Importance of International Business: A Case Study of CafePod Coffee Co.

This report evaluates the importance of international business for CafePod Coffee Co. and discusses the advantages and barriers faced by the organisation. It also recommends China as the target market and discusses the typical barriers faced by the organisation in expanding internationally.

International
business

Executive Summary
International Business is considered as the movement of goods, services, technologies from one
country to another. It includes cross-border transactions of products between two or more
countries. In this report, Cafepod Coffee Co. is taken that is situated in London, England, UK.
The main purpose of this report is to evaluate the importance of international business.
Furthermore, advantages as well as barriers in international business that are faced by the
respective organisation are discussed in this report. In the last section of this report methods of
internationalisation process are mentioned.

Table of Contents
Executive Summary ........................................................................................................................3
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Provide a brief overview of the chosen organisation and the rationale for going international 1
Critically discuss which country you would recommend them to enter and the rationale behind
the decision..................................................................................................................................3
Discuss typical barriers that will be faced as the organisation expands internationally.............5
Based on your analysis, critically evaluate a relevant implementation approach for the
internationalisation process for the specified target market........................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
International business is defined as the trade of business goods, services, technology ,
knowledge as well as capital across national boundaries. In international business cross border
transactions are included between two or more countries. Organisations expand business
operations in other countries in order to attain the objective of growth and development.
Internationalisation of business provides various benefits to business such as expansion in new
markets and enhance customer base (Bolwijn, Casella and Zhan, 2018). There are some barriers
or challenges are faced by the organisation in the process of globalise business operations and
activities like tariff and non-tariff taxes. In this report the chosen organisation is Cafepod Coffee
Co. which is situated in London, UK and expanding its business its branch in China. The report
covers rational to going towards internationalisation. Barriers that are faced by the organisation
to expand business in other country are discussed. In the last section of report, approaches of
internationalisation in target market are mentioned.
MAIN BODY
Provide a brief overview of the chosen organisation and the rationale for going international
Overview of organisation:
CafePod Coffee Co. is UK based organisation which founded by two entrepreneurs Peter
Grainger and Brent Hadfield in the year of 2011. Organisation's headquarter is situated in
London, England. Respective organisation offers manufactures as well as supplies Nespresso
compatible coffee capsule. The main objective or purpose of organisation is to offer better
quality coffee to its customers at their doorstep and bring happiness in their lives (CAFEPOD
COFFEE CO., 2021). Journey of CafePod Coffee Co. was started when its founder peter visited
and travelled in South America for a year. He has visited to various plantation of coffee and shop
making Nespresso compatible capsules through providing amazing coffees. He has analysed that
in the supermarket of UK, absence of high street coffee than he started range of blended coffee
that attracts huge customers base who have habit of drinking coffee. Organisation offers Ground
coffee and Roast Whole Bean as well as Nespresso Compatible Aluminium Pods. There are
some blends like Decaf Espresso, Supercharger Espresso and Ristretto are provides by the
organisation.
Rationale for going international
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As CafePod Coffee Co. operates its business functions in the market of UK but there are
some reasons, respective organisation moves to international coffee market. It enable
organisation to attain the objective of high sales, growth and development. Coffee is most
consumable drink across the world, so it becomes beneficial for organisation to expand business
internationally. Benefits that are gained by the organisation through expanding business across
the borders are discussed below:
Entry into New markets
By reaching out to new consumer base a company could invest and introduce new
products or services in the market and increase sale. Internationalisation facilitates business to
explore itself in new market places. When organisation gain popularity in its home country than
it going to international market that helps business to access in new market areas (REASONS TO
EXPAND INTERNATIONALLY IN 2020, 2021). CafePod Coffee Co. select the market of China
to expand its business operations and create higher customer base. Internationalisation helps
respective organisation to provide its products and services to large market share and enhance the
objective of higher sales.
Access to new talent
Internationalisation of business facilitates organisation by providing a chance of
attracting potential employees who have unique talent and abilities. Skilled and experiences
employees plays important role in business growth and development (Enderwick, 2018).
Appointment of international talent provides various advantages to CafePod Coffee Co. because
they have advanced language skills, higher educational background. Global business expansion
allow organisation to hire local employees of that country who have expertise in communicate as
well as serve to clients without having any kind of complications.
Improve organisational reputation:
Gain Competitive Advantage
Moving towards international markets before their competitors provides competitive
advantages. It helps business to gain saturated market place that contains various growth
opportunities. CafePod Coffee Co. globalises its operations in the market of China that enhances
organisation's customer base and sales ratio (Benefits of international expansion, 2021). It
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provides advantages to business through offer products and services to wide customers base
without having any threat of competitors.
