Managing Opportunities and Risks in High vs Low Context Cultural Environment

This report explores how organizations can effectively manage potential opportunities and risks of doing business in a high context vs low context cultural environment. It focuses on The Coffee Bean & Tea Leaf, an American coffee chain, and discusses strategies for cultural proficiency and market expansion.

INTERNATIONAL
BUSINESS

Contents
INTRODUCTION................................................................................................................................3
Literature Review-& Critical Analysis..........................................................................................3
How the potential opportunities and risks of doing business in a high context vs low
context cultural environment can be effectively managed.........................................................3
3. Objectives and Strategies.........................................................................................................7
4. Implementation (Marketing Mix).............................................................................................11
5. Control and Evaluation............................................................................................................12
Conclusions & Recommendations.............................................................................................12
REFERENCES..................................................................................................................................14

INTRODUCTION
International business includes several activities that take place to promote
several business practices as resources management, transfer of goods and
services, management of technology and ideas across national boundaries. In this
process, cross culture management take place in order to promote universalism all
around the world. Some of the organisations also provide their contribution in these
kind of activities by promoting employees who belongs to diverse culture. These kind
of business activities assist in managing equality and diversity at workplace. Cross
culture management practices can be beneficial for those organisations who wants
to expand their business globally. This report is based on The Coffee Bean & Tea
Leaf which is an American coffee chain which was founded in the year of 1963. This
organisation has around 1000 self-owned as well as franchised stores in USA and
approx. 31 other countries. In order to analyse area of market expansion, firm needs
to implement cross culture management practices through which they can analyse
potential opportunities. This report is going to determine hoe an organisation can
grab potential opportunities and risk by doing business in high and low context
business environment. Furthermore, it also determine how organisation can achieve
cultural proficiency by implementing different business strategies.
Literature Review-& Critical Analysis
How the potential opportunities and risks of doing business in a high context vs low
context cultural environment can be effectively managed
There are many risks that a business faces during the course of operations
that can be analysed through PESTEL analysis. It can be defined as a framework
which is used to analyse the impact of various macro environmental factors on an
organization. PESTEL stands for Political, Economic, Social, Technological,
Environmental and Legal Factors. It also helps in examining various changes that
place in these various factors.The Coffee Bean & Tea Leaf is a coffee chain that is
headquartered in California, United States and offers a variety of tea and coffee
beverages/drinks to the customers. The PESTEL analysis of The Coffee Bean & Tea
Leaf, which is an American coffee chain, is described below-
Political Factors – These are the factors that determine the extent to which
the government of a nation can impact an organization. These factors can include

the political stability and instability of a country, trade policy, fiscal policy etc. The
Coffee Bean & Tea Leaf, the company is one of the oldest coffee chains and the
political condition of America is also stable. The company’s operations re carried out
smoothly and it is not required to change its policies according to changes in the
political condition.
Economic Factors – These are the factors that can impact the overall
economy of a country. This further leads to an impact on the organization as well as
its overall profitability. Different economic factors are inflation rate, employment or
unemployment, exchange rates etc. The company has decided to expand its
operations in a developing nation where the people will be able to afford its products
and services. On the other hand, for example if the company would have decided to
expand its business in UK, people would not have been able to afford the same
because of Brexit.
Social Factors – These are the factors that focus on the socio-cultural
environment of a country and include demographics, education levels, levels of
disposable incomes of people, cultural trends etc. The Coffee Bean & Tea Leaf
knows the preferences and potential changes in them through the market research
that is conducted from time to time. This helps in getting a better insight about their
expectations as well and this is how the company can provide better experiences to
customers.
Technological Factors – These factors analyse the rate at which technology
and innovation are advancing and what is the level of impact they can cause on a
particular business. Factors included in this are automation, research and
development etc. Although, The Coffee Bean & Tea Leaf has incorporated decent
technology in its system, it still needs to level up the same. This will help it in making
the various business operations effective as well as efficient.
Environmental Factors – Environmental factors can also impact a business
and its operations significantly. The different environmental factors are climate,
sustainability, carbon emissions, waste disposal etc. Also, customers are
increasingly becoming aware and concerned about the environment which has led to
companies practicing Corporate Social Responsibility or CSR. The Coffee Bean &

