Global Business Expansion Strategies

This solved assignment examines the influence of the business environment on organizations expanding globally. It discusses key factors like economic, social, political, and technological influences, highlighting tools such as PESTEL analysis and Porter's Five Forces for strategic decision-making in foreign direct investments. The document also delves into market segmentation strategies based on consumer needs and wants.

Business Organisations and
Environments in a Global
Context

Table of Contents
INTRODUCTION...........................................................................................................................1
BRITISH AMERICAN TOBACCO...........................................................................................1
PESTEL Analysis........................................................................................................................2
Porter's Five Forces Model..........................................................................................................4
The establishment of a company in the allocated country..........................................................5
An expansion of its current operations within the allocated country..........................................6
CONCLUSION................................................................................................................................6
References........................................................................................................................................7

INTRODUCTION
BRITISH AMERICAN TOBACCO
Domestic markets are not able to make sufficient profits for to meet the demands of
global customers (Byram and Parmenter. eds., 2012). Therefore business is developing in
expanding in other countries. Globalisation is a key element for organisations to become popular
and effective in domestic as well as foreign markets. In this assignment, the company which is
considered is British American Tobacco Poland. The headquarters of the company are in
London, United Kingdom. British American Tobacco group in Poland mainly consists of two
groups- British American Tobacco Polska and British American Tobacco Polska S.A. It is the
first international tobacco company in Poland that has introduced a sales model. In this
assignment various concepts of business environment in a global context are discussed. It will
provide information about business activities involved in expansion of organisation in foreign
countries. The involvement of foreign direct investment decision in expansion of the firm. It
includes several approaches like porters five model, PESTEL analysis and demand supply
schemes before establishing of the business in other country.
The British American Tobacco is a multinational company that deals with tobacco and
cigarette. The headquarters of this company are situated in London, United Kingdom. This is one
of the largest public company that trades in tobacco. This firm has leading markets in around 50
countries. There are different largest selling brands of this tobacco company naming Dunhill,
Lucky Strike, Kent and Pall Mall. The other brands that this company markets are Rothmans and
Benson & Hedges. In Poland, there are two companies in which this British Tobacco firm deals.
They are British American Tobacco Polska which has office located in Warsaw and it has sales
people working in whole Poland. The other part i.e. British American Tobacco Polska deals in
manufacturing cigarettes for adult smokers. This company offers products in the brand name of
Vogue Clic, Vogue La Cigarette, Jan III Sobieski, Nevada, Lucky Strike, Pall Mall and
Rothmans of London. This company was founded in the year 1951. This is a subsidiary company
of multinational firm, British American Tobacco. British American Tobacco was started in the
year 1902 by James Buchaman Duke. It was a joint venture of British Imperial Tobacco
company and American Tobacco company. This was established in order to operate it's business
outside United Kingdom and United States and enter in markets of other countries like Asia,
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Africa, Latin America and Europe. The British American Tobacco Poland firm is a subsidiary of
British American Tobacco therefore principles of this are followed in Office of Poland. The
actions and behaviours of the firm are based on values. There are four phases which reflects the
culture and atmosphere of the company (Baker, 2012). The four values are enterprising spirit,
freedom through responsibility open minded, strength from diversity. There are various
strategies and values of this firm in providing products and services in the company. This
company has a strong foundation of sustainable development socially responsible business that is
helpful in creating future of the industry. According to this company tobacco is the foundation of
their firm and it provides opportunities for growth and making profits. This company is involved
in promoting and developing products of new generation and other products of nicotine.
Business environment is defined as the sum of all external and internal factors that affects the
business. It is essential for the organisation to evaluate external and internal factors before
establishing business. Both external and internal factors work together in implementing
successful business. This can be explained with an example safety and health regulation is
external factor and internal operations of the firm gets affected by this. There are some external
factors on which there is no control of organisation. These are known as external constraints. In
multinational firms there are number of investors and stakeholders. These are classified as as two
types of stakeholders- major and secondary stakeholders. Major stakeholders are one who are
involved directly in stake or fascination in the company (Deresky, 2017). On the other hand,
secondary stakeholders includes special interest or public groups that do no have direct stake in
the company. The environment of business enterprise consists of all factors that are outside the
business. It is important to keep analysing the environment of business and perform accordingly
so that business can succeed and make profits. There are following key elements present in the
environment of business that should be considered discussed below-
PESTEL Analysis
Political Factors- There are different international trading rules, regulations and tariffs of
every country. For e.g. there are different rules for oil and gas companies in Asia and in
America. In context of British American Tobacco company of Poland it is advisable to analyse
regulations and tariff of country in which it has expanded for avoiding governmental
interruptions and conflicts (Harish and Kumar, 2014). Moreover, governmental stability is also a
major factor which affects the business of the company. The firm takes care of political stability
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of country before expansion of business in that area. If there is unstable government authority,
then company will not be able to establish and trade in that country in an effective manner. For
e.g. if there is no fixed government, rules and laws on trading, tobacco, packaging will be
changed regularly. It will cost company a high investment in functioning according to rules and
regulations of ruling government (Loch, DeMeyer and Pich, 2011). Suppose there is a
government policy to advertise tobacco by making TV commercials but after some time another
government starts to rule and it bans these commercials. This affects the company as the
investment in making commercials was a total loss.
