Executive summary
Since the signing of a preferential trade agreement between Australia and the United States, the establishment of businesses in the two countries has been made much easier. The agreement was established in the North America free trade agreement that was ratified in late 2004 but effected early January 2005. The agreement followed the WTO rules which advocate equal treatment of investors in the two countries (International Trade Administration, 2007, p. 137). Special tariff rate quotas were also encrypted on the agreement; the quotas were meant to encourage agricultural trade between the two countries. This paper seeks to analyze the United States-Australia trade relationship.
The legal registration of the business
Considering the preferential treatment accorded to the agricultural trade between the two nations, ABC breeding company will undergo fast registration procedures. The licensing process that is involved in registering the company will be simple compared to other sectors of the economy (the United States International Trade Commission, 2004, p.1). Since ABC breeding is an agricultural-oriented company that seeks to improve beef raring in the US, a special tariff rate quota will be given to the firm. The US specifically specializes in agricultural trade since it makes up quite a considerable portion of its GDP. According to the available economic statistics, farm exports in America make up more than 25% of its national GDP. Additionally, agriculture has a favorable trade balance which attracts foreign investors.
Most of the US ranchers and farmers largely depend on foreign markets to trade their products. As a result, the ABC breeding company that an Austrian investor intends to locate in the US will quickly pick as there is a ready and available market from the existing ranchers. In addition, the US government through the free trade agreement seeks to advance its agricultural productivity from its current level to the advanced level which New Zealand and Australia have been able to achieve lately. That is the main reason that the US government has continuously advocated to have a close relationship with the two nations. Currently, both Australia and New Zealand are among the highly ranked agriculturally developed nations generating a considerable GDP from the sector. Since the American farmers used to equally depend on subsidies, just as New Zealand and Austria did, they greatly hope that the same transformation will be attained just as in the two countries. The current agricultural policy that the US has is to ensure that it boosts agriculture to a higher level so as to ensure sustainability among the farmers. The move aims at ensuring dependency in farming and in the overall agricultural practice. For a long period of time now, American farmers have always depended on federal government subsidies, something that has really caused a lot of inefficiencies in the sector.
The ABC Company will therefore assist the American government to up the beef breeding and ranching in the US (Yu, 2007, p.160). It is as a result of this that the US congress has amended the farm bill in order to accommodate foreign trade, more so with the two nations (New Zealand and Australia). The major reference point for the farm bill amendment is from the two nations. But the US government needs to go an extra mile further in order to ensure that the bill is actually implemented. As it has been in the past most of the development resolutions end up not being implemented or if implemented, it’s done partially. It is also advisable that the US government should seek to completely remove tariffs on agricultural imports. By so doing, the country will have assisted the farmers to get quality breeds and other farming implements that can help them increase production. Complete removal of tariffs can greatly assist the American people to obtain quality products from the agricultural sectors. Indeed, food security and the overall growth in the country’s GDP will be necessitated by such an effort.
The ABC strategic planning
The strategic planning will assist ABC to implement and evaluate functional decisions in the firm with an aim of achieving both short-term and long-term objectives. Additionally, strategic planning will seek to specify the mission statement and also ensure proper implementation by establishing small goals and targets (Goodstein, Nolan & Pfeiffer, 1998, p.169). Businesses require a vision, mission, and values in determining the strategic direction. ABC will also be required to establish a successful framework. This will enable the business to forge ahead strategically and progressively with effective monitoring and evaluations. Certain objectives must be set so that the business becomes viable. It must state the image it intends to portray in the future, the business activities and their existence, and the traits and governing qualities of the business.
For a business to be successful, adequate plans should be put in place. The plan in this case acts as a guideline upon which the company’s operations will follow. Businesses that deal with technology have great potential and stand to make high profits especially if they remain updated on the upcoming breeding technologies (Wittmann & Reuter, 2008, p.27). Dealing with agricultural products proves to be easier than dealing with any other goods in the US market. This is because the US government aims at overlooking the sector much than the other sectors of the economy. The sector also happens to be among the prioritized sectors in the US budget. For the company to fully equip itself well to face the market, highly competent and experienced expertise should be employed to manage and operate the firm’s activities and there should be close coordination between the new firm and the mother company.
