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Introduction
Tipsy Inc. Company is an Australian-based family-owned enterprise. The firm began its operation in the commercial industry in the early 2000s. It was started as a small-scale venture that deals in beverages and it was wholly run and managed by the owner. However, around 2007, the business organization gain traction in the Australian market and the demand for its product prompted the management to expand its activities. Due to the growth of the firm, the founder hired several managers to facilitate the production processes. Currently, the firm has over 20 successfully operated ventures under its brand name in 10 countries across the globe.
Product Lines
The company has various wine and beverage products that it manufactures and distributes into the market. The key brands include The Magic Package, Glenrowan Baileys, Rutherglen Wines, Coonawarra Laira Brands, and Peter Lehmann Vinos. Similarly, the beverages it produces are Tips, Peptip, Quencher, and drinking water. Tipsy sells the mentioned commodities separately but under its company name. The firm’s products have penetrated both the domestic and international markets making it a renowned brand in the industry.
Purpose of the Report
The Australian market especially the beverage industry is having a large number of companies manufacturing and distributing the same products as Tipsy. Due to the entrance of new firms, the rate of competition is high making the marginal profit decline. To increase its revenue, Tipsy Inc. Corporation is opting to establish its subsidiary in a South Asian country (Yildirim-Öktem & Selekler-Göksen, 2018). By venturing into the foreign market, the business organization is targeting to lower the cost of production and access diverse markets for its products to enable it to generate more income. In addition, the enterprise is further aiming to access new technology that can be utilized to improve the production processes while lowering the cost associated.
The report is aimed at providing proper insight to the management board of Tipsy Inc. Company to facilitate their decision-making on whether to expand the corporation’s operations to foreign countries. The designed team will explore the external factors in the given nation to determine their impact on the enterprise. In addition, the group will access the possibility of a merger to enable Tipsy to establish an effective relationship that will facilitate proper business management that benefits the company.
Business Expansion to Singapore
Singapore is a sovereign country located in the South Asia maritime. Based on the latest census report, the nation has over 5 million people of different ethnicity. The economic state of the country is high due to its trade ties with other countries such as Hong Kong, Taiwan, and South Korea. In the region, Singapore has managed to increase its gross domestic product (GDP) which has made the lives of its citizen improve significantly over the years. Singapore’s market economy is free, dynamic, innovative, and business-friendly (Chiu et al., 2019). Furthermore, the country has a skilled workforce, improved infrastructure, low tax rate making it attract a large number of foreign investors. Its location makes it a suitable trading center for companies around the globe.
Singapore Environmental Analysis
To effectively understand the country’s business environment, the team performed a PESTEL analysis to depict key external factors that Tipsy must consider during decision-making. The framework will explore all aspects that directly and indirectly relate to the country’s economy. The contextual information gained through the examination will enable the company to define its product line, growth target, and brand position in the country.
Political Environment
In the country, there is an effective rule of law that has made issues such as corruption to be minimal. With limited bribery cases, it is easier for a foreign company to successfully start and run its operations in the region. In addition, the Singapore government advocates for intellectual property rights. Having such practices will enable Tipsy to maintain and protect its production secrets to give it a competitive advantage. Australia and Singapore do not have political issues thus making it a viable ground for the corporation to invest. Moreover, Singapore is one of the countries with a stable political atmosphere (Hwang, 2020). Businesses and people in the country can manage their organizations peacefully without fear of political instability.
Economic Environment
The country’s market is best performing in the Asia region. Its average annual growth rate is estimated at approximately 3.75% (Gleason, 2018). Investing in the country will give Tipsy the potential to generate more income. In addition, the nation’s population is about 5 million, making it have a wide market for products. Following the adoption of Western culture, the rate of wine and beverage consumption is more likely to increase. The cheap labor being provided by people from another country will enable Tipsy to minimize expenditure on the workforce (Toh, 2022). Its manufacturing sector has a large share of the economy.
Social Environment
Singapore hosts several cultures including Japanese, Indian, Chinese, and other European groups. Diversity is essential for the company because most of the groups conduct celebrations where drinks are necessary. In addition, consumers are attracted to foreign brands thus will promote the purchase of Tipsy products. The level of education in the country is high which implies that most clients are informed and able to make rational choices. Most of the people are located in the urban center and the majority are between 25 to 55 years old. The age bracket prefers partying thus they will likely purchase the commodities.
Technological Factors
There is a significant advancement in the level of technology in the country, which has influenced the overall lifestyle of the people. Easy access to the internet has facilitated the rate of communication which is vital for business practices. The aspect of social networking is high due to increased connectivity. Singapore has improved its Information Technology (IT) infrastructure, which is essential for eCommerce business approaches. The country’s government is further transforming the nation into electronic error. Multinational organizations have the potential to establish regional business activities due to the availability, and overall IT structure.
