Market Size Structure and Trend - Case Study Example

BUSINESS CAPSTONE FINAL PLAN Student’s name Code & Course Professor’s name University City Date Contents 1.0 Introduction 2 2.0 Strategic Plan 3 3.0 Market Size, Structure and Trend 3 4.0 SWOT Analysis 5 5.0 Cost and Prices 5 6.0 Strategic Factors 8 7.0 Entry mode 9 8.0 Distribution Strategy 9 9.0 Strategy Execution 11 10.0 Risk Management 11 Business Capstone Final Plan 1.0 Introduction Otherwise known as Orlando Wine Jacob’s Creek Wine seek to venture into a new business opportunity. The company seeks to venture into the Poland market to acquire a broader consumer base. As such, it seeks to export its wine products to Poland given the favourable market demand for the product. Whereas it focuses on middle-income consumers, it anticipates to penetrate the Poland market in order to compete with international and domestic brand. The aim of this paper is twofold, to develop a business plan that will effectively oversee the successful export of wine products. Various environmental and logistics aspects will be considered as major influencers of the challenge. 2.0 Strategic Plan An effective strategic plan is needed to maintain its competitive market in the Poland market. In this respect, some divergent strategies will be considered in this regard. Australia and Poland are referred to as natural partners (Sikorski, 2013; Budnik, 2011). Therefore, transporting wine from Australia to Poland anticipates some challenges. An implementing strategic plan that effectively integrates external factors is important. In this regard, the strategic plan seeks to integrate the market conditions and outbound logistics that influence its introduction in the Poland market (Budnik et al., 2009). Razorfish Australia will conduct preliminary research, to enable the company understand the prevailing conditions. 3.0 Market Size, Structure and Trend Location of the new market in Poland needs to be considered it a foreign market (Boulhol, 2014). There are several factors that need to be taken into consideration before the later exportation of the Jacob’s Creek wine from Australia to Poland. These factors include but not limited to cost factors, demand factors and strategic factors (Lieb, 2012; Boulhol, 2014). These factors need to be established first by the Jacob’s Creek Wine before taking a step to transport wine in Poland. Evidently, there are always challenges that might be associated with establishment of a new marking zone (Tausch, 2011). The Polish Wine market has increased by two and a half percent to 96 million litres. Evidently, the wine imports in 2013 increased, in comparison to 2012. The following table showcases the import type from respective countries to Poland. Table: Poland Imports of Wine The pivotal goal of exporting wine from Australia to Poland by Jacob’s Creek Wine is because of high demand in the country. Consequently, high demand triggers supply so as to achieve a stable market. Prudently, the market size or growth in Poland is significantly notable globally (Boulhol, 2014). As a result, the decision by the Jacob’s Creek Wine to export its wine to Poland was wise. The company shall sell its products consistently due to the availability of a stable market in Poland. Additionally, the presence of large market size in Poland indicates customer presence (Kelm, 2012; Lieb, 2012). A market with customer stability ensures effective business operations since the demand and supply are almost equal. In regard to the customer presence in Poland markets, the wine being exported from Australia will greatly sell since there is the availability of customers. Competition is a factor in business. Evidently, the wine from Jacob’s Creek Wine will face competition from other locally manufactured wines from Poland. In order to help combat this and ensure maximum sale of Jacob’s Creek Wine, the company needs to manufacture quality brands of wine with affordable prices. Quality product with favourable prices shall attract many customers to come and buy the products. Poland’s competitive market shall only be maintained when Jacob’s Creek Wine emphasizes on quality and affordability. 4.0 SWOT Analysis Strength i. A strong brand name that pioneers international strategies for acquisitions. ii. Variety of product hence offering value proposition iii. Availability of funds for investment iv. The company offers good bargain with dignified labels Weaknesses i. Despite high-quality product, its global recognition is low ii. Ageing brand that is typified by less innovation iii. Counterfeit brand that misuse the brand name Opportunity i. The “Three Vines range obtainable in three classic grapes available in white and red. ii. Wine drinkers population has increased in the global market Threat i. Strict marketing rules in some markets such as Poland ii. Increased competitors in the Wine segment 5.0 Cost and Prices Most consumed wine in Poland is cheaper that economical formats and brands. The prices for these categories have considerably increased, given an improvement in wine sophistication. Evidently, most of the household are not willing to spend more than 10 USD on a wine purchased from hypermarkets. Tentatively, they are more likely to spend in the 3 to 8 USD range on a bottle of wine. Cost in USD Percentage of Market By Value $ 0 - $ 9 45 % $9.01- $ 15 30 % $15.01-$ 30 15 % $30.01 10 % (1 USD = 3.04 PLN; As of Oct 2013) On the other hand, there will be a need for the company to consult Poland lands housing ministry before executing their plan. Other cost factors such as the cost of raw materials, financing costs, investment incentives and profit repatriation will be considered before the actual transportation of wine to Poland. For instance, the tax that the Poland government charges companies in the country shall be different from the charges that the Jacobs’s Creek Wine shall be charged. Taxation An important consideration is the exercise duty imposed on the importation of the wine by the relevant governing body. Table: Excise per 9 Litres of Wine, assuming 12 % alcohol Country 2005-Jan (USD) 2007-Jan (USD) 2008-July (USD) Poland 2.96 6.44 5.76 Suggested Pricing Wine Suggested Retail Price White $ 15 Chardonnay $ 13 Sauvignon Blanc $ 17 Pinot Grigio $ 13 Chardonnay Piccolo $ 10 Red Shiraz Cabernet $ 14 Reserve Cabernet Sauvignon $ 16 Cool Harvest Rose $ 12 Double Barrel Shiraz $ 15 Shiraz Rose $ 16 Financial