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BUS202: Barrett Farm Foods
Transcript of BUS202: Barrett Farm Foods
Why did Barrett
choose exporting as its entry
strategy for Europe, as opposed to foreign direct investment or licensing?
Foreign direct investment (FDI) occurs when a firm invests directly in new facilities to produce and/or market in a foreign country.
Green field investment and acquisition.
There would be more competition/increased risk in
Profits tend to be lower
than those from exporting or FDI
it does not guarantee limited control
Most favoured strategy
More flexible entry than others.
Avoids risks and complexity
Low start up costs, few risks, and no fixed capital requirements, but with prospects for increasing sales.
More ability to control the
process and potential
Barrett relies on intermediaries in Australia
Europeans view Australia as an exotic and pollution-free production place
The market for canned fruit has risen in Europe => opportunity for Barrett Farm foods
This process involves less risk than the other options.
Barrett Farm Foods can minimize the costs
and maximize their flexibility
Challenges to export drive
Food is perishable
Understanding of foreign market
Large physical distance
Payment is in a different currency
to manage exports
Assess political, legal, regulatory, business
What advantages and
disadvantages does exporting provide to Barrett?
We have some questions for
A little bit of info on Barrett Farm Foods
BFF is based in Melbourne, Australia
It is Australia's 6th largest food company.
A healthy rate of growth over the past decade.
Sales reached USD $215 million last year.
Barrett Farm Foods has relied on intermediaries
They are enthusiastic about substantially
expanding their export business
Reasons for exportation:
Creation of jobs
Added value on exports
Helps to boost economy
BFF's exoticness of product => $
Cavusgil, Knight & Riesenberg (2013), International Business, Pearson Australia
Davis, Donald R. and David E. Weinstein (2002), “An Account of Global Factor Trade”, American Economic Review, 91, 1423-53.
Feenstra, Robert C. (2003), Advanced International Trade: Theory and Evidence, Princeton: Princeton University Press.
Gresser, Edward (2002), “Toughest on the Poor”, Foreign Affairs, November/December, 81(6).
for listening to our presentation!
Increase in jobs
What does Barrett Farm Foods sell?
Are there advantages or drawbacks for Barrett to export to the Chinese market?
Could Barrett Farm Foods manage to make Vegemite a ‘new breakfast item/household name’ in Europe?
Which country could Barrett Farm Foods target first in Europe?
Can be high risks in export of food
Food is perishable
Marketing of product can be a
Barrett Farm Foods
value on exports
boost the economy