Tea Leaf uses procedures that are not harmful for the environment to make coffee
beverages.
Legal Factors – These factors include various legislation or regulations that
all organizations across different industries are expected to adhere to. Factors
include employment laws, health and safety laws etc. Since respective company is
planning to enhance its business, it should comply by all the important laws to build
an effective business. This will help it in gaining the loyalty of customers.
Porter’s Five Force Model: Porter’s five force model is very much important for
organisation as it helps to organisation to access the competitors analysis. It helps
in acknowledging the competitors and their strategy to gain the desirable outcomes.
In context of The Coffee Bean & Tea Leaf while they aimed to expand their market
need to analyze the market and collect potential outcomes that are as follows:
Competition in the industry It has been analyzed that for an
organisation competitors plays very
much important role as by underlying the
competitors strategy organisation can be
able to build strategies and tactics
(Wettstein And et.al., 2019). In context of
The Coffee Bean & Tea Leaf there are
large no. of competitors are available in
the market place that directly influence
the work and activities of organisation. In
that regards for high context culture
competition in market is low as they deal
effectively with the situations and
compete in positive manner. the main
competitors of respective organisation
are Dutch Bros, Caribou coffee, Peet’s,
Dunkin’s Donuts, costa coffee and many
more. So in that regards it can be stated
that competition in market is fierce.
Potential of the new entrants in the New entrants in the industry plays very

industry much important role, they contributes in
raising standard of people by providing
wide range of products and services to
them. In context of The Coffee Bean &
Tea Leaf that operate in the US
marketplace, where organisation not
easily get the entry into the marketplace
as rules are very much strict in
respective nation. In the high context
culture they greet the new entrants for
managing the work in the potential
manner. it helps to bring specialisation in
their work and productivity (Wettstein
And et.al., 2019).
Power of suppliers Suppliers are very much important for an
industry as they contributes one of their
best efforts for supplying the products
and services to the end users. In context
of The Coffee Bean & Tea Leaf due to
usage of rare kind of raw material in the
production of respective organisation
product they have very less no. of
suppliers. So bargaining power of
suppliers are high in that regards and
they directly influence the capacities of
organisation. In the high context culture
the countries that deal with it are Asian,
African, Arab and central European by
building strong relationship lessen down
the bargaining power of suppliers (Van
Tulder And et.al., 2019).
Power of consumers Consumers is one of most potential
assets for organisation. It has been

analyzed that The Coffee Bean & Tea
Leaf deal in coffee industry and large no.
of small coffee manufacturer existed in
market. it create fierce competition in
market and lead towards destruction. In
high context culture organisation by
providing best products with help of
servicing in order to remain competitive
in marketplace.
Threat of substitute products Every product has the substitutes that
are available in the market. it reduce the
price of other products and selling also.
In context of The Coffee Bean & Tea
Leaf their are large no. of substitutes
available in market such as tea, other
kinds of drinks. So the threat of substitute
products is high. In the context of low
context culture such as united states and
Australia come under respective
category, so sometimes due to
mismanagement and not able to deal
with dynamic aspects fail to provide one
of best products and services to
consumers in effective manner (Jethu-
Ramsoedh and Hendrickx, 2019).
3. Objectives and Strategies
It is very important for organisation to develop effective and efficient business
strategy that will lead to growth and development of organisation. The Coffee Bean &
Tea Leaf organisation is planning to expand its business market into completely new
area. This will support organisation to enhance business activities as well as
increase sales of products. for creating smart objective and effective strategies for

