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International Business Group Assignment
International Business Group Assignment
INTERNATIONAL BUSINESS
GROUP PROJECT
4. Why did you choose this country? Discuss the Advantages of your selected
country and how you intend to benefit from them. [25 marks]
5. What are the disadvantages (challenges) of the selected country and how
you intend to deal with them? [25 marks]
6. Risks associated with the country and how to deal with them. [20 marks]
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TABLE OF CONTENTS
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1.0 Background of the chosen country
Given that it is completely encircled by the ocean, Australia is a unique nation. Australia
is big enough to be regarded as a separate continent. Australia is the world's largest island and a
constitutional monarchy, meaning that the Queen of England remains its ultimate authority.
Australia is a country and continent located in the southern hemisphere, with a total land area of
7.7 million square kilometers and a population of approximately 25 million people (Australian
Bureau of Statistics, 2021). The capital city of Australia is Canberra, while the largest city is
Sydney. Australia is known for its unique and diverse wildlife, such as kangaroos, koalas, and
wallabies, as well as its stunning natural landscapes, such as the Great Barrier Reef and Uluru
(also known as Ayers Rock).
Australia has a diverse economy, with a strong focus on services, mining, and agriculture.
The country has abundant natural resources, including coal, iron ore, gold, and natural gas, and
has one of the world's largest reserves of uranium. Additionally, Australia is a leading producer
of wool, beef, and wheat (Department of Foreign Affairs and Trade, 2021).
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International business in Australia can be traced back to the country's colonial history,
where trade with other countries was an important part of the economy. Natural resources,
institutions, the workforce, and innovation capacity are just a few of the variables that have an
impact on Australia's economic growth and competitiveness. Australia recently put its attention
on bolstering important industries such as advanced manufacturing, agriculture, education and
training, health and medical research, mining equipment, technology and services, and tourism
(Department of Foreign Affairs and Trade, 2021). The government has also put measures into
place to assist growth and competitiveness, such as lowering trade barriers, investing in
infrastructure, and fostering R&D. (Department of Foreign Affairs and Trade, 2021)
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2.0 Type of expansion and its benefits.
Foreign Direct Investment (FDI) is one kind of expansion that can help a business in
Australia with regard to sourcing and marketing. FDI is the term used to describe an investment
made by a foreign company to start up operations or buy a stake in an already existing business
in another nation. For the investing company, FDI can offer a number of procurement
advantages. First off, FDI can open up access to less expensive natural resources and raw
materials, which can sharply lower production costs. For instance, China made significant
investments in Australia's mining sector to ensure supplies of coal and iron ore (Department of
Foreign Affairs and Trade, 2022). Second, FDI can give investors access to cutting-edge
technologies and manufacturing techniques that are unavailable in their country of residence,
which can boost production effectiveness and product quality. For instance, to benefit from
Australia's advanced manufacturing capabilities, automakers like Toyota and Hyundai have
invested in the country (Australian Trade and Investment Commission (Austrade), 2021).
When it comes to marketing, FDI can significantly benefit a business by increasing brand
recognition and its customer base. Access to new markets and customers, which can be difficult
to achieve through conventional marketing strategies, can be provided by FDI. Additionally, FDI
can assist in developing connections with distributors, suppliers, and other significant
stakeholders, which can ease entry into and expansion into the local market (UNCTAD, 2019).
By utilizing the reputation and experience of the parent company, FDI can also assist in creating
a strong brand presence in the local market.
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Meanwhile, franchising is a different form of expansion that can help a business in
Australia with regard to marketing and procurement. Giving another party the right to use a
company's name, goods, and business model in exchange for a fee or royalty is known as
franchising, and it is a common expansion strategy. In terms of procurement, franchising can
offer a number of advantages, primarily through economies of scale and increased purchasing
power. Franchisees can pool their purchasing power to obtain more favourable terms from
vendors, which could result in lower costs for both the franchisor and the franchisees (“Business
Franchise Australia”. n.d.).
Franchising is a different form of expansion that can help a business in Australia with
regard to marketing and procurement. Franchising entails granting third-party franchisee
permission to use a company's name and business model. Additionally, access to less expensive
manufacturing resources, production facilities, and raw materials through exporting can result in
cost savings for the exporting company. Additionally, diversifying customer bases, reducing
reliance on domestic markets, and spreading risk across several markets are all benefits of
exporting for businesses (Export Finance Australia, n.d.). A company can grow its brand
presence and revenue streams through franchising without having to invest as much money or
take on the same level of risk as with FDI.
