Companies globally devise a number of strategies such that they are able to expand their competitive advantages (Wilson, 2012). While devising a strategy it becomes critical to evaluate and analyse the pertinent macro environment and industry wide forces that are facing the Company. A strategy for expansion hence needs to adhere to all such critical points and be established for global expansions. Industry situation persisting in Australia for scope of personal treatment equipment are immense in nature. With government providing impetus to growth and development in the field there are various companies and people who are extending their entrepreneurial skills in the area and establishing prominent businesses to cater to diversified customer needs (Albaum, 2008). The scope of the current report concerns Athlegen Pty Ltd in Australia. The Company’s macro environmental and competition analysis reveals in-depth understanding regarding the various possible strategies that the Company can make use of for its international expansion. Thus, the report includes step by step procedures to arrive at the international expansion strategy for the Company.
Athelegen Pty Ltd was established in the year 1986 in Adelaide by two therapists who had significant ideas regarding welding as well (www.athlegen.com.au, Retrieved on 21st May 2017). The promoters of the Company recognized immense potential in the market and a steady demand for portable message tables. There company was enriched with the vision to become market leaders in the area, though there has been turbulent times that have been faced by the Company leading to public subscription. Recently the Company is back on concrete footholds to become a strong brand and cater to various markets across 35 world countries. The name of the Company has become prevalent amongst its athletes as well for its high reputation as well as quality. The Company promises strong and reliable focus on product quality with high functionality and features. The report has been developed taking into consideration the Company’s operation in Australia only.
Macro environmental analysis is undertaken by using PESTLE factor analysis. PESTLE is an abbreviated form for political factors, economic, social, technological, legal and environmental factors (Dcosta, 2012). As the scope of the present Company is in Australia, relevant analysis of factors for Australia has been undertaken.
Political factors: Australia is a political stable country with a democratic form of governance. The ruling parties in Australia have provided immense support for business growth and prosperity and will continue providing the same. It is easy to set up and conduct business in the country with relatively low intervention from bureaucratic (Alon I. a., 2012).
Economic Factors: Economically Australia is one of the most developed and stable country with a stable exchange system. The markets in Australia are governed by central banking systems and financial systems. Due to the robust economic structure of the country businesses prosper in the country, however the recent economic slowdown globally has impacted the country severely leading to lowered growth in overall demands (Adkins, 2007).
Social Factors: Socially the country is very advanced and culturally too. The people in the country make use of advanced techniques and procedures in medical and other instruments in their treatment. The culture and society of the country being tremendously advanced offers immense scopes for expansion and markets ready for products for treatment. Further Australia being leader in world for various sports form makes use of such treatment instruments in order to overcome injuries or pains. The population of the country is quite robust that allows to accommodate for larger demand. Australia receives a large number of immigrants each year who come to work and study in the country.
Figure 1: PESTLE Analysis
Source: (www.coetl.com, Retrieved on 21st May 2017)
Technological Factors: Technologically Australia is very advanced and has now integrated 5G technology. Businesses that are run in the country can make use of technological factors and extend their ecommerce features in the market. Companies makes use of such robust and highly developed technologies such as to market their products by means of social medias as well as ecommerce businesses. Such technological advancements offer the Company aid to establish and grow further in their market scopes.
Legal Factors: There is a stable judiciary system in the country along with laws and legislations. Such prevailing legislations allow the country to have steady labor and other significant laws. there are various legal standards that needs to be maintained for setting up of factories and making instruments and equipment of medical nature. A certification from the pollution control boards needs to be obtained as well to conduct businesses.
Environmental Factors: Australia is now bent on incorporating reversing of greenhouse effect. The Company has significantly reduced its carbon footprints and accommodated recycling as well as reusing of various materials. It aims to create renewable sources of energy as well to avoid usage of scarce natural resources. Adopting ISO certification enables the Company to establish better standards fro environmental concerns.
Thus, from analysis of prevailing PESTLE factors it can be well understood that the country is well suited for conducting business in it.
Every company makes use of segmentation strategy to cater to their customers in an easier manner (Bailey, 2009). Segmentation of customer allows understanding of the various areas that the Company needs to meet to satisfy needs of its customers.
Demographic Segmentation: Demographic segmentation allows the country to cater to particular segment of masses. As in this case the Company caters to both genders, who are of middle and upper income levels. Further the Company caters to age group of 17 years to 65 years of age, who can avail for their therapies (Hassan, 2012).
Psychographic Segmentation: Psychographic segmentation allows the products to be marketed to people who want to avail such therapies in order to recover from their injuries. The highly advanced population segment especially those involved in sports often caters to this particular segment. Mostly the products of the Company are marketed to a large number of players across various fields who avail treatment for overcoming pain and injuries they suffer during the matches.
Geographic Segmentation: The country is present in Australia and caters to the entire country by means of its ecommerce strategies (Armstrong, 2014). The Company has a steady chain of supply management that allows the Company to cater to its customers all over the country.
Target Market Strategy is defined by the Company such that it can cater to and service a particular segment and meets its needs. For the purpose of target marketing, a Company selects a particular market and then caters to its needs and demands, as in this case the target market is Australia cities and suburbs (Sharma, 2013). Defining of target market allows positioning of the products and to meet its demands and needs. A STP strategy is followed by almost every company to extend their product scope to the markets and makes available necessary products at right places. The 4 P’s of marketing are used to target the market and cater to them such that companies profitability can be enhanced to a great extent.
