BMG705 Global Business In Context Assignment Sample

Comprehensive Guide to Global Business In Context Assignment

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Introduction Of Global Business In Context Assignment

Section 1: Introduction and company overview

The report is made to discuss the Global Business in Context with the Northern Bloc Ice-cream company. The company believes in its vision which is giving its customers best experience to be indulging in with some exciting flavours. Northern Bloc uses natural ingredients with innovative experiments in support with the chef's. The case company follows the feedbacks of the clients to re-evaluate the ice-cream in the sustainable ways. Northern Bloc is the first and foremost brand which adopts the biodegradable packaging in UK. The company is running through the Chef's support and creativity and giving its best single handily through the operation of molecular chemistry in combinations with the taste liked by the customers. The case company needs to expand its business, as it is already an SME company and to get development and more profits it has to go international level. If the company has more excess when it provides its services globally, and gets a higher reach of the market with a huge customer base.

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The report contains the impacts of internal and external conditions of a case company on its internationalization process. The entry mode evaluation of NORTHERN BL°C is also considered in the report in context with countries like USA, China and South Africa. At last, the recommendation for internationalization in USA Country for a company is discussed in the report. The Company Northern Bloc is leading in the UK market ice cream industry through introducing 15 and more flavours securing investment through the Mobeus Equity Partners in 7 figures. The company has to effectively evaluate its all external and macro environments to make better strategies for better expansion.

Section 2: Impacts of conditions on the internationalization process

The foreign macroeconomic environment refers to the forces that indirectly affect a business's operation and functioning condition (AllozaFrutos,et. al. 2021). These elements are irrepressible and the firm is powerless and unable of exercising any control over them. When any SME company wants to represent its business on an international level then it has to consider all foreign macro-environment factors to easily run its business globally. The internationalization process for a company includes the emphasis on the path of business in its changeover from a domestic market to a specific foreign market. The 2 most significant theories that clarify the internationalization process are the network-based and the Uppsala model approach.

As the macro or external environment defines the health of an economy. It merely represents the wider picture of an economy. If the nation's economy is on the rise, it means that the public and corporations are executing well fiscally which rises their acquiring power.As the case company is reliable on the financial sectors of a country an effective which will assess situations and other projects that are very serious in the financial resolutions. The valuation calls for the analysis of several factors fitting both the macro and microenvironment. Financial management and its judgments are critically based on some important mods. These mods are seriously based on macro or external factors such as country or international interest rates, gross domestic product (GDP) of the country, an economy's growth rate, sales production figures,population census, etc.

In 2021, there are projected to be 332.99 million SMEs globally, a small increase from the 328.5 million expected in 2019. The most SMEs existed within the specified time period in the most recent year.

number of small and medium sized enterprises (SMEs) worldwide from 2000 to 2021

Figure 1 Estimated number of small and medium sized enterprises (SMEs) worldwide from 2000 to 2021

(Source: Statista, 2022)

If the case company wants to run its business on an international level then it has to analyse all the external environment factors of the country in which it wants to operate. The case company is a small and medium enterprise in the UK economy, and it has lots of opportunities to expand its business in more than one country in the world. As the company's products are very common and easily acceptable by any customers, it can earn high profits through international exploration.The company can choose various other countries like South Africa, the USA, China, etc. There are many challenges faced by any SME not only by the case company while expanding its business globally. The challenges may include other countries' political environments, economic, environmental, and socio-cultural environments, and many more. Generally, any exploring company faces challenges of other country's public preferences but in case of Northern Bloc,it is predicted that this company has a greater impact of legal factor or environment of the country in which it wants to explore its business. Legal factors comprise that whether the rules of law is well-established or not, how quickly or easily laws and regulations might change, and at what costs of governing compliance are done by the case company.

As opposed to a microenvironment, which concentrates on the economy of a particular sector or region, a macro environment refers to the overall, broader economy and the forces affecting it. The case operations are impacted by macroeconomic conditions or causes, which have an impact on the economy as a whole. Macroeconomics generally addresses the DEPEST analysis in order to best serve customers and the economy as a whole.

  • Demographic Factor: The case company is must pay close attention to demographic shifts. It's crucial to understand how to reach out to new or developing demographics. To ensure that the business continues to meet the needs of its customers, changes must also be communicated to operations and production.

World population pie chart

Figure 2 World population pie chart

Environment Factor: Overall, the systematic versions of a product have lesser environment influences than the premium. Raw materials subsidize most to the mainstream of influences that is greater than 70%. The exemption is an ozone depletion that is mostly due to frozen storage at a retailer that is approx. 95%. It is more preferable for the case company to pay attention on this and take major precautions to show their part in eco-friendly activities to attract more customers.

