International Business Expansion Strategies

The assignment explores various ways companies can expand their businesses, including government financial support. It also highlights the importance of ensuring advertising methods do not offend local customers. The report concludes by emphasizing the need for companies to serve high-quality products to beat competitors globally.

INTERNATIONAL
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 International Business Environment.......................................................................................1
P2 Mechanisms that regulate international trade.........................................................................1
P3 Environment and culture of another country..........................................................................2
TASK 2............................................................................................................................................3
P4 Monetary environment affect.................................................................................................3
P5 Businesses operate internationally.........................................................................................4
P6 Business strategies used by a business operating internationally...........................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
International businesses grew in scope and size to the point where at the moment; the
global economy is dominated by multinationals from all countries in the world. international
businesses grew in scope and size to the point where at the moment; the global economy is
dominated by multinationals from all countries in the world (Dunning, 2012). Present report is
based on Pizza Hut who is serving different kinds of pizza to customers and providing various
offers to attract more consumers. In report, concept of international business environment is
explained in detailed. Further, mechanism which are regulated at international trade is discussed.
Along with this, effect of monetary environment on business is explained.
TASK 1
P1 International Business Environment
Pizza Hut is an international organization that has been running its business in the whole
world. This food chain has its own challenges that have been faced by the owners of the
organization as well as the team which manages all the affairs of the organizations. These
challenges are the internal as well as the external challenges. Pizza has become world’s most
favourite and common food which is always in demand. The people who are doing the business
of the pizza need to be very vigilant about many aspects (Welch and et. al., 2011). As the pizza
lovers are very much possessive about the taste of the pizza.
Company introduced the concept of deliver service; the total amount of the sales of the
company in 1986 alone amounted to $2 billion dollars. In the years 1990, the total sales of Pizza
Hut reached $4 billion dollars’ worldwide. By the year 1996, the sales in the domestic market,
which is the United States, have reached over $5 million dollars; the company had the largest
share of the market in that year for 46.4%. In the year 1998, Pizza Hut launched their campaign,
“The Best Pizzas under one Roof,” in celebration of the company’s 40th anniversary.
P2 Mechanisms that regulate international trade
There are many tools and techniques which can be used by Pizza hut and these are
explained as below:
Free trade - Free trade is a policy by which a government does not discriminate against
imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports) or
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quotas. According to the law of comparative advantage, the policy permits trading partner’s
mutual gains from trade of goods and services.
Under a WTO treaty signed by 124 nations in 1995, tariffs are being systematically cut
by an average of 40 percent during a fixed timeframe.
The concept of free trade is an interrelated factor to the aspect of globalization. Therefore, quite
obviously, it is also one of the most controversial topics of 20th and 21st centuries focusing on
economical, societal and moral issues and its impact in upcoming times both in positive and
negative frameworks (Mumtaz, Simonelli and Surico, 2011).
Economics of scales - The increase in efficiency of production as the number of goods
being produced increases
Barriers to trade - Trade barriers are government-induced restrictions on international
trade. The barriers can take many forms, including the following:
 Tariffs
 Non-tariff barriers to trade
 Import licenses
 Export licenses
 Import quotas
 Subsidies
 Voluntary Export Restraints
P3 Environment and culture of another country
During the positive expansion of Pizza Hut, there are many problems faced by them that
are to adapt Pizza Hut’s menu and services to the local demands as well as the way of managing people
cross-culturally. Pizza Hut worked hard in order to meet the satisfaction of their customer in
different countries. There are two specified culture environment problem faced by Pizza Hut, it is
internal and external.
Malaysia - Cerebos is a Singapore based-company and was the first owner of the Pizza
Hut in Malaysia. Pizza Hut began its operation in Malaysia on 19th May 1982 with the opening
of its first outlet at Yow Chuan Plaza, Kuala Lumpur (Shenkar, 2012). Pizza Hut are able to
attract customer to come to their restaurants mostly Malay. Pizza Hut in Malaysia need to apply, Halal ‟
certificates from JAKIM in order to operate their business to all citizens. In terms of menu, Pizza
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Hut are try to adapt all the ethnics, custom and traditional foods in order to produce the most
attractive and delicious pizza in Malaysia
India - Pizza Hut in India was opened in 1996; its brought in India its international
heritage, its pizza expertise and world class standards of quality and taste. The pizza is a food
foreign to the Indian palate; this is small feat by looking it as successful brand today. The
advertising or Promotion strategies for Pizza Hut in India are divided in to two-fold. Firstly, by
laying emphasis in India and being International brand with an Indian heart. For example, by
creating the pizzas and side dishes by follow the Indian cuisines.
