International Strategies For Nestle Australia Limited In The Food Focused Agribusiness Sector

Discussion about Australian Food Focused Agribusiness Sector

The report provides an insight into strategic management in context of Australian agribusiness sector. The company chosen here is Nestle Australia Limited. It was found in the year 1908 with its headquarters located in Rhodes, Australia (nestle.com.au 2018).  The company markets and manufactures range of beverage and food products in Australia. The products of the company includes coffees, drinks, culinary product, confectionary and chocolate products, sauces and recipe bases, muesli bars and snacks, baking ingredients, breakfast cereals, noodles, cooking milks, toddler and baby nutrition products and pet accessories and foods(nestle.com.au 2018). The company also undertakes export of its products. Nestle Australia Ltd operates as the subsidiary of the Nestle S.A. The report starts with an introduction of the food focused agribusiness sector of Australia with a special focus on the external, internal and the porter’s five forces analysis. The report then discusses about the international opportunities of the Nestle Australia Limited. The international strategies suitable for the agribusiness sector also find a mention in this report. There are various foreign entry modes for entering into the international market. The report puts for ward a discussion about the most appropriate and the non-appropriate entry modes of the agribusiness sector. The report further draws in recommendations for determining the future strategic direction of the agribusiness in the arena of chosen international market.

Nestle Australia Ltd represents a public company ranked at a position of 198 amongst the topmost 2000 companies across Australia. In the year 2017, the company had a total revenue generation of about $ 2,220,849,000 including the sales and the other revenues (ibisworld.com.au 2018). As per the records of 2017, the company had close to 4432 employees that included all the employees of the subsidiary (nestle.com.au 2018). The CEO of the company is Mr Trevor Clayton. The brands of the company includes Nescafe, Nespresso, Nesquik, Uncle Tobys, Maggi, Milo, Carnation, Kitkat, Quick Eze, Allen, Butter Menthol, Optifast, Sustagen, Nestle professional, Bakers’ Choice, Plaistowe, Purina Felix Supercoat, Nan and Nan Toddler, Cerelac and Nestle Health Science.  

The external environment analysis of Nestle Australia Limited is determined with the help of PESTEL that a tool used by the marketers for monitoring and analyzing the factors influencing the organization (Pan, Chen and Zhan 2018). These factors include political, economic, social, technological, environmental and legal.

Political:	Australia is a liberal democracy that is politically stable. This ensures the suitability of the country for making investments in the agribusiness sector (Wright 2017). A growing economy with a multilingual and skilled workforce will provide a boost to the agribusiness sector to flourish. Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper
Economic:	The economic stability of Australia ensures higher growth rate. In fact, a stable interest rate, lower degree of risk, stronger GDP growth and higher levels of employment, lower inflation and higher exchange rate provides an ideal ambience for the agribusiness to prosper (Bajada 2017).
Social:	A multicultural and educated country like Australia gives rise to a positive social culture thereby prompting the growth of Nestle Australia Limited(Forrest,  Lean and Dunn 2017)
Technological:	Australia undertakes huge investments in research and development. The implementation of newer technologies not only leads to lower cost of production but also improvement and innovation (Prajogo 2016). Such developments act beneficial for the agribusiness sector.
Environmental:	The constant scarcity of the water resources, water quality and constant availability might act as a challenge in determining the growth of agribusiness (Winchester et al. 2018)
Legal:	New laws related to regulation or taxes might influence the operation of a business. Implementation of new systems and change in legal framework can not only have an influence on the cost of the agribusiness but also bring about a change in customer demand.

This an important tool used for analyzing the competitive nature of a business. It depends on the five forces that determine competitive intensity and attractiveness of the business in terms of profitability. The forces include (Song and Tsai 2017):

External Environment Analysis

Threat of New Entrant: The customer satisfaction and product quality enabled Nestle Australia in gaining a considerable market share. Since the food processing industry is viable and huge, so there are lot of companies who entered Nestle market and captured a place although it could not match the market share of Nestle Australia.

Threat of Substitute: Nestle Australia faces fierce competition and remains surrounded by similar products. Therefore, the company needs to innovate constantly for staying in the market and working efficiently for removing substitutes.

Bargaining Power of Suppliers: Nestle Australia believes in maintaining a sturdy and strong business relations so it provides guidance to the suppliers in working effectively in reducing the redundant expense. The care for the suppliers pays them in return with quality products.

Bargaining Power of Customers: To understand the power of the customers it is very necessary to understand their needs and adopt ways in better satisfying them. Nestle have become successful amongst the users through introduction of health and awareness program.

Competitive Rivalry within Industry: Competition is aggressive within food processing industry and the companies competing with one another tries to improve product quality thereby proving to be beneficial for the consumers.  

The international opportunities for the food focused Agribusiness includes:

1. Market Driven Opportunity for Real Growth:The rising global demand for the  Agrifood products represent remarkable growth in the exports thereby boosting the actual value of the  sector by two fold  by the end of 2025 (Paschen et al. 2017). Stakeholders belonging to agrifood value chain and the international and the domestic investors are faced with major opportunity of capitalizing on the demand and thereby earning improved returns.
2. Leverages the Competitive Strength of State through Enhanced Growth: Australia holds a good position as a modern, trusted and quality producer of food products. Here the beverages and food are grown within a proper supervised environment (Ho e al. 2017). Besides, the agribusiness sector puts forward immense opportunities for both the inbound and the domestic investment. These investment leverages long term returns and growth thereby leveraging the competitive strength of the state.
3. Identification of Growth Market with Higher Potential: Research and analysis conducted by Government on behalf of Australia, found that close to twenty four states across the South Asia, South East Asia and the Middle East, showed higher potential as target markets for the investors and business looking for growth via exports.

