International Business - Sample Assignment

International Business report
- By : Maple field Milk

Executive summary
The report will highlight small sized dairy company Maple field milk which is going to
enter the Chinese market. They are going to deal in UHT milk and the targeted consumer will be
the children aged between 3-11. Study will also present the factors such as political, legal,
economical which will drive and impact upon the working of organization. It will also present
various trade barriers like tax policy, inflation rate that might affect Maple field milk in entering
the new market. Social and cultural issues will also be considered in the report that can hamper
the growth of firm.

Table of Contents
Executive summary..........................................................................................................................2
INTRODUCTION...........................................................................................................................2
MAIN BODY ..................................................................................................................................2
Business drivers behind Maple field milk’ expansion ...............................................................2
Trade Barriers in China...............................................................................................................5
Ethical and social issues need to be considered..........................................................................7
Cultural preferences to be Considered by Maple field milk ......................................................8
Expansion Methods to be chosen by company ..........................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
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INTRODUCTION
Maple field milk is a community owned micro sized small-scale dairy farming. They are
engaged in providing high quality milk and cream. The organization has been developed with the
aim of looking after the land and nurturing the cows within the alternative system. Main
objective of Maple field milk is to enhance the viability of small-scale dairy farming,
encouraging new entrants in the field of dairy farming. The long-term vision of the company is
to have 4 satellite dairy businesses, providing the training on micro dairying and increasing the
sales of milk sold in local areas (Bisson and Diner, 2017).
Company has the key objective to enter the Chinese market in which they are going to
provide UHT milk from the children aged between 3-11 years. Study will lay emphasis on the
significant business drivers for internationalism. It will also highlight the trade barriers that
Maple field milk can face while extending their business in Chinese market. Report also focuses
on ethical and social issues that might be faced by organization while expanding their
organization. Assessment will also show the culture preferences that needs to be considered by
business. It will also lay emphasis on the extension methods that can be used by Maple field
milk.
MAIN BODY
Business drivers behind Maple field milk’ expansion
Figure 1: Pestle analysis of Maple field milk
(Source: Pestle analysis,2016)
There are various macro environmental factors that are responsible for expansion of business of
Maple field milk. These includes the following:
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11 Political factors: These factors include laws, rules and regulations implemented by
Government. Government policies, laws and rules regarding the agricultural products will
affect the farmer’s decision to keep livestock and extract milk out of them relative to
other livestock. Maple field is going to expand their product UHT milk in Chinese market
before analysing the trade, regulations and tariffs relate to food, beverages and dairy
products. This will assist company in easily entering the market and will also support
them in gaining competitive advantage. China has also implemented new milk
regulations back in the year 2015. This can also affect Maple field milk in entering the
Chinese market. The New measures adopted by China government aimed at addressing
widespread counterfeiting and adulteration by improving product traceability, particularly
for infant formulas. Company needs to make sure that the UHT Milk supplied for the
children aged between 3-11 needs to meet out the food safety and quality objectives.
Addressing to all these factors can support Maple field milk in expanding their market in
Chinese market. Chinese government has taken several measures, including cracking
down on illegal producers, enforcing new regulations to better ensure the safety and
quality of domestic dairy products11 Economic factors: These factors include inflation rate, savings rate, foreign exchange
rate, labor rate that can affect the expansion of Maple field milk. Before launching the
new product, UHT milk company needs to firmly analyze these factors. This can assist
firm in growing. The current market scenario of Chinese market shows that the labour
rate in the country are currently low. So, Maple field milk can seek it as a golden
opportunity to grow their business over there. This aspect can support firm in saving their
huge operational cost and increasing their profitability. It has also been analyzed that
China’s self-sufficiency in milk production has been declining rapidly in the past years.
So Chinese government is providing desire support domestic dairy firms in a globalizing
sector. Encouraging participation of smallholders in milk production has been a
component of national and regional policies of Chinese government to promote regional
development and reduce poverty11 Social factors: Society’s culture and way of doing things impact the culture of an
organization in an environment. These factors include the value, belief, consumer attitude
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and thoughts that needs to be analysed by Maple field milk before entering into Chinese
market for their product UHT milk. Firm needs to make sure that for expanding their
market in China, they do not harm the sentiments and beliefs of general people living
over there. This will assist firm in entering the new market easily and will also help in
gaining competitive advantage. Shared beliefs and attitudes of the population play a great
role in how marketers at Maple field milk will understand the customers of a given
market. Company is going target the children aged between 3-11, in which they have
responsibility that the UHT milk which they are going to deliver is of high quality and is
free from various type of bacteria such as Micrococci, Bacilli, Staphyloccoci,
Lactobacilli, Pseudomonas, and coliforms which are often presented in Ultra heat
treatment milk. Another factor which will drive the sales of UHT milk in Chinese market
is that milk is rich in calcium, protein and several minerals which would be liked by
parents of children aged between 3-11 as they are more health conscious.11 Technological factors: China is one of the most technology advanced company. For
expanding market over there Maple field milk company needs to make use of advancing
techniques. With the help of advancing techniques, the dairy industrialists is able to sale
the dairy products across wide areas in the world (Forney and Häberli, 2016). This will
also support Maple field milk company to reach the targeted sector of consumers. The
use of new and innovative techniques to produce milk will assist the company in reducing
the cost and enhancing their operational profit. Also, company is benefited by the
technological aspects as UHT milk can be preserved under constant temperature for a
fairly long period of time, thus allowing consumers to buy several boxes and thus avoid
the inconvenience of purchasing milk daily. Also, Maple field milk for increasing the
sales of UHT can make use of advance promotional techniques such as advertising.
