Australian wool industry

Class: International Business

Class: International Business

Australian Wool Industry



Index:
Introduction………………………………………………………………………………………….....Page 1
Competition………………………………………………………………………………………………Page 2
Signs of Globalization………………………………………………………………………………..Page 4
Prevalent strategies and degree of internationalization....………………………..Page 5

Introduction:

Australia's economyis dominated by its services sector, however are the agricultural and mining sectors wich represent the bulk of Australia's exports. Rich in resources, is the major exporter of agricultural products, particulary wheat and wool, minerals such as iron and gold, and energy in the forms of liquified natural gas and coal.
In this work, particulary, we will talk about the australian wool industry,that has come a long way since 1807, when the first bale of australian wool was sent to England with the intent of commercial sale. Today, Australia is the largest producer of wool in the world, its wool (particularly the merino type) is recognized by many as world’s whitest, softest and most lavish natural fibre.

Competition

The wool industry is not very extensive and is affected by loweconomic returns that have related to the other items of livestock production and agriculture. Another issue that influences the development of this industry is that often prefer to use sheep to the meat production, instead of using their wool.

Despite of this, Australia has effectively manage the business very well, winning the first place as a producer of wool with the 21.5% of the world's greasywool. It has an output of approximately 475.000 tons of wool, of which exports 80% (375.000 tons). Unlike other producers, Australia is the only one that has 85% of their sheep breeds, of merino type, that is the finest one. This gives a comparative advantage relative to other producers in terms of quality.
As for Australian exports, 65% of the wool produced in this country is exported to China,then followed Italy with 7%. China, in particular, has become the largest importer of wool worldwide and is responsible for processing (which not all countries do) and then dedicate to the manufacturing. For its part, Italy buy australian wool to destinated primarily to the fashion and couture industry.
Other importers of Australian wool worth mentioning are India, Taiwan and Czech Republic, butwith very small percentages of imports, which have decreasing over time, beacause the existence of other substitutes such as cotton and synthetic fibers.

China is the second largest producer of wool in the world (18% market share). And a curious fact to mention is that while Australia produces more wool than any other country, China have the largest sheep population, and still can not meet thedemand. China's problem is that rapid economic growth and urbanization of the country, has led to important changes in the demand for agricultural products, which means a challenge to achieve its own production stock. Although China have a big livestock sheep to produce wool, this is not enough, so besides of all the wool consumed domestically produced, also are forced to buy what they lack toAustralians.
Top Wool producing countries
Top Wool producing countries

New Zealand has the third largest in terms of production (11% market share), but the second level of exports (89% of its wool). It has also found a business niche in the production of organic wool (market where Australia has also investigated), wich is characterized by have a very limitedsupply. This tupe of wool has managed position within the market, however has a higher cost, wich directly influences the quantity demanded. Most New Zealand wool, is crossbred and carpet wool, that are much thicker, unlike the wool for clothing, that is usually from merino sheep, typically, twice as fine.
Russia is the fourth largest producer of wool in the world (7% market share). But like China,...