Assignment 2 tasks this report focuses on a fictional aus

1. Assignment 2-Tasks
This report focuses on a fictional Australian engineering and
manufacturing company called TSA Pty. Ltd. (TSA). TSA is a
global leader in the food packaging and processing industry,
supplying turnkey solutions and single systems to customers
around the world.
The task will be to familiarise yourself with the company and
then investigate and comment on specific questions relating to
the company’s international operation and expansion.
Company Background
TSA was co-foundered by Ald and Nataly Wood in 1982 based
on the original idea of Nataly Wood. When TSA started it spent
much of the 1980s installing machines for Australian potato
crisp manufacturer Poty’s. In 1989 the company entered the
U.K. started to earn its first overseas revenue.
TSA’s business is based on the development of innovative
packaging equipment. Ald Wood the company’s managing
director was originally an engineer, who had experience
working in the snack food industry. He worked with food
manufacturers previously which had given him a detailed
knowledge of the food packaging business. He worked on
developing packaging machines that incorporated a unique
stripping action using rotary continuous motion jaws, to
generate an output of bags more than double the industry
average.
According to Wood, the decision to go international was made
at the same time as this innovation was conceived. It was felt at
the time that developing a global business model would be

2. relatively easy. However the development of the packaging
machine proved much more difficult than anticipated due in part
to a number of design faults in the machine. A break through
ultimately occurred in 1986 when Poty’s took a risk and place
an order for a large number of the machines. Installation
commenced in 1987 but involved major problems for both TSA
and Poty’s. As Ald explains:
We have serious problem in our processing. The software was
stopping many times during the day, machines just refuse to
work. We spend two years, from 1987 to 1989, to resolve all of
these issues.
The prototype machines had been installed in Poty’s brand new
facilities in South Australia. Poty’s were heavily dependent on
TSA and continued to fund them for two years to fix the
outstanding problems. By 1989 the machines were fully
functional and TSA was now a $5M company with 20
employees.
TSA has grown from a small Australian company into a large
organisation with operations in over 12 countries across the
world. With a history spanning more than twenty years, TSA
has grown from a packaging machine supplier initially targeting
snack food production lines to become internationally
recognized as a leader in packaging technology and solutions.
Offering customers a complete processing/packaging production
line, TSA can now not only include the design, delivery and
installation of integrated packaging and processing equipment
but also fully integrated operational elements such as power
supply, voice and data cabling, wastewater management and
building design.
With growing pressure to retain shelf-space and presence in the

3. eyes of the consumer, processors are faced with numerous
challenges when it comes to processing and packaging their
products. With the availability of a true turn-key
process/production line, project managers no longer have to
‘cherry-pick’ and coordinate multiple quotes from multiple
suppliers.
As a solutions provider, TSA claims its new division is not just
a response to problems posed by customers. It also involves
improvements to existing machinery and the company’s
philosophy of “Rethink the Conventional”.
The management of TSA considers that TSA’s defining benefit
is one of practical ingenuity. By taking as standard the things
that competitors treat as challenges TSA can accommodate the
needs of clients and develop machinery to meet those demands.
“With greater processing speed and higher quality we will have
lower costs per bag and we would reduce maintenance costs,”
said Ald Wood.
Products
TSA is a leading supplier of complete turnkey solutions to the
food packaging and processing industry with the packaging and
distribution systems, mabag® and maflo® being benchmark
products in the industry. TSA products include:
· Product transfer & distribution
· Multiplatform scales
· Coders
· metal detectors
· case packers
· case erectors
· shrink wrappers
· seasoning systems
· complete processing equipment
The company sources most of the parts for its machines from

