International Strategy Case Study: Risk Assessment of Biosata Organics

This report presents a comprehensive risk assessment of Biosata Organics Pty Ltd, an Australian honey producer, focusing on the challenges and opportunities associated with international expansion and export. The analysis delves into the Australian honey industry, highlighting key factors s...Read More

Risk Management of
Biosata Organics Pty
Ltd.
An Analysis of the Australian Honey
Industry.

Honey Industry in Australia
• The Australian Honey Industry produces over 20,000 tons of
honey annually.
• The industry is dependent on the weather conditions such as
floods, droughts and bushfires.
• Other factors affecting the production of honey include nutritional
aspects of bees and native vegetation (Beeaware.org.au 2019).
• Commercial bee-keeping and production of honey is a growing
industry in Australia.
• Australia is recognized among the top ten major honey producing
countries in the world.

Operations in the Honey Marketing and International Trade
• Packaging – One of the primary procedures involved in trade of
honey is the proper packaging of the product. This includes the
portability of the containers, low costing as transparency of
containers so that the customers can see the product before buying.
• Transporting – Large quantities of honey requires transportation
through plastic buckets with lids that fit tightly. Tin cans are not
suitable as it deteriorates the quality of the product.
• Labelling – In order to optimize marketing honey must be labelled so
that adequate information is provided to the customers about its
quality, features and authenticity (Yadeta, 2015).

Risks involved in Honey production
The risks involved in beekeeping and honey
production include the following:
• Changes in weather may affect the production.
• Diseases in bees can hamper the quality of honey produced
(Fairbrother, Purdy, Anderson and Fell 2014).
• Packaging defects may result in major losses during
transportation.
• Contamination of the product during processing operations
may result in deterioration of quality.

Biosata Organics Private Limited
• A family owned Australian Company, Biosata Organics Pty
Ltd was established in the year 1999 (Biosota.com.au
2019).
• Biosata stands for ‘natural hexagon’ thereby indicating the
authenticity of the products.
• The owners of the company, Oxana and Andrey make sure
that the quality of the products is maintained throughout.
• The mission of the Company is to ensure the finest honey
to the customers additionally ensuring sustainability of the
environment.

Risks involved in Exports by Biosata
Organics
• Compliances with legal requirements in several countries
pertaining to the exportation of honey.
• Legislations in several countries regarding food safety and health
standards.
• Contamination residues of pesticides in the products leading to
deterioration in quality.
• Use of Genetically Modified Organisms for production processes
(Yu, Qi, Yan and Cui 2015).
• Legislations pertaining to honey, like the European Union honey
legislation with respect to quality and labelling.

PESTEL Analysis
The framework of PESTEL analysis aids in the identification of the several
external factors that may affect the business operations and functions of
an organization (Cadle, Paul and Turner 2014). The political, economic,
social, technological, environmental and legal factors affecting the
business of Biosata Organics can be identified to be the following:
• Political factors – Trade regulations and tax rates in several countries,
along with regulations regarding labelling and maintenance of food
safety standards.
• Economic Factors – Governmental regulations and infrastructural quality
available in the various countries where the product may be exported
to. Labor costs and economic growth rates in Australia.

PESTEL Analysis
• Social Factors – Consumption behaviors of the customers
pertaining to their usage of the product. Awareness of the
individuals regarding the production and sustainability of honey
production.
• Technological Factors – Technological developments in the
extraction, processing and packaging procedures. Technology
used for the supply of the product and its cost efficiency
(Gebremichael and Gebremedhin 2014).

PESTEL Analysis
• Environmental Factors – Weather and climatic changes
along with control of diseases in the bees. Regulations
relating to environmental pollution and waste management
in the production process.
• Legal factors – Health and safety regulations present in
several countries. Regulations pertaining to the
maintenance of authenticity and quality of honey. Rules
regarding practices of beekeeping and labelling of
products.

Porter’s Five Forces Analysis
The analysis of the five forces as presented by Michael E. Porter,
presents a framework for the identification of the competitive factors
that affect the operations and functions of a business organization
(Dobbs 2014).
• Threat of New Entrants – Biosata Organics faces a high threat in this
aspect due to the rapid developments in the honey industry.
• Threat of substitutes – Biosata Organics faces a medium to low
threat in th8is aspect due to the growing consciousness of the
customers regarding the health benefits of using honey.

