Introduction
It has been identified that planning for the globalisation of the organisation has become essential as it helps in the effective understanding of the new market environment, and demand for the product in the country thus strategy used by organisation for the expansion (Yameogo et. al. 2021). Furthermore, different approaches are being used by organisations in the United Kingdom in order to make effective globalisation of the company.
This report is based on the Sweet Fit organisation which is a British organisation engaged in the production of healthy sweet products and food supplements. The company provide sugar free and gluten free products to the people and creates an effective increase in the healthy environment of the organisation. The report will identify the country for the expansion along with the mode of entry. Furthermore, the report will also discuss the optimal rate of Expansion and CSR initiatives.
Choosing a Country for International Expansion
In order to create an effective globalisation of Sweet Fit in the new market, Denmark is the effective location for the expansion of the business as it is the neighbourhood country of the United Kingdom which will decrease the transportation cost and helps in effective imports and exports of the goods and services. PESTEL analysis of the country will lead to a better and more effective understanding of the new market. Such as:
Political Environment
It has been critically identified that the country has been a political member of the North Atlantic Treaty Organisation and European Union, such political membership of the country has created an effective opportunity for the Sweet Fit as the agreement between the EU and UK helps the companies of the United Kingdom to trade effectively and create an effective environment of trading (Garcia et. al.2019).. However, Expansion of the organisation in Denmark will lead to an effective increase in the growth and competitive position of the company.
Economic Environment
The economic environment of Denmark has been impacted from the Covid-19, as the pandemic in the country has created a major downfall in the GDP which impacted the various organisations in the country. it has increased the threat to the company as such a downfall in the country may impact the success of the organisation in the new market.
Figure 1: GDP or Denmark
(Source: Focus Economics, 2020)
However, the economy of the Country rose in the Q4 of 2020 which identify an effective increase in the economy of the country. Such changes lead to an increase in the challenges for Sweet Fit. On the other hand, the recovery capabilities of the environment have increased the opportunities for the organization the expansion of its business in Denmark.
Social Factor
It refers to the living standard and preferences of the people in the country. It has been analysed that the impact of the Coivd-19 has created a major change in the perspectives of people towards health. Likewise, it has been identified that people of Denmark are more likely to consume healthy food products which have created an opportunity for Sweet Fit to expand the business in the country. Effective education in the country also increased the opportunity for the organisation as the people of the country are open minded and wise towards others (Wang and Steiner, 2020). It will increase the effective increase in the market of Denmark for the organisation. However, it has been critically analysed that the Danish People do not accept foreigners easily which will lead to an increase in the threat to the company in the effective hiring process. Furthermore, the education system of the country teaches the children morality which helps in effective human behaviour and makes better opportunities for the organisation to increase business in Denmark.
Technological Factor
Technology plays an essential role in the globalisation of the organisation as the company is highly impacted by the technology of the country. it has been identified that Denmark is a digitally advanced country which will help Sweet Fit to make better and more effective adoption of the technology in the production process and delivery of the services will also be improved in the country with the help of technological changes in the expansion of the country.
It is analysed that Danish citizens have a positive outlook on technology development, which is a subset of the service sector. Denmark possesses one of the most advanced R&D departments across European nations, claims research (Korberg et. al.2020). Because of this, their IT field is the best in the world. It will lead to an effective increase intheopportunityfor the organisation to make expansion of the business in the country as it will create an effective increase in the global position of the organisation with the use of advanced technology in the country.
Legal Factor
It has been identified that the legal factors of the Country are effective and increase the better and effective expansion of the business. The policies and regulations of the country allow the other business to make better expansion into the country. On the contrary, it is critically analysed that the strict laws in the business and food production management policies by the government of Denmark will increase the threat for the company as it will force the organisation to make changes in the regulation. Furthermore, the laws and policies of the country will also help the organisation to make better and more effective development in the country.
Environmental Factor
The government of Denmark is taking various steps in order to create a positive impact on the environment The Danish government is actively promoting the switch to energy from renewable sources. More than 6000 windmills are in operation and provide almost 50% of the nation’s energy (Su et. al.2022). But Denmark requires significant capital to fully shift to sources of renewable energy due to the kind of wind speed there. Denmark is a leading supplier of wind turbines. It will provide the opportunity for the organisation as it will help in the effective sustainable development of the organisation. The adoption of the renewal sources of energy will also reduce the cost of the organisation and increase the opportunities in the new market of Denmark.
Mode of Entry
Mode of entry refers to the channel, way or the path selected by a company through which it can be able to enter into the foreign market. Different entry modes such as Licensing, export, franchising, mergers and acquisitions that are as follows-
Licensing
It is one of the fast entry modes that involve low risk as well as low cost. Licensing refers to the process that enables a company to grant the permission in order to distribute their goods and services in the other countries under a trademark. The license of running the company in the international market is for a certain period of time as well as these products are not the duplicate products but needs some adaptation process. (Liet. al. 2020). The main advantage of this type of strategy chooses by the firm is the speed of the entry in the international market even if the company have less knowledge and skills of the foreign market.