4. overseas. Japan provides most of the parts in dollar terms, with
the U.K. the second largest supplier. The Uruguay Round of the
General Agreement on Tariffs and Trade (now WTO) was
particularly beneficial to TSA. In particular, the agreement
extended the life of patents from 16 to 20 years. TSA has
approximately 30 patents overall, but this extends to several
hundred patents in the patent family worldwide.
The Organisation
In Australia, TSA runs offices in Sydney and Melbourne. The
company’s products are manufactured and distributed from its
Melbourne office. Sydney is its corporate support office, which
houses all of the administrative functions required to run the
global business. Research and development (R&D) is carried
out in Melbourne, as is marketing, corporate finance and human
resources management. This structure ensures that the
international offices run as smoothly as possible with the
majority of control exercised in Melbourne and Sydney. Of the
functions carried out in Australia, R&D remains a key function
of the corporate support office. The majority of staff involved
in R&D are employed in Melbourne, although there are one or
two R&D staff in the U.S. and U.K. The R&D team receives
feedback from TSA’s overseas sales, particularly regarding
opportunities that have arisen in overseas markets such as the
Middle East, China or the U.S., and is then able to incorporate
this into the product design.
Current Locations
Americas: Minnesota, Oregon, Mexico, Argentina
Europe: Glasgow, Prague, Venice, Paris, Madride
Indian-Pacific: Australia New Zealand, Philippines, South
Africa.
Agents: South America, Indonesia, Germany, Russia, Thailand,
Korea, Greece, Israel.
The company has approximately 300 staff.

5. Going International
TSA realized early that as Australia had a population of only 25
million there was a limited domestic snack food market and
therefore that they would need to look overseas for expansion.
The company therefore approached Austrade for assistance, and
was provided with a small development grant which enabled
them to set up TSA Europe. In 1991 Wood established a small
office in the U.K. and spent the next six years in the U.K. trying
to ensure that the European operation would be successful. The
U.K. office was involved in sales, support, logistics and
administration, a model that TSA has continued to follow as it
expands globally.
The company’s reason for choosing Europe as its first overseas
expansion was that the technical specifications of TSA’s
products were more suited to this region than to others. In
particular the British market offered the fewest hurdles for
TSA. It was similar to Australia in terms of organizational
culture and consumer preferences for snack foods. Also since
Taylor originally came from Scotland he understood the U.K.
environment. Continental Europe presented more challenges for
TSA, but the company went on to launch successfully in Spain,
Germany and the Netherlands.
TSA’s expansion into the U.S. in 1995 was much more difficult,
owing to the lack of technical compatibility between TSA’s
system and those prevailing in the U.S. snack food packaging
industry. Additionally, Ald Wood found the U.S. staff at the
time far less industrious and committed than workers elsewhere.
The terrorist attacks of 11th September 2001 also caused a
dramatic reduction in the supply of financial capital.
Furthermore, TSA had made a change of management that
proved disastrous for the organization. In the space of twelve
months the company’s total sales in the U.S. dropped from $US
18 million to $US 6 million. Fortunately for TSA the U.S.
market started to pick up some 12 to 18 months after the

6. terrorist attacks and prompted by its difficulties in the U.S. TSA
extended south to establish operations in Mexico, setting up an
office in 2001. In the same year, the company also established
offices in South Africa and China.
Competition
Ald Wood believes that having a strategic mindset has been a
key factor in TSA’s ability to move into the world marketplace.
In the packaging industry, there are around 20 competitors
worldwide, and the industry has a total size of around $1
billion. This makes it a relatively small industry, says Wood.
What TSA sought to do was to gain an advantage over its
competitors by employing strategies that were suited to its
industry’s particular environment. Importantly, the company
analysed all of its competitors and determined that the
competition collectively suffered from a lack of vision and an
overestimation of its geographic limitations. This gave TSA the
confidence to pursue a grand vision that would give the
company a decisive edge over its competitors.
In particular, TSA realised that all of its competitors were
extremely parochial. The U.S. companies carried out most of
their business in the U.S., the Germans operated solely in
Germany, and so on. TSA concluded that this parochialism
made little business sense: it didn’t matter where in the world a
product was being packaged, the packaging requirements were
no different. TSA then looked at the packaging products that
were being used, and found that they were almost identical
worldwide, except in terms of colour. There was very little
technical difference. TSA knew that it possessed a serious
technical advantage over its competitors, and determined that
the best way to succeed was to go global with this technical
innovation. Today 95% of TSA’s revenue is derived from
offshore business.
Taylor remarks that, in retrospect, the organisation had
relatively little difficulty in taking its products worldwide.
Some of the greatest difficulties arose when its competitors

