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GBMT2009 Global Business Management

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GBMT2009 Global Business Management

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Course Code: GBMT2009
University: Georgian College is not sponsored or endorsed by this college or university

Country: Canada


In this task, you have been engaged as a consultant to conduct a country attractiveness assessment for an Australian agribusiness producer which is seeking to expand its business offshore. The company produces a range of wines of the highest quality. It has been successful in growing its domestic market and now wishes to explore opportunities internationally. However, it lacks international experience so has sought external advice in making its country selection decision. Your client is currently evaluating the following markets for their potential attractiveness: United States of America, Poland, and Turkey. The company is intending to expand into foreign markets by exporting via a distributor. As a consultant to the company, you are being asked to provide a report on ONE of these countries only. You are not being asked to rank the countries so you need to choose a single country to research for your report. Please note that you may not choose a country for your assignment if it is your home country/a country in your home region. This consulting assignment requires you to assess the country risks and market opportunities of the business environment of your chosen country, taking into account the product and its industry context
This task is a continuation of the country attractiveness assessment that you have commenced in Part 1. In Part 2, you are required to continue researching the same country that you selected for Part 1. In Part 2, your focus is on assessing the country’s economic environment (Theme 3) and socio-cultural trends (Theme 4) relevant to your client. At the end of the report, you should make an overall recommendation as to whether the country is potentially attractive to your client, given your analysis in Parts 1 and 2. You will need to show evidence that you have used the feedback from Part 1 to inform and improve your Part 2 report.


The globalization increases the scope of growth for businesses by grabbing the opportunity of overseas expansion; however, it is crucial to analyze the new market in context of its external and internal business environment  (Shenkar, Luo & Chi, 2014). In this regard, the selection of country for business expansion plays most important role in the success of business in host country because the economic and socio-cultural aspects of host country affect new business to a great extent (Lussier & Halabi, 2010). In this context, the present report based on the case study of Australian agribusiness producer firm which targets to expand their wine business globally. In relation to this, the present report identifies the attractiveness of Turkey in the context of economic environment and socio-cultural trends. For this purpose, the recommendations are suggested for Australian company for country attractiveness.
The Economic Environment Of Turkey
Government regulations
The government of Turkey has several regulations for a wine industry such as on the promotion of alcoholic drinks. In this manner, the wine producer companies do not promote their product through any type of promotion activity including website promotion, visual promotion, advertisement in the events (Pitel, 2015). In this regard, Omarjee & Chiliya (2014) explained that the low marketing of product negatively influences the popularity of product in the customer. Owing to this, ban on wine promotion has negative impact on the productivity of the wine industry in Turkey because customers will not get the information related to the new brand and accordingly sales turnover will go down. However,the anti -promotional rules create the risk for overseas products.
The government of Turkey foster the import tariff on the alcoholic product is between the 50 -70%, it increases the price of wine in Turkey and makes the wine unaffordable for the local customer in Turkey (Sirtioglu, 2017). The less affordable price of wine adversely affects the consumption of foreign wine. In this context,Kassim (2015) stated that the proportion of total import is highly influenced by the regulations imposed on imported goods in term of import duty.
In Turkey, the government increases the taxes on the alcoholic product and the reason behind this is the Islamic rooted government. In this manner, the Turkish government considers the alcoholic drinks as unethical as consumption of liquor is prohibited in Islam; therefore, they adopt indirect ways to reduce the use of such kind of products through increasing the tax (Pitel, 2015). In this regard, government high taxes policy reduces the wine consumption in the country (Özdemir, 2015). In this context,Ozdemir (2013) asserted that the unethical behavior of government for a particular product decline success of product in the market and reduces the opportunity for development.Owing to this,high the taxes from the Turkish government create the threats for development of wine industry in Turkey.
The government of Turkey increases the value-added tax (VAT) on the alcoholic product up to 18% (Sirtioglu, 2017). This action of the Turkish government also minimizes the consumption of wine in the country. In this context, the following diagram shows the year-wise consumption of alcoholic product.