Besides the agribusiness sector have recently experienced certain major advancement through liberalization related to the target market exports which includes the Free Trade Agreements (FTA) (McKenzie 2018). These are major international trade reforms that possess the potential of increasing the competitiveness of the state in the key market thereby spurring investment and growth opportunities across sectors once there has been a negotiation for the particular product.  

In the ever changing and overtly complex trade setting, international activities are conducted for not only supporting the Australian industries, farmers and government but also building a resilient, strong and competitive agribusiness sector. There are various international strategies that also prove ideal for the chosen agribusiness sector. These international strategies act as a framework for the engagement of the sector into the various international activities thereby setting out focal points for the international engagement. These strategies include (Felzensztein et al. 2014):

1. Maintaining, Gaining and Improving Access to Market through Strong Biodiversity System: This strategy ensures trade in the agricultural goods and protects the status of a stronger biodiversity through negotiation of technical arrangement for the exports and the imports.  
2. Influencing Global Agenda Related to Agribusiness for Sustainable Food and Resource Management: This involves bilateral, plural and multilateral engagement for prioritizing the international policy related to agribusiness set or while remaining vested to the Australian interest.
3. Reduction and Removal of Production and International Trade Distortions: The long term international strategy of Australia related to the agribusiness sector has remained in removing and reducing the production and trade distortions for the creation of an equitable and open trade environment for carrying out trade.
4. Strengthening AgriBusiness through Global Citizenship: The strategy involves working with the trading partners for building the capability of the global agricultural sector and the infrastructure for trade. This strategy also involves sharing skills and strategies thereby helping in improving the protocols and the systems for achieving a mutually favorable outcome for the production and trade of the agribusiness sector.  

Modes of entry into the international market represent channels that Nestle Australia might employ in gaining an entry into a chosen international market. Some of the common entry modes include exporting, partnering, licensing, acquisition and turnkey projects. Exporting seems to be the most appropriate mode for Nestle Australia for entering into international market. Exporting represents a function in the international trade where the goods produced in a country gets shipped to another country for the future of sales or trade (Huo  2014). It seems to be the most appropriate modes of entry for Nestle Australia for the following reasons:

• It results in higher potential profits due to the elimination of the intermediaries
• Involves greater control on all the aspects of transaction.
• Customers are known
• From the customers end also there exists security in performing the business activities
• Business trips become more effective and efficient since the contact points are known.
• It helps in the development of a better understanding of marketplace
• There exists greater flexibility in redirecting or improving market efforts

Porter’s Five Forces

On the other hand, licensing as a mode of entry might seem inappropriate for the international market. Licensing refers to the agreement that allows the foreign firms in manufacturing Nestle Australia’s products for a particular term and in defined market (Moeen and Agarwal 2017). The reasons for being inappropriate are as follows:

• It might lead to partial or complete loss in  control and intervention
• Effective commercialization of the parent company patent depends on the ability of the licensee
• The risk of execution or poor strategy might lead to a damage of the product success
• The risk of poor quality of management that might lead to the damage of the product or brand reputation.

1. 1. It involves supporting the people in driving the futuristic propensity of the agribusiness sector and the regional communities by providing learning experiences and opportunities: This implies that for   building the prosperous and sustainable industries intervention of skilled and knowledgeable rural leaders with are required for making informed choices about future of the industries and the enterprise.
2. Identification and Nurturing of Innovation and Research Opportunities Synergistic across the Agribusiness Sectors: The Australians agribusiness sector faces challenges and opportunities common across the rural sector. Hence the agribusiness sector requires leadership for responding and identifying issues and enhancing the shared benefits.
3. Targeting for enhancing the Sustainability and Profitability of the Sector: The broader Australian economic has dependency on the profitable farms. There however exists a link between the economic prosperity and the capacity for up taking newer technology and innovation. Agribusiness like Nestle Australia that is well positioned should adopt newer ideas and ensure usage of technology for the creation of productivity benefits thereby resulting in sustainable growth and competitive advantage.
4. Supporting the Newer and Emerging Agribusiness: The emergence of the market trends and the global environment not only impacts food consumption but also puts forward an opportunity  to the agribusiness sector in identifying newer food types and in connecting with and expanding and driving newer markets.

Conclusion: 

On a concluding note, it can be said that the future of Australian agribusiness is followed by an ambition that places people and the regional communities at the core of everything. Agribusiness like Nestle Australia embraces a commercial approach for innovation and research that leads to initiated changes across the sector and the regional communities. International opportunities and commercial partnerships predefined the future of the agribusiness sectors. It has however been found that the agribusiness sector operates in dynamic and complex ambience and faces certain common opportunities and challenges as a result o the national, global and the local change. The report also puts forwards certain future strategies for determining the future directions of the agribusiness sector.  

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