improving business performance, STP analyse and SWOT analyse is mention below
in detail.
3.1. STP Analysis.
This is an effective model that will help organisation to identify and analyse
different targeted customers which will support in increasing sales of
organisation. STP analysis stand for segmentation, targeting and positioning.
 Segmentation – This refer as the way of dividing large market area into
smaller parts. Segmentation can be describe as a process in which
respective company will be able to classify customer base into different
part in order to select the most effective segment (Mäkelä, Kinnunen and
Suutari, 2015). The Coffee Bean & Tea Leaf organisation can determine
most potential segment on the basis of demographic, psychographics,
lifestyle, behaviour, geography and so on. Segmentation will help in
selecting most appropriate and effective segment for attracting customer.
 Targeting – Once respective coffee company has classify different
customers on the basis of segment. The Coffee Bean & Tea Leaf
organisation will focus on determining the target audience. In this stage
respective organisation will evaluate the selected market area as well as
its impact on business profits. For Coffee Bean & Tea Leaf targeted
market area is customers of Poland geographic location who are of age
above 7 years old. Products of respective company will be offered in new
targeted market area that is Poland and it is focusing on people of all age
group, occupation or background. Targeted customer have interest in
drinking coffee as well as have potential to purchase products and
services of The Coffee Bean & Tea Leaf company.
 Positioning – This is very crucial part of attracting customer in order to
increase the sales of organisation. In this step The Coffee Bean & Tea
Leaf organisation needs to analyse most effective and efficient strategy in
order to develop positive image of company products in customer mind.
For this respective organisation is promote and advertise coffee products
as beverage that is invokes sense of happiness, love and warmth spirits.
Amazing taste and high quality manufacturing process is very useful in

creating effective brand value of The Coffee Bean & Tea Leaf in targeted
market area.
3.2. Strategies (SWOT & TOWS)..
It is very much important for an organisation to collect necessary knowledge
and information of the internal environment of the organisation in order to build
strategies and tactics in effective manner. in context of The Coffee Bean & Tea
Leaf they aimed to expand their market so before implying in practical need to
take help from the SWOT analysis that are as follows:
Strength:
Strength of the organisation is one of
most important aspect to gain the
sustainability and profitability into the
market place. In context of the The
Coffee Bean & Tea Leaf the main
strength of respective organisation that
they are very much proficient in the
training and development for that they
established a regional office in the
Singapore. With their each and every
outlet is controlled and monitored
under the surveillance of professionals
to gain desirable outcomes.
They by maintaining the organisational
traditional values that is secret of their
success in which each team member
provides the total quality experience to
other for raising their motivation and
productivity (Ghauri, Grønhaug and
Strange, 2020). In that regards the high
context culture organisation by
accumulating data and information can
Weakness
Every organisation have some sort of
weakness too that harms their
profitability and in achieving
sustainability into the market place. In
context of The Coffee Bean & Tea Leaf
the targeted individuals of organisation
are youth, who are teens and working
with the adults but it is weakness for
the firm. As it lead towards the lose of
some market, in that regards it is very
much important for respective
organisation to target the wide range of
individuals by collecting their needs
and wants in potential manner to
remain competitive in marketplace
(Gray, 2019). in context of The Coffee
Bean & Tea Leaf to overcome from
respective weakness organisation have
to build strong communication network
and collate the self interest of one
another so that they can contribute one
of their best efforts.

be optimally maintain their values.
Threats:
The major threat of the organisation is
the fierce competition in the market
place that hinders the self interest of
the organisation. In context of The
Coffee Bean & Tea Leaf there are
various competitors that are
Starbucks, Dome and old town cafe
and many more. The major competitor
in that series is the greater kind of
financial, marketing and operating
resources of organisation that required
while entering into the market in
potential manner. so collecting all the
necessary resources for manufacturing
the coffee and other products in wider
market place is very much difficult.
Besides the coffee manufacturer the
other organisations also include such
as Starbucks, the procter & Gamble
and many more. In that regards it is
very much potential for an organisation
to adopt the culture in which every one
can be able to contribute one of their
best efforts in achieving definite goals
and objectives.
It also analyzed that while an
organisation deal in many countries
they encounter the risk to fail. In that
regards it is very much important to
analyze the market risk by using
Opportunities:
The main opportunity in front of
respective organisation is to expand in
the other markets. After the getting
success in the Singapore and Malaysia
after that it has been analyzed that
they have greater potential in Asian
market. due to the highly potential in
the growth of market in US they aimed
to expand the products and market in
other places. From the outlets in the
southern California they aimed to open
the outlets in Nevada and Arizona and
in Chicago and new York.
The another important factor that work
as the opportunity for the respective
organisation is the changing lifestyle of
people. As people in the present
scenario is very much health conscious
and they always demand innovation in
their products and services. So it is one
of most important kind of efforts put
forward to grab the opportunities by
launching number of range of coffee in
market to gain the large no. of
consumer base potentially. In that
regards it is very important for
organisation to evaluate the culture of
organisation as high context culture
proved very much beneficial in
distributing roles and responsibilities to

