Vinomofo: International Business Strategy for Dubai Market Entry

This report analyzes Vinomofo Pty Ltd's international business strategy for expanding its wine business, specifically focusing on the Dubai market. It begins with an introduction to international business strategy and provides a background of Vinomofo, founded in Melbourne, Australia. The report details the country and product choice, highlighting Dubai's appeal due to the absence of local wine manufacturing and a high tourism rate, and focusing on Pinot Noir. It then explores relevant strategic theories and concepts, including the Ansoff matrix and Porter's generic model, and how they can be applied. The report discusses various international business strategy choices, such as direct exporting and joint ventures, and concludes with strategic implications of the chosen approach, offering a comprehensive overview of Vinomofo's expansion plan.

International Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Background of the organisation...................................................................................................1
Country and product choice.........................................................................................................1
Useful theories and concepts in strategy design..........................................................................3
International business strategy choice.........................................................................................5
Strategic implications of the choice.............................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
International business strategy is the process of formulating plan for the purpose of
expanding business in different locations. It also guides commercial transactions all around the
world. It is mainly focused by private companies in order to increase their profits in upcoming
years (Buckley and Ghauri, 2015). The organisation which is selected for this report is Vinomofo
Pty Ltd. It was founded in year 2011 by Andre Eikmeier and Justin Dry in Melbourne, Australia.
The country which is selected for the expansion of business is Dubai and the product which will
be mainly focused by the company is Pinot Noir. This report covers various topics such as
background of enterprise, country and product choice, theories and concept in strategy design,
international business strategy choice etc. Along with this, strategic implications of the choice
are also covered in this project.
MAIN BODY
Background of the organisation
Vinomofo Pty Ltd. is a wine selling company which is mainly established in Australia.
There are various types of drinks which are sold by it in the six countries where it has expanded
its business. These are red, white wine, rose / sparkling, mixed cases and black market. Domestic
market of the company is Melbourne, Australia where it was founded and offering different
varieties of wines to the customers. It has attained good competitive advantage in the market due
to key competencies which are range of hand-picked wines, online presence is high, sell products
through website etc.
Country and product choice
Vinomofo is currently operating business in six different countries in order to increase
profitability enhance market share and expand business the company is planning to expand itself
in Dubai (Unites Arab Emirates). The organisation produces various drinks that are sold by it to
its customers. These are red wine, rose / sparkling, black market, white wine, mixed cases etc.
While expanding business in Dubai the enterprise have planned to focus on Pinot Noir which is a
red wine made from grapes (Buckley, Burton and Mirza, 2016). It is considered as one of the
safest wines which could be served to a big group of people. This country is selected for various
reasons which are as follows:
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No manufacturing of wine in Dubai: Vinomofo Pty Ltd has selected Dubai to expand
its business because there are no manufacturing companies of wine. All of them which are sold
within the nation is imported from different regions. It is a great opportunity for Vinomofo to
expand its business successfully and attract new clients. Pinot Noir is one of the best red wine
which is sold by the enterprise so this product is mainly focused for the expansion. It will help to
establish business in Dubai successfully by providing good quality products to all the buyers.
Large contribution in tourism: Dubai is considered as one of the famous destinations
where number of tourists is very high. It contributes a higher amount in the total income of
tourism sectors. It is selected for the expansion of business because it is a great opportunity for
Vinomofo to spread awareness about its products in different locations by selling wines to the
tourists. With the help of it the company can increase its global presence find new opportunities
for business expansion. As the organisation has attained speciality in selling red wines so the
management has decided to focus on the sales of them firstly so that a strong customer base
could be prepared (Drahokoupil, 2014).
Small number of competitors: In Dubai only two companies are allowed by the
government to sale alcohol. These are Maritime and Mercantile International and African and
Eastern. Both of them are selling wines to 300 hotel and 1000 restaurants of the city (Dubai Wine
Market, 2019). It shows that there will be very low competition for Vinomofo if it expands its
business there. It is also a reason for the selection of Dubai as the place where the company will
expand its business in upcoming period.
In order to analyse the environment of UAE, PESTLE analysis could be used as it helps
to determine impacts of all the external factors on the business. All the element of it are as
follows:
 Political: In UAE political situations are stable and the governmental policies for selling
and buying of alcohol are very strict. Therefore, for Vinofomo it is very important to
make sure that it complies with all the rules and regulations while expansion in order to
execute business in Dubai properly.
 Economic: The economy of UAE is stabilised where all the activities of business entities
are controlled and monitored by the legal authorities. In order to take advantage of the
stable economic conditions it is very important for Vinofomo to be aware of the factors
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which may affect the business growth. These could be inflation, deflation and exchange
rates.
