Advantages And Disadvantages Of Direct Exporting In The International Business Industry

The winery industry can be categorized into red and white wine segments. The red wine segment, measured by tonnage of varietals crushed, has grown at a compounded annual rate of 4.7% for 10 years from 1989 to 1998, and a year over year growth rate of 8.2% from 1998 to 1999. Judging by the strong growth rate experienced in the red wine segment, it is reasonable to conclude that the red wine segment is in the growth phase of the life cycle model. In addition, production of red wine varietals which are relatively unknown such as syrah and sangiovese nearly doubled in a year from 1998 to 1999. The white wine segment, however, is at the mature phase of its life cycle as the segment shrunk slightly by 0.42% from 1998 to 1999. Overall, the industry is still at the growth stage lead by growth in the red wine segment.

The dynamics of the global wine industry are better understood through a brief history of wine as well as an overview of the wine making process. Some countries have longer historical and cultural ties with wine then others and that can affect the quality and perception of the product in the eyes of the consumer. Also, the conditions in which the wine grapes are raised and the processes used to make the wine can create a superior wine and therefore a competitive advantage.

Wine production involves two parts of economic activity – viticulture and wine making in the winery. In the global context, wine production is dynamic due to the influence of globalization, technological advancements and extensive research. These have essentially influenced the nature, spatial patterns and the ecological dimensions of the wine industry.

The buyer’s power within the wine industry varies between different places in the world. There are for example strategic differences between Europe and the “New World”. The “New World” includes countries like the US, Australia, Chile and South Africa. In Europe there is a big competition

1.Discuss critically the competitive advantages of New World wine producers and contrast these against their Old World competitors.

Indirect exporting is when a company sells their product to a third party that will then sell that product to customers in foreign countries (2012). Strengths for this type of strategy are there is little financial commitment, the financial risk is reduced by using the third party, and there is a reduced risk that the future of the product or brand will look bad in the new market (2012). A limitation of this entrance strategy are the company has to rely on the third party to get customers and negotiate the sale prices for them (2012). Direct exporting is when the firm that is entering the market enters on its own and handles their own exports (2012). Strengths of this strategy are the company gets to handle their own exports, they have complete control, the company also has a greater amount of potential returns, and they can maintain a greater profit from their sales (2012). Limitations of this are there is a higher risk involved since the company is handling its own foreign markets, and there is a larger investment in not only money but time (2012). Licensing is when there is a relatively low link to risk that permits the company to enter into the market (2012). The strengths associated with licensing are no large capital investment, the company may be able to get around the restrictions and barriers a country can put up, and the company can charge a higher price for their product (2012). Limitations of licensing are

Direct exporting is more expensive than indirect exporting. The entry cost & ongoing cost are high for direct exporting. In direct exporting a company have greater chances to build up good relationship. Direct exporting is used by many famous companies in toady’s competitive world as a source of entering new international market. SAMSUNG is also one of the companies who uses direct exporting as a source of Marketing Strategy. Direct exporting is cheaper as compared to other ways of market entering strategy and biggest benefit of direct exporting is it helps in acquiring the information of local market. Potential conflicts with distributors is one of the biggest disadvantage which a company can face in Direct

In 2001 there were over 1 million wine producers worldwide, and no firm accounted for more than 1% of global retail sales. Because of this, it would be nearly impossible for the Robert Mondavi winery to dominate sales in any region. Due to Mondavi’s efforts, the winery became one of America’s most innovative,

The United States wine industry is a 12 billion dollar industry and is composed of 7,000 wineries and around 1,800 different companies. The three major companies within the industry are Constellation brands, E&J Gallo, and The Wine Group Inc. The industry has made its way through the economic crisis at a better rate than some of the other U.S industries however in order for them to continue to see any type of growth it is important that they acknowledge their issues and find ways in which they can rectify them. The majority of the issues among the industry are problems that cannot be directly controlled by individual wine companies. Therefore it is imperative that wineries find away to use these issues to their

In all countries that are concerned to trade relations, they follow a trade policy which defines standards, goals, rules and regulations between two or more countries. These policies are particular to each country and are formulated by its public officials. A country’s trade policy includes taxes imposed on import and export, examination regulations, and tariffs. “Their aim is to boost the nation’s international trade” (Azzam, H., T. 2002). One of these several trade policies is the foreign direct investment that encounters an investment in an industry by a shareholder from another country, for which the foreign investor has control over the company purchase.

Green, Aaron. (2007, September 17). “Part 1: Offshoring basics: definitions, benefits, and challenges.” Retrieved from www.boston.com/jobs/on_staffing/091707.shtml

lassical theories of international trade suggest that comparative advantage exist in the factor endowments that a country may be fortunate enough to inherit. Factor endowments include land, natural resources, labor, and the size of the local population.

Nowadays, in the “Old World” countries of Europe, where the bulk of the volume is still produced, this is of great concern. However, consumers, especially younger drinkers, prefer the high quality wine from famous brands which are imported into Europe by the “New World” player, and the growth rate is at average10% per

This paper will outline an executive summary of a marketing strategy of a new wine brand to a targeted audience that will incorporate the buyers motivation, psychographics, and demographics. A description of the overall marketing strategy will include advertising, customer relationship manager and a Public Relations campaign. Finally, a an overall strategy to position the brand against the competition will be outlined.

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