BILLABONG
Nature of the business * Marketing, distribution, wholesaling and retailing of apparel, accessories, eyewear, wetsuits and hardgoods in the boardsports sector under the Billabong element, von zipper, honolua surf company, kustom, palmers surf, Nixon, xcel, tigerlily, sector 9, DaKine and RVCA brands * Billabong International’s values remain consistent with its foundation objectives. Includes a commitment to brand protection and enhancement, the manufacture of design-relevant and functional products, marketing in the core boardsports channels, the professional development of staff and ongoing attention to customer service and relationships. * The majority of revenue is generated through wholly-owned operations in Australia, North America, Europe, Japan, New Zealand, South Africa and Brazil.

Exec summary
Billabong’s aggressive approach in their expansion into foreign markets, taking their opposition and in the process, acquiring some of them allows Billabong to continuously expand and eradicate competitors. Billabong’s global expansion has greatly affected stakeholders and has allowed it to experience the many advantages of globalization. * one of Australia’s smaller transnational companies, operating on four continents, and was established as a private company in 1973 * In 2000 it was listed on the ASX and became a public company with shareholders. * The process of globalisation has allowed Billabong to now be able to distribute their products in over sixty countries throughout the world, as well as having acquired a number of other businesses through the desire to diversify their products and services that they are able to offer to their customers. Currently has approximately 600 staff worldwide

Methods of global expansion
The international expansion of Billabong has allowed the business to become more diversified and more competitive within the surf wear industry. It has also allowed the business to have improved access to foreign markets and access to the latest improvements in business technology.

Exporting – * main motivation for this is increased sales and profits but there are also accompanying benefits such as improved profitability for the business during an economic downturn in their domestic market. * Billabong has used the direct method of exporting as a low risk way of expanding their business global markets to export its manufactured products to the United States and Europe.
Foreign direct investment –
The management of Billabong has used both the Greenfield Strategy and the Acquisition Strategy of Foreign Direct Investment (FDI) to expand their business internationally.

* The Greenfield Strategy has been used the in the seeking out of cheaper sources for manufacturing in places such as Hong Kong and China, where they now have factories established which produce garments for sale in Australia. * The management of Billabong has used the Acquisition Strategy of Foreign Direct Investment (FDI) to expand their business internationally. * used in the acquisition of other businesses so that they become wholly owned subsidiaries of Billabong. * This has occurred with Element and Von Zipper, which have retained their brand name, but are wholly owned and controlled by Billabong. * This strategy has also been used in the establishment of offshore operations in places such as the United States, Brazil, Canada and New Zealand. These operations are responsible for importing, distributing and wholesaling Billabong Products.

Reasons for Billabongs global expansion
The reasons for which businesses aspire to enter foreign markets are all ultimately linked to the desire for increased sales and profits. Billabong is no different and has taken the opportunity to expand in order to have access to the numerous advantages that this expansion will provide.

The management of Billabong identified a number of reasons for its domestic and international expansion.

New markets – * Today, Billabong is a major transnational surfing brand, with operations in Australia, New Zealand, USA, France, Brazil and Hong Kong with over 70% of its revenue being generated from overseas markets (between 2003-04). * The desire of Billabong in wanting to find new markets and increase sales has been influenced by the limitations of the domestic market, in terms of the limited size of the Australian population and surfing not being a sport that is suited to all members of a population. * As a result of expanding into new markets, Billabong has been able to increase their profits and also increase the size of their product range and also the size of their worldwide operations.

Economies of Scale * Through globalization Billabong has increased its production facilities and garnered greater product exposure in foreign markets. * The average cost of manufacturing each individual product is inversely proportional to the businesses’ gross scale of production * therefore Billabong has downsized costs through economies of scale and increased profitability.

Cushioning Against the Economic Cycle * Globalisation allows billabong to safeguard itself from the economic life cycle. * If Billabong is marketing its product in a country experiencing an economic recession, its level of revenue and profitability can be adversely affected. * However, Billabong can offset this problem by simultaneously marketing its product in a country experiencing an economic boom, with high levels of consumer spending allowing Billabong to increase its revenue. * As a result Billabong’s profitability is ‘cushioned’ through its presence in several global markets.

Product life cycle * Through Globalisation Billabong is able to extend the life cycle of many of its products. * Billabong’s target market is seasonal, as the popularity of surfing is heavily dependent on the climate, with summer an ideal environment for surfing. * The Southern and Northern Hemispheres have diametrically opposed seasons, and thus the product line for Australia’s summer season can be directly translated to America’s summer season. * Hence, efficiency is improved as less time is invested in developing product lines, and seasonal changes have little impact on the profitability of Billabong’s global operations.

Influences on the business
There are four main influences on global businesses – financial, political, legal, and social/cultural. It is the specific strategies put in place by each business to effectively manage these influences that will largely determine the success of a businesses international expansion activities. financial – * currency fluctuations, interest rates and overseas borrowing of funds. * In the case of Billabong the major influence is currency fluctuations due to the business having operations in over sixty countries worldwide. These currency fluctuations have a relatively large impact on the accounting systems of Billabong with approximately $3 million being in net exchange differences. Billabong is also open to the risk of transaction exposure is currency fluctuations occur as they move goods around the world.
Political – * may include things such as tension between protectionism and free trade, trade agreements and regionalism, international organisations and treaties (World Trade Organisation) and civil unrest in foreign countries. * minor impact on Billabong with tariffs and quotas on clothing imported into countries being the more prominent influences.
Legal – * required to abide by the local laws and regulations that are set in each of the countries that it operates in, hence the management of Billabong need to have a sound understanding of both the common and civil laws of the different countries that they operate in. * Billabong also has a considerable interest in protecting its intellectual property, which includes its brand name, patents, trademarks and copyright rights. social – * there are still some products that are not suitable for sale in certain countries such as bikinis in a Muslim country, the company has overcome this * Billabong uses global packaging and marketing strategies in the effort to reduce costs. * The varying business practices of different countries have been overcome by the purchase of distributors of the establishment of operations in the specific country or region. * * .