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Australia Essay Research Paper AustraliaExecutive SummaryThere are

Australia Essay, Research Paper


Australia


Executive Summary


There are many components to a successful organization, among them is a steady


flow of innovative products that are consistently produced to high standards,


available to customers when and where they are needed, and backed with diligent


service and support. We will demonstrate the viability of capturing a


significant market share of sunscreen products Down Under. We will inform you


of our unique market entrance plans, our unique product and its marketable


attributes. We will layout our target markets and their demographic information,


and we will conclude with the profitability remarks necessary to gain your


confidence and investment.


Sun Cosmetics, Inc., the parent company, was founded in 1955 and has been a


publicly held company since 1973. It was incorporated in the State of


Massachusetts. Any U.S. legal conflicts fall under the jurisdiction of the


Massachusetts state court system. It’s annual North American sales of sunscreen


products are in excess of $20 billion. Sun Cosmetics created Oceana’s


development team for the express purpose of penetrating Australia’s regional


markets. Its members were selected based on their cultural appreciation and


adaptability, their research expertise, and their discerning abilities with both


primary and secondary data.


Cheri Brown, Vice President of International Operations


Robert Roy, Director of International Sales & Marketing


Helen Quinn, Director of Cultural Adaptation


Becky Barth, Director of Research & Development


Sun Cosmetics, Inc. will send two expatriate executives to F.H. Faulding &


Company Limited to work in commensurate positions and pay grades. The training


and marketing guidance is invaluable from both perspectives.


Product introduction and formulation


Due to the high incident of skin cancer Down Under, primarily originating in


young children, we have developed an additive that enables parents and children


to see that this sunscreen has in fact been applied to all areas of exposed skin.


This additive is a coloring agent that fades approximately three minutes after


application. Taking advantage of the Sydney 2000 Olympic Summer Games approach,


we have incorporated the additive with an olympic theme: Oceana


Gold, Silver & Bronze. The coloring agents will actually be gold,


silver or bronze according to the label of the particular sunscreen purchased.


In addition to these choices, each color would be available in several degrees


of sun protection factor (SPF): SPF4, SPF8, SPF15 & SPF30 (SPF4 being the least


and SPF30 being almost total sunblock). Oceana is a non-greasy water resistant


sunscreen with aloe vera gel, vitamin E and is paba free.


Incidence of skin cancer


The high incidence of skin cancer in Australia is the reason for our choice of


this product. Skin cancer has been on the rise due to environmental issues


caused by humankind. Australia is known for its sunshine and carefree good life


attitude; but Australians are facing a severe problem with exposure to the sun.


Australia is the perfect market for sunscreen because two out of every three


Australians will develop skin cancer at some point in their life. One half of


Australians under the age of fourteen already have some damage to their skin.


Australians have the highest rate of skin cancer in the world, with are


approximately 140 thousand new cases per year. See Appendix A for additional


information.


Cultural aspects surrounding market entrance to the Oceanic region


Australia


The seven states of the Australian country/continent are very similar to those


of the United States. That is to say, all of these states are English speaking,


with a high literacy rate, a well-developed infrastructure, a significant volume


of tourism and laws that promote interstate commerce. These elements are what


make this market an easy entrance for our product.


Tahiti


This territory is part of the French Polynesian Overseas territory. This


territory falls under the French Republic guidelines of government. Some


aspects of this territory have autonomy. Tahiti’s principle trade imports come


from Australia, France, Germany, Japan and New Zealand. They export mainly to


France, New Caledonia and (limited) United States. The facts that Tahiti is


known for tourism and has principle importing and exporting, make this market


accessible for our product. It’s location geographically, climate and


infrastructure, make for easy distribution and market entry. Its principle


language is French, but with a cultural adaptation to English products, we may


utilize standardized production.


New Caledonia


This territory is also part of the French Overseas Territory, which means that


it also falls under the French rule of government court and political systems.


This territory is in the European Parliament. It’s primary imports come from


Australia, France, Germany, Japan and the United States. Its exports are mainly


to France, Germany, Japan and the United States. The same basic infrastructure,


climate and tourism as Tahiti makes this market accessible and allows for


standardized product introduction.


