Global International Business For Technology And Positivity In The Wine Industry: An Analysis Of Porter’s National Diamond Model

Porter’s National Diamond Analysis

Discuss about the Global International Business for Technology and Positivity.

Australia has turned out to be the initiator of new world wine producer by gaining the profit from the advancement of the technology and positivity of the natural conditions. The country almost provides wines at very low cost all over the world. Wine industry is the one of the vital industry of Australia sales of wine in this country contributes additional 5.5 billion dollar to the Australian GDP since 2009 (Lereboullet et al., 2013). There are significant optimal potential and consumption is noted among the wine business in Australia, which was augmented notably during the year of 2009.

Perhaps, as wine industry has great importance in Australia, so the country has many opportunities for the companies approaching and initiating their business in wine industry. The aggressive surroundings, threatens of the market have to be analyzed for making decisions and finding opportunities. This report consists of the magnetism and competency in the wine production in Australia by using Porter’s National Diamond Model. This is done due t analyzing the scope of starting a new business in this industry, which also provides an idea of entering the market in a proper way.

Figure 1: Porter’s National Diamond Analysis

(Source: Spawton, 2013 pp-100)

Currently there are 2320 wineries situated in Australia around 2009, among which most of them are considered to be an individual companies. There are major four companies which covers almost 70% of the Australian wine market. This is defined as thee Oligopoly market. While taking cost advantages most of the wineries positioned themselves as the provider of products which have middle-low worth. This is because of the fact that the late arrival marketplace positioning is the key strategy (Spawton, 2013).

Configuration and approach are two important aspects, which influences a most important role in evaluating the implication of the troubled situation (Edwards & Spawton, 2013). It is extremely important to put more focus on the strategies and the structure of the company as it will check the appropriateness of changes and evaluate if it can make the company a winner in the global competitive market.

According to the Porter’s National Diamond Model, the analysis of the rivalry states that, it is putting more focus on the positioning of the internal part of the nation (Angove et al., 2016). This learning also influences the opposition in the Australian market.

Strategic and Rivalry Context of the Firm

There are several vineyards in Australia; among them the most popular one is situated in South Australia named as Barossa Valley. This is mainly famous for providing high quality grapes. In addition to this, another popular vineyard is Penfolds. These two vineyards are known for the top quality wine suppliers of South Australia.

The corporation can gain an augmented advantage and also can conquer the evolving difficulties by collecting all the information about the wineries before these enters into a innovative marketplace (Galbreath et al., 2014).

The organization can easily set the practical target market by analyzing the demanding factors. Though Australia has huge output through the wine industry, the need of the customers makes sure that everyone loves wine and this will results into the high demand of wine in the marketplace.

According to the Porter’s Theory, the demanding and captious customers influences the organization in a continuous manner to improve their goods and services. This aspect may help the organization for maintaining their position in the competitive market.

Figure 2: Production of Wine

(Source: Galbreath, 2014, pp-300 )

At the present scenario, wines are exported much more than the domestic sales within the country. The demand is increasing in such a way that the sufficient limit of the exportation is not meeting up the demands. The domestic market of Australia has taken the general sales of the country as per the demands of the residents (Fleming et al., 2015). In addition to this, Australia ranked highest in measuring the per drinker expenditure, which is just next to UK.

Figure 3: Alcohol Consumption

(Source: Sadras, 2014, pp-44)

It is found that, the per drinker expenditure of Australia is additional than the average of OECDAverage wine utilization countries. The domestic market is crucial for sale of wine.

The domestic needs of the Australian market mark the country in definite ways. In comparison with the French wine the local consumers gain low fraction of product loyalty. 37% of the wine drinkers enquire for advice in the shop or restaurant and 64% about those chose their wine according to their type, rather than their brands (Mozell & Thach, 2014).

In addition to this, there are very few of wine choices available which comes up to compete with the Australian wines. According to the conventions of the local wine marketplace, the position and area are not the matter of focus.

Diamond Conditions

Figure 4: Expenditure of Australian Wine

(Source: Galbreath, 2014,pp-90)

The above graph is showing that the expenditure of the Australian wine has increased up till the year 2008. In 2009 the production downed drastically by 30%, where as the income from the familial sales condensed by a little edge, which indicated an increase in average consumed price within Australia (Caron et al., 2014). This tendency has influenced the wineries to make new effective brand strategy for producing the high excellence wines.

Australian wine business has developed up very fast and productively 2000 years ago. The country has started it from some small grape firms. In comparison with France and Italy, Australia owned a quick and victorious history. It shows the position of Australia in the global wine market (Wilson et al., 2015). The specialty of Australian wine is: primarily all the country has all type of weather and soil variety. This ensures all type of wine production from red wine to harbour wines.

Therefore it is one benefit to the customers to seek the customer’s attentions by providing high quality of wines with its different variety.