However, it can be critically analysed that there is a risk involved of selecting the wrong partner for the entry process that directly affects the goodwill of the organization. For example- Morrison use the licensing mode of entry for the globalization of the business.
Figure 2: Entering modes
(Source: Different Modes of Entering International Business, 2021)
Export
Exporting is the process or procedure to send the products and services to the foreign market. It is one of the simplest modes of entering the international market that is mainly adopted or choose by the small-scale industries for the entry purpose. The risk involved in this type of strategy is generally low as compared to the other modes of entry in the context of human resources and finance.
The limitation of this approach is that there is a less control of the company over the operations in the other country. There are mainly three export categories such as active involvement, experimental involvement and committed involvement (Park, 2020).
Franchising
It refers to the speedy process of entry that includes a franchisor of a company that have a deep knowledge and understanding about the intellectual property rights. The firm allows them to use the brand name in the other country as well as to sell the branded products and services that are helpful in expanding and enhancing the brand image of the company. There is also the franchise fee that is payable to the franchisor for using their brand name. It is one of the best modes of entry in the international market that provides various advantages such as increased trust and goodwill of the enterprise.
But, In this process franchisor is responsible and accountable in order to improve the performance of the franchise as well as to promote the product in the market effectively and successfully (Rosado-Serrano and Navarro-García, 2022). For example- Starbucks entering in the international market by choosing the franchising strategy as it involves less risk and cost.
Mergers and Acquisitions
It refers to the cases that include a foreign company needs or wants to acquire the local business or mergers the business in its own entity. Mainly there are three forms of mergers and acquisitions that are as follows-
Vertical-Vertical merger and acquisition is that type of the mergers by the companies that complement each other in terms of supply chain. For instance- eBay and PayPal merger that is helpful for both the companies to earn more profits and gain success.
Horizontal-It refers to the merger of the enterprise in the same industry. For instance- the merger of Whatsapp, Instrgram, Facebook and Messenger into one social media company named as Facebook Inc (Amankwah-Amoahet. al. 2022).
Conglomerate-This type of merger involves unrelated or different industries. For instance- Amazon now has a grocery store.
From above, it has been evaluated that the best mode of entry is franchising so the Sweet FitCompany must choose franchising strategy in order to expand its business and to enter effectively in Denmark. This will help the firm to enhance the brand image as well as to improve the productivity and profitability in the foreign market. The main advantage of franchising is the speed of the entry as well as low risk and cost involved in it.
The optimal rate of expansion
It is important for the organisation to identify the optimal rate of expansion as it helps in the effective increase in the growth of the company in the new market. It has been identified that the optimal rate of expansion refers to the identification of the scale on which the business is expanded in the new market.
Small scale expansion
It refers to the expansion of the organisation on a small scale as it requires low investments in the globalisation process and helps in the effective identification of the success rate of the company in the new country (Lee et. al. 2020). It can be analysed that there are various companies that are adopting the small scale of optimal rate of expansion as it includes the low risk of failure and helps the company to make a better understanding of the market to increase the business growth in the new market.
For Example- Tesco opens only one retail store in the new market which helps the organisation to understand the market effectively and also includes the low risk of failure as this approach helped the organisation in the successful expansion of the organisation in different countries (Yawson, and Yamoah, 2022).
Large scale expansion
Large-scale expansion of the business refers to the process of globalisation where the company has the objective to provide the service to a whole new market. It requires a huge amount of capital and also includes a major risk of failure. It has been analysed and identified that such a rate of optimal expansion of the business requires a lot of studies on the new market and identification of demand and supply also becomes a necessary element in the process of globalisation. For example- Vodafone Group Plc expanded on a large scale in order to increase the effective services to the people of the new country which led to an increase in the various challenges for the company.
It has been analysed that the small-scale expansion is more profitable and effective for Sweet Fit as it will help the organisation to make a better analysis of the requirements of the customers and marketing strategies can also be improved for the further expansion of the organisation. The small-scale expansion will increase the opportunities and reduce the threat of failure in globalisation (Wang et. al.2019).
Corporate Social Responsibility initiatives
Sweet fit is a food product company which is creating an effective impact on society by providing them sugar free products and ensuring the effective health of the people. Different CSR initiatives can be taken by the organisation in the new market such as promoting healthy food products as it will help the organisation to get a better and more effective increase in sales. The vision of the organisation is to keep people healthy without compromising their happiness. Such initiatives will increase the corporate social responsibility of the organisation and further lead to better and more effective development.
