A PESTEL Analysis on the Australian Nuts Company

COMPANY: Name: Australian Nuts Company Company Background: Australian Nuts Company is a family-owned established since 1987. This business is dedicated to sourcing, manufacturing and supplying the highest quality Nuts, Nut Spreads and Dried Fruit and mixed with different flavours, aromas, tastes and textures. The company is characterized for the high quality standards, innovative culinary ideas and support local Australian Farmers. The customer value of the company is compromise each other to our daily operations from ordering to delivery and personalized touch for an exemplary level of service to the consumers. The company have many important competitors and the current position of the company is regulated by the Australian Nut Industry who standardizes prices and product quality, promoting a healthy competition among companies. Australian Nuts Company is located in Melbourne – Australia with three stores in different suburbs. The head office is located in Albion suburb (Melbourne – Australia). The production plant is located in Victoria – Australia and in different countries around the world in stables climate zones depend of the type of nut produced when guarantee that the product has been produced with high standards of quality. China Where is China? China is in the Eastern side of Asia. The Asian Continent is the largest and most populous of all continents. (Where is China? . 2015) In the following two pictures is showed where exactly is China. Picture1 Source: Where is China? . 2015 Picture 2 Source: Where is China? . 2015 Picture 3 (China’s flag) China Flag Source: (China | history. 2015) Official name: Zhonghua Renmin Gongheguo (People’s Republic of China) Form of government:single-party people’s republic with one legislative house (National People’s Congress [3,0001]) Head of state:President: Xi Jinping Head of government:Premier: Li Keqiang Capital:Beijing (Peking) Official language:Mandarin Chinese Official religion:none Monetary unit:renminbi (yuan) (Y) Population:(2014) 1,364,038,000 Source: (China | history. 2015) PESTLE Political: Is necessary to consider which and how is the politic system inside the country when any company or any person want to do a business in this mentioned country. For the case of China even more due to is necessary to consider the possibility of nationalization of industries, in fact this happen in China in 1949. (Political Risk. 2015) Also is necessary to consider factors such as expropriation, confiscation, contract repudiation and currency inconvertibility. Furthermore, in China are probable scenarios to consider such as rampant inflation and currency devaluation. There are also risks to company’s employees of personal harm, and risk to the firm of extortion attempts. There is also some things to bear in mind, this is that in China sometimes is difficult to the companies which operates in China or want to operate over there, due to sometimes is hard to know exactly what the rules are, this meanly because over there in China always exist a battle between the country’s central government and the local and provincial governments over applicable law, and non-observance or observance of it. Even in china this is well known by the Chinese, which says that “The mountains are high and the Emperor is far away” Economical: An important announcement was done in 2014, which say that the nut industry probably will have a free trade agreement with China, which will see prices on Australian nuts drop to zero within the next five years. (Australian nut industry hopeful free trade agreement with China would eliminate all tariffs, particularly on walnuts, almonds and macadamias – ABC Rural (Australian Broadcasting Corporation). 2015) This announcement is mainly due to a real and notorious increment of demand of nuts in China which are demonstrated in the following statements: Actually Australia is selling to China around $64 million dollars per year. Currently tariffs on the three biggest sellers, which are walnuts, almonds and macadamias, sit at about 25 per cent. Thee actually Australian Nut Industry Council director, Chris Joyce, says the industry’s hopes for export growth are riding on tariffs being abolished. “We expect Australian exports to rise from the current $600 million to over a billion dollars by the year 2020. “To do that we need more markets. China is the second largest market in the world for tree nuts, after USA. “The Chinese market is the market that it’s expanding. That’s the market we want to access. “This forthcoming trade deal is very important, more for the future than it is today. The Australian nut industry is investing millions of dollars to increase production. Walnut growers are no exception. Walnuts Australia, owned by Tasmanian company Webster, produces more than 90 per cent of the country’s crop. “The current FTA that’s being negotiated proposes that all tariffs on all nuts reduce to zero over five years. That’s what I understand is being discussed at this time.” Meanwhile, Mr Joyce says the seed has already been sown for the nut industry’s future expansion. “The trees are in the ground. You know that nut crops are coming well in advance of them actually being there, because it takes five to eight years to enter full production. “There’s a lot of walnut trees in the ground, a lot of almond and macadamia trees in the ground,” he said. He’s hopeful a China Australia free trade agreement could eventually see all tariffs on Australian nut imports abolished. “I would be confident that we would see the total elimination of tariff on Australian nuts going into China over a reasonable period of time. I think something like five years would be a good result.” The elimination of tariffs would put Australia on a level playing field with competitor Chile and may allow Australian nut exporters to break the stranglehold the US, the world’s largest producers of walnuts, almonds and pistachios, has on the Chinese market. How is showed in the statements above, China shows a really attractive market to the nuts and its merchandising over there, and additionally China is actually the second strong economy in the world after United States of America. (Australian Broadcasting Corporation). 