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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 and 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

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