1.Identify increased consumption globally;#61607;Strong economic growth period
1.Identify its international marketsUS and North America identifiedoDistribution network – 44 states.
oSize – initially estimated 20-30 thousand cartons to 100 thousand cartons, reality was 20 to 200 thousand.oAnnual sales $3 million.UKoSome regional supermarkets hoping to expand to majors.Mainland EuropeoSome beginning sales.2.
Describe and analyse the reason for its international expansionIncrease sales/find new markets – domestic market oversuppliedMinimise competitive riskEconomies of scaleCushioning economic cycleComparative advantageoHigh cost of labour and land in US.3.Explaing the influences on this business in the global marketPoliticalTensions between free trade and protectionGlobalisation seeing removal of barriersEg.
Quotas, tariffs, subsidies – statisticsExports of wine have increased from 3% of sales to 52% of sales in 2002. this equals $2.3 billion dollars or 414 million litresUS greatest source of export growthAustralia’s export policy has led to major reforms in the Australian wine industry;#61607;Rationalisation of wine production’ leading to overall efficiency giving them cost advantages over their competitors and reshaping of distribution lines.
4th largest wine exported in the world with 5% of global marketInternational organisations and treaties1994 Uruguay multilateral agreement (WTO)Agreement to reduce protection on agricultural products (wines/grapes) by 36% by 2000UK has the largest export market of wineTrade agreementsUS and Australia have strong trade relations and trade agreementsWar in the Middle EastWeak economic conditionsSocialConsumer tastesGlobal markets have been increasingly integratedGrowing demand for mass market, high quality wines and a recognisable brandMarketing of wines other benefits’ has increased consumption globally;#61607;Strong economic growth period sees wine viewed as a luxury good, something consumers buy when they feel conditions are good as their incomes are increasing. Also at this particular price range fluctuations do not vary with economic conditions;#61607;Strong market for Australian markets taking off in the USFinancial;#61607;Currency fluctuations;#61607;Weak Australian dollar has helped making Yellow Tail a better taste at $7 and a lower price than its Californian counterparts which are hobbled by high cost of land and labour;#61607;Currency fluctuations would have to get way about 70 cents for Casella to be unprofitable without a price changeLegal;#61607;None mentioned4.Explain the strategies used by the business to achieve its target marketsMarketing;#61607;Niche market;#61607;Distinctive Australian product – market for Australian wines – packaging iconic for Australia, yellow wallaby franchise for the taste and style of wine. Yellow tail reserve wines at different price points and several wine styles to be developed;#61607;Competitive price point between 6 and 7 dollars, five varieties of Yellow tail;#61607;Fruit forte wine which doesn’t lend itself to ageingExport manager was hired – John SoutterIndirect exporting strategyW.J.
Deutsch & Sons, a big importer is used; 50% equity in on Yellow tail brand in North America.