Fiji


Fiji is an established country. It’s form of government is much like the


English Parliament. It’s imports also come from Australia, Germany, Japan and


New Zealand. It exports mainly to Australia, Germany, Japan and New Zealand.


Once again established infrastructure and trade routes within the region,


tourism and the climate, make this country’s accessibility applicable for our


product. Primarily an English speaking island, Fiji also allows Oceana to be a


standardized product.


All of these islands and countries, including Australia and New Zealand, have


the same principle religions. These are Catholic, Protestant, Muslim, and few


native island beliefs.


Intellectual property laws in Australia


A joint venture has been established so our license is already in place. A


patent is pending for the three gold, silver, and bronze coloring agents. This


patent will be exclusive for a period of five years before renewal. Our


trademark name that for our product is Oceana Gold, Oceana Silver and Oceana


Bronze.


Trade Relations APEC and ANZCERTA


ANZCERTA is trade agreement between Australia and New Zealand.


(Australia New Zealand Closer Economic Relations Trade Agreement)


ANZCERTA has been around since 1983, when it replaced their NAFTA, and has


undergone significant changes in industrial and agricultural trade. Free trade


between these countries has enabled rapid development in world exporting. At


this time the process of improving air transportation and expanding trade laws


is underway. The goal of ANZCERTA is to become a single trade entity


representing a unified economic front. In the next ten years they hope to


remain committed to the same economic goals and effectively compete with the


Asian Pacific region through their alliances to the commonly known APEC (Asian


Pacific Economic Cooperation).


APEC is the formation of trade alliances among 18 countries in the south pacific


region of the world. The leaders of these countries meet regularly to discuss


ways of improving liberal trade and creating a more open environment. Australia


has been active with this alliance since 1989. One of the benefits of


Australia’s involvement is that the economies of the different countries range


from underdeveloped to industrialized countries. Our product will be marketed


in a diversified economic range, enabling us to reach more than one specific


market. Skin cancer and environmental issues are discussed at these meetings


and concern all leaders of the different governments. APEC hopes to reach free


trade as already established by GATT.


Political risk


There are no governmental policies or parties who could politically overrun the


government, therefore, expropriation is not a major consideration. The concern


for nationalism is also unwarranted because Australians have hopes of attaining


the “American good life.” Our image as a nation demonstrates a positive public


relation between two countries.


Joint Venture (unincorporated)


A foreign company deciding to do business in Australia has a selection of


business structures available. The most common forms of organizations are


representative offices, branches of parent companies’ subsidiaries, sole trades,


partnerships and joint ventures. Joint ventures in Australia are a very common


business practice, with some differences in structure from that of the United


States but they are similar enough for American investors to comprehend.. An


unincorporated joint venture may be described as “contractual”, meaning that a


separate entity is not formed. Shares are not allocated for payment of any


kind; and they end up resembling a partnership. Incorporated joint ventures are


companies that have shareholders with no rights to the company’s assets; which


are not exposed to sharing losses, but which do participate in distributed


dividends. Legal restrictions are limited and private companies operate


basically uninterrupted as long as established ethical business codes are


followed. Any company that registers in Australia falls under their corporation


law jurisdiction. Hybrid forms of joint ventures can be created to meet the


demands of each participant involved. After having carefully reviewed our


options, we chose the unincorporated joint venture with a company whose name and


reputations are established.


Our Partner


Australians are very demanding regarding timely delivery, product warranties


along with consistent advertising and promotions. They are proven to be very


quality conscious and discerning. The decision to pursue a joint venture was to


limit initial investment and operating expenses, limit liability/lower risk and


ease into the market via a company well aware of the culture and infrastructure.


Our partner company is F.H. Faulding & Company Limited, positioned in Parkside,


South Australia, Australia. They possess the capacity to meet our company


objectives (production and distribution) and are aligned with our corporate


ideals and values. F.H. Faulding has an 11 year financial history of


established success in all facets of production management, distribution and


customer trust. Combined with their current assets, desire for growth and


development, they are very attractive to Sun Cosmetics, Inc. as an


unincorporated joint venture partner for Oceana. Their location is significant,


and of strategic importance to the actual distribution of our product.


