International Business Expansion: A Case Study of Cafepod Coffee Co.

This report discusses the international business expansion of Cafepod Coffee Co. in Sweden. It covers the rationale behind the decision, barriers faced, and approaches to internationalization. The report also provides an overview of the organization and the country in which it wants to expand its operations. Subject: Business, Course Code: N/A, Course Name: N/A, College/University: N/A

International
business

Executive summary
International business is considered as the process of trading products, services,
technology and capital from one country to another. It includes various commercial activities
across national boundaries. In this report, chosen organisation is Cafepod Coffee Co. that
conducts its operations in UK and expand operations in Sweden. There are various topics are
covered such as description of Cafepod Coffee Co. and its rational to expand business in other
country like Sweden. It is recommended to organisation to expand business operations in
Sweden. There are various barriers or obstacles are faced by the organisation in
internationalisation process are covered. Apart from that approaches of internationalisation
process are mentioned in this project report.

Table of Contents
Executive summary .........................................................................................................................3
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Analysis and discussion...................................................................................................................1
Brief overview of the chosen organisation and the rationale for going international.................1
Discuss which country you would recommend them to enter and the rationale behind the
decision.......................................................................................................................................3
Typical barriers that will be faced as the organisation expands internationally.........................5
Approach for the internationalisation process for the specified target market...........................7
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Internationalisation of business is considered as the process of transferring organisational
products, services, technology and capital across national boundaries or between two or more
countries. To expand business at international level, certain things and factors are considered by
the managers to attain success in specific market place. Business faces various barriers in to
expand operations at international level (Alaaraj, Mohamed and Bustamam, 2018). In this report
selected organisation is Cafepod Coffee Co. which is UK based organisation founded in 2011
and decides to expand its operations in Sweden. Organisation want to expand its business in the
country of Sweden in order to enhance profitability ratio and customer base. This report covers
introduction of organisation and country in which organisation want to expand its operations.
Further, various rational of expanding business in specific country and barriers or challenges that
are faced by the organisation in the process of expansion are covered. In the last section of report
approaches of internationalisation process is discussed in the context of chosen organisation.
MAIN BODY
Analysis and discussion
Brief overview of the chosen organisation and the rationale for going international
CafePod Coffee Co. is independent craft coffee business established in the year of 2011
by Peter Grainger and Brent Hadfield. Respected organisation provides coffee to adventurous
coffee drinkers at home. Headquarter of organisation located in London, England, UK.
Organisation is established with the objective of bringing happiness to people everyday life. It
provides better quality coffee that enhances their experience with organisation. CafePod Coffee
Co. involved in producing Nespresso compatible coffee capsule. Organisation delivers coffee to
doorsteps of customers (CAFEPOD COFFEE CO., 2021). Ideas of setting business was come in
the mind of entrepreneur Peter when he was travelling in South America for a year. At the time
of financial crisis, he left job and stumbled to coffee plantation and independent shop with the
objective of producing Nespresso compatible capsule. It is being analysed by the Peter that there
is lack of excitement and energy high street coffee in retailing supermarkets of UK. Then
entrepreneur of CafePod Coffee Co. decides to produce range of strong and exciting coffee
blends for coffee enthusiasts. Organisation provides its coffee in local supermarkets of UK and
organisation also provides online retailing services to its customers. Organisation provides Roast
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Whole Beans, Nespresso compatible aluminium Pods as well as Ground coffee that attracts
customers towards brand. CafePod Coffee Co. expands its business operations in Sweden.
Rationale for going international
Cafepod Coffee Co. performs its business operations in UK. Now it decides to expand
business in Sweden to enhance market share and number of customers. Expansion facilitates
business to enhance sales and profitability ratio through provide products to to international
customers. Respective organisation considered various factors before expanding business in
other country are mentioned below:
Expand business into New markets
Internationalisation facilitates business to expand its operations at global market place. It
helps business to provides its products and services to wide market and enhance sales and
revenue. It provides various opportunities to enhance reach at global level (REASONS TO
EXPAND INTERNATIONALLY IN 2020, 2021). Cafepod Coffee Co. expands its operations in
Sweden through providing quality products and services to new customers. It facilitates business
to attain the objective of growth and development. When country gain success in home county
than it move international market. Respective organisation conduct proper research in targeted
market to to analyse needs, demands and preferences of customers. Internationalisation of
business provides broader customer base to organisation that help business to generate higher
sales. It is the important reason that attracts business to expand operations at international level.
Gain Competitive Advantage
Expansion of business operations at international level facilitates to gain various
competitive advantages through getting saturated market to provide products and services.
Cafepod Coffee Co. expands business in Sweden that provides growth and development
opportunities. Expansion provides access of new customers in market place where less number
of competitors are operate their functions. It enhances organisational performance, profitability
and sustainability in different market place.
