International Business: Drivers, Trade Barriers, Social and Ethical Issues

This report discusses the drivers of business expansion into China, trade barriers, and social and ethical issues that UK SMEs need to consider. It also covers methods of expansion and cultural preferences.

International Business

Table of Contents
Executive Summary.........................................................................................................................3
INTRODUCTION ..........................................................................................................................4
MAIN BODY ..................................................................................................................................4
Drivers of business which are behind the expansion of company into the given country.....4
Trade Barriers.........................................................................................................................6
Social and ethical issues which needs to be considered through the SME of UK.................7
Cultural preferences which needs to be considered within the business ...............................9
Describe about the methods of expansion which needs to be chosen through the organisation
..............................................................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

Executive Summary
The overall report is about the international business. Within the report, UK SME to expand their
business into Chinese market for their milk of UHT which is aged from three to eleven years.
The report basically consist of the drivers of business which is behind the company's expansion
into the given country. The report basically consist of trade barriers and also about social and
ethical issues which needs to be taken into consideration by the SME of UK.. The report also
consist of cultural preferences which needs to be taken into consideration by the people of
business and also about about methods of expansion for particular company.

INTRODUCTION
Business at international level basically refers to the trade of technology, goods, capital,
services and knowledge across the borders at national level which is at transactional or global
scale. It basically involves transactions of services and goods at cross border level between more
than two countries. In the present report, a case study is taken into consideration where a
consultant of business at international level for the high profile into UK SME that is basically
based in London. The core objective is to expand their business into Chinese market for their
milk of UHT which is aged from three to eleven years. Small and medium enterprises are
basically non-subsidiary which are independent firms that employs fewer than the given number
of employees. Within the report, First milk company is taken into consideration(Aharoni., 2015).
It is the company who supplies milk, cheese and other dairy products as well. The present report
will cover discussion about the drivers of business which is behind the company's expansion into
the given country. The report basically consist of the trade barriers and also about social and
ethical issues which needs to be taken into consideration by the SME of UK. The report also
consist of cultural preferences which needs to be considered by the students of business and also
about methods of expansion for particular company.
MAIN BODY
Drivers of business which are behind the expansion of company into the given country
There are certain drivers of business which are behind the company's expansion and it
includes global market place, excess of production, growth in market share, emerging markets,
political stability, higher rate of profits, transportation, technology and communication,
liberalisation of economic policies and changing demographics and as well. The expansion of
company can also be cleared out through applying PESTLE analysis which is explained into the
following manner:
 Political Factors: There are certain political factors which influences China in terms of
expansion of First milk company into other country (Alayo and et.al., 2019). China has
very good relationship with most powerful nations that has dispute with US and countries
of South China and it ruins the stability at political level as well. So it disturbs the ideal
environment of business for the investors.

China has the strategies into proper manner for maintaining the raw materials low cost and
investors have also labour at lower cost which makes the good choice for government and
business also makes plans for promoting subsidises companies and businesses as well.
 Economic Factors: According to this analysis, economic factors shows that it has
impact on its development. Within the country of China, cost of labour is also low and
there are many established organisations who also prefer for the hiring of employees
from China (Gaur and et.al., 2019). They also recruit the labour who are experienced
from the country where prices are lower than other countries. China is a country who has
GDP at higher rate and the country's people purchasing power is also higher that's why
investors have good opportunity in the market of China. The cost of property and
inflation rate in China is also higher is also increasing on the fast pace manner which can
decreases the speed of growth of economy from the perspective of upcoming period of
time that can impact the growth.
 Factors at Social level: There are certain factors which can impact the growth of the
country and it is the country which has massive level of population and most of them are
literate. Business can also get expert employees and labourers that are at the cost of low.
The people lifestyle is also changing into the fast pace manner and and they have also
their own preferences and choices as well. Lifestyle at urban level is also penetrating the
land at higher pace and the businesses have also facing changes into the purchasing
trends and social behaviour as well.
 Technological Factors: The innovations at technical level affect the capacity of
production which also result into surge into business revenue. The country has also
shown advancement into innovation at technical terms. It has also changed their
distribution and mode of production as well(Holmes Jr and et.al., 2018). China is also
the country who are making strategies in order to inspire people for concentrating on
innovation which can be helpful for their growth. The country has also support system at
technological level who prefers to utilise the online platforms rather than visiting the
stores in order to buy products.
 Factors at environmental level: There are certain issues at ecological level that have
effect on the china country. The country has also set certain guidelines for the business