 Social: The demand of local people for wine is very low as compare to the tourists
because it is the second biggest tourism destinations in the world. It is continuously
increasing by 6% every year from 2015 and it has been estimated that it will rise till
2021. It is a good opportunity for Vinofomo to establish its business there ad grow due to
higher demand of tourists in UAE (Forsgren and Johanson, 2014).
 Technological: Now a days different technologies are used to make the wine which
allows the maker to make the wine more effectively. As wine is not manufactured in
UAE so it will be a great opportunity for Vinofomo to sale such products which are
totally new to the customers. It will help to attract large number of customers.
 Legal: The law and legal implications on buying and selling for wine and other alcohols
are very strict. In order to establish business in Dubai it is very important for Vinofomo
to analyse all of them and make st4rategies according to them. It will help to achieve
assured success.
 Environmental: The organisations which are involved in selling of alcohol businesses it
is very important to make sure that their business operations are not harming the
environment. In UAE rules for companies such as Vinofomo are very strict so it is very
important for it to be part of social activities so that a positive image in the market could
be established and business could be expanded successfully.
Useful theories and concepts in strategy design
As Vinofomo is planning to expand its business in UAE so it is very important for it to
make sure that it formulates proper strategy for it. In order to assure the success of business it is
vital to deign strategies in systematic manner. It will help to find best way to grow the
organisation. There are two main theories and concepts which could be applied by the company.
Description of both of them is as follows:
Ansoff matrix: This theory was developed by Ansoff in year 1960 for the purpose of
facilitating the organisations to find best way to grow. There are four different strategies under it
which are being applied in Vinofomo for the purpose of analysing the best way to attain success.
All of them are discussed below:
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 Market development: While using this strategy business entities such as Vinofomo try
to launch existing products in a new market so that the area of business could be
enhanced. With the help of it number of customers could be increased by focusing upon
expansion in different locations.
 Market penetration: It is also a growth strategy which could be used by companies such
as Vinofomo to increase sales in the existing market by attracting prospects from current
marketplace. Very low level of risk is involved in it because the organisation have
detailed information about buying habits and behaviour of customers.
 Product development: In order to introduce new products in the existing market this
strategy could be used by companies such as Vinofomo. It can help to target such
individuals who are considered as prospect customers of the organisation (Hamel and
Prahalad, 2017).
 Diversification: It is the last strategy of Ansoff Matrix in which enterprises such as
Vinofomo can launch new products in new markets. Main purpose of it is to expand
business and enhance profits. It requires higher monetary investment and risk associated
with it is also very high because the company do not have any information regarding the
new market where products will be launched.
From all the above described strategies Vinofomo is using the market development
strategy in order to expand its business in Dubai (UAE). The company is required to formulate
strategies for conducting market research which can help it to gather information about the
targeted customers.
Porter's generic model: This model was developed by Michael Porter in year 1985.
There are four different elements of it which could be focused by management of Vinofomo for
the purpose of expanding business in Dubai (UAE). All the elements of it are described below:
 Cost leadership: This strategy could be used by the management of the company to
attain competitive advantage in the market by selling all its products on lower price as
compare to other sellers. Here, Vinofomo can reduce unnecessary cost of the wine and
sale it on lower price which will help it to attract large number of customers (Helm and
Gritsch, 2014).
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 Differentiation: By using this strategy Vinofomo can introduce unique products in the
industry. With the help of it competitive advantage could be acquired which will facilitate
the company to execute business in systematic manner.
 Cost focus: This strategy states that companies such as Vinofomo can focus on lower
cost advantage by selling its products in small market segment so that it can be analysed
that it will be able to attain growth or not.
 Differentiation focus: It is the last element of Porter's generic model in which companies
such as Vinofomo introduce unique product in small market segment in order to
determine that the customers will adopt it or not (Kolk, 2016).
From all the above described strategies Vinofomo can implement the strategy of cost
leadership because it will be the best option for it to launch it self in UAE. It will also help to
analyse that it can attain success in the market or not.
International business strategy choice
Vinofomo is a wine manufacturing and selling company which is planning to expand its
business in Dubai (UAE) in order to attain higher level of growth. There are various options
available to the company to enter in wine market of Dubai. All of them are as follows:
 Direct exporting: It is a strategy of entering into a market in which the company can sale
all its products to the chosen market directly. This option could be selected by Vinofomo
while expanding its business in Dubai by opening various distributors in the market who
can represent them. By using this option the management of the organisation can save
monetary resources for future which could be used for marketing purposes.
 Joint venture: It is a type of entry mode which helps an organisation to expand its
business in new location by partnering with another company and creating a new entity.
This option could be adopted by Vinofomo to establish its business in Dubai as it can
create a new enterprise there by signing a joint venture with a well established local
company of UAE (Musso and Francioni, 2014).
