In search of foreign markets: A case of an Australian SME in sports equipment manufacturing industry

Overview Cricket Bats (CB) is an Australian SME created in 1989 by Tim White, who currently owns and manages the company. The firm produces and sells cricket gear such as bats, balls, pads, gloves and sportswear (see Appendix 1) at six retail outlets located in five major cities in Australia. As of April 2022, CB has 250 employees and a product portfolio of more than 50 different items. A well-known brand in the domestic market, CB began to get interested in international markets since 2012. After many attempts and with Tim's hard work, CB managed to enter the Indian market for the first time in early 2020, amidst the COVID 19 pandemic. Though this was a huge step for CB, Tim believes that the firm still has not reached its full potential in terms of its international sales. Business Model CB is a B to B and a B to C firm. CB's only manufacturing facility is located in Brisbane, where all production take place. CB has its own brand called OZ Fire which is a trusted brand among the first-class cricketers in Australia. CB produces all cricket gear under this brand name and sells the products in six branded retail stores, two in Melbourne, and one each in Sydney, Brisbane, Perth, and Hobart. Apart from that, CB also sells its products to a few other small sports retailers in Australia. These retailers will then sell this equipment in their physical and online shops at different prices. CB gets a fixed price from the sale of its products to these retailers, regardless of the final selling price. CB also directly import bats and other cricket gear from Pakistan and Bangladesh, which it sells at its own six retail outlets, alongside their own branded equipment. Before Tim invented the OZ Fire brand in 2008, this was CB's initial business model, operating since 1989. Competitive Advantage The sports gear manufacturing industry is dominated by large scale manufacturers, such as Kookaburra, Gray-Nicolls, Gunn & Moore, CA, New Balance and Adidas. Though CB sells most of these brands in their retail outlets, the sales of own OZ Fire products have also increased significantly over the years. Tim believes that the main reasons for this growth in are OZ Fire products' quality and performance due to the use of state-of-the-art production techniques. On the other hand, Tim also believes that there is still enough room for a "Made in Australia" cricket brand that offers good quality at an affordable price. "We can produce custom-made cricket gear, even it's just one bat for a player, because it will be my decision. I do not have to wait till the next board meeting to get it approved" said by Tim to a local newspaper when he was asked about the secret of CB's success. "With cricket bats, size matters and one size does not fit all. CB is capable

of meeting the specific needs of individual players, something that big brands cannot afford to do", Tim explained. Tim White Tim White was born in 1965 in Adelaide, South Australia. After high-school, Tim got his first job as a shopkeeper in one of the sports equipment manufacturing plants in Melbourne, Australia. As the shop was located next to the factory, Tim had enough time to master the art of manufacturing cricket bats and leather balls, while doing his working in the shop. After four successful years, in August 1989, Tim quit his first job and, along with one of his colleagues, he started his own cricket equipment shop (CB) in Melbourne. Initially, they imported all cricket gear from Pakistan. Some family contacts of Tim's business partner Yusuf, who is originally from Pakistan, helped them in this process. Due to the lack of cricket equipment retailers in Melbourne at the time, Tim and Yusuf had no problem making a profit right from the first year. Later, Yusuf managed to find some more suppliers from Bangladesh, for sports apparel such as cricket jerseys, track bottoms and playing kits. These low-cost products were sold in the CB retail shop after adding a thick margin. However, Tim quickly realised that these short-term gains were not going to last for long. It was just a matter of time before new players would enter the market and these high margins would disappear. "Had I not realised that and not expanded the number of retail shops to other parts of Australia, CB would not have lasted for this many years", Tim said when he was addressing a workshop for young entrepreneurs. "I felt the same even after setting up six retail outlets, which led to the invention of OZ Fire in 2008", Tim added. CB's expansion process is outlined in more detail in Appendix 3. Tim has been the owner-manager of CB since 2011, as his partner moved out of the business due to personal commitments and later had success in other ventures. Tim strongly believes that OZ Fire has the capability to become a global brand and that its products can be sold in every cricket loving nation. "Cricket is still evolving. With the shortened formats like T-20, more and more countries are drawn into this game; even the ones that are not into cricket initially," Tim once said to a friend. Tim started playing cricket as a teenager, but never really continued it to a professional level. He has always had a great passion for it. "Tim is crazy about this game. He is always reading about cricket. Not only about the tournaments but also about the latest developments, like new domestic tournaments in different countries, emerging players, what brands they use, and how much these products cost. He knows everything", one of CB's oldest employees commented. "I remember he went to watch the Indian Premier League in 2016 and created a list of brands used by the local players" he added. "What's special about these bats? If they can do it, why can't we? That was Tim's attitude, always."

