Is The Strategy Making Context Different In Australia And The Usa? If So, How?
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Question:
Is the strategy making context different in Australia and the USA? If so, how?
The strategy-making context is different in Australia and USA, as it varies from the different nature and direction of the country’s general external environment, leading to different opportunities and threats; these will influence businesses in shaping their strategies and tactics to gain strategic competitiveness.
In other words, businesses need to scan, monitor, forecast and assess the external variables before crafting appropriate strategic moves; they aim to capture opportunities and to defend against threats, in order to craft a responsive and proactive strategic plan.
The context of strategy making in Australia and USA is different in seven external predominant segments: demographic, economic, political, social-cultural, technological and global segments.
In the comparison below, some strategic implications are highlighted on context different in strategy making between Australia and USA.
The Demographic Segment
The demographic segment is concerned with a population’s size, age, structure, geographic distribution, ethic mix and income distribution (Hanson et al. 2005, P. 51).
To highlights the similarity, both Australia and USA are experiencing a demographic shift towards an older population (Social Security Online 2007). To imply, old generation is a new niche market opportunity in both countries today.
Population Size
The resident population of USA today is above 302 million, and of Australia today is approximately 21 million (U.S. Census Bureau 2007). It implicates that USA domestic market is 15 times bigger than Australia.
The implication on strategy making is, the greater domestic demand provides better opportunities for some manufacturers / retailers to achieve economies of scale, and it is therefore easier to apply low-cost leadership strategy in USA than in Australia. For example: Wal-Mart.
Demographic Distribution
The model of demographic distribution is different; Australia’s population is mostly distributed along the coastline, where USA congregates in big cities.
Approximately 77% of Australia population is congregating at New South Wales, Victoria and Queensland (Australia Bureau of Statistics 2007). On the other hand, 30% USA population is congregating at New York City, Los Angeles and Chicago (U.S. Census Bureau 2007).
The different distribution models will affect the company segmentation and targeting strategy and company structure.
For example, applying centralized marketing strategy in Australia as these three states are near to each other, and applying decentralized marketing strategy in USA as the key markets are far from each other.
The Economic Segment
The economic environment refers to the nature and direction of the economy in which a firm competes or may compete (Hanson et al. 2005, P. 54).
To highlight the similarity, both Australia and USA have been experiencing stable and positive economy growth (Australia Bureau of Statistic 2007). Besides, their personal saving rate has been increasing (Bureau of Economic Analysis 2007). This implies that market consumption power is increasing.
Gross Domestic Products
The investment strategy in Australia and USA is varied from the key contributors to their GDP respectively.
For instance, property, manufacturing, finance and insurance are the three main contributors for over 30% of Australia GDP since 2005 (Australia Bureau of Statistic 2007). Nevertheless, USA key contributor is from real estate industry (Lovelock & Wirtz, 2007, P. 10).
The stronger performance the industry is, the greater the opportunity and competition are. To imply, these are favorite businesses for diversified companies in structuring their corporate strategy.
Unemployment Rate
The different contributor to the unemployment rate is varied from countries, and they offer different opportunities in strategy making.
In USA, the black or African American has suffered the unemployment rate of 8.1%, which is double of White People (U.S. Bureau of Labor Statistics 2007). To imply, there is an opportunity for businesses, based on the ethnic language and nature, to apply customization strategy and provide special training and rehabilitation program to meet the demand.
Nevertheless, this strategic plan doesn’t work at Australia, where African American is very limited in the population.
The Political Segment
The political segment is the arena in which organizations and interest groups compete for attention, resources and a voice in overseeing the body of laws and regulations guiding the interaction among nations (Hanson et al. 2005, P. 55).
Tax Laws and Regulation
The Federal Legal System in USA is different from Australia, as it is a federation composing of a number of self-governing states, yet the latter is applying Parliamentary Democracy System, where the regulation between different states are not significant (Wikimedia Foundation, Inc 2007).
To highlight, the taxation laws in USA are varied from states, yet there are almost the same among Australia states. To the context of international marketing strategy, the company will choose a state offering lower tax rate to maximize the shareholders’ interest. Nevertheless, in Australia, it won’t be a key consideration for businesses to exploit to another state.
R&D Taxes
The degree of R&D taxes of USA is lower than Australia; USA is defining more tax codes to provide tax credit to allow businesses to deduct part of their R&D investment, to improve their competition competency (The White House 2007).
To imply, it is more encouraging for business to apply product differentiation strategies in USA than Australia.