Advertising will help company in convincing consumers that UHT milk is more
nutritious than pasteurized milk. Company can gain competitive advantage by making
use of advancing technology.11 Legal factors: These factors include the various laws and rules which has been
implemented by Chinese government. Maple field milk to increase their share in Chinese
market have to adhere to all the rules given by the government. Company will be
benefited by doing business in China as The financing of local governments in China is
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heavily reliant on local taxation. This dependency has prompted local governments to
actively develop and attract outside businesses to local regions through tax policies
(Farmer, Singh and Maharaj, 2015). In the coastal regions in South China, due to their
existing industrial base, local governments have initiated policies on taxation in town and
village enterprises. This will support Maple field in reducing their expenses which is been
related to taxation which will directly increase their profit share. Also the Chinese
government has implemented the laws related to health and safety of consumers that are
consuming dairy products. Special focus has been laid on infants. Maple field milk will
be benefited by expanding their market in China by delivering UHT milk over there as it
has been analysed that Chinese consumers are well satisfied with the foreign milk brand.
The only concern they have is that the company follows all rules and regulations related
to health and safety of them. The product supplied must be hygienic. Also it has been
expected that milk production will further grow in Country.11 Environmental factor: These factors can also drive the expansion which is been taken
by Maple field milk. Company before entering the Chinese market needs to follow the
environment regulations given by Chinese government. This will support firm in
increasing the sale of their new products UHT milk where the targeted consumer is
children between the age of 3-11. In most parts of China, the small-scale dairy farmers
also plant maize, which is used to feed dairy cows, thus reducing the need to buy feed.
Maple field milk also make use of Fermented dairy cow manure that can be used as an
organic fertilizer for growing the maize, enhancing yields at a low cost as well as
reducing environmental pollution. This will support company in establishing their market
in the new area (Gbadebo, 2015). Also, firm is engaged in doing CSR activity which has
been regulated by the Chinese government. This will support them in having positive
impact in the mind of consumers. Also following the environmental laws and rules can
assist company in making their brand image better in the new market. These factors are
the main drivers which can lay impact on the process of globalization for the dairy
industry.
Trade Barriers in China
There are several barriers in each and every market that prevents a business or
organisation to actively perform their business activities or trade. China trade barriers includes
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different imposed fees and restrictions that negatively affects trading by companies such as
Maple field milk. These barriers to trade can be defined as below -
1. Tariff Trade Barrier - A tariff is essentially a duty or tax imposed on a specific class of
exports or imports, Tariffs or taxes all around the world are increasingly being imposed
again against products from China, after they were mutually reduced earlier. IN the year
2016, the European Union declared its strategy for imposing a new range of tariffs in
Chinese imports, specifically within the solar and steel industry. Hence, any tax or tariff
needs to be researched and understood before deciding to import form china. In order to
enter into Chinese market UHT milk needs to be priced considering the tax imposed by
government of china on milk and dairy products as it can be a major barrier affecting the
sales of this product.
2. Anti-Dumping duties – There are many anti-dumping duties place presently against
china, it is a method allowed by the WTO as as a safeguard with respect to cheap imports
which are a danger to the local industry & is aimed at imported goods. Various nations
impose anti-dumping duties against China for example exporting stainless steel into EU
or India.
3. Subsidiaries as China Trade Barriers – These are the incentives for domestic
manufacturers to benefit from declined costs. This policy is a China trade barrier to
global trade since foreign organisation may not be able to compete the price wise in the
same marketplace (Gbadebo, 2015). The subsidies that the Chinese government gives out
to its own producers allow it to compete internationally in the basis of price. If a factory
is established in one of the many special economic zones, they are capable of getting
benefit from declined corporation tax & other be benefits including direct cash subsides,
VAT rebates and even discounted utility rates.
