International Strategy: Risk Assessment for Biosata Organics (MBA611)

This project presents an international risk assessment for Biosata Organics Pty Ltd, an Australian honey production firm. The assessment identifies and analyzes risks associated with exporting honey, including foreign exchange fluctuations, international political changes such as the US-China trade war, and competition from New Zealand companies. The project also considers the impact of environmental factors like climate change on honey production. Recommendations for risk mitigation are provided, such as diversifying products and markets, engaging with government departments, and investing in market research. The assessment highlights the importance of adapting to changing consumer specifications and international regulations. The conclusion emphasizes the need for a balanced approach to managing risks and rewards, particularly in the face of competition and market volatility.

International Risk
Assessment
BIOSATA ORGANICS PTY LTD

Significance of risk assessment
 Risks lead to various internal and external business
challenges.
 Critical risks can lead to adverse impact on the business
of an organisation.
 Organisations are increasingly having the risk
management department because of changing global
business environment.
 Identification and quantification of risks is imperative to
devise the guards against these risks.
 The periodic assessment of the guards is also imperative.

Honey Industry in Australia
 Increased demand of honey over the years.
 Alternative of the healthy alternative to cane sugar.
 It is essential to examine the internal risks to
production and manufacturing.
 It is essential to examine external risks in the export
of honey.
 Natural honey exports are estimated to grow at a
rate of 8.8% over the period of five years (Pash,
2018).
 Manuka honey is most lucrative nature of honey.

Features of International market
 Complex interactions between supply and demand.
 Fluctuations in exchange rates.
 Changes in technology
 Changes in international regulations.
 International political changes.
 Changes in preferences of international consumers
because of the international demographic changes.

Fluctuations in exchange rates
 Fluctuation in the value of investment due to
the changes in the currency’s exchange rates.
 Volatile nature of investment.
 The international developments like Brexit
would continue to lead to the major
fluctuations in the international exchange
rates.

International Political and Regulatory
Changes
 US China Trade War is one major international political
change impacting the industry.
 Southeast Asia constitutes 70 percent market of the
company apart from Oceania (Alibaba, 2019).
 Oceania constitutes 30 percent market.
 The Manuka Honey is particular lucrative in the Chinese
market.
 The company is required to abide by WTO principles and
similar international regulations and changes therein can
cause problems.

International Competition
 New Zealand companies are the biggest
international competitors in the Manuka
honey production.
 The Kiwi industries are more advanced than
the Australian counterparts (The Guardian,
2019).
 New Zealand government supporting the
trademarking the Manuka honey production
in China.
 The said trademarking would push Australia
out of market.

International Competition
 New Zealand companies are getting support from the New Zealand trade minister.
 The government is all set to apply to the Beijing intellectual property court to obtain the
Chinese certification trademark.
 The success of the claim would force the company Biosata to market honey under a
different tradename.

Levels of Risks
High
• International
Political Changes
• International
Competition
• Changes in
international
laws and rules
Medium
• Technology
changes
Low
• Changes in
international
demographics
leading to change
in customer
preferences

Recommendations for risk mitigation in
international markets
 Foreign Exchange Flucutations
1. Diversification of business products
2. Search of new markets
3. More realistic budgets.
4. Improved financial forecasting

Recommendations for risk mitigation in
international markets
 International Competition:
1. Involve the Department of Agriculture and the Department of Trade for potential loss of
China Market.
2. Involve Australian Manuka Honey Association to address New Zealand competition
3. The company must invest more in market research, both on the international front to develop
marketing strategies.
4. The research will aid in pre-pone of the information of international political developments.
5. The company should expand beyond the South Asian markets.

Recommendations for risk mitigation in
international markets
 Change in Consumer Specifications
1. Regular sampling and laboratory testing of
Australian honey for bee disease (Australian
Government, 2019).
2. Support customer specifications by organising
feedback workshops

Environmental Factors Impact
 Climate Changes
1. The droughts and heat waves particularly in
southeast and southwest regions of Australia
impact the health of bees (WWF- Australia,
2019).
2. Droughts can lead to the reduction in the food
supply of bees.
3. Heat waves can lead to the literal disintegration
of a hive.
4. Changes in density of flower affect the honey
generation.

Environmental Factors Impact
 Economic Impact
1. Imposition of tariffs by importing countries
2. Absence of Free Trade Agreements with
certain countries such as South Korea
(Australian Honey Bee Industry Council Inc.,
2014).
European
Union -
17.3%
Japan - over
25%
South Korea
- 253% China - 15%
India - 60%

Conclusion
 There is an overall balance of the risk and rewards.
 At present the chief risks are from Chinese markets.
 New Zealand competitors are a threat too.
 The involvement of domestic government is essential.
 The exchange rate and revenue risks can only be managed by diversification of the
products and destinations.

Bibliography
 Pash, Chris. "The Health Trend That Encouraged Companies To Produce Adulterated Australian Honey".
Business Insider Australia, 2019. https://www.businessinsider.com.au/australian-honey-adulterated-2018-10.
 "Company Overview - BIOSOTA ORGANICS PTY LTD". Alibaba.Com, 2019.
https://au1122940256mdpu.trustpass.alibaba.com/company_profile.html.
 "New Zealand Pushes To Shut Australia Out Of Manuka Honey Market In China". The Guardian, 2019.
https://www.theguardian.com/business/2019/sep/24/new-zealand-pushes-to-shut-australia-out-of-manuka-
honey-market-in-china.
 "Annual Report 2018/19". Honeybee.Org.Au, 2019.
https://honeybee.org.au/wp-content/uploads/2019/08/Australian-Honey-Bee-Industry-Council-AHBIC-
2019-Annual-Report.pdf.
 "Department Of Agriculture Australian Honey And China (2018-04)". Agriculture.Gov.Au, 2019.
http://www.agriculture.gov.au/export/controlled-goods/non-prescribed-goods/market-access-advice-notices/
2018/maa04-2018.

Bibliography
 "Climate Change Affects Our Beekeeping Industry - WWF-Australia". Wwf.Org.Au, 2019.
https://www.wwf.org.au/news/blogs/the-buzz#gs.8a2vht.
 “The future of the beekeeping and pollination service industries in Australia, Australian Honey Bee
Industry Council Inc.” Honeybee. org.au, 2019.