International Business Expansion Strategies

This assignment delves into the world of international business expansion, highlighting crucial strategies for companies seeking to tap into global markets. From market research and cultural awareness to navigating language barriers and complying with local laws, students will gain a comprehensive understanding of the complexities involved in international trade. By examining real-world examples and theoretical frameworks, learners will develop a nuanced perspective on the opportunities and challenges that come with expanding business operations abroad.

INTERNATIONAL
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Explain the international business environment in Pizza Hut...........................................1
P2 Describe the mechanisms that regulate international trade...............................................2
P3 How the environment and culture of another country affects international business.......3
P4 Describe how the monetary environment affects businesses that operate internationally 4
P5 Identify why businesses operate internationally...............................................................5
P6 Explain the business strategies used by a business operating internationally...................5
CONCLUSION................................................................................................................................7
REFERENECS................................................................................................................................8
.........................................................................................................................................................8

INTRODUCTION
International Business conducts business transactions all over the world. These
transactions include the transfer of goods, services, technology, managerial knowledge, and
capital to other countries (Astrachan, 2010). International business involves exports and imports.
International Business is also known, called or referred as a Global Business or an International
Marketing. An international business has many options for doing business, it includes exporting
goods and services, Giving license to produce goods in the host country, Starting a joint venture
with a company, Opening a branch for producing & distributing goods in the host country,
Providing managerial services to companies in the host country etc. This project is based on
Pizza hut which deals in fast food restaurant chain. This assignment will explain about
international business environment, different types of mechanisms that regulates that trade which
is operating their business at global level. It will also define that how environment and culture of
another country affects enterprise operating internationally.
TASK 1
P1 Explain the international business environment in Pizza Hut
The main nature of the business Pizza hut is food and drink. Pizza hut is known for
selling wide range of pizza ranging from sizes of 9inches to 16inches. The business is known for
delicious pizza, therefore pizza hut specialise in Pizza, and the company sells pizza more often
than any other products. Other than pizza they also sell sides, desserts and drinks. The products
Pizza hut uses are Italian – American cuisine, pizza, pasta and wings.
Pizza hut provide good service to their customers by excellent employees and the Food
compliments the service of pizza hut which makes them the best Pizza restaurant in the world.
Pizza Hut headquarters are based in Plano, Texas, USA. Pizza Hut operates in more than 94
countries internationally (Birkinshaw, Brannen and Tung, 2011).
Running a business is a difficult task for the management team, as well as, the owners.
The managers and owners must face the challenges and the risks involved in managing business,
especially if it spans internationally. Pizza is one of the most popular food sin the world. Almost
every people in this world, at some point in their lives, have tasted Pizza. Pizza marginalised the
social status of the people, from class A to E individual seat Pizza. Therefore, the demand for the
food is high and businesses catering to this market have emerged over the past years. One of the
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most popular Pizza parlours in the world today is the Pizza Hut. The company is one of the
oldest chains of restaurant sin the industry today, having been in the food industry for almost 50
years. Pizza Hut continues to flourish in the business, adding more chains in every part of this
world. This paper describes the appropriate tools and techniques in the strategic analysis in order
to examine the current trends and issues in the business environment of Pizza Hut. In addition, at
the beginning of this paper a brief history of Pizza Hut will be provided. In the strategic analysis
of Pizza Hut different methods will be used. For the analysis of the impact of the external
environment a PEST analysis will be used, in determining the mobility barriers and the strategic
space, strat6egic group analysis will be utilised. Moreover, for the determination of the
competitive advantage of Pizza Hut,Porters Five Forces Analysis will be used and competitor
analysis will be used for the determination of the vulnerabilities of the competitors in order to
assess the opportunities and threats in the industry
P2 Describe the mechanisms that regulate international trade
There are a number of factors which can encourage or restrict international trade such as:
free trade, barriers to trade, embargoes, quotas, tariffs and economic blocs such as the EU
(European Union) or WTO (World Trade Organisation).
