International Business Report: Brew Dog's Australian Market Analysis

This report analyzes the market attractiveness of Australia for Brew Dog, a multinational brewery and pub chain. The report begins with an introduction to international business and the importance of market analysis for successful global expansion. It then conducts a PESTLE analysis, examining the political, economic, social, technological, legal, and environmental factors influencing the Australian market for beer. Following this, the report applies Hofstede's Insights to understand cultural dimensions in Australia and their impact on business. The report also covers trade agreements and policies relevant to the brewing industry. Furthermore, it employs Porter's Five Forces framework to assess the competitive landscape, including the threat of new entrants, bargaining power of buyers and suppliers, the threat of competitors and substitutes. The report concludes by summarizing the key findings and suggesting the opportunities for Brew Dog to successfully expand in the Australian market. The analysis highlights the high demand for beer, the growing brewing industry, and the potential for Brew Dog's success in Australia.

International Business Management

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Contents
Introduction.................................................................................................................................................2
PESTLE Analysis........................................................................................................................................2
Hofstede Insights.........................................................................................................................................4
Trade and Policies.......................................................................................................................................5
Porter’s Five Forces Framework..................................................................................................................6
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9

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Introduction
International business defines trade of goods, and services across the global borders. It is
observed that the main aim of the companies is to establish the business to expand it at the
international level or global level. It is required for the companies to implement the strategies
while expanding the business at the international level so that it can attain the success in the
business. During the expansion of the business, it is necessary for the companies have to analyze
the business environment of the market so that it can develop the strategy according to the
market environment (Hamilton, & Webster, 2018). There are numerous strategic management
tools that can be used to analyze the business environment and these are SWOT Analysis,
PESTLE Analysis, Porters Five Forces Framework and many others. The main aim of this report
is to evaluate the business environment of the organization.
In this paper, Brew Dog has been taken into consideration for the expansion. Brew Dog is a
multinational company that operates the business in Brewery and Pub Chain. The company is
based in Eltion, Scotland. It produces bottled and canned beers in different varieties such as
stout, ale, India pale ale, and lager. The company has various pubs in the UK, Spain, Brazil,
Finland, Japan, and in many more new locations in which it expanded the business such as
Toronto, Shanghai and Kuala Lumpur. Nowadays, Brew Dog wants to expand the business in
Australian market. It is required for the company to analyze the Australian market for the
expansion.

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PESTLE Analysis
Political: Australian government has strong trade ties with all over the world. The government
of Australia introduced new policies related to international trade. Regulation introduces by the
government helps to protect the domestic industries, customers and the environment from
dangerous goods imported from overseas. There are six trade agreements that the companies
have to be implemented to trade with the other countries. Lodging formal submissions to
governments is a necessary part of Brewery Association’s Constructive Policy. For submission,
the companies has to follow the policies such as NHMRC Drinking Guidelines, ACT Drug
Strategy Action Plan 2018-21, Pregnancy warning labels on packaged alcoholic beverages and
many other have to implement (Brewers Association, 2019).
Economical: The economy of Australia is $1.89 trillion in the year 2019. The high GDP rate
states the high willing power of consumers in the market (Focus Economics, 2020). The high
purchasing power of consumers helps to increases the demand of the company towards the beer.
85% of people consume the beer due to which brewing industry is growing (Brewers, 2019).
Beer Industry of Australia is ranked as third or fourth player in terms of contributing in the
economy. Each and every pub and other licensed premises contribute in economy with the
amount of $ 7.50 to GDP.
Social: It is observed that beer is highly popular in Australian market. There are lot of people
consume the beer in Australia by recognizing it as the necessary consumption. It has been
determined that 1.9 billion liters consumed by Australian in the previous year. It states that
Australian has 9% of strong growth in the beet industry as their demands towards the les alcohol
have been increase. It is observed that the Australian people consume more beer as compare to
Alcohol (Business Wire, 2019).

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Technology: Australia is a technologically advanced and forward-thinking country as the
government of Australia invests in it. High technology helps the beer companies to improve their
beer quality and its techniques to manufacture it. The companies can develop the different
flavors and styles in order to improve the drinkability of the consumers. Craft beer grasps the
high market share in Australian market due to its high technology to enhance its brand
reputation. Developed technology in brewing industry helps to enhance the size of brewery
industry and also improves the brewery equipment that helps to improve it services (Cutcliffe,
2017).
Legal: It is observed that there are many rules and regulation that has been developed for
brewing industry. It is required for the brewing companies to submit the lodging formal to
government. The company has to implements the policies to submit the government and these
are NHMRC Drinking Guidelines, Carbohydrates & Sugar in Alcoholic Beverages, ACT Drug
Strategy Action Plan 2018-21 and many others.
Environment: Brewery companies face the challenges related to environmental issue. Water
consumption, solid waste, waste water, energy use, emission to air and the others are the
environmental issue that the company faces during the production of beer (Olajire, 2012).
Hofstede Insights
Power Distance: In Australian market, power is distributed unequally to every member of the
society. The power has been divided according to hierarchy system for convenience. It states that
the communication among the members is informal which helps to increases the demand of beer.

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Individualism: People of Australia follow the individualism theory as they firstly focus on
themselves and after their immediate families. It is observed that people does not follow the
collectivist due to which the demand of beer is decreases (Heritage, 2019).
Masculinity: Australian people follow the Masculine theory which means the people has more
power to resolve the conflicts, and it also offers the hiring and promotion decision.
Uncertainty Avoidance: Australians always adopt the uncertainty avoidance to deal with the
future issues. They always think about the future and the solutions of the issues that can be arises
in the coming future.
Long term orientation: People of Australia always think about the future and presents.
Australian are highly health conscious for their health that is why; they more prefers the beer
which contains less alcohol.
Trade and Policies
There are some trade agreements for brewing industry to operate the business successfully and
these are:
Free Trade Agreement: Australia has 6 Free Trade Agreements with other countries for
trading, FTAs includes the legally binding commitments of every member to liberalize the access
to their markets (Australian Government, 2019).
Tariffs and Duties: Australia has commitments with the World Trade Organization (WTO) on
tariffs and tariff quotas.

