This report explores the concept of expansion and various elements essential for a company to study. It discusses the global business environment, company outline, comparison of countries on the basis of global business environment, and modes of market entry. The report also provides recommendations and conclusions.
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GLOBAL BUSINESS IN CONTEXT
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Table of Contents INTRODUCTION...........................................................................................................................3 MAIN BODY..................................................................................................................................3 Company outline..........................................................................................................................3 Comparison on countries on the basis of global business environment......................................4 Entry mode analysis.....................................................................................................................8 RECOMMENDATIONS...............................................................................................................10 CONCLUSION..............................................................................................................................10 REFERENCES................................................................................................................................1
INTRODUCTION Expansion of business refers to exploration of business from home country to some other country. This is one of the important concept that make the business of the companies to grow and achieve success (Zhang and Warner, 2017). Expansion of business outside the national boundaries refers to internalisation and international expansion of business. For raising the performance or exploring opportunities it is very essential that company should adopt the practice of expansion. However, while making internalisation of business it is again very important that company must consider several factors because a negligence of those factor may direct have an impact over the company and its business. This report will study about the concept of expansion and discussion about various elements that is essential for company to study. Various modes of market entry are also being highlighted in this report. MAIN BODY Global business environment: It refers to the environment of business at the global level. It is one of the important concept that consist of various forces and its impacts over the business of the companies. This means that no company can operate its business without having a consideration of this concept. It is to be noted that business environment refers to that environment in which business of the company will operate (Vlados and Chatzinikolaou, 2019). Also the business environment of every country differ in terms of its factors. So it is very essential for every company to analyse this environment if they are planning to expand their business in some other countries. Company outline Container components Europe limited (CCEL) is one of the famous SME of UK. It deals in the manufacturing of Duraflex rotationally moulded plastic lids. The main focus of this company is to meet the need of the customers by adopting the process of using the waste material. This company is famous for taking best out of west. The main aim of this company is to survive and expand its business without harming the environment. This means that adoption of such practices that will includes use of waste material to produce and manufacture such product
that can be consumed by the customers. As it is operating its business in UK but for the achievement of better success and growth it is very essential that it should expand its business. This expansion will not only lead to success but it will also help in enabling financially strong because through expansion it can grab more customer and as a result of that its sales and revenue share will also raise. Being a SME it is best and recommended that it can expand its business in the European countries. The reason behind such expansion in EU is the availability of opportunities and the support of the government that is being provided by the legal environment of the EU. As under EU there are various provisions that offer business growth opportunities to SME so that they can establish and set their business in EU. In addition of this SME are the base and the main element of the economy of EU which support the EU in terms of generating GDP and employment opportunities for the local peoples. Thus, due to such business exploration opportunities in EU CCEL is planning to move and expand its business in EU so that along with internationalisation and expansion of business it can grab the opportunities. Comparison on countries on the basis of global business environment Before making internationalisation and expansion of business by any company including CCEL it is very essential that it can have an analysis of external business environment of the country in which it is planning its expansion. As external environment of business is very different of every country. Also the factors of these environment are highly volatile. Thus it is very essential that every company must analyse the various factors of external environment before making expansion of its business (Hamilton and Webster, 2018). As CCEL is planning to expand its business in EU so it is very essential for it that it can compare the external business environment of both the countries. Along with comparing it also have to analyse the environment of both the country in a deeper mode so that it can take decision and made the expansion. It will act as a base over which the decision of expansion depends that if the environment of EU would be favourable then it can execute its plan of expansion but if not then it has to say no to expansion to EU. For making this comparison it has to compare the various aspect of external environment of both these countries: Political:
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It is the first and the most important aspect and element that has to be considered by CCEL. This is because the political situation of both the UK and EU are different in many ways especially after the event of Brexit where restriction on trade are being imposed between UK and EU. Likewise, the political situation in the form of rules and policies and political parties and their force are also different in both the countries (Shtal and et.al., 2018). So it is very essential that CCEL has to carefully analyse this factor before making plan of expansion. As trade restrictions are imposed due to the Brexit so CCEL has to make and reform its planning in such a manner that it can safeguard itself from trade barrier and high payment of tax. Economic: This is the second and most important concept and element that is needed to be considered by CCEL as it is planning for expansion. Since the economic condition and economic policies of both the EU as well as UK is different in terms of employment rate, interest rate, government subsidy or help, and economic situation. So again it raises the importance of analysation and study of this environment (Samusenko, Plaskova and Prodanova, 