International Business: Evaluating Business Drivers and Trade Barriers for Expansion to China

This report analyses the business drivers and trade barriers for Dairy Pride Milks to expand to China. It includes a PESTLE analysis, trade policies of China, and the importance of CSR. The Hofstede's 4D model is used to identify cultural importance in international business.

International Business

Table of Contents
Table of Contents.............................................................................................................................2
Introduction......................................................................................................................................1
MAIN BODY..................................................................................................................................1
Evaluating the business drivers that can impact the country's expansion to china......................1
Highlighting the trade barriers as well as business opportunities and challenges created by
trade policies of national government..........................................................................................3
Analysing the importance of Corporate social responsibility when operating in the
international market.....................................................................................................................5
Identifying the cultural importance in international business by using the Hoefstede's 4D
model...........................................................................................................................................7
Evaluating the internationalisation methods as well as growth strategies by adopting Ansoff’s
matrix...........................................................................................................................................8
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

Introduction
he international business activities allow the business organisation to operate across theT
international market in the most effective manner t fosters the sale of goods and services between. I
different countries with an objective of increasing customer market share and gain competitive
position in the foreign as well as domestic market t also allows the company to take opportunities. I
in terms of using newer technologies and more competitive workers leading to high growth and
development or this report the Dairy ride Milks fi rm is taken into consideration he company. F , P . T
is recognised as the leading dairy drinks business which is located in the Aztec est ristol130 W , B ,
his company comes under the dairy industry and it comes in the market of erfectUK. T P
Competition he organisation sells the diversified range of fresh milk products that comes in the. T
form of chilled milk drinks iced coffee drinks whole milk skimmed milk as well as, , UHT, UHT
Semi skilled milk hese products are especially produced for using in professional- UHT . T
kitchens and all its dairy products comes after heating it on ultra mode in order to maintain long
lasting freshness hattacharyya(B , 2020). Along with it the fi rm sources the milk from local, 65
farmers which enable it in selling the freshest milk products he high quality standards of milk. T
assures that it is very safe for children who falls in the age group of to years and are also its3 11
main target customers n addition to this the fi rm has covers appropriately market share of. I , 26%
the ritish long life milk market here are high level of opportunity for the fi rm to e pand itsB . T x
market area by entering into Chinese market his can result into large number of customers. T .
owever the challenges in the form of barriers can also occur in the processH , .
MAIN BODY
valuating the business drivers that can impact the country s e pansion to chinaE ' x
n order to analyse the impact of e ternal factors the S analysis tool is taken intoI x , PE TLE
consideration he application of this business tool will support the Dairy ride Milks organisation to. T P
establish their market growth strategies according to the e ternal market forces of Chinesex
market t can also allow the company to make data driven business decisions which may result. I
into less e posure with various risks he elements of S model is described in belowx . T PE TLE
points which are:
1

Political force:
he political factor studies the element that are connected with the political climate as wellT
as rules of government related to the country Aguilera and r gaard( G ø , 2019). his factorsT
involves legislation acts ta rate import and e port duties and many more n conte t to Dairy, x , x . I x
pride milks the company can benefit from the strategies of Chinese government regarding,
maintaining the low cost of raw materials his can allow the company to deliver milk for. T UHT
children s of china market in the competitive rates owever the negative political relations between' . H ,
the china and can disturb the ideal business environment leading to huge lossUK .Economical force:
his type factor involves the element related to the economic environment of theT
country which includes employment rate interest rate of fi nancial institutions labour cost and, ,
many more n conte t to Dairy ride Milks the second highest D of china can support the. I x P , G P
company to gain large amount of profits due to high purchasing power of Chinese customers n. I
relation to this the fi rm can take advantage of significantly lower labour cost in china that can allow,
it to reduce cost in gaining attention of large number of customers owever the increment in. H ,
inflation rates of country can slow down its growth which may negatively impact the growth of
company Silva( , 2022).Social force:
he social factors deals with the socio cultural values of the country hese sources canT - . T
cover tastes and preferences of customers population cultural values and much more n relation, , . I
to Dairy ride Milks the very high population of china along with high level literate people canP ,
enable the company to get e pert labourers as well as employees at the lowest cost possiblex .
Apart from this the rise in lifestyle trends of Chinese citizens towards consuming high quality,
items is good news for it as it delivers highest quality milk products with diverse ranges.Technological force:
his type of factor basically includes the innovational as well as technological initiativesT
under the given market he application of new technologies can allow the company in altering. T
old business processes with the optimised ones n relation to Dairy pride milks the recent high. I ,
technological advancements by china in the fi elds of production and distribution channels can
2

