Vinomofo's International Business Strategy: Dubai Market Analysis

This report provides a comprehensive analysis of Vinomofo's international business strategy, focusing on its potential expansion into the Dubai wine market. It begins with an overview of Vinomofo, an online wine retailer, and its micro-environment, highlighting its competitive position and past successes. The report then delves into the analysis of a new emerging market, specifically the Dubai wine market, and applies the OLI (Ownership, Location, and Internationalization) framework to assess the opportunities and challenges. The analysis considers factors such as Dubai's tourism industry, government regulations, and competitive landscape. The report concludes that entering the Dubai market could be beneficial for Vinomofo, and supports this with statistical figures and relevant data. The report also touches on the role of SMEs in the global economy and how they can use technology to compete in international markets.

International Business Strategy

Table of Contents
Background......................................................................................................................................1
Key Descriptive Information...........................................................................................................1
Overview of Vinomofo and its micro-environment....................................................................1
Overview of new emerging market.............................................................................................4
Conclusion ......................................................................................................................................6
REFERENCES................................................................................................................................7
.........................................................................................................................................................7

Background
Today, every organisation whether deals at small or large level, specifically aims to
expand its business market at international level. This would provide opportunity to enhance
customer base and generate high revenues to operate business successfully. In this regard, for
expanding business at global level, firms that operate business as SME (small to medium sized)
are needed to evaluate both micro and macro environment (Verbeke, 2013). Through this
process, they can develop better international strategies to integrate opportunities of emerging
market into business. Therefore, to analyse this concept, Vinomofo firm is chosen that operate
business as online wine retailer in Australia, Singapore and New Zealand. It offers a range of
unique wine and brands on amazing rates with high quality. This retailer recognises as one of the
leading small enterprise that has maintained its sustained revenue growth. In this regard, to enter
into new business, market analysis has been done under this assignment in terms of competitive
position of business. While macro-environment of Vinomofo is analysed by utilising the OLE
economical theory.
Key Descriptive Information
Overview of Vinomofo and its micro-environment
Vinomofo is one of the leading firm in retailing market, that offers wines with 100%
Mofo Happiness Guarantee. It is founded by two Australian Brothers-in-law Vinomofo Andre
Eikmeier and Justin Dry in 2011. Within just seven years, they have grown business to a tribe of
more than 500k wine-loving mofos worldwide. It's main mission is “To build a place where firm
can buy best wine products and sell the same to wine-loving mofos” (Teagarden and et. al.,
2018). In this regard, its co-founders thoughts that wine is not just a delicious drink, it has
capability to bring food alive as well as makes an individual smile and feel something. Wine
with unique and good texture should never be domain or intimidating of some self-proclaimed
‘connoisseurs’ (González-Rodríguez and et. al., 2018). It provides a flavour to life, a good
company and a layer of richness. Having such an amazing thought, it is going to take business
model and wine from outside the Australia. According to Imogen Brennan (2016), the potential
factors of this firm to expand business globally, can be measured in terms of growth, where in
2016 it has become a successful wine retailing online business, that turns its profitability to over
AUS $50 million per year (Australian Online Wine Retailer Vinomofo Goes Global, 2016).
1

