International Business Strategy

This report analyzes the internal and external environment of a SME in Australia planning to expand their business in China. It includes a SWOT analysis, market entry strategy, and PESTLE analysis.

INTERNATIONAL
BUSINESS STRATEGY

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Contents
INTRODUCTION......................................................................................................................2
Part 1..........................................................................................................................................2
SME in Australia....................................................................................................................2
Information about the firm.....................................................................................................2
Part 2..........................................................................................................................................3
Micro environment of the firm...............................................................................................3
SWOT analysis...................................................................................................................3
Market entry strategy..........................................................................................................4
Macro environment analysis...................................................................................................4
PESTLE Analysis.............................................................................................................4
OLI Framework..................................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................7

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INTRODUCTION
SMEs are doing good business in Australia and they have potential to expand in the overseas
market. It is crucial that firms do an analysis on the basis of their resources and capabilities.
This was essential for the firm to manage the way in which they are doing their business and
the way in which they can expand their business in different parts of the world (Ahmad, Abu
Bakar, Faziharudean & Mohamad Zaki, 2015). Bronze Snake is a SME in Australia that is
planning to expand their business in different parts of the world. This company aims to enter
into China. This report will do the overall analysis of the SME’s internal and external
environment.
Part 1
SME in Australia
Bronze Snake is a small scale fashion retailer from Australia. This company deals in the
business of fashion retailing. There products range includes all the clothing and fashion
accessories. This company aims to expand its business in China where they have higher
amount of potential to do business in the country (Anwar & Sun, 2011). This company has
capacity to expand in the international market because they are having innovative products
and the quality of their products is also high.
Information about the firm
Bronze snake works in the industry of Fashion retail trade. They believe in delivering simple
and perfect shopping experience which has given them competitive benefits over the rivals.
In 2013, this firm received smart company award. Since this company’s major stake is on the
online mediums hence they have an effective shipping mechanism. This was essential for the
effective growth of the company. Revenue growth of the company is around 118%. It is
having total numbers of 17 employees. It was founded back in the year 2008. Its turnover is
around $3.9 million a year.
Fashion industry in Australia is very big. Its turnover is around 16.21 billion AUD in the year
2017 (Gaille, 2018). In terms of structure there are three parameters such as market
concentration is good and most of the companies are performing in a better manner. This
firm’s competitive position within Australian fashion industry is good as it can be seen from
its growth rate which is around 110%. The target market of the firm in the overseas market is
the young customers that are fashion lovers.

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In Australia the firms that has lesser than 200 employees within the firm are considered to be
an SME. This is different from the large companies who have businesses in Australia and
overseas. They also have more than 200 employees. The business of the SME has been
sustainable in the market over the years. If Bronze Snake enters into an international market
then it will be a boost to the SMEs of Australia.
Part 2
Micro environment of the firm
The micro environment of the Chinese market for the Bronze snake when it considers
expansion can be understood with the help of the tool such as SWOT analysis.
SWOT analysis
Strength
 This firm has innovative products that are able to attract the customers from different
segments of the society.
This firm is expanding at much faster speed which enables them to improve their position in
the market and the industry (Kasiran, Mohamad & Chin, 2016).
 They have highly skilled employees that are capable of dealing with the challenges
that are confronting their business. These skilled labourers play a crucial role in the
management of tasks and operations.
Weaknesses
 It does not have experience to work in the international market and hence their
strategies can be poorly dealt.
 This firm does not have large distribution network outside Australia which might be a
biggest weakness while expanding in the nations like China (Ng, 2012).
 This firm also does not have higher access to larger database which is again a
challenge for the company in terms of decision making. This is because decision
making can be made effective with the use of database management system.
Opportunities

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 China is an expanding market for fashion retail hence a high degree of sales can be
achieved in the market.
 China also has a skilled workforce that can help the company in improving their
performance in all across the globe.
 Since Chinese fashion industry is not under the control of the any one bigger firm
hence the opportunities for the development of the SMEs in the Chinese market is
higher (Ng & Kee, 2012).
 This company also has scope in the niche market of China which can improve the
profits within the firm.
 China is a developing market hence it can provide a good base to its revenue growth.
Threats
 The world economy is facing turbulence hence management of finance needs to be
done in an appropriate manner (Rose, Deros, Rahman & Nordin, 2011).
 The increasing trade barriers between Australia and China are having impact on the
SMEs that aims to expand in China.
Market entry strategy
The strategy that this firm can adopt for its expansion in China is through Joint Venture. This
is because at the initial stage of the expansion it is difficult to understand the mood of the
country towards their product. Since there is difference between the culture of China and
Australia hence it will be difficult for the SME to adapt according to these changes. This joint
venture can make their process of expansion easier.
Macro environment analysis
PESTLE Analysis
Political
Politics in China take place in a framework of socialist republic run by a single party. Single
party framework is more appropriate for the fashion industry in terms of changing in rules
and regulation. Government of China is mainly focuses on the expansion of domestic
consumption and stabilise international trade share (Fibre2fashion, 2012). The government of
China support export diversity in the way of stabilize and strengthen. The government also
eliminate obsolete capacity, reduce energy consumption and increase efficiency in the
domestic textile industry due to which the fashion or clothe industry operate smooth in the