Brings Diversity
Bounding business operations in home market place limits organisational potentiality of
generating higher profitability. Instead of that internationalisation bring various growth
opportunities to business through serving products to diversify market. If organisation faces
downside in domestic market than having presence in global market helps to protect business at
the time of economic recession. As CafePod Coffee Co. expands its business in the market of
China and hire local employees that bring diversity at workplace. It enhances organisational
reachability as well as profitability ratio. Diversification is the main reason to expand business in
international market. It enable business to diversify its assets and actions that protect
organisation against unforeseen events.
Enhance Business Growth
Expansion in international market facilitates organisation to attain the objective of growth and
development. It provides opportunity to CafePod Coffee Co. through explore in new market and
enhance the potentiality of gaining higher revenue. One of the reason of expanding business
operations is to provide organisational products and services to international clients (Fitzpatrick,
2017). It enhances organisational brand reputation and image that attracts more customers as
well. Globalisation facilitates respective organisation to saves cost because of having lower
operational cost such as cheap labour cost and skilled as well as talented employees.
Critically discuss which country you would recommend them to enter and the rationale behind
the decision.
It is recommended to CafePod Coffee Co. to expand its business operation in the country
of China. As China is one of the global economic leader as well as provides foreign investment
opportunities to other business. It is situated in East Asia and popular country in the world. It is
fastest growing consumer market and second largest importer of products and services in the
world. In China market cost of labour and raw products is low that facilitates business to perform
business operations in efficient manner (Graafland and Noorderhaven, 2018). There is high
growth rate in economy in country that attracts higher foreign investment. After the pandemic of
Covid-19, China is the only country that has been attained the growth in GDP by 6.5% in the
year of 2020. All these information states that Chinese market provide higher potentiality as well
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as stability to foreign business. businesses. Some reasons that are considered by the CafePod
Coffee Co. to expand business in China country are discussed below:
Favourable Government Policies
CafePod Coffee Co. prefers China to expand business operations because its government is
dynamic and formulates various regulations and measures to support entrepreneur of domestic as
well as international organisation. These measures includes supporting young generation,
encourage innovation and creativity as well as provide subsidiaries to business for their
expansion. Government develops clear and effective policies related to taxation and investment
that facilitates respective organisation to run business operations in most efficient manner. China
imposed lower tax rates on business that facilitates them to conduct business activities properly.
Beneficial Entrepreneurial Environment
As China's policies and regulation are in the favour of foreign investors that attracts
CafePod Coffee Co. expand business operations there. It becomes easy for organisation to find
investors and partners in Chinese market place. China has high entrepreneurial business
environment that facilitates respective organisation to run business properly and attain defined
goals and objectives. China has world's top technological infrastructure like Shenzhen, Shanghai,
Beijing and Hangzhou that facilitates business to run and manage effortlessly.
Ample of Skilled Talents
CafePod Coffee Co. could easily find skilful, talented, certified and English-speaking
Chinese employees for them. Young generation of China county is highly talented, proficient as
well as involved in professional activities. There is huge number of students are graduate from
Chinese university and the country also make it easy for foreign students to work and settle
within country (Hernandez-Perlines, 2018). The country is considered as effective work ethics
and value to hard work and consistency. Country strict work culture provides organised and
effective working environment to employees.
Opportunities for Growth
Chinese government takes various favourable decisions related to international business
that facilitates organisation to attain the objective of growth and development. Minimal
regulations helps CafePod Coffee CO. to implement business operations and innovative ideas in
country as well as analyse new possibilities for expansion. China has stable political environment
that encourages foreign investment to expand their business in the country. China has strong
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economy that hardly face the condition of recession that is beneficial for the organisation to
explore and invest in market place.
Captivating Market
China is the huge and popular county in the world that contains population around 1.41
billion. It provides huge and capable market place for foreign organisation to serve their products
and services. Market of china consist well established multinational organisation as well as new
entrants that have no experience. Organisations of all sectors (food, hospitality and beverages) in
different sizes like (large and small) find the market of china attractive. CafePod Coffee CO.
select the market of China because it can capture high market share and enhance organisational
sales and profitability.
Discuss typical barriers that will be faced as the organisation expands internationally.
There is various barriers are faced by the organisation to expand business internationally.
