International Business: Market Selection and Entry Strategies for Unicorn Grocery

This report discusses the market selection and entry strategies for Unicorn Grocery, a local grocery store in the UK, to expand internationally. It includes a critical analysis of India as the recommended country, relevant academic theories/models related to the process of international market selection and entry strategies, and identifying barriers that will be faced as the organisation expands internationally.

INTERNATIONAL
BUSINESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
An overview of the organisation and rationale for going international.......................................3
Critically discussing which country they should enter................................................................4
Relevant academic theories/models related to the process of international market selection and
entry strategies.............................................................................................................................6
Identifying Barriers that will be faced as the organisation expands internationally....................8
Critically evaluating a relevant implementation approach for the internationalisation process
for the specified target market...................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business internationalisation can be said to be the expanding of business of an organisation in
the markets of foreign countries and is making the products or services of the organisation
available in the international markets. Taking a business to international markets helps the
business to attract new potential customers and the business to grow in various different
markets. This assignment is based on Unicorn Grocery, which is a local grocery store in the
UK. This report will outline the overview of the organisation and the rationale as in the reasons
and importance of going international. Further, a country that should be chosen by the
organisation will be recommended and a critical analysis of the recommended country will be
done. The report will also highlight various theories and models that can be used for
international market selection and entry strategies and barriers in expanding internationally will
also be outlined. And a critical evaluation of a relevant strategy that can be applied by the
organisation for entering in the specified market will be done.
MAIN BODY
An overview of the organisation and rationale for going international
Unicorn Grocery is and interdependent store is one of the largest wholefood grocery store in
the UK and was founded around 26 years ago. It is a workers co-op and is run democratically
by the members or owners. The co-operative store has a flat management structure as every
member/owner has equal rights of participation and equal rate of pay. The store is located in
Chorlton-cum-Hardy, Manchester, England. The business focuses on fair-trade and local
sourcing and trades mostly in organic stuff. It sells variety of food and drinks which are fresh,
dried and processed. It also has general grocery, household and bodycare items(Overview of
the company, 2022). It has also won BBC Food and Farming Awards as the ‘Best Food
Retailer’.
The main business model of Unicorn Grocery is to often purchase in bulk and mainly through
the manufacturers directly, process it on-site to add value to maintain competitive margins and

prices which enables the organisation to match supermarket prices and compete with them. Its
core principle is of co-operative organisation where there are no outside shareholders or
owners and the employees are the members who receive the generated profits and benefits.
As expanding internationally has been a very prominent goal of most of the businesses. It is
because expanding in a foreign market and growing internationally has a lot of benefits for the
businesses(Dabić and et.al., 2020). The company can grow and earn better profits by
expanding in the new markets. As it gives competition to the supermarkets, it can surely attract
more customers from the foreign markets as well. The company can have a better saturated
market by expanding in the markets outside UK and generate more revenues. The company can
have overall organisational growth as it can procure better talents and resources from the
foreign market, which can improve the quality of products and services of the organisation. By
diversifying the market, the company does not have to depend solely on one country and can
compete at international level and get a gain in its sales which will ultimately improve the
profits of the organisation(Lahiri, Mukherjee and Peng, 2020). Going international also
improves the company’s goodwill and foreign investment opportunities.
Critically discussing which country they should enter.
They should enter India as it is one of the most rapidly growing countries in the world that has
opened up new resources for both local and international brands. It also has the second-largest
population in the world which can be beneficial for the company to boost their sales as more
number of people means more sales.
A critical analysis of India can be done using the PESTLE analysis in which the Political,
Economical, Social or Socio-Cultural, Technological, Legal and Environmental dynamics of
the country are studied to understand the various factors that could affect the organisations and
businesses working in the country. These factors also determine the scope of profitability and
growth in the country.
 Political Factors
Political stability of a country the business operates in play a great role in its
profitability and growth. The political factors include the government rules and
regulations including the trade policy, corruption, income tax, labor tax, and all other
taxes impact the businesses(Pestle analysis of India, 2022). The political situation of