Choosing the right export strategy remains to be a good ingredient to the success of the foreign market entry. According to Fisher and Fisher (1998, p. 6), an export strategy is a blueprint or roadmap for implementing an export plan in a target market” and should follow the firm’s assessment of its readiness to engage in export business. The firm should prioritize research and development programs in order to ensure it offers excellent and quality products to the US farmers (Olsen, 2006, p.23). The firm should also seek to advertise some of the services and products that it intends to launch into the market. These will increase awareness among the customers and consequently increase output. Among the analysis that the ABC needs to fully analyze before establishing its operations includes the SWOT analysis and PESTLE analysis. This is because the analysis will enable the firm to understand well the US market conditions. An active and successful strategic management requires more information on the firm’s environment. Such information always assists the firm to adjust accordingly and develop a viable export marketing plan in order to suit the prevailing market condition
ABC Breeding Company the SWOT Analysis
SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is a strategic planning method used to evaluate the business environment. The analysis basically requires businesses to specifically direct their resources towards the overall attainment of the firm’s objectives. Critical evaluation of favorable and unfavorable internal and external environments is done in order to assist the businesses to suit well in the industry. In this case, the firm is required to fully exploit its strengths and opportunities. A positive counter of threats and weaknesses should also be undertaken in order to ensure market competitiveness. ABC breeding company should therefore analyze its internal operations together with the external environment in order to ensure economic sustainability in its operations (Griffin, 2007, p.168).
Strengths
Among the strengths that ABC possesses includes the advanced breeding technology which has already been tested back in Australia. Since the company has immensely invested in the research and development program back at home, it can utilize the same technology to enhance growth in the US branch. Similar technology should be implemented in the American branch in order to attract similar results as in Australia. The company should fully exercise the preferential treatment that the US government has already given to Australia. Benefits such as low tariffs on agricultural imports should be enjoyed by the ABC Company in importing the firm’s products direct from the mother country. The firm should effectively market its superior beef breed in the US market in order to increase its awareness. The current agricultural growth in Australia can be used by the ABC to advantageously penetrate into the US market. Considering that the US market perceives Australian breeds positively, the marketing of the products will be easier for the firm.
Weaknesses
ABC ought to experience some marketing problems since the firm is new in the US market. The newness in the field mixes the team that barely has enough knowledge about the market. This weakness will however be improved as the firm stabilizes its operations in the US market. The firm will also greatly depend on its headquarters in Australia as most of the operations will have to be coordinated from there. Although this is not a weakness as such, it will definitely slow down the company’s operations as the importation procedures will have to be followed to the latter. It is therefore advisable for the new branch to be autonomous.
Opportunities
There is a great potential for the ABC products to penetrate the US market. This is because a working relationship exists between the two nations. The US has political goodwill which encourages investors from the two nations. The US farmers already acknowledge the Australian breeds and this will make it easy for ABC Company. Indeed, the agreement between the two countries provides an attractive avenue for future exports business success between them (Shanahan, M. treuren, 2003, p. 54).
Threats
The company will experience enormous competition from the already established breeding firms in the US market. In order to counter this ABC Company should strategically market their products efficiently. Experienced and competent workers should be employed in order to offer quality and excellent services to potential clients. The continued elevation of the US farmers may consistently seek to empower and encourage homegrown products. As a result, the move may finally block foreign investors especially if the sector attains the intended growth.