2020). As any fluctuation in this environment will lead to a severe impact over the CCEL thus its study and comparison is important so that it can take the advantage of the current economic environment of both the country and can expand its business. As CCEL is planning to expand its business in EU and likewise the economic environment of the EU consists of free trade so this will raise the chances of getting success in EU but at the same side due to Bexit the movement and trade with EU consist of several restrictions so again it raises the importance of analysing this environment carefully before making decision. Social: This is one of the important factor which need to be considered. This is because this factor has direct association with the customer. As every company work only for meeting the need of the customers so it is very essential to study and analyse the actual need of the customers. As the society and the customer of different country have different needs, perception, taste and preferences (Helmold, 2019). So it makes it more essential for CCEL to have an analysation of this factor before making internalisation. As EU is a mix of cultural diversity, likewise the product of CCEL is also comprised of using of waste material and the production of new product from them along with safeguarding the environment so this will raise the chances of getting success in EU also because every country wants that without having an impact over their
natural resources its citizens will get best product. Thus this factor would work in favour of CCEL if it will give dual consideration this factor. Technological: This factor is consisting of technological changes in the form of advancement of technology, launching of new technology or upgradation of technology (Matovic, 2020). As the technological environment of EU comprised of highly advanced technology. This is like technologically driven nation. But at the same side EU doesn’t have its own technologically driven companies that has full belonging to EU. Thus there is great scope for technologically driven companies in EU. While in case of UK the technological environment is highly advanced. So in the case of CCEL if it will lie its more focus towards the technology then this factor will work in favour of that. However, as CCEL is that company that is related with manufacturing of those products that are concerned with using of waste so this factor is significant but its impact is not that much as other factors have. Legal: No organisation or the company make expansion of its business if this factor is not being given consideration. This means that it is mandatory for every company including CCEL to have consideration of legal environment. As there is a major difference between the legal environment of UK and EU so it is very important for the CCEL to have detailed and careful analysis of this factor. As in case of UK there is an existence of several act including employment act, equality act that work for protecting the right of employees and the employer. But in case of EU, it has its own laws and the rules of EU overhead and overrule various other laws of different country. This means that the law of the EU is having overruling nature by which it heads the law of different nation. So it is very essential for CCEL to have a compliance of the laws of EU in order to have operation of its business. Environmental: This is also an important factor like others. It is basically related with the environmental situation of the country. As it is one of the fluctuating element along with occur in different form in different countries. This means that the environment of different countries differs from each other. This basically comprised of climatic change, weather changes, environmental situation and various other (Perera, 2017). Since the environmental factor of EU is having serious issue in terms of air pollution, acidification, water pollution, environmental pollution and many more
issue. Thus in case of CCEL this factor will work in favour. As this company is highly concerned towards the sustainability concept and the environmental protection so this factor has high advantage for CCEL that could help it in expansion of its business and achievement of success along with. Also as CCEL is having a main focus towards the concept of using waste material and production of new product so this factor of environmental will work in favour of that because through this concept it can easily meet the environmental need as well as make expansion in EU. Cultural difference: This is also a major component that need to be analyse before making decision regarding expansion of the business of the company. As the culture of every nation is different from one other so it makes it important for the companies that they should comply with the existing culture. Since the culture of the UK and EU is also different in terms of cultural diversity, which means that in EU the culture comprise of architecture, music, literature and various other in comparison of the culture that persist in UK which is focussed on Christianity and religion. In addition of that the work culture of both the countries also differ in terms of employment legislations and working environment. Thus due to persistence of such cultural difference it become very essential for the CCEL to have a careful analysis of this factor so that it can grab the growth opportunities and expand its business. Level of market competition: Apart from considering these factors, analysing the level of market competition is also an important factor that need to be analysed before making internalisation and expansion of business by CCEL. Level of competition means that the number of companies that may compete with each other (Fernandes and et.al., 2020). This is categorised as important factor because if the level of the of market competition is high then the chances of getting success become tough and low. So it makes necessary for companies to have a study about this factor before internalisation. As the intensity of competition also varies between UK and EU. This means that meeting market competition at local level is somewhat different from meeting at international level. Thus it is very important for CCEL to analysis the level of market competition in EU. This means that as EU comprised of many countries so this indicate that the level of competition in EU is much
