Business Expansion in a Foreign Country

This report discusses the process of business expansion in a foreign country, using Paytm's expansion in Germany as a case study. It covers the background information on Paytm, the business environment in Germany, and an analysis of the business environment using PESTLE and Porter's Five Forces models. The report concludes with recommendations for Paytm's expansion strategy.

Business expanding
in a foreign Country

INTRODUCTION...............................................................................................................................3
BACKGROUND INFORMATION ON CHOSEN COMPANY......................................................3
BACKGROUND INFORMATION ON BUSINESS ENVIRONMENT.........................................4
ANALYSIS OF BUSINESS ENVIRONMENT.................................................................................6
CONCLUSION....................................................................................................................................7
REFERENCES....................................................................................................................................9

INTRODUCTION
Business expansion is stage where an organisation reaches the point for growth as
well as seeks out for several more options in relation of generating profit. In addition to this,
there are different forms of business expansion which include opening company in another
location, adding sales employees, adding franchisee’s, forming an alliance, entering new
market, expanding through internet and many more. This report is based on Paytm which is
Indian e-commerce payment and financial technology company. It was founded in 2010 by
Vijay Shekhar Sharma as well as serving at worldwide level.
Respective company is trying to expand their business in Germany and their
expansion tool will be FDI (Foreign Direct Investment). Germany is consider as an attractive
nation for FDI but in recent years global recession as well as subsequent Eurozone crisis have
hampered influx of foreign direct investment (Germany: Foreign Direct Investment, 2019).
Moreover, Germany have highly powerful and diversified industrial network as well as they
also have highly skilled manpower who have good command over English, favourable social
climate, stable legal network, reliable infrastructure and location at the heart of Europe. In
addition to this, financial and insurance sector was investing 9.6% in 2017. Thus, when
Paytm expand their business in Germany they will gain several business advantages, increase
customer base, high revenue and many more.
Respective report will give overview of business organisation along with its size,
legal form as well as current international operations. In addition to this, PESTEL analysis on
the basis of country will conduct in which company will expand. Moreover, porters 5 force
model will also applied for studying specific market. In the end section, recommendation will
be given related to the business scenario.
BACKGROUND INFORMATION ON CHOSEN COMPANY
Paytm is India’s largest leading payment gateway which offers comprehensive
payment services for customer as well as merchants. Respective company is offering mobile
payment solution to approx. 7 million merchants and also allow customers to make seamless
mobile payments from bank accounts, cards as well as Digital Credit within others. In
addition to this, with the launch of Paytm Payments Bank, aim of respective organisation is
bring banking as well as other financial services to half-a-billion un-served people. Moreover,
Paytm offers online use-cases such as utility bill payments, travel, mobile recharge, events &

mobile booking as well as several other in-store payments at grocery stores, parking,
restaurants, tolls, education institutions with Paytm QR code.
There are several competitors of Paytm such as Flipkart, PayPal, Free Charge,
Mobikwik and many more (Paytm, 2020). As per the data of 2019, revenue is 3,579 crore₹
(US$500 million). Legal structure of company are as follows :-
Legal structure – Private limited company is type of business structure as well as LTD
is privately held business. It is kind of business entity which limits liability of owners to their
shares. Along with this, it also limits number of shareholders to 50 as well as restricts
shareholders from publicly trading shares. It is not only small businesses that set up private
companies but also big firms and corporations as incorporation is the only way to protect a
company name against registration by another person. It is also cheap and simple and will
help you beat the competition to new prestigious company names. Paytm is not operating at
international level but they are making strategy for its expansion purpose.
BACKGROUND INFORMATION ON BUSINESS ENVIRONMENT
Business Environment: The business environment is the factors that effects a
organisation to develop and maintain successfully and make better relations with there
customers. The business environment is made by some factors such as, clients, employs,
customers, innovation in technology, owners, suppliers, market trend, social trend, etc. Sum
of these factors influences business organisations environment and company situation. There
are three level of business environment such as internal environment External Micro
environment and External Macro environment
PESTLE Analysis – It is a framework as well as tool utilise by marketers for
analysing and monitoring macro-environmental factors which have wide impact on the
working of business firm. Here, PESTLE stands for political, economical, social,
technological, legal and economical. Germany is one of the leading power of European
Continent which is officially well known as Federal Republic of Germany. In addition to this,
Germany consist 16 states as well as is spread over an area of 357,578 square kilometres.
Moreover, it is second famous country within Europe with around 83 million inhabitants, as
and socially as well as economically advanced nation Germany recognized as worldwide.
Along with this, respective nation is also considered as technological leader and also
produced some famous scientists. Explanation of PESTLE analysis are as follows :-

