Business Expansion To India Essay

5117 words - 20 pages

IntroductionBallarat wine is a big conglomerate company in Victoria, Australia.From our vineyards in Hunter Valley in New South Wales and Ballarat in Victoria the company produces a wide selection of table wine, sparkling and fortified wine. Our wineries are located in our vineyards. We continue to invest in Research and Development located in Ballarat.The company has been growing since its foundation 24 years ago. We will celebrate our silver anniversary next year that is why we will expand our market base to India. The company has 3,000 employees worldwide. We will maintain our reputation as a "family-friendly company".The company is the second biggest producer of wine in the country with an annual production of 7 million bottles of wine for domestic consumption. We have subsidiaries in almost every country in the world namely: North America, Canada, Europe, Japan, South Korea, China, and the South-east Asia. We choose India as our next priority. We will set-up a wholly owned subsidiary by acquiring an existing company in Maharashtra, State of India. The location of the vineyards is near Kukadi Dam project, one of the largest grids made for irrigation purposes. It is situated in Pune Nashik highway.India is one of the fastest growing wine consumers in Asia. Current study shows (Ahmed, 2004) that wine consumption is on the rise at a rate of 20 % per annum.Right now, growth is impeded by central customs duties that range from 140 to 250 percent on the landed costs of each case of wine imported, plus state taxes and label registration fees. These are the impediments to the free flow of products. By placing tariffs on imported goods, government can increase the cost of exporting and licensing (Hill, 2001). These are the reasons why we choose to establish a wholly owned subsidiary apart from the economic factors.In addition, 80% of wines sold in India are domestically produced because Indians are overwhelmingly drinking their own, home-grown vintages, Ahmed (2004).Furthermore, the Australian dollar is very strong. As of posting time, the exchange rate is A$1= Rs33 but this was higher than its value last year of A$1=Rs28, from (2005). This means that exporting to India is not as good as last year. Our wine would be more expensive than last year.Also, the theory of strategic behaviour of F.T. Knickerbocker will explain why we became interested in the Indian wine industry. The entrant of overseas wine companies from U.S and Europe persuaded us to penetrate the market. 'Even if we only reach the 1% of the wealthiest Indian population we are talking of 10 million people' from the reports of Two Oceans News Service.The company has the latest technology in wine-making. We have another company in Australia that do our packing and bottling as well as logistics. In India we plan to license our packaging and bottling to a local Indian company. If the project is successful we will then buy these companies as part of our strategic plan.Location,...

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