Economic Factors – This is an essential aspect that includes concerns like nature and
economy where a company operates. There are various economic rates which affects the
functioning of the company. For e.g. demand of tobacco is increasing in some countries but on
the other hand there are some countries which avoids tobacco consumption. The different
economic rates that affects the internal rates, exchange rates and economic growth. If there is any
increase in interest rates this will affect the projects of company, trading of company with other
countries. Every country has exchange rates at which products are transferred among countries
and if there are change in exchange rates this will affect business activities. Economic growth of
a country must be good for initiating trading with other countries (Luthans, and Doh, 2012). The
country which has low economic growth or it is suffering from recession then it badly affects the
business of companies.
Social factors- The social factors that affect the business operations of the company are
income distribution and population demographics, social class, wealth of people, level of
education, health consciousness, consumer preferences and consumer behaviour. For a firm like
British American Tobacco Poland, it is analysed that several social factors will affect success
rate of business. If people of a country avoids use of tobacco then this firm will not expand it's
business in that area. It will just be a loss of their investment.
Technological factors- Technological factors are those elements that affects the
organisation. They include innovations in technology that affects the various operation of
industry. It includes level of innovation, technology incentives, Research and development,
automation, technological awareness and technological change. These are the factors that helps a
company to enhance their business by adding technological advantages in their products and
services (Mohamed and Kaur a/p Gian Singh, 2012). Being a tobacco manufacturer, this firm has
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to take care of technological advantages for analysing consumer behaviour and making changes
in products. A technological evaluation is done before business expansion in other countries.
Environmental Factors- The environmental factors that are considered when entering
into new marketplace are climate, weather, environmental offsets and climate change. The
awareness about climate change and weather change affects the operating of companies and
according to these factors products are also offered accordingly. It is important for an
organisation to be aware of safety, healthy and environment risks while doing expansion in
foreign country. The British American Tobacco Poland works according to international
environment guidelines about social impacts, safety requirements and environmental
requirements. The company is advised to analyse needs to aware of all different applicable
legislation and intentional code of practise in various countries.
Legal Factors- These factors are the elements that sometimes overlap with political
factors. They involve particular laws that affects the expansion of business. The various laws
involved while business expansion are antitrust laws, discrimination laws, employment laws,
copyright and patent laws, protection laws, safety and health laws. The companies should
function properly in order to get success. It is advised to companies that they should know what
is legal and what is illegal according to law for trading ethically and successfully (Porwal and
Hewage, 2013). This is very difficult for global countries to analyse legal issues of every country
they are operating. The British American Tobacco has a legal advisor who handles all such legal
implementation involved while expansion of business in other country.
Porter's Five Forces Model
This is a model that identifies and analyses different competitive forces that are involved
in developing any company or industry. It provides information about weakness of the company.
It also tells about structure of organisation to determine strategy. This model is applied in order
to know attractiveness and profitability.
Rivalry among firms in the industry- Tobacco industry is a developing company that has several
competitors. Rivalry influences company to reduce price of their product, introduce new
products and improve service for sustaining in competitive market.
Buyer Power- This is the power that buyers have. When there are more number of buyers
in the industry. The buyers who contracts for large purchases are also involved in delayed
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payments, price concession or return of products. In a tobacco industry, buyers do not have
purchasing power as there are less suppliers of tobacco in the world.
Power of suppliers- In the tobacco industry, suppliers have the power over buyers. The
competition between suppliers causes pressure on product price that leads to price race, limits
quality.
Threat of substitute- A substitute of tobacco is nicotine pack. Nicotine industry are
increasing and they are a threat to the cigarette and tobacco industry. Before expanding to other
countries, British American Tobacco Poland must ensure to advertise tobacco there in an
effective way to make profits.
