Australian Garlic Producers Pty Ltd Essay Example

Executive Summary

This report represents a marketing proposal for Australian Garlic Producers Pty Ltd. The company is the largest garlic producer in Australia with the ability to expand into a foreign market. Therefore, this paper presents an analysis of the ability of the company to survive in India. First the report will offer the details of the company. Second, it will describe the industry background using porter’s five forces. It will also offer information about India as the potential market and the target audience of garlic products. Using SWOT analysis, it will then analyse the internal and external factors affecting the company.

Table of Contents

Company Name and Detail

Australian Garlic Producers Pty Ltd is an Australian company made up of producers of fresh garlic who grow and market their products locally and internationally (Australian Garlic Producers, 2017). The organization was founded in 1988 as a way of reducing imports and increasing locally produced garlic. Today, Australian Garlic Producers Pty Ltd is the largest producer and distributer of Australian garlic and has a licence that allows the producers to market free garlic varieties to France (Australian Garlic Producers, 2017b). Furthermore, Australian Garlic Producers Pty Ltd has formed Australian Gourmet Pastes Ltd that manufactures and market garlic paste products to retail stores such as Woolworth, Coles and Myer Australia. It also supplies bulk goods to manufacturing companies such as bead manufactures in Australia (Australian Garlic Industry Association, 2017).

Industry Background
Porters Five Forces

Buyer Power

The buyer power is low in India. The country has few companies that produce garlic products given the high consumption. And with such low competition, buyers have little to choose from and sellers can offer their products at higher prices (Saxena, 2006).

Supplier Power

Supplier power is also low since being in the food industry; garlic is not a rare commodity and is produce locally and internationally. Thus, there are many suppliers to choose from. However, there is a challenge of quality since most suppliers have no ability to offer quality products to buyers (Backman, 2005).

Threat of Substitute

Garlic can be substituted for other products and spices such as celery and green paper. However, having sophisticated taste, lovers of garlic prefer to consume it even though these substitutes are cheaper (Australian Garlic Producers, 2017b). Therefore, the threat of substitute is low.

Competitive Rivalry

India has many companies that produce and distribute garlic and garlic products. The main market players include Shree Garlic, Virdhara International and Pardesh Dehydration Private Limited. This creates stiff competition where a newcomer will face challenges when exploiting the market (Hill, 2000).

Threat of New Entrants

The threat of new entrants is low. Indian government has established strict regulation governing foreign investments and exports of food products which make it hard for new companies to enter the industry (Bhagwati and Arvind, 2013).

Country and market selected

Australian Garlic Producers Pty Ltd has the potential to expand into foreign market which will ensure long-term success and prosperity. Also, as a result of Australia’s geographical location, the organization has an opportunity to export counter seasonally to other markets across north hemisphere (Australian Garlic Producers, 2017a). The country that Australian Garlic Producers Pty Ltd should select for its products is India. Indian market is known to appreciate spices and therefore this offers a great opportunity for the organization who can offer its garlic products to the customers in the country. The favourable mode of entry into India is direct export. The organization can establish a sale program in the country by using agents and distributers to represent them in the market (Dacko, 2002). These distributers can act as the face of the organization and control the distribution of products in India. The main target market for garlic and garlic products in India should be retail stores. The product will be sold as an ingredient that can be used by manufacturers of bread among other goods (Chetty and Campbell, 2003). Therefore, Australian Garlic Producers Pty Ltd can linkup with food retailers in India to supply garlic products to them counter seasonally.

Internal Analysis

One factor that differentiates Australian Garlic Producers Ltd from its competitors is its ability to produce high quality products. The concept of counter seasonal production offers some advantages to the organization since it can provide product offering even during off seasons. The company has also formed relationships with farmers and growers that have contributed to high quality products and constant supply of products (Yusuf, Altaf and Nebeshima, 2004). Nevertheless, the company is affected by environmental conditions which indicate the main weakness when considering growth (Cullen and Parboteeah, 2010). In addition, being in the food industry, the company is affected by market changes which may affect its profit stability and quality of its products.

External Analysis

Australian Garlic Producers Pty Ltd has the opportunity to thrive in foreign markets due to the counter seasonality made possible by the geographical location of Australia (Luo and Tung, 2007). In addition, due to low interest rates and economic growth in India and Australia, the company has the potential to increase its profit margins. There is also an opportunity to increase local products by partnering with more farmers in order to extend produce into winter months. This ensures the company satisfy quality concerns even during off seasons. Nevertheless, due to strict regulations that target food industry, Australian Garlic Producers Ltd is bound to suffer significantly. The company will also face stiff competition from established companies that have established loyal customers (Rammer and Schiemiele, 2008). In addition, increase in commodity price could increase the cost of production, while economic conditions limits the ability to pass the prices increase to the customers.

SWOT Analysis Table

Conclusion

Australian Garlic Producers Ltd has experienced growth over the years due to high quality products. It has the capacity to expand by exploiting foreign markets such as India. India is a favourable market for the organization due to many factors such as market acceptance, good economic conditions, etc. The probability of success of the company in India is high due to numerous external and internal factors. Therefore, Australian Garlic Producers Ltd should definitely consider India as a potential market for its products and set numerous conditions to accommodate challenges and changes in the future.

This project will be conducted by collecting both primary and secondary data to help in gathering relevant information. Theprimary data will be collected using interview method and the secondary data will be collected from relevant literature, journal articels and company’s website and annual reports. I will then analyze and interpprete my finding in order to address the research question.

References

Australian Garlic Industry Association. (2017). The Australian Garlic Trade; Main Trends. Retrieved 14^th August 2017 from https://garlicaustralia.asn.au/article/garlic-market-report-analysis-and-forecast-2020

Australian Garlic Producers, (2017a). About us. Retrieved 14^th August 2017 from http://www.australiangarlic.com.au/about.html

Australian Garlic Producers, (2017b). AGP News, Fresh Australian Grown Garlic. Retrieved 14^th August 2017 from http://www.australiangarlic.com.au/news.html

Backman, M. (2005). Inside knowledge streetwise in Asia. Houndmills, Balsingstoke, Hampshire New York: Palgrave Macmillan.

Bhagwati, N., and Arvind P. (2013). Why growth matters : how economic growth in India reduced poverty and the lessons for other developing countries. New York: PublicAffairs.

Chetty, S. & Campbell, C. (2003). Paths to internationalisation among small-to medium-sized firms: a global versus regional approach. European Journal of
Marketing, 37:796-820.

Cullen, J. B., & Parboteeah, K. P. (2010). International Business, Strategy and the Multinational Company. New York: Routledge.

Dacko, (2002), S.G. “Understanding market entry timing decisions: the practitioner academic gap”, Marketing Intelligence & Planning, 20(2): 70-81.

Hill, C. (2000). International Business — Competing in the Global Marketplace. University of Washington: Irwin McGraw-Hill.

Luo, Y. and Tung, R. (2007). International expansion of emerging market enterprises: A springboard perspective. Journal of International Business Studies, 38(4): 481-498.

Rammer & Schiemiele. (2008). Drivers and effects of internationalizing innovation by SMEs. Discussion paper No. 08 – 035.

Saxena, R. (2006). Marketing management. New Delhi: Tata McGraw-Hill.

Yusuf, S., Altaf, M. & Nabeshima, K. (2004). Global production networking and technological change in East Asia. Washington, DC: World Bank.