Legal Aspects
Singapore has a program that supports the eCommerce business in the country. The government has created legislation favorable to the market and transparency to facilitate operations. It further has several eCommerce policy initiatives that protect the interest of companies. In addition, the country has cross-border e-business regulations. It has substantial intellectual property rights and a reliable rule of law. Furthermore, being a pro-business nation, the Singapore government has no trade barriers, making it suitable for foreign investors.
Environmental Atmosphere
Singapore is committed to improving the air quality in the country. Previously, the country was rated among the most affected nations with a high carbon footprint. The country majorly depends on imported water from neighboring states. Singapore lacks water supply resources to meet the needs of its population. This aspect creates a gap for Tipsy Inc. to invest in the drinks. It has a single local brand that performs water purification in the market.
The Market for Product
In Singapore, there is no specific company producing wine products. However, the food and beverage industry is full of well-established business organizations. Currently, the sector is attracting a large number of firms to produce and sell wineries (Romero-Gómez & Ferro, 2020). In other words, there is no significant competition for the wine products. The main distributor of the commodity is CornerStone Wines which has been in the industry for over two decades. The main channel for advertising is social media where the companies can display their products and receive constant feedback from consumers. The market size of the wine industry in Singapore is $1.45 billion. The market is growing at a significant rate which is approximately 5% (Gleason, 2018). Tipsy should, therefore, target the wine segment because of limited competition in the market.
Conclusion
Singapore’s economy is an ideal market for the Tipsy Company. The political stability, high-performing economy, diverse culture, effective legal system, and advanced technology make it reliable and suitable for business operations. The population size and availability of skilled laborers will enhance the ability of Tipsy to generate more income at a reduced cost. The mentioned circumstances will favor the growth and performance of the firm which is vital for the management and stakeholders.
Recommendation
Based on the PESTEL analysis of Singapore’s environment, the country is viable and worth investment. Tipsy Inc. Company should pursue the opportunities present in the country’s economy to enable it to make more profit and increase its brand awareness. Due to limited competition in the industry and favorable economic, social, and legal factors, the corporation will be able to remain competitive and even become the market leader in the wine sector.
Merger
Singapore enjoys several aspects of business culture regarding investment and expansion. Its culture displays much reverence for the aged, and topmost business leaders. The culture shows great respect for the elderly, and the person in the highest position in the business is revered. Besides, its market is very competitive and anchors on strong labor codes. To ensure the successful expansion and growth of Tipsy Inc., It must adopt various ethical and tactical negotiation practices with Singapore. Many Singapore residents necessitate a basis of mutual respect and trust before consenting to conduct business with investors. As the manager, the organization’s focus is to establish appropriate negotiation and management approaches for a potential merger of the corporations in terms of the benefits, decision-making strategies, organizational structure, and control processes.
Benefits of a Merger
The company is one of the leading wine distributors, importers, and retailers within Australia and across the world. The beverage corporation advocates for global artisanal and quality wine production, with an interest in obtaining well-crafted wines brewed by progressive and passionate winemakers (Romero-Gomez & Ferro, 2020). Besides, over the years, Singapore’s wine industry has developed as a trusted collaborator and partner to luxury hotels, hospitality groups, and Michelin-starred restaurants due to its exceptional services and wine expertise. The merger will significantly benefit our businesses since both companies enjoy evolving and vibrant e-commerce environments with shrewd wine lovers globally.
One of the benefits of this merger is tax advantages and reductions by the government. When this union becomes completed, various tax reductions and tax cuts will be enjoyed. For instance, Singapore’s acquisitions and mergers support corporations’ growth. The scheme encompasses stamp duty reductions and merger allowances acquired by corporations involved. Government regulations are essential for a business’s growth and development (Prayogi, 2022). Through tax exemptions and deductions, costs such as valuation fees, tax advisory or accounting expenses, and legal fees become catered for.
Besides, the corporation will enjoy new markets with more excellent product diversification opportunities. Despite the various existing rivals in the beverages and wine industry within Singapore and Australia, this merger can open opportunities for expansion and growth of the business. Besides, mergers save costs and time than new companies, leading to faster increases (Grandy & Rixon, 2018). Singaporeans are conventional wine lovers with a great taste for quality. Since both countries have a history of quality wine and beverage products, we aim to acquire more potential customers. Furthermore, Singapore enjoys new technology in the production of beverages and wine. Following the challenges faced by Tipsy Inc. Corporation due to rising consumer demand for accountability and traceability and climate change, new technology will play a major role. The trends in the wine industry are automation packaging, wine blockchain, and digital marketing platforms. The technologies will aid in developing new products as well as minimize waste and propel efficiencies in the wine industry.
