1. What are the key issues presented in this case?

2. SWOT analysis of Barrett Farm Foods in the context of international business in Europe

Strengths, Weaknesses, Opportunities, Threats

3. Do you see any problems with Philip Austin plan for European expansion?

4. What are some issues he needs to consider?

Barrett Farm Foods: A Small Firm's International Launch Philp Austin, general manager of Barrett Farm Foods, was thriled after (EU). Telford emphasized his knowledge of the market, extensive canreturning from the food industry trade fair in Cologne, Germany-the tacts, and prier busincss experience, He noted that other Australian largest food ard beverage fair in the world. Barrett Farm Foods, based in firms, such as Burns Phillo, Elders-IXL, and Southern Farmers, are alMelocurne, Victoria, is Australia's sixth-largest food compary. It distrib- ready doing business in Eurape. He painted to several success steries, utas both bulk agricultural commodities and processed food products. induding Sydney-based pastry manufacturer, C \& M Antonlou, which Among others, it sells macadarnia nuts, cereal bars, garlic, ginger, dried establashed a small plart in Britain to avoid the wal of agricultural fruits, and heriey throughout Australla. Barrett has had a healthy rate duties in the EU market, The compary now supplies seueral British suof growth over the past decade, and its sales reached USD $215 milion permarket chains, including Marks \& Spencer, Tesco, and 5 ainsburys. last year. While Barett is wel knamm in the damestic market, its interna- Anather Australiar group, Buderim Ginger, eppanded its operations tional experience has been limited to responding to occasional, unsolic- from Britain into continental Europe by opening an office in Germany. ited orders from foreign custarners, h cormpleting these export arders, Barrett has relied on intermediaries in Australla that provided assistance Creating a Task Force for international logistics and payments. Yet Austin is enthusisstic about After the fair, Austin created a three-persan task force among his substantially expanding the export business over the next few years. senior managers and charged them with implementing an export Recognizing an Opportunity _ was reasonable. To idontify the most promising cuports, Barrett would What prompted Austin to attend the Calagne fair was a report from examine lts current product offerings. It would appoint an agent, such Austrade, the Australian povernment's trade promotion agency, which as Peter Telfard, to faciitate EU sales. The people Austin met at the highlighted the potential of Aistralan foodstuffs exparts. According Cologne fair were potential oustomers to contact for immediate sales. to Austrade, Augtialian food exports exceeded AlJ $30 biliori last Barrett could also forward same product and comparry literature to yoar. Austrape believes processed foodstulfs are the coming trend and European importers, identify and appoint one or more distributors in Wants to bodst exgorts. Europe that here access to supemarkets and other large-seale buyers, But this falses a oilemma: Much of current exports are primar- and revamp its Wab site to attract export business. ily raw foods, nat, processed focds, If just, 10 percent of processed While Barrett senior managers shared Austin's enthuslasm about food value-addhg were done in Australla, the country's balance of exparting to Europe, they did nat share his optimism. Barrett had little trade would improve. For example, irstead of exporting raw grains to internal expertise to deal with the complexities of international shippling, Europe, Austrade wants Australian producers to process the grainsinto expart documertation, and receiving psymerits from export custembread and other bakefy products, thereby creating jobs for Australlans. ers. In addition, they knew export transactions take time to complete, Austrade beleves mest, cereal, sugar, dairy commodities, and mafine and the fifm would hame to arrange for financing of export sales. lubst products have the most potential for food processing. impartanthy soniar managers felt they would have to invest in creating a small export team and hire or trah employees in export operations. Meeting with Potential Export Customers Food is a camplex business, in part because it is perishable, often attheCologneFairAttheColognefair,Harrettsnut-and-honeycerealbarsandbutter-likeferencesinnaticnaltastes,regulations,andmarketstructures.WhileAustraliansloveVegerniteabrown,saltybreakfastspreadmadefrom requiring spedal equipment for distribution. Europe also has many difspread were a hit. Luigi Calrati, a senior executive with the Itallan su- yeast-the product enjoys little popularity outside Australia. With no perrnarket chain Standa, was keen on doing business with Barrett. He name recognition in Eurcpe, Barrett may have to rescrt to stoce brandpcinted out that, coor the past docade, there has been an explosian of ing, which will penerate lower profit margins. interest among European supermarkets for exotic foods and vegetables, Barrett would have to rely on foreign intermediafies with access to with cach group competing to display produce from arcund the world. Well-knawn supermarket chains to distributo its products. Is Peter ldifard Standa was seeking new products from other countries, partly to meet the right choice? What is the appropriate commission structure for comoff-season demand for fruit and vegetables. Gebrielle Martin, purchas- pensating intermeciaries? With mary larget, more experienced competiing manager far French foad group Fauchon, also canfirmed her inter- tars in the EU, Barrett must keep its pricing competitive, although the est in showasing exotic and high-qualty food in Fauchon stores, She complexdy of pridng can onerwinelm inexperienced managers. Bamett's added that Europeans view Australia as exotic and pollution-free and as senior managers also realize that prices strongly atfect sales and profits. a producrer of quality products. In addition, the market far carned fruit The eurd, Eurapes comman oumency, simplifiod pricing strategy, but is opering up as the fruit oop from trees in Europe declines over time, numerous challenges remain. Prices are affected by transportation costs, Austin also met Peter Tellord, an agent from the United Kingdom buyer dernand, exchange rates, tariffs, carrpetitors' pricing, regulatory who showed interest in representing Barrett in the Europesn Urion compliance, and the costs of marketing and physical cistribution