support the fi rm to also apply these technologies and gain highest efficiency he considerable size. T
of china population have their presence on digital platforms his can help it in attracting large. T
number of targeted customers by effective online advertisements sang(T , 2020).Legal force:
his force combines the factors connected to the actions of legal bodies in the countryT .
he legal factors cover the elements such as trade laws labour law employment law and manyT , ,
more n relation to Dairy pride milks the stricter legal laws in the china country related to ban. I ,
social media channels such as acebook hatsApp ou ube and more can prevent theF , W , Y T
company to initiate social media marketing strategies n addition to this the lack of law for. I ,
validating the online contract between the seller and buyer can also cause troublesome situation
for the fi rm in conducting smooth operations.Environmental force:
he environmental factor involves the sustainable practises and measures which canT
allow the company to meet the goal of gaining the sustainable competitive advantage in effective
manner t also includes the factors related to the climatic conditions of the country n conte t to. I . I x
Dairy pride milk the china country has formed the guidelines for the business for the purpose,
setting environmental standards ohnson(J , 2020). his can cause increment in the cost ofT
production that can negatively effect its profit and growth in long run n relation to this the. I ,
organisation will be needed to adopt the sustainable practises in order to gain favourable
response from the legal bodies of china.
ighlighting the trade barriers as well as business opportunities and challenges created by tradeH
policies of national government
he trade barriers are implemented by the countries who does not favour the free tradeT
practises as they feel that free trade are not the best deal for their respective economies as well as
can also negatively impact their growth and employment market he following are the four. T
main trade barriers which the Dairy pride milk organisation can face when launching its milkUHT
products in Chinese market are:Voluntary export Restraints:
3

n this the e porting as well as importing countries comes in the agreement in order toI , x
limit the volume of e ports in the given ti me period he e port restraints on voluntarily basisx . T x
can allow the company in increasing the prices as well as revenue by make possible reductions in
the volume of e portx .Regulatory Barriers:
he ne t type of trade barrier is formed for restricting the import of products or theT x
services hese restrictions are regulatory and are set by the government such as product. T
standards safety standards as well as pollution standards or instance the dairy pride milk, . F ,
needs to make sure compliance with the food regulatory standards of china for selling milk
products zkan(O , 2020).Tariffs:
he tariff related trade barrier represents the ta on the import of products his strategyT x . T
is often used by government of country to increase the import prices so that it can become
e pensive to consume by society members of the country his basically includes the two typesx . T
of tariff in the form of ad valorem or the specific tax.Language Barriers:
his is the main barrier in which the Dairy pride milk organisation can misunderstood theT
cultural aspects of Chinese society if it does not know about Mandarin language as well as
cultural values of china in detailed manner uan and et al(Y . ., 2020). So it is better for the fi rm to hire
the e pert translator so that cultural system of Chinese people can be understood in better wayx .Quotas:
he quota can be recognised as the type of trade barrier which restricts the amount ofT
products which can be imported within the country he tariff and quotas are the same but the. T
collection parties remain different.
Describing trade policies of china
he new trade policy of china aims for accelerating the openness for outside worldT ,
reforming the foreign trade practises as well as promoting the positive economic development or. F
meeting this objectives the government of china is taking necessary measures such as,
enhancement in value added manufacturing facilitating continued growth of e ports and, x
4

welcoming the foreign capital investments for improving industrial structure as well as
technological capabilities n conte t to Dairy pride milk the trade policies of china government. I x ,
can benefit the company to take advantage of its advanced infrastructure facilities for improving
business operations in the effective manner n addition to this the Chinese government is constantly. I ,
intensifying the bilateral agreements which support the free trade agreement orp and(T
Andersen, T.J, 2020). his can allow the organisation to e pand its business and lower theT x
production costs in the most effective manner leading to high profit margins n contrast the unfair. I ,
trade policies of china such as data restrictions inadequate law of intellectual property rights,
and cyber attacks can negatively affect the performance of doing business activities in proper manner.
Analysing the importance of Corporate social responsibility when operating in the international
market
he corporate social responsibility represents that the business company undertake theT
measures for returning back the society members by adopting sustainable practises which causes
less loss to the natural environment of the country n conte t to Dairy pride milk the. I x ,
organisation needs to give proper importance for the adoption of sustainable practises that are
followed in the country of china for gaining favourable reactions from the legal and government
bodies ooper and oltbr gge(H H ü , 2020). he meeting of objectives related to corporate socialT
responsibility can enable the company to enjoy the benefits which includes:Improved public image:
he fulfilment of goals of CSR can allow the Dairy pride milk to improve the public imageT
in the most appropriate manner his will allow the company to reduce the social issues by. T
implementing sustainable practises such as installing solar plants or planting more trees within its
building he initiatives can support the organisation to become favoured from their targeted. T
customers leading to growth and development.Increase in brand awareness:
n conte t to Dairy pride milk the adoption of sustainable practises can make the companyI x ,
to positively enhance its brand awareness in the market by taking the support of ublic RelationsP .
he increase in recognition will support the fi rm in attracting large number of customers that canT
help in gaining high number of sales and profit.
5

