MGT5STR: AWB Limited's Strategic Marketing Management Report

This report examines the international market opportunities for AWB Limited, focusing on the Australian agribusiness sector. It identifies potential growth areas, particularly in South Asia, and recommends a global strategy with a multi-domestic approach. The analysis includes discussions on mark...Read More

Running head: STRATEGIC MARKETING MANAGEMENT
Strategic marketing management
Name of the student
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Executive summary
The aim of this report is to discuss about the international market opportunities for AWB
Limited from the perspective of Australian agribusiness industry. This report identified a few
opportunities that can be gained by AWB Limited from their international business along with a
few strategies. This is also identified that they should follow direct exporting entry strategy in
their initial stage of international operation. There are few recommendations discussed in this
report, which includes initiation of diversification strategy for AWB Limited. These
recommended steps can help AWB Limited to gain long term business sustainability.

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Table of Contents
Introduction......................................................................................................................................3
Identification of the international opportunities..............................................................................4
Identification of the international strategies....................................................................................5
Identification of the market entry strategy.......................................................................................5
Direct exporting...........................................................................................................................6
Joint venture.................................................................................................................................6
Foreign direct investment............................................................................................................7
Recommendations............................................................................................................................8
Conclusion.......................................................................................................................................9
Reference.......................................................................................................................................10

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Introduction
Agribusiness sector of Australia is one of their largest revenue generating sources due to
the massive scale of operation. It is leading in terms of number of employment, market size and
generation of foreign reserve. Thus, with the given potentiality and size of operation in this
sector, the intensity of competition is also high. There is good number of competitors operating
in this sector. However, it should also be noted that the agribusiness sector of Australia is diverse
and covers different areas such as food processing industry and beverage manufacturing process.
It is reported that as of 2015, more than 520,000 persons are employed in this sector and more
than 175,000 business entities are operating (Purves, Niblock and Sloan 2015). This denotes the
scale of operation of this sector. It is also reported that as of 2017-2015, the Australian
agribusiness sector is was valued at $53.9 billion, which further equals to 3.3 percent of the GDP
of Australia. It is also estimated that this sector will further grow at the minimum rate of 1.5
percent till 2020. This denotes the potentiality and opportunities to be gained by the operating
firms in the agribusiness sector (Jie, Parton and Cox 2013).
Another major reason of the growth of the Australian agribusiness sector is export. This
is due to the reason that Australia is exporting half of their agribusiness production, which is
helping this sector in becoming one of largest foreign reserve sources for the country. The value
of the net agribusiness exports of Australia is also growing at the rate of more than 6 percent,
which states the huge marketing opportunities in the global market. Thus, it can be concluded
that entering and tapping the global market is one of the most effective and suitable options
available for the agribusiness entities.

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This report will discuss about the international opportunities for AWB Limited along
with the different strategies that will be suitable for them in the international market. In addition,
this report will also discuss about the different modes of entry for AWB Limited and the more
effective one will be selected. On the basis of the major factors identified, a few
recommendations will be discussed.
Identification of the international opportunities
It is reported that as of 2014, the agribusiness sector of Australia spent approximately
$924 million on the research and development. This refers to the fact that domestic agribusiness
industry of Australia is gaining enough effectiveness and competencies to compete in the global
market. One of the major international opportunities that can be gained by AWB Limited is the
huge population in the South Asian region including China. This part of the world is one of most
populated regions with having the presence of two most populated countries in the world (Cheng
et al. 2014). Thus, the more will be the population, the more will be demand for food products
such as wheat. Moreover, wheat is one of the staple food items in the South Asian countries.
Hence, AWB Limited is having huge market opportunities in tapping this region.
Most of countries in Asia and Latin American region are traditionally agriculture based
economy but with the recent pace of development and urbanization in the developing economies,
these countries are slowly turning towards service industry based economy. This is reducing the
average agricultural production of these countries. In this case, this will be a major opportunity
for AWB Limited to export their wheat to these countries in line to their increasing demand
(Mainela, Puhakka and Servais 2014). Another international opportunity for AWB Limited will
be the lower average cost of production of wheat in Australia. Hence, AWB Limited is having