 Buying a company: When an organisation is planning to expand its business in a new
location then it is considered as the best option because with the help of it the rules and
regulations of government for a new company could be avoided. It also help the top level
management to keep their power safe in their own hands. This option can be selected by
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Vinofomo to expand its business in UAE as it can help to establish itself there
successfully with low level of governmental interference.
From all the above described options the management of Vinofomo can select the option
of joint venture because it will help the company to sale wines by partnering with a well
established company. By using this alternative cost of marketing activities could also be saved
because the organisation will not require to make very high efforts to spread awareness about the
wines which are sold by it (PONIATOWSKA-JAKSCH and Pakulska, 2015).
Business model: It can be defined as a tool which is used for the purpose of getting brief
information about the company and its key elements. A business model for Vinofomo is as
follows that provides brief details about the organisation:
Key Partners
 Suppli
ers
 Invest
ors
 Staff
memb
ers
Key Activities
 Selling
different
ranges of
wines and
alcohol
 Marketin
g
Value
Proposition
 Attractiv
e
packagin
g and
bottles of
wine
 Good
quality of
all the
drinks
sold by
the entity
Customer
Relationships
 Providin
g online
order
facility
 Good
quality
Customer
Segments
 People
above the
age to 18
who like
to
consume
wine on
special
occasions
Key Resources
 Staff
members
 Money
invested
by
investors
Channels
 Physical
stores
 Online
website
Cost Structure
 Salaries paid to staff
 Cost of grapes for wines
 Cost of marketing and research
Revenue Streams
 Sales of wines through online
websites
 Sales through physical stores
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The above business model might work for the future business operations in UAE because
all the elements which are mentioned in this are required to be focused while operating business
in a new location. With the help of all of them managers can formulate strategic decisions for
future which may help to reach long term business goals (Rugman and Verbeke, 2017).
Strategic implications of the choice
In order to implement the business strategy it is very important for the management of
Vinofomo to arrange the resources which are required to execute the plan. These are funds,
skilled staff members, detailed information of market etc. There are various types of risks which
may take place for the business. All of them are as follows:
 As Vinofomo is a small company therefore it may face issues regarding financial because
for expansion higher monetary resources are required as for a small organisation it is very
difficult to arrange funding easily.
 Vinofomo is a wine company so it is not possible for the organisation to perform
marketing activities through TV commercials or online media so the company may also
face risk of marketing (Thompson, Strickland and Gamble, 2015).
 In order to execute the expansion plan properly it is vital to use appropriate leadership
style which can help to motivate the staff but while expanding it is very difficult to select
a motivating leaders for whole business.
 In order to operate business strategically and appropriately it is very important to recruit
human resources so that they can perform all the tasks properly. It may also result in risk
because it is very difficult to hire individuals from a new location.
CONCLUSION
From the above project report it has been concluded that while planning for expansion it
is very important for an organisation to pay attention towards the international business strategy.
With the help of it best suitable decisions for company could be taken. In order to achieve
success it is very important to select the country and product specifically because a small mistake
can fail the plan. In order to design the strategy different theories and concepts such as porter's
generic and Ansoff matrix theory. While expansion various entry modes, risks and resources are
also required to be determined as it can help to assure the success.
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REFERENCES
Books and journals:
Buckley, P. J. and Ghauri, P. eds., 2015. International business strategy: theory and practice.
Routledge.
Buckley, P. J., Burton, F. and Mirza, H. eds., 2016. The strategy and organization of
international business. Springer.
Drahokoupil, J., 2014. Decision-making in multinational corporations: key issues in international
business strategy. Transfer: European Review of Labour and Research. 20(2). pp.199-
215.
Forsgren, M. and Johanson, J., 2014. Managing networks in international business. Routledge.
Hamel, G. and Prahalad, C. K., 2017. Do you really have a global strategy?. In International
Business (pp. 285-294). Routledge.
Helm, R. and Gritsch, S., 2014. Examining the influence of uncertainty on marketing mix
strategy elements in emerging business to business export-markets. International
Business Review. 23(2). pp.418-428.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Musso, F. and Francioni, B., 2014. International strategy for SMEs: Criteria for foreign markets
and entry modes selection. Journal of Small Business and Enterprise Development.
21(2). pp.301-312.
PONIATOWSKA-JAKSCH, M. G. P. T. and Pakulska, T., 2015. Non-Equity Modes as
International Business Strategy. LAP LAMBERT ACADEMIC PUBL.
Rugman, A. M. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Thompson, A., Strickland, A. J. and Gamble, J., 2015. Crafting and executing strategy:
Concepts and readings. McGraw-Hill Education.
Online
Dubai Wine Market. 2019. [Online]. Available through:
<https://tusharborah.wordpress.com/2016/06/10/dubai-wine-market-brief-introduction/>
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