These barriers or obstacles impacts on business performance and sustainability in competitive
business environment for longer period of time. Barriers are related to language, culture and and
taxation policies of other country (Hsu and Chen, 2017). There is some non barriers also faced
by the organisation that are related to government regulations and policies. CafePod Coffee Co.
consider all these challenges and barriers in business before entering in the market of China.
Some barriers are mentioned below:
Communication difficulties and cultural differences: As strong and effective
communication is heart of international business strategy. Communication in different culture
create challenge and barrier to business. Before entering in new market place, it is essential for
organisation to examine the language that is spoken in targeted country. Miscommunication with
client as well as customers impacts negatively on their relationship with brand. If in business
process some gapes are found in conversation with foreign suppliers than it could lead business
towards financial loss. In the country of China, Chinese is spoken and most of employees can not
speak English fluently that create the barrier for CafePod Coffee Co. organisation to operate
business operations properly. On the other hand, China has different culture, tradition and food
and preferences that are followed by the people (İpek, 2019). So, culture is the main factor that
build barriers to business when it goes to globalise its operations.
Foreign rules and regulations
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To expand business in international market place, it is very important to analyse and
examine laws and legislations of targeted country to run business in efficient manner.
Organisation should access tax implications by navigating trade laws and legal requirements.
Potential tariff that are imposed by the government on business and legal cost are considered by
the organisation before entering in new market place. In China, organisations adopt lengthy
administrative process for registering, permitting and getting license to start business operations.
It is quite challenges for CafePod Coffee Co. to open branch in country. Respective country also
has different employment and labour requirements that develop barriers (Lai, Lin and Chen,
2017). Beyond fulfilling official laws, emerging business also require to complete other
unwritten formalities.
Currency rates
Fluctuations in currency rates is the major challenge or problem in international business
market. Analysation and monitoring of exchange rate is the central part of establishing strategies
for business in international market place. Instability in global economy creates difficulty for
business to forecast profitability when currency rates are fluctuating at unpredictable way. These
fluctuations directly impacts on business balances, profits and performance. China has two
currency named Yuan and Renminbi. Both currency have similar bank notes but they have
different ISO codes. Yuan is represented as CNY and Renmimbi is represented by CNH. CNY is
used in the country national economy as well as CNH is used for the purpose of international
trading. There is fluctuations are happened in Chinese currency that impacts on CafePod Coffee
Co. profitability and performance level.
Political Risks
In internationalisation of business operations, political uncertainties and instability is the
major factor that create risk, challenge and barrier. Emerging markets provides considerable
opportunity of expansion. On the other hand, it creates various challenges to business due to
political instability. CafePod Coffee Co. analyses risk factors that are associated with political as
well as economic situations before take decision of expansion in other country (Lim, Hemmert
and Kim, 2017). Changes in government damage foreign business and investment because new
government bring modifications and changes in policies, interest rate and regulations. Chinese
government develops various regulations, policies and restrictions on online content and social
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sites like You Tube and Facebook. These social media platforms are banned in China that are
major tool of marketing.
Supply chain issues:
Supply chain that crosses national boundaries could be the great challenge for business
that globalise its business in new market. There are some factors such as import, export, logistics
as well as shipping are time consuming as well as complex in nature in international business.
Delay in these activities impacts on organisational sales, reputation and lead it towards higher
operating cost. CafePod Coffee Co. faces the problem to get required material for producing
Coffee for customers.
Based on your analysis, critically evaluate a relevant implementation approach for the
internationalisation process for the specified target market
Internationalisation process is defined as the systematic approach to expand business
operations in international markets. Organisation analyses appropriate modes of entry in
international market place before enter in new geographical areas for business purpose. Uppsala
internationalisation process model in implemented by the organisation to establishing business in
new market of other country (Mariotti and Marzano, 2019). There is various stages are included
in respective model of internationalisation. The model is introduced by the Johanson and
Wiedersheim-Paul in the year of 1975. Stages of Uppsala model are mentioned below:
No regular export activities
In the first step of Uppasala model of internationalisation consist no regular export
activities. In this step, organisation enter in new international market but do not trade of on
continuous bases. Company analyse the market deeply through conducting research to gain
market knowledge and understanding related to targeted areas. CafePod Coffee CO. expand
business in the market of China through exporting products according to demand and preferences
of targeted customers (Muralidharan, Wei and Liu, 2017). It facilitates respective organisation to
understand new market area properly and attain the experience of trading in international market
place.
