• Posted on November 22, 2022
• Deepanshu saini

GLOBAL BUSINESS IN CONTEXT ASSIGNMENT SAMPLE

 Introduction

The global context of the business is the most important prospect for a company. It helps the organization to gain the benefits of globalization by the expansion of the business and also enhancing the value of the shareholders in the global aspect. Here, in this report, the global context of the business of the selected company Davison Canners has been described and discussed briefly. The contemplation factor that evaluates to demonstrate the effect of international business implies a certain factor.

More likely saying, technological factors, political factors, legal liabilities, social and environmental factors.

The context of international business is concerned with the worldwide perception of making decisions on the global aspect. Expansion of the business on a global gives substantial advantages to the organization related to the increasing volume of revenue, and foreign investment opportunities.

Along with this, the business gains exposure to differentiation in the culture and greater access to talent. For this, the report selected the PESTLE analysis to accommodate the external factors of the company. In addition to this, the Five-factor of porter’s have also been examined for analyzing the impact of the international process on the company.

Analysis of critical environmental factors and their impact on the internationalization process

PESTLE

The proper understanding of the macroeconomic factors of a country is helpful as this helps companies to get a clear picture of the country in which foreign company tends to expand. For Davison canners which is a UK-based small and medium company that is aiming to expand its business in India, the proper implementation of a PESTLE analysis of India can help the company to understand whether they would get higher FDI from the country or not.

“Economic factor”: This is one of the most important factors that Davison Canners should implement to understand whether the company would be able to get higher FDI or not by conducting business in India. As per the view of Ahmed and Brennan (2019), the economic environment of the country is bit of a problem.

The economy of India is “one of the largest” when it comes to “nominal GDP”. The country has been able to achieve a GDP of $3.17 trillion in 2021. On the contrary, Yoon et al. (2018), stated that despite a high nominal GDP, the “consumer demand” of the country has fallen in recent years. Apart from this, there is 13% growth in FDI in India, which highlight potential better market in this country. In this situation expanding business in this country may lead to positively impact on financial health.

This has caused the economy to slow down which has created some tension. The slowing of the economy has caused a loss of around 12 million people in 2021[referred to Appendix 2].

The “corporate tax rate” of the country is high. Similarly, Kahiya (2020), stated that the rate is 25.17% and is also expected to rise shortly. The rate of corporate tax in the country has changed frequently in recent times. Despite this, the country has one of the highest inflows of FDI or the “Foreign Direct Investment” in the world. In 2021, the country received an FDI of $64.37 billion. Apart from this UK employment rate stood at 75.9%, which indicate that, there is high availability of skilled employee.

This leads to increase economies of scale for a company. But expanding business in other market may not be as much suitable as domestic country which create constraint in business expansion. This has happened since the country is one of the largest exporters of coffee. This has helped the country to become one of the leading agriculture-producing countries in the world [referred to Appendix 1].

This helped the country to increase its FDI. Likewise, Alsharari (2018), stated that India is also one of the largest exporters of petroleum products, jewelry as well as pharmaceutical products in the world. As a result of which the country has been able to have a high inflow of FDI. The economic condition of India has helped in achieving high FDI as the “domestic market” of the country has helped international companies to do business in the country. Similarly, Hu et al. (2020), stated that the main sectors that are seen a boom in India include the “service, IT, telecommunication, healthcare, retail, and the food and beverages sector”.

Thus, after properly analyzing the Economic factor of India, it can be concluded that the expansion plan of Davison Canners in India can be helpful for them as they would be able to capture the market share very easily due to a high customer base. This would also help the company to achieve a higher rate of FDI. Although, the company is going to face problems in paying high corporate taxes.

Technological

This is the most convenient factor of the PESTLE analysis, as operating in the international platform technology plays a vital role in the growth of the business. This factor ascertains the aspect of production, logistics, marketing, e-commerce technology, and communication resources (Thomas et al. 2021, p.5). The company for operating its business like MNEs, and expands the business from India to the UK, the above-mentioned factor will contradict the potential of the organization.

The variable of the technological factor devotes the variables alternatives, which Davison Canners can use to upgrade the technology in the best possible way.

Davison Canners need to apply the digital marketing ecosystem for its business for better communication and for the best possible way to connect with customers. Technology in current market of era it quite significant, adaptation of industrialization 4.0 and other digital tools allows business to add value to its product and enhance its efficiency in better service procurement.