Figure 1: Domestic wine consumption (Liters) in Turkey
(Source:Sirtioglu, 2017)
According to above diagram, the consumption of wine was regularly increased between 2012 and 2015. Yet, in 2016 the consumption of wine was decreased because of high taxes and import duties. In this manner, if any alcoholic product manufacturing company targets to sell their production Turkey then the company will face many barriers. Apart from this, many other alcoholic products such as beer and rakicreate the risk for wine in the turkey. Thus, the concern on the competitor product may helpful for a foreign wine exporter company.
Inflation in Turkey
According to several studies, Turkey faces the currency crises because of high inflation rate (Belvedere, 2018; Money Week, 2018). In this regard, the inflation rate is going above the estimated rate (ANKARA, 2018). Thus, high inflation rate minimizes attractiveness of the country for overseas companies because the uncertainty in the currency value foster the overseas companies to revise the price of their product in Turkey. These change in price negatively affect the overseas business companies and create the causes for loss in business. In this context, Galí (2015) commented that the high rate inflation negatively affects the purchasing behavior of customer because it increases the price of overseas product. In this manner, the customers of wine industry are also influenced by the high price rises and minimize the consumption of wine. This low consumption of wine enhances the risk for foreign companies for expanding their business in Turkey.
In Turkey, the unemployment is rising continuously which adversely affects the buying behavior of Turkish public (ANKARA, 2018). It is already known that the high taxes on alcoholic product from Turkish government increase the price of wine.  In this regard, the low source of income prevents the customer to buy expensive imported wine product. Due to this, the unemployment in Turkey minimizes the country attractiveness for overseas wine companies.   
Tourist attraction
The historical culture and regional identity of Turkey attract the several tourists towards the country. In this regard, the major tourists come to Turkey from Russia, Germany and UK (Trading Economy, 2018). The lifestyle of tourist enhances the consumption of alcoholic product in turkey. Thus, it is an opportunity for wine manufacturing companies to sell their product among the tourist of Turkey. In this regard, Lee & Brahmasrene (2013) stated that the tourism of a country enhances the growth of foreign business in host country by contributing the capital income.
Figure 2: Touristarrivals in Turkey
(Source:Trading Economy, 2018)
As per the above diagram, arrivals of tourist in Turkey are continuously increasing. Therefore, the attraction of tourist for Turkey enhances the attractiveness of the country for foreign wine manufacturing companies to sell their product among the tourist of turkey.    
Political instability
The political instability of Turkey negatively influenced the foreign capital inflows in the country (Letsch, 2014). However, other developed countries differentiate Turkey and create the causes for the global economic shift (Toksoz, 2017). In this context, Aisen&Veiga (2013) asserted that political instability and economic growth are interconnected. They also mentioned that the unstable political environment reduces the investment which adversely affects the growth of economy. In this regard, the wine industry is also influenced by the political instability because the political instability reduces the interest of foreign investor for investing in the country. It is already known that the political instability rapidly changes the government rules and regulation, which creates the adverse circumstances for a foreign investor (Roe & Siegel, 2011). Nonetheless, the political environment of Turkey is considerable for investment from foreign countries.
The lacks in the present government policies also influence the economic development of Turkey because the libel government parties decline the discussion on the economic difficulties of the country and put restriction on the discussion on foreign policies (Mert, 2017). However, government readiness is important to attract foreign investment in the country and for the development of the economy (Alfaro & Johnson, 2012). At this juncture, Buckley et al. (2010) mentioned that the awareness of government policy is imperative for improving the foreign direct investment (FDI) in the country.  Apart from this, the liberalization in the policies encourages the foreign sponsor for investing (Luo, Xue & Han, 2010). Yet, the concentration of Turkish government in the creation of liberalizing policies for overseas wine investor is low; thus, it adversely influenced the interest of wine investor.
Social Cultural Trends Of Turkey
Religion barrier
Turkey is an emerging country which has major populationof Muslim religion (Dudek, 2018). In Muslim religion, the wine is prohibited and drinking of wines as the most demeritorious activity.In this manner, a Turkish people drink one-litre wine in a year which is very low from Italians and 80% Turkish people don’t drink any type of alcoholic drinks (Jeffreys, 2016). Owing to this, the regional cultural trends of Turkey reduces the consumption of wine in the country.In this regard,Conto, Vrontis, Fiore &Thrassou (2014) stated that the regional identity impacts the overseas wine investors in host country.
Eating culture
In the eating culture of the Muslim religion, the grapes are used in almost every dish in different ways. In this regard, the wine industry has a low supply of raw material for wine even after, it is the major producer of grapes (Ozerkan, 2017). In this context, Lea & Piggott (2012) asserted that the poor supply of raw material negatively affects the manufacturing process which further influences the whole industry. Owing to this, cultural trends of Turkey for the consumption of grapes negatively affect the wine production. Therefore, social trends of eating grapes in Turkey enhances the opportunity for the overseas wine manufacturing companies to sell their product in Turkey. On the other hand, the majority in the grapes production attract the foreign investor to establish their business in Turkey.   
Life style
The globalization in the lifestyle and education influences the thought of every person on the earth. In this regard, the young generation of Turkey changes their behavior for liquor and get attracted towards the liquor which has positive impact on the wine industry by increasing the consumption of wine by 2% (Ç?nar& Pauwels, 2015). Therefore, the social trend of youth in Turkey is potential for creating enactment in the growth of wine industry. Apart from this, the globalized lifestyle enhances public awareness for global brands and creates the opportunity for an overseas wine manufacturing company to launch their product in Turkey.
Population growth
The population of Turkey contributes in the world population by 1.07% and listed on 19 in the world populated countries. In this regard, the median age of public in the Turkey is 30.2 year (Worldometers, 2018).  It is already known that the young generation except for the change in the behavior easily in comparison to older age people. In this manner, the youth ofTurkey may change the perception of large mass of population of the selected country towards the product. Thus, it is an opportunity for a foreign company to sell their product in Turkey.  
Customer demand
As per the above discussion, the marketing, advertisement and selling of alcoholic product are strictly controlled by the Turkish government. However, the demand for imported wine products is increasing continuously. In 2009 the Turkey imported 1.3 million liters of wine and in 2014, Turkey import 7.2 million liters (ITE Food and Drink, 2017). It reveals that the consumer demands for imported wine are continuously increasing which enhances the attractiveness of country for foreign wine companies. In this context, Fogarty (2010) asserted the identification of market demand is imperative for boosting the sale of product.
Table 1: Factors affecting customers demand