India has been improving through the last few years. The country is the largest
democracy in the world and also offers great opportunities for businesses to thrive. The
government has made several efforts for the businesses to grow independently by
reducing government interventions and interferences.
 Economical Factors
The economic factors help the company to set their goals and determine the
profitability of businesses. These include employment and unemployment rate,
inflation, purchasing power of the consumers, economic growth of the country, etc. The
GDP is increasing which promises growth opportunities in the country. After the
formation of FIBP, the industrial policies in India have become liberal and ensured
increase in foreign investments that has boosted the economy.
 Socio-cultural Factors
Factors that affect the consumer attitude, their values, beliefs, lifestyle, etc. and the
social norms, population growth, traditions, health awareness, career attitude, etc. are
the social and cultural factors that affect the businesses of the country(Pestle analysis of
India, 2021). India is called the land of diversity and the companies must take into
account the local culture, acceptability and beliefs of the people to smoothly run their
business. India has majority of working capital which facilitates the companies to get
affordable employees. The massive domestic market is a major reason the company
should invest in the country.
 Technological Factors
Technological advancement in terms of innovation, technological awareness,
automation has major impacts on the businesses of the country. Technology influences
product development and cost of production, hence advance technology can help the
companies to produce effectively. India’s technology is rapidly growing and has a
robust IT sector. Frequent investments in the tech industry by foreign companies play
positive role for companies to expand in the country.
 Legal Factors
The various copyright laws, advertising laws, consumer rights, employee welfare laws,
discrimination laws, etc. have been made to boost the international investment and also
the flexible regulations framed for foreign trade offer great growth opportunities for the

companies to grow in India. There have been some recent changes in laws regarding
recycling, discrimination, employability that the companies have to consider.
 Environmental Factors
The environmental awareness is continuously growing and the consumers prefer
products and processes that are more eco friendly and do not damage the environment.
The scarcity of resources, increased carbon footprint, pollution, climate change, etc. are
the various factors that the companies should take into account while planning out their
processes and production with an aim to reduce wastage, increase efficiency so as to
work in an environment friendly way. As Unicorn groceries have organic products, the
consumers will definitely prefer their products and the company will surely succeed if it
keeps up with their environmental friendly processes. As the natural beauty of the
country attracts many tourists, it boosts the saes of the companies here which works in
the favour of the organisation.
Relevant academic theories/models related to the process of international market selection and
entry strategies
Some of the most popular Theories/models of international market selection are -
 Uppsala internationalisation model – The main assumption of this model is that there is
a lack of knowledge of the foreign market which can hamper internationalisation.
Hence, it suggests the firms to first establish itself completely in the domestic market
and then increase its resources and commitment in the desired foreign country in stages,
first obtaining sufficient knowledge and understanding of the conditions of foreign
market and then moving to the next stage(Arvidsson and Arvidsson, 2019).

 Transactional cost theory – This theory majorly focuses on the cost aspect and how
these costs can affect the company’s choice of market or entry strategy in the desired
foreign market. The firms try to minimise their costs during all operations and
decisions. This involves all the cost incurred right from the beginning of a specific
transaction to the end of it(Bužavaitė, Ščeulovs and Korsakienė, 2019). These include
the explicit as well implicit costs incurred to enter the foreign market.
 Network model – The network model or approach of internationalisation focuses on the
importance of maintain relationships with the customers, suppliers and market that can
be helpful for the company to reach foreign market. This model focuses on social
exchange and behaviour of the firms in interpersonal and inter-organisational
relationships. Networking can help the companies to complete internationalisation
faster with the help of resources and expertise of their network partners(Rubino, Vitolla
and Garzoni, 2018). The relationships are generally bonded with technical, legal,
economical and even personal ties. The market knowledge can be obtained through
networking which will help to bridge the distance between all the parties involved like
customers, distributors, suppliers, regulatory and public agencies, industry and also the
market actors.
Market Entry Strategy
The methods that companies use to plan, produce, distribute and deliver the goods and services
in the foreign markets are called market entry strategies. The strategy that the company
chooses to enter into the international market depends on the type of product they sell, the
country they plan to enter, value of the product, shipping procedures, etc. The strategy is
chooses affects the cost and level of the company’s control over distribution and management.
Marketing, sourcing and control are the basic factors that affect the company’s entry strategy in
the international market(Dinu, 2018). As it is a small company, it cannot invest too much in
expanding and hence, can use franchising or outsourcing strategies to enter the new foreign
market for the initial period. Franchising is when the company (franchisor) gives rights to
another party (franchisee) to use the company’s trademark and sell products and services under
the same name of the company in exchange of the fees and royalties paid by the franchisee. It
has lower risks and as the franchisee is a local in the targeted market, the company can benefit