Brings Diversity
Conducting business operations at home country or market place limits organisational
potentiality to attain success and higher profitability. Internationalisation facilitates business to
gain opportunity to diversify market and gain stable revenue (Bianchi, Glavas, and Mathews,
2017). If business in its downturn condition in local market place than presence in international
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market facilitates it diversify losses. Cafepod Coffee Co. takes decision to expand business in
Sweden that bring diversity in business as well as help to face slower economic times in efficient
manner.
Improve organisational reputation:
Maintaining reputation at international level is the major reason of business expand
globally. Strong and effective reputation at international level attracts new customers. Other
reason of going international is the lower operational cost that enable organisation to save money
to invest them in another important operations. Cafepod Coffee Co. offers quality products and
services to customers that maintains its reputation at international level and increase sales ratio.
Expansion facilitates organisation to get labour at cheaper cost that accelerate manufacturing
operations and profitability ratio.
Greater access to talent:
International business provides advantages to organisation through accessing pool of
talent. Expansion of business facilitates to gain employees who have potentiality, abilities, skills
and knowledge of market that enable them to perform business in most efficient manner
(Caiazza, Very and Ferrara, 2017). Talented employees facilitates organisation to serve
customers properly and attain the objective of growth and development. Cafepod Coffee Co.
expands in Sweden and hire local employees of country with having strong educational
background and effective language skills. These employees help business to communicate with
customers, serve them products and services as well as persuade to purchase organisational
products and services.
Discuss which country you would recommend them to enter and the rationale behind the
decision
Cafepod Coffee Co. is recommended to expand business operations at in the market of
Sweden. It facilitates organisation to enhance market share and customer base. Sweden is
considered as high class country in the world that contains peace and high standard of living.
Sweden has 10.4 million population, 80% of Swedes live in urban areas that covers 1.5% land of
Sweden. It is the geographical part of Fennoscandia and located in between North Atlantic, the
Baltic Sea, and vast Russia. It is the best option for organisation to expand business operations.
Cafepod Coffee Co. organisation internationalise its operations in the country of Sweden.
Government of respective country formulated various rules and regulations that helps business to
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conducts business operations in efficient manner. Per capita income of government if highest in
the world on the other hand its tax rates also high that create burden on business. Sweden is
highly depends on international trade to gain products and services of other country to enhance
standard of living. There are various reasons that behind the decisions of Cafepod Coffee Co.
organisation to expand business operations in Sweden are mentioned below:
Favourable Government Policies
Cafepod Coffee Co. organisation expands business operations in the country of Sweden
because its government supports foreign investors and formulated various policies that attracts
international business. Respective organisation encourage innovation, support young
entrepreneurs and provide subsidiaries to new organisation. Government of Sweden creates
clear policies related to investment and taxation that help business to run operations in efficient
way. Country formulates free trade agreements and EU trade policies to reduce the tension at
geopolitical ends. Sweden conducts various programmes and services to foreign organisation to
export their products and services in country (Casson and Wadeson, 2018). Commercial
specialist of Sweden helps Cafepod Coffee Co. organisation to identify trade opportunities in
country, find local business partners as well as promote their products in market place. This is
the reason that respective organisation prefer to expand business in the market of Sweden.
Captivating Market:
Expansion facilitates organisation to provide its products and services to international
customers and gain high market share. Nordic countries that includes Sweden is considered as
the 11th largest economy contains innovation, transparency and other factors that help
international business to expand operations in it. GDP rate of Sweden is $537 billion and 10.4
million population (Drahos and Braithwaite, 2017). Respective country has huge customers with
high purchasing power that helps Cafepod Coffee Co. organisation to capture high market share
to enhance sales and profitability ratio. Due to having higher customer base, Cafepod Coffee Co.
take decision to expand business in Sweden. Respective country offers various efficient
processes that makes business formation and operations easy.
Growth opportunities:
Internationalisation process is related to conducting business operations or providing
organisational products and services across national boundaries. It provides various growth and
development opportunities. Sweden posses strong as well as stable economy that make it
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attractive location for business expansion. Sweden has open economy that promotes innovation
and its government also promotes food technology that facilitates Cafepod Coffee Co. to attain
success. Sweden if the hub of start-ups that helps respective organisation to operate its operations
in efficient manner and gain objectives of higher profitability and sales.
Sweden has talented and skilled candidates who can perform their functions in well-
defined manner to achieve organisational goals and objectives. Sweden uses swedish krona as a
local currency of country. Cafepod Coffee Co. expands business operations in Stockholm which
is largest city of the country. Respective organisation deals in school knitwear and commercial
dress (Hampden-Turner, Trompenaars and Hampden-Turner, 2020). Sweden consists different
manufacturings as well as production techniques that helps organisation to produce quality
products services that satisfy customers needs and demands. If Cafepod Coffee Co. expands its
operations in Sweden market than it could take some advantages, gain higher customer base and
profitability.
