Auspace Limited Export - Case Study Example

EXPORT REPORT Name: Course: Tutor: Date: Executive Summary Auspace limited is a company based in Mitchell, Australia. They deal with products, Services, training of military modems, earth terminals, space systems, satellite communications and electro-optic instruments. It is one of 134 companies in Australian Capital Territory (ACT) listed on Australian exporters. Auspace limited is a member of the Nova group of companies since 2007, by joining the group it availed specialized skills to the market. The company is focused to avail high-level communication solutions and support to remote customers by using the most appropriate means available. Its main aim is to serve customers regardless of the size or type of job; it reduces complexity at work by taking the customer through the process from development through to the implementation to having a working system. The management team of Auspace limited is headed by Paul Weiss the General Manager, who has experience in Communications and Information Technology, he holds a master of Business Administration and an engineering Degree in Electrical and Computer systems. Dr. Paul Grosser, the Chief Technical Officer (CTO), assists him, he holds a PhD in satellite telecommunications and a degree in Computer systems engineering. He is also a member of the Institute of Electrical and Electronics Engineers (IEEE). The company has 30 members of staff and has high returns they have achieved sum revenue of AU$5,000,000. The company is distinct in services provided because they offer solutions with the right technology for your business and those that make it easy to change in the future, they have current technology worldwide and provide support to all t heir clients. The Company is a member of Trimble Field Service Management and Pactel International, authorized by Value Added Resellers for Australia. They have an Auspace Gateways, which manages the field services and systems. It has a trusted emergency management called Dynamiq globally, which services in Australia, New Zealand, Asia-Pacific, Africa, South East Asia and the Middle East region. Contents Contents 3 INTRODUCTION 4 MARKET ANALYSIS 5 MARKET ENTRY STRATEGY 7 DISTRIBUTION STRATEGY 7 EXCHANGE RATE STRATEGY 8 MARKETING STRATEGY 8 CULTURAL STRATEGY 9 CORPORATE SOCIAL RESPONSIBILITY STRATEGY 10 CONCLUSION 10 Reference 11 INTRODUCTION Auspace limited is seeking to be an international company by engaging, in the export business, to expand its business and foster growth. The company has undertaken a research to identify the best and most viable markets to expand to and invest in, and three countries were identified. The three countries are Brazil, South Africa and India. These countries were chosen due to their viability in doing business, their huge market potential as a result of their high populations and their strong Gross Domestic Products (GDPs) with high growth rates. The potential markets were analyzed and compared to come up with the most viable market. This was done by considering factors like political stability, ease of doing business, economic growth, country’s population, literacy levels and the unemployment levels. One of the major clients of Auspace is the military and the research considered these countries allocation to their militaries and the total financial capabilities of these militaries. India was found to be the most viable of the three as a result of its large population, which provided a big market for Auspace products as compared to Brazil or South Africa. India also has a very high Gross Domestic Product (GDP) with high literacy levels, which are good characteristic of market viability. India’s location is also strategic to Auspace as compared to Brazil or South Africa, which are farther off from Australia than India. This offers reduced transport and logistical costs as compared to either Brazil or South Africa. MARKET ANALYSIS Globalization has brought about unprecedented opportunities and increased competition, and this has necessitated companies to expand, grow and produce quality products while at the same time setting competitive prices for their products. People all over the world seek the same goods, share the same tastes and require the same standards due to worldwide distribution, satellite communications, internet and speedy transportation systems (Nelson, 2008). Auspace has identified the products that it intends to export to the target market of India as it expands, grows and strengthens its competitiveness in the face of globalization. Auspace will export its communication equipments, which are electro-optic instruments, earth terminals, satellite communication and training military modems. Auspace will also focus on the production of technical gadgets that are tailor-made for the Indian market to increase its market share in the prospect and to be competitive in the market. It will also focus in providing focused solutions, which are effective and low cost. Unemployment levels being low in India, will offer the company the ability to experiment and test the market on what they prefer by the production of new and modern equipments. This also reduces the penetration period of the company in the market, as a large part of the population will have modest or no problem in understanding or using the firm’s products (Hill, 2005).  The likelihood of Auspace’s success in this market is high because of several factors, which include the rapidly expanding economy, which has the result of escalating the disposable proceeds of the population and as a consequence the market for firms like Auspace. The other factor that is likely to increase the market for this firm is the high growth rate of the population of this country and the fact that a large percentage of the populace is between the ages of 15-64 years. This assures firms of the availability of the market in the near and foreseeable future. The high literacy levels, which will be pushed even higher due to development, will not only provide market for the goods but also the required skilled labor. This will reduce the overall cost of the firm in the end. Trade in the Asian region has expanded faster than any other region in the globe and reinforces the viability of India by foreign firms, as it is one of the leaders in this region. The infant industrialization in this country, whose majority live in rural areas, offers great opportunities for foreign firms like Auspace which are encouraged to invest in the country by the Indian government (Johnson & Turner, 2010). Auspace has undertaken a market research, which has shown the desirability, viability and sustainability of this market. The firm considered the bargaining power of suppliers in this market and found that it is low, which indicates sustainability of this market in the future when the company will decide to undertake its production for this market in India. This is the case because there are not many manufacturers of communication equipment in this market. Bargaining power of the buyers was also taken in to consideration in the research and it was initiated to be feeble due to the same reason of communication products being few. This had the effect of low supply hence high demand, with the bargaining power of buyers weak. This showed the viability of this market both in the interim and long-term. Another factor was the threat of substitutes. This threat was found to be low as a result of products of this nature being few in this market, and this provided a big market potential for Auspace. Another factor that was considered is the threat of new entrants to the market, which would complicate issues for Auspace. Nevertheless, the likelihood of this happening is low as firms that deal with