EXECUTIVE SUMMARY

Just wool is an Australian clothing manufacture and retailer with stores throughout Australia exclusively sells Just wool products. The company uses pure Australian wool to produce jumpers, beanies, scarves and socks. Just wool has used the same methods of production throughout its 20 year history and has achieved reasonable success in the industry.Recently, Just wool has experienced a decline in sales and market share due mainly to competition from cheaper overseas imports. Management has decided Just wool needs a new direction for the future and is looking for opportunities in the global market. In this report, reasons will be outlined why Just wool might consider global expansion and the different methods it can use for global expansion. Also, how the proposed changes could be effectively managed by Just wool.

REASON FOR EXPANSION

There are many reasons a global business will enter foreign markets, all of which are ultimately linked to increasing the businesses sales as well as its profits.

Tax minimisation

Increasing sales and finding new markets.

RESONS FOR EXPANSION

Minimise the risk of competition.

Acquiring resources and technology.

Diversification

INCREASING SALES AND FIND NEW MARKETS

Businesses are under pressure to increase sales revenue and profits. This can be difficult if the domestic market: Becomes saturated. Has stopped expanding due to a low population growth rate. Is dominated by a competitor. Is experiencing an economic downturn. Is being flooded by foreign made products. These conditions often result in a search for new markets outside the home country. Many markets around the world are growing as countries experience economic growth. As a result, domestic businesses may see profit making opportunities opening in new markets. ACQUIRING RESOURCES AND TECHNOLOGY Few countries, poss sufficient domestic supplies of raw materials. As well, no country is technologically self-sufficent.to guarantee a continuous supply of raw materials ,many businesses are directly investing in developing countries.Deveopling a number of raw material sources spreads the risk, so that if one source of supply is restricted there is another to rely on. Also, if the resources can be obtained more cheaply, the businesses cost of production decreases.

DIVERSIFICATION
Diversification is a process of spreading the risks encountered by a business. Diversification can occur at a number of different levels. These are: -Geographic diversification (operating in foreign locations).having a number of markets across the world helps minimise the risk of business failure -Product diversification. A business may decide to enter a foreign market as a way of increasing the range of products sold. -Supplier diversification.Buisnesses will prefer to have a number of supplies of raw materials .for a business to be solely reliant on one supplier puts it at a distinct disadvantage.

MINIMISING THE RISK OF COMPETEION

Competition is a factor faced by all businesses. It doesn t come only from other domestic producers.Often, an overseas business is able to enter the domestic market and sell their products at a cheaper price. A domestic producer may view selling overseas as a way of minimising these competitive markets and another source of revenue that reduces the risks involved from these competitive pressures.

TAX MINIMISATION
Of particular interest to many businesses, is the company taxes imposed by a country s government.Industralised countries tend to have higher rates of company tax compared to developing countries. The high tax rate could act as a disincentive to a domestic producer, encouraging them to move to a location with low tax rates. Some developing countries offer taxation incentives such as tax holidays and tax havens. To businesses and their managers if they invest in their country. A tax holiday occurs when no tax is paid for a certain period of time. A tax haven is a country that imposes little or no taxes on businesses income. Reasons for Just wool to consider global expansion because =of increase sales and finding new materials.Accquiring resources and technology, diversification, minimising the risk of completion and tax minimisation.

METHODS FOR GLOBAL EXPANSION

When a business decides to expand from a domestic business to a global operation, it can do so in several ways. They can be: 1. Export. 2. Foreign direct investment. 3. Relocation of production. 4. Licensing and franchising. These different methods and strategies require varying degrees of involvement in global businesses. A business commences its global operations at the simplest level; for example, exporting the products and services to a foreign country. Then, depending upon its long term goals and the success of its previous ventures, it may progress to a more complex level of involvement, such as foreign direct investment. EXPORT- exporting occurs when a business manufactures its products in its home country and then sells them in foreign markets. Increased sales and profits are normally the main incentives for exporting. Exporting can be a relatively low risk method of entering overseas markets. There are three different methods of exporting. Each method requires a different level of involvement for the exporting business. -Indirect business is the most basic level. A business sells its products to a domestic customer, who then exports the product. The domestic customer then assumes all the risks of distribution, ownership, sales and transportation. -Direct exporting happens when the exporting business sells its products to an agent, intermediary or final consumers in another country. Often the intermediary is a trading company, a business that buys and sells products in many countries.