4. Exchange rate controls – Due to China intervening with Yuan exchange rate against the
dollar a global trade barrier is developed against Western nations. Since China effectively
props-up the exchange rate, there can be a variance within the price paid depending on
the currency exchange rate (Forney and Häberli, 2016). Another barrier to trade in China
is the self-imposed exchange rate controls. The nation has wide range of foreign
investment restrictions & the level of foreign direct investment in Chinese businesses is
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also restricted. Although, these restrictions are being lifted slowly and an increase in the
level of foreign direct investment can be seen year after year.
Maple field milk needs to consider all these trade barriers in order to successfully enter
into the Chinese market with their new product. Strategies such as low pricing, foreign
production etc, can assist the company to manage the cost as well as tariffs imposed on the
trading practices.
Ethical and social issues need to be considered
There are various ethical, social and cultural issues Maple field milk can face while
entering into Chinese market with its UHT milk. When organisations operate in their native
markets, most of their employees come from regions with a common culture. Their native market
customers share the share ethical and social standards of company management and staff to a
great level. When these organisations enter into a foreign market, maximum number of
customers come from a culture having different values and beliefs (Bisson and Diner, 2017).
China society is highly affected by the traditional values related to Confucianism that is
promoting a strict or bounded system of propriety and norms.
This demonstrate how an individual should act within a community, with hierarchy a central
theme. The various ethical and social issues Maple field milk needs to considered can be defined
as below -
 Cultural understanding – Maple field milk needs to have sensitivity to the Chinese culture
and the way it can affect its business in China. Hierarchy plays a significant role in
business culture within China with mangers and leaders being distinguished as compared
to western countries (Gramotina, 2018). As the country has a long history of being
exploited by foreign nations, it is of particular significance to show respect as a westerner
doing business in China. Giving gifts, acknowledging hierarchy, accepting invitations,
attending meetings, addressing people by their designation and showing authentic
involvement in the local culture are ways to show respect in China.
 Corruption – Corruption in China has certainly become a major issue as the communist
party of China's institutions, policies and norms have clashed with recent liberalization in
the market. Theft, Bribery Kickbacks and misspending of public funds cost around 3% of
GDP every (Ngo, 2018).
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 Discrimination – Discrimination against women within the organisation in China is a
most common issue or problem. Some women are seen in senior position in Chinese
organisations, demonstrating the masculine attitude of the Chinese culture. Sexual
discrimination at workplace in also a commonly observed with junior female employees
generally finding it challenging to say no to sexual advances and still maintaining their
jobs.
 Environmental degradation – Cities in China have grown so rapidly that the nation now
has more urban centres in comparison to most of the western countries (Farmer, Singh
and Maharaj, 2015). It is predicted that by the year 2020, China will have more than 400
cities with at least 25,000 middle class families and among those cities 50 will have more
than 1 million middle-class inhabitants. Due to such rapid growth, environment
degradation has become a critical issue for china.
Cultural preferences to be Considered by Maple field milk
Due to increasing globalisation of businesses, China has become one of the most
attractive market for foreign entrepreneurs and investors. Although, cultural differences present
significant barriers between Chinese and western partners. In order achieve success it is essential
to understand and respect China's culture and long history. The following are the key cultural
areas or elements Maple field needs to considered while entering into Chinese market -
1. Guanxi – China is a relationship-oriented society, Network and interaction or Gaunxi is
very important for any business. By developing Gaunxi, the dairy can minimize failures,
risks and setbacks effectively. Chinese give high preferences for dealing with individuals
they trust and know. Firstly, if a company has partnership with local businesses it is very
essential to build interpersonal relationship, before they start to work together (Sischo
and et.al., 2019). In addition to this, the relationship is not only among the partners but
also among the members of both the companies. The more a company interact with the
Chinese, their lives, hobbies & families the easier it will be to overcome problems or
issue in business.
2. Face – The concept of Face or Mianzi is essential for the purpose of interaction in
business. Face is the combination of pride, dignity and public reputation. A small mistake
can make Chinese lose face and it can offend them. The simplest method to cause
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someone to lose face is to insult the person, to treat him or her as an underlining when
official position in a company is higher or to criticize them in the individuals in front of
others. “Giving face” refers to show respect to people, doing things that enhance self-
pride and giving complements (Oukemeni and Muthee, 2018). It should be done with
honour and utmost sincerity, if this concept is carried in a proper way it can help an
individual to gain respect, loyalty and even a positive element in business negotiation.
Further, “Saying face” means to maintain a good self-image. Maple field can use these
cultural aspects to successfully enter into the Chinese market.
3. Meeting and Greetings – While meeting businessmen in China, foreigners should show
respect and sincerity. Handshaking should be very lightly along with exchanging of
business cards, preferably with English text on one side and Chinese on the other.
