International Expansion Opportunities for Australian Agricultural Company in Brazilian Market

This report discusses the international opportunities for Australian Agricultural Company in Brazilian market, including increased consumption of beef products, technology advancement, and growth and development opportunities. It also suggests three international strategies for AAC, including multi-domestic, transnational, and global strategies. Moreover, it recommends the most appropriate and inappropriate modes of entry for AAC in Brazilian market. Finally, it provides some recommendations for future strategic directions, including differentiation, diversification, and effective promotion strategies.

Running Head: STRATEGIC MANAGEMENT 1
Strategic Management

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Executive Summary
Agrifood business industry is one of the most growing businesses in Australia and it is one of
biggest contributor to country’s economy. There are various organizations which are supporting
this industry to grow. Australian Agricultural Company (AAC) is among them that is operating
its business as largest agro-food producer and exporter in Australia. This report purposes to
analyze the international opportunities while company is planning to expand its business in
Brazilian market. This report includes the international strategies which AAC can use in
Brazilian market. The company will use three international strategies i.e. transnational strategy,
multi-domestic and global strategy. There is the discussion about the market entry modes which
company will use while going to Brazilian market. In the last section, some recommendations are
provided for future strategic directions.

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Table of Contents
Introduction.................................................................................................................................................4
Australian Food Agribusiness Sector...........................................................................................................4
International Opportunities for Australian Agricultural Company Limited..................................................5
Increased Consumption of beef products in Brazil..................................................................................5
Technology Advancement.......................................................................................................................6
Growth and Development Opportunities................................................................................................6
International Strategies...............................................................................................................................6
Multi-domestic Strategy..........................................................................................................................7
Transnational Strategy.............................................................................................................................7
Global Strategy........................................................................................................................................7
Modes of Entry............................................................................................................................................8
Most Appropriate modes........................................................................................................................8
Inappropriate Modes...............................................................................................................................8
Recommendations for Future Strategic Direction.......................................................................................9
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10

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Introduction
Business expansion is very important for the growth of every organization that wants to stay
competitive in developing market. Without this, an organization cannot increase its brand
presence in global business market. In this process, the organizations need to make most
appropriate decisions on the selection of perspective market and market entry modes (Robson,
2015). The major objective of this report is to discuss about international expansion opportunities
for the chosen organization i.e. Australian Agricultural Company.
Australian Agricultural Company (AAC) is an Australia based company which owns and runs
the feedlots and farms covering around 7 million hectares of land in Queensland and Northern,
approximately 1% of Australia’s land mass (Bloomberg, 2017). The company is operating its
business in Australia successfully so now it is planning to expand its business in another
international market i.e. Brazil. This report focuses on the international business opportunities
which the chosen organization can have in Brazilian market. It outlines the international
strategies which can be adopted by this company when expanding its business in foreign market.
Moreover, there is the discussion about both most suitable and inappropriate market entry modes
to the foreign market. At the end, recommendations are provided for the future strategic
directions of the Australian Agricultural Company.
Australian Food Agribusiness Sector
Australia is one of the largest agriculture products producers and exporters across the world.
Agri-business sector in Australia covers a large market share in this country. It can be stated that
this nation produces more than $155 bn per year from the food agri-business and related sectors
and it covers 12 percent of Australian GDP. In this country, farmers have 136,000 farms which
include 60% of country’s land. There is a mixture of dry land and irrigation agriculture
(Australian Trade and Investment Commission, 2018). Among all segments in agriculture sector,
beef segment is one of the chief sectors which Australian Agricultural Company belongs to.
Australia is among top three largest beef exporters all over the universe. Australian food-focused
agribusiness sector has a significant place in Australian economy. This sector has a sound
financial record in attracting global investment all over the supply chain of agricultural products.
It is a $256 bn dollar sector and it is growing very fast. As a basis of Australian industry,

