Indonesia as an Environment for Australian Business

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Introduction
Market Overview (PEST, Indonesia)
SWOT
Recommendation
Bibliography

Introduction

The Woolmark Company is one of the oldest wool companies in the world operating in Australia since 1936. Woolmark brand is one of the most popular around the globe based on unique quality and exceptional product offering. Woolmark operates on the slowly growing market, but the company obtains a strong market position and became one of the most popular brands in the region. Expansion strategy will help Woolmark to gain new markets and penetrate a new region.

It will be the base for further expansion and market growth on the global scale. Woolmark’s target market involves middle income and high income segment. The mission of the company is: “to serve our shareholders by being a financially sustainable company that provides quality certification technology, product and services to the global wool industry” (Woolmark Home Page 2008). In Australia, Woolmark relies on an efficient market system and product improvement, innovative technological solutions and unique brand image. Marketing communication plays a crucial role in successful market performance as it influences brand image and product recognition.

Market Overview (PEST, Indonesia)

Political /Legal factors

Recent years, political situation is Indonesia is marked by stability and democratization of government institutions. It is a republic with a presidential authority. The head of the state is President Susilo Bambang Yudhoyono. Indonesian government exercises control over its nation’s economic development by passing protectionist laws and regulations. On the other hand, it does not restrict or limit foreign expansion strategies and activities provided by foreign companies, so this market proposes a favorable environment for Woolmark. Thus, critics admit that Indonesia remains one of the countries with high risk of political struggle and revolution.

Democratization processes cannot eliminate corruption and bribery, unfair market policies and unlawful decisions accepted by some government institutions. “President Yudhoyono has highlighted the need to lift economic growth and investment in order to create jobs as key priorities. The administration’s other priority is to stamp out corruption, which significantly raises producers’ costs and deters investment” (Indonesia Country Profile 2008).

Economic Environment

The Indonesian economy is marked by stable development. The main economic indexes are: GDP, IDR 3,500 trillion (US$376 billion), GDP per capita: US$1,503, annual growth: 5.8%, inflation: 7%. Low inflation rates, exchange rate stability, government budgets and the record of growth are the main advantages of Indonesia. Economic indicators show that the Indonesian market proposes a great opportunities for Woolmark to enter the county. “Compared with other countries in the region, Indonesia is not particularly export focused.

Some 26% of GDP is derived from trade, with exports mainly in the oil, mining and agricultural sectors, and imports in manufactured goods” (Indonesia Country Profile 2008). The wool industry is underdeveloped in Indonesia and does not play a great role in economy. The currency is Rupiah “Indonesia is keen to promote good co-operation with ASEAN countries, particularly on trade and on regional issues such as piracy and smuggling” (Indonesia Country Profile 2008).

Social/Cultural

The population of is 221.5 million, or the fourth largest population in the world (Vickers 2005). The official language of the country is Bahasa Indonesia. The ‘main weakness” of the country is national diversity and geographical separation of the regions. “There are about 583 languages and dialects, but only 13 of these have more than 1m speakers” (Indonesia Country Profile 2008). The wool market is validated. The changes in the environment are changed the demand, but they do not have a significant influence on customers’ purchasing power. Life style and values are similar to those in Australia. Indonesia is one of the most popular countries for tourists attracting millions of global tourists each year (Vickers 2005),

Technological factors/resources Innovation in production technologies and computerized system of supply chain is the main opportunity for Woolmark marketing communication. Internet could be a useful tool for Woolmark, but many areas a re isolated from the center and do not have Internet connection. The threat is that investment in new technologies requires additional finance. Intellectual property and licensing protect business operations.

SWOT

Strengths

Woolmark is well-positioned to take on a leadership role in the world. It has a strong brand name which creates a core of loyal supporters around the world. The strength of the company is that it is an expert and leader in the market proposing high quality products and services. The main strength is that Indonesian market has low competition in this sector and it will help Woolmark to obtain a strong market position at a short period of time.

