International Marketing Environment of Australia - Essay Example

? International Marketing environment analysis report for Australia Contents Contents Executive Summary 2 Introduction 4 International marketing environment in Australia 4 Political environment 4 Economic Environment 5 Social environment 5 Cultural Factor 6 Technological Environment 6 Legal Factor 7 Financial Factor 7 Current challenges for international marketers 7 Protectionism 7 Opportunities for international marketers 9 Conclusion 10 References 12 Executive Summary Australia is a developed country with majority of their economy dependent on exports of goods and commodities. Australia has given major emphasis on exporting manufactured goods. Australia has a strong infrastructure along with stable institutions to support its trading activities. It is rich in skilled workforce and agricultural produces. Australia has been adopting Technology in their business environment. The benefits of adoption of technology are reduced costs, new products and higher quality. Australia has a strong financial regulations and institutions which makes the business environment healthy. Introduction Australia is a country which comprises of the mainland of Australian continent, Tasmanian Island and smaller islands. It is sixth-largest country in the world by total area. It is a developed country and also one of the wealthiest of countries in the world. It is presently the world’s 12th largest economy. Australia has achieved second-highest human development index globally. It has achieved good performance in many vital statistics like health, quality of life, protection of civil liberties, economic freedom and political rights. Australia has a high urbanized population. In terms of trade Australia has given major emphasis on exporting manufactured goods. For more than 50 years, Australia has been facing a large current account deficit. For more than 15 years their GDP has grown by over 3.6% which is satisfactory as compared to other OECD average of 2.5%. During financial downturn in 2008-2009, Australia was the only advanced economy which had not been affected. But being a global economy Australia faced the effect because their trades with other countries got affected. It was during 2012 to early 2013, Australia faced major recession in some non-mining states. Inflation rate in Australia has been under control averaging about 2-3%. The major sector which contributes to the GDP is tourism, education, economy, financial services. They contribute about 70% of GDP to Australia’s economy. Australia’s major export includes agricultural products, like wool, wheat, minerals etc. International marketing environment in Australia The important factors of International marketing environment of Australia are as follows: Political environment Australia is a liberal-capitalistic democracy. Through government interference, they can decide the amount of importation taxes to be imposed to protect the domestic economy. They can also create an environmental protection laws to protect the natural heritage of the country. It will automatically affect the Australian economy, since it will affect the amount of trade which takes place and also the exchange rates faced by it. With the global financial meltdown the Australian economy slowed down. The Australian economy is expected to grow due to its demand for raw materials from China. Since Australia exports vastly in iron ore and other agricultural products, the recession had comparatively less effect on them. Economic Environment Australia is lies between Antarctica and Asia. It has Indian Ocean to the west, Arafura, Timor and Coral Seas to the north, The Tasman Sea and the Southern Ocean to its south and finally Pacific Ocean to its east. This shows that Australia is at a strategic advantage in terms of exports and imports. But much of the country is dry, low and flat. Due to this harsh physical environment people live close to the fertile coastal areas. Everyone wants to own home, and hence the nation has a high number of home ownership rates (Mulligan, 1996, p. 453). Hence the real estate business is a lucrative industry in the nation. Australia is known for their cuisine industry, with their chefs commonly known around the world for their fusion cuisine. Social environment The Australian society is relatively young with a diverse collection of peoples living there. These diverse collections of people live with differences in ethnicity, race, gender, social class. Australia is composed of six new states Tasmania, South Australia, Northern Territory, New South Wales, Queensland and Victoria. Their dominant language has been English with little linguistic languages among the population. Cultural Factor Australia is a multi-cultural society. The initial population of Australia included people from the Irish and British descendent. After World War II happened, heavy migration started to take place from countries like Italy, Greece, Netherlands, Turkey, Lebanon and Yugoslavia. The Australian government wanted to boost the population and workforce of the state and hence they allowed the migrants into their state. Since then, Australia has made their immigration policy open to the countries of South East Asia. This made an impact on the Australian Society had to re-define them