Distribution


Our joint venture partner will enable us to use their established sources of


distribution. A distributor acts as an independent agent who purchases products


from an agent and delivers them to wholesalers and/or retailers. It is common


practice for Australian distributors to ask for exclusive geographic rights due


to the size of the market. Australian distribution and sales channels are


comparable to other industrialized countries. Channels of distribution are


direct sales, use of agents, and direct investment. Their duties include good


faith representation and the maintenance of proper accounts, We will be


utilizing all methods of distribution as available and established through our


joint venture partner. Through our direct and distributor sales we expect to


attain the mix that will achieve Oceana the market share it deserves and meets


the customer needs Down Under. See Appendix B for additional information.


There are many major ports located throughout the continent. Transporting to


these active ports is very accessible through several shipping means (including


air transportation, where applicable). The size and population locations are


very unevenly distributed. Key population areas tend to center around the outer


perimeter of the country where these major cities’ airports and seaports are


located.


The following is an overview of the transportation and communications systems:


Established railway systems 40,478 km


The highways of the country total 873,872 km


The telephone communication systems are very extensive both internationally and


domestically. Radio broadcast frequencies include 258 am and 67 fm. There are


134 broadcast stations. (National Trade Databank).


Raw materials


All raw materials will be purchased and supplied locally through ICI Australia


Pty Limited’s botany plant. ICI Australia is a large manufacturing facility


that produces 50 organic and non-organic chemicals located in Castle Hill, South


Australia. Our suncreen’s ingredients are, or can be, produced by this facility


for easy “just-in-time” inventory delivery. Our sunscreen will be safe for the


environment and everyone that uses it. The main ingredients in our products are


octylmethooxycinnamate, oxybenzone, octylsalidylate, titanium dioxide,


octocrylene and the secret ingredients necessary for our gold, silver a

nd bronze


coloring agents.


Target Market Demographics


Since such a high incident rate of skin cancer and skin damage exists in this


region, there is an ever growing need (market) for sunscreen products. Based on


our marketing research we have focused on three specific markets: tourism,


teenagers/young adults and parents with young children. These target markets


will allow for market penetration and diffusion at a quick rate since they are


the groups that have the highest need for our product and the greatest


purchasing power.


Geographically, our focus is on the Australian states, New Zealand, Tahiti, New


Caledonia and Fiji. The following demographics will highlight the targeted


areas beginning with the Australian states:


+ NEW SOUTH WALES — SYDNEY & CANBERRA


- Tourism: 1,237,900 per year or seasonally and is expected to increase


by 60% for the 2000 summer Olympic games.


- Teenagers/Young Adults: 26,000.


- Parents and Children: 6,066,000 with a population growth rate of


about .07% per year.


+ VICTORIA — MELBOURNE


- Tourism: 728,200 per year or seasonally.


- Overall population: 2,676,000.


+ NORTHERN TERRITORY- DARWIN & AYERS ROCK


- Tourism: 146,650 per year or seasonally.


- Overall Population: 892,150.


+ SOUTH AUSTRALIA — ADELAIDE


- Tourism: 182,050 per year or seasonally.


- Overall Population: 1,427,460.


+ WESTERN AUSTRALIA — PERTH


- Tourism: 364,100 per year or seasonally.


- Overall Population: 1,695,113.


+ QUEENSLAND — BRISBANE, CAIRNS & GREAT BARRIER REEF REGION


- Tourism: 1,092,300 per year or seasonally.


- Overall Population: 3,033,361.


+ TASMANIA — HOBART


- Tourism: 36,500 per year or seasonally.


- Overall Population: 2,027,200.


NOTE: Overall population of Australia is approximately 18,000,000 with a growth


rate of 1.1% per year.


The following demographics are for the countries that border Australia in the


Oceanic Region:


+ NEW ZEALAND — NORTH ISLAND — Auckland


- Tourism: 546,000 per year or seasonally.


- Overall Population: 1,540,000.


+ NEW ZEALAND — SOUTH ISLAND — Christchurch & Queensland


- Tourism: 756,420 per year or seasonally.


- Overall Population: 1,630,000.


+ TAHITI


- Tourism: 150,000 per year or seasonally.


- Overall Population: 213,000.


+ NEW CALEDONIA


- Tourism: 81,000 per year or seasonally.


- Overall Population: 179,000.


+ FIJI


- Tourism: 288,000 per year or seasonally.


- Overall Population: 588,068.