China - The First Pizza Hut was opened in 1990 at Beijing, Pizza Hut has been in China
more than 50 city opened 187 Chain store, more than 10000 employees. Among them, the East
China market has 69 stores, located in 15 cities. In late May 2004, China Yum has announced
about the domestic more than 130 Pizza Hut stores management in China has been fully
recovered. China is one of the countries that have technological advances rapidly; in the terms
of promotion China is one of the countries that have a many ways itself in order to promote the
pizza.
TASK 2
P4 Monetary environment affect
Pizza Hut was created as a BBQ restaurant. They purchased and took over the company
oversaw the international growth (Aharoni, Tihanyi and Connelly, 2011). Pizza Hut is a well-
known fast food chain across the world, with restaurants serving food in over 120 countries.
Pizza Hut owns 23% of the market share in UK, globally, which is the second biggest ownership
in the worldwide section. The company is well known for their range of pizzas. Their target
market is a wide range of people, including families (which they offer Happy Meals), workers
who need breakfast or coffee on the go or those who have time to eat meals inside the restaurants
and use their free Wi-Fi facility. Pizza hut offer a well-known Monopoly promotion annually,
where customers can collect stickers each time they visit which can add up to big prizes or
instant wins on products they offer. The company mainly advertises through expensive television
adverts, posters and billboards around towns and cities and via the internet – banners on websites
and social media pages.
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Pizza Hut finances - Due to the fact of mentioned company is an international business
their finances are dealt with banks all over the world. The importance of having access to the
businesses money from all over the world is any branch can use it for operation purposes
whenever they need (Im, Hong and Kang, 2011). The company uses certain technology so
money can be transferred across the world via the internet through online banking; this
technology allows the company to manage their finances more appropriate way.
Economies of scale - Result of this globalisation process has been that multinational
companies are increasingly targeting the whole or substantial parts of the globe as their domestic
markets. Business that fails to respond to this change stands to lose out too much bigger
international competitors that are enjoying global economies of scale. There are two main ways
to respond:
1. To increase global presence by operating in more and more overseas markets. This can be
done by setting up overseas plant, and hiring overseas specialists directly, or developing joint
ventures with overseas partners.
2. Another related approach is to develop global power brands. This is where a company will
focus on the range of brands in which it has greatest competitive advantage, and will sell off non-
core brands. Most large companies do this. It enables them to sell a narrower range of leading
brands into more and more geographical markets.
P5 Businesses operate internationally
Growth (value, volume, market coverage); Pizza hut have expanded on a massive scale
because they have done research on the area they are moving to before they moved their business
over there. They only would make moves on that scale if they were doing well and they are
doing well in fact they are very successful. Currently there are 7,599 stores including franchises.
With more expansion comes more opportunities and profit. Being a private business would mean
that they are out to make profit so this would be a reason why they would want to expand to
different areas (Brouthers, 2013). In addition, some people would be trying to survive in their
market however when it comes to Pizza hut they would be competing to maintain their place in
the market share or go to the top. Pizza hut shares have slumped by more than 15pc after
Britain's biggest food issued its fourth profit warning in a matter of months. The fast food joint
said that profits for the year to the end of February will now be less than £1.4bn, far below the
£2bn expected by analysts and the £3.3bn reported last year
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Diversification - Pizza hut has been the leader for change in the UK food and eatery
market, introducing such initiatives as 24-hour shopping, self-checkout, and online retailing. By
being diverse within the market that allows them to make more money because they are going
into different departments.