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competitiveness in terms of cost of production and this will help them to export their product in
competitive price points.
Identification of the international strategies
One of the most applicable international business strategies for AWB Limited is multi
domestic approach. This refers to the market adaptable process of them through which they will
offer the variants of wheat according to the local market trend of the host country. However, in
this case, it should also be noted that in order to have multi domestic approach, AWB Limited
should have farming activities in the targeted country to adapt with the local market (Tulung
2017). There are number of countries where foreign investment in the agriculture sector is
restricted or limited such as in India, where foreign investment cannot be made in the agricultural
sector. Hence, the selected country will also influence the effectiveness of multi domestic
strategy for AWB Limited.
Global strategy can also be applicable for AWB Limited in terms of their international
business strategy due to the reason that this strategy will enable them to direct export the wheat
from Australia to other countries. Moreover, AWB Limited will not have to adapt to the local
market trends rather they export standardized wheat variants across the world. However, the cost
may get increased for them as tariff and tax is involved in the process (Lin 2014). Thus it can be
concluded that compared to the multi domestic strategy, AWB Limited will have more
opportunities through global strategy on the basis of different advantages and disadvantages.
Identification of the market entry strategy

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There are number of market entry strategies available for AWB Limited in terms of their
international business strategy. The following sections will discuss and analyze about each of
these available market entry strategies.
Direct exporting
Direct exporting refers to the process of exporting the finished products from the home
country to the host country. This is one of the least risky entry strategies available as there is no
need for investments in the host market. In the case of AWB Limited, it will be an effective
choice due to the reason that they will have bear less risk in the process of international business
and will also bear less cost due to offering standardized products (Sandberg 2013). Moreover, the
wheat AWB Limited is producing is difficult to maintain its quality and standard by growing in
the foreign soil. Hence, it will help AWB Limited to offer their products to the host country
according to the trends and demand pattern.
However, on the other hand, there are few challenges also to be faced by AWB Limited
in initiating the direct exporting market entry strategy. The major challenge will be the cost
regulation. Wheat is a necessity product and cannot be sold at premium. However, with the
involvement of tax and tariffs in the international trading process, average cost will get
increased, which will reduce the market attractiveness and viability of AWB Limited (Fernandes,
Gouveia and Pinho 2014). On the other hand, international transport process of the food items is
difficult due to the involvement of perishable nature. Hence, AWB Limited will have to transport
their items minimal time and cost, which is difficult in the case of direct exporting.
Joint venture

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Joint venture can be another suitable and effective marker entry strategy for AWB
Limited due to the reason that risks will be limited as well as the responsibility. With the help of
the joint venture strategy, AWB Limited will come in partnership with another domestic entity in
the target market to co-produce the products. However, the co-production model will not be
applicable for AWB Limited due to the fact that farming activities is difficult to co-produce.
Thus, partnering in terms of licensing will be more applicable for AWB Limited where their
farming activities will be carried out by the licensed partners in the host country (Eriksson et al.
2015). This will help AWB Limited to have less involved risk in the process along with offering
the wheat variants as per the local trends. The domestic firm will have more local market
understanding compared to AWB Limited and it will be beneficial in catering in the host
country. The cost of operation will also be limited in this process.
However, this strategy is also having a few limitations that will be faced by AWB
Limited. One of the major limitations is the complexity involved in the process. The entire
process of production in the host country will be controlled by the licensed partner and
emergence of negative factor will pose challenges for AWB Limited to continue. In addition, the
profit margin will also be low for AWB limited in this case due to the reason that major portion
of the revenue will be with the licensed partner.
Foreign direct investment
The last market entry strategy applicable for AWB Limited is foreign direct investment
through which they will invest directly in the host country and will have their operation and
production facility. This is the most direct form of entering in the foreign market but with more
opportunities as well as more risks. One of the major advantages that will be gained by AWB