Australian industry experiences growth and threat from large number of companies. After opening up of the markets in the country there are further number of companies that have entered the markets (Alon I. J., 2013). An overview of Athelegen completion analysis can be done by use of Porter’s Five Forces as given below.
Threat of New Entrant: There are relatively low threats from new entrants in this industry due to high amounts of investments required to design and make the systems (Porter M. E., 2008). Though Australian markets have opened up to international players to allow for entry and conduct business in their markets, there prevails immense scopes for indigenous players as well.
Bargaining Power of Suppliers: The bargaining power of suppliers is relatively low in the market due to power of the Company that they exert on these suppliers. The suppliers of various products to the Companies cater to large number of instruments and equipment dealers hence they experience relatively low power, especially due to the high capacities of these companies to integrate backwards and large order volumes they place with the suppliers (Stonehouse, 2007).
Figure 2: Competition Analysis
Source: (https://www.cgma.org, Retreived on 21st May 2017)
Bargaining Power of Buyers: The bargaining power of buyers is relatively high due to the presence of large numbers of competitors present in the market (Porter M. , The five competitive forces that shape strategy., 2008). Due to advancement in ecommerce and large number of retail outlets for these products the company faces immense threats from its potential buyers, hence a PR team of the Company maintains relationships with regularly customers such that sales of its products can easily be made.
Threat from Substitute Products: There is relatively moderate threats from substitute products as there are multiple medical instruments and treatments oils available for curing pains that Athelegen products can provide (Wood, 2008).
Rivalry amongst Industry Participants: There is high industry based rivalry amongst the various products offered in this segment due to large number of participants. Industry players are constantly reducing costs over high quality products to attract more buyers towards their Company’s products (Varadarajan, 2010). Some of the competitors of the Company include Centurion Tables, Azima Message Tables and so on.
In order to sell products in the markets in Australia, the scope of the current Company has adopted Porter’s Generic Strategies for its Positioning (Porter M. , Competitive strategy: Techniques for analyzing industries and competitors, 2008). According to Porter’s Generic Strategies there can be three types of strategies as focus strategy, cost leadership strategy and differentiation strategy.
Figure 3: Market Positioning Strategy
Source: (strategy-models.blogspot.in, Retrieved on 21st May 2017)
Athelegen follows cost leadership strategy in the market as it is already existing and conducting its business in a grand scale. The cost leadership strategy allows the Company to set up and conducts its business and gain higher market share compared to those of its competitors (Rust, Moorman, & Bhalla, 2010). As the target market segment for the broad such cost leadership is justified and enables the Company to reach out to more number of customers. Marketing through ecommerce strategies also enables the Company to market its various products to customers that are present all over Australia. As there are no office spaces in each part of the Country that the Company needs to pay rent for and it sales by making use of ecommerce strategies it can adopt cost leadership. Cost leadership strategies are incorporated by very few market participants due to the high costs prevailing in production of the products and in marketing the same.
The Company is already successful in Australia and is now planning to extend its business to other countries (Ansoff, 2007). A Company can expand its scope by Ansoff’s matrix which is either by market penetration, product development, market development and diversification. The Company has already explored various product development scopes as well as market penetration in Australia, hence now the Company is considering market development for its various products in off-shore companies that can further offer immense growth potential (Hussain, 2013). Diversification is not opted by the Company as the product portfolio for the Company is immensely complex in nature and it extensive. As the Company is already existing in Australia, it can aim to develop markets in nearby countries especially BRICS or MINT countries. These countries offers immense scope and potential for expansion as they have robust population (Doole, 2008).
Figure 4: Ansoff’s Matrix
Source: (www.themediaant.com, Retrieved on 21st May 2017)
BRICS is an abbreviated form for Brazil, Russia, India, China and South Africa on the other hand MINT is an abbreviated form for Mexico, Indonesia, Nigeria and Turkey. After evaluation and careful analysis of each countries it can be ascertained that China, India and Indonesia offers a huge market for the various products of the Company hence are appropriate countries for diversifications. Further the cost of labor, land and other resources is relatively low in these countries (Haq, 2008). Prior to diversification the Company needs to assess and evaluate the costs pertaining to such diversification such that they can easily be accommodated into profitability of the Company. Diversification into new markets has to be profitable as well as significant such that it can offer immense market scopes.
The Company can make use of several techniques to expand into foreign markets, either by export or strategic alliances as joint ventures, or distributorship and so on. With their robust population they offer high consumer markets and there are predominantly lower trade barriers that allows the Company to easily set up their operations there (Richardson, 2007). However, prior to entering new markets the Company need to conduct systematic analysis of various companies and factors that prevail in such new markets.
Conclusion
Analysis of macro and industry levels competition entails that the Company has immense scope and growth capabilities. As Australian markets remains saturated the Company needs to evaluate other prospective markets in nearby nations for considering expansions. The Company can make use of its profitability and expand into such markets initially by exporting and then gradually forming joint ventures prior to becoming a wholly owned subsidiary in the international markets. The scopes of expansion in these markets are immense in nature however, the Company needs to undertake extensive market research prior to expanding in these markets and making an entry.
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