various kinds of tools and techniques
(Aguilera and Grøgaard, 2019). So in
low context culture organisation by
organizing various kinds of attribute
organisation can overcome from the
respective threats.
each individual in achieving desirable
outcomes (de Vasconcellos, Garrido
and Parente, 2019).
In that regards it has been evaluated that for an organisation it is very much
potential to analyze or evaluate various attributes with the help of tools and
techniques in order to remain competitive in the market place. With the help of
competitors analysis organisation can be able to demonstrate the knowledge
and its implication.
4. Implementation (Marketing Mix).
It is crucial for respective organisation to implement business strategies in effective manner in
order to achieve desired goals and objective. Implementation stage will include actual execution of
products and services in market area in order to meet with the need and wants of customers. This
will include 4 P’s such as promotion, price, products and place.
4.1. Promotion – This refer as the way in which company is attracting and influencing its
targeted customers in order to increase the sales. There are different promotional tools and
techniques that can be used by The Coffee Bean & Tea Leaf organisation for
influencing large number of customer. Promotion can be done through modern
and traditional method. This will includes news paper advertisement, social
networking sites, T.V promotions and so on.
4.2. Price - Price can be describe as the amount that is charged by company for
offering its valuable product and services to customers. The Coffee Bean & Tea
Leaf organisation is conducting its business activities by setting price of products
by analysing cost of developing product (Knudsen and Moon, 2017). This is
effective pricing strategy as this will help in meeting with the cost of products as
well as earning appropriate amount of profits. This types of pricing strategy will
be will be quite affordable for different income group customers.

4.3. Product – This can be describe as the actual good or commodity that is
offered by organisation in order to meet with the needs and want of customers. It
is crucial for The Coffee Bean & Tea Leaf to create high quality products which
lead to enhance the experience of customers. Products and service quality will
support in developing relationship with customer as well as meeting with their
desire by offering products which is according to the expectation of customer.
4.4. Place – Place is an area in which company is offering its products and
services to customer. The Coffee Bean & Tea Leaf is providing its high quality
products and services to different market area all around the globe (Kourula,
Pisani and Kolk, 2017). In order to expand market respective company is
planning to targeted customer of Poland. Through this The Coffee Bean & Tea
Leaf organisation place can be consider as coffee shops which is located in
market area of Poland country. This place is an attractive area with different
facilities in order to enhance the experience of customers.
5. Control and Evaluation.
It is crucial for respective organisation to analyse and identify different methods that
will support in controlling and evaluation of marketing activities of coffee product in
market area. The Coffee Bean & Tea Leaf is operating its business function in new
market area that is Poland. In order to identify and analyse wheathe this market
expansion plan is helpful in meeting with the business objective or not, respective
company needs to take different controlling measures. Feedback from customers will
be very effective controlling and monitoring techniques as in this actual performance
of company and its products will be evaluated correctly.
Conclusions & Recommendations
From the above report it can be concluded that there are different activities
that is associated with international business. It is crucial for business to identify
different external and internal factors of business which can have impact on business
decision and performance. Porters five force model is useful in identifying
competitive presence of company in potential market area. Through this business
will be able to develop and create effective and strong business strategies that will
lead to growth and development of business. Company should correctly implement

business strategies as well as control activities in order to identify its actual
performance.

REFERENCES
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