-Intracorporate exporting (also known as transfer) is the selling of a product by a firm in one country to a subsidiary firm in another. As transnational cooperation s have increased in size, this form of exporting has become much more important. For example, if Ford ships body panels and engine parts from its manufacturing plant in Australian plant in Australia to its Mexican subsidiary, the transaction is recorded as an Australian export, but all the money for the transaction stays within Ford. The main advantages of exporting as a method of overseas entry are as follows: -It is relatively inexpensive, especially compared to establishing production facilities overseas. -It provides an opportunity to gain valuable experience, although this would depend upon the exporting method selected. The main disadvantages are as follows: -Overseas countries may use a number of barriers to trade, which could result in an increase to the price of the exported products. -High transport costs may make exporting uneconomical, especially if air transport is involved. -Overseas agents or intermediaries may not do a good job as the business itself. -It could be uneconomical, especially if there are more favourable low-cost locations for manufacturing overseas.

FORIGN DIRECT INVESTMENT

Foreign direct investment occurs when a business from one country owns property, assets or business interests in another country. There are three methods of foreign direct investment: -The Greenfield strategy involves commencing a new business venture from scratch. The business purchases land constructs new facilities and commences production. -The acquisition strategy is appropriate for any business that wishes to move quickly into an overseas market. It involves a business acquiring, through a takeover or merger, an existing business already operating in the foreign country. -A joint venture means two or more businesses agree to work together and form a jointly owned but separate business. The main advantages of foreign direct investment include: -It provides the parent business with direct control over the foreign facilities. -As the products are being produced in the overseas country there is a subsequent reduction in transport costs. -Transfer of technology, people, products and intellectual property becomes easier.

-The parent business is in a better position to be able to monitor and adapt to changes in the foreign country s business environment. The main disadvantages include the following: -Increased financial risk is likely, especially when investing in a business that is located in a politically unstable country. -The parent business is exposed to the economic uncertainties of the foreign countries. -Adverse currency fluctuations may wipe out any cost efficiencies. -Legal, social, cultural and language barriers may create problems. -Joint venture profits must be shared between all parties involved.

RELOCATION OF PRODUCTION
Relocation of production takes this strategy one step further. It involves closing down the domestic production facilities, which are then set up in a foreign country. The motivation behind this strategy is cost reduction. Increased global competition is forcing businesses to increase efficiency and reduce costs of production. The main advantages of this strategy include the following: -Moving to a low-cost labour country should help decrease costs of production. -Decreased production costs may result in increased profits. -Some governments provide financial assistance to cover relocation expenses. The main disadvantages include: -The parent business may be faced with social, cultural and language barriers in the overseas country. -The possibility of a consumer backlash if exploitative work practices are used. -The business need to recruit a local workforce and train it to meet its standards. This could be time consuming and expensive.

MANAGEMENT CONTRACT
The management contract is an arrangement under which a global business provides managerial assistance and technical expertise to a second or host business for a fee. The advantages of this strategy include the following: -The global partner has greater control over production standards in a joint venture operation.

-The fees paid by the subsidiary are a business expense and, therefore, a tax deduction. -The global business is able to earn extra revenue. The main disadvantages include the following: -The host business does not gain any managerial training. -The global business may face political pressures from the host s business s government, especially with regard to foreign exchange restrictions.

LICENSICING AND FRANCHISING

Licensing is an agreement in which one business (licensor) permits another (licensee) to produce and market its product, brand name, trademark, copyright and technology, and other intellectual properties in return for a royalty fee. Franchising is a specialised form of licensing in which the franchisor grants the franchise the right to use a company s trademark and distribute its products. Franchising is more common in the United States than in other countries. Therefore, across the globe there are more US franchise operations than those from any other country. The main advantages of licensing and franchising include the following: -There is little financial risk for the licensor/franchisor -It is a useful option for firms lacking the capital to develop an overseas operation. -The licensor/franchisor is able to develop a global presence relatively quickly. The main disadvantages include the following: -There is risk of losing intellectual property rights to the licensee/franchisee. -It is difficult to maintain quality control over a wide range of locations. -International franchising is more complex then the domestic franchising, often requiring the need for extensive legal advice. -The profits are shared between the two parties.

MARKETING STATERGIES
Marketing strategies are plans that outline how a business will use its resources to achieve its marketing objectives. Just wool can also use marketing planning process which is very effective. Strategic marketing planning is the process of developing and implementing marketing strategies to achieve marketing objectives, which in turn helps to realise the businesses goals. With this strategic marketing plan, objectives can be identified and strategies developed to achieve them. Such a plan will consist of five steps.

Implementing monitoring and controlling

Performing situational analysis including SWOT analysis.