Typical barriers that will be faced as the organisation expands internationally
Expanding internationally has a lot of benefits to the company as there are a lot of customers in
the world who are willing to buy the organisation's products and services. But expansion could
be difficult as there are a lot of barriers that effects the inception of the company in that
particular company. Few of these barriers are further discussed which Cafepod Coffee Co. might
face while expanding in Sweden.
 Registration and compliance difficulties: Expanding business in a totally new territory
could be tricky as there are a lot of restrictions in Sweden for the foreign businesses
setting up in their country. The process of registering business in Country is quite lengthy
and complicated that enhances organisational cost. There are different kinds of issues that
are faced in registering the company according to the government norms. Cafepod Coffee
organisation conduct business operations through licensing to run business efficiently.
 Language barrier: Language barrier refers to the problem that occur when two people
don't speak or understand same language. In context of Cafepod Coffee Co., expansion in
Sweden where the official language is Swedish is quite difficult. Most of the people there
communicate in Swedish language so the organization needs to promote their product in
both English and Swedish language (Jain, Kuvvet and Pagano, 2017). If they will
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promote their products in English language only then they might not be able to capture a
wide market place.
 Trouble with taxes: There are different types of taxes with different rates in every
country. In context of Cafepod Coffee Co. there is a high import duty in Sweden which
will eventually make the whole plan of expansion less profitable so the company may
need to set up their manufacturing plants in Sweden (6 Ways to Break Through the
Barriers to International Expansion, 2021). There are also a lot of other taxes which the
company needs to understand in order to run business in Sweden.
 Staffing: Staffing is one of the most essential task, while expanding the HR needs to
make sure that they employ the best people in the organisation who are comfortable with
the goals of the company so that the functioning in the new country can be smooth.
Expanding human resource could be time taking and costly as the process of staffing is
very long and requires a lot of resources (Challenges in international business, 2017). In
context of Cafepod Coffee Co., the company have to ensure that they hire the best people
so that they can nicely present their brand in Sweden.
 Supply Chain issues: Supply chain refers to a network between the manufacturer,
retailer and the customer. This network ensures that the end products are delivered to the
customers without any difficulties. Smooth transportation of goods from the
manufacturer to the store is the most essential thing. Finding appropriate supply chain is
the biggest difficulty for organisations to performing operations in another country. In
context of Cafepod Coffee Co., deciding the best mode of transportation that is available
in the cities of Sweden helps the organisation in reducing the cost of the product which
will eventually help in maximizing profits (Joardar and Wu, 2017).
 Local competition: This refers to the businesses who are already selling the products or
services which the organisation is planning to offer in a particular area. In the context of
Cafepod Coffee Co., it faces competition from local business of Sweden which deal in
similar product line. To overcome this difficulty, they should introduce themselves as a
superior brand with the most effective pricing which provides sustainable competitive
advantages to business through enhancing sales ratio.
 Cultural differences: Every country has its own set of followings and their culture might
differ in some aspects, this leads to change in the taste and behaviour of the consumer.
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Cafepod Coffee Co. faces various barriers that are related to culture, norms and
differences in customer’s preferences in UK and Sweden. It impacts business sales and
profitability.
Approach for the internationalisation process for the specified target market
Internationalisation is defined as the systematic approach or methods that are implemented by
the organisation to expand business operations in another country. Cafepod Coffee Co. analysis
various modes of expansion and adopt most appropriate one that help business to conduct
business operations in other country or market place (Lai, Lin and Chen, 2017). Some modes of
expansion are mentioned below:
Exporting of goods and services: Exporting is defined as the process of selling
organisational products and services across national boundaries. It is the most efficient manner of
internationalising business in other country. Exporting is related to transferring goods and
services from home country to another country. It provides various advantages to organisation by
producing products in home country at lower price and sale them to another country at higher
price. Its enhances organisational profitability as well as provides various competitive
advantages (Lel, 2019)(Liu, 2017). Exporting enhance control of organisation over business
operations and production that improves overall efficiency to attain determined goals and
objectives.
Advantages:
 Exporting facilitates business to gain growth and development opportunities through
selling products across national boundaries.
 Government of local country support exporters and provides various direct and indirect
benefits. High prices are offered by the foreign market that enhances organisational
profitability.
Disadvantages:
 It takes too much time to develop extra market and require high investment.
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Making direct investments: Business can explore its operations in new market place
through making direct investment in that country. Direct investment offers capital funding in
exchange of equity interest without purchasing share or stock of organisation (Manolopoulos,
Chatzopoulou and Kottaridi, 2018). foreign direct investment is related to the organisation that
operates its business operations in another country.
