Due to increased globalization and integration of world economies, companies are constantly seeking to expand their markets beyond regional boundaries into the global market (Das 2004). Consequently, companies reap benefits associated with diverse markets, economies of scale, and increased consumer base (Cragg 2005). These benefits associated with globalization prompted the Greek company to decide to venture into the European market through countries such as Serbia, Romania and Australia. The company sought to venture into the market of the country that had competitive advantage over the rest and the country in which it would reap extensive benefits associated with market expansions.
Why the Greek company should venture in Australia
Australia is generally one of the most competitive locations for business in the world (Australian government 2010). This is primarily due to its established and strong institutions, its flexile markets as well as its effective and strategic economic policies (Australian government 2010). These factors provide a strong foundation for business and political stability consequently promoting business performance in the region. In Australia, consumer ready foods continue to dominate the import market for foodstuffs consequently providing a wide market for the Greek company (Nolan 1996). Although the country continuously encourages consumption of local products, the change in trend has not yet manifested itself in terms of reduced sales for the imported retail products (Nolan 1996). Consequently, the Greek company should venture into this market in order to reap benefits associated with widespread popularity of ready food products in the Australian market. In addition, local competition in the Australian market is still limited to relatively narrow range of products and the consumers still display preference of imported products rather than locally produced goods and this is further enhanced by low tariffs imposed on imported goods which facilitate competitiveness of imports in the local market (Nolan 1996). The Greek company should therefore expand its market into the Australian market since its goods will compete favorably in the local market in comparison with other countries.
The country of Serbia on the other hand is strategically situated in the Southeastern and central parts of Europe covering the key route that links Europe to Asia which consequently facilitates its easy access to markets in Europe Asia and the Middle East (BDO 2009). The Greek company would therefore benefit from an increased market hence increasing sales and consequently its profitability further promoted by the country’s duty free access to various parts of Europe which increases marketing opportunities and widens the consumer base. Serbia simplified its registration procedures through the establishment of Serbian business agency registration procedures for companies in 2005 (BDO 2009). The agency centralized the registration procedures as well as the data bases consequently reducing the period of time required to register companies in the region. The country further simplified its foreign trade and investment regulations making it easier for foreign companies to establish in the region (BDO 2009). The simplified procedures would benefit the Greek company in its efforts to venture into the Serbian market. These efforts would further be promoted by the incentives provided by the Serbian government to foreign investment. However, the country lacks a stable economic climate relative to the Australian economy which discourages foreign investors from venturing in the country and limits the Greek Company accessibility opportunities to its local market (Anonymous 2010).
The republic of Romania has overcome numerous challenges ranging from widespread corruption to implementation of social reforms (Anonymous 2009). As a result, the country has achieved remarkable success in improving its economy performance facilitating establishment of new business and investment opportunities (Anonymous 2009). In order to successfully venture into the Romania market, the Greek company requires a clear understanding of Romanian business culture and etiquette (Anonymous 2009). The Romanian communist background has led to the persistent culture where the group interests are upheld rather than individual interest (Anonymous, 2009). It is therefore important for the Greek company to promote relationships to uphold the culture of Romanians in order to succeed in penetrating into their markets. Business transactions take a long time before completion especially due to the bureaucratic nature of the Romanian society which is characterized by extensive system of rules and regulations. Consequently, the Greek company is likely to face numerous procedure related barriers in their attempt to venture into the Romanian market (Anonymous 2009). Consequently, the Greek company prefers to venture into the Australian market since it’s more conducive and is associated with higher returns.
Potential entry modes into the Australian market
There are various means through which the Greek company can penetrate into the Australian market. Through direct foreign investment, the Greek company can establish new branches in Australia. Direct foreign investment would enable the company to reap benefits from advanced technology, management and marketing skills (Fleming 2004). However, direct foreign investment in Australian market involves foreign control in the Australian market as well as establishment of future burden via dividends and remittance of profits (Fleming 2004). Since 1996, the Australian government policy has focused on financial incentives for foreign companies consequently promoting the country as an investment site for foreign investors (Fleming 2004). In addition, the government has provided tax relief to foreign companies importing into the country since the foreign investments enables the country to achieve higher levels of economic activities and employment that could not have otherwise been achieved through local investment (Fleming 2004).
