STRATEGIC CHANGES IN NATIONAL IT
Introduction
The principal activity of National IT is to import, store and distribute IT hardware from Asia into the Australian market. However, even though with stable growth in sales and profit, the operations of National IT can be considered risky due to the fact that it transacts business across different borders. There are currency fluctuations and labor situations in Asian countries which may affect its pricing strategies in Australia. As it profit from bulk purchase and incomplete information and merely acting as an intermediary between Asian exporters and Australian resellers/ customers, there is also a risk of loosing the business instantaneously once local and overseas partners decided to transact business directly or without the help of an international intermediary. In effect, there is a need to diversify business stakes away from hardware importation and through other value-added investments or acquisitions.
Background about Export Intermediary
Export trade intermediary is a person or company who acts as distributor, sales representative, marketing agent or broker who facilitates the function of arranging provision of export trade facilitation services (Federal Notices 2003). Such services often include information, aggregation, assortment, transport, storage, selling transactions and after-sales service (ITÂ 2001). According to National Bureau of Economic Research (2002), international intermediaries are motivated by the presence of incomplete information and foreign contacts. They also hypothesized that the initial strategy before becoming an entrepreneur-intermediary is to accumulate foreign networks and working as an employee of a production firm (Tech Republic 2006).
Export intermediaries assist new and inexperienced export producers in reaching wider market base specifically across country borders while minimizing the latter transaction and agency cost due to the former trade specialty (Root 1994 p. 102). Intermediaries provide manufacturers a quantum leap to export market and diminish the traditional, often long, internationalization stage that producers should face (Clinic et al 1994). As a compensation for this, intermediaries have their way to sustain profits from their manufacture-clients by controlling the export advancement of the latter according to the former strategies (Pang & York 2001 p. 327). The dilemma of such is that it can compel prospective export manufacturers in making relations with intermediaries because it minimizes their international trade potential.
Overview of Potential Investment in Five Sectors
In most countries, the software sector is composed of mostly small and medium scale enterprises (Software Patents vs. Parliamentary Democracy 2006). However, even with this sector structure, big companies such as Cisco remained on top because of large cost associated in addressing the biggest obstacle for small players which is application for patents. In the software sector, local or isolated technical talent has its available global market ( 2004 pp. 484+). This is why small players could sell their software to large companies and still stay in business by profiting from selling software technologies that they created in their own laboratories. Seventy percent (70%) of the cost structure of the sector comes from personnel-related costs. It is labor intensive which makes employees in third world countries (e.g. most nations in Asia) a good investment because investors will get quality skill at minimum cost. The Australian software sector enjoys well-developed communications and information technology infrastructures as well as legal and regulatory framework (UNPIN 2007). This makes it a very competitive and world-class provider of software-related applications. As skills support, most of Australian universities engaged in software research and development studies while most business also engaged on the same feat.
Furniture output of manufacturers is affected by consumer’s demand in which level is varied by economic and financial situation as well as residence mobility of consumers (Falk & Moth 1994 pp. 35+). The primary purchasers of furniture are head of the family while sixty percent (60%) of all sales are financed through credit. The demand of furniture products is also affected by oil price changes that led people to stay in their homes rather to take a vacation or a tour. In this regard, families have greater incentive to buy high-end furniture because of ample time staying at home. The growth of furniture manufacturers in Asia is an incentive for developed countries to import low-cost but quality outputs as developing countries have also exercised growing interests on furniture (COIL Consulting 2007). Computers and its hardware accessories necessitate reliable and durable furniture to accommodate for handles, locks and ventilation (The Journal 2001 p. 74). Alternatively, furniture that supports complete multi-media systems can give cost advantages to purchasers which would typically be a bestseller.
Mobile sector is still the prominent form of communication despite the looming significance of internet (Scales 2003). Fixed network voice revenues are shrinking as broadband access is being dispersed while overcapacity of bandwidth deters other players from gaining access to the market. For its part, the mobile sector exploits this loophole for its own competitive strength. However, to maintain mobile efficiency, mobile networks have to create bilateral agreements with other networks that can cause small mobile players with large amount of money. Mobile networks compete for coverage and network quality which means a greater customer focus is necessary which leads to creation of pre-sales support to make customers more informed in purchase and usage decisions.
The do-it-yourself (DIY) sector has high fixed costs, seasonal sales (especially on semi-fixed asset products like furniture) (EPPS 2004) and reliance on strategic forward (for consistent order) and backward (for supplier priority) alliances. The sector is more profitable under a less restrictive business arena that involves both local and foreign retailers due to free-flowing of goods and customers (Euro Monitor 2003). According to Careers in Asia 2006, industry players are optimistic about the higher profits associated with the on-going industry expansion. Although there is an obvious benefit for the community due to higher taxes and lower prices, more effort is needed to the industry players since they are competing under a slow cycle market. This seemingly placed giant retailers in the upper hand as they can compete in price to attract customers (TIC Trade 2006). Since big companies have more leverage and marketing prowess, small players can be easily driven out of the market. However, the latter can be shielded from the harsh effects of economies of scale through competing on value and creation of market niche.