Free Trade Free trade is unrestricted trade and sales of goods and/or services between
countries without the restrictions of quotas or tariffs. Free trade allows countries to focus on
maximizing their economic output and income growth for the people of their country. A free
trade zone has been set up so companies such as Pizza Hut can set up their manufacturing
factories in areas where they will not have to pay tax. . Communist countries such as Cuba and
North Korea will not allow free trade between different countries due to different governing
beliefs and how each government is run (Cantwell, Dunning and Lundan, 2010). In some Middle
Eastern countries, they believe that Westernization should not be encouraged and that by
rejecting Americanization and commercialization then they are keeping their cultural identity.
Political instability has also caused some countries to not engage in free trade as no major
political party has been established to make rules on free trade.
Barriers to Trade- Some countries have taken steps to give barriers to stop free trade
concerning their country through:
Protectionism: Protectionism is the practice of blocking a country’s domestic industries
from foreign competition by introducing taxing imports. In Malaysia, they have introduced a
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high tax on importing foreign cars, this means they could introduce a high tax on Pizza Hut
bringing in any products to trade with other countries who do not feel free trade is useful or
needed.
Quotas- Quotas are the most common form of importing and exporting restrictions as
they limit the amount of products which may be imported or exported in a time frame set by the
country imposing the quota, which means that if Pizza Hut were to export or import items, they
would only be allowed to import or export a certain amount of products within a time frame,
otherwise they may be blocked from importing or exporting products fully if they do not comply.
P3 How the environment and culture of another country affects international business
The Impact of Culture on International Business
Doing business on the international plane presents many challenges because of a variety of
factors which differ from one market to the other. These differences are basically informed by
the environment of the host country, which is often times different from that at home. One of the
environmental factors that present such a challenge is culture. Culture can be defined as complex
construct that embodies a people's knowledge, morals, art, beliefs, customs, laws and other
capabilities gathered by a community over time (Clifton, 2004). The culture of the host country
strongly impacts on the performance of a firm that engages in international business. Notable
aspects of culture central to the conduct of international business include the social structure,
religion, language and education. G4S, a company that has established itself in international
business has had its fair share of challenges in this area.
Social structure has to do with how society is socially organized. It could be looked at from the
individual-group dimension, or from the social stratification dimension. Some societies consider
an individual the pillar of social organization (Emerson, 2007). This is the scenario G4S
encountered when it entered the American and most Western markets. The challenge here was
how to instill a sense of teamwork among employees. It was an uphill task for managers who had
been socialized to believe in the superiority of teamwork, as individuals compete against each
other for results. On the Japanese market however, the firm found that emphasis was on group,
rather than individual performance. Though this is said to be the driving force behind the
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company's success in Japan, it is vilified for imbedding creativity, and is touted as a stumbling
block to dynamism. This, indeed, is a challenge the firm has had to deal with.
Social stratification has to do with placing members of society in certain classes. There are those
in the lower, middle and upper classes. Many times, this is borne out of one's family background,
income or occupation. Those from the lower class only hope to move from that class to the upper
one through a process called social mobility, which is in most cases done through education and
job opportunities. When opportunities for mobility are suffocated, there is likely to be conflict
between the classes; and in the job situation, between management and employees. Some
societies have room for social mobility, while others do not. A country like Britain has less social
mobility (Hill & Jain, 2008, p. 66, 67). As a result, there is always simmering tension between
management and workers, which the firm has had to deal with from time to time. When
industrial disputes become frequent, the firm finds doing business in the country quite expensive.
Such a problem is not common in America, where social mobility is easy.
P4 Describe how the monetary environment affects businesses that operate internationally
Monetary policy consists of the actions of a central bank, currency board or other
regulatory committee that determine the size and rate of growth of the money supply, which in
turn affects interest rates (Carroll and Shabana, 2010). The Federal Reserve is in charge of the
United States' monetary policy.
Pizza Hut is a well-known fast food chain across the world, with restaurants serving food
in over 120 countries. It owns 22% of the market share, globally, which is the second biggest
ownership in the worldwide section. 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 offers 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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P5 Identify why businesses operate internationally
International businesses such as Pizza Hut will decide to expand internationally if they
have the capital or investment to do so. If it’s an opportunity or a chance to expand
internationally, Majority of the international business will expand further into different market. If
Pizza Hut does expand and emerge into a new market they will have access to a different and a
new market area where they will trade their products and services of the people in the markets.
