STRATEGIES OF AUSTRALIAN EXPORTING COMPANIES

QUESTION

MGMT 304 Strategic Management, Sem.1.2012

OUTLINE OF TASK FOR THE INDIVIDUAL ASSIGNMENT

TOPIC:THE STRATEGIES OF AUSTRALIAN EXPORTING COMPANIES

The task requires you to:

a)     Select one of the Australian major export industries

b)     Describe the main exporters and evaluate their respective entry strategies, share of the overall Australian exports to other countries, their rate of growth and overall performance. What are the main export markets for their products/services?

c)     Examine the corporate, business and functional level strategies of the Australian exporters to identify how they gain competitive advantage overseas. Link your finding to the material studied in global strategies in this subject, to identify which of the four possible internationalisation strategies (i.e. international, multidomestic, global or transnational) each  main exporter is using. What proof is there to support your judgement?Is there a dominant type of internationalisation strategy used by most of the main Australian exporters within the industry? If so, why?

d)     Try to establish potential correlation between size, age, location, type of product/service, or other characteristics of the company and its selection of international strategy. Is this correlation consistent with the principles of Strategic Management, and how?

e)     Based on your literature search, do exporters of the same product from other countries use similar global strategies as their Australian counterparts?

f)       Finally, make a conclusion of your findings. Make some recommendations to the companies in order to improve their export performance.

ASSESSMENT CRITERIA for individual assignment

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SOLUTION

Introduction

Australian world class scientific research is well known in the whole world. They are using it as a better option for the export considerations. Here in this report we will see the strategies and planning for the better and effective market considerations and segmentation and to grow their market demand by their innovation and effective strategic orientation for the better chances of their future perspective in this sector.

Earlier Australian government had very rigid policies related to the exports of the services and the technological innovations. But as the time went on and they understood the need of reform and change in the whole scenario to make better option for the growth and development of the whole economy in terms of macro and micro economic considerations.

Here we will see one of the most emerging and growing export industry in Australia i.e. Biotechnology industry and their economic aspects for Australian economy.

What is Biotechnology?

Biotechnology can be defined as “the application of Scientific and engineering principles to the processing of materials by biological agents to provide goods and services” (Australian Biotechnology Association, 1990). Biotechnology is a key aspects in the product/organism development with the help of other living being/organism. It has a great role in the drug, medicine, and chemical innovation. It is a combination of biology and the technology. So we can understand the kind of synergy this technology will have. It is a kind of deadly combination of bio and technology that may be used for the vast research and development consideration of new products, drugs, medicines, or any other organism for the biological utility.

Biotechnology is one of the most effective and emerging aspects for the Australian economy to gain the competitive advantage in terms of exporting the new and innovative biotechnology products and services. This is an untapped market yet, and Australia have a good option to utilize it in a better way to make an effective and integrated move towards the better opportunities and future perspective in this sector.

Strategies

The Australian Biotechnology firms are using their innovation and technological advancement as their competitive advantage and that is the most effective and strong part for the Australian exporters to gain value and sustainability in this field.

AusBiotech is one of the biggest organizations in the biotechnology sector in Australia. They have a great role in the export of biotechnology product and innovation to the other countries.

Biotechnology has a diversified network and broad areas and that is why it has a broader aspects and areas to cover up in terms of exports. We can gain a great advantage with this technological advancement and innovation.

The market players are utilizing this aspect effectively and making a better growth and development opportunities for Australian export market in the other countries. Biotechnology also provided the better opportunities for the industrial products and manufacturing of the industrial goods.

Most of the biotechnology products are high value and less volume, that relates to the huge implications of the biotechnology and its innovation to the outer world and it will have a direct effect on the Australian economy to gain competitive and comparative advantage.

So these are the most effective and important part for the market players to make a better chances of growth and development in biotechnology.