Environmental elements are also assessed on the footprint left by the company on its respective environments. Recently the case company launched the innovative idea of selling a plant-based range of ice creams in Biodegradable tubs. The company adopted CSR practice by considering the issues related to the environment and society.For case company, this can be cover the organic-farming and waste-management practices used its domestic countries where raw materials are acquired. In the year 2018, the company launched vegan ice cream in different flavours.The case company is more focused on the Vegan flavours of the ice cream which are plant-based and good for the health of customers and environment friendly which also increases the interest of investors towards the company.

Political Factor: The Company can also be affected by the political environment and forces in the country. Northern Bloc if chooses to operate its business in other countries than it has to make good connections and communication with the existing political party in that country (Smallbone, et. al. 2022). As the political environment shows taxable changes and other government policies that will be more affect the case company's business in different countries with different taxable policies. Generally speaking, political factors are those motivated by government actions and policies. The company before going internalisation should consider:

  • Corporate taxation
  • Other fiscal policy initiatives
  • Free trade disputes
  • Antitrust and other anti-competition issues related to USA, South Africa and China where company want to expand the business.

If a case company going to operate its business in other international countries then it should analyze or estimate the country's GDP criteria. Political concerns also involve trade treaties like EU, NAFTA, and ASEAN. These treaties tend to favour trade between the member countries but enact penalties or few favourable trade terms on non-members. So, the company also have to deal with different countries treaties.

The above figure shows the GDP, These GDP numbers were computed using the PPP technique. Purchasing power parity, or PPP, is a technique of expressing GDP in nominal US dollars that tries to convey the value of real economic output.

  • Economic Factor: After it, there is a huge impact of the economic conditions of a country on the case company (Belás, et. al. 2018). If the company has an opportunity to expand its business on an international level then it has to deeply examine or compare the economic condition of other countries. The predicted inflation conditions and better precautions will lead a company to get better returns in its home country as well as in other countries. In contrast, while entering in the global retail industry the core product is standardized, the marketing method is comparatively constant, and the competitive strategies are combined in diverse international markets. In the case company industry, competitive advantage undoubtedly belongs to companies that can compete globally through the exchange rate and interest rate.
  • Social factor: The Company can focus on the social factor which can be referred as evolutions or shifts in the ways that stakeholder's tactic life or leisure that in turn can influence commercial activity. Social factors comprise demographic considerations, lifestyle trends, consumer beliefs, attitudes nearby working conditions from which the company can target the customer and make the positioning in the countries company want to expand. These factors may seem like the small consideration, comparative to more tangible things such as corporate taxation or interest rates.

It is not easy for the company to expand itself globally or even in one country only. Like in the USA, Northern Bloc will face lots of local companies such as HaagenDazs, Ben & Jerry's, Turkey Hill Dairy, etc. Talking about the South Africa exploration the company will face other local companies like Orley Foods Ltd, Hermes Cone & Snack Manufacturers, Mighty Moo Ltd, etc. And if the case company wants to expand its services in China then it will face local ice- cream companies like Qiaolezi, Binggongchang, Little pudding, Guangming, etc.

  • Technological Factor: Another challenge that can impact a huge effect on the case company is technology innovation (SANYAL,et. al. 2020). The case company gets more influenced by new and trendy technologies. But not only trendy technologies will lead a company to the top of a mountain. The company has to also pay attention to its automation or research and development activities adopted in different countries to reduce costs and earn more profit. To be in an internationally competitive market, Northern Bloc has to innovate new technologies which will lead the company more powerful and big ice-cream supplier on the global level. Any business can get a hike if it timely and easily adapts the trendy technologies in its day-to-day operations. Northern Bloc is constantly working towards growth and adopting innovative approaches to sell ice creams globally.

The case company has many opportunities in the international market along with the higher barriers and challenges to enter the international market. If the company will able to expand its business in different countries then it will be more effective for Northern Bloc.The company has the potential to expand its services and beat its rivals in the international ice-cream businesses.

The following three strategies can also be used to break down an internationalisation strategy:

  • Competitive advancement: If the company goes into the international market then it will face various competitors that are already placed their positions in different countries (Maudos, and Vives, 2019). Those competitors are such as NH Foods, Mccain Foods, Bel Brands, Frito Lay, etc. To beat these competitors on an international level the company has to make its position very effective and unbreakable in the international market.
  • Legal factors: The above-mentioned competitors of a case company in different countries can boost or may flop the case company's strategy in the different countries. The retail industry regulations have a different impact on the case company's operations. Different country has different rules and regulations for their retail industry that will be compulsorily adopted by any company to operate their business in that country. Northern Bloc has to strictly follow all the recommended policy and rules of different countries to run its business legally in that country.
  • Environmental factors: To critically analyse the entire affected environment on Northern Bloc, the RVB model will easily help out the company. The RVB model states that companies has exceptional resources which enable them to attain competitive advantage and a long-term superior performance. In this framework, a company can only accomplish the sustainable competitive advantage if the resources are valuable and rare. Assessing a case company's performance using RVB agenda includes analysing its internal, external, and also competitive environment.

