M and S Textile Australia International Business Plan
A study to choose a viable country for setting up of this manufacturing plant was done among the four Asian country; Bangladesh, Indonesia, Thailand and Philippines. The criteria used in choosing a country was based on three factors; demographic, economic and likely competition to be encountered. Upon analysis of the three factors in the four countries, Indonesia was found to be the most viable and suitable country for the M&S Textiles Australia to set its manufacturing operating plant. The results of the study are used to evaluate the advantages, disadvantages, entry market strategies for operating a business plan in Indonesia. Conclusions and recommendations were drawn based on the study’s findings. The M&S Textiles Australia have been engaging in manufacturing supplying this product both in Australia and globally employing many people including the Aboriginal artists.
However, of late the industry has been facing stiff competition from cheaper imported products from China, India, and Singapore thus seeking to establish a manufacturing plant one of the following Asian countries; Indonesia, Philippines, Bangladesh, and Thailand. This report will explore and choose the best among the above-listed countries for M& S Textiles Australia to establish its new manufacturing plant. Reasons behind the choice of that country, strengths, and weakness of operating there as well as findings, discussion, and a concise conclusion will also be covered by this report. International Business Bangladesh, Indonesia, Thailand, and the Philippines are countries in Asian countries which represent potential environments for the establishment of M&S Textiles Australia foreign manufacturing plant. Competition Competition in today’s business world is a major factor determining its success or failure.
Stiff competition reduces the sales volume of the company or business resulting in business failures. According to Bangladesh Garment Manufacturing Export Association, Bangladesh net worth textiles exports was $28. 5 billion USD. According to Indonesia Textile Association report 2017, Indonesia’s net textile exports lies at $12. 6 billion USD and Indonesia about Based on the above criteria for selecting the ideal country for M& S to set up a new manufacturing plant in Indonesia. It has the largest population, which will provide a ready market for the products manufactured. Its large population will also offer a varied labor required during manufacturing and supplying of the M&S Textile products. Another reason is the reduced level of competition. Based on the exports and imports figures above, it clearly shows that there is a huge demand for the supply of textile products in Indonesia while its supply is limited.
This will help Australia by avoiding serious problems like corruption, bureaucracy, and corruption encountered by other countries trying to thrive in Indonesia foreign market. This engagement will help M&S Company enjoy easier registration of the company which will save time through the issuance of the business license. The treatment of countries venturing into a foreign market without invitation by the host companies to do so is completely different than the company invited to do so because it enjoys a warm welcome. • The favorable economic policies-an agreement was signed between the Australia government and Indonesia government for the avoidance of the Double Taxation to prevent evasion of taxes on income, moreover, it will enjoy reduced incentives to run out business effectively in Indonesia territory.
• Economic framework-there is that growing desire by the Indonesia government to work closely with Australia, the reason of their engagement is meant to build trust between the two nations, and this will also expand their market through open trade of commodities hence posing a very great opportunity for M&S Company to increase the sales of textiles fabrics in Indonesia. M&S Company in Australia will generate profit from the increased sales of textiles fabrics in Indonesia. Disadvantages of operating in Indonesia • The high corporate tax-any company operating in Indonesia is liable to pay 25%of the income sourced from the country hence this will require M&S company to pay a quarter of its income as tax. • The high cost of operation-M&S Company will incur additional cost in establishing a business in Indonesia, this involves transportation of raw materials, the cost incurred in sales and advertising cost.
The cost of operation will be much lower if M&S Company chooses to operate in a company with the availability of raw materials. • Fluctuating currency –Indonesia is faced with a problem of currency fluctuations will reduce export competitiveness of M&S Company in Indonesia causing deficit in trade reducing the profit margin. Licensing will enable the company to obtain permits to run manufacturing plant activities in the country. • Joint ventures- M&S Company can alternatively identify a firm in Indonesia with similar interest and work together in as partners. This will spread the risks and enhance in-depth combinations of foreign and local knowledge. This will in curb the challenges of technical skills. • Contract the manufacturer- this is also another entry mode.
The government of Indonesia is currently undertaking policy, social, political and legal reforms so as to create an enabling business environment. This is shown by its commitment to lower inflation, intervene the government budget deficit and debts as well as ensuring a steady and stable economic growth. According to the Indonesia Investment Authority (BKPM), the government in 2017 amended the old regulations which required the acquisition of principle license by foreign companies prior to applying for business permits. Lack of stiff competition, surplus demand over supply, quality and quantity standards problems in Indonesia market presents a business gap and M& S Textiles Australia investing there will translate into many positive impacts. The sales volume will increase thus realizing the profits which in turn will surplus the cost of production.
v. The company should consider partnering or signing agreements with other private firms or government in Indonesia, this will reduce the cost of operation and risk in business. The company should make sure there is technical skill training for their local staff as well foreign experienced managers. vi. Language barriers should be considered for effective communications to be achieved. Mason, OH: South-Western Cengage Learning. Khan, A. and Ullah, M. Export Scenario Between Bangladesh and China: Opportunities of Bangladesh in RMG Sector. European Scientific Journal, 13(28). Modified Ovitrap to Control Aedes Sp Population in Central Java, Indonesia. Journal Of Communicable Diseases, 49(3), pp. Omar, M. and Porter, M. Reducing risk in foreign market entry strategies: standardization versus modification. Pluralism and Political Conflict in Indonesia.
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