Analysis of UK aspect in term of technology prospect it has been found that UK is technologically developed country, which enable a business to operate its activity in way that is more systematic.

However, expanding business in other country may not be as technologically developed as UK, which creates barrier for company to expand. According to Georgieva et al. (2020,p.2) for the improvement of operational functions of the business, the company’s technology needs to be up to date as per the market revolution. For the compatibility of the business, consumer devices are the more relevant technology,

which the company can use in its business for expansion. With the expression, the range of the customers was also being enlarged, thus the aspect of technology to connect with the customers directly.

 

Figure 1: Economic Factor of India

(Source: Self-Made)

Five factors model

The proper implementation of Porter’s five-factor model can also help to understand whether Davison Canners would be beneficial in expanding their business in India. The proper implementation of the Five-factor model helps to understand whether the company has been able to face the level of competition in international markets. One of the main factors of the five-factor model can help to understand what type of competition Davison Canners can face while expanding the business to India.

“Industry competition”: This is the most common form of competition that Davison Canners can face while the company tends to expand its business in India. As per the view of Torkkeliet al. (2018), the level of competition in India is very high. This happens since India provides a good business environment for not only domestic companies but also international companies as well.Increase in number of rival company in market leads to affect potential benefit in market. In this situation it may lead to affected startup in India if a company strategy is not too good.

The industry in which Davison Canners tends to operate is the food and beverage industry. This industry of India is very competitive as the industry in the country has nearly 40% of the businesses in the country. This allows the industry to have a profit of nearly $100 million every year. Likewise, Azman and Isa (2021) stated that for properly expanding the business in India,

Davison Canners should consider the “number of competitors, strength and the product and services that are offered”. The food and beverages industry of India can pose some level of competition to Davison Canners since the consumer base in this industry is very high as well as the customers are loyal to the existing brands. This industry makes up almost 45% of the customer base of the country. Thus, for the company to properly perform in the country should properly implement strategies that can help the company to attract customers as well as survive the competition.

The proper implementation of the five forces model to understand the competition of the food and beverages of India can also help Davison Canners to understand whether they would be able to survive the Indian market. Conversely, Baier-Fuentes et al. (2019), stated that since the industry is highly competitive the power of the businesses also gets reduced.

Since there are many brands in the industry, for Davison Canners to survive the competition needs to implement “aggressive marketing tactics as well as slash prices” which would help the company to attract customers. On the other hand, this can lead to a loss in productivity. With this high level of competition in the industry, the company should make a proper pricing policy that can help the company to attract customers as, without the correct pricing policy, the company might suffer a huge loss.

Thus, with the help of Porter’s five forces model, Davison Canners has been able to understand the high level of competition in the Indian food and beverage industry and can help the company to implement some policies that can help the company to perform the business in India properly.

 

Figure 2: Industry competition in Five Forces Model

(Source: Self Made)

Entry mode evaluation

Exporting

One of the most important prospects of business during the time of expansion and entering another country for a global context is exporting. The most ordinary strategy for exporting is the usage of direct or indirect methods more likely as agents (Coudounaris, 2021, p.2). With the formation of the counter trade, exporting becomes easier. Davison Canner while expanding its business from India to UK can use this strategy, as it is the most relevant for monitoring the supply chain. One more aspect that the company implies in its is mutual consideration between the two countries.

Licensing

Licensing is being recognized as a transfer-related marketing strategy, for the expansion of the business, this is the most affected strategy. It helps the company to grant permission from the latter company for using the intellectual property over a certain period (Surdu et al. 2019, p.5). Davison Canner applies this strategy to get permission and conceptualize the licenses for its business legally. Having a legal permit helps the company deal with future circumstances. Moreover, the company can operate its business easily in the UK whether it comes to production or selling its products in the UK market.

Greenfield Venturing

The Greenfield venturing entry mode for business expansion gives the company to make the investment in the foreign market to achieve the highest degree of control over foreign activities. The strategy of the Greenfield venture helps the organization to make a new form of entry into the foreign market (Schwens et al. 2018, p.2). This strategy will help the company, Davison Canner, to make its entrance into the new market, and sell its products in the foreign market. Moreover, the strategy will also help the company, Davison Canner, to set a benchmark in the foreign market.

