Use Stp Model - Standardization and Adaptation

USE STP MODEL: - Standardization and adaptation

Barrett Farm Foods:-

• Sells nuts, cereal bars, garlic, ginger, dried fruits, and honey throughout Australia.
• Australia's 6th largest food company.
• Healthy growth rate over past decades and its sales reached USD $215 million last year.
• well known in the domestic market (international experience has been limited)
• Barrett has relied on intermediaries in Australia (for completing export orders)

Opportunity:-

• Australian food export exceeds AU $ 30bn last year
• Processed food stuffs are the coming trends and want to boost exports

(Most current export is raw foods)

• Processed food bring in more money in exports and creates jobs
• If just 10 percent of processed food value-adding done in Australia, the country's balance of trade would improve.
• Meat, cereal, sugar, dairy commodities, and marine products have the most potential for food processing.

Do you see any problems with Philip Austin's plan for European expansion?
Do you support his entrepreneurial approach to exporting?
What should be the features of a more systematic approach to exporting?

Main issues:-

• First, Europe, also, has many differences in national tastes and market structures.
• While Australians love Vegemite-a brown, salty breakfast spread - little popularity outside Australia.
• Second, BFF had little almost nil experience in export.
• BFF has to solve problems of export sector as they have very little internal expertise to deal with international shipping
• BFF managers were not as optimistic as Phillip Austin
• Moreover, they have to rely on foreign Intermediaries, therefore they have to ensure no dispute arises during compensations
• Compete with larger and more experienced competitors in EU with competitive pricing, whose complexity can overwhelm inexperienced managers

Phillip Austin’s Approach;

• Created a three person task force from his senior managers  to implement the Export drive
• Targeted US$30 million volume for the first year
• Identify its most promising product for export
• Appoint agents like Peter Telford to facilitate EU sales
• People met during Cologne fair were potential customers for immediate sales
• Identify and appoint distributor(s) with access to supermarkets and large scale buyers or forward some company products to EU importers
• Revamp website to attract Export business

Foreign Market Entry Strategies:-

• Importing or global sourcing:
• Exporting: BFF
• Countertrade:
• Foreign direct investment (FDI): BFF 
• Collaborative ventures: BFF
• licensing
• Franchising

COmpany Readiness to Exporting (CORE)

• Importing or global sourcing: Procurement of products and services from foreign sources  
• Exporting: Producing products or services in one country (often the producer’s home country), and selling and distributing them to customers in other countries
• Countertrade: International transaction in which all or partial payments are made in kind rather than cash
• In contrast to home-based international operations (e.g., exporting), foreign direct investment (FDI) involves establishing a presence in the foreign market by investing capital and securing ownership of a factory, subsidiary, or other facility there.  
• Collaborative ventures include joint ventures in which the firm makes similar equity investments abroad, but in partnership with another company.

• With licensing, the firm allows a foreign partner to use its intellectual property in return for royalties or other compensation.
• Franchising is common in retailing. McDonalds, Dunkin’ Donuts, Century 21 Real Estate, and many other firms have used franchising to internationalize worldwide.

Factors to Consider When Choosing a Foreign Market Entry Strategy:-

• Goals and objectives of the firm
• Degree of control desired
• The firm’s resources and capabilities 
• The types of risk inherent in each proposed foreign venture
• Conditions in the target country 
• Nature and extent of competition 
• Availability and capabilities of partners in the market
• The value-adding activities the firm is willing to perform in the market and the activities it will delegate to local partners
• Long-term strategic importance of the market
• Characteristics of the product or service

Exporting Overview:-

Usually the firm’s first foreign entry strategy,

• Low risk, low cost, and flexible.
• Popular among SMEs.
• Most exports involve merchandise.
• Export channels:

• Independent distributor or agent
• Firm’s own marketing subsidiary abroad

Internal and External analysis:-

External

• PESTEL
• Porters Five forces
• OT from SWOT
• Competitors Analysis :- WAITROSE, Sainsbury’s

Internal

• Strength & Weaknesses
• Benchmarking
• VRIN Analysis

Systematic Approach:-

[pic 1]

Step one:-

Assess global market opportunity

• BFF must screen most attractive markets
• Identify the qualified distributers
• estimate industry market potential and company sales potential

Step Two:-

        Organise for Exporting

• Assess firm’s resource needs;
•  establish timetable for achieving export goals;
• decide on distribution strategy

Step Three:-

        Acquire needed skills and Competencies