Piggybacking Strategy for Fame Pharmaceuticals

The assignment discusses the possibility of Fame Pharmaceuticals using a piggybacking strategy with a local pharmaceutical company in the UK. It examines the cost and risk of expansion, and how initial marketing and brand creation would be handled by another large domestic company. The performance of the products would then help Fame Pharmaceuticals to expand further in the UK.

Running head: INTERNATIONAL BUSINESS
From Local to Global
Name of the Student:
Name of the University:
Author note:

1INTERNATIONAL BUSINESS
Task 1
Answer (a) (P2)
Fame Pharmaceuticals is a well established company in Myanmar operating since 1994.
The company specializes in providing natural and organic herbal products to the citizens of
Myanmar. The company actively promotes eco-friendly practices in their business operations to
support the economic and cultural sustainability for the local farmers.
Fame Pharmaceuticals aims to expand their business in the UK. The following analysis of
UK shows various factors that are suitable for international business.
 UK is relatively fair in terms of business regulations, with public influence on the
working system, proactive and politically stable government generating confidence
among the international investors.
 Economically, UK is in a better position than Myanmar. It has world’s 5th highest GDP,
only second to Germany in Europe (Mason and Harrison 2015). It has a big diversified
economy with large private and public sectors that is drawing high amount of Foreign
Direct Investment (FDI) every year from investors across the world (Feenstra 2015).
 Standard of living is very high in UK
 UK is one of the advanced countries of the world, and hence, it offers high quality
innovation skills and expertise in IT and science, high level of international competition
to stimulate the growth and intellectual property protection laws (Barber, Metcalfe and
Porteous 2016).
 UK has been contributing largely in environmental projects, which could provide a good
platform for Fame Pharmaceuticals and its organic, natural and eco-friendly products.

2INTERNATIONAL BUSINESS
 The labor laws of UK contain many beneficial laws, such as, minimum legal wage, more
generous maternity and paternity benefits, and reduction of discrimination in the
workplace (Keeble and Wever 2016).
All these factors can are beneficial for international investors to expand their business in the UK.
On the other hand, there are some factors that can restrict the investors from growing their
business in the UK.
 Corruptions in the country that hampers the growth of the businesses to some extent.
 Recovery of the economy was slow after the global financial crisis and huge money is
spent on giving free services to the public.
 There is increasing dependency ratio as the level of unemployment is rising, along with
some social unrest regarding the migration issue.
 The migration laws are being stricter which could create problems for the immigrants.
 Technological growth is quite slow compared to the other developed countries, such as
USA (Mansfield and Reinhardt 2015).
 Lastly, the economic uncertainty, emerged due to the Brexit referendum, has depreciated
the GBP, which makes the business opportunities less profitable (Keeble and Wever
2016).
Answer (b) (M1)
Trade between the countries can be increased by reducing the trade barriers, such as,
reducing the impact and extent of tariffs and taxes on the imports, providing export subsidies and
increasing competitiveness in the global market. Policies with high tariffs and import restrictions

3INTERNATIONAL BUSINESS
lead to a fall in the level of international trade, which affects the balance of payments of the
nations (Rugman, Collinson and Hodgetts 2006). Brexit might have negative impact on the
expanding business of Fame Pharmaceuticals. Due to Brexit, UK will lose its access to the single
market of European Union, which would raise the cost of importing and reduce the benefits of
exporters (Cumming and Zahra 2016). Taxes and tariffs will be increased, leading to a higher
price of the products. There is an uncertain business environment, which make the international
investors apprehensive about their profit and losses from the business or investment ventures
(Dhingra et al. 2016). As the value of GBP has fallen dramatically after the Brexit referendum,
the new venture of business expansion might not be as profitable as it would have been earlier.