Statements Asset Ratio Total Assets $ 550, 897 Total Liabilities $ 330,000 Current Ratio Current Asset $ 73,430 Current Liabilities $ 9, 456 Ratio 7.77 Breakeven Analysis Breakeven Bottles Sold 6.0 Strategic Factors The location of the wine manufacturing industry in Poland bases on the type of industry (Kelm, 2012). Essentially, some factors need to be considered before setting up the wine manufacturing industry in Poland. First investment infrastructure; most parts of Poland are well developed, and the infrastructure is not a big deal. In regard to this, the company might not incur any extra costs in investing in the infrastructure before setting up the industry. Second manufacturing concentration in the production of wine shall be concentrated in urban centers (Borio et al. 2013). The manufacturing concentration will, therefore, target mostly those people who live in towns. Third industrial linkages in Poland are treated and then released into the rivers. Concretively, Jacob’s Creek Wine company needs to understand the regulations governing the release of the industrial wastes in Poland. Other factors such as the inbound logistics or the outbound logistics shall be executed basing on terms of investment policies in Poland. In this case, in Poland any foreign company that bases on FDI shall have to use the outbound logistics (Borio et al., 2013). The stipulated logistics holds that a foreign company investing Poland need to comply with foreign tax rates. In effect, the Jacob’s Creek wine company when exporting its wine to Poland shall have to comply with the foreign tax remuneration. In Poland workforce productivity is essential to any firm (Budnik et al., 2011). Prudently, the Jacob’s Creek Wines will be able to get best workers that will enable proper output from the industry. 7.0 Entry mode Exporting wine to Poland from Australia by Jacob’s Creek wine company makes the entry mode to be Foreign Direct Investment (Boulhol, 2014). FDI holds that the foreign company becomes an umbrella company in the foreign country. In this regard, company will make much profit because it will be l.ike the umbrella company manufacturing very many products. In this case, wine will be manufactured in large quantities and be sold to Poland citizens. The FDI entry mode will also enable the foreign wine manufacturing company to be owned wholly owned subsidiary (Boulhol, 2014). The company shall be owned wholly by the subsidiaries, and this shall even boost its production and sales. Cooperate ownership is also an entry mode provided by Poland to its foreign investors. Evidently, all these options are geared to making great sales hence boosting production and latter radicalization of profit. 8.0 Distribution Strategy The distribution strategy in Poland will follow the trading channels showcased in the diagram below. As such, the strategy will utilize off-trade as an instrumental sales channel. The majority of the off trade I the region is done through off-trade, accounting for 77 % of the wine sold. Discounters and the Supermarkets are the major market channel hence, Tesco, Auchan, Lecrec and Carrefour will be used as the primary market channels. Figure: Trade Channels Source: Polagent (2015) 9.0 Strategy Execution Development of business plan ends up with a very vital stage; plan execution (Borio et al., 2013; Naegle, 2013). In relation to this, the following five steps might be adopted to ensure that exporting wine from Australia to Poland is done properly. First is the setting of clear priorities; this should the first step and as stated above the priority is to enable the export of wine from Jacob’s Creek Wine to Poland, second translate the strategy, the targets and initiatives of the business plan must be translated. Thirdly, plan operations, at this stage there is need to improve the key processes that are required for the attainment of the set goal; exporting wine to Poland. The fourth step is monitoring the strategy and learning its outcomes. Strategy review meetings must be held to keep monitoring the progress of the plan. Lastly, testing and adapting the strategy. A profitability analysis needs to be conducted just to ensure the strategy is adopted (Garry et al., 2011). 10.0 Risk Management In the aspects of undertaking the exporting initiatives to Poland, some risks are anticipated as opposed to the domestic market. While operating in the international market, like that presented in the domestics market. Transport risk will be the major risk that is expected. Minimal risk linked to political factors is witnessed given that the country enjoys the stability of its political leadership. Contrariwise, the country’s currency is rated at “A”. Addressing these risks is imperative, and the following strategies will be used in managing these risks. Transport Management Risk Plan Marine insurance policies will insure the goods from any transport risk. This will protect the products from any losses from the warehouses and general loss emanating from any forms of damage. As such, Polagent Company will be used to ensure the goods, given their effectiveness in handling freight (Polagent, 2015). Reference List Borio, C. E., Disyatat, P., & Juselius, M. (2013) Rethinking potential output: Embedding information about the financial cycle. Boulhol, H. (2014). Making the labour market work better in Poland. Budnik, K. B. (2011) Non-accelerating wage inflation rate of unemployment in Poland. National Bank of Poland Working Paper, (48). Budnik, K. B., Greszta, M., Hulej, M., Kolasa, M., Murawski, K., Rot, M., & Tarnicka, M. (2009) The new macro econometric model of the Polish economy. National Bank of Poland Working Paper. 62. Kelm, R. (2012) The Exchange Rate and Two Price Inflations in Poland in the Period 1999- 2009. Do Globalization and Balassa-Samuelson Effect Matter? Central European Journal of Economic Modeling and Econometrics, 2(4): 315-349. Lieb, R. (2012) Content marketing: Think like a publisher-How to use content to market online and in social media. Que Publishing. Naegle, L. (2013). Domestic Content Requirements: A Legal and Economic Analysis of Proposed US Legislation and Foreign Content Laws. George Washington Journal of International Law and Economics 17: 407. Polagent Company (2015) . Tausch, A. (2011) On the global political and economic environment of the current Al Jazeera Revolution. Middle East Studies On-Line Journal, (5). Read More