In 2015, Tim managed to get his first international sign up with a young Australian cricketer, Brad, who made his debut to the national team in 2016. Tim managed to sign Brad up with OZ Fire when he made it to the Big Bash cricket league in 2014, which he then renewed in 2016. Following Brad's sign up, Tim used this to approach two other senior players in the national team and managed to secure a three-year contract with both of them. Currently OZ Fire has international cricket players signed up (all Australians) and it is the sponsor of two premier cricket clubs, one in Victoria and the other in Brisbane. Internationalisation The idea of extending the OZ Fire brand to foreign markets had been in Tim's mind since 2012. What sparked this idea was both OZ Fire's invention as a brand in 2008 and also the growing interest far and wide in cricket. In particular, with the increasing number around the world of domestic premier leagues similar to the Big Bash League in Australia, Tim believes there is a real opportunity to establish the OZ Fire brand in some of the South Asian emerging markets. A complete list of major domestic leagues and hosting countries is provided in Appendix 4. OZ Fire is already a trusted brands among first-class cricketers in Australia and has been for years. During a factory visit to Brisbane, Tim told his production team, "We have a huge opportunity to take this brand to other countries, especially to markets like India." Beside these obvious growth opportunities, another reason to expedite CB's internationalisation efforts is declining sales in Australia. This has been an issue since 2005. However, the invention of the OZ Fire brand helped CB to temporarily maintain sales during 2009 and 2010. This increase in sales came from a massive pre-season sale conducted in five CB outlets soon after launching the OZ Fire brand. Despite these efforts, Tim realised that CB would not be able grow unless the firm ventures into new markets. Challenges Tim has always been enthusiastic about going international with CB's OZ Fire brand although he was not sure where and how. He had no previous experience or education in international business. Once he tried to get some ideas from his factory supervisors but none of them had experience in an international firm either. "We had experts in manufacturing sports gear, but we didn't know much about international markets or how to get into those markets", Tim explained. "I knew we could do it. Our products are the best. And we have been in this business for more than two decades. But I didn't know where to start." Another challenge is to identify an appropriate foreign market. There are only about 12 countries in the world with full International Cricket Council (ICC) membership. These are the ones that can be considered major cricket playing nations (Appendix 2). About 94 other countries are associate members, with national cricket teams playing in lower-grade ICC tournaments.

Market selection is a crucial decision in CB's expansion. For this, Tim also has to think about how exactly OZ Fire is going to compete in these foreign markets. So far, OZ Fire has positioned itself under the "Made in Australia" tag, which is a successful strategy in the local Australian market. Although there are cheaper alternatives from South Asian countries such as India, Pakistan and Bangladesh, some Australians prefer 100% Australian made bats. On top of that, despite being an SME, OZ Fire's reputation for good quality products is a huge advantage. However, to what extent these advantages would hold up in a foreign market is questionable. As well, locating distributors in unknown markets will not be easy. Tim also has doubts whether CB's small production facility would have enough capacity to operate on such a large scale. Exploring the Possibilities Despite the challenges, Tim has always perceived internationalisation as an opportunity for OZ Fire and CB. He strongly believes that some level of global presence is a must to survive and grow in the long run. Whenever he makes factory visits, he always emphasises this to his supervisors and production staff. "It will increase our revenues, more people will get to know our brand, plus we will be able to make cost savings due to increased production. Isn't that great!" he once told them. Since in 2012 when he first had the idea of establishing OZ Fire globally, Tim has always been on the lookout for international opportunities. Every morning he spends a couple of hours browsing the internet, looking for potential buyers in foreign countries. He is particularly interested in the Indian market due to its size and passion for cricket. In fact he made a couple of visits to watch a few Indian Premier League games during 2016 and 2018. During these trips, he met a number of local cricketers and their managers, and also developed a few relationships with local retailers who showed an interest in OZ Fire products. He always took some products with him, which he used to give away as promotional items. During his 2018 visit, Tim managed to sell 25 OZ Fire cricket bats to one of the retailers in Mumbai, India. These bats were originally produced to an order from a local cricket club in Melbourne, but at the last minute this order was cancelled. Tim knew this retailer from his first visit in 2016. This was the first export sale of CB, ever! During 2019, Tim was invited to attend a trade fair conducted by the Department of Foreign Affairs and Trade (DFAT). This event was designed to provide Australian SMEs with an opportunity to network with foreign buyers and investors. During this visit, Tim managed to meet with a number of entrepreneurs in the sports gear industry from India, Bangladesh, New Zealand, England and South Africa. They were really keen on the OZ Fire brand and impressed with the quality of its products. These entrepreneurs came up with various suggestions. Some expressed a willingness just to sell OZ Fire products in their retail stores whereas others proposed producing cricket gear under the OZ Fire brand name in their respective

countries and then selling it locally. Some even recommended establishing a separate company with the name of OZ Fire, to be jointly owned by CB and the other investors. Expansion to India Following the DFAT exhibition, in early 2020, Tim managed to finalise a deal with an Indian retailer who owns a number of sports warehouses, known as Indi Crick, in major Indian cities like Mumbai, Delhi, Bangalore and Chennai. According to the agreement, Indi Crick would directly import OZ Fire cricket gear which will then be sold in their warehouses around India. Sales were slow during 2020 due to the pandemic and several lockdowns in both India and Australia. Even so, Tim remains optimistic about this move. With the easing of restrictions in early 2021, OZ Fire bats gained some attention among Indian cricketers. As of the first quarter in 2022, export sales account for 7.5% of CB's total sales. The Future Ahead In spite of the superior quality and the "Made in Australia" tag, the cost of OZ Fire products is significantly higher than the other local brands in India. Indi Crick representatives emphasised this point during a recent meeting with Tim. One solution Indi Crick proposed was to shift the manufacturing of OZ Fire bats, the highest selling CB product in India, to their Indian production facilities. This will help to bring down the OZ Fire bats' prices, making them affordable to young school-aged cricketers. On the other hand, this move will allow OZ Fire to use a "Made in India" label, making it more appealing to Indian consumers. Tim is not fully convinced about this proposal as he does not want to lose control of the quality of CB's OZ Fire bats. He is convinced that this will happen if the production is outsourced to another country. He has also started to doubt whether selling via Indi Crick is CB's best option. Tim's idea is that the high tariff on imported sports gear (for the purpose of re-sale) in India and the high markup Indi Crick adds on top of that are the main reasons why OZ Fire bats are expensive there. With the ambition of growing CB's export performances in the next five years, Tim has started to consider alternative markets as well as niche strategies that he can use to gain and sustain a competitive advantage in foreign markets. He firmly believes that he can make OZ Fire a global brand used by international cricketers all- around the world.

• Analyse the motivations and challenges behind the internationalisation decision of Cricket Bats. Do you agree or disagree with CB's decision to start exporting? Use appropriate theories/concepts, research evidence and case information in your answer.
• Analyse Cricket Bats' internationalisation process, using appropriate theories, research evidence and case information.
• Analyse Tim's thinking process behind the decision to initiate exporting. How do you explain his decision to select India as the target market? Use appropriate theories/concepts, research evidence and case information in your answer.