Cost savings:
he Dairy pride milk organisation can also reduce the cost structure of its milk productsT
by implementing the sustainable practises like using renewable sources for generating power
needed for pasteurisation process of milk his will not only support the fi rm to cope with. T
sustainable practises but also lead to necessary cost reductions in the usage of electricity Apart.
from this by doing less packaging the organisation can meet with sustainable goals, iu and et al(L . .,
2019).Greater customer engagement:
n conte t to Dairy pride milk the company can develop high customer market share byI x ,
embracing the socially responsible policies his can make the customer to feel proud when. T
purchasing products from the fi rm who undertake sustainable operations that is without causing
harm the elements of mother nature n addition to this it can increase the satisfaction level of. I ,
customer if it adopts the ethical practises in the phase of production and marketing activities.Higher employee engagement:
n relation to Dairy pride milk the social responsibility measures undertaken by companyI ,
can become the effective tool when it comes to increasing engagement level of workers t can. I
also promote the collective efforts of workers which directly results in the boost of morale and
productivity level of workers n relation to this the non bias selection process of the fi rm can. I , -
positively influence the behaviour of e isting workers leading to positive working culturex night(K ,
Moen and Madsen, 2020).Greater support from Chinese government:
he Dairy pride milk company can gain assistance from the government of china if itT
adopts the sustainable practises and make effective strategies for providing solution to society
problems and issues n relation to this it can also support the fi rm to gain rela ations from. I , x
government regarding taking loans and developing other investment projects.
dentifying the cultural importance in international business by using the oefstede s D modelI H ' 4
he ofstede s cultural dimension theory relates with the framework that e plains theT H ' x
cross cultural communication n conte t to Dairy pride Milk Company this model can allow the. I x ,
organisation to study effects of culture of china on the values of its staff member n addition to this. I ,
6

it enables the company to analyse how the values represents the behaviour of worker he. T
following are the elements of ofstede s cultural model that areH ' :Power distance:
his element of model e plains that all the individuals of the society do not have equalT x
power he power distance is the term which connects with the e tent to which the less. T x
powerful people of the country realises that power is distributed in the unequal manner atifah(L
and et al. ., 2020) n conte t to Dairy pride milk fi rm the china country holds high in the ranking. I x ,
of power distance inde as the community member have beliefs that inequality among peoplex
is not the big problem n relation to this the formal authority channels are well established in. I ,
Chinese business culture which highly favours the superior people.Individualism:
he element of this model e plains the degree of mutuality that the society maintainsT x
among the members t represents whether the self image of individual are defined in the word. I
of or n the individualistic type of society the society member only focus on satisfying theirI WE. I
personal needs rather than looking into problems of the society as whole n conte t to Dairy. I x
pride milk the china country scores low in this as it represents the highly collectivist culture in,
which the people are involved in fulfilling the interest of group rather than focusing on solving
individual problems o su and ee(H , H L , 2022).Masculinity:
he high masculine type of dimension indicates that the society members are driven byT
facing tough competition achievements as well as success n contrast the low score on this, . I ,
dimension portrays the feministic characteristics in which the society cares quality of life rather
than making more money n this the quality of life signifies the sign of success n conte t to. I , . I x
Dairy pride milk the china country scores high in the Masculine society where the more,
importance is given for achieving wealth and high corporate position his shows that the. T
Chinese people can sacrifice their family ti me by giving more ti me for doing their work and also take
holidays in rare chances.Uncertainty avoidance:
7