2015) The Gross Domestic Product (GDP) in China was worth 9240.27 billion US dollars in 2013. The GDP value of China represents 14.90 percent of the world economy. GDP in China averaged 1252.79 USD Billion from 1960 until 2013, reaching an all time high of 9240.27 USD Billion in 2013 and a record low of 46.50 USD Billion in 1962. (China GDP. 2015). The following chart shows how China’s GDP is increasing year by year. Graph 1. C:UserseduardoDesktopFederationInternational Marketingtask 2imagenes task 2china-gdp.png Culture Actually China is a really large country, its traditions and customs vary importantly by ethnicity and geography. Nowadays there are more than 1 billion people, which represent 56 ethnic minority groups. However the largest group is the Han Chinese, with around 900 million people. Other important groups include the Manchus, the Tibetans, the Naxi, the Mongols, and the Hezhen, which represent the smallest group, with just 2,000 people approx. However Chinese and its rice is not just its major food source; rice for Chinese also meant a big help of growing their society, due to rice is part of Chinese culture. However there are also some food really present in the Chinese diet, which are also chicken and pork. (Chinese Culture, 2015) As this report is about nuts is important deepen in food culture and nuts in China. China’s cuisine is strongly influenced by ethnic diversity and geography. One of the most important styles of Chinese cuisine are Cantonese, which are stir-fried dishes, and Szechuan, which relies heavily on use of peanuts, ginger and sesame paste and also its known spiciness. The Macadamia Processing Company’s supply chain manager, Kevin Quinlan, says it’s part of their culture. “The Chinese culture is very much about eating nuts, and especially nut-in-shell, and as their affluence has grown their demand for all nut crops has increased as well,” he said. “They’re used to cracking nuts by hand – almonds, pistachios, and pecans – that all the shells have some sort of break in them and they crack them open. (Is China’s love for our native nut a production threat or marketing opportunity for Australian macadamia growers? – ABC Rural (Australian Broadcasting Corporation). 2015.) Social: China is mainly organized along unitary principles and not federals. Both the government and the Chinese Communist Party (CCP; Pinyin: Zhongguo Gongchan Dang; Wade-Giles romanization: Chung-kuo Kung-ch’an Tang), moreover, operate “from the top down,” arrogating to the “Centre” all powers that are not explicitly delegated to lower levels. To run the country, the government and the CCP have established roughly parallel national bureaucracies extending from Beijing down to local levels. These bureaucracies are assisted by various “mass organizations”—e.g., trade unions, a youth league, women’s associations, and writers’ and other professional associations—that encompass key sectors of the population. These organizations, with their extremely large memberships, have generally served as transmission lines for communicating and uniformly implementing policies affecting their members. No voluntary associations are permitted to function that are wholly independent of CCP and government leadership. (China | history, 2015) Technology: In 2012 China’s total spending on research and development was one trillion yuan ($164 billion), just under 2% of its gross domestic product. The same year, the U.S. spent $447 billion, or 2.8% of its GDP. But as China’s economy continues to grow rapidly, so does its R&D spending — and it’s projected to overtake that of the United States by 2022. Scientific advances contributed 51.7% to China’s economic growth in 2011, and the country is betting that technical innovations can help it address many challenges, including the need to upgrade its industrial base, reduce air pollution and address growing inequality. (China’s rise as a major contributor to science and technology. 2015) The Chinese government unveiled its “indigenous innovation” campaign in 2006, with a goal of turning the country into a “science powerhouse” by 2020 through an emphasis on human capital. Approximately 7 million Chinese citizens will graduate from college in 2014, up from just 1.1 million in 2001, and the country wants to lure back Chinese-origin scientists working abroad. China’s increasing number of academics have pushed China up in global rankings of published science and engineering papers: The country was 14th in 1995 and by 2007 was second only to the United States. (China’s rise as a major contributor to science and technology. 2015) Environmetal factors: Government takes serious matter especially in protection of the environment, where they impose a lot of regulations and laws to protect, control and prevention of pollution and also an improving of urban environment. The government also is contributing with a important number of NGO’s to try to maintain in good conditions the nature. Legal The legal representative of a company gets to make decisions. If a Chinese joint venture partner hires the legal rep, says Harris, it doesn’t matter whether you have the majority stake, or if you’re on the board. The legal rep still has the power. “Your Chinese partner can go to the bank and take out $2 million without your say,” he adds. There is no such thing as an independent contractor in China “I had a company of 15 people who signed a contract to develop an app for three years,” says Harris. “Then when the app was developed the Chinese refused to pay and told them to get out.” The majority shareholder of a firm has to have been at the company for three years before an IPO can be made It has occurred before when Chinese companies were about to initiate an IPO when the majority shareholder has died, meaning that the move has to be sent back to the drawing board. “China doesn’t like these super-fast IPOs like the U.S. does,” adds Harris. A U.S. court ruling holds no truck in China “Sometimes Americans will fight Chinese to have a dispute settled in a U.S. court, then the Chinese will battle them, putting up the illusion they care,” says Harris. “Then the American court will favor the American company. But a U.S. court ruling has no jurisdiction in China whatsoever.” Do not terminate employees as if you are in the U.S. In the States a company can hire and fire at will, often for no reason at all without transgressing discrimination laws. In China an employee may be fired without notice or severance pay only if he or she has severely violated company rules; engaged in dereliction of duty or corruption that dents the employer; made business ties with another company; or is facing criminal investigations. Other reasons, which carry notice and severance, include an inability to perform following a statutory treatment period, and incompetence not remedied by relocation or training (which Harris highly recommends not to follow). Firing twenty employees, or more than 10% of the workforce, carries additional stipulations. “Americans are used to just firing people,” says Harris. “It doesn’t work that way in China.” (Top five Chinese business laws everyone should know. 2015) SWOT

Strengths Weaknesses
  • High customer satisfaction
  • Capacity of production
  • Build long-term relationships with customers and suppliers
  • 100% environmentally friendly
  • High hygienic standards
  • Price very competitive
  • Modern roasting techniques
  • Managerial Commitment
  • Oil/dry/flavour roasting techniques
  • Natural raw materials
  • Different and innovative flavours
  • Fresh products
  • Teamwork
  • High Market Competition
  • High production cost
  • Lack of experience in local and international Markets
  • Absence of reputation
  • High risk of customer change resistance
Opportunities Threats
  • Faster Market Growing
  • The best nutritional value
  • Higher Quality
  • Competitors’ vulnerabilities with some benefits of the product.