that aims for securing the standards of production environment. It also decreases the
profit and increases the cost of production as well. China is also the country who is
aiming to make electronic vehicles which act as the primary mode of transport.
They need to work on their technologies as the country has many factories on the higher scale
which reduces the pollution level and manufacturing cost as well.
 Factors at legal level: There are certain conditions at legal level which has the effect on
organisational business. There are certain Chinese laws which shows the effect on the
growth as the business promoting country(Khalid and Ali., 2017). The country has also
banned the platforms at social media such as Twitter ,Facebook, Whatsapp, You tube that
has prevented the platforms from the earning of revenue. It is the country which has
certain restrictions on the foreign companies investment which decreases the companies
at international level number who invests into the market of country.
So these are the factors which has confirmed the First Milk company to expand themselves into
the country of China because it has greater level of opportunity and also have lower labour cost
due to which they can easily expand themselves into the new country.
Trade Barriers
Trade barriers refer to those obstacles which are put into place through government in
order to limit free between national economies and they are basically the interventions into
markets which happen to operate at the international level. These are the barrier which are
basically government induced restrictions on the trade at international level. There are certain
trade barriers which has impacted the First Milk company in order to expand themselves into
Chines market. The trade barriers are defined into the following manner:
 Natural Barriers: These are the barriers who are either trade in terms of cultural or
physical terms. The transportation cost of milk from one country to another also drive the
price on the higher pace and distance is also one the factor of barrier into the context of
natural level in order to trade at international level(Kim and Song., 2017).Language is
also the other trade barrier at natural level where employees do not have communication
into the effective manner and also not be able to have negotiation regarding the
agreements at trade level into positive manner. In context to First Milk company, they

have to face these barriers due to which it create impacts on the growth and development
of the company.
 Tariff Barriers: Tariff is the kind of tax which is imposed on the imported goods
through the nation and it may be charge per unit as well. There are certain arguments
against tariffs which include tariffs basically include free trade which lets the principle of
competitive advantage work into the most efficient manner. Tariffs also increases the
prices due to which it decrease the consumers purchasing power as well. In context to
First Milk company, they have to pay tariffs in order to expand themselves into new
market i.e. Chinese market.
 Barriers of Non tariff : Government also uses different tools apart from the tariffs for
restricting the trade. There is also one kind of barrier at non tariff level that is the import
quota or also have limitation regarding the quantity of particular goods that can be
imported (Le and Kroll., 2017). The main aim of quotas setting is to have limitation
regarding the imports of specific amount of product. In context to Milk First company,
they have to face this barrier due to which they face to face challenges in terms of
establishing themselves or expanding themselves into new country i.e. Chinese market.
There are certain uncertainties due to which business have to face difficulties in terms of
implementation of these new policies and there are certain policies which cannot be accepted by
the country into positive manner. Although trade policies contribute into the context of growing
faster, improve productivity, innovate and also provide opportunities to their people as well. In
this manner, First Milk has to faced different kinds of obstacles or barriers in order to expand
themselves into positive manner at the international level.
Social and ethical issues which needs to be considered through the SME of UK
Ethical issues: Ethical issues refers to those issues which occurs when the given
scenario, activity or decision which creates conflict within the moral principles of society.
Within these conflicts, businesses and individuals both are involved since any of the activity put
it into question from the point of view of ethical terms(Liao., 2015). There are certain examples
of issues at ethical level which include harassment, discrimination unethical accounting,,
privacy, nepotism, health and safety corporate espionage.
There are majorly five biggest ethical issues which has been faced by the businesses
which are defined into the following manner:

 Unethical accounting: It is the accounting practices which is unethical and also act as
the serious problem as well. When people are following such kind of practices then it
becomes difficult to continue business into proper manner.
 Toxic work place culture: Organisation who are following unethical leadership are
totally into the environment of toxic work place culture.
A toxic culture creates hindrance in terms of achieving organisational goals and objectives as
well due to which it becomes challenging to complete the daily tasks into positive manner.
Toxic work place also lead towards the delay in terms of achieving target within a set period of
time.
 Discrimination and Harassment: At the organisational level, there is discrimination
among employees due to which employees do not feel motivated towards their work.
Harassment at work place also made the culture of organisation very negative and not
impactful into context of further positive development of all the employees working at
the organisational level(Lojacono and et.al., 2017). In context to UK SME, it has been
observed that they have to take initiative in such a manner that they have to enforce
policies and training which supports for equal opportunity program. They have to set
values at personal level into such a manner that there can be harmonious situation can be
maintained among employees.
Social Issues: A social problem refers to those issues within the society which makes it difficult
for people in order to achieve their full potential. There are certain examples of social issues
which include unemployment, poverty, racism, unequal opportunity and malnutrition.
 Uncertainty about the future: There are different issues from the perspective of future
because there is no guarantee that small and medium enterprises can perform into
consistent manner for longer period of time (Muralidharan and Pathak., 2017). Within
the business of small and medium enterprises, there is also no guarantee about the long
term investment due to which they can't perform into positive manner for longer period
of time.
 Financial management: As these are the small businesses so its very difficult to
maintain the finance into appropriate manner according to the desired requirements of the

business. There are various times very small medium enterprises can't perform according
to their set goals so it becomes very challenging to manage the finances into effective
manner.
 Technological changes: In this fast competitive environment, there are lots of
technologies which are changing on a very fast pace manner due to which it becomes
challenging for the small and medium enterprises to maintain the consistency level in
terms of their performance(Pouramini and Fayyazi, ., 2015).Every kind of business have
their own requirements due to which it becomes challenging to implement technology on
the fast pace manner at the organisational level.
When company has trying to expand themselves into different country then they need to
understand the importance of corporate social responsibility into positive manner. Corporate
social responsibility is when the company operates in a sustainable and ethical manner and it also
deals with their social impacts and environment as well. Social responsibility at corporate level is
very important because the company operates in a way which demonstrates the social
responsibility and it also observed as the good practice as well which needs to be taken into
account the environmental and social issues. Corporate social responsibility contribute into the
context of improving the brand image and also increases the recognition and brand awareness as
well. They also act as good in terms of cost savings and also an advantage over their competitors.
It also lead towards the greater employee engagement and also have more benefits over their
employees
In context to First Milk which is also a very small business so there is possibility of
certain kinds of issues which are at the organisational level. These issues needs to be resolved
into positive manner so that they can grow themselves into positive manner according to the
requirements of an organisation. For achieving the tasks into positive manner, it is necessary that
these issues need not to be unresolved for longer period of time otherwise it becomes very
challenging to find out the loop holes of business into positive manner within a set period of
time.
Cultural preferences which needs to be considered within the business
Culture refers to the behaviours and beliefs which determines that in which manner the
employees of company and management needs to interact and also handles the outside

transactions of business as well (Sadegh and et.al., 2020). Cultural preferences are also very
important at the organisational level where there meaning of colours, shapes and features which
are iconic can also have the significance of culture as well.
Culture is very significant at the organisational level which reflects not only those who
are into position of power but also drives the employees satisfaction and engagement as well. At
the organisational level, there are certain factors which an organisation needs to consider while
setting different parameters of culture and these are defined into the following manner:
 Material culture: It basically involves goods which are technological which has been
utilised through the main population, personal transport, and the resources availability
like electricity, natural gas, wireless communication and telephone internet as well.
 Preferences of culture: Within market at international level will have different choices
regarding the quality levels, products and brands as well (Sensini., 2016). There are
certain iconic features, colour, shapes which have dissimilar significance of culture.
 Languages: The languages which have been used and spoken in a country that has an
effect on the names of brand, collection of information, marketing by interviews and
surveys, conduct of business relationship and advertising as well. It has been observed
that there are different languages into different countries of region there are certain
countries who have two or more language at official level. Languages which has been
spoken within a country gives proper indication about the level of diversity in attitudes
and culture as well. Those countries which have only one language is to be spoken can
have the regions of wide cultural diversity.
 Education: When typical kind of education has been completed within a region gives
consideration about the potential status of consumers at potential level and work force as
well.
 Collectivism: The culture of china is collectivist oriented which basically results into
better team work, more consensual decision making spread information sharing and more
obedience as well(Shaffer and et.al., 2016). It has been observed that People of china are
cooperative in terms of their group and organisation showcase the orientation into
competitive manner into context of dealing with different organisation.
 Greetings and Meetings: Doing business in the country of China, it is necessary that
foreigners have to display their sincerity and respect as well. Within the meetings of