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agribusiness and food sector are the major parts of identity of Australia (Ardeshiri and Rose,
2018). There are various leading players in Australian sector like NAPCO, Kidman and Co.,
Australian Agricultural Company Ltd and Consolidated Pastoral Company etc.
Australian Agricultural Company is one of the major players in this sector that owns and
manages many properties, feedlots and farms in Queensland and Northern Territory.
Additionally, it is engaged in finishing, breeding and processing of cattle and this company also
grows food crops. It also grains to the assist the livestock production. It maintains a cattle herd
that includes around 500,000 cows (AACO, 2018). Now, the company is planning to expand its
business in Brazilian market.
International Opportunities for Australian Agricultural Company
Limited
While any company plans to expand its business in any new and international market, it explores
different opportunities which can provide it different opportunities. It can be stated that
Australian Agricultural Company can have various opportunities while spreading business in
Brazilian market. Some of these international opportunities are discussed below:
Increased Consumption of beef products in Brazil
Brazil is among the top 10 countries in terms of consumption of beef products by its population.
By conducting the analysis, it is identified that consumption of beef in this market is estimated
7.585 million metric tons in the year 2016. As mentioned above, Australian Agricultural
Company is world leading producer of agricultural beef products and it is the largest producer of
beef in Australia. So, it will be favorable for AAC Company’s business to explore business
opportunities in this country. The government of this country is supporting the production and
exporting of agricultural and beef products. This is the major reason that country is able to
become the 2nd largest commercial beef producer all over the world, behind United States
(Greenwood, Gardner and Ferguson, 2018). By expanding its business in Brazil, Australian
Agricultural Company will be able to get significant opportunities in international market.
Currently, this company owns more than 500,000 beef cattle which will help it to fulfill the
needs of Brazilian population toward beef consumption (Cook, 2018). It will assist Australian

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Agricultural Company to enhance its brand presence and overall revenues along with sustainable
competitive advantage.
Technology Advancement
Technology is one of the major reasons behind the growth of food and agriculture sector in
Brazil. The country is involved in enhancing the soil to standard needed by agricultural
utilization, producing pasture varieties and new crops and enhancing the productivity of field
animals, specifically dairy and beef cattle. Australian Agricultural Company can have various
international opportunities in this market by upgrading its beef processing and other farming
operations with the assistance of advanced technology and modern farming techniques. Brazil is
a technologically advanced market so AAC will have various opportunities to update its
operations. It will assist the organization to decrease the costs of agriculture and enhance the
quality of beef (Cavallo, et al, 2014). The major reason behind the selection of Brazilian market
for AAC is its agricultural potential and role of new technologies in enhancing the productivity
of farming operations in this country.
Growth and Development Opportunities
Food and agribusiness sector is one of the most profitable and significant sectors in Brazil
because this nation has massive agricultural resources available to it. The most significant
products in this country are such as beef, cocoa, coffee, corn, wheat, soybeans, sugarcane, rice
and citrus. This sector covers one third of the total employment rate of Brazil. Among all the
segments, the fastest growing segment is meat and beverages that is around 40% of total food
agribusiness sector in the nation (Mueller and Mueller, 2014). As sixth largest economy in the
world, Brazil is on the third rank among major agriculture exporters in the world. It indicates that
the country has experienced a significant growth which will support the growth and profitability
of Australian Agricultural Company. This company will be able to increase its customer base by
operating the business as per Brazil market trends and changes in the needs and demands of
Australian customers. It can launch its food and agribusiness products in Brazilian market to deal
with the competing brands both in Australian and Brazil. This is the nation with a variety of
targeted customers and farming lands which will provide outstanding achievement in agro-food
business (Galanakis, 2018).

