps in targeting increased set of customers. There can be used B2B distribution strategy for ensuring high sales (Van Bruggen, et al., 2010).
There are several pricing issues such as Tyson Foods will be taking sue of low cost strategy for acquiring the market share. But there are some industrial standards which restricts the organisations and the industries to maintain a balance in the prices. Therefore, it will be challenging for Tyson that in what manner it maintain its low cost pricing of the processed food products. The recommendation for managing the price related issue is that, the company should follow the industrial rules and regulation and must adopt such price strategies which do not result in destruction of domestic market. This will ensure a balance approach in the pricing strategy of Tyson Foods (Hu, et al., 2015).
There are several macro/cultural issues which impacts the promotion of the company. There are various issues which the meat products processing companies has to face at the time of their operations in the overseas regions. The primary issues are related to the animal welfare issues, environmental issues, etc. There are number of diseases which are the result of the consumption of these processed meats such as various kinds of flus (Fitzgerald, 2010) Therefore, it is recommended to the company that there must incorporate practices that are ethical and does not harm environment and the animals. There must be taken be taken certification by the company for ethical manufacturing and processing so that the company works as per the norms and ethical practices. The second cultural issue is cultural diversity among the staff members. The high level of cultural diversity results in several issues for the organisation (Mazur, 2010).
In supply chain management and control there are also certain issues which hamper the effective functioning of the company in Australia. There are issues related to the sourcing, managing and controlling of the supply chains and the partners. In exporting, if the distribution channels or the agents are not good, then the brand image of the company declines. Therefore, it is essential that the company must take products from genuine suppliers as well as further supply them through adequate channels. There must be adopting a strategy of integrated execution and rapid planning. This will help in changing the supply chains as per the changes occurred in the markets and demands (Pettit, Fiksel and Croxton, 2010).
The company is taking sue of direct exporting as the market entry strategy. This will not affect the production control such but still there are issues related to the demand. It is recommended that the company must take use of a demand driven planning strategy so that there can be appropriate production levels. By forecasting and analysing the demand, Tyson Foods must plan kit production so that the demands can be met and production can be controlled (Brown and Chandrasekaran, 2014).
The cultural issues identified earlier have a direct implication over the staff management, international staff relations and management structure. Because of increased cultural diversity there is difficulty in the staff management. The managers are required to understand the cultural differences which are there in the workforces. The international staff relations get affected as there occurs communication gaps among them which results in delayed decision making. It is the implications for the management structure that appropriate channels must be create so that these diversified groups can be managed and appropriate communication flow can be maintained among the diverse cultural groups of the staff (Colquitt, Lepine and Wesson, 2011).
There is etiquette or a custom that the global mangers must maintain n equity based approach at the time of recruitment of the workforce. The managers must be aware that the domestic individuals must also get equal job opportunities and not only there must be appointment of individual from the home country. Another customer or etiquette is the way of communication. In the international businesses, the managers must have a great emphasis upon the communication channels and the ways so that it does not go beyond the cultural norms and customs (Martin and Chaney, 2012).
The trade unions have their significant role in the Australian markets as they direct the functioning and activities of the labors in the organisations. If the labors do not get ]adequate wages or they are work more than the set working hours then several issues arise such as strikes etc. This it is essential for the foreign companies to take care of all such international labour relations. It is recommended that appropriate wage structure must be developed as well as adequate working condition must be offered to the workforces (Valticos, 2013).
Conclusion
From this report it can be concluded that Australia has potential opportunities for the leading MNCs to boom and expand. Tyson Foods can get a boom and sustainable future of its business operations in the markets of Australia. From the 12 pillars of competitiveness, it can be analyzed that, there are still various segments in which there is essential need for improvement. From the other analysis and aspects, it can also be conclude that the lifestyles if Australians are changing and they are having an increased demand for such processed meats. There are also numbers of fast food chains that require such products in their day to day business operations. Thus, from the overall perspective, it can be analyzed that Tyson Foods will have sustainable and successful business operations in the markets of Australia.
References
Aigroup, (2016). Economic Research, WEF Global Competitiveness Report 2016-17: Summary of Results for Australia, Pp.9, Retrieved on: 20th May, 2017, Retrieved from: https://cdn.aigroup.com.au/Economic_Indicators/Fact_Sheets/2016/WEF_Global_Competitiveness_Report_2016-17_Australian_Summary.pdf
Albornoz, F., Pardo, H. F. C., Corcos, G., & Ornelas, E. (2012). Sequential exporting. Journal of International Economics, 88(1), 17-31.
Brown, D. C., & Chandrasekaran, B. (2014). Design problem solving: knowledge structures and control strategies. Morgan Kaufmann.
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.
Colquitt, J., Lepine, J. A., & Wesson, M. J. (2011). Organizational behavior: Improving performance and commitment in the workplace. McGraw-Hill Irwin.
Fitzgerald, A. J. (2010). A social history of the slaughterhouse: From inception to contemporary implications. Human Ecology Review, 17(1), 58-69.
Hasan, M., Ibrahim, Y., & Uddin, M. M. (2015). Institutional distance on cross-border mergers and acquisition performance: a hypothetical framework. In Proceedings of the Asia Pacific conference on business and social sciences, Kuala Lumpur.
Hu, Z., Kim, J. H., Wang, J., & Byrne, J. (2015). Review of dynamic pricing programs in the US and Europe: Status quo and policy recommendations. Renewable and Sustainable Energy Reviews, 42, 743-751.
Martin, J. S., & Chaney, L. H. (2012). Global Business Etiquette: A Guide to International Communication and Customs: A Guide to International Communication and Customs. ABC-CLIO.
Martin, X. (2013). Solving theoretical and empirical conundrums in international strategy research: Linking foreign entry mode choices and performance. Journal of International Business Studies, 44(1), 28-41.
Mazur, B. (2010). Cultural diversity in organisational theory and practice. Journal of Intercultural Management, 2(2), 5-15.
Pettit, T. J., Fiksel, J., & Croxton, K. L. (2010). Ensuring supply chain resilience: development of a conceptual framework. Journal of business logistics, 31(1), 1-21.
Priede, J., & Neuert, J. (2015). Competitiveness Gap of the European Union Member Countries in the Context of Europe 2020 Strategy. Procedia-Social and Behavioral Sciences, 207, 690-699.
Rothaermel, F. T. (2015). Strategic management. New York, NY: McGraw-Hill.
Sala-i-Martin, X., Bilbao-Osorio, B., Blanke, J., Hanouz, M.D., Geiger, T. and Ko, C., (2013). The Global Competitiveness Index 2013–2014: sustaining growth, building resilience. The Global Competitiveness Report, 2014, pp.3-52.
Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2), 172-194.
Tysonfoods, (2017). Around the World, Retrieved on: 22nd May, 2017, Retrieved from: https://www.tysonfoods.com/our-story/around-the-world
Valticos, N. (2013). International labour law. Springer Science & Business Media.
Van Bruggen, G. H., Antia, K. D., Jap, S. D., Reinartz, W. J., & Pallas, F. (2010). Managing marketing channel multiplicity. Journal of Service Research, 13(3), 331-340.
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