  • Modern and attractive packaging
  • Interest and demand for Australian nuts.
  • Provide a clean and green environment
  • Establish a new alternative to improve the lifestyle with more varieties of nuts
  • Give the customers a confidence in food safety and ingredients.
  • Customer Allergies
  • Barriers of trade
  • High sell prices for importing goods in China
  • production costs in the home country

References Australian nut industry hopeful free trade agreement with China would eliminate all tariffs, particularly on walnuts, almonds and macadamias – ABC Rural (Australian Broadcasting Corporation). 2015.Australian nut industry hopeful free trade agreement with China would eliminate all tariffs, particularly on walnuts, almonds and macadamias – ABC Rural (Australian Broadcasting Corporation). [ONLINE] Available at:https://www.abc.net.au/news/2014-11-13/trade-australian-nuts-china-tariffs/5888452. [Accessed 10 May 2015]. China GDP | 1960-2015 | Data | Chart | Calendar | Forecast | News . 2015.China GDP | 1960-2015 | Data | Chart | Calendar | Forecast | News. [ONLINE] Available at:https://www.tradingeconomics.com/china/gdp. [Accessed 10 May 2015]. The World’s Top 10 Economies. 2015.The World’s Top 10 Economies. [ONLINE] Available at:https://www.investopedia.com/articles/investing/022415/worlds-top-10-economies.asp. [Accessed 10 May 2015]. Political Risk. 2015.Political Risk. [ONLINE] Available at:https://www.chinariskmanagement.com/Political.html. [Accessed 10 May 2015]. Where is China? . 2015.Where is China?. [ONLINE] Available at:https://www.china-family-adventure.com/where-is-china.html. [Accessed 10 May 2015]. China | history – geography :: Social, political, and cultural changes | Encyclopedia Britannica. 2015.China | history – geography :: Social, political, and cultural changes | Encyclopedia Britannica. [ONLINE] Available at:https://www.britannica.com/EBchecked/topic/111803/China/71635/Social-political-and-cultural-changes. [Accessed 10 May 2015]. Is China’s love for our native nut a production threat or marketing opportunity for Australian macadamia growers? – ABC Rural (Australian Broadcasting Corporation). 2015.Is China’s love for our native nut a production threat or marketing opportunity for Australian macadamia growers? – ABC Rural (Australian Broadcasting Corporation). [ONLINE] Available at:https://www.abc.net.au/news/2014-10-24/cracking-nuts-in-china/5834734. [Accessed 10 May 2015]. Chinese Culture: Customs & Traditions of China. 2015.Chinese Culture: Customs & Traditions of China. [ONLINE] Available at:https://www.livescience.com/28823-chinese-culture.html. [Accessed 11 May 2015]. China’s rise as a major contributor to science and technology – Journalist’s Resource Journalist’s Resource. 2015.China’s rise as a major contributor to science and technology – Journalist’s Resource Journalist’s Resource. [ONLINE] Available at:https://journalistsresource.org/studies/international/china/china-rising-science-technology-research-contributions. [Accessed 11 May 2015]. Top five Chinese business laws everyone should know — Red Herring. 2015.Top five Chinese business laws everyone should know — Red Herring. [ONLINE] Available at:https://www.redherring.com/startups/top-five-chinese-business-laws-everyone-should-know/. [Accessed 11 May 2015]. https://www.royalnutcompany.com.au/about-us/about-us https://www.austrade.gov.au/export/export-markets/countries/china/industries/Food-and-beverage#.VUiNuZWJgtp https://www.austnuts.com.au/industry.html

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A PESTEL Analysis on the Australian Nuts Company. (2017, Jun 26). Retrieved July 28, 2021 , from
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