Section 3: Entry mode evaluation

There are several strategies to internationalize the business and expand the business effectively(Blackburne, and Buckley, 2019). The business can opt for one or more strategies at the same time to operate its business at an international level. The Northern Bloc is SME still working hard to become famous all over the world to get entry into the international market.

  • Export- This is the most common entry mode for an organization's internationalization. The company can directly or can indirectly sell its product outside the boundaries of a country (Coudounaris, 2021). In a direct exporting business, a company can directly create contacts and sell its goods and services to foreign businesses or consumers. On the other hand, indirect exporting is in the least demand but is safer than direct exporting.
  • FDI-Another approach to accomplish the foreign market is a direct investment in partial and total attainment of an organization that already operates abroad(Kang, al. 2021). Despite a high cost the FDI strategy substitute can be pleasant to decrease the risks of ingoing the new country investing in the firm that already operates abroad minimize the risk of implementation.
  • Licensing strategy-Licensing approach is a type ofinternational agreement that involves two or more parties are agree on the licensee subject to payment of royalty and can use a licensor's owner resource for a particular period. In this plan, internationalization takes place with ahelp of the entrepreneur outside a country, taking benefit of the image to start a partnership in a new market.
  • Set up a franchise-In franchising an organization chooses to be the affiliate, having to pay the fee to a franchisor. The franchisee is authorized to sell goods and services using a franchise system and the company's operation system(Rosado-Serrano, and Paul, 2018). Businesses that choose a franchise as the internationalization policy must follow a franchisor's advertising,quality, and price standards.
  • Creating a joint venture with the company-A Joint-Venture is an association between two and more Businesses for a given period along with the common reason that apartner'sprofits or losses, management, share capital can be known (Minbaeva, al. 2018). The joint venturescheme can be fascinating to internationalize an organization with the support of a partner who previouslyknows a foreign market.

For the case company, the most suitable internationalization strategy is a franchise, licensing, and joint venture. Northern Bloc can expand its services by making an agreement with the other international or nationwide ice-cream company in which the company wants to operate its business. The company can also get a license from other foreign countries. While it can also offer its franchise to open in the other country.

The USA had inward FDI stock of around $3.3 trillion for 2015 and $3.7 trillion for 2016, on the historical cost basis. The company is also moving forward to the crowd funding financing method which is named Crowdcube through engaging customers to invest in the brand to grow the business.

If the case company primarily wants to enter in the US retail market than it has to follow the 12 steps process to get successful entrance.

  • Market research- The case company first research the retail market or mainly the ice-cream competition market in the USA.
  • Location evaluation- The company have to evaluate that where it wants to establish its stores and in which location of the USA.
  • Choosing a legal entity- The Company is recommended to form its legal entity in the US as a C corporation.
  • Initial tax planning- Northern Bloc has to analyse all the taxable policy of the US retail market and then develop its taxable strategy on it.
  • Visa support-The case company get visa of the US by understanding the E-2 Treaty Investors visa, L-1 visa, E-1 visaand ESTA.

Further steps are Setting up bank accounts, Recruiting US employees, Choosing a co-employment service, Accounting help, Selecting the right IT infrastructure, Americanised marketing, and branding and Tax accounts for the US entity. These are shown in the figure 3.

Section 4: Conclusion & recommendation

From the above-mentioned report, it is concluded that the case company has lots of options and strategies to expand its business in a new market. It is recommended for the company that it can also attract various international customers with its effective services along with quality products. A DEPEST study, which analyses the macroeconomic, socio cultural, political, ecological, and technical elements that can affect how businesses operate, is frequently carried out by analysts in order to strategically manage the internalization of the company. The company has a greater market reach in its domestic market and has the potential to explore its business in other countries of the world. It is also suggested to the company that it essentially evaluates its external environment and the other country's political, economic, and socio-cultural environment. Based on the report it is concluded that Northern Bloc will gain more profits and create more consumer base at the international level. It is also concluded that the company is growing in the retail market and working to raise money through the rising opportunities of investments. This is summarised that business can explore a change in an environment rather than merely survive or compete with the change then those companies are more likely to be successful.

References

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