Partnering

For the entry, mode collaborating can be helpful for the expansion company to explode its business in the foreign market. Joint distribution networks, licensing, and joint ventures are the expected factor following which the organization exposed its business (Özcan et al. 2018, p.2).

Davison Canner for future expansion can use this perspective strategy of Partnering by making collaboration with other multinational companies. The strategy also gives the conferences equal substantial for product distribution and marketing. The visually manifest approach will be helpful for deriving the anticipation of collaborating strategy as a new entry mode.

Conclusion and recommendation

Conclusion

In conclusion, it can be said that the expansion of a business from the national level to the international level displays the ability of the business to go beyond its limit. The level of business expansion derives when the company reaches the point growth occurs rapidly.

More often, the company Davison Canner’s additional amount of retained profit from its business, than the business actually generates from its sales. Based on this, the chance of expansion arises and success comes to a point. Hence, it can be concluded that the company Davison Canner takes a positive indication for expansion and stretching out the business from India to the United Kingdom.

Recommendation

It has been recommended that the expansion of business from the national level to the international level have some affected limitations. For mitigating, the global context there arises the cost of expansion.

There is a need for the required amount of capital, as matching the level of business operations at the international level is complex. It is to be recommended that Davison Canner can apply the effective value proposition strategy, price skimming, and CSR for balancing the operations of the business in the global context. Moreover, the company Davison Canner can imply a market penetration strategy for business expansion in the UK sector.

Reference List

Ahmed, F.U. and Brennan, L., 2019. An institution-based view of firms’ early internationalization: Effectiveness of national export promotion policies. International Marketing Review.

Alsharari, N.M., 2018. Internationalization of the higher education system: an interpretive analysis. International Journal of Educational Management.

Azman, N.A. and Isa, M.A.B.M., 2021. Internationalization of SMEs in Malaysia: A Critical Role of Firm Resources.

Baier-Fuentes, H., Hormiga Pérez, E., Miravitlles Matamoros, P. and Blanco Mesa, F.R., 2019. International entrepreneurship: a critical review of the research field. European Journal of International Management, 2019, vol. 13, num. 3, p. 381-412.

Coudounaris, D.N., 2021. The internationalisation process of UK SMEs: exporting and non-exporting behaviours based on a four forces behavioural model. Review of International Business and Strategy.

Georgieva, M. and Abdelazim, A., 2020. Strategic Mer0067ers and Acquisitions in Higher Education: A Case Study from the UK. European Journal of Business and Management, 12(33), pp.1-15.

Hu, Y., Visser, M. and Kaiser, S., 2020. Perceived stress and sleep quality in midlife and later: controlling for genetic and environmental influences. Behavioral sleep medicine, 18(4), pp.537-549.

Kahiya, E.T., 2020. Context in international business: Entrepreneurial internationalization from a distant small open economy. International Business Review, 29(1), p.101621.

Özcan, G.B., Mondragon, A.E.C. and Harindranath, G., 2018. Strategic entry and operational integration of emerging market firms: The case of Cemex, Beko and Tata Steel in the UK. Journal of Business Research, 93, pp.242-254.

Schwens, C., Zapkau, F.B., Brouthers, K.D. and Hollender, L., 2018. Limits to international entry mode learning in SMEs. Journal of International Business Studies, 49(7), pp.809-831.

Surdu, I., Mellahi, K. and Glaister, K.W., 2019. Once bitten, not necessarily shy? Determinants of foreign market re-entry commitment strategies. Journal of International Business Studies, 50(3), pp.393-422.

Thomas, P.J.M., Sandwell, P., Williamson, S.J. and Harper, P.W., 2021. A PESTLE analysis of solar home systems in refugee camps in Rwanda. Renewable and Sustainable Energy Reviews, 143, p.110872.

Torkkeli, L., Kuivalainen, O., Saarenketo, S. and Puumalainen, K., 2018. Institutional environment and network competence in successful SME internationalisation. International Marketing Review.

 

. and Dedahanov, A.T., 2018. The role of international entrepreneurial orientation in successful internationalization from the network capability perspective. Sustainability, 10(6), p.1709

Websites

ons.gov.uk, 2022, UK national data available at: https://www.ons.gov.uk/[accessed on 6 august 2022]

statista.com, 2021 FDI  inindiaavailable at: https://www.statista.com/topics/5560/fdi-in-india/#dossierContents__outerWrapper[accessed on 6 august 2022]