Along with this, Vinomofo also won the Smart and Lasting award as fast growing online
retailing firm in Australia (Australia’s 50 Fastest Growing SMEs Revealed At SmartCompany
WFI Smart50 Awards 2015, 2015). It also recognises as the firm with sustained revenue growth
in past years, that show strong competitive factors for future development of business.
As Vinomofo operates business in online retailing sector, therefore, it has potential
features of global reach due to less requirement of huge marketing budgets. With the help of
investors in 2013 who are Adelaide-based, co-founders of this firm has taken it into overseas
market (Ribau, Moreira and Raposo, 2018). In addition to this, in April 2016, respective retailer
also secured a breaking record by over AUS $25 million investment from Blue Sky Ventures
(venture capital firm). These funding have allowed Vinomofo for global expansion in rapid
manner. Currently, it has launched its online pop-up wine store in more than six markets – UK,
China, Singapore, New Zealand, Hong Kong and the US. Now, it seeks to expand business in
new emerging market, so, it is essential for this company to analyse the micro-environmental
factors or market system first.
Vinimofo mainly targets the niche market of a wine lover, where due to the nature as
online distributor, it has a strong competitive position in respective sector. This firm also
considers as biggest or direct competitor of NWA (Naked Wines Australia). It business strategy
i.e. to offer wines on 100% happiness guarantee, with best quality and fast delivery that managed
by a sound CRM system, helps in earning a high degree of competition as well (Anwar, 2018).
Along with this, another main strategy which is based on embracing innovation in technology, to
lower down the entry barriers in new emerging market and utilisation of digital platform for
distribution of wine, provides evidences of its strong online presence in online retailing sector
(Dominguez and Mayrhofer, 2018). The main competitors in wine retailing sector that currently
faced by Vinomofo in Australian market are – Dan Murphy's, LiqourLand, NWA, BWS and
other wineries, which targeted the specific audience in niche market.
According to Australian Taxation Office (ATO), small and medium sized business can be
defined as firms with annual turnover of less than AUS $10 million. These companies are
considered as engine room for development of economy, that contributes more than $380 billion
each year. As per ABS i.e. Australian Bureau of Statistics, micro-businesses usually employees 0
to 4 persons, while 5 to 19 workers are employed under small-businesses (Hoque, 2018). In
context with medium-sized firms, they provide jobs to 20 to 199 individuals, while large
2

organisations given employment to more than 200 workers. In terms of contribution of SMEs in
development of Australian economy, can be evident by below statistical figure -
(Source:Small business share of key economic aggregates, 2017)
3
Illustration 1: Small business share of key economic aggregates
Illustration 2: Business innovation by activity and Size

Thus, it has been evaluated that size of companies makes relative less difference in terms
of innovation, where investment in technology provides a better chance to SMEs in dealing with
high degree of competition (Karami and Tang, 2019). In this regard, to expand business in
international market, SMEs can sell directly its products to customers via local distributors,
combining business local business partners through joint venture and offer through websites.
Therefore, in context with Vinomofo, as it operates online business, therefore, for entering into
new emerging market, offering products through its websites consider as perfect international
business strategy (González-Rodríguez and et. al., 2018).
Overview of new emerging market
As Vinomofo already expand its business in six international countries, therefore, to enter
into new era for further expansion, Dubai Wine Market is considered as the best one because it is
one of the rapid growing emirates in UAE (Teagarden and et. al., 2018). Along with this, it holds
as second position as largest share in tourism industry. So, it increases the demand of luxury or
finest quality of wine by licensed hotels and restaurants, to provide a culinary experience to
tourists (Karami and Tang, 2019). Furthermore, due to strict regulations of Government on
buying or selling the business of alcohol, only two companies that are African & Eastern,
Maritime & Mercantile International are allowed to do their business in Dubai market. So,
considering the less degree of competition, it will prove better to Vinomofo to open its business
over here (Verbeke, 2013). To analyse competitive factors, that bring opportunities for respective
firm of Australia, to operate business in Dubai Wine Market, an economical theory – Eclectic
Paradigm or OLI Framework (Ownership, Location and Internationalisation) can be used. This
economical theory can help co-founders of Vinomofo in analysing the nature of market of Dubai
in following way –
4