Correlation

As biotechnology is one of the most emerging market and we can easily see the increased demand of biotechnology product and innovation in the whole world, it is increasing day by day. We know that the Australia is one of the most emerging place for the biotechnology companies with almost 470 core biotechnology companies. They all are indulge in manufacturing and R&D of various medicines and other chemicals. The utility of these drugs, medicines and chemicals is very obvious for the other countries and mostly for the Asia-Pacific region. So the Australian biotech companies are using this advantage in an effective and integrated manner and producing more and more drugs, medicines and chemicals based on the biotechnology. They are exporting it to the other countries and making a huge chunk of profit margin.

It has a positive and strong correlation with their society, technological advancement, innovation and the population. That is why they have adopted this aspect and technology and growing based on these aspects effectively.

They are also utilizing their technological advancement by various alliances to gain competitive advantage and synergy.

In 2007, 399 biotech alliances were taken place in Australia itself. So, these aspects clearly indicate that Australia has a better and long lasting aspect in this sector and they are utilizing this aspects effectively to gain maximum advantage and this is reflecting in their objective and vision.

Global Consideration

As we can see in the report, Australia is doing a great role in the development and innovation of biotechnology and they are gaining competitive advantage in this sector. So we can say that they are utilizing their resources and innovation in a strategic manner. That is why they are gaining competitive advantage and synergy.

In the same way the other countries and other market players in the neighbour countries are adopting the same kind of strategy to attain the same height. It is not very much easy for them but although they are making a good try to make a space for them in the market. But even though Australian market is one of the most emerging markets for the biotechnology companies and they are really doing good in this field to sustain in the market and gain competitive advantage for the long run of economy.

Australian Exports by Sector: 1999

If we talk about the exports condition in terms of sector then it is again very clear by the below mentioned graph that Australian industry is also indulge and influenced by the service sectors and their export to the other countries.

(Source: DFAT, ABS)

There are various reasons that make Australia to get indulge in more and more exports. The few important reasons and concerns are as follows:

The Economic Aspects

The main economic aspect is to gain ‘comparative advantage’ in terms of exports. It is said that if we specialise in what we are good at and trade with another nation for what they are good at then it will be a win-win situation for both the nations. In the words of leading US trade economist, J. David Richardson, if we export the cream of our nation’s competitiveness for the cream of everyone else’s competitiveness there will be benefits all round (Richardson, 1996;p13). Economists terms this relationship and mutual bonding as ‘gains from trade’.

It is also said that the exporters have a long terms perspective to the economy in terms of global relations and global diversification. These aspects have both macroeconomic and microeconomic considerations and play an important role for the strengthening of any economy in an effective and integrated manner. Diversification of sales across international borders spreads risk especially if demand patterns differ across borders (Richardson, 2000 and Bernard and Jensen, 1999). Exporting can therefore boost and benefit an individual firm’s credibility and performance and long terms goal perspective but also benefit other existing firms and the overall condition of the Australian economy hand on hand.

If we talk about the biotechnology market then it is quite obvious that the Australian economy is booming in this regards and they are gaining competitive and comparative advantage with the help of biotechnology to growth their market and export. This can be directly seen from the kind of alliances and synergy they are showing in the Australian economy. They are making a good move towards the biotechnology sector and utilizing their resources and research and development to grow it further and to gain competitive advantage.

The Non-Economic Aspects

There are various non-economic reasons why exports are good for Australian economy. Exports create a kind of close links and help in making good relationship between Australia and rest of the world. They also help in creating personal as well as professional relationships between Australians and the people present in the other countries. By doing so, they can assist Australia’s international relation. This is really creating a good opportunities for the Australian people to come across to the borders and gain the new kinds of knowledge and synergy in terms of cross cultural aspects, diversity and languages. These aspects are very much required to gain competitive advantage. Now the whole world is becoming a single marketplace and workplace. So it is very much required to know about the cross cultures, diversity, demographics and other aspects that may further help in betterment of the career opportunities and long term growth opportunities.

Foreign Investment

Foreign investment is again a main reason for the export and its encouragement for any economy. It has been a necessary aspect to grab foreign investment and foreign direct investments to grown in the global economic parameters and monetary funds. The economy of any country is being considered by these aspects also. So rather than looking to the domestic funds, the economy should also look to grab and collect the foreign direct funds. The export is one of the best tools and techniques to grab the foreign direct investment.