Another advantage of this merger is acquiring additional skills, quality personnel, and business intelligence. An essential term in the acquisition or merging of companies in Singapore includes recalling the personnel and incorporating them in the merger. Both Australia and Singapore have skilled personnel in wine production (Romero-Gomez & Ferro, 2020). They can be very beneficial in promoting the organization’s activities to achieve its objectives. Besides, with the corporation’s expansion, several individuals within the surrounding communities may have employment opportunities.
Furthermore, the merger will enhance the influence and financial power of the corporation in the wine and beverage industry. It is a form of expansion in terms of products introduced and additional personnel and expertise incorporated—the firm deals in brands like Baileys, Rutherglen, and Lehmann Vinos. However, through this merger, more quality products can be introduced, ranging from wine, spirits, and other alcoholic drinks. Greater profits lead to market share expansion since other competitors become overpowered (Grandy & Rixon, 2018). Singapore heavily relies on the importation of wine and alcoholic products. The merger can identify the opportunity and expand its activities by introducing Australia’s famous still wine.
On the other hand, the costs of Tipsy Inc.’s expansion into Singapore will include direct fiscal losses, exchange-rate variations, and operating complexity. Merger and expansion laws incorporate income charges and deductions by corporations involved. Therefore, both Australia and Singapore have different taxation protocols which may hinder business. However, safe-harbor regulations come in handy to protect new or foreign organizations in Singapore (Grandy & Rixon, 2018). Other business risks that may affect the expansion of the corporation is the political factors. Singapore has an efficient policymaking and stable political structure with judicious corporate laws. Besides, it is a high-income nation that acts as a global and regional center for wine and beverage trade.
Management Decision-Making Approaches
The company aims to increase sales and market share of the wine industry in Singapore. It hopes to achieve this through a mutual merger with aligned marketing and leadership approaches. Since the merger will have more stakeholders to consider, there exists a need for distinct principles in decision-making. One of the approaches in decision-making will include ownership advantages. The proprietorship returns to uphold in choice-making are; product innovations, marketing systems, minimized production costs, and corporate culture (Wittwer & Anderson, 2020). Adopting these strategies will result in Tipsy Inc. Company’s growth in market power, trust, and legitimacy.
Another approach in decision-making will involve the political structure. Politics plays a vital role in the growth and development of a company. The merger will therefore consider the political system of Singapore and Australia in terms of business regulations. This approach assesses the coalitions and conflicts between the organization and government legislators (Li et al., 2018). The ability to influence the outcomes of corporations’ processes illustrates the prominence of politics. However, Singapore creates a good business environment for investment and expansion of businesses (Graves et al., 2021). Its business regulations are favorable and protect investors from corporate bullying and unhealthy rivalry. Therefore, beverage firms will have to review all the legal requirements of wines and spirits operations in the region before making any choices affecting the consumers.
Control Processes
For the merger to maximize profits and increase market shares, it has to develop unique control programs. The control operations include purchasing approaches, receiving process, storage, issuing strategies, preparation and control, service, sales, and accounting processes. The purchase approaches involve creating acquisition specifications, picking suppliers, determining correct trade quantities, and assessing the purchase processes. Since the companies deal in wine and beverages, the merger should identify the quality of wines. Still, wine constitutes the most prevalent wine traded in Singapore. However, Prosecco also experiences a potential trend as clients seek an affordable substitute for French Champagne. Besides, Singaporean alcohol customers enjoy the urge for new tastes and products (Wittwer & Anderson, 2020). The merger should therefore assess the most popular trends in purchasing beverage and wine products among its potential consumers.
Another control strategy is the receiving approach in the resulting merger corporation. It involves the quality and magnitude of inspection and clerical processes. Besides, the organization will develop measures such as the number of still wine imports from Australia. It will further need to address security and financial concerns involved in the trade of beverage products. Some of the fears experienced by major corporations include erroneous transaction audits and illegal business permits and contracts. Singapore has stringent laws on selling alcohol products to children (Wittwer & Anderson, 2020). The company will have to strengthen receiving approaches to sustain the business.
The corporation will establish groundwork and control strategies in its area of business. For the merger to succeed, the organization will minimize waste in raw products and ensure standard proportion in wine mixology and sake preparation. The manager will further prepare pre-costing expenditures and develop necessities for workers’ and products’ safety. Due to mergers, corporations may lose their original cultures and business objectives (Grandy & Rixon, 2018). However, this merger will have to set the foundation for work regarding the proportion of raw products and the quality needed.