communication equipments of this nature are few and Auspace already in the market will the entry of another firm difficult. This allows the firm to entrench itself in the market to be firmly competitive in case of any other entrant in the market. Rivalry was also considered but with no any other big communication equipment firm in the market and a new major entrant unlikely, then this non-existent. This gives the firm a large market, and it gives it great opportunities to introduce new products and services (Griffin, Pustay & Liu, 2010). . MARKET ENTRY STRATEGY Auspace will strive to have a quick way of acquiring the market share in the target market by giving local managers a high degree of discretion over the marketing mix. The entry strategy will be characterized by a high degree of adaptation with value propositions determined locally and operations being country-centered. This means that all or most of the value adding activities are undertaken within the host economy. Exportation of the products will be done directly to reduce the overall exportation costs. Standardization adaptation, which provides a higher degree of adjustment, will also be adopted to suit the target market, and as a result, ease the market entry process while allowing the capture of the market share more rapidly (Jain, 1989). DISTRIBUTION STRATEGY The firm’s distribution strategy is direct exports from Australia, where the products are produced, to the target market of India. The firm undertook research on this using several factors, which include ratio of exports to total sales, export sales volume and growth and profitability. These were analyzed relative to the measurement of the fiscal performance of the firm. This was undertaken with a view of coming up with a distribution strategy that would ensure that the products reach the consumer at an appropriate time without delays. Additionally, minimize breakages and wastage while at the same time reducing costs. Other factors that were analyzed include the sales force management, distributors, logistics and agents. This meant that products to consumer from producer flowed smoothly. The consumer of the product will also have the opportunity of ordering the product direct from the producer as a measure of increasing customer loyalty, satisfaction and encouraging feedback. A thorough background check will be undertaken prior to engagements with agents to ensure that they are capable of making the product available to the customer efficiently and effectively. Their financial strength, honesty, integrity, experience and logistical support will be ascertained (Dent, 2011). EXCHANGE RATE STRATEGY Companies that engage in cross-border trade are exposed to the exchange rate risk. The exchange rate risk is a financial risk posed by an exposure to unforeseen or unanticipated changes in the exchange rate between the two currencies involved in the transaction. This risk can negatively affect a company’s profitability, cash flows, market value, financial reporting and competitiveness. These exposures are economic (operating) exposure, transaction exposure and translation exposure. Companies use exchange rate hedging strategies to reduce the effects of the exchange rate exposure. These strategies include natural hedging, forward contracts, currency options and currency swaps. The company will use a combination of these strategies to optimize the hedging strategy. Auspace will also set prices in the Indian currency to reduce the exchange rate exposure and to be competitive in the market (Allayannis, Brown &  Klapper, 2001). MARKETING STRATEGY Auspace limited will take several approaches to have a marketing strategy that will not only offer it market leadership and the desired growth, but also the customer loyalty it needs to sustain its business in India. First, the company will introduce durable products of the highest quality into the market so as not to disappoint customers and to provide value for money. The product would be easy to use with warranties and user manuals, which are written, in the traditional language of Hindi for easy understanding by the buyer of the product. The company will also offer after-sales service for all its products and ensure that their products are available always and when they are needed. The company will also formulate a pricing policy and a pricing strategy to find a way of offering a competitive price for the products while also ensuring return on investment. Discount structures will also be established to have a standard way of giving loyal customers and those who buy many products discounts to ensure they come back. Discounts will also be considered to attract customers. Promotions will be held, and rewards offered not only to attract customers, but also to retain them and to promote them to buy even more and to bring friends and relatives. Lastly, the company will undertake advertisements before entering the market to announce its entrance and throughout to sustain growth through sales and profits (Doole & Lowe, 2008).  CULTURAL STRATEGY The company undertook a cultural research in India to be able to align its policies and strategies for the Indian business as per the dominant Hindu and Muslim culture. The Hindu and the Muslim are conservative people and the company will take that in to consideration any time it takes decisions concerning the Indian business. The company will also introduce products, advertisements and promotions that compliment their culture and their religion to reap maximum benefits from the diverse and different culture (Holt & Cameron, 2010).  CORPORATE SOCIAL RESPONSIBILITY STRATEGY Corporate social responsibility refers to a way that businesses are administered to bring about an overall constructive impact on the societies, cultures, environments, and communities in which they operate. The company will provide competitive package and employment opportunities to the Indian nationals in its business, in India. It will include corporate social responsibility in its core strategy and all its business operations, in the country. The company will formulate a corporate social responsibility policy to guide its operations in India. The company will be conscious of the environment and through donations and charity events (Kotler & Lee, 2004) CONCLUSION The research undertaken shows how India is the most viable market to invest in as compared to either Brazil or South Africa. India has a large population and a substantial GDP, which offers a huge market for Auspace. Its location is also strategic to Auspace due to its proximity, which leads to reduced cost of doing business. The company will undertake a major market research and analysis before venturing in to the chosen market of India. It will apply best business to get a quick footing in the market and gain substantial market share and increase sales while engaging in corporate social responsibility. The company will start by exporting directly from Australia with an intention of doing production for the Indian market in India to reduce cost, increase its presence, and boost its growth. Reference Allayannis, G., Brown W. & Klapper, L. (2001). Exchange rate risk management, evidence from east Asia. World Bank Publications. Dent, J. (2011). Distribution Channels: Understanding and Managing Channels to Market. New York: Kogan Page Publishers Doole, I. & Lowe, R. (2008). International marketing strategy: analysis, development and implementation. New York: Cengage Learning EMEA. Griffin, R. W., Pustay, M. W. & Liu, C. (2010). International business. New York: Pearson Prentice Hall. Hill, C. W. (2005). International business: Competing in the global marketplace (Vol. 5). New York: McGraw-Hill/Irwin. 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