Investment and trade both are required to create the dynamism in the global economy.

Foreign direct investment is one of the necessary parts for the economy to gain competitive advantage and to earn most of the foreign funds in terms of foreign investment. This also represents the economic power of the economy and helps in gaining sustainable development to the world trade.

Conclusion

An open economy goes hand in hand with an open and diversified society and economy. Countries that close off to the rest of the world do not thrive economically or socially (Rodrik, 1997). Australia is a successful nation in both the social and economic aspects. Exports contribute a lot to this success and gave a new dimension to Australia in front of the other countries.

Australia needs exports and trade to uplift and further develop in both macroeconomic and microeconomic perspective. They need exports to help and grow their economy and strengthen the economy and also to provide a chunk of employment opportunities for Australians. They need to export to ensure that they are engage and in a good relation with the outer world and are able to show that they can compete in the global market place and not only compete but they can also boom in the outer market. They need to be an exporting nation that takes what the world has to offer in terms of knowledge, skills and technology. By exporting, they will also become more innovative and dynamic.

The Australian biotechnology industry, despite its relative immaturity as an industry has a vast international and multinational orientation, with 88 percent of biotechnology companies being involved in export. Most of these biotech companies are involved and indulged in international manufacturing and marketing, few of them new to export, with the majority (75%) having less than 10-12 years experience in export. This is really a good and shining aspect in terms of good and emerging opportunity for the existing market player to grab the new market and attain a new height in the field of biotechnology and its export to the outer world.

Recommendation

Australian biotechnology companies are doing good but they can still do better if they will adopt following aspects and considerations:

1. Utility of R&D: They should utilize their R&D in a more effective an strategic manner to make it more optimal and integrated for the better chances and aspects of new product development. Although they are using it but they can put little more effort to perform better in this regards.
2. More funding for the R&D: Fund is one of the most important aspects in this field. If we will have issue in fund raising then the whole R&D will be affected form this. To avoid this we can make a better fund raising policy that will have better growth opportunities for the long term growth aspects.
3. Government policies: Government policies are modified now and earlier these were having a tough and strict consideration, but now as per the need and requirement of the biotechnology aspects the government policies have been revised and modified.
4. Global move: They should increase their export activities and move towards the untapped market and to the whole world. They are now doing a great role in the biotech exporter in Asia-Pacific market but they need to go global to grab the other emerging markets.

They need to work upon these aspects to make them more competitive and strategic. It will surely have a positive and effective impact on their strategic considerations for the long terms goals and sustainability.

Reference List

Austrade and Australian Bureau of Statistics (2000) A Portrait of Australian Exporters. ABS Cat 8154.0, August, Canberra.

Bernard, A. and Jensen, J. (1999) “Exporting and productivity”, NBER Working Paper, No.7135, National Bureau of Economic Research, Cambridge, Massachusetts.

Clerides, S., Laul, S. and Tybout, J. (1998) “Is learning by exporting important? Microeconomic evidence from Columbia, Mexico and Morrocco”, Quarterly Journal of Economics, vol. CXIII, pp. 903-948.

James, D. (2000) “Lighting a fire under Australia’s future”, Business Review Weekly, 4th February

Richardson, J. David and Karen Rindal (1995), Why Exports Really Matter!, Institute for International Economics and The Manufacturing Institute, Washington D.C.

Stanton, P. and Lee, J. (1995) “Australian Cultural Diversity and Export Growth”, Journal of Multilingual and Multicultural Development, vol 16, no 6, 1995.

Pappas, Carter; Evans and Koop (1989), Towards Strategic Export Assistance: Implications

for Austrade of Australian Manufacturing Council Study, The Australian Manufacturing

Council.

Scott-Kemmis, D et al (1990), Strategic Alliances in the Internationalisation of Australian

Industry, Department of Industry Technology and Commerce, Australian Government

Publishing Service.

Stanton and Lee (1995) “Australian Cultural Diversity and Export Growth” Journal of Multilingual and Multicultural Development,

vol 16, no 6, 1995.

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