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Limited from directly investing in the foreign country is the maximum control over the foreign
operation. They will be able to control the process in the foreign market based on the local
market trends (Blonigen and Piger 2014). Moreover, the foreign direct investment process will
also be beneficial for AWB Limited in terms of offering products according to the local market
trends and demand. They will have the flexibility in the foreign business operations along with
converting it as the export hub.
This market entry strategy is also having a few limitations to be faced by AWB Limited.
In the case of foreign direct investment, huge capital will have to be invested and this will bear
huge risks. The more will be the amount of foreign investments; the lower will be the chance of
return on investments. Moreover, in case turbulence in the external business factors, the capital
invested by AWB Limited will be at stake. As discussed earlier, there are number of countries
where foreign investments in agribusiness sector are limited. Thus, AWB Limited will have
limited opportunity with foreign direct investments.
Recommendations
 It is recommended that AWB Limited should initiate direct exporting in the initial stage
of their international business in order to bear fewer risks. In the later stage, foreign
investment can be done based on the identified opportunities. This will ensure that less
risk will be incurred by them in their process of international business.
 It is also recommended that AWB Limited should target various countries at a time to
have the larger opportunities. This is due to the reason that international business cannot
be successful in operating in a single country. In this case, it is recommended that AWB
Limited should target the developing countries to tap their increasing demand for food

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items and greater economic growth. This will ensure the long term viability of AWB
Limited in terms of their international business.
 AWB Limited should maintain their cost competency in operating in the foreign market
also. This is due to the reason that cost competency will help AWB Limited to generate
larger revenue from their international business also. In this case, the host countries
should be selected based on their average cost of operation and resources.
 Diversification can also be an effective for the international business of AWB Limited.
With the help of the diversification strategy, AWB Limited can have their different
business segments in different countries, which will help to gain global branding across
the world. This strategy will also help AWB Limited to reduce their dependability from
the wheat production only.
Conclusion
Thus it can be concluded that there are huge opportunities waiting for AWB Limited in
the international market. In this report, it is identified that there are number of international
business strategies can be initiated by AWB Limited. This report proposed that they should
follow direct exporting in the initial stage of their operation and should cater to various countries
at a time. Moreover, it is also recommended that they should initiate diversification strategy to
gain the global identity in the long term. There are number of market entry strategies discussed
in this report along with their respective advantages and disadvantages. On the basis of these
factors, AWB Limited should select their suitable entry strategy.

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Reference
Blonigen, B.A. and Piger, J., 2014. Determinants of foreign direct investment. Canadian Journal
of Economics/Revue canadienne d'économique, 47(3), pp.775-812.
Cheng, M., Green, W., Conradie, P., Konishi, N. and Romi, A., 2014. The international
integrated reporting framework: key issues and future research opportunities. Journal of
International Financial Management & Accounting, 25(1), pp.90-119.
Eriksson, K., Johanson, J., Majkgård, A. and Sharma, D.D., 2015. Experiential knowledge and
cost in the internationalization process. In Knowledge, Networks and Power (pp. 41-63).
Palgrave Macmillan, London.
Fernandes, R., Gouveia, B. and Pinho, C., 2014. Exploring modes of entry into international
markets: direct investment or contractual relations. Journal of Business Economics and
Management, 15(1), pp.56-73.
Jie, F., Parton, K.A. and Cox, R.J., 2013. Linking supply chain practices to competitive
advantage: An example from Australian agribusiness. British Food Journal, 115(7), pp.1003-
1024.
Lin, L.H., 2014. Subsidiary performance: The contingency of multinational corporation’s
international strategy. European Management Journal, 32(6), pp.928-937.
Mainela, T., Puhakka, V. and Servais, P., 2014. The concept of international opportunity in
international entrepreneurship: a review and a research agenda. International journal of
management reviews, 16(1), pp.105-129.

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Purves, N., Niblock, S.J. and Sloan, K., 2015. On the relationship between financial and non-
financial factors: A case study analysis of financial failure predictors of agribusiness firms in
Australia. Agricultural Finance Review, 75(2), pp.282-300.
Sandberg, S., 2013. Emerging market entry node pattern and experiential knowledge of small
and medium-sized enterprises. International Marketing Review, 30(2), pp.106-129.
Tulung, J.E., 2017. Resource Availability and Firm’s International Strategy as Key Determinants
Of Entry Mode Choice. Jurnal Aplikasi Manajemen, 15(1), pp.160-168.