Chinese, they don't see directly into the eyes but slowly lower down their lids of their
eyes into proper manner.
It is basically the sign of respect and deference and their nature is not of that kind they
rushed into every kind of situation which takes very long period of time before any tangible
progress is made. From the perspective of business, Chinese are more interested in terms of long
term commitment(Shearmur and et.al., 2015). In context to First Milk, they have to follow such
kind of activities when doing business at international level specially into the case of Chinese
market. They have to take care about their culture of doing business so that they can easily
expand their business into that particular country. For convincing the clients and business person
of Chinese market they have to properly follow all rules and regulations, culture, trend and
traditions as well so that they can do their business into result oriented manner. As Chinese
market is a kind of very rigid market so they have to follow proper culture so that they easily get
entry into that particular market and Chinese people always looks from the longer perspective so
its not very easy to convince them for their expansion of business that's why they need to be
extra cautious while dealing into the Chines market.
Describe about the methods of expansion which needs to be chosen through the organisation
There are different kinds of methods of expansion which help the international business
to grow themselves into positive manner and these certain methods basically include licensing
arrangements, exporting goods, partnerships, mergers and acquisitions and global PEO as well.
In context to First Milk, they can adopt one method in order to expand themselves into another
country into positive manner. Licensing arrangements are defined into the following manner:
Licensing Arrangement: It is a kind of arrangement of business where one organisation
gives permission to other organisation for manufacturing of product for specific payment. It
basically include allows other organisation for using trademarks, designs, patents other
intellectual for exchange of percentage of fee or revenue and copyrights as well(Talebi and et.al.,
2017). This is the fastest way of generating income and also grows the business into fast pace
manner where no sales or manufacturing are included.
Licensing basically refers to the advantage which needs to be taken for the infrastructure
and existing pipeline means that taking the advantage of the existing company's pipeline in the
barter of revenue which is of small percentage. The agreement of international licensing

basically givers permission to the firms which are of foreign level which is at either non-
exclusive or exclusive or form in order to produce of proprietor for particular period of time into
a particular market. Within the licensing method of expansion of business, a licensor has limited
rights in their home country which have the availability to the licensee in the country of host.
There are certain rights or resources which basically include trademarks, patents, technology
skills, managerial skills which has the possibility for the license to sell and manufacture into the
country of host. Although there are certain negative points of licensing but it has also certain
positive points as well in order to expand the business into positive manner at the organisational
level. So it has been recommended for the First Milk company they have to particularly adopt
licensing method in order to expand their business into Chinese market. That's why its very
important for the company to consider this method of expansion into serious manner.
CONCLUSION
It has been concluded that international business plays a very important role into context
of economic development and growth as well. There are certain drivers of business which is in
terms of company's expansion into the given country and there are certain frameworks which
help the business in terms of analysing their performance and beneficial for the future decision
making of an organisation. It has been determined that trade barriers act as negative role in terms
of expanding their business at the international level. These barriers needs to be removed into
result oriented manner so that they can attract large number of investment and trade as well. It
has been observed that there are certain issues at the ethical and social level which create
negative impact in terms of performance of the business. There are certain cultural preferences
which needs to be considered by the business so that they can create only that particular kind of
culture within the organisation so that they can accordingly perform it. There are also certain
expansion methods of business at the international level so that they can adopt it for their further
growth and development as well.

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