Organizational Structure
The organization’s current structure will have to be reformed to cover the dynamic global market settings in the wine and beverage industry. Its corporate structure should address the merger’s worldwide leadership and expansion objectives in Australia and Singapore. The company’s strategies will be vested in how its managerial arrangement supports global growth. An industry’s organizational arrangement describes the coordination and strategy of corporate modules and how the elements function to satisfy the firm’s vision and mission (Li et al., 2018). The features of the merger’s organizational makeup will include the global hierarchy, functional corporate offices, and market divisions.
The essential feature of the corporation’s organizational arrangement should be its market configuration. The market makeup can be divided into two factors: geography and business. The business, suggests that both companies enjoy significant prominence in the wine industries in Australia and Singapore. The expansion will enable the organization to dominate its unique brands in the region. The brands it aims to major in are Baileys and Lehmann wines. According to geography, the merger will have operations divisions for Asia and Australia and expand to other international markets such as Europe and America. Each region will consider trade in prominent types of beverages in the area. For instance, in Australia, wine lovers majorly appreciate fine wine, such as Shiraz and Penfolds which dominate the market (Prayogi, 2022). On the other hand, the most traded vine in Singapore is still wine.
Besides, the merger must create a functional corporate authority to guide basic transaction operations. Developing these operational offices involves promoting the rapid execution of strategies, policies, and business control. Each of the divisions will be headed by the Chief Vice President proceeds. The union will divide its basic business structure into; communications, counseling department, finance, global development and research, and international operations and categories. The union will also need to have a global leadership hierarchy to ensure perfect coordination of international markets and branches worldwide. A hierarchy usually supports governance, control, and monitoring of industries at the corporate level (Prayogi, 2022). It will have the overseeing president supported by a global manager in various regions in Australia, Singapore, and the rest of the world.
Conclusion
The appropriate negotiation and management approaches when considering a potential merger of beverage and wine corporations will involve its benefits, decision-making strategies, organization structure, and control processes. The basal company deals in wine products in Australia and constitutes one of the leading distributors. However, through the merger, the firm will enjoy tax reductions, new markets, additional skilled personnel, and greater financial power in Singapore. However, to ensure continuity and growth the corporation will develop better decision-making approaches such as rational thinking and political approach. It will also employ control strategies such as purchasing and receiving approaches and management mechanisms. The resulting organizational structure will also incorporate market configuration, financial corporates, and multinational hierarchy.
References
Chiu, S. W., Ho, K. C., & Lui, T. L. (2019). City-states in the global economy: Industrial restructuring in Hong Kong and Singapore. Routledge.
Gleason, N. W. (2018). Singapore’s higher education systems in the era of the fourth industrial revolution: Preparing lifelong learners. In N. Gleason (Ed.) Higher education in the era of the fourth industrial revolution (pp. 145-169). Palgrave Macmillan, Singapore.
Grandy, G., & Rixon, D. (2018). Who really benefits? Neighborhood credit union’s merger decision. The CASE Journal, 14(6), 736-752.
Graves, J., Garbett, S., Zhou, Z., Schildcrout, J., & Peterson, J. (2021). Comparison of decision modeling approaches for health technology and policy evaluation. Medical Decision Making, 41(4), 453-464.
Hwang, G. J. (2020). The political economy of welfare in Singapore: Explaining continuity and change. Policy Studies, 41(1), 63-79.
Li, Y., Redding, K., & Xie, E. (2018). Organizational characteristics of cross-border mergers and acquisitions. Journal of Organizational Change Management, 34(1), 223-251.
Prayogi, J. (2022). The effect of resource complementarity on a company’s performance post-merger and acquisition in the Southeast Asia region: The moderating role of the merger and acquisition experience. Gadjah Mada International Journal of Business, 24(2), 223.
Romero-Gómez, E., & Ferro, G. (2020). Determining wine relevant markets. International Journal of Wine Business Research, 32(4), 523-536.
Toh, M. H. (2022). Dr Winsemius and Singapore’s Economic Development. In E. Quah, L. Nursultan, and Z. Lee (Eds.) Albert Winsemius and Singapore: Here it is going to happen (pp. 636-638).
Wittwer, G., & Anderson, K. (2020). A model of global beverage markets. Journal of Wine Economics, 15(3), 330-354.
Yildirim-Öktem, Ö., & Selekler-Göksen, N. (2018). Internationalization of family business groups: Content analysis of the literature and a synthesis model. European Journal of Family Business, 8(1).
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