How To Gain Advantages From Free trade Agreement Opportunity And Traits

Published by Dewa Agung Yudhistira (dyudhist@deakin.edu.au)

Successful marketer understand that organization has to grow in the long-term, they can’t stand still in the “convert zone” even when they can perform well.  They need to find way to reach more costumer and increase profit otherwise they will disappear eroded by competitor.

What is Free trade agreement (FTA)

Recently Australia has sigh  Chian – Australia Free Trade Agreement (ChaFTA), which come into force on 20 December 2015. Free trade agreement (FTA) is an official agreement made by two or more country to eliminate barriers to trade between countries, such as export and import tariff. FTA aiming to establish benefits for the members such as new idea and technology, Increase availability of supply, increase investment , FTA fostering the innovation and increasing demands of products.

free-trade-agreement

Free Trade Agreement effect on Marketing Management

Many assume that free trade agreement affects only on the international business environment. In fact, the free trade agreement is affecting the whole business environment both international and local busines. Free trade agreement increases the competitors in the market For example Catton-on is Australia Company, has affected from Free trade agreement by new competitors from overseas which targeting the same segmentation such as UNIQLO and H&M. Therefore if we apply SWOT analysis (strength, weakness, opportunity, traits), Free trade agreement create opportunity and traits for the whole business environment, and business in this case, will automatically force to rearrange their marketing strategy and plan to transform the traits to opportunity for the business.

Understanding the Strategy to Growth

Business-Growing-Pains-Can-You-Grow-Too-Fast-Small-1024x741Every business strategy is aiming to seek higher profit and remain their competitive advantages. However, external environment change that generated from factor such as free trade agreement force business to change. This demonstrates Gerald Watts argument, a business can compete in changing environment if they able to adjust and growth more demand for their product. However, the question is what should Marketing managers do? The answer is the strategy.

What is strategy

From the discussion above, Strategy is a reactive and proactive adaptation to external changes. Each of the strategies has own specialization, and managers must know which one is the most effective to cope the challenge. There are many frameworks that managers can use to select strategy includes Ansoff’s product growth matrix, BCG Matrix, General electric Model, Peter Strategy, and Tracy and Wiersema strategy.

The Importance of SWOT Analysis

Manuficient - Threat - Opportunity

Before choosing a strategy SWOT analysis is applied to review firm strength, weakness, treats and opportunity to know its internal and external situation. For instance, using SWOT analysis marketer will find that Free trade agreement can  create more demand (opportunity) and increasing competitors (traits), which shows that the business must growth to sustain in the market.

Method to Choose Strategy

The appropriate marketing framework to select  strategy to growth is Ansoff’s growth matrix. This matrix simplifies business strategies to growth into four categories; market penetration, market development, diversification and product development. In this matrix we assume that managers can grow the business by producing a new product, entering a new market, or implement both of them. Depends on the business ability and set of goal and objective.

Figur 1.1

Figure 1.1

Understanding the toll

According to Lacobucci the Ansoff’s  strategy can explain as:

  1. Market penetration
    with this strategy manager, focus on enforcing current customers in existing market to buy existing product and services. for example, company can perform geographical expansion and target new segment.
  2. Market development
    in this strategy existing product are introduced to meet the demand of new markets. This strategy is useful for the business that has limited resource to develop a new product but willing to expand their market share. One company that use this strategy is Coca-Cola which entering multiple countries with minimum change in the product.
  3. Product developments
    This strategy applied to expand the new products to an existing market. For example, Mc Donald’s continuously improve their products to satisfy their current costumers. This strategy is important for business in order to retain their current costumer’s demand.
  4. Diversification
    This strategy is focus to create a new product and introduce it to a new market which concentric (related business) or Conglomerate (unrelated business.

 

Key Point

What we can learn from the is free trade agreement is that external environment of business is changing and It can create the opportunity and traits for the business therefore a proper application of marketing strategy to grow, playing an important role for the business life. And marketer need to be proactive to continuously analyses the external and internal environment.

References

NewsComAu. (2014). Historic day for Australia and China. [online] Available at: http://www.news.com.au/national/chinese-president-xi-jinping-signs-freetrade-deal-with-australia-after-addressing-parliament/news-story/f22f2856fbac5ca573aec2c3385bf3d0 [Accessed 21 Jul. 2016].

Government of australia. (2016). [online] Available at: http://China-Australia Free Trade Agreement”. Department of Foreign Affairs and Trade. N.p., 2016. Web. 22 July 2016. [Accessed 22 Jul. 2016].

Ansoff’s Matrix, pain and gain: Growth strategies and adaptive learning among small food producers”, International Journal of Entrepreneurial Behavior & Research, Vol. 4 Iss: 2, pp.101 – 111

ABC News. (2015). China-Australia Free Trade Agreement: Pros and cons. [online] Available at: http://www.abc.net.au/news/2015-06-17/china-australia-free-trade-agreement-pros-and-cons/6553680 [Accessed 21 Jul. 2016].

Steven Edward (2016). [online] Available at: http:////www.mindtools.com/pages/article/newTMC_90.htm [Accessed 21 Jul. 2016]. [Accessed 25 Jul. 2016].

Iacobucci, D. (n.d.). MM4. Mason, Ohio : South-Western: Cengage Learning, p.210.

Google.com.au. (2016). market penetration – Google Search. [online] Available at: https://www.google.com.au/search?q=market+penetration&source=lnms&tbm=isch&sa=X&ved=0ahUKEwi9_N72sI3OAhVDupQKHYClDIEQ_AUICCgB&biw=1920&bih=911#tbm=isch&q=ansoff+matrix+example+&imgrc=0xPvLaaenQcGpM%3A [Accessed 21 Jul. 2016].

Posted By : Dewa agung Yudhistira (216206544)

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