Also, Woolmark has a favorable geographical location and access to distribution networks. Market entry will help Woolmark to enter other countries in this region and expends its activities. The company has strong patent protection for all products. Woolmark brand creates a complex bundle of images and experiences in the customer’s mind. It represents a promise about a high quality product and the latest technological solutions.

Woolmark brand recognition helps it to differentiate the company’s offering from all others. Brand equity represents the added value that accrues to a product as a result of Woolmark’s prior investments in the marketing of the brand. Brand equity is thought of as an asset representing the value created by the relationship between the brand and customers over time (McDonald and Christopher 2003).

Weaknesses

Include high price for some types of wool and high cost structure. On the other hand, high price helps to sustain a strong brand image as a unique brand. There is a danger of ignoring the environment, as customers and their needs, competitors, changes in technology, etc., can play an important role in determining competitive success. Also, the Indonesian market has low purchasing power so Woolmark will have to use this market as a location for further growth (SWOT Analysis 2004).

Opportunities

Of Woolmark include potential to expend its activities in India and China, Japan and Vietnam. New technologies will create new markets for Woolmark. Increased size of wool market in Japan and Europe create new opportunities for sales in these regions. Indonesia has the forth largest population is the world, so Woolmark will be able to cover the main expenses and gin large market share. A merger with the Indonesian-based company will help Woolmark to penetrate the market and minimize political and economic risks. In this situation Woolmark will be in a powerful position within market to influence the expectations of other stakeholders. It will have access to information and channels of influence which are not available to many other stakeholders (SWOT Analysis 2004).

Major threats

Include global competition and entrance to new markets with high political and economic risk. Inflation and low income create threats for profitability and successful performance. “Although most of the economic indicators show that unemployment (10.3% of working age population) and poverty rates (17.7%) remain a problem” Although most of the economic indicators show positive results, unemployment (10.3% of working age population) and poverty rates (17.7%) remain a problem.

These new tendencies will have a negative impact on sales and future potential of this segment. Demographic and cultural diversity factors also have a great influence on profitability. The changes in the environment are changed the demand and have a negative impact on customers’ purchasing power and preferences (Johnson and Scholes 1998).

Recommendation

Woolmark should view Indonesia as a strategic local market and a location for global operations. the company should save costs on advertising and promotion selling directly to apparel manufacturers and small factories. This strategy will help to create a core of loyal supporters and repeat buyers. This strategy will help to overcome possible demographic changes and attract new market segment in order to sustain strong brand and market image as a leader in the wool industry.

The sales strategy is to build and open new locations on schedule in order to increase revenue. Woolmark is well-positioned to take on the leadership role. It has the resources and certainly had the technological capability (Johnson and Scholes 1998).

The major responsibility of marketing is to deliver and maintain the highest possible standard of living, to see that products and services offered for sale are those desired by consumers, and to distribute them in the most effective manner possible from the point of view of both consumers and companies. Therefore, the delineation of profitable market segments becomes critical for individual companies. A -continuing goal of marketing management will be that of assessing market niches, or groups of consumers, and developing products that are especially appropriate, thereby adding economic value.

In Indonesia, Woolmark should pay a special attention to political and economic risks, and use partnership strategies to maintain strong position in this region. Markets are subjected to numerous contradictory pressures. Society desires the preservation of small business, yet craves the benefits of efficient mass producers and distributors. It limits competition but seeks the low prices of vigorous competitive effort. it wants the lowest prices for consumers but high wages for labor.

Bibliography

Indonesia Country Profile. UK Office of Foreign Affairs. 2008. Web.
Johnson, G., Scholes, K. Exploring Corporate Strategy. Hemel Hempstead: Prentice Hall, 1998.
McDonald M., Christopher M. Marketing: A complete Guide. Palgrave Macmillan, 2003.
SWOT Analysis 2004, Strategic Management QuickMBA. Web.
Vickers, A. A History of Modern Indonesia. Cambridge University Press, 2005.
Woolmark Home Page. 2008. Web.

Click Here To Order Now!