Wine Industry Analysis of China

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China, India & Wine| May 19
2011
|
Assessing the global environment and developing solutions for Australian international managers: a WebQuest. (5461 words)| Sheena Bobeechun Troy Credlin Sarah Duff Audrey James.|

Table of Contents
Executive Summary3
PESTL Analysis4
Political & Legal Factors (Author - Sarah Duff)4
Economic Factors (Author - Sheena Bobeechun)5
Social & Cultural Factors (Author - Audrey James)7
Technological Factors (Author - Troy Credlin)8
Managing Ethics (Author - Audrey James)9
Strategy & Entry Mode (Author - Sheena Bobeechun) 11
Global Human Resource Management13
Linking with Strategy (Author - Sarah Duff pp. 13-15)13
Staffing Policies14
Training & Development14
Performance measurements15
Engagement (Author - Troy Credlin pp. 16 -18)16
Compensation18
Labour Relations issues18
References20
SEE References23

Executive Summary

The Australian Government is in the process of developing strategies to encourage West Australian wine makers to export their wine to either China or India. This report seeks to examine the global business environment and provide a deeper understanding of its risks and their implications for the international wine managers. Throughout this report discussions will lead to conclusions about management responses to firm level factors such as formulation strategy, developing alliances, creating a firm architecture and managing human resources when operating internationally. Key theoretical concepts and frameworks will also be included as a guide for understanding our recommendations. Our key recommendations have been organised into four main aspects. These are; the risk appetite, managing ethics, strategy and entry mode, and human resource management policies. Through our risk appetite analysis we found China to be our recommended country of choice when exporting wines from Australia. This conclusion came as China held predominantly less political and legal risk factors and stronger trade agreements, a higher demand for wine and less risky taxing systems, a more socially and culturally accepting culture towards wine, and more appropriate infrastructure and manufacturing capacities when compared with India. Our analysis of ethics management has also provided some strong recommendations to international managers to keep in mind. These include abiding to the guidelines for correct sales and distribution of wine due to legal age factors, including pollution policies in managerial practices, and developing a Corporate Social Responsibility program. Analysis of risk appetite and ethics managements has allowed us to conclude a recommended strategy option of a differentiation business-level strategy and a multi-domestic global strategy for the Australian wine makers and an entry option of direct exporting. Based on the previous recommendations human resource management policies have also been formulated. These include linking local and home country strategies to form a competitive advantage through staffing policies, training, development and appraisal methods, engaging policies, and labour relations issues.

PESTL Analysis
Political & Legal Factors
China
China is currently ruled by the Chinese Communist party and operates under a fundamentally socialist system (CIA 2011). While its government is relatively stable it is entrenched with a degree of corruption, creating political risk implications and political violence unrest (EDC 2011). Its government policies, rules, and regulations are often unclear and the legal systems are also fairly weak and frequently contain loopholes (EDC 2011). China’s recent accession to the World Trade Organisation (WTO) is one of many trade agreement policies it shares with Australia. Becoming a member of the WTO provides an inclusion of international business laws leading to improved trade and investment (McFarlin & Sweeney 2011). The Australian...
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