Based on the Michael Porter’s Model, the chances and roles provided by the government are measured as the foreign attributes of the replica of Diamond. The upright effect in the various basics of the diamond is the main reason behind it (Szolnoki, 2013). In case of governmental positions, if the openness of the former Australian trade is decreased, then it will simultaneously hamper the demands and it would also put an effect to other variables of the other determinants. By considering the case related to chances, this research is focusing on two specific variables explained by the fiction review.

The first attribute in the list is considered with the migration process that the recent world wine countries are going through. Another reason for this is obligation of overcome in the innovative territories (Overton & Murray, 2013). It was found that, the countries becoming aggressive in the Australian industry was starting with the production and development of wine grapes.

The above mentioned occurrence had a high-quality constructive result on the development in wine business, though this fact does not explain that all of these countries were ruled by the old wine producing countries. Now it is becoming important to establish the prosperous wine industry to as the agricultural industries are willing to be part of the wine industry (Grant et al., 2015). Additionally it is getting important to improvise the industrial policies to that will affect the concealed sector for the increased competitiveness. In addition to this, it was clear that, the sale of wine is increasing as the fresh World wine states are increasing their demands. The climbing succession of the requirement of these manufactured goods is increasing rapidly by each year.

Chances

All kind of industry that supports the processing and production of wine such as: marketing, transportation, and viticulture are known as the related and following industries. Grapes are the most important raw element for establishing the wine industry (Santini et al., 2013). Most of the wine producing companies are attached with the raw material suppliers of different areas. The reason behind keeping a lees number of raw material supplier isto avoids the inflation of price of grapes.

The production of wine grapes over previous 6 years shows the rapid reduction in production of grapes since 2008 (Morrison & Rabellotti, 2013). In 2010 theproduction was condensed by 8.9%. In case of the production of the raw resources and goods a huge drop was indentified. This evaluated the prediction of rise of wine price due to oversupply.

The factors involved as the conditions can be pointed out dividing it into two aspects: one is highly specialized resources and other is home grown resources for others. According to the specification of the Michael Porter the local home grown resources can be achieved by enhancing the technology as the value of it is reduced. This is unforgettable that the home developed are crucial for the industry where the other industries are using the normal products. This is totally relevant to the industry mentioned here (Felzensztein, 2014). The frequent kind of grapes are the crucial raw material for the wine producing procedure and most importantly few varieties create a big change in the superiority of wine.

The climate of Australia is perfect for the plantation of the grapes. The required features of the climate for the plantation of grapes are: less pollution, steady state of the climate, fertile soil and plenty of sunshine etc (Bryant & Garnham, 2013).

One aspect that must be highlighted is Australians have exclusive stroke for developing and producing quality wines. The processes of making wine, relative population, quality of the wine have contribution to the production of grapes. Though the total community is not huge in Australia there are several industries those are trying to grab the market by improving their strategies. This aspect could provide proper training for wine in the universities in one side and in the other side it will provide expert people for the wine industry who are skilled according to the new technological development (Zalan & Lewis, 2014). The popular wine producing areas in Australia are: New South Wales, South Australia, and Western Australia.

This can be explained in a easy term that, the expert labor force is getting used in a proper manner. The knowledge of the wine making specified the Australian wine industry that, the home developed and specialized resources of wine owns the relational advantages and it ensures the expansion and growth related to wine industry (Bowe et al., 2015).

The Australian administration made a very stable administration policy, which keeps the check on the progress of the wine business with its connected industries. The government provides importance to the logistics and transportation of wine and grapes by providing roads, railways and the technological improvement for improving the quality of wine. The government invests a hugeamount of money in this sector. All of these steps are introduced to make developmental changes in the wine business, which makes it recognizable in the world. Potency and power of a single separate corporation can be unstable even it has a multinational base (Fleming et al., 2014). For this reason the Australian administration puts so much pressure in the Australian wine industry, which makes it easy for the government to control the other businesses as well.

The proper skill shipping and smooth data transfer ensures the communication process between the manufacturing companies inside and outside the country (Anderson, 2013). This aspect will provide guarantee to the information proficiency about the synchronization and expansion of the market, which will provide the more comfortable choices for selecting their options. This will allow the customers for enjoying their life in effective way by selecting their own choice.

The foreigners that start their trade in Australia get many choices available for them, because the customers get, though there may be some exceptions sometimes.

I would like to highlight that, the investment should be direct from the foreigners; it will increase the efficiency of the investment strategies. A description from the Australian administration, Australia was positioned 14^th biggest and major target country in the world and it was nominated on the 18^th position, which has the largest foundation country for the straight investment of the world (Galati et al., 2015).

According to the FDI’s Regulatory Restrictiveness Index of the OECD, Australia has more provisional government than the average of OECD. But if the comparison is with the UK and US then Australia will be found to be more restrictive.