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International Strategies
When any organization plans to spread its business in foreign market so it needs to formulate and
implement effective international strategies so that it can stay competitive in new market. Same
as, Australian Agricultural Company needs to adopt some international strategies to compete
with the existing players and increase its profitability in global agricultural market. International
strategies for Australian Agricultural Company are stated below:
Multi-domestic Strategy
One of the major international strategies which Australian Agricultural Company can use is
multi-domestic strategy. This is a strategy by which organizations try to attain maximum local
responsiveness by modifying their product offering and marketing strategies so that they can
match the conditions of different countries. This is a suitable strategy for AAC as it can expand
its business in Brazil by analyzing the needs and demands of Brazilian customers. Before
entering into Brazil, this company should conduct market research so that it can understand the
trends and demands of agricultural products in country. After that, it should customize its beef
products and services accordingly so that it can attract more people (Engel and Siczek, 2018).
Transnational Strategy
Transnational strategy is another international strategy that can be utilized by AAC while
spreading its business in international market. This strategy will combine both global and multi-
domestic strategy. Under this international strategy, AAC will use its management tactics for
achieving increased efficiency and profitable economies of scale. By using this strategy, AAC
will offer its agricultural and beef products in all the markets by using a single way (Swoboda,
Elsner and Morschett, 2014). In Brazil, this strategy will support significantly as it is already
agricultural potential market where it can use the same strategies as it is using in Australia and
New Zealand. The company can use transnational strategy to enhance the effectiveness of its
business.
Global Strategy
In addition to above strategies, AAC can implement global strategy as its international strategy.
It can use these services when developing the operations in Brazilian market. Under this, this
firm will make more emphasis on Brazilian market than its local market. It will help the
organization to excel its customer base and profitability in world food and agribusiness sector. It

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can decrease the costs and approach a larger population all over the world (Laurance, Sayer and
Cassman, 2014).
Thus, this organization can use above international strategies while expanding operations in
Brazilian market.
Modes of Entry
Before entering into new market, Australian Agricultural Company will determine some specific
market entry modes which are given below:
Most Appropriate modes
Most appropriate modes for AAC in Brazil are stated below:
Exporting
Nowadays, Australian Agricultural Company is one of the largest producers of cattle and beef.
Now, it is able to become the largest Wagyu beef exporter all over the world. Brazil is one of the
largest economies all over the world so it will be the most appropriate market for the expansion
of AAC’s operations. It can use exporting mode to enter in this market. Under this mode, the
company can use two types of exporting modes i.e. direct exporting and indirect exporting. AAC
can use both of the methods as it can export agricultural and beef products directly from
Australia to Brazil by using direct exporting. Furthermore, it can use indirect exporting in which
it can use intermediaries and third parties (Game and Apfelthaler, 2016). This will be the most
suitable entry mode for AAC as it can help the company to establish its brand presence without
setting up the premises.
Green Field Investment
Green Field investment is one of the suitable entry modes that assist the firm to establish
business in international country. To start its business in Brazil, AAC can use this market entry
mode. Under this, it can set up its facilities in Brazil and develop more opportunities in new
international market. If AAC will adopt this type of market entry mode then it will be able to
have various tax benefits Brazilian market (Richards and Arima, 2018).

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Inappropriate Modes
The inappropriate modes of entry for AAC in Brazil are discussed below:
Joint Ventures
Joint venture can be defined as a business venture where two or more firms enter into an
agreement to participate in the revenues and profits. This is not much appropriate entry mode for
AAC as all the involved parties need to share the profits and revenues. It can affect the profit
earnings of company. There may be issues and conflicts among the firms while operating
business on global level.
Franchising mode
Franchising mode can be an inappropriate entry mode for AAC as franchisee can work as
competing brand in the coming future. Moreover, a single firm can have adverse impact on the
overall brand image and financial performance of company (Schierhorn, et al, 2016).
Recommendations for Future Strategic Direction
It is hereby recommended that AAC Company should focus on using effective strategies for
future strategic directions. It should implement differentiation strategy to spread its operations in
Brazilian market. It should make efforts to differentiate its agricultural and beef products from
other players in the industry. Moreover, diversification can assist the firm for business
development and expansion. It will provide AAC to get a good chance to compete with
international competitors. In order to stay competitive, AAC should make changes in its pricing
strategy. It should lower the prices of its beef products so people in Brazil prefer to purchase its
products. To enhance its brand presence, Agribusiness Company should implement effective
promotion strategies so that it can approach a larger population in Brazil. By conducting market
research, the company should analyze the needs and demands of targeted customers and fulfill
their needs. It will help the organization to enhance its revenues and profitability in global
agribusiness sector.

