Understanding of Global Markets and Cultural Environment | International Market

Running head: INTERNATIONAL MARKET
INTERNATIONAL MARKET
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Purpose
New Zealand is a highly developed free market economy, which ranks among the 53rd
greatest economies in terms of purchasing power. The economy has grown over the years due its
improved service and manufacturing sectors that drives huge amount of goods and services. It
has a well-established export market that is driven by technological capabilities. New Zealand
wants to expand its market in several sectors that is crucial for its growth and development due
to increased efficiency and performance.
The paper tries to focus on the understanding of the global markets and cultural
environment that is effective for business development with respect to global market
opportunities. This is done by choosing a favorable foreign market that is effective for
expansion. For this, four emerging markets are considered New Zealand can effective expand its
revenues and extract super normal profits. The impacts can be either positive or negative.
Therefore, it becomes important to understand and compare the business opportunities in
different countries where New Zealand can effectively operate and extract huge revenues.
Background
The background of the paper gives the setting of the paper with respect to the
organization that will expand its business in other markets. The chosen company is The A2 Milk
Company which is a part of ASX 200 public listed company. The company was also known as
A2 Corporation which deals in the commercialization of intellectual property that is related with
A1 protein-free milk. The products produced by the company are sold under the a2 and a2 milk
brands. The company also makes infant formula that provides huge revenues. It has an annual
revenue of 337.3 million dollars. The firm does not need much labor as goods are produced by

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capital intensive techniques. It operated with an asset value of about 210.15 million that is
crucial for business and organizational development.
The A2 Milk Company is followed by A2 Corporation that was established in 2000. The
impacts of A1 beta-casein has been researched by Dr Corran McLachlan. The company
undertook a genetic test to denote whether cows are able to produce milk with a1 protein. The
goal of the A2 Corporation was to make dairy products that is free of A1 protein milk. The
company organized several dairy farm breeding programs to establish the goals. However, the
launch of such products were delayed due to operational objectives and it was not made. Instead,
A2 products were made in the market. The company made huge profits with a year of its
establishment with the creation of effective policies and maximized output.
Gallons of milk has been produced by the company that is encouraged the firm in
generation of huge revenues. About 40 liters of free milk were produced by the company in 2010
and extracted huge revenues and marginal proficiency. A1 protein free milk and yoghurt were
supplied to Queensland. By 2012, the company came under the New Zealand Stock Exchange
that created a brand name for the company. The A2 corporate created infant formula and sold it
to several market. It increased its milk business over United Kingdom and United States that
enabled huge sales. Thus, it can be seen that it follows a diversified market strategy due to
expansion of businesses over wider area. The name of company has been hanged in 2015 after
the firm started marking huge profits by expanding its business ventures in the developed
countries. However, businesses are now flexible in emerging markets where foreign firms started
shifting their business in a place that is abundant in resources. This has enabled to firms to
produce goods at a much lower cost the increases their sales and profit percentage. The firm has
a sustainable market as it delivers milk that is enrich in protein. A1 proteins are termed as

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harmful and so milk produced by the company is free from A1 protein. Market distribution
hugely increased in several regions such as UK, US, Australia, Hong-Kong, America and China.
Topic 1: A market selection decision, based on a shortlist of four (4) markets and relevant
criteria.
The decision to expand a business in international markets over other countries is to
understand the impact on the profitability of the chosen firm with respect to several market
strategies. Exploring and accessing the international markets involves the comparison of several
markets with respect to their performance, opportunity, growth, revenue, sales and profit
margins. Data needs to be collected from several authentic sources that can be either qualitative
or data. Collection of this data is not easy because the data is different in each country with
respect to several outcomes. The strategy of structural approach is applied to understand the
changes in several markets by screening the core effective policies for the organizational
development with respect to several outcomes that is crucial for the business development.
Exploring a new market is based on the selection process that is reflected from the way
firms enter in the foreign market. This is judged in terms of incremental basis strategy which is
related to the decisions taken by the investors on an incremental basis. The change in the value of
balance sheets or income statements are important to understand the financial condition of the
economy. Firms take decisions on the basis of their experience on the performance of
international markets in a number of ways. This is effective for the firm to maintain the output by
using lowering resources and involving less risk in terms of exposure. However, this approach
contributes to a greater risk value and leads to a greater competitive risk from the competitors.
This is because firms can effectively analyze the performance of its rival firms and move to other
regions where companies earn huge profits.

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Another strategy that is effectively used in businesses is the simultaneous entry approach.
This strategy works on the principle of diverseness where a firm tries to enter as many markets
as possible within a shorter time span. The strategy needs a strong understanding of the markets
and marketing activities due to difficulties of operating in simultaneous markets where the
market has several successful entries. When there is a successful market entry, there occurs an
entry barriers for the other followers as the successful firm has already dominated the industry
which is known as the first mover advantage. Entry into several market normally increases the
volume f sales which helps in utilizing the capacity of each firm. Firms are able to achieve
economies of scale in production while operating in the international market. As a result,
companies use its natural resources fully that s effective for the organizational development a per
the core attributes. Simultaneous entry approach is foreseen as a resource intensive strategy that
can bring about higher operating risk. Moreover, firms has to adequately maintain its target and
use more competitrivge techniques of production and deliver products at proper time. Firms
needs to resort to several marketing strategies that can effectively improve the performance of
The A2 Milk Company in the global market.
Studying the market structure is effective before entering the market and sell the goods.
The third strategy is to see which approach will be effective, diversified or concentrated. A
concentrated market strategy is the strategy where the sale of the products are targeted towards
one set of audience or a specific segment of the consumer population that operates in a limited
markets. This strategy is effective for small business to sell products with limited financial
resources and dominate the market with their targeted audience. This enables the firm in the
creation of a distinct market niche for a particular commodity. Diversification is the opposite of

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concentrated market approach. Diversification is the process by which firms enter into new
markets by launching new products that is not focused on one set of target audience.
When firms decide to operate in a concentrated market they need to give more focus
towards the sourcing of the products in such small markets for a smaller set of audience. The
firms get benefit from exploiting the information and acquire a competitive experience. They are
able to facilitate competitive advantage by providing goods at low costs and raise its optimum
level of output that enhances producer surplus. This is because when firms can produce gods by
using less resources it lowers the production costs. Low production costs enable firms to sell the
goods at low price and attract more their targeted set of customers which raises their productivity
level. This is effective for the business ventures to communicate and extract huge revenues that
will help them get the return on the invested amount. However, they face the risk of attracting
potential customers. Since, these firms depend on only a small range of customers or operate
over a smaller geographic area, their sales might get hampered if they are unable to attract their
targeted customers. This makes the firm ignorant to the rest of the population even though the
firm has acquired fir global expansion. Thus is crucial for the business to operate in a diversified
market approach that is intended to attract several customers.
The effectiveness of such policies are dealt in the way goods area being produced and
delivered in several markets as it diversifies the risk opportunity in several market strategies. The
approach of diversification markets offers greater strategic flexibility because the diversification
strategy can be approached in several ways (Alon et al., 2016). It enables the firm to extract huge
revenues to by creating products that is innovative and efficient as per the geographical area.
Among the four strategies, the most effective strategy is the screening approach which analyzes
the markets with respect to cost effective outcomes and technologies. Screening is done on the