as a multi-faith and multi-cultural society. Technological Environment Australia has been adopting Technology in their business environment. The benefits of adoption of technology are reduced costs, new products and higher quality. According to a recent survey Australia has shown increase in real investment, real wages, national output, consumption and employment. With the adoption of IT and e-commerce Australia is more likely to succeed in the global market. Information technology is one of the key drivers to Australia’s strong economic growth. Time being one of the major factors in today’s business, Information technology acts as a boon to the state. IT reduces the effort by taking half of the time needed to do the business while if a man had to do everything in the international business all by himself it would have taken him ages. In Australia and most of European countries the use of computerized systems is increasing with its application in petrol stations, supermarkets, malls, banks etc. Internet and e-commerce facility have given a boost to the international competitiveness of the Australian business. Many of the Australian firms are now using e-commerce and IT to expand their operation in foreign countries. Legal Factor Australia has a strong financial regulations and institutions which makes the business environment healthy and free of illegal activities. It gives the investor confidence to make investments in Australia. Australia’s business laws are open and transparent so that new businesses can easily open up and easy to operate. Their governance system is strong and transparent which supports business oriented regulations (Doole and Lowe, 2008, p. 24). According to the World Bank report it takes only two days for a new business to establish them and start operation as compared to an average of 20 days in other countries. Financial Factor Australia has the world’s 8th largest listed stock exchange. It has one of the highest percentages of shareholders in the world; hence the volume of international business is very lucrative. Australia has a strong infrastructure along with stable institutions to support its trading activities. It is rich in skilled workforce and agricultural produces. Major Trading partners of Australia are Japan, China, United States, New Zealand and United Kingdom. Australia is one of the largest exporters of meat, wool and wheat. Current challenges for international marketers Protectionism For Australia, the concept of protectionism is more of faith than a policy. Kevin Rudd, the foreign minister of the county believes in the merits of free trade. He also wants to eliminate artificial trade tariffs. Protectionism played a major role in Australia’s economy. Australia decided to impose tariff regime on Britain instead of embracing the free trade regime of Britain. There was debate within Australia on whether the incipient industries should be protected from outside countries. Australia’s economic growth is primarily driven by strong growth in the emerging nations like India and China. But with slowing down of their economies, the export of their resources will decrease and thereby reducing the demand for commodities (Czinkota, 2012, p. 326). Australia has been facing trade account deficit since 2001, despite boom in the mining sector. With the current level of 3-4% current account deficit, it is likely to widen. Australia is facing a deteriorating condition in the public finances of both national and state. The government revenues are deteriorating with large amounts of budget deficits. The Australian housing market is overvalued which affects the Australian banking system as they have a high level of exposure to the domestic economy. Hence with overvaluation of the housing market, the real estate sector faces a crisis (Toyne, 1989, pp. 1-17). With the fall in housing prices, the unemployment will increase and it will lead to decrease in income. Australia has achieved limited success in their attempts at rebalancing the economy. Reserve bank of Australia has lowered the interest rates to 2.5% to boost the housing industry, and also to reduce the value of Australian dollar. Lowering the interest rates hasn’t had much impact on credit growth, housing, employment, consumption and consumer confidence. As Australia is an importer of manufactured goods, lowering of the currency value will increase the prices of products and thus it will dampen the consumption and lower the purchasing power. With slowing down of their commodity and mining business, Australia now is aiming at selling healthcare, education, financial services, food to Asia (Chong and Kasturiratne, 2009, p.6). But with Asia facing their own challenges, their strategy is flawed. There are inherent contradictions in their partnership with US and their economic dependence on Asia. Opportunities for international marketers Australia provides the international marketers with a range of opportunities across diverse industry sectors (Sheth and Sisodia 1995, pp. 19-33). Foreign investors can invest in range of traditional industries like mining, agribusiness, technology and service sectors etc. There has been an unprecedented growth in the Australia’s infrastructure construction market. This has happened due to the availability of resources and the economic stimulus