from his knowledge of the market. Another method can be through outsourcing, in which an
agreement is made between the company and a company from the targeted market. This
agreement states that the company with whom the agreement has been made will handle the
international sale of the product (in the target market) on behalf of the company who is
expanding. This helps the companies to enter a new market with reduced cost and also
overcome several barriers to entry. This also enables in supporting market expansion services
and better understanding of the local market requirements(Onyusheva, 2020). This also reduces
the cost and requirements of resources as they do not need to invest in new infrastructure or
other set ups.
Identifying Barriers that will be faced as the organisation expands internationally.
Not all countries have the same laws, regulations and even market. The PESTLE analysis is
done to analyse the various dynamics in the country that can have direct or indirect impacts on
the existing businesses as well as the new ones. The entry of the firm in the country’s market,
its working and operations are all affected by these factors like political, economical, social,
technological, legal and environmental that can play a major role in the growth and success rate
of the business. Apart from the dynamics in the new country, there are many other barriers that
the company might face while expanding internationally(Mendy, Rahman and Bal 2020).
These are generally the external barriers to the organisation, and there are some internal
challenges that are the issues related to the resources and capabilities of the organisation. Some
of the internal barriers are –
 Information barriers which are the issues related to the identification of the problems
and selection of a suitable market because of inadequate information and knowledge
about the international market. Obstacles like identifying foreign business opportunities
or analysing foreign markets arise due to information barriers.
 Functional barriers, which are the ineffective and inadequate human resources, funds
and production inefficiency of the company. Marketing barriers
 Marketing barriers, which include the various aspects of the organisation in the foreign
market like distribution and promotional activities, product, logistics, pricing, etc.
The barriers are generally present at almost all the stages of the internationalisation process and
their intensity depends on the level of the internationalisation that the firm is planning. These
are majorly classified into the following categories –

 Financial Barriers
The limitations and scarcity of resources, both physical and financial act as a great
barrier to international expansion of an organisation. There are chances of them having
limited access to key infrastructure and the essential resources. As the cost of operating
in a foreign country might be higher and the availability of credit and capital is
uncertain, the company might face financial issues as generally local businesses and
SMEs do not have large funds and generally have limited resources and also have
limited access to financial assistance like loans, etc.
 Market-based Barriers
The companies cannot always have complete knowledge of the foreign market and the
gap of information about these markets is an important challenge that the companies
must deal with(Mueller‐Using, Urban and Wedemeier, 2020). The market-based
barriers include the government regulations, cultural differences, tariff and non-tariff
barriers. Also the social and cultural barriers have an impact on the company’s potential
market and success.
 Firm- specific Barriers
As SMEs and local businesses generally have limited financial capital and also human
and managerial resource, accessibility to capital, research and development, training,
resources, etc. become firm-specific barriers to the expansion. These generally have
difficulty obtaining the required financial capital that it needs to become competitive,
survive and grow in the market.
 Managerial Barriers
The local businesses or SMEs generally have limited management knowledge as
managing a small business in home country and expanding it internationally are two
separate things. Lack of expansion and international skills and experience, partnership
difficulties in new countries, etc. come out as big managerial barriers for the
international expansion.
 Industry specific Barriers
Trade opening leads to change in the market structure as entry of new firms leads to
increases the competition and create fluctuations in the demand and prices. Use of

technology, knowledge of IT and the level of investment required, etc. ca also be a kind
of industry specific barriers for the firms to expand.
Critically evaluating a relevant implementation approach for the internationalisation process for
the specified target market.
The company’s success in the international market depends on the implementation of it
internationalisation process. Firstly, various approaches, theories and models for analysis of
different foreign markets and selecting the best suited country should be selected. The
country’s analysis can be done using PESTLE analysis to understand the dynamics of the
country and its market(Castagna and et.al., 2020). Then various modes of entry like
franchising, outsourcing, licensing, joint ventures, etc. and other necessary aspects must be
evaluated to choose how the company wants to enter into the market of the foreign country.
Then the company has to analyse various barriers that can come in the way of the company’s
entry into the foreign market and can hamper the company’s growth and success. As there are
barriers at every stage of the internationalisation process, corrective ways to deal with them
should be identified. The various approaches and models of internationalisation like Uppsala
model, networking model, transactional cost approach etc. should be studied in detail to
understand the best suited model that can be used to expand(Relevant approach for
internationalisation, 2022). All the models, theories and modes of entry should be selected
based on the type of the product the company deals in, the level of expansion it wants and the
level of control and authority it wants in the expanded organisation, the cost it can incur and
other such factors(Hult and et.al., 2018).
The transactional cost is the cost incurred for carrying out economic trading and involves all
the cost incurred from beginning to end of the transaction. The transaction cost approach or
theory helps to signify the various costs that the company will have to incur in the process of
establishing in a new foreign market during internationalisation. With the help of this theory,
firms can try to minimise their costs or operations and decisions. This helps the firms to decide
how it wants to enter the foreign market either by investing all their assets or they should
consider collaboration with the external partners to avoid the additional infrastructure
costs(Matarazzo, Penco and Profumo, 2020). All these will help the company to make all the
necessary decisions regarding their internationalisation process.