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Import Regulations: The companies have to implement the regulation and have to pay the duty
taxes, and permits. Import trade policy is less so that the companies expand their business at the
global level. There is $3.6bn tax revenue that have to pay by beer companies.
Porter’s Five Forces Framework
The threat of new entrants: Moderate
It has been analyzed that the threat of new entrants is moderate. It is observed that the
profitability of the beer industry is high. The profitability of the industry is high which attracts
the new entrants to enter the market. Encouragement for the new entrants helps to increases the
threat of new entrants in brewing industry.
It is observed that the high cost is required to establish the business in brewery industry just
because of installment of heavy machines. It is difficult for the sole proprietor to establish the
business in it due to which the threat of new entrants is low. There are two aspects have the
logical concept that is why; it can be said that threat of new entrants is high.
Bargaining power of buyers: Low
Bargaining power of buyers is low as the beer company’s influence to consumers to buy the
beers. Consumers have less power to bargain with the companies in terms of purchasing the
beers as it is kind of necessities of the people. In Australia, 85% of people drink it as the demand
of consumers is high (Sanders, 2015). Consumers have not choices to shift their demand from
one supplier to another due to which the people have less negotiation power to purchase the beer.
Bargaining power of suppliers: High

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Negotiation power of suppliers is high as the suppliers also invest the money in raw material,
labor to supplies the services to the companies. It is an attractive industry for suppliers as well
due to which there are many suppliers in the market that helps the brewing companies to provide
the services. The companies have less the options to shift their demand from one supplier to the
other supplier.
In brewing industry, trust and loyalty are the major factors as the companies have to maintain
their relations with their suppliers because the chances of frauds are high. It is challenge for the
companies to develop the trust on the new suppliers that is why; it is difficult for the companies
to shift from one supplier to other suppliers. Both the points’ states that the companies in the
brewing industry of Australia are high as the companies have less choice to switch (Ansoff, et.
al, 2018).
The threat of competitors:
The threat degree of competitors is high as the existing companies have high brand image in the
market. As per the discussion, loyalty is always the first preference of this industry which means
the consumers purchase the beer bottles from the existing companies just because of loyalty and
trust. Balter Brewing Co., 4 Pines Brewing Company, Matilda Bay Brewing Company, Pirate
Life Brewing and many others are the companies that operate the business in brewing industry
and compete with each other. There are many companies in the market that provides the similar
services to consumers and also attracts them to come back with their friends. It states that
Australian brewing industry has high competition.
The threat of substitute: Moderate

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The degree of threat of substitute is moderate. The beer contains the less amount of drugs due to
which the demand of consumers is high for beers. As per this concept, the threat degree of
substitute is low. But the companies provides the different flavors of beers and other alcoholic
drinks due to which the demand of consumers can be shift from one suppliers to another.
According to this concept, the threat level of substitute is high. Both the aspects state that high
level of threat of substitute.
Conclusion
At the end, it is concluded that Brew Dog has the opportunity to expand the business in
Australian market. According to market analysis of Australia, it is observed that the demand of
beer is high. The brewing industry is growing continuously in Australian market that is why; it
can be said that the Australian market is the best market for the companies to expand the
business at the global level as it can attain the high success.

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References
Ansoff, H. I., Kipley, D., Lewis, A. O., Helm-Stevens, R., and Ansoff, R. (2018). Implanting
strategic management. Springer.
Australian Government. (2019) Australian export and import laws. Available From:
https://www.austrade.gov.au/International/Invest/Guide-to-investing/Running-a-business/
Understanding-Australian-business-regulation/Australian-export-and-import-laws [Accessed
7/4/2020].
Brewers Association. (2019) Policy & Issues. Available From:
https://www.brewers.org.au/policies.html [Accessed 7/4/2020].
Brewers. (2019) Beer: The Facts. Available From: https://www.brewers.org.au/beer-facts.html
[Accessed 7/4/2020].
Business Wire. (2019) Beer Industry in Australia 2019 - ResearchAndMarkets.com. Available
From: https://www.businesswire.com/news/home/20190918005614/en/Beer-Industry-Australia-
2019---ResearchAndMarkets.com [Accessed 7/4/2020].
Cutcliffe, J. (2017) The 20 Best Australian Craft Breweries. Available From:
http://craftbeerreviewer.com/the-brewery-list/ [Accessed 7/4/2020].
Focus Economics. (2020) Australia Economic Outlook. Available From: https://www.focus-
economics.com/countries/australia [Accessed 7/4/2020].

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Hamilton, L., & Webster, P. (2018). The international business environment. Oxford University
Press.
Heritage. (2019) Australia. Available From: https://www.heritage.org/index/country/australia
[Accessed 7/4/2020].
Hofstede Insights. (2019) Australia. Available From:
https://www.hofstede-insights.com/country/australia/ [Accessed 7/4/2020].
Olajire, A. (2012) The brewing industry and environmental challenges, Journal of Cleaner
Production, p. 1-21.
Sanders, J. (2015) Australian technology lifts quality, flavour of small batch beer. Available
From: https://www.brewsnews.com.au/2015/05/14/australian-technology-improves-quality-and-
flavour-of-small-batch-beer/ [Accessed 7/4/2020].