An Overseas Venture

Introduction: This is a proposal for a U.S. based company to create a supercenter store in Australia modeled on Wal Mart. This would be the flagship store in a chain of superstores serving the major population centers in Australia which are concentrated on the eastern coast of this nation. The purpose is to convince potential investors of the feasibility of this idea.

Background: Kerry Dolan of Forbes writes that lured by bargains prices, customers in Mexico have been flocking in ever-greater numbers to the 600 plus retail outlets across the country owned by Wal-Mart de Mexico. That helped Walmex, as it is known locally, to increase revenues in 2002 by 13% to $10.2 billion. Profits on sales in Mexico grew in 2002 by 12% to $476 million. This represented a return on sales of 4.7% thanks in part to the fact that Mexican nationals are now firmly in charge of determining the mix of products that will be offered at each of Wal-Mart de Mexico's store formats. This is higher than the 3.3% profit margin reported by its parent company (Dolan 84). Even if only a small portion of this success can be repeated in Australia, this new business venture will be successful.

It has been suggested that if the superstore model can be successful in a developing country like Mexico, it can be successful anywhere. This argument, however, is illogical. The country where this business model would work best would be one in which:

Americans, American companies and Ameri

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Australia's emphasis on reforms is another key factor behind the economy's strength. The following statistics are also available: The nation's GDP real growth rate was estimated at 3.6% in 2002. The estimated GDP per capita in 2002 was $26,900. Keegan suggests that the single most important factor in developing a plan for international marketing expansion involves understanding the location and the distribution of income (Keegan, 40). The 2002 inflation rate was estimated at 2.2% for consumer goods The unemployment rate is approximately 6% The industrial production growth rate is just over 4% Australia's primary trading partner, for imports is the United States Australia's population is approximately 20 million Australia has five cities with populations in excess of 1 million; which are: Sydney with 4.1 million Melbourne at 3.5 million Brisbane at 1.7 million Adelaide with 1.1 million and Perth with 1.4 million. Keegan suggests that it is critical to any marketing plan to have specific information about where the population is concentrated (Keegan, 46). Marketing: Keegan writes in Global Marketing Management that a company that engages in global marketing activities must have a detailed understanding of speci

Category: Business - A