Alternatively, exporting is often the most common type of expansion which has a positive
impact on marketing by increasing a company's customer base and brand recognition.
Companies can expand their markets and customer bases through exporting, which can be
difficult to do through conventional marketing strategies. Moreover, by utilizing the reputation
and expertise of the exporting company, exporting can aid in building a strong brand presence in
the local market.
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Licensing comes last but not least. Giving someone else permission to use a business's
intellectual property, such as its trademarks, patents, or copyrights, in exchange for a fee or
royalty, is known as licensing. In terms of procurement, licensing can have a number of
advantages, chiefly through increased revenue sources from licensing fees and decreased costs
due to the licensee's production and distribution efforts. Additionally, licensing enables
businesses to increase their product offerings without incurring significant risks or capital costs
(Dale, 2022).
All in all, based on the list that has been explained, the best type of expansion is Foreign
Direct Investment (FDI). When a company expands into a foreign market, FDI can give them
access to new markets, resources, and talent. In terms of procurement, FDI enables businesses to
develop direct connections with regional manufacturers and suppliers, leading to lower costs and
a more dependable supply chain. On the subject of marketing, FDI enables businesses to create a
localized brand presence, cultivate clientele in the new market, and modify their goods and
services to satisfy regional demand. In general, FDI can give businesses looking to enter a
foreign market a strategic edge because it enables them to better comprehend and adjust to local
market conditions.
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3.0 Advantages of the selected country
For companies wishing to grow or establish a new presence, Australia offers a variety of
alternatives. Australia's stable economy, highly skilled workforce, and welcoming business
environment are some benefits of conducting business there. The stability of the Australian
economy is one of the key benefits of conducting business there. For more than 20 years, the
nation has had consistent economic growth, a relatively low unemployment rate, and a high
standard of living. Furthermore, Australia is a G20 member and has strong trade ties with Asia.
In addition, The Group of Twenty (G20) is the main setting for economic cooperation on a global
scale. On all significant international economic issues, it plays a significant role in forming and
strengthening global architecture and governance. This means Australia is giving companies
access to a sizable and expanding market.
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Another benefit for businesses wishing to establish a presence in Australia is the
country's favorable business climate. In order to assist enterprises, the Australian government has
put out a variety of policies and programs, including tax benefits, grants, and funding
possibilities. Additionally, the nation has a solid intellectual property framework and a
well-established judicial system, which gives businesses confidence and security when investing
there. In addition, Fidinam Australiasia Real Estate News (2022) emphasizes Australia's
government and regulatory framework are supportive of investment. The government supports
and protects international investors by enacting rules that attract foreign investment. Investors
are able to benefit from the country’s transparent and effective legal framework, which offers
security and stability. By investing in Australian businesses or real estate, or by starting a firm
there and benefiting from the country's favorable regulatory and legislative environment,
investors can make the most of this advantage.
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4.0 Disadvantages of the selected country
Australia is a highly developed, affluent country with a robust market economy. Yet
companies considering entering the Australian market should be aware of the difficulties they
might encounter, including high operating costs, complex regulatory requirements, and fierce
competition. Softsis (2022) states that due to the high cost of living and operating businesses in
Australia, it may be challenging for businesses to remain competitive in the international market.
Real estate prices, taxes, and labor costs can all be extremely high. Australia has some of the
highest real estate prices in the world, especially in large cities like Sydney and Melbourne.
Regarding taxation, the full company tax rate in Australia is 30%, according to the Australian
Taxation Office (ATO), while Malaysia's Lembaga Hasil Dalam Negeri (LHDN) indicates that
the corporate income tax rate is 24%. In terms of labor costs, the Fair Work Ombudsman, a
statutory independent agency of the Australian government, reports that the federally mandated
minimum wage in Australia in 2022 is AUD$ 21.38 per hour. Nevertheless, according to Salva
(2022), the minimum pay rate for employees paid on an hourly basis in Malaysia is RM7.21.