 Political factors – Germany is Federal, Parliamentary Democratic Republic with
Chancellor as head of government. It is consider as most powerful players within
European Union as well as respective nation has been long-time ally of their
neighbour France which is essential in cementing position of Germany as leading
power within the continent. In recent years Germany has been rankled through
political turmoil. Looming modification in leadership together with approaching
shadow of Brexit result in fair amount if upheaval with political landscape if nation.
By looking at nation history related to opting for stable governments Germany have
hope in relation of leading Europe in new era.
 Economic factors – In world, Germany is 4th largest economy as well as with nominal
GDP forecast of $4.2 trillion. In addition to this, Germany looks set for robust growth
of economy. In late 2018, GDP decline coupled with unstable industrial growth which
left on the horizon economy of nation. Moreover, respective nation have low
unemployment rate of 3.2% which is lowest at worldwide level. Along with this, it is
also top exporters as well as have mixed economy with budgetary surplus. Current
refugee crisis result in left country shaken but with strong foundation of economy
respective country remain ab established economic power.
 Social factors – Germany have high economic standards, technological advancement
as well as education which simple means that it is best place to live. In addition to
this, life expectancy of German men is 78 years as well as women is 83 years.
Moreover, respective country is also well known for its punctuality, hand work as
well as strong ethics. It is also good in world of sports especially football as well as
Germany identify themselves as welfare state and their primary objective is welfare of
citizens.
 Technological factor – Germany is well known nation for advancement within science
and technology. With the assistance of such factors it become easy for organisations
to work in Germany and gain competitive advantages. In simple term it can be said
that by expanding business within Germany it become easy for Paytm to implement
latest technology within their working so they will be able to attract more customers
in better manner.
 Legal factors – Legal landscape of Germany promotes establishing business ventures
through both citizens and foreign investors. In addition to this, excellent investment
environment along with top-notch infrastructure as well as structural reforms to the

corporate tax rates result in making country as an attractive destination for investors at
global level.
 Environmental factors – Along with rest world, Germany faces threats related to
global warming as well as climate change. Moreover, Environmental pollution along
with quick industrialization and utilization of petroleum products has incited the
country to embrace an arrangement of empowering elective vitality sources. The
nation is home to the world's biggest breeze homesteads and wind turbine, just as the
biggest solar park, Solarkomplex Senftenberg. Germany is working its way towards
reasonable asset use and assumes a significant job in worldwide atmosphere
collaboration.
ANALYSIS OF BUSINESS ENVIRONMENT
Porters five force analysis is strategic management tool utilise for analysing industry
as well as underlying levers of profitability within specific industry. In relation of, Paytm
porters five force model are as follows :-
 Rivalry among the existing enterprises - A high level of contention among the current
endeavours prompts high serious pressure and can bring down net revenues and the
gainfulness of person ventures. In circumstances in which an enormous number of
endeavours target comparative showcase fragments with practically identical
techniques, in which the market develops gradually, cost is the most significant
separation factor and high leave hindrances exist, a negative effect on the business'
productivity is affected.
 Threat of new entrants - The danger of new contestants can be controlled by the
passage boundaries of a market. The serious weight on existing undertakings
increments with low passage hindrances. In such a circumstance significant
components of the market (e.g, portions of the market, cost level) can change because
of the passage of new market members.
 Bargaining power of buyers - The bartering intensity of purchasers decides to what
degree clients can impact undertakings by the measure of utilization and the weight
on edges. Significant lists of a high level of purchaser power include: high fixed
expenses in the business, presence of enhancements of the item or administration,
high level of client focus, clients' information on creation costs, plausibility of an