spending by the government. Australia has successfully implemented projects based on the Public Private Partnerships (PPPs) model. Such projects range from major hospital construction to toll roads (OECD, 2010, p. 38). This PPPs model of work is expected to grow strongly and hence it provides an opportunity for the international marketers to invest in the market. Australia welcomes foreign investment to help their firms financially. Through this investment Australia will reap the benefits from a pipeline of infrastructure projects. With continuous growth in the infrastructure sector in Australia it will create huge opportunities for the international market to reap the benefits out of it. Outside countries can invest in the state-of-art technologies of new projects in the country. International Marketers can invest in Australia’s clean technology company which is poised for growth. Australia has well-regulated energy markets, supported by world class research facilities that make it an ideal destination for the companies to invest in clean energy. As Australia has a large landmass which is barren it is particularly suitable for clean energy infrastructure (Samiee and Roth, 1992, pp. 1-17). With an estimated energy capacity of 170,000 MW, it provides a huge opportunity for the international companies to look at this market segment and earn huge profit margin. Australia also has the capability of developing large scale biomass so that they can support industries in the bio-mass manufacturing business and help in the production of alternative transport fuels (Sheth, 1992, pp. 71-87). They have excellent science and technology capabilities and world class R&D expertise for doing chemical, biological and mechanical testing. Australia has a sophisticated financial services sector which provides the international investors opportunities to invest in the growing Asia-Pacific region they have highly liquid financial markets which enables them to generate high investment management opportunities. They also a large Insurance and Financial sector which has generated around 10.4 % or A $128 billion value in the fiscal year 2011 (Clark, 1990, pp. 66-79). Australia has world-class research facilities and a flexible regulatory regime. It has made them a house of pharmaceutical innovation. The revenue generation from the biotechnology industry is $7.48 billion in 2010-2012. With a number of discoveries in this field, the biotechnology industry is an excellent area to invest in for the multinationals. Conclusion Australia is a country where lot of opportunity is available. Government supports the companies in setting up the business with the formulation of business friendly policies. International Market which Australia now faces have changed owing to the use the change in economic scenario which many countries faces now. With the global financial meltdown and euro crisis much of the trading partners of the Australia have faced effect of the effect and hence Australia is also facing the heat. With countries like China forecasted to grow at 6%, and India projected to grow at 4% the trading with these countries are not expected to be like before, but with the global economy slowly recuperating the trade factor will rise in this sector. Australia has major investment opportunities across major fields like financial, technological, biotechnological, and others which gives the multinational companies a huge opportunity to invest and earn profit margin. Though Australia has been facing economic crisis recently like large current account deficit with strong policy framework and proper investment climate their trading scenario will improve. Being one of the large exporters of agricultural goods and having a good mining industry it will help Australia to grow beyond conventional boundaries. References Mulligan, D.R. 1996. Environmental Management in the Australian Minerals and Energy Industries: Principles and Practices. New South Wales: UNSW Press. Czinkota, M.R. 2012. International Marketing. Stamford: Cengage Learning. Sheth, J.N. 1992. Emerging marketing strategies in a changing macroeconomic environment, International Marketing Review, Vol.9 (1), pp.71-87. Sheth, J.N. and Sisodia, R.S. 1995. Feeling the heat - part2. Marketing Management. Vol.4 (3), pp. 19-33. Toyne, B. 1989. International exchange: a foundation for theory building in international business. Journal of International Business Studies. Vol.20 (1), pp. 1-17. Samiee, S. and Roth, K. 1992. The influence of global marketing standardization on performance. Journal of Marketing. Vol.56 (4), pp. 1-17. Clark, T. 1990. International marketing and national character: a review and proposal for an integrative theory. Journal of Marketing. Vol.54 (4), pp. 66-79. Chong, D. and Kasturiratne, D. 2009. International Marketing. Available at: http://www.londoninternational.ac.uk/sites/default/files/international-marketing-sample-study-guide.pdf. [Accessed on 20th November 2013]. Doole, I. and Lowe, R. 2008. International Marketing Strategy. Available at: http://www.cengagebrain.co.nz/content/doole07630_1844807630_02.01_chapter01.pdf. [Accessed on 20th November 2013]. OECD.2010. Market Openness in Australia. Available at: http://www.oecd.org/gov/regulatory-policy/44529957.pdf. [Accessed on 20th November 2013]. Read More