his element of model illustrates that every society follow different methods of dealingT
with the fear of future uncertain situations he one society members believe that future cannot. T
be known and it should let it go Alayo and et al( . ., 2019). hereas the other society membersW ,
have thinking that risk can be avoided by taking relevant strategies in pre planned manner n- . I
conte t to Dairy pride milk the people of china are high risk takers meaning that they scoresx ,
low in the uncertainty avoidance n addition to this the Chinese people are full of aspirations to. I ,
adopt new things which can improve their performance in doing business operations.
valuating the internationalisation methods as well as growth strategies by adopting Ansoff s matriE ’ x
he changes in the fi eld of technology and due to the low cost of cross border operationsT
encourage the fi rms to practise the transnational production activities n conte t to dairy pride milk. I x ,
the internationalisation of business activities can allow the company in ma imising the profits so thatx
this can help it to survive the world full of uncertainty and comple ity here are number ofx . T
ways the company can internationalise its operations that are discussed below:Direct exporting:
n this the company takes responsibility to directly sell its own products outside theI ,
border of their country hu and et al(Z . ., 2019). he fi rm can take support from local distributors ofT
foreign country so that it can sell products to its targeted customer in proper manner he. T
e porting process can allow the business company to share all losses and profits without losing itsx
ownership in decision making process owever the e porting documentation can be ti me. H , x
consuming.Franchising:
n this type of entry mode the franchisee proprietary owner can take the right ofI , ( )
conducting business activities from the franchisor foreign party by using its name as well as( )
trademark he choosing of franchising type of business can enable the fi rm to establish its. T
business name in very short ti me and also with a little direct investment he franchisee pays the. T
franchiser in the fi ed ratio in profit decided in the contract owever the franchisee company canx . H ,
not possess full control over the making of day to day decisions.Licensing:
8

n this process the licensor who is proprietary owner icensor grants the permission toI , (L )
the foreign party icensee for conducting business activities in the legal manner he licensee after(L ) . T
signing the contract can e ploit the technologies as well as products from the licensor that isx
protected by intellectual property rights he licensor can gain benefits from the licensee s local. T ’
knowledge of customer demands and also is low cost strategy that requires very little
investments.Joint ventures:
he joint venture is the result of connection between two foreign companies who joinT
ends in order to perform business activities for the purpose of gaining competitive position in the
market oth the initiating partners can actively participate in day to day decision making process for. B
formulating business strategies he domestic company can gain benefits of economies of scale. T
leading to low cost per unit as well as can also take advantage of new technologies followed by
foreign company Santos orini and nior( , B Jú , 2020).
Ansoff’s growth matrix
his business model can allow the Dairy pride milk company to gain insight about theT
different growth inducing strategies from which the most suitable strategy can be adopted for
the purpose of gaining the competitive position in market he following are the elements of this. T
model in conte t to Dairy pride milk fi rm arex :Market penetration:
n this the company can launch e isting products range to the large number of customersI , x
present in the domestic market he fi rm can e ecute some strategies for gaining competitive. T x
advantage such as optimising marketing efforts decreasing price structure and much more, .Product development:
n this the fi rm can launch the different varieties of product range within the domesticI ,
market t can also update the current product by adding some unique features that can attract. I
the attention from customers.Market development:
9

his the riskier option for attaining growth in which the organisation can sell its e istingT x
products into the foreign market conditions his can enable the fi rm to gain newer technologies. T
and also take advantage of economies of scale.Diversification:
his option is recognised as most risky one where the organisation can launch new rangeT
of products into the international market t can cause huge failure if the company does not able. I
to satisfy the demands of new customer with new products.
Recommendations:
t has been recommended from the above information that the Dairy pride milk companyI
should follow the oint venture strategy for entering into the Chinese market n this the fi rmJ . I ,
can join hands with the famous companies under dairy industry t will allow the organisation to. I
take advantage of already established market and can use the newer cost effective technologies
for increasing output level n the other hand the fi rm should adopt the Market development. O ,
strategy of growth as this step will enable the company to enhance its customer share by selling
products to the large customer base present in international market his may lead to attaining. T
competitive position in market.
Conclusion
t has been analysed from the above report that international business is critical forI
allowing the organisation to e plore into untapped markets in most effective manner t was alsox . I
concluded that establishing foreign operations supports the company in gaining new technology
and competitive multilingual staff members he report has described the e ternal environment of. T x
china by using the S analysis his report has also identified the trade barriers that can occurPE TLE . T
when entering into the china country n addition to this the critical evaluation of government. I ,
policies was taken into consideration Moreover the report has also analysed the role of CSR. ,
when operating in international markets along with the importance of understanding culture was
also determined urthermore the various internationalisation methods as well as growth. F ,
strategies was also critically evaluated in this report.
10

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