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Task 2 (P4)
Monetary environment is one of the major conditions other than political environment
that determines the direction and extent of foreign trade among the countries. Monetary
environment includes the economic factors, such as, exchange rate fluctuations, international
payment methods, monetary policies by the central bank, trade policies and regulations, trade
insurances, inflation level in the country and UK and the EU grants (Cavusgil et al. 2014).
Bank of England, the central bank of UK, determines the monetary policies for the
nation. The objective of monetary policies is to increase the money supply in the economy,
reduce unemployment and inflation. The changes in the short term interest rates influence the
investors before making any business decision. Lower interest rate attracts more international
investors, as they now have to pay less money as interest and gets more return on their products
or services. At the same time, lower interest rate lowers the value of the currency relative to
other country’s currencies, which raises the import cost and decreases the export cost. This will
have a positive impact on the local industries, as the manufacturers would become more
competitive for the global market. The lower interest rate and value of GBP will help Fame
pharma to avail the benefits in UK market and in the global market through the export of more
products. The access to the foreign exchange increases in case of international business
operations (Galí 2015). Level of export increases leading to inflow of more foreign exchange,
which Fame Pharmaceuticals can reinvest for further expansion.
The international payment methods are particularly important for any international
business. Fame Pharmaceuticals must use the technologically advanced method of payment
while expanding its business in UK. Wire transfer is the most suitable method of payment in case

5INTERNATIONAL BUSINESS
of international business expansion. The usage of credit note, and third party intermediates, such
as, Paypal, are helpful in monetary transactions across many countries and makes operations
easier (Hardy 2014). Apart from that, the UK and EU financial grants are beneficial to promote
the growth of the industries, which in turn helps in decreasing inflation and unemployment.
Institutions such as, ECGD (Export Credit Guarantee Department), UKTI (UK Trade and
Investment), World Bank, IMF and EMU (European Monetary Union) provide monetary support
to the investors bringing in FDI into the UK (Hamilton and Webster 2015). These grants and
support services are helpful for an international business to take up the expansionary ventures.
There are many policies that support businesses with sustainability practices and eco-friendly
products, which will help Fame Pharmaceuticals of Myanmar to expand its business in UK
successfully.

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Task 3 (P6)
There are few commonly used market entry strategies for expanding the business internationally.
Those strategies are as follows.
 Franchising the brand: Firms with a repeatable business model, such as, food chains,
and established brand takes up franchising strategy by allowing the other business owners
to take up the name and open an outlet in exchange for a certain fees and certain profit
cut off (tradestart.ca 2015).
 Direct exporting: It is about directly selling the product in the international target market
through agents and distributors. Before entering the foreign market by opening up stores
or franchises, direct exporting is helpful to gauge the demand for the product and
anticipate if it will be successful in that market.
 Partnering up: This strategy is most suitable for business expansion in a foreign
country. Partnering up helps the new company to know about the characteristics of the
foreign market and its regulations well and with the help of the local partner, it can gain a
headstart in a new land.
 Joint ventures: This is a legal partnership between two companies with an equal share in
the investment and profits.
 Buying a company: It is another easier strategy to enter a new market in a foreign land.
Buying up a company helps the foreign business to gain already an established market
share and brand image of the existing local company. The regulations will already be
placed and licensing would have been done. However, this also brings along the
problems faced by the old company.

7INTERNATIONAL BUSINESS
 Turnkey products or solutions: These are particular to the businesses providing
services like environmental consulting, construction, engineering and architecture. In this
strategy, a product is developed and turned over to the client, which is mostly the
government for direct plantation. The financing come from international financing
agencies, such as, IMF and World Bank (tradestart.ca 2015).
 Piggybacking: The firms with unique products or service sell those to large domestic
companies operating in the international market to include the product in their
inventories. This reduces the risk and cost of expansion as the marketing is being done by
the larger firm in the international market (bubblestranslation.com 2017).
 Licensing: In this strategy, a company transfers the rights of using the good or service to
another company. This works best when the new entrant has a large market share in the
new market.
Fame Pharmaceuticals can choose the strategy of piggybacking with a local pharmaceutical
company of UK. Although, Fame Pharmaceuticals is an established company in Myanmar, it
does not have a market share in the UK. Hence, the cost and risk of expansion would be large if
they want to adopt any other strategy, such as, buying an existing company, joint ventures or
partnering up. Piggybacking is an easier strategy for initial ground break in the UK. The initial
marketing and brand creation will be done by another large domestic company and the
performance of the products will help Fame Pharmaceuticals to expand further in the UK
(Agarwal, Dreszer and Mina 2017).

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Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
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