Figure 3: CSR
(Source: Yoon, 2015)
The company will also adopt the renewal source of emery in the product of the food as it will help the company in creating a positive impact on the environment and lead to better performance of the organisation with the adoption of such initiatives in the operational activities. Furthermore, it has been analysed that the adoption of the renewal sources of energy leads to a decrease in the cost of production which can be utilised in the effective improvement of the workplace environment (Du Plessis et. al.2018).
The corporate social responsibility of the organisation will further lead to an increase in the opportunities for the organisation and helps in the effective improvement of the process of globalisation (Doshi and Deshmukh, 2021). The responsibility towards the society and environment will increase the long-term benefits and creates an effective development of the company in the new market of Denmark.
Conclusion
From the discussion in the report, it has been identified that the process of globalisation is a difficult task as it requires a lot of planning and analysis. It is necessary for the organisation to evaluate the new market and identify opportunities and threats. The report has discussed the impact of the external environment of Denmark. The country was selected for the expansion of the sweet fit. Furthermore, it has been concluded that globalisation in Denmark increased the opportunities for the company and provided a better and more effective identification for the mode of entry. The optimal scale of expansion and it was found that small scale expansion includes a low risk of failure and CSR initiatives for the globalisation of Sweet Fit.
References
Amankwah-Amoah, J., Adomako, S., Danquah, J.K., Opoku, R.A. and Zahoor, N., (2022).Foreign market knowledge, entry mode choice and SME international performance in an emerging market. Journal of International Management, p.100955.
Doshi, D. and Deshmukh, R., (2021). CSR & Globalisation. Available at SSRN 4106576.
Du Plessis, J.J., Varottil, U. and Veldman, J. eds., (2018). Globalisation of corporate social responsibility and its impact on corporate governance. Cham: Springer.
Garcia, R., Wigger, K. and Hermann, R.R., (2019). Challenges of creating and capturing value in open eco-innovation: Evidence from the maritime industry in Denmark. Journal of Cleaner Production, 220, pp.642-654.
Korberg, A.D., Skov, I.R. and Mathiesen, B.V., (2020). The role of biogas and biogas-derived fuels in a 100% renewable energy system in Denmark. Energy, 199, p.117426.
Lee, S., Jensen, C., Arndt, C. and Wenzelburger, G., (2020). Risky business? Welfare state reforms and government support in Britain and Denmark. British Journal of Political Science, 50(1), pp.165-184.
Li, L., Luo, Y., Li, R., Zhou, Q., Peijnenburg, W.J., Yin, N., Yang, J., Tu, C. and Zhang, Y., (2020). Effective uptake of submicrometre plastics by crop plants via a crack-entry mode. Nature sustainability, 3(11), pp.929-937.
Park, C., (2020). Market entry strategies in a high-tech successive generations market: a case study of three semiconductor firms with different entry modes. Journal of Business & Industrial Marketing.
Rosado-Serrano, A. and Navarro-García, A., (2022).Alternative modes of entry and unexpected events in franchising. Journal of Global Business Insights, 7(2), pp.94-108.
Su, W., Xiao, X., Yang, X. and Fang, X., (2022), June. Research on distribution network expansion planning based on load feature library and load simultaneous rate. In 2022 IEEE 10th Joint International Information Technology and Artificial Intelligence Conference (ITAIC) (Vol. 10, pp. 1471-1475). IEEE.
Wang, C. and Steiner, B., (2020). Can social capital explain business performance in Denmark?. Empirical Economics, 59(4), pp.1699-1722.
Wang, Y., Li, R., Dong, H., Ma, Y., Yang, J., Zhang, F., Zhu, J. and Li, S., (2019). Capacity planning and optimization of business park-level integrated energy system based on investment constraints. Energy, 189, p.116345.
Yameogo, C.E., Omojolaibi, J.A. and Dauda, R.O., (2021). Economic globalisation, institutions and environmental quality in Sub-Saharan Africa. Research in Globalization, 3, p.100035.
Yawson, D.E. and Yamoah, F.A., (2022). The TESCO Club Card Loyalty Programme: The Gold Standard. In Contemporary Retail Marketing in Emerging Economies (pp. 77-87). Palgrave Macmillan, Cham.
Yoon, D. (2015). Corporate Social Responsibility (CSR) Advertising and Consumer Responses in the Lodging Industry: Functions of Green Marketing Motive and Appeal Type.
Focus Economics, (2020) Denmark GDP Q3[Online]. [Accessed through]: <https://www.focus-economics.com/countries/denmark/news/gdp/economy-rebounds-notably-in-q3>
Different Modes of Entering International Business, 2021, [Online]. [Accessed through]: < https://www.vedantu.com/commerce/different-modes-of-entering-international-business
Know more about UniqueSubmission’s other writing services:
