In 2005 the Australia –U.S. Free Trade Agreement (AUSFTA) became effective and by 2010 the trade of bilateral goods and services increased to US$ 50 billion. The export of U.S. goods in Australia increased to $ 22 billion. In 2010 Australia was the tenth largest investor in U.S. The market of Australia is highly opportunistic so the American firms must pay full attention to the macro measures associated with an opportunity which provides the developed country like U.S more purchasing power in comparison to countries with less developed economies (Berecki-Gisolf, 2012). Due to the Free Trade Agreement U.S. companies have strong chances of effectively entering and expanding in the market of Australia. The demand for goods and services of America creates reserves of strong Australian dollar with the companies of America. The demand for innovative and technologically advanced products in Australia of American companies is showing an increasing trend.
Australian market at present is an integral part of the international market by being the commercial and financial center for the region. For American companies there are many competitor firms in Australia some domestic and some of other countries which are already established in the country with strong brand image and strong social network and relationships with suppliers. The low cost producers from the world are already in access with Australian market (Lippel, 2012). Thus it is essential for the companies like IBM planning to expand in Australia to present their products and services with some value added advantages so as to build a distinctive image of the company and for overcoming the cost of entry into the market of Australia for competing with other rivalry firms.