Kayu Life

Content

EXECUTIVE SUMMARY 3

1. INTRODUCTION 4

2. LAGUNA 4

COMPANY PROFILE 4

FACTOR ENDOWMENTS 4

DEMAND CONDITIONS 5

RELATED AND SUPPORTING INDUSTRIES 5

FIRM STRATEGY, STRUCTURE AND RIVALRY 6

GOVERNMENT 6

CHANGE IN PREFERENCES 6

3. KAYU LIFE 7

COMPANY PROFILE 7

KAYU LLIFE IN THE SUPPLY CHAIN 7

FACTOR ENDOWMENTS 8

THE FACTOR ENDOWMENT FOR THIS COMPANY IS MUCH THE SAME TO THE LAGUNA GROCERIES STORES IN WAY THAT THAT THEY WERE IMPORTED FROM INDONESIA. THE ONLY DIFFERENCE IS THAT THE TWO COMPANIES ARE OPERATING IN THE DIFFERENT INDUSTRIES WHERE DIFFERENT REGULATIONS. 8

DEMAND CONDITIONS AND SUPPORTING INDUSTRIES 8

CHANGE IN AUSTRALIAN REGULATION 8

CURRENCY FLUCTUATION (ADVANTAGE OR DRAWBACK) 8

4. ARCHITECK 9

COMPANY PROFILE 9

FACTOR CONDITION 10

DOMESTIC DEMAND CONDITIONS 10

RELATED AND SUPPORTING INDUSTRIES 10

FIRM STRATEGY, STRUCTURE AND RIVALRY 11

PROBLEM 12

GOVERNMENT 13

5. REFERENCE LIST: 14

Executive summary

The aim of this essay is basically to provide a better understanding of the Exports and Import Industry in Australia using Porter’s Diamond. The industry is going to be analysed using these four factors:

• Factor endowments

• Demand Conditions

• Related Supporting industries

• Firm Strategy, Structure and Rivalry.

In applying these four factors the recommendations are:

Updating information regularly using existing IT services

This is important because government regulation as explained below changes frequently and importers and exporters that is discussed in this report has to adapt to the Australian or overseas Government regulations

Integrating Logistics and Marketing factors in the firms

In order to be a fully functional company, the firms have to be able to have good integration in Logistics and Marketing to optimise their profitability. This can be done by establishing good relationship with the suppliers and applying it to the marketing of the local demands. The know how of keeping inventory in check is particularly important and making it to be in line with the demands.

1. Introduction

In today’s world of globalization, international management skill is needed to tackle a variety international problems. This essay’s structure is going to be based on the Porter’s Diamond model. The articles are going to be discussed in relevance with the organisations, which will also explain the four economic condition of the Porter’s model. The four economic conditions are Factor Endowments, Demand Conditions, Related Supported Industries and Firm Strategy, Structure and Rivalry. Porter also mentions two additional variables as external factors which can have a major impact to the success of the three organizations we studied.

2. Laguna

Company profile

The first company is an Asian-grocery store in the city area of Melbourne. Its focus is on Asian groceries but with a slight focus on Indonesian products. The two products are Blue Band which is an Indonesian made butter and a jasmine tea soft drink. The position of the organization of these two products acts as the distributor and an intermediary between the distributor and the customers.

Factor Endowments

The correlation of factor endowments is that it describes the importance of Comparative and Competitive advantage to these trades between countries. Gionea (2005, p. 58) explains Comparative advantage as �a concept that based on relative cost of production (and opportunity cost) between nations and Competitive advantage �characteristics (skill or capability) held by a firm that enables it to achieve lower costs, higher revenues, or lower risk than its competitors.’

The comparative advantage to Indonesia just by comparing the regional minimum wage in Jakarta is significant enough to emphasize this point. The minimum wage in regional district of Jakarta is USD 82.15 per month (Worker Rights Consortium 2005). The competitive advantage for Indonesia is the ability for them to produce consumable goods at low cost to their already low living minimum wage of IDR 228.54 per month (Worker Rights Consortium 2005).

Australia had experiences in trying to build their domestic manufacturing using immigrant labours and high tariffs for imports however this was unsuccessful as imports start to rise again by the 1970’s (Hawkins & Dark 2005). The latter part of the assignment will describe in more detail of the aspects in country of origin as an aspect of import consumption.

Demand Conditions

The Queensland Treasury (2007) states that in January 2007, a total of 63,070 international students were enrolled in Victoria. This number had increased by 16% from 54,365 student enrolments in January 2006. Both Indonesia and India take big parts in this increase. With Indonesia become Australia’s fourth largest source of overseas student with 15,000 students in 2006, India has 39,000 students in 2006 and Sri Lankan community in Australia is estimated at over 70,000 people (Queensland Treasury 2007). The increase will leads to an increase in demand of products from India, Sri Lanka and Indonesia.

Related and Supporting Industries

The prominent