There are different markets ranging from different locations. What makes the market
between each other are the people buying power, culture, the amount of purchase, population,
wealth, location and the GDP. All these factors will make up a market and this is what
businesses like Pizza Hut look for before entering the market and trading. Another reason why
international businesses like Pizza Hut decide to go international is because of cheaper
manufacturing location. Cheaper manufacturing location means an area with labour that is
charged less to perform a job and produce maximum outputs of production and manufacturing.
There are various countries who have cheaper manufacturing such as Brazil, China,
Taiwan, India, Pakistan, Nepal and many other countries. These types of countries are good for
manufacturing and this will be beneficial for Pizza Hut as they can locate their manufacturing
assets in those countries and produce maximum products at lower costs.
Another factor which influences international businesses to expand internationally and
into different market is due to economies of scale. This factor is beneficial for Pizza Hut because
they’re expanding into a different market and this will increase the product rate and decrease the
prices per unit which will make it affordable and efficient for Pizza Hut to produce more and sell
more at a decent price which in result will be products (De Wit and Meyer, 2010).
P6 Explain the business strategies used by a business operating internationally
Strategies for Expanding into International Markets
A business analysing the options suggest by the Ansoff Matrix might well be tempted to
focus on the bottom-left quadrant (market development) and try to enter international markets as
part of a growth strategy.
Selling into international markets is increasingly attractive for UK businesses. For example
because of:
Stronger economic growth in emerging economies such as China, India, Brazil and Russia
(BRICs) and Malaysia, Indonesia, Nigeria & Turkey (MINT)
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Market saturation and maturity (slow or declining sales) in domestic markets
Easier to reach international customers using e-commerce
Greater government support for businesses wishing to expand overseas
The main methods of investing in international markets are:
Exporting direct to international customers
The UK business takes orders from international customers and ships them to the customer
destination
Selling via overseas agents or distributors
A distribution or agency contract is made with one or more intermediaries
Distributors & agents may buy stock to service local demand
The customer is owned by the distributor or agent
Opening an operation overseas
Involves physically setting up one or more business locations in the target markets
Initially may just be a sales office – potentially leading onto production facilities (depends on
product)
Joint venture or buying a business overseas
The business acquires or invests in an existing business that operates in the target market
Whatever method is used, a business looking at international expansion needs to consider some
specific risk factors:
Cultural differences: a business needs to understand local cultural influences in order to sell its
products effectively. For example, a product may be viewed as a basic commodity at home, but
not in the target overseas market. The sales and marketing approach will need to reflect this.
Language issues: although the common business language worldwide is now English, there
could still be language issues. Can the business market its product effectively in the local
language? Will it have access to professional translators and marketing agencies?
Legislation: legislation varies widely in overseas markets and will affect how to sell into them. A
business must make sure it adheres to local laws. It will also need to consider how to find and
select partners in overseas countries, as well as how to investigate the freight and
communications options available.
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CONCLUSION
From the above report, it has been said that mostly company does international business
because of various reasons like for achieving large market share, increasing revenue etc. But
while carry out activities at internal level, there are various factors which influences its
operations like political, social etc. It has also stated about business strategies which aids the
company in achieving desired result or outcome.
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REFERENECS
Books and Journals
Astrachan, J. H., 2010. Strategy in family business: Toward a multidimensional research agenda.
Journal of Family Business Strategy. 1(1). pp.6-14.
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.
Cantwell, J., Dunning, J. H. and Lundan, S.M., 2010. An evolutionary approach to
understanding international business activity: The co-evolution of MNEs and the
institutional environment. Journal of International Business Studies. 41(4). pp.567-586.
Carroll, A. B. and Shabana, K. M., 2010. The business case for corporate social responsibility: A
review of concepts, research and practice. International journal of management reviews.
12(1). pp.85-105.
Casadesus-Masanell, R. and Ricart, J. E., 2010. From strategy to business models and onto
tactics.Long range planning. 43(2). pp.195-215.
De Wit, B. and Meyer, R., 2010. Strategy: Process, content, context. Cengage Learning EMEA.
Doz, Y., 2011. Qualitative research for international business. Journal of International Business
Studies. 42(5). pp.582-590.
Foss, N. J. and Knudsen, C. eds., 2013. Towards a competence theory of the firm (Vol. 2).
Routledge.
Grant, R. M., 2016. Contemporary Strategy Analysis Text Only. John Wiley & Sons.
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