opposite combination of clients, high development paces of the market and a solid
individualization of client request
 Bargaining power of suppliers - The bartering intensity of providers influences
industry gainfulness if, for instance, a concentrated provider bunch commands over
existing ventures in the market, which are not significant purchasers for the providers.
At that point the business faces high edge pressure by the providers.
 Threat of substitute products and services - A threat of substitute items and
administrations exists specifically if less expensive or more excellent items and
administrations can decrease existing deals volumes of a market or an endeavour. The
future deals capability of existing endeavours gets restricted and industry rivalry
increments.
CONCLUSION
After going through above discussion it has been summarised that, for an organisation
it is important to expand business so that they will be able to generate high revenue. But
while expanding organisation at foreign market it is essential to select suitable expansion
approach. Such as Paytm is expanding their business in Germany by using Foreign direct
investment as an expansion strategy because it is suitable method of expansion for them. FDI
is the investment which made by firm or individual in one nation within business interests
located in another country. Primarily, FDI take place when investors establish foreign
business operation or acquire assets within foreign company.
After going through overall report, it has been recommended to Paytm that
implemented strategy of Foreign Direct investment is suitable for them but they have to focus
on several areas for gaining better advantages. Below mention are some recommendation in
relation of Paytm :-
 Before entering in market it is important for Paytm to conduct market analysis so that,
they will be able to determine current market trends, customers demand, taste and
preferences related to services and many more.
 In addition to this, they have to select suitable marketing strategy also because it will
help them in attracting more and more customers as well as also in fulfilling their
needs or wants in more effective manner without facing any difficulties.

By implementing these recommendation within working of Paytm they will be able to gain
better competitive advantages as well as expand their business in Germany within more
effective manner.

REFERENCES
Books and Journals
Yoder, S., Visich, J.K. and Rustambekov, E., 2016. Lessons learned from international expansion
failures and successes. Business Horizons, 59(2), pp.233-243.
Lynch, R. and Jin, Z., 2016. Exploring the institutional perspective on international business
expansion: Towards a more detailed conceptual framework. Journal of Innovation & Knowledge, 1(2),
pp.117-124.
Gaur, A.S., Ma, X. and Ding, Z., 2018. Home country supportiveness/unfavorableness and outward
foreign direct investment from China. Journal of International Business Studies, 49(3), pp.324-345.
Cui, L. and He, X., 2017. Expanding near the home base or venture far? The influence of home
country state on the economic distance of foreign direct investments. Journal of Business
Research, 75, pp.95-107.
Lee, S.H., Oh, C.H. and Lee, J.Y., 2017. The effect of host country Internet infrastructure on foreign
expansion of Korean MNCs. Asia Pacific Business Review, 23(3), pp.396-419.
Jiang, G.F. and Holburn, G.L., 2018. Organizational performance feedback effects and international
expansion. Journal of Business Research, 90, pp.48-58.
Oh, C.H. and Oetzel, J., 2017. Once bitten twice shy? E xperience managing violent conflict risk and
MNC subsidiary‐level investment and expansion. Strategic Management Journal, 38(3), pp.714-731.
Hwang, J.A. and Boo, K.J., 2018. Overseas expansion of South Korean renewable energy firms:
Status and barriers. Renewable and Sustainable Energy Reviews, 81, pp.2862-2869.
Kim, J.U. and Aguilera, R.V., 2016. Foreign location choice: Review and extensions. International
Journal of Management Reviews, 18(2), pp.133-159.
Online
Germany: Foreign Direct Investment, 2019.[Online].Available through<
https://santandertrade.com/en/portal/establish-overseas/germany/foreign-investment>
Paytm, 2020.[Online].Available through< https://craft.co/paytm>