The Greek company may also opt for joint ventures and alliances which have become an increasingly key strategic option for many companies intending to expand their markets (Hewitt 2005). There exists strong competitive trend towards globalization in the food industry consequently enabling companies to access emerging markets leading to the increased number of ‘cross border’ business relationships. The Greek company would explore the growth opportunities outside the core business lines by utilizing equity alliances with third parties from Australia (Hewitt 2005).
In addition, the Greek company may choose to acquire existing business in Australia in order to penetrate the Australian market. The Greek company can utilize business brokers or conduct extensive research on Australian websites and newspapers in order to locate appropriate business acquisition targets (Dickson 2005). The Greek Company should identify a target business that is within the industry that it deals with and the business should be such that its financial performance is compatible with the Greek Company (Dickson 2005). Due diligence is a widely accepted practice in mergers and acquisitions in Australia and the extent both in terms of what is required by the acquiring company and what is permitted depends on various factors such as buyer’s familiarity with the target company , partial or full acquisition among other factors (Committee of negotiated acquisitions 2007).
Franchising as the most preferred mode of entry into the Australian market
Further, the company can utilize a franchise which involves an agreement between the Greek Company and a franchisee who undertake to market the products of the Company in Australia (Fleming 2004). Franchising is the concept through which a particular company imparts its brand name on other companies at a fee which helps the company to achieve higher returns primarily due to the ability to create larger networks without direct involvement of the day to day activities of the franchise (Lamba 2002). Franchising has become a popular means of expanding the Australian business sector (Stephen lawyers and consultants 2010). In order for the Greek Company to successfully expand in the Australian market, the Franchisors should put into consideration the possible franchising structures as well as their protection under the Australian law (Stephen lawyers and consultants 2010). Since franchising is one of the modern fastest growing business sectors in Australia and it is efficiently regulated by the Australian Franchising code of conduct, I would suggest that the Greek company should utilize this means to access the Australian market.
By venturing into the international markets, the Greek company will reap considerable benefits and consequently increase its profitability. This will result from increased sales as well as promotion of the company’s brand name in the foreign market (Kuratko 2008). Through franchising, the company will sell out their brand name into the Australian market where the marketing strategies will be undertaken by franchises that are familiar with the Australian local consumer trends hence likely to succeed in marketing the company’s products relative to the company’s own attempt to individually into the Australian market.
Anonymous, 2010, EU Report Strongly Criticizes Serbia’s Progress, WAZ media group. Web.
Anonymous, 2009, Doing Romanian Social Business In Romania, And Business Culture, London: communicaid. Web.
Australian government, 2010, Doing Business In Australia, Australian Trade Commission. Web.
BDO BC Excel, 2009, Doing Business In Serbia, BDO International. Web.
Committee of negotiated acquisitions, 2007, International Mergers And Acquisitions Due Diligence. New York, American bar association
Cragg, W, 2005, Ethics Codes Corporations And The Challenges Of Globalization. New York, Edward Elgar publishing.
Das, K D, 2004, Financial Globalization And The Emerging Market Economies, UK, Routledge.
Dickson, B G, 2005, Tips And Traps When Buying A Business. New York, McGraw hill professional.
Fleming, L. 2004, Excel HSC Business Studies. NSW, Pascal press.
Hewitt, I. 2005, Joint Ventures. London, sweet and Maxwell
Kuratko, F, D, 2008, Entrepreneurship; Theory And Practice. New York, Cengage learning.
Lamba, 2002, The Art of Retailing, Tata. New York, McGraw hill.
Nolan, N.J, 1996, Australia Business; The Portable Encyclopedia For Doing Business With Australia. New York, World trade press.
Stephens lawyers and consultants, 2004, Franchising In Australia, Read Business Information. Web.