Emerging markets - An emerging market is a country that has some characteristics of a
developed market, but does not meet standards to be a developed market. This includes countries
that may be developed markets in the future or were in the past. Brazil, Russia, India and China
are places that could be in the group of emerging markets. Analysts argue Pizza hut's expansion
in emerging markets such as China, Thailand and India has led them to neglect their UK
business. As a business Pizza hut operate in some of these kind of economies because they can
see that the economy within that country is developing, developed or has the potential to grow on
a massive scale. Currently they operate in 12 different countries which are: Pizza hut UK Pizza
hut in India Pizza hut Malaysia Pizza Hut Lotus Pizza hut Czech Republic Pizza hut Hungary
Pizza hut Ireland.
P6 Business strategies used by a business operating internationally
There are many reasons because of which Pizza hut will go international:
Reasons why businesses go international: There are many reasons why businesses expand into
new international markets: growth, diversification, emerging markets, economies of scale, cost
reduction taxation regime and legal and regulatory regime. All of the reasons mentioned can
encourage businesses to go international in order to give its company and product a value, to sell
as much products as possible and become globally known. Going international will automatically
create different streams of income for the business (Rockstuhl and et. al., 2011). Entering
emerging markets can make it easier for the business to become popular as competition is low
and establishing the business can be relatively cheap. Taxation and legal regimes can be less of a
limitation in international markets comparing to the domestic market.
Marketing: International businesses always try to find new markets for their
products/services, however before marketing their product they always carry out market research
and analyse the data collected in order to identify the market, customer needs and potential
product success – and base their decision on such information collected. The next step in
marketing for international businesses is advertising. International companies do not simply use
one advertising method for all markets, but they come up with advertising that is very likely to
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interest one specific market. As every country is different in culture, the company has to make
sure that it has a lot of knowledge about the culture of the country it operates in to be able and
bring the message across as clearly as possible through their advertising techniques (What Does
it Mean to Study International Business, 2017). International businesses also have to ensure that
their advertising methods do not offend the local customers in any way.
CONCLUSION
It has been concluded from above report that there are many ways in which company can
expand their business. Along with this government is also supporting them in terms of finance so
that they can conduct their business in appropriate manner. Further, there are many factors which
are affecting to business environment of Pizza Hut. Moreover, they are trying to serve best
quality of pizza and other items so that they can beat their competitors all over the world.
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REFERENCES
Books and journals
Aharoni, Y., Tihanyi, L. and Connelly, B. L., 2011. Managerial decision-making in international
business: A forty-five-year retrospective. Journal of World Business. 46(2). pp.135-142.
Birkinshaw, J., Brannen, M. Y. and Tung, R. L., 2011. From a distance and generalizable to up
close and grounded: Reclaiming a place for qualitative methods in international business
research. Journal of International Business Studies. 42(5). pp.573-581.
Brouthers, K. D., 2013. A retrospective on: Institutional, cultural and transaction cost influences
on entry mode choice and performance. Journal of International Business Studies. 44(1).
pp.14-22.
Dunning, J. H., 2012. International Production and the Multinational Enterprise (RLE
International Business). Routledge.
Im, I., Hong, S. and Kang, M. S., 2011. An international comparison of technology adoption:
Testing the UTAUT model. Information & management. 48(1). pp.1-8.
Mumtaz, H., Simonelli, S. and Surico, P., 2011. International comovements, business cycle and
inflation: A historical perspective. Review of Economic Dynamics. 14(1). pp.176-198.
Rockstuhl, T., and et. al., 2011. Beyond general intelligence (IQ) and emotional intelligence
(EQ): The role of cultural intelligence (CQ) on cross‐border leadership effectiveness in a
globalized world. Journal of Social Issues. 67(4). pp.825-840.
Shenkar, O., 2012. Beyond cultural distance: Switching to a friction lens in the study of cultural
differences. Journal of International Business Studies. 43(1). pp.12-17.
Welch, C., and et. al., 2011. Theorising from case studies: Towards a pluralist future for
international business research. Journal of International Business Studies. 42(5). pp.740-
762.
Online
What Does it Mean to Study International Business?. 2017. [Online]. Available through:
<http://www.worldwidelearn.com/online-education-guide/business/international-
business-major.htm>. [Accessed on 24st August 2017].
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