Age group

43.21% people in the 25-54 age group (Index mundi, 2018)


Collectivism (refer to figure 3)


Muslim avoids wine


Low masculinity

References group

Visitors and friends


Less supportive for wine because 99.8% people are Islamic (Dudek, 2018)

As per the above table, the customer demand is affected by the majority age group, attitude, reference group, personality and culture of the Turkish people. In this context, a huge part of the population is between the 25-54 age which creates the opportunity for imported wine because most of the public is self-dependent and buy the imported wine on their behalf. Similarly, the references group also affects the buying behavior of customer and it can be positive or negative. In Turkey, youngsters and tourists are positively affecting the buying behavior; yet,  families are less supportive of buying wine product (refer to table1).

Figure 3: cultural differences between Turkey and Australia
(Source: Hofstede Insight, 2018)
 As per the above figure, Australia and Turkey have major differences in the culture. In this regard, the inequality in Australia is less in comparison to Turkey. This means that majority of the public does not express their attitude towards the leader. Similarly, in Australia focus on individualism whereas in Turkey collectivism is on focus (refer to figure 3). However, according to the case study, the Australian firm will expand the business through the exporting mode. Thus, the local distributor will handle this situation and does not affect Australian manufacturer. Therefore, the expansion through distributor is an opportunity for Australian wine business to overcome the cultural barriers.
According to the above analysis of Turkey’s economic environment and social-cultural trends, there are many barriers which affect the wine business in the country. In this regard, the following recommendations are suggested for Australian wine producer company for business expansion in Turkey.
Economic barrier
As already known the economic condition of Turkey creates the barrier for Australian wine producer because of the high inflation rate and unemployment. If the company will sell their product in Turkey, then the company will have to sell the wine product at low cost for the low amount of public. Owing to this, it will decrease the profitability of the company. Therefore, the Australian wine produces should not expand their business in Turkey.  
Cultural barrier
If the Australian company will expand their business in Turkey, then the company can face criticism from the local rigid public. Due to narrow thinking of public for wine in Turkey, it will minimize the consumption of wine. It will negatively affect the profitability of Australian company and will create the low attractiveness of Turkey for Australian manufacturing company.  However, the eating culture of Turkey negatively affects the production of wine in the country because of the low availability of grapes. In this regard, the Australian wine producer can import low quantity and high quality of wine in Turkey for those people who want leisure in life.    
Government restriction
Since restrictions from local government will degrade the opportunity for enhancing the popularity of Australian wine. If Australian company will expand in Turkey, then the company cannot operate any marketing operation in the country and cannot inform the public for the new product even operating the business by the distributor. Owing to this, it will minimize the awareness of new Australian wine product in Turkey’s public. Therefore, the Australian wine producer company should not expand their business in Turkey because of the high restriction on marketing activity.   
Tourist demand
The demand of tourist for wine in Turkey is high and which can work as an opportunity for Australian agri-business firm to sell wine product in Turkey. However, due to low consumption of wine, the Australian company should export little amount of product and can enhance the product popularity in tourist through maintaining the availability of wine product in Turkey.
On the basis of above report, it has been concluded that the economic environment of Turkey for wine is adversely influenced by the many factors such as government rulers, taxes, policies and minimize the country attractiveness for the overseas business. At the same time, the socio-culture trends also adversely influenced the wine business in Turkey because of the rigid thinking of the local public. However, according to the analysis of tourist demand and lifestyle of the young generation, the Australian company has little bit favorable conditions in which the company can expand in Turkey. Yet, the chances of business success in the expansion are very low; thus, it is recommended that the Australian agri-business firm should not expand their business in Turkey.   
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Alfaro, L., & Johnson, M. S. (2012). Foreign direct investment and growth. In The evidence and impact of financial globalization (pp. 299-309).
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ANKARA, (2018). Turkey’s unemployment rate hits 10.8 pct in July. [Online]. Available at:<>. [Accessed on 18October 2018]
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