ELELMENT OF THE MARKETING PLAN

Developing marketing strategies

Establishing market objectives

Identifying target market

1. PERFORMING SITUATIONAL ANALYSIS This is the best achieved by conducting a situational analysis, which investigates the marketing opportunities and potential problems. To do this, market research is used to gather all the available information about the market environment. The data is then analysed by marketing managers. Qantas uses the SWOT analysis. This gives it an advantage because it will know the companies strengths, weaknesses, opportunities and its threats. 2. ESTABLISHING MARKET OBJECTIVES A market objective is a statement of what the business expects to achieve through its marketing activities. These expectations become the businesses objectives. Clear objectives are essential for any marketing plan to be effective. Determining these objectives is the most important step in the marketing planning process. Qantas also has objectives. The main marketing objective is to make profit, both in the current and long terms. The overall goal is to provide a satisfactory return to shareholders and to

generate enough profit in reserve to fund growth and the acquisition of new air craft. Other marketing objectives include: -increased sales of passenger tickets. -increased internet sales, and -improve efficiency across all areas of the business. 3. IDENTIFYING TARGET MARKETS Sales are the life blood of any business, so it is important for businesses to have a good understanding of their target market. Target market refers to the group of customers to which the business intends to sell its product. Once the target market has been identified, the business concentrates its market activities towards that group. Business owners must conduct some basic research to identify their customers needs in order to tailor stock service standards to the groups expectations. Data maybe collected through questionnaires, informal interviews with customers and written surveys. 4. DEVELOPING MARKETING STATEGIES Marketing strategies are plans that outline how a business will use its resources to achieve its marketing objectives. The four main strategies a business can pursue are referred to as the marketing mix. This is the combination of the four elements of marketing, the four P s that make up the marketing strategy. They are: -product, including brand name, packaging and positioning. -price including list price, discounts, credit terms and payment period. -promotion, including advertising, sales, promotion and publicity. -place, including location of markets, warehousing, distribution, transport and inventory. Qantas uses the four P s very effectively. PRODUCT Product is the bundle of attributes and benefits designed to satisfy Qantas customers needs. They include: -Scheduling features: -the rate frequency -time of departure or arrival -number of stops or direct flights and the aircraft type -Comfort based features:-include lounges -in flight meals and drinks -in flight entertainment and seat width

-the Qantas frequent flyer scheme: with more than 2.6 million members and 198 programme partners are used to retain customers, increase market share and fill otherwise empty seats. -brand name: Qantas is one of Australia s leading brand names and it is a powerful marketing tool. The brand name, kangaroo symbol and logo spirit of Australia , clearly identify Qantas and distinguishes it from its competitors. PRICE Pricing methods used by Qantas include a combination of: -cost plus margin -market -competetion based Pricing strategies employed by Qantas include: -price penetration -full fares -promotional fares PROMOTION Promotional strategies used by Qantas include: -advertising: Qantas uses advertising agencies to create media advertisements for television radio, magazines, newspapers, brochures, and billboards. -sales promotion: (short time inducements) particularly in periods of subdued demand. -personal setting: based on sales representatives who sell directly to travel agents, businesses and government departments. -publicity: to enhance the image of Qantas includes news releases, feature articles, press conferences and interviews. PLACE Distribution to end customers is achieved by Qantas in two ways: -direct: via its own retail outlets, such as telephone sales centres, airport ticket sales and through the internet. -indirect: via travel agents.

5. IMPLEMENTING, MONITORING AND CONTROLLING THE MARETING PLAN The marketing plan will not operate effectively unless it is well managed. Marketing management is the process of monitoring and modifying the marketing plan. Monitoring involves comparing actual performance with predetermined performance standards. By using performance standards such as market share analysis and profitability by product or territory, management can assess the effectiveness of the marketing plan. Qantas has a systematic base for continually monitoring, controlling and adjusting its marketing activities using the following tools: -developing financial forecast of revenue using statistical models, past sales data, executive judgement and surveys of consumer buying intentions. -comparing actual and planned results using a number of performance criteria. They include; sales analysis, market share analysis and market profitability analysis. Revising marketing strategies and taking corrective action where appropriate. By using these steps, Just wool will be on a great way and provide satisfaction and this will ensure maximum profit for the business. The marketing plan must focus the businesses activities towards optimising customer satisfaction in the market. However, markets are not static- they are dynamic. Markets change and the marketing plans must evolve and adapt to new circumstances. Inflexible plans result ultimately in dissatisfied customers, lost sales and reduced profits.