Global Business Strategies MGT/448
August 10, 2011
Country Risk and Strategic Planning Analysis
Sydney Cove produces the finest Aussie wine on the market. This paper will convey the various risks associated with implanting a forging business venture and identity key components of the organization’s business plan. It is imperative in this business to identify potential harm, define what Sydney Cove stands for and outline potential advantages. Political, Legal, and Regulatory Risks
Sydney Cove Winery is one of the finest wine distributors in the Australia and New Zealand region. Sydney Cove Winery is looking to expand and share their fine wine with the rest of the world, but global expansion is not easy. Before Sydney Cove Winery can begin to extend internationally they must consider the political, legal, and regulatory risks that their business will face while distributing their product. Because Sydney Cove Winery is an alcoholic beverage company they have to consider the political aspect of shipping alcohol to different countries. Politics play a major part in initiating a business. Sydney Cove Winery will have to conduct the necessary research regarding the political and legal systems for the countries the company desires to distribute. Every region, country, and state has different regulations that must be followed. When serving and selling alcohol there are various laws that merchants must abide by. The risk that Sydney Cove Winery is facing is the inability to sell and its product to various countries, otherwise suffocating maximum expansion. Furthermore, the company must obtain the appropriate licenses and certificates to distribute and manufacture alcohol in its home countries of Australia and New Zealand. For instance,“the production of fortified wine requires a permit from the Excise Business Line of the Australian Taxation Office” (Drug and Alcohol Servers Australia, 2009, p. 1). “Permits are only granted for commercial purposes” (Drug and Alcohol Servers Australia, 2009, p. 1). “A person who sells liquor without being licensed to do so under the Liquor Licensing Act is guilty of an offence and is liable to a penalty of $20 000” (Drug and Alcohol Servers Australia, 2009, p. 1). Should Sydney Cove Winery fall short in its obligations to these regulations, it will monetarily penalize the company and potentially lead to closure. Competitive Risk and Taxation
Sydney Cove Winery has to study the exchange and repatriation of funds risks for every country that they plan on doing business with. When pricing their product for sale to other countries, Sydney Cove Winery must consider the exchange rate of other countries’ currency. Sydney Cove Winery does not want to under-price their goods nor do they want to set prices so high that their consumers are not willing to buy. Because wine in Australia is considered a luxury good the company must remain competitive in the market they enter. They must also conduct a proper risk assessment to be successful such as the evaluation of physical, humanity, and monetary risks. Another situation that Sydney Cove will have to deal with is taxation and double taxation risk. Being taxed is a part of being in business and like everything else; each country has its own tax laws. For example, the company may experience a tax from Australia and Newland to export their good and a tax from the country that will import the good. Marketing Risk and Distribution Risk
Sydney Cove Winery is in the beginning stages on attempting to establish themselves in Australia, which is the fourth largest exporter of wine in the world. Wine is a profitable and reliable choice to produce out of Australia. Wine produces $5.5 billion per annum to the nation’s economy. The primary locations that Sydney cove will use for the vineyards will be Western and Southern Australia. The Coonawarra terra rossa soils have...