Research suggests that logistics creates more value when cost leadership strategy is applied (cited in Hitt, Ireland & Hoskinsson 2003 p. 122). Best performers have highly integrated system across internal and external supply chains (cited in Neumann, Ring beck & Sherman 2000 p. 19). IT can help integrate logistic systems but having the fundamentals of IT does not mean that competitive advantages would follow. It can help when emphasized is given to vehicle management through prescheduled and dynamic dock scheduling including automatic picking or retrieval of goods from the warehouse. Efficient shippers use electronic data interchanges to place order and on-line booking. There is transparency, automatic capacity checking, monitoring of orders and maintenance of quality control. Logistics service providers offer lower labor costs although when logistics serve as core competency for the prospective clients or it is very integrated in the business, they are reluctant to outsource such service.
Potential Destination from Five Australian Companies
In its three-year operations, Atlas Sian is named as third fastest growing company in Australia with 427% yearly growth rate (Atlas Sian Bog 2005). It caters to collaboration and project management needs of companies such as Oracle, Citigroup, GE, Pfizer and United Nations. In Australia, its main customers are Telstra, Optus, News Interactive and local government departments within the country. Its core competency arises from its ability to deliver customer needs through excellent service and keen attention to details. The recognition is also attributed to its staff, corporate culture and strong developer communities which let the company adapt to drastic changes in technology without loosing customer focus. Their software products enable teams within organizations to share documents, discuss strategies, manage tasks, and search information in a fast and easy manner (Atlas Sian Bog 2005).
Furniture Manufacturing Company of Australia (FACE) is a Brisbane-based company which has three niche markets; namely, the supply of custom-designed furniture for hotels and resorts, interior designs of yachts and customer-designed furniture for homes (National Innovation Website 2007). The company adopts a business model into which movement in new markets is supported by detailed business management plan. Although successful in the early years, the company begun to confront problems like decline in hospitality boom as well as loosing its major factory from a fire. Despite the losses, FACE relived its mission and gained a stable Million turnover until it grew quickly to Million. This recovery and growth would not become possible without employee empowerment and admission of the owner in changing its governance structure to provide platform for creativity and innovation among its workers. The fast growth of the company from three-employed personnel to almost a hundred required different control (National Innovation Website 2007).
Telstra is known as a leading telecommunications company in Australia engaged in 8.5 million mobile services (Telstra 2007). More specifically, it offers basic access mobile services to businesses and homes. Its major competence is the provision of an integrated telecommunications services through mobile infrastructure wherein the majority of Australia’s domestic and international voice and data telephony is connected. It also has operations in Hong Kong and China. The business unit responsible for selling mobile phones is the Consumer Marketing and Channels which caters to the needs of small and medium size businesses. The company offers a full range of mobile services to customers that include voice calling, messaging, text and multi-media messaging and a range of information, entertainment and connectivity overhauls. Recently, its mobile division introduced innovations like a Billion wireless broadband network (Telstra 2007).
According to EUROMONITER 2006, Price rite is one among the top brands of the local DIY industry especially in its headquarters in Hong Kong. This can imply that its brand name has greatly impacted the local market with regards to its recognition, awareness and acceptance. As stated in its website, the Price rite brand specializes on home improvement products that range from furniture, electrical appliances and maintenance tool and other consumable accessories (Price rite 2006). It targets the middle- to high-end markets as it offers value-for-money and innovative products. The Pricerite.com offers newest information about new product models including enlargeable pictures of current offerings that are classified in an organized manner under living room, bedroom and kitchen, among others. However, prices for these products are not in place which reflect not only the vulnerability of the industry to economic shocks, but more importantly, how the brand instill its intended response on value rather than price.
Boom Logistics provides lifting solutions and other logistic needs (Boom Logistics 2007). Its competitive advantage is in its crane-hired or access equipment which makes the company a one stop shop good for long-term hire arrangements. It has an extensive fleet of 551 mobile and tower cranes, mobile hydraulic cranes, rigging services and engineering services. In addition, it has over 53 depots all over the country enabling faster and easier placement of equipment in every site. Lastly, it has experienced skilled and professional labor force and continuous service in a 24 / 7 basis. Through its subsidiary, Sherri Hire, the transport services of goods and other commodities can be put in place. This subsidiary offers services such as commodity logistics which include innovative solutions for every logistic needs of an organization.
Conclusion
The risk minimization goal of National IT through this discussion is obtained by acquiring, investing or partnering with these five companies. Its knowledge of Asian manufacturers as well as customers in Australia can implore the intermediary information National IT has which can add value to these engagements. As it also has Million stocks in Sydney, it can also use them to finance a strategic alliance among the five companies. Their combination in resources can create economies of scale and scope and this can be attained as the sectors involved in the plan are those related to the hardware and importation operations of the company. As a result, the partnership would not require overall and drastic changes in the operations and strategy of National IT because target companies tend to be with similar goals, resources and markets. Altogether, National IT can have a more secure outlook through this feat and is not completely at risk in loosing to its hardware competitors such as Cell net, Sinned and Ingram Micro.
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