Porter’s Five Forces Analysis
• Competitive Rivalry – Biosata Organics faces a high threat of
competition from major producers of ho9ney such as Capilano
Honey and Tasmanian Honey Company.
• Bargaining power of the suppliers – Biosata Organics faces a low
threat in this aspect due to the presence of a wide number of
suppliers and beekeepers for the production of premium quality
honey.
• Bargaining power of Customers – Biosata Organics faces a high
threat in this aspect due to the presence of a large number of
competitors for which they need to adopt the strategy of
competitive pricing.

Recommended methods of Risk
Mitigation
• High threat of new entrants – This risk can be managed by
diversifying the range of products available and introducing
innovations. Additionally investments can be made in
research and development to improve quality of products.
• Low threat of substitutes – This risk can be mitigated by
focusing on services provided and efficiency in product
supply. Additionally the switching costs of the customers
can be increased.

Recommended methods of Risk
Mitigation
• High threat from Competitive Rivalry – This risk can be mitigated by
collaborations and partnerships with competitors to increase market
size. Diversification of products and efficient pricing strategies can also
provide a competitive edge.
• Low threat from bargaining power of suppliers – This threat can be
managed by building efficient supply chains with multiple suppliers.
• High threat from bargaining power of customers – This threat can be
managed by proper marketing strategies and innovations in product
range.

Impact of Environmental Factors
In Australia the business operations of Biosata Organics is determined by several
regulations like Consumer Laws, Food and Safety Laws and laws regarding
Environmental Sustainability.
• Consumer laws protect the rights of the customers to know about the product
features and quality. This requires a meticulous process of labelling the
products.
• Food and Safety laws ensures that the company must maintain a high quality of
products and deliver only authentic honey, free from contamination.
• Environmental Sustainability Laws require the company to manage beekeeping
processes and ensure prevention of environmental pollution during production
processes (Schaltegger, Burritt and Petersen 2017).

Expansion of Business in China
• The environmental factors pertaining to such business expansion
includes the climatic conditions, which are suitable for the
production of honey.
• Stringent laws regarding environmental sustainability need to be
followed by the organization.
• The company may also face high level of competition from the
existing honey producers as China is one of the largest honey
producing countries in the world (Zheng et al. 2018).
• Changing trends of labor costs in the country will also determine the
nature of business operations by Biosata Organics as honey
production is labor intensive.

Conclusion
Biosata Organics is one of the leading producers of honey in
Australia. However, it may face several risks pertaining to its
bus9iness operations. Such risks can be managed by a persistent
process of product innovation and diversification, which may provide
it with a competitive edge in the market.

References
Beeaware.org.au (2019). Industry « Bee Aware. [online] Beeaware.org.au. Available at: https://beeaware.org.au/industry/
[Accessed 2 Oct. 2019].
Biosota.com.au (2019). About | Biosota manuka honey from Australia. [online] Biosota.com.au. Available at:
https://www.biosota.com.au/about [Accessed 2 Oct. 2019].
Cadle, J., Paul, D. and Turner, P., 2014. Business analysis techniques. Chartered Institute for IT.
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness
Review, 24(1), pp.32-45.
Fairbrother, A., Purdy, J., Anderson, T. and Fell, R., 2014. Risks of neonicotinoid insecticides to honeybees. Environmental
toxicology and chemistry, 33(4), pp.719-731.
Gebremichael, B. and Gebremedhin, B., 2014. Adoption of improved box hive technology: analysis of smallholder farmers in
Northern Ethiopia. International Journal of Agricultural Economics and Extension, 2(2), pp.77-82.
Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental management: Striving for
sustainability. Routledge.
Yadeta, G.L., 2015. Honey production and marketing in Ethiopia. American Journal of Life Sciences, 3(1), pp.42-46.
Yu, H., Qi, Y., Yan, Y. and Cui, P., 2015. Research on the international export competitiveness of honey–taking Anhui province as
an example. In SHS Web of Conferences (Vol. 14, p. 02015). EDP Sciences.
Zheng, H., Cao, L., Huang, S., Neumann, P. and Hu, F., 2018. Current status of the beekeeping industry in China. In Asian
beekeeping in the 21st century (pp. 129-158). Springer, Singapore.