Expansion and FDI: A Report on Market Entry for Davison Canners in the US

This report details the concept of expansion and FDI for Davison Canners in the US market. It covers the attractiveness of the country, FDI and related issues, mode of entry, and recommendations.

INDIVIDUAL WRITTEN
REPORT

EXECUTIVE SUMMARY
Making and expansion of the business is one of the major aspect related with the growth and
development of the company. it will lead to enable various growth and development
opportunities to company to make an exploration of different market and the country. With the
aspect of expansion various other aspect including the FDI, market analysis, analysis of business
environment would play and important role. This report would detail about the concept of
expansion and FDI along with related issues that would draw an assistance towards they decision
of expansion. Various mode of market entry would also be a part of this report followed with
recommendations.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY AND COUNTRY ATTRACTIVENESS................................................................4
Attractiveness of country.............................................................................................................4
FDI and related issues..................................................................................................................6
Mode of entry..............................................................................................................................7
CONCLUSION AND RECOMMENDATIONS............................................................................8
Conclusion...................................................................................................................................8
Recommendations........................................................................................................................8
REFERENCES................................................................................................................................1

INTRODUCTION
Expansion of business is one of the important aspect with respect to companies and their
development (Zhang and Warner, 2017). It is depending upon various factors including the
attractiveness of the country and the FDI aspects. Since FDI would lead to assist in the creation
of new jobs and expansion of company in new country which make it important to have
consideration towards this aspect (Nambisan, Zahra and Luo, 2019). This would consider as base
that would lead to assist the decision regarding the making of expansion of company in some
other country. This report will discuss about the aspect including the attractiveness of the country
or the FDI that would lead to impact the decision of expansion in respect to company.
COMPANY OVERVIEW:
Davison Canners is a small speciality food manufacturing industry that is related with
preserving of fruits and vegetables. It is located in Craigavon, UK. It has 108 employees and it
generate a sales revenue of 16.26 USD (DAVISON CANNERS LIMITED, 2021). It was started in
1995 and incorporated in 1978. It follows the business model of business to customers wherein
direct interaction will be made by the company to the customers. It falls in the category of
medium and small enterprises. It is famous and work as a manufacturing industries in relation
with food. Its major aim is to use a variety of fruits and other ingredients that would be assisted
by cooking, creating and meeting the requirement of its customer’s project. it is famous to make
experiments in food in order to meet the need of its customers.
MAIN BODY AND COUNTRY ATTRACTIVENESS
Attractiveness of country
Expansion of business:
This is an important aspect that is related with the company and its growth and development
(Jiang and Holburn, 2018). This is because it would the opportunities to the company to make
exploration in different market that would assist it in terms of raising of sales and profitability
(Hamidi and Jahanshahifard, 2018). Expansion will lead to market capturing and raining of
brand awareness along with grabbing of new customers belonging to different culture (Deresky,
2017). Expansion of business would also enable growth opportunities (Lin and et.al., 2020).
Unites States of America:

It is one of the major country with respect to its culture, food, operation, FDI and various
other aspect. The chosen country that would be related with the expansion of the Davison
Canners would be US (Shiller, 2020). The reason behind the choosing of US for its expansion
would include various aspects that may majorly include:
Political factors:
These are related with the political aspect with respect to a country (LEYVA and et.al.,
2018). The political environment of the US is highly manageable and fair. It does not affected by
the political changes and it run smooth operation.
Economic environment:
This is related with the economy and its working including the GDP, inflation rate,
growth and various other (Kuvylina and Cherepanova, 2020). With respect to US it is the largest
economy of the world. It serves the open economy with strong economic base. It allow a high
leverage with respect to the FDI that would allow the companies to make an investment and
exploration of the US market.
In the same way while considering the economic environment it is analysed that the GDP
of the country is raising however it decline by 5% in 2020 but overlal the US has high GDP
growth rate. In the same way the expected raise in the GDP of the country will be approx by 7%
in 2021. in the same way the it is estimated that the unemployment rate is 4.5% in 2021
(AMADEO, 2021).