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market. It is a positive factor that government party does not change because the rules
developed by the company will not change.
Economic
China is the world second largest economy in terms of GDP due to which the willing power
of consumers is high. It is also world largest economy in the context of purchasing power
parity. The economy of China is growing continuously with the averaging rate of 6% over 30
years. On the income basis, it has been evaluated that the China is ranked in 67th by GDP
(nominal) and 73rd by GDP (PPP) per capita in the year 2018. The consumer willing power is
high that is why; it is beneficial for the organisation to enter the market in the context of
increasing sale.
Social
China has one-fifth of world’s population and it is the world’s fastest growing economy. The
other factor that will be beneficial for the organisation is “visitors”. The large number of
visitors comes to visit the China as a trip to see the culture. In China, people follow their
custom or tradition in outlooks (British council, 2018). It will be a barrier for the organisation
as the consumers more follow their tradition in outlooks.
Legal
China’s Government develop the laws to maintain the efficiency and integrity among the
businesses. The government raise the export tax rebate rate from 14% to 15% in the plan
(Fibre2fashion, 2012). The government inspire financial institutions for providing the credit
guaranty and financial support to small and medium sized textile enterprises.
Technological
Technology is developed rapidly in China during the year 1990s to 2010s. The government of
China made the rapid advances in some areas such as education, infrastructure, high-tech
manufacturing, patents, academic publishing and many others. China is continuously
targeting innovation and also working on its weaknesses in terms of technology. It has been
observed that the Nano technological development in Chinese regions.
Environmental

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It has been analysed that the China is the most populated country in the world. The main
issues faces by the China Company are soil problems, water problem and many others. The
company will face the issues in manufacturing the product otherwise; it does not faces any
issue in future regarding environmental factor.
OLI Framework
As per the analysis, it is observed that the organisation has to implement the OLI Framework
while expanding the business at the international level. The framework contains the three
tiers such as ownership, location, and internalization. The company has to analyse these three
factors before expanding the business.
Ownership- Company has to analyse the ownership style that which kind of style will
appropriate for it. As per the analysis, Joint venture will more beneficial for the organisation
to enter the market.
Location- It tells the area in which it has to establish the stores or chains to gain advantage. It
has been recommended that the organisation has to establish the store where the celebrities or
youth lives.
Internationalisation- It tells that how the company expand the business at the international
level. The company has to enter the market with the Joint venture mode of entry in China.
Conclusion
From the above based report it can be concluded that a firm having lesser than 200 employees
are understood to be as the SME in Australia. Bronze snake wants to expand its business in
China. Chinese fashion market is highly concentrated but the scope for the SMEs are higher.
The misbalance in the economic health of the world might be a threat to the expansion of the
company. The external market environment is good within China for the small and medium
enterprises expansion.

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References
Ahmad, S. Z., Abu Bakar, A. R., Faziharudean, T. M., & Mohamad Zaki, K. A. (2015). An
empirical study of factors affecting e-commerce adoption among small-and medium-
sized enterprises in a developing country: Evidence from Malaysia. Information
Technology for Development, 21(4), 555-572.
Anwar, S., & Sun, S. (2011). Financial development, foreign investment and economic
growth in Malaysia. Journal of Asian Economics, 22(4), 335-342.
Bronze Snake, (2018) About Us. Retrieved from: https://bronzesnake.com/about-us
Kasiran, F. W., Mohamad, N. A., & Chin, O. (2016). Working Capital Management
Efficiency: A Study on the Small Medium Enterprise in Malaysia. Procedia
Economics and Finance, 35, 297-303.
Ng, H. S. (2012). Development of intangible factors for SME success in a developing
country. International Journal of Academic Research in Business and Social
Sciences, 2(12), 198.
Ng, H. S., & Kee, D. M. H. (2012). The issues and development of critical success factors for
the SME success in a developing country. International Business Management, 6(6),
680-691.
Rose, A. M. N., Deros, B. M., Rahman, M. A., & Nordin, N. (2011, January). Lean
manufacturing best practices in SMEs. In Proceedings of the 2011 International
Conference on Industrial Engineering and Operations Management (Vol. 2, No. 5,
pp. 872-877).
Gaille, B. 2018. 18 Australian Clothing Industry Statistics and Trends. Retrieved from:
https://brandongaille.com/18-australian-clothing-industry-statistics-and-trends/
Fibre2fashion. (2012). China Textile Industry Overview. Retrieved from:
https://www.fibre2fashion.com/market-intelligence/countryprofile/china-textile-
industry-overview/policy-news.asp
British council. (2018). The power of fashion. Retrieved from:
https://www.britishcouncil.org/research-policy-insight/insight-articles/power-fashion

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