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BUS202: Barrett Farm Foods

Week 8: Barrett Farm Foods
by

Jade Whiteman

on 11 March 2014

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Transcript of BUS202: Barrett Farm Foods

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
investment.
Licensing
Profits tend to be lower
than those from exporting or FDI
it does not guarantee limited control
the asset

Exporting
Most favoured strategy
More flexible entry than others.

Indirect export
Avoids risks and complexity
Low start up costs, few risks, and no fixed capital requirements, but with prospects for increasing sales.

Direct export
More ability to control the
process and potential
higher profits


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

Profit margin

Understanding of foreign market

Large physical distance

Payment is in a different currency
New capabilities
to manage exports
Hire Austrade

Secure funding

Assess political, legal, regulatory, business
risk

What advantages and
disadvantages does exporting provide to Barrett?
We have some questions for
YOU!
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
in Australia

They are enthusiastic about substantially
expanding their export business
Reasons for exportation:
Advantages
Creation of jobs
Added value on exports
Helps to boost economy
BFF's exoticness of product => $
Globalisation
References

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).

Thank you
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
challenge
Disadvantages
Week 8:
Barrett Farm Foods
Zhenzhu Tang
Jade
Whiteman
Jason Nguyen
value on exports
boost the economy
Full transcript