Advantages:
 It improves organisational cash flow as well as employment opportunities. FDI helps
business to gain latest technology, operational practices and financial tools from any part
of world. It enhances business production and profitability ratio.
Disadvantages:
 Political conditions of country are getting changed regularly that enhance risk to
organisation that invest in other country through foreign direct investment.
 Fluctuations in exchange rates the negative factor for business which involves in FDI.
Domestic business are getting affected by the foreign direct investment.
Partnerships and alliances: Partnership and alliances are the better method to expand
business operational in other country with the objective of growth and development.
Internationalisation policies and structure can vary as per business goals and partners.
Partnership is defined as the form of company in which partners are gathered with the aim of
sharing profits and losses in determined ratio (Ratanavararak, 2018). On the other hand, alliances
are defined as the collaboration of existing business entity without giving up their independent
status. It involves franchise agreement that is used by local organisations to buy right to operate
operations under international brand.
Advantages: Partnership facilitates business to gain additional resources, capital and knowledge that
enhance organisational profitability and performance level. There is less requirements of
paper work as well as legal formalities to establish business. Partnership is easy as
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compared to other modes of entry to expand business at international level and share
burden among all partners.
Disadvantages:
 There is unlimited liabilities are imposed on partners and sometimes they are responsible
to pay losses of business from their personal assets. It contains slower decision-making
that is the cause of missing various opportunities.
CafePod Coffee Co. will adopt foreign direct investment as the mode of expanding
business operations in Sweden in order to achieve growth and development objectives. It helps
business to gain higher market share and customer base. This method maintains organisational
control on intellectual property. Respective organisation provides quality products and services
to customers that maintains effective brand image and attract more customer base. On the other
hand, it contains high investment risk to business (Ratten Dana and Ramadani, 2017). As
organisation is involved in providing quality coffee in UK. CafePod Coffee Co. selects
horizontal expansion method to expand its operations at international level. It facilitates business
to enhance diversification and attain the objective of higher profitability.
CONCLUSION
As per above report, it can be concluded that international business is the process of transferring
business products and services across national boundaries. It helps business to reach potential
international customers and enhance sales. Business considers various factors before entering in
new market place such as it brings diversity, improve reputation and many more. CafePod
Coffee Co. explores its operations in Sweden to attract new customers. There are various barriers
are faced by organisations internationalisation process and develop policies. Barriers work as
obstacles in growth and development of organisation. Business analysis various modes to enter
in international business and select the most appropriate one. Foreign direct investment is
adopted by the respective organisation to enter market of Sweden.
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REFERENCES
Books and Journals
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organizational performance in emerging markets: The mediating role of inter-
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America: The role of entrepreneurial and technological capabilities. Journal of Small
Business and Enterprise Development.
Caiazza, R., Very, P. and Ferrara, G., 2017. New geography of M&As: A framing device of
firms' strategies. Thunderbird International Business Review, 59(2), pp.243-250.
Casson, M. and Wadeson, N., 2018. Emerging market multinationals and internalisation theory.
International Business Review, 27(6), pp.1150-1160.
Drahos, P. and Braithwaite, J., 2017. Information feudalism: Who owns the knowledge
economy?. Routledge.
Hampden-Turner, C., Trompenaars, F. and Hampden-Turner, C., 2020. Riding the waves of
culture: Understanding diversity in global business. Hachette UK.
Jain, P. K., Kuvvet, E. and Pagano, M. S., 2017. Corruption’s impact on foreign portfolio
investment. International Business Review, 26(1), pp.23-35.
Joardar, A. and Wu, S., 2017. Liabilities and benefits: Examining the two sides of the
foreignness coin from entrepreneurial perspective. International Business Review, 26(6),
pp.1157-1167.
Lai, J. H., Lin, W. C. and Chen, L. Y., 2017. The influence of CEO overconfidence on ownership
choice in foreign market entry decisions. International Business Review, 26(4), pp.774-
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Lel, U., 2019. The role of foreign institutional investors in restraining earnings management
activities across countries. Journal of International Business Studies, 50(6), pp.895-922.
Liu, C., 2017. International competitiveness and the fourth industrial revolution. Entrepreneurial
Business and Economics Review, 5(4), pp.111-133.
Manolopoulos, D., Chatzopoulou, E. and Kottaridi, C., 2018. Resources, home institutional
context and SMEs’ exporting: Direct relationships and contingency effects.
International Business Review, 27(5), pp.993-1006.
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Ratanavararak, L., 2018. The impact of financial and trade integration on business cycles in
emerging markets. International Journal of Monetary Economics and Finance, 11(3),
pp.215-223.
Ratten, V., Dana, L. P. and Ramadani, V., 2017. Internationalisation of family business groups in
transition economies. International Journal of Entrepreneurship and Small Business,
30(4), pp.509-525.
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