BS7312A – International Business Environment & Trade Assignment Sample 2023
1. Introduction
The purpose of this individual report is to represent the challenges faced by the Levendary Cafe during its business expansion in China. This study aims to understand the capability of the new CEO of this cafe to spread the business in the fast-growing market of China. In this report, there is in-depth knowledge regarding the threats and opportunities of this cafe after expanding its business in the US and China accordingly. The concept of relevant theories is also covered in this report with the support of a distinct discussion. Moreover, there are some effective recommendations for this cafe to ensure its marketing growth in the US and China at the same time.
2. Main report
2.1 Problem identification
Identification of internal and external challenges is an important6 framework for modernist business organisations before expanding their business globally. As per the views of Nugraha (2019), analysing the risks is effective for international businesses to ensure a high-performance level of their supply chain management. Hence, it can be said that lack of risk or problem analysis within an organisational management system reduces the performance level of the organisational supply chain management.
Levendary Cafe has a great marketing platform in the US while it’s annualised sales in the US Denver area is around $2,126,000 that denoting its high marketing position in the US food industry of US. However, the dream of this cafe to enter China is quite difficult while its annualised sales in China are almost $288,000. This difference indicates the presence of challenging considerations of this cafe during its business expansion. The domestic business of this cafe has tapped out and the CEO of this cafe is quite less experienced as Mia Foster has no experience in international management.
On the other hand, this cafe is mostly focused only on some selected foods such as soup, sandwiches and salad that are quite unpreferable by China. Since, China has high competition with its Chinese foods rather than others. Therefore, it can be said that a lack of food variety is one of the effective challenges with business expansion in China. According to Wang et al. (2017), China has a high pricing level in its foods as it has a fast-growing business platform. This quietly affected the pricing strategy of this cafe while this cafe is focused on the high cost-effectively within its products. Therefore, analysing these kinds of internal and external challenges of this cafe is capable of ensuring its opportunities in the fast-growing platform of China.
Moreover, the concept of entering into China is quite difficult for this cafe while there is a challenge with the localization of its supply chains in the right direction. Since, managing the supply chain in the international business operations is quite challenging while there is an involvement of transporting cost management. As per the views of Aithal (2017), international business operations involve several critical frameworks including cost and supply chain management systems. In this case, it is important to say that the involvement in the competitive marketplace of China is quite challenging for the Levendary Cafe while its CEO has not had enough experience in international marketing and management which is highly required.
2.2 Discussion on “International business analysis”
At the very first time, Louis Chen became a little bit less confident about the decision of entering China after identifying the internal and external issues of Levendary Cafe. However, the confidence of Louis has been increased after considering the concept of a joint venture with a Chinese operator who is established in the competitive marketplace of China. This joint venture became effective for the business developing intention of the Caffe. Since, the entrepreneurial spirit and energy of both have increased their confidence level to handle critical challenging situations. According to the explanation of Kim (2021), brand expansion requires unique and creative ideas and strategies for ensuring ultimate success. In this case, it is necessary to say that the review of the business strategies and operational culture of the famous restaurants in China has helped Foster to understand the actual threats and opportunities regarding this expansion.
The concept of bringing unique food items such as cheese soup became helpful for this company to create its position in the highly competitive marketplace of China. Since some Chinese like some dairy products, the mixture of tests and healthiness of foods is effective to attract children. In addition, Louis Chen has decided to provide chicken items in a different manner to satisfy the citizens of China as they love to eat chicken. The experience of Louis Chen regarding retail marketing has also influenced his development strategies within Levendary Cafe. Moreover, entering into Shanghai and Beijing has become a profitable asset for the Caffe while the chosen locations are suitable for the marketing growth of this cafe. Since, the location is near a crowded area of China.