Figure5: Total FDI Index

(Source: Bianchi, 2014, pp-100)

In spite of the fall found in the trade barriers, the FDI growth found to be more important at a superior rate than the height of world trade of business is trying to take protectionist measures dealing with the straight funds. The addition of investors and globalization increases the limits and horizons. FDI facilitates the advantages of concentrated cost through coordination (Bianchi & Wickramasekera, 2013). The strategic control can be defined as the advancement of straight investment rather than the licensing and franchising. Here the rights related to the management are allowed for the academicproperty.

I would advise a joint venture for approaching an entry mode of the market. Taking entry to the Australian marketplace by setting up a combined business with a local Australian entity will be better for the new comers. It will be of worth if the new comers tie up their business with the local business holders of Australia, which will help them to know about the regulatory system of Australia for establishing a business (Thompson, 2013). Participants who are taking part in the joint course of action will be benefitted by the venture but they have to maintain their liability. The commodity projects and infrastructure are the crucial key drivers of the economy of Australia. These two aspectsallow the different parties for demanding the financial and technological support from other parties(Coelli & Sanders, 2013). The independent joint ventures commonly can comprise a corporation for the purpose of tax, although it might not be granted as legal partnership.

Partnership granted in joint venture for the purpose of tax is quite prestigious. The main dissimilarity is that, the joint venture is not recognized as the gain revenues in jointly manner. In this condition, all the parties should be liable for their providences in the joint venture including the cost of operation.The partners involved in a joint venture are allowed to consult between each other. This dealing is dependent on various aspects of the partnership (Morrison & Rabellotti, 2014). Most importantly, the collaboration made by an election is important to each partner. The consultations between the partners are totally dependent on the proceedings of tax.

Oversupply

Excess amount of supply is most genuine and challenging problem till date in the industrial sector. The example of some organizations, which explained the overall structure of the surplus of the wine industry are: Wine Grape Grower’s, Winemaker’s Federation of Australia, the Australian Wine and Bready Corporation (Lereboullet et al., 2013). These organizations are capturing the market very fast, which shows that their competitors are losing their production rates.

There are 18% of vineyards available in Australia, which are to be found as inefficient. In addition to this, there are 22% of wines which are not desired. The investigation has shown that Australia give production about 21- 41 million per annum, which is additional than its exports (Spawton, 2013).

The manufacturers have given this issue a proper answer, while selling their vineyards and gaining millions and billions of money, which is just because of those vineyards. The time period between 2009- 2010 the Capital wine cut off was around 37 different kinds of wines. In addition to this, there were 31 vineyards which were sold with additional 10 vineyards (Angove et al., 2016).

Throughout the time of 2009- 2010 capital Wine Estates reduced 37 brands of wine by selling 31 vineyards (Galbreath et al., 2014). Whereas, constellation Wines made a sell of 10 wineries with 23 vineyards. In spite of this, there is a devastating effect on effectiveness. If the capacity of production is matched with the demands then the profit should be increased up to some value.

Super Markets

According to the Australian magazines, the uneasiness was increasing due to the increasing supremacy of super markets. There are few examples of such organizations: Coles, Woolworths. These have strong supply chain and allocating ability in liquor retailing. Presently both of these organizations are involving themselves in the wine industry (Galbreath 2014). Violently these organizations are making their products such as: Woolworths liquor, BWS, Dan Murphy’s, Liquor lands.

According to several report published in Australia, there are 60% alcohol retailing available. In addition to this, the Coles and Woolworth are scheduling to start 270 new stores of alcohol, which will in terms giving rise to the above mentioned percentage (Fleming et al., 2015).

Since five years, the market of the Woolworth and Wesfarmers attributed a huge amount of discount, which has influenced the price rise in the wholesale market. This market has more bargaining power than the conventional wine producers in the market. The report published in IBIS world’s shows that, there are chains available in the supermarket which introduces the swish products win the market, which allows the market for bringing down the shelf space of the bargaining power (Caron et., 2014).

Conclusion

If an organization wants to enter the Australian wine market in order to gain profit, then it is suggested that they must enter through joint venture. Joint venture helps those organizations to achieve factor resources. The technology of wine production can also be improved by using joint venture process. The process is also helpful for organizations as they trained workers and distribute infrastructure very quickly. The strategy considers the goals and targets of an organization while considering the product lines of the resources and competitive quality of the product. The organization put effort on innovation and development while entering the market of Australia. Australia is very much attractive to investors and the place provides a wide range of opportunity to the organizations who wants to start their business in Australia. The wine industry of Australia supports the organization high industrious factors. The Australian industry provides support by guaranteeing the quality of construction and innovation. The organizations who want to start their business n Australia will also get support from the Australian Market. Presence of this entire factor make Australia more attractive to investors to wants to start their business in Australia. But the organizations have to implement new strategies in order fight against oversupply and price diminution.

It is concluded from the report that the organizations have to enter in the market of Australia sensibly. They have to be careful while considering the strongest point of their organization. Recommendation is provided in the case if an organization powerfully goes ahead with the investment process. It is recommended to approach the market with the help of joint venture in order to select the ideal goals and objectives of the organizations. This must be done in harmony with the integrating approach of the marketplace.

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