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Sharing YalumbaSharing Yalumba

By: 30084157 Jian WangBy: 30084157 Jian Wang 30049583 Wei Yu30049583 Wei Yu

30087239 Sonia30087239 Sonia 30096364 Murtaza30096364 Murtaza

30087234 Louise30087234 Louise 30067446 Gourab30067446 Gourab

A Wine for All Chinese TastesA Wine for All Chinese Tastes

International Business GroupInternational Business Group PresentationPresentation

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Talk, Eat, Live, Love, ShareTalk, Eat, Live, Love, Share

YalumbaYalumba

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Objectives of PresentationObjectives of Presentation

y Discussing the country factory Analysis

y Analyzing the comparative advantage

y

Business action plan Firm strategyFirm strategy

Organization structure and managementOrganization structure and management

Entry strategyEntry strategy

Marketing planMarketing plan

y Recommendation and conclusion

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CompanyCompany

IntroductionIntroduction

Name:Name:YalumbaYalumba

LocationLocation: Angaston, South Australia: Angaston, South AustraliaEstablished:Established: 18471847Mission:Mission: SharingYalumbaSharingYalumbaProductions:Productions:

Cask wineCask wine Boutique wineBoutique wineRed Wine, White Wine,RosRed Wine, White Wine,Ros, Dessert, DessertWines,etc.Wines,etc.

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Country Factor AnalysisCountry Factor Analysis

Political TrendPolitical Trend : Stable: Stable

Economic Trend :Economic Trend :Rapidly growingRapidly growing

Societal Trend : *Societal Trend : *Educated new generationsEducated new generations

*Ready to accept wines*Ready to accept wines

Technological Trend :Technological Trend :E

asy access to labor, land andE

asy access to labor, land andother resources.other resources.

Global Trend :Global Trend : Fast globalizationFast globalization

Industry Trend:Industry Trend:UnexploredUnexplored

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Comparative advantageComparative advantage

Chinese emerging market show the world a miracle. 20 yearsago, rarely have Chinese know about wine.

In 2008, Chinese wine production totalled 698,300 kiloliters,5% increase over 2007.

In 2009, Chinese wine production amounted to 960,000kiloliters, rising by 37.48%.

Between 200910, wine consumption in China has totalledapproximately 0.96 billion litres; which represented a totalincrease of 27.63 per cent over the previous year.

After the GFC (Global Finical Crisis), worldwide economystarted to get a downturn situation. Even under that negativeatmosphere, total import increased by 4.93 per

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National comparative advantagesNational comparative advantages

ImportImport winewine hashas dominateddominated ChineseChinese highhigh--endend winewinemarketmarket withwith thethe superiorsuperior advantagesadvantages inin rawraw materialmaterialqualityquality andand culturalcultural contentcontent..

TheThe educationeducation isis playingplaying itsits rolerole inin creatingcreatingawarenessawareness ofof howhow winewine isis moremore beneficialbeneficial..

BecauseBecause ofof cheapcheap resourcesresources andand cheapcheap labour,labour, evenevenpoorpoor peoplepeople cancan easilyeasily affordaffordYalumbaYalumba..

YalumbaYalumba isis aa lowlow costcost productproduct soso itit willwill achieveachieve itsitsdesiredesire profitprofit

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National comparative disadvantagesNational comparative disadvantages

In order to adjust with drinking habit it will need

some time so because of this it may cause

business Loss and it may not hit its targeted profit

in the first period.

FDI may suffer lackof investment backfrom their

target market.

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Evaluation of product, industry and firmEvaluation of product, industry and firm

level advantageslevel advantages

The wine industry is growing worldwide rapidly

and China itself has an increased 23.67 % of wine

consumption in the last year and its still growingday by day because of this wine market shares arealso increasing so there is a great opportunity for

Yalumba to capture Chinese market with is low

cost product.

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Government attitude towards FDI andGovernment attitude towards FDI and

marketing potentialsmarketing potentials

It is claimed that foreign direct investment (FDI) hasplayed an important part in driving Chinas economicrevolution over the last 20 years. To boost theeconomy and encourage FDIs, the financial aid isreturned.FDIs are now open to reach customer basein China. Government sets stimulated terms, such aslow taxed in the wine industry. Due to all thesesubsidies and benefits provided by the government,

emerging market is expected to grow rapidly.