Consideration of the food quality has also influenced the marketing growth of this cafe the fast-growing marketplace of China. The first meeting with the new CEO of Levendary Cafe with Louis Chen is one of the important factors of developing the marketing sales of this cafe in China. During the conversation, multiple thoughts and critical thinking styles were built which are effective to ensure the marketing position of Levendary Cafe in the competitive marketplace of China. The concept of changing the “classic wooden framed upholstered chairs” of Levendary cafe with a “plastic-framed alternative” has become profitable. This change has been managed by the support of local suppliers that have successfully reduced the wastage of money for the cafe during its design and structure changing process.
In this case, it is important to say that the involvement in the China marketplace has also brought some noticeable changes in this cafe as sandwiches have been removed from the menu of this cafe to satisfy the citizens of China. As per the views of Zhang et al. (2018), analysis of the internal problems by considering the economical consideration and opportunities is helpful for ensuring economic stability. Therefore, it can be said that the involvement of proper risk identification within the management system of the cafe becomes beneficial for ensuring ultimate success.
Developing the strategies of the Levendary cafe with the support of Louis Chen has brought huge changes within the income statement of it in China. Since, the sales value of this cafe in China is around $ 3,261,598 after expanding the business. Additionally, this sales value indicates a low range of costs and expenses of the cafe in China. Since, there are huge challenges including the operational and managerial changes of the cafe that have increased after entering the competitive marketplace of China. Moreover, the technological invasion related requirement has also increased in this cafe during the business expansion process.
Bartlett & Ghoshal’s Theory
The purpose of this theory is to provide ultimate guidelines to the organisational contribution to ensure their marketing growth internationally. Consideration of this theory is on the organisational international business development by focussing the organisational cost pressures and local responsiveness.
Additionally, this theory is capable of increasing organisational responsiveness with support of low integration in the context of multi-domestic production. This theory suggests identifying the actual needs and expectations of the local market to provide the ultimate satisfaction for ensuring high competitive advantages. As per the views of Yeh and Chang (2018), understanding the actual needs of global and local markets help the global business to bring appropriate changes within organisations.
On the other hand, this theory suggests the global business bring high integration with low responsiveness in place of globalisation which is different from the multi-domestic. Since, it supports traditional production with the presence of high quality and creativity to build a noticeable position in the global marketplace. Transactional is one of the effective directions of this theory while it suggests that organisations ensure high responsiveness and integration. This helps global organisations to bring innovative and unique changes within the workplace to attract global customers. Moreover, the international is the other effective factor that indicates the global businesses to make low integration with low responsiveness for ensuring the high marketing growth in the globally competitive marketplace. In this case, it is important to say that the theory is helpful for globalisation businesses while it provides the ultimate guidelines to ensure a high and noticeable marketing position in the global marketplace.
The application of this theory is capable of beginning innovative and creative changes within the Levendary cafe of China. Since, it is beneficial for the globalisation of business operations with the support of high customer’s interest. Moreover, this kind of involvement is capable of expanding the business internationally with the support of proper guidelines to ensure the marketing and economic growth of the global businesses. In addition, the adoption of the “Bartlett & Ghoshal matrix” is quite effective to increase the portfolio control of the global business. According to Yeh and Chang (2018), this theory has a great impact on global business analysis and development strategies. Hence, it can be said that the adoption of these theoretical aspects is quite beneficial for the Levendary cafe of China.
Porter’s Diamond Model
The purpose of this theory is to ensure the competitive advantage in the organisational expansion into a globally competitive marketplace. This theory is also known as “National Competitive Advantage Theory” as it is focused on increasing the competitive advantages of globalisation businesses. As per the views of Deng et al. (2018), the adoption of “Porter’s Diamond Model” has a great influence on the modernist business organisations to expand their business.