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The business climate in Australia is renowned for being fiercely competitive, with both
small and major businesses striving for market dominance. According to the Australian Bureau
of Statistics (2022), there were over 2.5 million actively trading businesses in the Australian
economy. This large amount of businesses indicate a competitive marketplace. In addition,
according to data from the Australian Bureau of Statistics (2022), small businesses—those with
fewer than 20 employees—accounted for over 97% of all Australian businesses. This implies
that small businesses are in fierce competition with one another. Furthermore, businesses in
Australia must compete not only with their local competitors but also with foreign competitors
due to their relatively small market. Free trade agreements are one of the elements that make
conducting business in Australia competitive on a worldwide scale. The free trade agreements
such as the Australia-United States Free Trade Agreement (AUSFTA) and the Comprehensive
and Progressive Agreement for Trans-Pacific Partnership (CPTPP) not only allow Australian
companies to have access to the international markets but these agreements also simplify the
process for foreign companies to enter the Australian market.
To deal with the challenges of high operating costs, businesses can find ways to reduce
operating costs such as outsourcing certain functions, implementing more efficient processes, or
negotiating better prices with suppliers. According to Blount et al. (2009), outsourcing is a
widespread practice among Australian organizations, particularly for non-core tasks like IT,
accounting, and customer support. Many companies outsource their IT functions, such as
software development, network administration, and data backup and recovery, in order to have
access to the most recent tools and knowledge without spending a fortune on internal resources.
Other than that, businesses can ensure compliance with tax rules and regulations by outsourcing
their accounting needs to a third-party service provider. Furthermore, some companies outsource
their customer service operations, including call centers and help desks, in order to enhance
customer satisfaction and cut expenses involved with hiring and training internal staff.
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To navigate the complex regulatory environment in Australia, businesses should consider
keeping updated with the regulatory changes, seeking expert advice, and implementing a
compliance management system. Businesses must be aware of changes in regulations that might
affect their operations by adhering to regulatory updates, attending industry events, and
communicating with regulatory agencies. Other than that, businesses can seek guidance from
experts in regulatory compliance including lawyers, accountants, and consultants to make sure
they are fulfilling all of their regulatory requirements. Additionally, businesses can implement a
compliance management system to ensure they are fulfilling all of their regulatory requirements
by creating policies and processes, providing employee training, and carrying out routine
compliance audits.
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5.0 Risks associated with the country
Worldwide marketplaces are rapidly becoming more globalized, which has prompted
businesses of all sizes and national origins to expand their markets internationally. One of the
many factors contributing to the complexity of international trade is the range of cultures, social
norms, corporate practices, laws, governmental regulations, and political stability between
nations.
While entering a new market like Australia can have many advantages, it can also have
some risks. Risk is commonly used to define the unpredictable nature of operational and
financial results. The most significant risk is always one that involves politics and the law.
Australia has its own distinct political and legal system, just like any other nation and it might be
difficult to navigate through complex rules and obscure tax procedures, which can make
employment challenging for anyone unaccustomed to the local laws. “Overseas Business Risk:
Australia” (2021) stated that there are also threats from terrorism, bribery, and corruption as well
as other political and financial risks that exist in Australia. Besides that, Shenkar et al. (2014),
observed that the profitability of an international corporation is significantly impacted by
differences in inflation, currency, taxation, and interest rates between different countries. Hence,
it is critical to comprehend the nation's laws, policies, and rules to ensure compliance.
Doing business internationally is generally riskier than doing business domestically, but
having a presence in several international markets offers some level of diversification. Another
risk of expanding internationally into Australia is that it has a distinctive culture where firms
may need to adjust to the different work cultures, communication methods, and consumer
preferences. In recent decades, Asia has grown in importance as a source of immigration for
Australia, which has increased the amount of racial diversity in the population. According to The
Australian Bureau of Statistics (ABS) Annual Report in 2017 (as cited in Awaworyi Churchill &
Smyth, 2020), in comparison to traditional sources countries like England, New Zealand, and
continental Europe, Australia presently has more foreign-born residents from China, India, the
Philippines, Vietnam, and Malaysia than it did in the past. Therefore, it is crucial to recognize
and respect cultural differences in order to form successful business partnerships in Australia.
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The final risk is the geographical distance and logistics. Businesses may have difficulties
due to the distance between Australia and other nations, especially when it comes to logistics like
shipping, handling, transit, and communication. In a study done by CT Corporation Staff in
2019, the cost of transportation of goods from areas that supply raw materials to the production
hubs in the city raises due to the great distance. Due to that, companies looking to expand in this
area should anticipate that transportation costs will heavily impact their budgets for
manufacturing and distribution. It was also mentioned that trading across international borders is
mainly the logistics risk companies will encounter. According to the World Bank's 2019 Doing
Business report, the nation ranks 103 for cross-border trade.