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higher than UK. This shows that adoption of adequate strategies and policies is the only way that could help CCEL to have a win over competition and making expansion of its business. Entry mode analysis For making an expansion of business it is very essential that companies will make their presence at global and international level. For this companies can make the establishment of their business in some other countries apart from parent and home country. There are various modes by which companies can expand their business by entering and establishing their business in international economy and countries. Out of those methods some are: Licensing: It is one of the best method by which companies can make international presence. As per this method one company will allow other company to produce its product but for specific period of time (Blackburne and Buckley, 2019). It is categorised as best method because of the involvement of low compliance of policies, regulations, equal distribution of risk, make the entry procedure easy but at the same side it raises the cost of the company along with dependency over the licensor. Merger and acquisition: It is one of the best and widely used method of international expansion of business by companies. As per the method of merger two companies will merge their business and carry on the business in the form of one company under one name. Here the sharing of profit as well as risk will remain the same. This means that the resources will also be shared equally. However, in case of acquisition one company will acquire the business of other company and then a new company will form which will operate the business (Maung and et.al., 2019). These are the best method because through this mode the efficiency of the business will raise along with raising the approach to different and professional expertise. This will make the expansion of company’s business with a low compliance of various laws and policies. However, it may have some adverse impact in the form of poor management, slow decision making process, cultural and diversity clashes and various other. Joint venture: It is also a method of international entry where two companies will make an agreement and then pooled their resources together and then as a result if that a new company or business
will emerge (Nippa and Reuer, 2019). This means that as per joint venture two companies will make a venture means a new company. Here the parent company will still existing but a new company will originate. There are various advantages associated with this method that may include: involvement of low cost, raising of high efficiency, access to new technology along with innovation in the product and business and various other. However, it may also have negative impact in the form of poor communication, non-matching of same level of expertise and knowledge, lack of clear objectives and various other. Exporting: As per this method company will without establishing their business in the new country will make the internationalisation and expansion of business. This means that under this method company will export and sale their product in some other country and raise the international presence (Paul, Parthasarathy and Gupta, 2017). This is one of the best method because this comprise very less formalities and trade restriction but along with that the sales and profit of the company will raise apart from expansion of its business. Since every method have certain advantages as well as disadvantages so it is very essential that CCEL have to choose most adequate and appropriate method so that it can grab the best and possible opportunities along with expansion of business. From these methods the best suitable method for CCEL may include licensing, joint venture, and exporting. The reason behind the choosing of these method may include less compliance of law and flexibility of business operation. This means that through the method of licensing it can easily expand its business without complying any high and strict rules of entry. Likewise exporting will allow it sale its product internationally without the following and compliance of any strict regulation and establishment cost. In addition of this CCEL may also adopt and choose joint venture whereby it can pull its resources with some other company and expand its operations. This will also provide a major advantage that it can internalise and expand its business but without shutting its main and business of parent country. Also it can grab advantage of local knowledge and access to better technology by which it can raise more efficiency. Thus, it can adopt any of the above method and expand its business in EU.
RECOMMENDATIONS From the above report it is concluded that: As CCEL is planning its expansion in Europe and since the legal, political, economic, cultural environment is not that much in favour of CCEL so in order to incorporate these factors and environment it has to made its policies and strategies in such a manner that these environment will be meet and expansion will also be possible. As this it is not possible to have control over this factors but making of strategies including compliance of laws of EU, meeting political situation, and making of expansion strategies considering economic environment will help the CCEL in coping up with these factors. Likewise, in order to meet high strength competition of EU, adoption of policies including making of superior product in terms of quality, availing at minimum price, manufacturing of product as per need of customers are some strategies that could be recommended to CCEL in order to have compliance of high degree competition. CONCLUSION From the above report it is concluded that in order to raise the business growth and opportunities specially in case of SME including CCEL internalisation and making expansion of business plays an important role. Through this report it is also understood that while making expansion of business it is very essential for SME to have a careful analysation of different factors including political, legal, social and various other. This is because these factors have direct and major impact over the company and its business. Various modes of market entry including joint venture, merger and acquisition and various other are also being understood from this report.
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REFERENCES Books and journals Blackburne, G.D. and Buckley, P.J., 2019. The international business incubator as a foreign market entry mode.Long Range Planning.52(1). pp.32-50. Fernandes, and et.al., 2020. The impact of market orientation on the internationalisation of SMEs.Review of International Business and Strategy. Hamilton, L. and Webster, P., 2018.The international business environment. Oxford University Press. Helmold, M., 2019. Tools in PM. InProgress in Performance Management(pp. 111-122). Springer, Cham. Matovic, I.M., 2020. PESTEL Analysis of External Environment as a Success Factor of Startup Business.ConScienS, p.96. Maung, andet.al., 2019. The investment environment and cross-border merger and acquisition premiums.Journal of International Financial Markets, Institutions and Money.59. pp.19-35. Nippa, M. and Reuer, J.J., 2019. On the future of international joint venture research.Journal of International Business Studies.50(4). pp.555-597. Paul, J., Parthasarathy, S. and Gupta, P., 2017. Exporting challenges of SMEs: A review and future research agenda.Journal of world business.52(3). pp.327-342. Perera, R., 2017.The PESTLE analysis. Nerdynaut. Samusenko, A.S., Plaskova, N.S. and Prodanova, N.A., 2020. The Analysis of the External Environment to Determine the Practical Focus of Applied Research.Complex Systems: Innovation and Sustainability in the Digital Age: Volume 1.282. p.245. Shtal, and et.al., 2018. Methods of analysis of the external environment of business activities. Vlados, C. and Chatzinikolaou, D., 2019. Methodological redirections for an evolutionary approach of the external business environment.J. Mgmt. & Sustainability.9. p.25. Zhang, X. and Warner, M.E., 2017. Business retention and expansion and business clusters–A comprehensive approach to community development.Community Development.48(2). pp.170-186. 1