7. tried to copy TSA machines, and the company was therefore
forced to initiate patent litigation. Additionally, some
competitors tried to undermine the credibility that TSA had
built up over many years by casting aspersions about the young
company from Australia, telling potential TSA clients that it
was impossible for the machines to work as quickly as TSA
claimed. Thus TSA discovered that many potential clients were
unwilling to step outside their comfort zones and consider a
new product manufacturer.
To overcome this obstacle, TSA decided to structure its fees
around the performance of its products. Clients would pay a
certain amount if the machines could bag 100 products per
minute, but if the result was only 70 bags per minute they would
pay a lesser amount. The company also sought potential clients
who were less conservative and more open to new business
ideas. Such clients were sourced by Wood himself, through
networks he had built, often by painstaking and unglamorous
means. Wood describes what this process involved:
Financing Growth
Ald Wood believes that the greatest hurdle that he has had to
face is finding money to fund growth. Each new overseas
venture has financed the next one. The two sources of funding
that TSA has been able to secure have been retained profits and
relationships built with various large banks, such as Barclay’s,
ANZ and the Bank of America. Ald Wood quickly grasped the
idea that while human capital is an organisation’s primary asset,
banks prefer to lend money for fixed capital such as buildings
or property. He therefore adopted the strategy of sourcing
money from the banks to fund purchasing buildings in key
operational centres. The organisation could then go about
populating these buildings with its key asset: its people.
Industry Recognition
In 2009 Ald Wood, the founder of TSA, was named one of

8. Australia's 100 most influential engineers of the year in the
June edition of Engineers Australia. The list, published
annually, identifies the country's leading engineers in
academia/research, associations, consulting, engineering
expertise, industry, public service and politics.
TSA has made the BMW’s (a leading business magazine) Fast
100 list for the last nine consecutive years and also made the
BRW’s list of Top 500 privately-owned companies. The Task
It has been suggested to Ald Wood that new developing
economies emerging in Asia would be attractive new markets
for TSA.
a. Carry out a preliminary analysis of these potential markets to
determine the country that will be the best choice for the
company. The analysis has to present relative advantages and
disadvantages in terms of their market profit potential, for at
least 2 Asian countries (of your choice).
b. Taking in consideration all factors you are aware of, outline
the main risks associated with these two potential markets. For
each group of risks (e.g. Financial, Political, Environmental..,)
use historical data (1980-2018) and current situation to predict
expected number of events that can affect the TSA business in
the next 5 years (e.g. ones per year, twice in five years …).
Also for the chosen events analyse the consequences on the TSA
business (e.g. Cancelling Business in the country; Significant
loses; TSA have to perform short brake; Minor Problems;
Business is not affected).
For the severity of the problems you can use the scale 0-5 or
similar. It is highly recommended to use Tables for the
presentation.
c. Based on your analysis of the market potentials and known
risks, make an initial recommendation:
Which one of these markets would provide the best option for

9. TSA and identify any other information that you feel would be
required to finalise a decision. Recommend some action that
you might take to improve the sales and marketing in those
countries.
Please Note
· Your work should be presented in a report of approximately
3000 (-10% +50%) words in length.
· The country is fictional and similarity with real world
company is accidental
· The report needs to be clearly written, well-structured and
well presented.
· You should acknowledge all sources used and provide
references where appropriate.
· References must be presented in approved standard form (e.g.
Harvard) and the reference list presented alphabetically by
author.
· Please note that the software program Turnitin may be used in
assessing your assignment.