Export via independent representatives
In the second step of internationalisation model organisational approaches to new market
area through middlemen and agents. CafePod Coffee Co. organisation appoint local employees,
agents and distributors of China that represent organisation in the specific Chinese market. It
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facilitates organisation to perform business functions in well defined manner. It provides benefits
to business because specialised and experienced staff members are involved in business
operations. Local employees have knowledge and understanding of market so that they are able
to improve organisational sales and enhance organisational customer base as well. There is low
financial risk to organisation and it provides complete coverage of market.
Establishment of foreign Sales subsidiary
In this stage of internationalisation process, organisation ignore middlemen operations and take
whole control in its own hands. CafePod Coffee Co. evaluate all threat and opportunities of
Chinese market. After that it can directly export its operations in specific market place. It enable
organisation to maintain effective and direct connections with customers to enhance
organisational profitability. It facilitates respective organisation enhance organisational
reputation through provide quality products to customers at affordable prices than other
competitors.
Foreign Production/manufacturing
Foreign production or manufacturing is the last step of model in which organisation
establishes production of product in country in which it is exporting previously. Organisation can
establish its production unites in other country after having full understanding and knowledge of
market (Mensah, Obi and Bokpin, 2017). It provides various advantages to organisation such as
enhance sales and customer base. CafePod Coffee Co. establish its production in the market of
china and maintains direct connection with retailers and suppliers. It facilitates CafePod Coffee
Co. to reduce cost because there is no need to pay taxes such as custom duty.
CONCLUSION
As per the above the report, it can be concluded that international business encompasses
various commercial activities that takes place to promote transfer organisational goods, services,
ideas and technology across national boundaries. Expansion of business activities in other
country facilitates to attain the objective of growth and development. It provides opportunity to
business to explore in different geographical areas and cover large customer base. CafePod
Coffee Co. organisation expand business operations in Chinese market that bring diversity in
organisation. Organisation examines various factors such as profitability, stability and
regulations of government of country. Business faces barriers in internationalisation of business
operations such as language, currency rates fluctuation, government policies, political risks and
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various others. Organisation selects suitable method of expansion to run business activities
properly.
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REFERENCES
Books and Journals
Bolwijn, R., Casella, B. and Zhan, J., 2018. International production and the digital economy. In
International business in the information and digital age. Emerald Publishing Limited.
Enderwick, P., 2018. The scope of corporate social responsibility in networked multinational
enterprises. International Business Review, 27(2), pp.410-417.
Fitzpatrick, F., 2017. Taking the “culture” out of “culture shock”–a critical review of literature
on cross-cultural adjustment in international relocation. critical perspectives on
international business.
Graafland, J. and Noorderhaven, N., 2018. National culture and environmental responsibility
research revisited. International Business Review, 27(5), pp.958-968.
Hernandez-Perlines, F., 2018. Moderating effect of absorptive capacity on the entrepreneurial
orientation of international performance of family businesses. Journal of Family
Business Management.
Hsu, C. W. and Chen, H., 2017. Local conditions, entry timing, and foreign subsidiary
performance. International Business Review, 26(3), pp.544-554.
İpek, İ., 2019. Organizational learning in exporting: A bibliometric analysis and critical review
of the empirical research. International Business Review, 28(3), pp.544-559.
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.774-785.
Lim, C., Hemmert, M. and Kim, S., 2017. MNE subsidiary evolution from sales to innovation:
Looking inside the black box. International Business Review, 26(1), pp.145-155.
Mariotti, S. and Marzano, R., 2019. Varieties of capitalism and the internationalization of state-
owned enterprises. Journal of International Business Studies, 50(5), pp.669-691.
Mensah, L., Obi, P. and Bokpin, G., 2017. Cointegration test of oil price and us dollar exchange
rates for some oil dependent economies. Research in International Business and
Finance, 42, pp.304-311.
Muralidharan, E., Wei, W. and Liu, X., 2017. Integration by emerging economy multinationals:
Perspectives from Chinese mergers and acquisitions. Thunderbird International
Business Review, 59(4), pp.503-518.
Online:
8 REASONS TO EXPAND INTERNATIONALLY IN 2020. 2021 [Online] available
through :<https://www.capital-ges.com/8-reasons-to-expand-internationally-in-2020/>
Benefits of international expansion.2021 [Online] avalilable through
:<https://www.bizjournals.com/bizjournals/how-to/growth-strategies/2017/12/5-benefits-
of-international-expansion.html>
CAFEPOD COFFEE CO..2021 [Online] available through
:<https://www.cafepod.com/pages/our-story>
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