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Firm StrategyFirm Strategy

To achieve competitive advantage that is

sustainable:

Pressure of local responsiveness: Differences in customer tastes, preferences

Differences in pricing, promotion and product positioning;

If local products with different specifications exist, then there is a need to adapt products in order tocompete;

When Chinese governments promote their native business, the company may be forced to be morelocally responsive.

Pressure for cost reduction Serving the global market from a single location helps to establish low cost strategy, rapidly build up sales

and get first-mover advantages

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Firm StrategyFirm Strategy

Localization strategy-Focus on increasingprofitability by customizing the firms goods so they

provide a good match to tastes and preferences in

different national markets

International strategy-should take proactiveactions, such as:

diversify the development portfolio

increase the bargaining power to distributors and suppliers

build and protect brands and business partnership

reduce the risk of being only a supply with limited control of supply

chain and value chain.

secure supply and quality control as bottom line to vertical integration

to reduce production cost.

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Marketing PlanMarketing Plan

Product A widerangeofProduct EstablishmentofBrandloyalty

A new product policy

Price

SegmentofChinesemarket

Lower-end--Priceoriented

Mid-end--Good quality

High-end--Excellent quality

Place

Formmultiplerelationships

Cooperate withtrustfully

distributorsdomesticallyand internationally

Promotion

Chineseslogan-Youni zou

zhu

Tastingevents Search partnerssuchas

mediaand international

hotelchains

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Organization structure andOrganization structure and

managementmanagement

y Vertical differentiation(Decision makingpower)

Decenralized decision making

y Horizontal differentiation

y Integrating mechanism

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Control system(output control)Control system(output control)

y Setting targets for subunits to achieve and performtargets in terms of objective performance metrics

y

Localization strategy Local responsiveness

Low risk of performance ambiguity and cost control

y International strategy

Creates value by ttransferring core competencies

Low risk of performance ambiguity and cost control

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Apply strategy onApply strategy onYalumbaYalumba casecase

y Localization strategy

Rapid increasing population leads increasing demandof wine

Chinese looking for high quility wine and healthier lifestyle on wine products

Doing research and fixing the flavour of wine to fit

Chinese customers need and gain more market share

in Chinese wine market

Low risk of ambiguity and cost of control

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Human resource managementHuman resource management

y HRM helps firms to reduce the cost of creating value and add valuefrom increasing customer demand

y Determine expatriate mangers use

y Ethnocentric staffing policy

There are no senior managers can be filled the gap in foreignsubunits who can unified firm culture but it will lead culturemyopia later

y Polycentric staffing policy

Subsidiaries control themselves but posit headquarters fromdomestic

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Human resource managementHuman resource management

contdcontd

y Geocentric staffing policy Best staffing policy but limited by immigration law and

costly

y Reduce risk of expatriate

Improve selection procedures

x Self orientationx Perceptual ability

Training

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Entry strategy and modesEntry strategy and modes

y Three issues of basic entry decision

y -Which foreign markets to enter

y -When to enter

y -On what scale should the entry beGood

financial management can helps firms gain

profits and creates competitive

advantages

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First Mover Theory&First Mover Theory& Six entry modesSix entry modes

- Previous Chinese wine targeted-market analysis

-First Mover Theory

-Advantage and Disadvantage-PEST On large scale

-Exporting: high transport cost

-Turnkey: create efficient competitors-Licensing and Franchising

-Joint Venture

-Wholly-owned subsidiaries

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Joint Venture (First Stage)Joint Venture (First Stage)

--Benefit from Chinese partnersBenefit from Chinese partners--Share costs and risksShare costs and risks--Low risk of government interferenceLow risk of government interference

--ProblemProblem losing control of techlosing control of techLimitation on expandingLimitation on expanding

WhollyWholly--owned subsidiaries (Second Stage)owned subsidiaries (Second Stage)

-JVs Problem

-Greenfield venture or acquisition

-Benefits from acquisition

-pre-empt future competitors

-quick presence in Chinese market

-Gain both tangible and intangible

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RecommendationsRecommendations

y Good trade relations

y

Low risksy 4p's of marketing strategy

y International strategy

y Gain competitive advantage

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ConclusionConclusion

y Attractive and easy market

y

Easy inflow ofFDIy Skilled workers

y Low marginal tax ratesAnalysis ofAnalysis of

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Thank you all

Any Question?