NOTE: Tahiti and New Caledonia are overseas territories of France. Although


these are target markets, secondary data for these areas are limited. Primary


data will be collected after the initial market distribution, subsequent to the


roll out in this area.


Direct Marketing (advertising)


Australia’s direct marketing industry is at the early stages of development when


compared to the United States but due to economic levels of income and the


infrastructure of the country this market is highly accessible and affective.


Australian citizens long to be “Americanized” which in terms of television


advertising and technological advancement, is a viable means that puts this form


of market at our fingertips. The adaptation of pay television also allows for


the consumer to shop at their convenience.


Direct Marketing (promotions)


Trade centers and shows are important, along with mass media ideas ranging from


newspapers to television advertisements. Our foremost research enables us to


believe that the Olympics in the year 2000 is the ultimate marketing entry gain.


By utilizing this direct market approach there are several promotional and


advertising methods, not the least of which, that F.H. Faulding is an Olympic


sponsor for the Sydney 2000 games. If we choose an Olympic team or spokesperson,


we can market/advertise through actual team/athlete T-shirts, hats, etc. This


would yield global advertising and public relations that could be a valuable


option as the games approach. Along with our product name and unique features,


we have contracted with Ken Done (a world renowned painter, based in Sydney) to


design our packaging and create other promotional materials as well (e.g., beach


bags, towels, etc.).


Market plan range/rollout


Sun Cosmetics anticipates completion of all contracts and legalities by mid-1997


and will then begin product distribution in late 1997, by introducing our


product line in Sydney, the highest populated area and one of the largest


tourist stops. After advertising and promotion have gained the attention and


recognition of the home market, we will get directly involved with the Olympic


sponsorship. Promotional items such as free samples, will be distributed in


advance, to gain brand recognition. In 1998 we plan to move into Melbourne,


Brisbaine, the Great Barrier Reef region and New Zealand’s South Island.


Towards the end of 1988, we will gear up for our entrance into Perth, New


Zealand’s North Island and Tasmania in 1999. The final oceanic regional move


will be in the year 2000 when we will complete our market rollout by entering


Fiji, New Caledonia and Tahiti. (This will allow us the time to conduct the


necessary primary research on these outlying countries/territories whose


secondary data was limited.) During the summer of the year 2000, we will


initiate our global presentation to expand our market to the other communities


of the world during the Olympic games being held in Sydney, New South Wales,


Australia, 2000.


Financial portrayal


Partner percentage expense (25%)* 2,000,000


Distribution expense 500,000


Expatriate compensation 100,000


Trademark fees 8,000


Patent fees 5,000


Packaging expense (Ken Done) 20,000


Give-away expense 25,000


Advertising expense 200,000


Olympic giveaways/sponsorship 250,000


Tax expense 35,000


Raw material expense 60,000 Total Operating Expenses


3,203,000


* Projections are based on $8,000,000 in 1997 sales.


(Just-in-time inventory system to be utilized for raw materials, with the


distributors warehousing the final product in the particular city of


import/distribution.)


Market share projections: 1997 5% 2,000,000


1998 15% 1,500,000


1999 5% 1,000,000


2000 5 500,000


1997 10% 5,000,000


1998 10% 4,500,000


1999 10% 3,500,000


2000 10% 2,500,000


1997 15% 8,000,000


1998 15% 7,000,000


1999 15% 6,500,000


2000 15% 5,500,000


15% is a conservative estimate of the market share attainable by 1999 for this


product, in this plan. The current market demand is growing at an accelerated


pace, with our established competition holding market shares in excess of 20%.


Due to the nature of Australia’s quality demands and the incident of skin cancer,


our product will capture a significant market share quickly. Retail selling


prices: $ 8.50 (U.S.) in urban areas, and $10.50 (U.S.) in rural areas based on


a 90 ml container.


Alternative entrance/contingency


Overall success of our plan of entrance into this region may rest solely on our


ability to implement a worthy alternate or contingency plan should we encounter


any major setbacks. Based on corporate profiles and market research, we have


determined that the best contingency plan is to form a joint venture with


Hoechst Australia Ltd., located in Melbourne, Victoria, Australia, and utilize


their established production and distribution system. An alternative supplier


of raw materials has also been coordinated, should the need arise. This plan is


designed to be a substitute source or can be used to supplement the primary


source if sales increase faster than projected or we encounter any other


problems.


