GLOBALISATIONGLOBALISATION

REASONS FOR REASONS FOR EXPANSIONEXPANSION

Reasons for Global Reasons for Global expansionexpansion

Increasing sales and new marketsIncreasing sales and new markets Acquisition of resources and Acquisition of resources and

technologytechnology DiversificationDiversification Minimisation of Competitive RiskMinimisation of Competitive Risk Exploiting Economies of ScaleExploiting Economies of Scale Responding to regulatory differencesResponding to regulatory differences Tax MinimisationTax Minimisation Cushioning economic cycleCushioning economic cycle

CCA-Sales and new CCA-Sales and new marketmarket

Australia is high income with small Australia is high income with small populationpopulation

Australians consume large quantities of Australians consume large quantities of NAB but the rate of growth of NAB but the rate of growth of consumption is slowconsumption is slow

Australia’s Asian markets are developing Australia’s Asian markets are developing hence offering greater opportunities for hence offering greater opportunities for growth than the existing Australian growth than the existing Australian market which CCA already dominatesmarket which CCA already dominates

The emphasis is on future growth salesThe emphasis is on future growth sales

CCA- acquisition of CCA- acquisition of resourcesresources

CCA has acquired plants and CCA has acquired plants and operations in many countries operations in many countries thereby enabling it to adopt new thereby enabling it to adopt new technologiestechnologies

The move into Asia has enabled The move into Asia has enabled it to take advantage of cheap it to take advantage of cheap labour costslabour costs

CCA -Diversification CCA -Diversification CCA through global expansion has the CCA through global expansion has the

opportunity to diversify it’s product range.opportunity to diversify it’s product range. In australia carbonated beverages are In australia carbonated beverages are

popular while in S.E. asia consumers prefer popular while in S.E. asia consumers prefer iced tea and fruit juices.iced tea and fruit juices.

These differentating consumer preferences These differentating consumer preferences has encouraged CCA to launch new has encouraged CCA to launch new productsproducts

Additionally it has allowed it to rejuvenate Additionally it has allowed it to rejuvenate its product life cycle for some of its its product life cycle for some of its established drinks such as Coca- Colaestablished drinks such as Coca- Cola

CCA- minimising CCA- minimising competitive riskcompetitive risk

Operating in more than one Operating in more than one market means that it faces market means that it faces less competition from the less competition from the potential entry of new potential entry of new products or competitiors into products or competitiors into its Home market e.g. ‘RED its Home market e.g. ‘RED BULL’ or ‘V’BULL’ or ‘V’

CCA – Economies of scaleCCA – Economies of scale

By increasing its operating size CCA By increasing its operating size CCA can acquire syrup at less costcan acquire syrup at less cost

Cor-procure adopted to buy Cor-procure adopted to buy aluminium through ‘100 club’ brings aluminium through ‘100 club’ brings down the input costs for aluminium down the input costs for aluminium

CCA – Economic Cycle CCA – Economic Cycle

International expansion has also International expansion has also made CCA less vulnerable to made CCA less vulnerable to fluctuations in the economic cycle. fluctuations in the economic cycle. E.g. if sales fall in Australia this can E.g. if sales fall in Australia this can be offset by increasing sales in be offset by increasing sales in foreign marketsforeign markets

Also seasonal variations – operating Also seasonal variations – operating in Northern and Southern in Northern and Southern Hemisphere will ensure a consistent Hemisphere will ensure a consistent demand for their productsdemand for their products

CCA- Regulatory CCA- Regulatory DifferencesDifferences

Abides by local laws as much Abides by local laws as much as possible- wages etc.as possible- wages etc.

Rejection by ACCC to buy Rejection by ACCC to buy Schweppes but in NZ they Schweppes but in NZ they had no problems as licensing had no problems as licensing laws are differentlaws are different

CCA – Tax MinimistaionCCA – Tax Minimistaion

10% GST to all goods sold in 10% GST to all goods sold in AustraliaAustralia

The Coke syrup is done through The Coke syrup is done through CCA’s subsidiary in Singapore in CCA’s subsidiary in Singapore in order to minimise tax on the order to minimise tax on the productproduct

Tax in Fiji and Indonesia is less Tax in Fiji and Indonesia is less tha tax in Australia, NZ and tha tax in Australia, NZ and South KoreaSouth Korea