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Conclusion
From the above analysis, it can be concluded that Australian Agricultural Company is the largest
agriculture and beef producer in Australia. The company has a great potential to expand its
products in international market. In this report, it is planning to spread its business in Brazil that
may offer various international opportunities to this company. The organization will use
effective international strategies which will help in establishing its business in foreign country.
AAC will use effective market entry modes which will assist it to set up its business and generate
more revenues. It is found that these entry modes will help this company to approach a larger
population in new market and increase its customer base. AAC will be able to set up its
operations in Brazil by practicing joint venture and franchising mode. In the future, the
organization should focus on formulating new and effective strategies so that it can stay
competitive in Brazilian agricultural industry. These business strategies will support this firm to
gain sustainable competitive advantage against Brazilian agriculture industry players. Moreover,
it should go ahead with the given recommendations so that it can flourish its business in
Brazilian market and other international markets. Thus, this firm should focus on developing its
international and business strategies in the future.

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References
AACO. 2018, Australian Agricultural Company Ltd., Available from https://aaco.com.au/about-
us [Accessed on 3 October 2018].
Ardeshiri, A. and Rose, J.M., 2018. How Australian consumers value intrinsic and extrinsic
attributes of beef products. Food Quality and Preference, 65, pp.146-163.
Australian Trade and Investment Commission 2018, Food and Agribusiness, Available from
https://www.austrade.gov.au/local-sites/singapore/contact-us/food-and-agribusiness [Accessed
on 3 October 2018].
Bloomberg, 2017, Company Overview of Australian Agricultural Company Limited. Available
from https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=8745402
[Accessed on 3 October 2018].
Cavallo, E., Ferrari, E., Bollani, L. and Coccia, M., 2014. Strategic management implications for
the adoption of technological innovations in agricultural tractor: the role of scale factors and
environmental attitude. Technology Analysis & Strategic Management, 26(7), pp.765-779.
Cook, R., 2018, Brazil Beef Consumption, Available from http://beef2live.com/story-brazil-beef-
consumption-0-153908 [Accessed on 3 October 2018].
Engel, L.C. and Siczek, M.M., 2018. A cross-national comparison of international strategies:
global citizenship and the advancement of national competitiveness. Compare: A Journal of
Comparative and International Education, 48(5), pp.749-767.
Galanakis, C. M. 2018 Sustainable Food Systems from Agriculture to Industry: Improving
Production and Processing, US: Academic Press.
Game, R. and Apfelthaler, G., 2016. Attitude and its role in SME internationalisation: why do
firms commit to advanced foreign market entry modes?. European Journal of International
Management, 10(2), pp.221-248.

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Greenwood, P.L., Gardner, G.E. and Ferguson, D.M., 2018. Current situation and future
prospects for the Australian beef industry—a review. Asian-Australasian journal of animal
sciences, 31(7), p.992.
Laurance, W.F., Sayer, J. and Cassman, K.G., 2014. Agricultural expansion and its impacts on
tropical nature. Trends in ecology & evolution, 29(2), pp.107-116.
Mueller, B. and Mueller, C., 2014, The Economics of the Brazilian Model of Agricultural
Development. International Research Initiative on Brazil and Africa, 1, pp. 5-6.
Richards, P. and Arima, E., 2018. Capital surpluses in the farming sector and agricultural
expansion in Brazil. Environmental Research Letters, 13(7), p.075011.
Robson, W., 2015. Strategic management and information systems. Pearson Higher Ed.
Schierhorn, F., Meyfroidt, P., Kastner, T., Kuemmerle, T., Prishchepov, A.V. and Müller, D.,
2016. The dynamics of beef trade between Brazil and Russia and their environmental
implications. Global Food Security, 11, pp.84-92.
Swoboda, B., Elsner, S. and Morschett, D., 2014. Preferences and performance of international
strategies in retail sectors: an empirical study. Long Range Planning, 47(6), pp.319-336.

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