CONCLUSION
This report has been made in context to the Unicorn Grocery, which is one of the largest
independent wholefood store that provides grocery, bodycare, beauty items, etc. It is a co-
operative organisation in the UK. A brief review of the organisation and the rationale to go
international for the organisation was outline in this report. The reasons and benefits for
expanding its business internationally has been stated in the rationale. Then, a foreign country
that they can expand to for internationalisation has been recommended. For the stated
organisation, India has been suggested to expand its business in. Further, various theories or
models like Networking model, Uppsala international model related to the process of
internationalisation and market entry strategies have been demonstrated. The report also
highlighted the various barriers that the organisation faces while expanding internationally.
Lastly, implementation of a relevant approach for the internationalisation process for the
specified target market is critically evaluated.

REFERENCES
Books and Journals
Dabić, M. and et.al., 2020. Pathways of SME internationalization: A bibliometric and
systematic review. Small Business Economics. 55(3). pp.705-725.
Lahiri, S., Mukherjee, D. and Peng, M. W., 2020. Behind the internationalization of family
SMEs: A strategy tripod synthesis. Global Strategy Journal. 10(4). pp.813-838.
Hult, G. T. M. and et.al., 2018. Addressing endogeneity in international marketing applications
of partial least squares structural equation modeling. Journal of International
Marketing. 26(3). pp.1-21.
Matarazzo, M., Penco, L. and Profumo, G., 2020. How is digital transformation changing
business models and internationalisation in Made in Italy SMEs?. Sinergie Italian
Journal of Management. 38(3). pp.89-107.
Arvidsson, H. and Arvidsson, R., 2019. The Uppsala Model of internationalisation and
beyond. International Journal of Finance and Administration. 42(2). pp.221-239.
Bužavaitė, M., Ščeulovs, D. and Korsakienė, R., 2019. Theoretical approach to the
internationalization of SMEs: Future research prospects based on bibliometric
analysis. Entrepreneurship and Sustainability Issues. 6(3). p.1497.
Rubino, M., Vitolla, F. and Garzoni, A., 2018. Network contract and internationalization:
evidence from Italian firms. Management Decision. 57(11). pp.2911-2939.
Dinu, A. M., 2018. International market entry strategies. Academic Journal of Economic
Studies. 4(2). pp.20-25.
Onyusheva, I. V., 2020. Exploring Foreign Market Entry Strategies as a Way of International
Business Expansion. Вестник университета «Туран». (1). pp.9-14.
Mendy, J., Rahman, M. and Bal, P. M., 2020. Using the “best‐fit” approach to investigate the
effects of politico‐economic and social barriers on SMEs' internationalization in an
emerging country context: Implications and future directions. Thunderbird
international business review. 62(2). pp.199-211.
Mueller‐Using, S., Urban, W. and Wedemeier, J., 2020. Internationalization of SMEs in the
Baltic Sea Region: Barriers of cross‐national collaboration considering regional
innovation strategies for smart specialization. Growth and Change. 51(4). pp.1471-
1490.
Castagna, F. and et.al., 2020. Assessing SMEs’ Internationalisation Strategies in
Action. Applied Sciences. 10(14). p.4743.
Online
Overview of the company. 2022. Available through:< https://www.sustainweb.org/good-food-
enterprises/unicorn_grocery/>
Pestle analysis of India. 2022. Available through:< https://www.edrawmax.com/article/india-
pestel-analysis.html>
Pestle analysis of India. 2021. Available through:< https://www.mbaknol.com/investment-
management/pestel-analysis-of-indian-capital-market/>

Relevant approach for internationalisation. 2022. Available through:<
https://link.springer.com/chapter/10.1007/978-1-4612-2850-9_6?noAccess=true >