Figure 1US GDP
Source: United States GDP Q1 2021, 2021
The above graph also depicts the same that the GDP of the US is fluctuating but remain
high which shows that the economic environment of US is favourable with respect to expansion
decision.
In addition of this while making an analysis of the food manufacturing industry of US the
sector employed 1.7 million people with the presence of thousands of manufacturing companies
are present in the US (Ag and Food Sectors and the Economy, 2021).
Social factor:
These factors are considered with the people and their taste and preferences (Tokmurzina,
2018). With respect to food the people have great taste and they are the appreciator of the good
taste. Also they are habitual of making an exploration of different taste that is related with the
food.
Technology:
This aspect is related with the technology and its factors (Cavaliere, 2020). The
technological advancement in US is high. It is an adaptor and innovator of new technology.
Technological assistance and advancement is both equally present in the country of USA.

Attractiveness of US for expansion of business:
With the persistence of favourable environment in the US and its market, it would be
right to state that the country is highly attractive with respect to the expansion and exploration of
the business of Davison Canners. With the persistence of favourable social environment and
open economy it would be made easy for Davison Canners to make an expansion of its company
in the market of US. In the same way it is to be noted that with the existence of favourableness
among people of US towards food and related products would highly relevant for the food
manufacturing company like Davison Canners the chances of success of decision related with the
expansion would be high along with attracting and retaining a high customer share. In the same
way with the presence of flexible and wide-ranging transportation facility of the US the economy
of the country would be strengthened and high. This will also lead to assist the company in
expanding in the US market with the good access of transportation that will further support the
manufacturing company.
With respect to the economy of US the FDI policies and attractiveness in the country is high i.e.
the FDI in inward flow is 223401 in 2018 which raised in 2019 i.e. 261412 and in case of 2020 it
decline but remain high i.e. 156321 (UNITED STATES: FOREIGN INVESTMENT, 2021).
This also lead to attract the companies to make expansion of companies in US.
Also with the mode of FDI the benefits that the company would grab would be related with
increase in employment and growth along with the capital flow and development. It will lead to
assist the growth of the company.
Although US is counted as one of the major country in case of manufacturing but with the aspect
of corruption and other aspect the manufacturing share of gross domestic product is falling from
27-12% (Who killed US manufacturing? 2021). This has showed that the country would be
moderate advantageous with respect to expansion.
Likewise, while making a market analysis of the US it would be right to state that the market
structure and performance of the US market is highly attractive (Lupton and et.al., 2020). This is
because of the high support to technology as well as FDI (Cavusgil, Knight and Riesenberger,
2017). This will lead to play an important role in business expansion (ROUX, 2021). This would
also include an analysis of market competition which would further act as assisting aspect for the
expansion decision of Davison Canners. Also the trade barriers related with the US economy are

low that would make it easy for the Davison Canners to make an expansion of its business in the
market of US market and its economy. Since there is an existence of flexibility with respect to
the US market that would make it easy for the Davison Canners to make an exploration of its
business in the economy of US.
Since no organization would be able to exist and make performance of their business
operation without making a consideration towards the business environment so making an
external analysis of the business environment through PEST model would enable details about
various aspects of it (Harrison, 2013). As majority of aspects related with the business
environment of US is positive which state that the country is attractive with respect to business
expansion (Zhang and Warner, 2017).
FDI, ISSUES AND ENTRY MODE
FDI and related issues
It refers to making a purchase of interest by a company in another company or by the
investor located outside the country (Seid, 2018). The investment may be related with the source
of material or an expansion of company’s business (Demena and Afesorgbor, 2020). It will assist
the company in making an expansion of their business in some other country.
In case of USA the FDI is increased to $187.2 billion to $4.63 trillion till the end of 2020
(Direct Investment by Country and Industry, 2020). This shows that the US and its economy is a
highly acceptor of FDI that would lead to enable an opportunity to make an entry in the US
economy along with allowing an opportunity to the companies to make an exploration of their
business in US market.
With the aspect of FDI the economy of US is impacted in various positive aspect that would
include the creation of new jobs, boosting of wages, raising of wages, strengthening the
manufacturing and service sector of the US, bring new skill and research, brining of new
technology, raising of productivity and various other (Impacts of FDI, 2021). With the aspect of
grabbing such positive aspect with regard to the FDI the US make an easy entrance of FDI and
new companies in its economy so that it would further assist the county in its development and
growth (Zafar and et.al., 2019).
FDI issues:

The major FDI issues would include the regulatory issues that is related with the strong
regulations and compliances, resource challenges, equity challenge, acquisition of land issues
and various other (Akhtar, 2021). In case of the economy of USA the issues that is related with
foreign investment and security issues (Oxford Analytica, 2020). This means the issue that
would be assisted with the economy of US is related with the foreign investment issues that may
lead to impact the local economy and affecting the security aspect of the country with respect to
the investment and other concerns (Baronchelli and Uberti, 2021). This would lead to resist the
country which would lead to debarred the FDI in the economy of US.
Thus, with a focus and consideration towards the flexibility and acceptance of FDI with
respect to the market of USA it would be right to state that the Davison Canners would take the
decision of expansion in US market. With the persistence of open economy, the company would
found easiness with respect to exploration and setting up of its business in the market and US
economy (Damgaard, Elkjaer and Johannesen, 2019). This would also assist the expansion
decision of the Davison Canners in terms of getting a support of FDI and expansion of its
business unit. With the presence of flexibility and lack of issues in relation with the economy of
US market it would be right to states that the decision of expansion of the business of Davison
Canners would be correct and it will also avail advantages and growth to the business of the
company.
Mode of entry
FDI:
It refers to an agreement according to which the ownership will be controlled by one
country over the another company in other country.
Advantages:
 Raise employment and growth
 Increase in export
 Improve capital flow
Disadvantages:
 Political corruption
 Trade deficit
 Cultural erosion

There are various modes by which Davison Canners would make entry in the market of USA.
These may majorly include:
Licensing:
It is a business arrangement that would enable the company a permission to make
manufacturing of product for the given of specified payment (Yang, Tsai and Hsu, 2021).
Davison Canners with the use of this mode may make expansion of their business in USA so that
with the following of minimum compliance and rules and regulations of the country they can
make exploration of their business. However, with this mode the dependency on the licensor and
the amount in terms of licence fee would be raised and need to bear by company.
Joint venture:
As pert this mode of market entry the company make an agreement with the existing
company of the target country that would lead to the creation of third company (Killing, 2017).
With the help of this mode the Davison Canners would make an exploration of market of USA.
This will enable the company to use the local infrastructure and knowledge and reputation of
existing company which would assist it for the market expansion. However, with this mode it
may also face the difficulty in respect to clashes in culture and lack of flexibility. But although
with this mode the expansion mode would be assisted.
CONCLUSION AND RECOMMENDATIONS
Conclusion
From the above report it can be concluded that making an expansion of the business would
be taken with a consideration towards various aspect and factors. As this is related with the
company’s growth and success which make it important that it need to be cautious towards the
various aspect including the market, customer need and various others which are related with
expansion. In the same way it is also understood that an attractiveness of the country along with
an existence of good FDI would be the major base that is related with the expansion of the
company and its business in some other country.

Recommendations
 While making an above analysis it would be recommended to Davison Canners that it can
make a detailed market analysis with respect to taking of decision related with expansion
of the business.
 It is further recommended to the company that it can make its expansion into new country
with the adequate evaluation of the various method and selection of the best that would
lead to enable it advantages (Hamidi and Jahanshahifard, 2018). In the same with the
option of FDI the company can make exploration of new market in new country which
will lead to growth and development.
 The mode of licensing would be highly recommended to the Davison Canners because
with this mode the business would be explored in the new country without taking
consideration of various formalities and compliances.
 Consideration towards the FDI with respect to the country is also highly recommended to
the company that its decision of expansion would make a base towards this aspect. This is
because it would lead to enable high support (Oh, Kim and Shin, 2019).
 Making an exploration of local market, analysing the attractiveness of the country,
analysis of the customers and their need along with the internal analysis would also be
recommended to the Davison Canners so that the chances of success towards the decision
of expansion would be succeed.
 Technological advancement and meeting the requirement of changing environment and
situation is also recommended to Davison Canners so that along with meeting high level
competition it can make successful expansion of its business.

REFERENCES
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and FDI Networks in the New Millennium. International Journal of Economics and
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Damgaard, J., Elkjaer, T. and Johannesen, N., 2019. What is real and what is not in the global
FDI network?. International Monetary Fund.
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Oh, C.H., Kim, M. and Shin, J., 2019. Paths and geographic scope of international expansion
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Oxford Analytica, 2020. US aid expansion for small businesses is coming. Emerald Expert
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ROUX, P., 2021. International Business Expansion: A guide to decision-making for greenfield
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Seid, S., 2018. Global regulation of foreign direct investment. Routledge.
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