The focus of this theory is on some effective factors which are deeply interlinked with the organisational competitive advantage development. The focusing factors are firm strategy, structure, conditions, related or supported firms, demands, government band change. These are capable of influencing globalisation business operations to ensure its competitive advantages with support of high productivity. Domestic rivalry can be considered as an effective instrument that is capable of increasing the competitive capabilities of global businesses. Maintaining the guidelines of this theory, global business companies can bring sustainable development. In this case, it is important to say that the involvement of these theoretical aspects is also capable of developing the global business operational capabilities by considering the improvement in the local market. This indicates that global business organisations can develop their marketing growth by increasing the marketing value in the local marketplace. Since, it is helpful to ensure the competitive advantages of the global business organisations with the support of high marketing positions.
Additionally, this theory suggests that there is a high influence of innovative changes by considering the existing financial and marketing condition of the global businesses organisations. In addition, it also inspires global business managers to understand the actual demands of the global market to satisfy them according to their requirements. Therefore, it can be said that global business organisations can develop their firm’s strategic concept as well as structure to ensure the ultimate innovation within the entire management system.
On the other hand, this theory also suggests that the consideration of government policies and regulations is also helpful for global business operations. Since, the government sometimes provides financial and operational support to the modernist global organisations to proceed with their business according to their requirements. As per the views of Erboz (2020), governmental support sometimes inspires companies to expand their business for individual and group aspirations.
Using these theoretical guidelines, the Levendary cafe can bring innovative changes within its workplace with the support of high competitive advantages. The application of this theory is quite beneficial for the cafe of China to bring changes by understanding the demands of the citizens of China. Moreover, this theory is also capable of bringing innovation in the entire management system of this cafe to handle critical challenges with its food quality and cost-effectiveness. Hence, it can be said that the adoption of this theory is beneficial for this café of China to ensure its high competitive advantages.
3. Conclusion and Recommendation
3.1 Conclusion
Internationalisation is a crucial step for a company to ensure business growth beyond its native boundaries. The cafe had the motive of gaining access to the food sector which is a lucrative market like China. Scopes of a business expansion faced a major backlash due to a lack of understanding of socio-cultural preferences. The food presented by the cafe met rejection from their target customers as there was an inaccuracy in understanding the food variations required, taste preferences, and cost that affected the business immensely. The cafe faced criticism due to its lack of research and analysis of market preferences. An inexperienced management is responsible for this mismanagement of the business in such an opportunistic foreign market. It reflected in the sales and the net profit the company received through the few days it could remain operational. The high trade and import costing could not be compensated due to the loss faced. Although the business was successful in the local markets, it could not be aligned with the loss faced in the Chinese market.
3.2 Recommendation
The company has to improve its business strategy and undergo major changes in its system. Changes can be brought about through research and implementation while focusing on the socio-cultural preference of the target market (Dyanasari et al. 2021, p. 2290).
- The identification of a target audience is the topmost priority of a business (Bilohrats, 2021, p.63); the food preferences of these audiences will help the business focus on deciding a selling point. Emphasis needs to be given to the demand of the market and the price range of the product. This will allow the enterprise to assort its resources according to the most preferred and the least in-demand items before preparing a menu.
- There is a need to bring in a variety in the food menu which will attract more customers to the cafe. This is in accordance with ‘the Bartlett & Ghoshal matrix’, customisation is necessary for gaining attention in a foreign market (Johansson and Olhager, 2018, p. 39). The company should manage its economical decision based on two factors: responsiveness in the local market and the integration in globalisation. This will act in the compensation of the loss incurred to an appreciable extent.
- The business should follow the porter’s diamond strategy to use the opportunities in the foreign market. This requires proper knowledge of the market trends and the factors that can provide a competitive advantage. Good knowledge of the cultural aspect of the target market is essential for this evaluation. The cafe makes strategies to balance their purchase cost and product sales with the help of this strategy.
- The cafe can incorporate technology into its management and promotional activities. The sales of companies with a good online visibility were seen to have accelerated in the era of the pandemic outbreak (Delios et al. 2021, p. 101197). A majority of the population in China has access to good internet connectivity and thus promotion through websites and online advertising can help to improve the visibility and reach of the cafe.
Reference list
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