First and foremost, consulting with knowledgeable legal and financial specialists is the
best course of action for the corporation to take in order to deal with the volatility surrounding
Australian politics and local legislation. In regards to that, the firm should think about partnering
up with a local firm in Australia that can assist in navigating the country’s legal system.
Secondly, the people who are most familiar with Australia's culture and working system
are always the locals and Australian residents. A firm should consider employing locals who are
versed in the subtle cultural differences and provide assistance as well as guidance through the
country's business landscape. Furthermore, it is crucial for an organization to educate itself on
Australian business customs and culture before deciding on the decision to expand
internationally.
Last but not least, a company can manage the logistics risk by dealing with a reliable
logistics provider with experience and a good reputation in Australia. Internationalization
frequently links the company to many suppliers, customers, and other networks. These networks
provide businesses with access to crucial resources and markets. Overall, entering the Australian
market involves a deep comprehension of the relevant market, laws, and culture. Firms may
reduce the risks of global expansion and improve their chances of success by consulting local
experts, researching the market, and developing trusting partnerships.
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6.0 Conclusion
To conclude, Australia is one of the easiest places to conduct business in the world.
Australia moved up four spots to take 14th place in the 2020 World Bank rankings that evaluate
how easy it is to do business in various nations. Australia, in 2021, ranked fifth in the world
when comparing economies with populations greater than 20 million only behind South Korea,
the United States, the United Kingdom, and Malaysia (fourth). Australia came up at number four
for obtaining finance, number six for upholding agreements, and number seven for beginning a
business.
Moreover, Australia is a great country to do business with because it has a free market
and few restrictions on the import of goods and services. High levels of foreign investment are
attracted by Australia's highly educated workforce and its wealth and diversity of natural
resources. The nation is also internationally competitive in technology, high-value manufactured
goods, and financial and insurance services. Australia is a target market for businesses wishing to
expand internationally since it is a developed country with a robust economy. It will help
businesses to thrive and be profitable. The ideal choice for expansion is a foreign direct
investment (FDI), which gives businesses access to new markets, resources, and talent as well as
the ability to build a native brand presence and build clientele in the local market.
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7.0 References
6. Australia as a top destination for investment and Migration. (2022). Fidinam Australasia
Real Estate. https://www.fidinam.com/en/blog/australia-investment-and-migration
8. Blount, Y., Maley, J., & Sharma, P. (2009). The outsourcing of business processes in
Australia: Evidence from case studies. Australian Journal of Management, 34(2),
235-256. https://doi.org/10.1177/0312896209349522
10. Benefits of investing in Australia. (2021). Australian Trade and Investment Commission
(Austrade). Retrieved from https://www.austrade.gov.au/international/invest/investor-
updates/toyota-opens-new-a-40m-product-centre-in-australia
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11. China country brief. Australian Government Department of Foreign Affairs and Trade.
(2022). Retrieved from https://www.dfat.gov.au/geo/china/china-country-brief
12. Davis, M. (2022, March 17). Government Regulations: Do They Help Businesses?
Investopedia.https://www.investopedia.com/articles/economics/11/government-regulation
s.asp
13. Department of Foreign Affairs and Trade. (2020). Why Australia? A guide to investing in
Australia. Retrieved from https://www.austrade.gov.au/why-australia
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https://www.dfat.gov.au/about-australia
15. Department of Foreign Affairs and Trade. (2021). Commonwealth of Nations. Retrieved
from https://www.dfat.gov.au/international-relations/international-organisations/
commonwealth-of-nations.
16. Department of Industry, Science and Resources. (2022). Australian Business Licensing
and Information Service. Retrieved from https://www.industry.gov.au/government-
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17. Dale, L. (2022). License to.....what? the nature of IP licensing in Australia. HWL
Ebsworth Lawyers. Retrieved from https://hwlebsworth.com.au/licence-to-what-the-
nature-of-ip-licensing-in-australia/
18. Exporting for global growth. (n.d.). Export Finance Australia. Retrieved from
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23. Shenkar, O., Luo, Y., & Chi, T. (2014). International Business (3rd ed.). Routledge.
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