Ownership advantages: Vinomofo has already sustained a competitive position in
domestic market of Australia, by giving an intense competition to both large and small-based
organisations. Along with this, by getting a support of various investors and venturing
companies, it has expanded its business in overseas market (Ribau, Moreira and Raposo, 2018).
These factors shows a high advantage factors for respective firm to open business in Dubai
market.
Location advantages: As Vinomofo offers products through its websites, so, it doesn't
need to open store physically to sell products directly. Along with this, as Government of Dubai
has levied a tax of more than 30% to 50% on alcoholic products that are importing in Dubai
(Dubai Wine Market, 2016). Furthermore, less competitive environment and presence of high
tourism factor, also provide beneficial for respective firm to launch its online business over here
(Anwar, 2018). Therefore, considering these factors, provide opportunity to Vinomofo to sell
wine on high price rates, because any brand that a person pays in other countries, gets doubled or
sometime triple in Dubai, due to high importing tax. Another main factor that leverages the
location advantage of Dubai market, is defined in the terms of manufacturing, where UAE
doesn't produces wine and other alcoholic beverages because of religion (Dominguez and
Mayrhofer, 2018). So, this country exports the wine products from other nations that provide
advantage to Vinomofo to enhance its customer base.
Internationalisation advantages: Vinomofo has already expanded its business market in
many developed countries, so, it has already acquired the global advantages to enter into new
emerging area. With this assistance, having lavishness and luxury celebration mode of tourism in
Dubai wine market, double the consumption of wines and other alcoholic products (Hoque,
2018). This would can be evident from following statistical figure -
5

Thus, it has been identified from entire discussion that entering into Dubai Wine Market of
United Arab Emirates, will prove beneficial for Vinomofo in generating high profitability.
Conclusion
It has been evaluated from this assignment that SMEs in today's business environment,
provides a large contribution in development of economy. Apart from size, as compared to large
organisation, they also create a number of innovations to offer high quality of products and meet
demands of customers. But before entering business into new environment, it is essential for
SMEs like Vinomofo to analyse both micro and macro-environment, so that better international
strategies can be made to gain high competitive factors.
6

REFERENCES
Books and Journals
Verbeke, A. (2013). International business strategy. Cambridge University Press.
Teagarden, M. B. & et. al. (2018). Contextualizing international business research: Enhancing
rigor and relevance. Journal of World Business. 53(3). 303-306.
González-Rodríguez, M. R. & et. al. (2018). Revisiting the link between business strategy and
performance: Evidence from hotels. International Journal of Hospitality Management.
72. 21-31.
Ribau, C. P., Moreira, A. C., & Raposo, M. (2018). SME internationalization research: Mapping
the state of the art. Canadian Journal of Administrative Sciences/Revue Canadienne des
Sciences de l'Administration. 35(2). 280-303.
Anwar, M. (2018). Business model innovation and SMEs performance—does competitive
advantage mediate?. International Journal of Innovation Management. 22(07).
1850057.
Dominguez, N., & Mayrhofer, U. (Eds.). (2018). Key success factors of SME
internationalisation: A cross-country perspective. Emerald Publishing Limited.
Hoque, A. S. M. M. (2018). Does government support policy moderate the relationship between
entrepreneurial orientation and Bangladeshi SME performance? A SEM
approach. International Journal of Business Economics and Management Studies. 6(3).
37-59.
Karami, M., & Tang, J. (2019). Entrepreneurial orientation and SME international performance:
The mediating role of networking capability and experiential learning. International
Small Business Journal. 37(2). 105-124.
Online
Australian Online Wine Retailer Vinomofo Goes Global. 2016. [Online] Available
Through:<https://www.australiaunlimited.com/business/vinomofo>.
Australia’s 50 Fastest Growing SMEs Revealed At SmartCompany WFI Smart50 Awards 2015.
2015. [Online] Available Through: <https://www.bandt.com.au/media/australias-50-
fastest-growing-smes-revealed-smartcompany-wfi-smart50-awards-2015>.
What is Small-Medium Enterprise (SME) in Australia?. 2019. [Online] Available
Through:<https://tidybiz.com.au/pages/what-is-a-small-medium-enterprise-sme>.
Dubai Wine Market. 2016. [Online] Available Through:
<https://tusharborah.wordpress.com/2016/06/10/dubai-wine-market-brief-introduction/
>.
7