Threat of new entrants- There are chances where a new company produces a product
that will be a threat to this tobacco industry. The threat of a new entry prevents profit potential of
the company.
To succeed in business environment organisation have to enlarge business opportunities
by expand market share in present market scape or by establish business in another market by
finding opportunities. This report is based on British American Tobacco which is an British
multinational cigarette company (Spender, 2014). It aimed to expand its market share by expand
either in allocated company and by current operations within allocated country but it is also
concerned with the matter of foreign direct investment decision that plays major role while
expand in another market.
The establishment of a company in the allocated country.
To set up an company in another nation organisation have to adopt legal processes that is
require to establish an corporate entity or company to expand their market share. In corporation
that is an separate legal entity of their owners. These corporations can operate nearly in all
nations in whole world and use term such as “Inc” or “Limited”. That legal entity is different
from their owners (Loch, DeMeyer and Pich, 2011). In case of British American tobacco they
establish and expand their sector of operation in another country which presently operates in
Poland. While expand in market foreign direct investment plays crucial role in developing and
emerge market opportunities. To expand market organisation requires multinational funding and
expertise to enlarge business opportunities in enhance sales ratio. Organisation needs private and
public investment to develop infrastructure, energy and water conservation that helps in enhance
job opportunities and enhance wages. The national bank of Poland gives opportunities of foreign
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direct investment that is USD based of BPM6. Their FDI in 2004 based on BPM5 according to
latest updates and current account deficit is 632.0 USD mn in 2018 that gives important insights
and knowledge before expansion in another market scape.
An expansion of its current operations within the allocated country.
To expand market share in existing country an organisation can adopt various ways and
patterns to enlarge business opportunities that are as follows:
In case of British American tobacco for expand their market in current location they evolve
before evaluate various options such as add some new products and services in their marketing
mix, sell more products and services for existing consumers, expand in new territory, Target new
customer market, Tap new sales and delivery channels and at last acquire new business.
Add new products and services in marketing mix:
To expand their market share in allocated country strategy of some new products and
services that are demand of their existing and new consumer base and they want from British
American tobacco. That is one of best way by conducting an through research before
accumulating resources for market expansion.
Sell more products and services to existing customers:
The another important attribute is penetrate deeply about consumer base and segment
market by analysing needs and wants of consumers that more interested to buy products of
British American tobacco (Luthans and Doh, 2012). In that aspect market should be divide and
analyse according to age, gender and buying patterns of consumers to attract and enlarge
business opportunities.
CONCLUSION
A Business environment is defined as different external factors that affects firm and
influence decision and operation of the company. Organisations face a range of opportunities and
challenges in the economical, social, political and business environment. Several ways like
porter's five model and PESTEL analysis are done before expansion of business in global
expansion of business. The foreign direct investment decisions help in making effective
decisions for implementing business activities in different countries.
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References
Books & Journal
Baker, J., 2012. The technology–organization–environment framework. In Information systems
theory (pp. 231-245). Springer, New York, NY.
Byram, M. and Parmenter, L. eds., 2012. The Common European Framework of Reference: The
globalisation of language education policy (Vol. 23). Multilingual matters.
Deresky, H., 2017. International management: Managing across borders and cultures. Pearson
Education India.Ferraro, G. P. and Briody, E. K., 2013. The cultural dimension of
global business. Upper Saddle River: Pearson.
Harish, V. S. K. V. and Kumar, A., 2014. Demand side management in India: action plan,
policies and regulations. Renewable and Sustainable Energy Reviews. 33. pp.613-624.
Loch, C. H., DeMeyer, A. and Pich, M., 2011. Managing the unknown: A new approach to
managing high uncertainty and risk in projects. John Wiley & Sons.
Luthans, F. and Doh, J.P., 2012. International management: Culture, strategy, and behavior.
New York: McGraw-Hill.
Mohamed, N. and Kaur a/p Gian Singh, J., 2012. A conceptual framework for information
technology governance effectiveness in private organizations. Information Management
& Computer Security. 20(2). pp.88-106.
Porwal, A. and Hewage, K. N., 2013. Building Information Modeling (BIM) partnering
framework for public construction projects. Automation in Construction. 31. pp.204-
214.
Spender, J.C., 2014. Business strategy: Managing uncertainty, opportunity, and enterprise.
Oxford University Press.
Online
Scanning the Environment: PESTEL Analysis. 2018. [Online]. Available
through:<https://www.business-to-you.com/scanning-the-environment-pestel-analysis/
>.
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