Conclusion


As an overview, statistics have shown that the Oceanic Region has the highest


amount of skin cancer and sun related damage in the world. Awareness and the


magnitude of this problem are apparent to residents and tourists, thus creating


a high demand for our sunscreen products. Our target markets are tourissts,


teenagers/young adults and parents with young children which makeup the majority


of the people directly effected by the sun. Presently, entrance into this


market is low risk. This is primarily due to the fact that language, cultural


and trade barriers do not exist. Also, the market is not saturated and our


initial expense and risk is limited due to our joint venture. We can gain a


high percentage of market share throughout this region by 1999 and begin our


global debut at the summer Olympic games at Sydney in the year 2000.


Appendix A


Here are some facts about skin cancer itself there are three basic types of this


disease. Basal cell carcinoma, squamous cell carcinoma are two types of cancer


that can cause disfiguring to the body but are not fatal. The third is


malignant melanoma which behaves like an internal cancer. It starts as a mole


and can spread to other parts of the body. The sun’s ultraviolet violet rays


are the most significant between 11 AM and 3 PM. This is the time that the


majority of children and outside labor workers are in the sun. In Australia’s


summer months’, exposure is so serious that safe sun time before damaged is


caused in Darwin is only 9 minutes. In Brisbane 11 minutes, Perth 10, Sydney


and Adelaide about 12 minutes. To demonstrate the concern for skin protection,


researchers have developed a T-shirt that has an ultraviolet sensitive paint on


the front of it which when exposed to the sun its picture will change color


revealing the radiation that the human eye cannot detect. It is said that by


the year 2050, society will not be able to go in the sun if humankind does not


recognize this issue.


Australia has developed a “slip slop slap” motto to promote skin protection.


Slip on a shirt, slop on sunscreen and slap on a hat.


Appendix B


There are several resources that we can use to discover our possible available


market for distribution. The services are located by contacting the local U.S.


Dept. of Commerce distribution. 1) Agent distributor search (AD) The US


commercial service will locate and screen potential Australian agents and


representatives for US companies. CS Australia will send information to


possible companies that might have an interest in our product. If the company


responds, the CS will make the opportunity for direct contact available. 2) CRS


Gold Key Service This idea makes it beneficial for US company representatives to


see the various services available. Such as market orientation meetings,


research, distributor searches and screening. They are an affective service


that truly widens the firm’s eyes in a particular country. 3) Customized Market


Analysis (CMA) This assessment provides information on the product’s potential


laws. This is very important to us as a joint venturer, because we need current


data and monetary trend information which oversees research. 4) CS — Catalog


Exhibitions CS Australia actively participates in trade shows, and a variety of


other trade events that provide actual catalogs or products for direct display.


5) Introduction to Australia


This new entry program is affective and inexpensive to test the Australian


market. Specific American firms in that industry contact Australian fin-ns. A


selected target industrial market is chosen through local agents and


distributors. Interested participants then actually follow up directly.


The CS also actively participates in trade missions, trade events, and the trade


opportunity program (TOPS). This service provides trade leads that manufactures


may request for representation, investment, licensing and finally joint ventures.


The last two services offered by CS are market research reporting and commercial


USA. The market research and reporting continually tracks major industrial


investments, projects, and policy developments.


Commercial news UA provides on new U.S. products available for the export market.


This distribution information goes to about 1,000 potential agents and


distributors in Australia. This service also identifies possible joint venture


participants. This distributive information goes to Australia. All of these


services are imperative to regarding possible market distribution resources.


Resources:


Austrade Australian Trade Commission 630 Fifth Avenue, Suite 420 New York, NY


10111 Nicholas Doumani (212)408-8473


Bureau of Tourism Research


Cambridge Encyclopedia of Australia Press Syndicate University of Cambridge 1994


CD ROM — U.S. DOC, International Trade Administration March, 1996


CD ROM — National Trade Data Bank February, 1996


Europa World Year Book 1995 London: Europa Publications Limited Volumes 1 & 2,


Pages 1236-1237 and 1246-1247.


Internet: HTTP://WWW.TELSTR.COM.AU/META/AUSTRALIA.HTML

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