ABC PESTLE analysis
Political factors
This is a marketing tool that enables the firm to have a thorough knowledge of the political, economic, sociological, technological, legal and environmental issues that may affect the firm’s operations. The analysis, therefore, seeks to analyze some of the political factors that may influence the operations of the company. For the ABC breeding company, there is political goodwill that encourages Austrian investors to invest in the US market. The congress move which aimed at amending the current farm bill clearly shows the political goodwill in the country. The signing of a free trade agreement between the United States and Australia also aims at improving the relationship between the two countries (the United States International Trade Commission, 2004, p. 78). The agreement, therefore, encourages willing investors to fully exploit the markets and resources in the two nations. The US government has also categorically encouraged the agricultural trade between the two nations by lowering the trade barriers and tariffs on agricultural imports. The move, therefore, allows firms such as the ABC breeding Company to fully exploit its motherland potentials in establishing itself in the US market. The two governments have also advocated for compliance with the WTO rules, which further boosts the trade between them. This political analysis, therefore, encourages the firm not to fear investing in the US market. This is because the two governments have established a proper trading avenue upon which the firm can successfully expand its operations (Henry, 2008p.51).
Economic factors
On the economic factors, the company requires to acknowledge that the US economy is perfect to sustain the firm’s growth and development. As one of the leading economies in the world, the ABC stands to benefit. Considering the fact that the US government is aimed at empowering its farmers, the sensitization will greatly reduce the ABC marketing operations. The consumer base is already perfectly established for the investors, the consumer spending is also quite high compared to other markets in the world. Since a liberalized trade exists between the two nations, ABC Company can easily access financial supports from the US market. The firm will also benefit from reduced taxation on the imported agricultural product which the US government has passed. This, therefore, provides an added advantage to the ABC expenditure budget.
Sociological factors
Considering the high farmer’s population in the US, a wider market is guaranteed for the company. The prevailing efforts to improve the agricultural sector will also significantly impact the company’s operations. Since there is a positive attitude about agriculture in the US market, a stable and sustainable environment exists for the agricultural-related venture. ABC Company should therefore fully and efficiently utilize the existing customer base in the US market by fully focusing on quality productions in the breeding and ranch improvements.
Technology factors
Technology-wise, the company is in a better position as Australia is ahead of the US in agricultural and breeding innovations. It should therefore utilize similar technology as used in Australia. Since the research and development level in Australia is higher than that of the US, the company stands in a better position to attain more in the market compared to the locally established companies. With the current global communication technologies, excellent services are assured in the industry. ABC can therefore undertake to use the internet in consultancy provision in order to lower the cost involved.
Legal factors
The free trade agreement between the US and Australia significantly reduces the legal requirement for the investors in the two nations. Indeed, the US market has been a major destination for a significant amount of Australian beef export for quite some time (Journal of Commerce, 2000, p. 30). The industry has great growth potential since the US government plans are still underway to improve the agricultural sector in the region. There is a possibility that Congress will completely remove the trade barriers for imports of the breeding products from New Zealand and Australia in follow-up to the quotas provided to the two countries (Williams, 1986, p. 86). Such an amendment will further better the US farmers as they will obtain the products at lower prices. The move will also better the ABC Company’s operations since the firm will closely relate to the mother company without lengthy procedures. The world trade organization policies also offer equitable treatments for the investors in the two nations. On the regulations issues, the firm should not fear much since all its breeding products have already been tested and approved by the Australian government.
Environmental factors
ABC Company will only have to continue advocating for similar technological techniques since they are environmentally friendly. The only worry that the company should have is whether the breed will be functional in the US nation. This is because the breed might be efficient and effective in the Australian environment but not in the US environment. The firm should also direct its research and development program towards greening the firm. Natural methods should be advocated when developing new breeds.
Conclusion
ABC breeding company should go ahead with its expansion program into the US market. This is because the US government through the free trade agreement seeks to advance its agricultural productivity from its current level to the advanced level which New Zealand and Australia have been able to achieve off late. The agricultural advancements in Australia have lured the US government towards bettering its relationship with it. The company will therefore enjoy some preferential treatments since the US government opts to improve its farming and breeding techniques to match the ones in New Zealand and Australia. The excellent strategic plans that the firm has will certainly enable it to achieve its objectives. The firm with therefore attain profitable achievements by investing in the US market. The ABC breeding is an agricultural-oriented company that seeks to improve beef raring in the US; a special tariff rate quota will be given to the firm. This will be a comparative advantage that will assist the firm to fully and successfully enter the US market.
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