Posted: February 26th, 2024

Parmalat Dairy Company: Cage Framework

Cultural Distance

The cultural difference between China and Australia may be a challenge to Parmalat, which is why it is important for the organization to establish strategies to break into the culture. The language barrier may pose a challenge thus the need for hiring the local people especially in functions that will require direct interaction with the clients.

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Administrative distance

Although the Free Trade Agreement has simplified trade between China and Australia, the two countries have different currency and China has relatively weak institutions. Parmalat will have to undertake all the documentation process required in addition to having a keen eye on the changes of the exchange rate.

Geographic distance

One of the areas that the organization can use to improve its competitive advantage is boosting its supply chain. Parmalat will have to look for ways of using the easiest and fastest route to ship its products to China. The political position of both countries is relatively stable thus promoting a business environment that is conducive for the dairy industry.

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Economic Distance

Although Chinas’ economy is larger than that of Australia, income per capita is still low. The household economic difference in China will require Parmalat to design its product so that it will suit both the low income earners and the emerging middle class.

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