Chinese people take time to build relationship, they can take long meetings before any
tangible progress is made (Singh and Grant, 2017). These people are very much
interested in long term commitment which needs to be considered by Maple field milk.
4. Power distance index – China has a high-power distance index for example, members of
Chinese society consider that significant inequalities among individuals are acceptable.
People in this hierarchical society tend to accept formal authority and are less likely to
challenge their superiors in the organisation in comparison with the cultures where power
distance is low. Therefore, the company can consider this aspect to develop a positive and
trust worthy image among the locals.
Expansion Methods to be chosen by company
There are numerous method and strategies available for Maple field milk to enter into
Chinese market. Different methods have different level of assets and requirements needed for the
procedure and they also have a different level of resource commitment, control, risk and
flexibility. When an organisation or business is making their decisions about which entry
strategies to uses for entering into a foreign market there are many factors which are needed to
be considered, internal as well as external (Weary and Von Keyserlingk, 2017). The internal
factors include elements such as size of the company, that demonstrate resources and
international experience of the company. The nature of product and its physical features also
influence the decision of selecting the mode of entry into a new market. On the other hand,
external factors involve sociocultural distance between host and home country, growth of market
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and its size, intensity of competition etc. These factors also have a great impact on decision
related to entry mode. There are various strategies for internalisation an organisation can choose
from such as -
1. Join venture – A joint venture simple refers to a collaboration between two or more
companies to create a jointly owned business by making investment & sharing risk. This
method can be helpful for companies as local partners are very much aware of the market
conditions and local ways (Min and Wood, 2017). It also helps in minimising risks as
investment is shared among the partners which reduces pressure on the company.
2. Direct exporting – Another option available for Maple field Milk is to enter intro
Chinese market is direct exporting their UHT milk product. It means the company can
directly sell their products to the final customers or to an importer in China. The importer
would act as an extension for Maple (Gopal and et.al., 2015).
3. Resident sales representative – A resident sales representative is an individual who
takes care of the functions related to sales in the foreign market. This method has a bigger
customer commitment as compared to the domestic based sales representative, in which
the representative lives in the home country of the company.
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Illustration 1: Classification of Foreign market entry strategies

4. Sales and promotion - In this method, the organisation that wants to enter into a foreign
market would put up a production and sales subsidiary, which refers that the business
would also produce and have sales representatives in the target marketplace. This entry
mode is known for high resource commitment, a higher risk and low flexibility as
compared to other strategies of foreign market entry.
Entering options for Maple Filed using Scoring model:
Factor Importance
of the factor
Joint Venture Direct
Exporting
Resident
Sales
Representativ
e
Sales and
Production
Subsidiary
Control over
marketing
2 3 4 4 4
Required
financial
resources
3 1 4 3 1
Required
management
resources
3 2 3 3 2
Production
Costs
3 3 3 3 2
Shipping
costs
1 3 3 3 4
Flexibility 2 1 4 3 1
Commitment
and Risk
3 2 3 3 1
Distribution
Channels
2 4 4 4 3
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Risk of
knowledge
dissemination
1 2 4 3 2
Overall Score 45 70 64 40
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Control over marketing: Better control over marketing while entering into new markets
is going to help the organisation achieve better results over promotion and advertising.
Required financial resources: As per the understanding of the report, the required
financial resource of the company is appropriate in order to enter into new market.
Requirement management resources: As per the above table, the required management
resources are enough but not proper for the organisation while entering into new markets
(Klepakova and Wolf, 2017).
Production costs: The costs of production are manageable as while entering into new
markets it is essential that the organisation properly defines its strategies accordingly.
Shipping Costs: Shipping costs will be high, because the market of China is vast and its
is going to cost a lot for the company while entering into new markets.
Flexibility: The factor of flexibility allows the organisation to manage its works and
processes according to the set needs. This is one of the major aspects that can help the
organisation enter into new markets.
Commitment and Risk: The risk and commitment involved is high, because the market
of china is already having some large dairy manufacturers.
Distribution channels: The distribution channels can be a advantage for the organisation
because of the growth and development prospect.
Risk of knowledge dissemination: The knowledge dissemination occurs when right
practices are not being followed as per the set guidelines. The risk is high, but a better
involvement while entering into new markets can help the organisation to achieve growth and
success (Sischo and et.al., 2019).
As per the above evaluations, it can be seen as Direct exporting is the best strategies for
the market as it involves better growth and development options.
CONCLUSION
From the above studied it is summarised that various macro environmental factors which
include political, economic, social, technological and legal factors are creating the impact on
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Maple Field Milk. It is also studied that trade barriers are imposing complications on Maple field
milk expansion process in the Asian market. Consisting many cultural and social factors of
China may result in modifications of strategies being used by the company. As being small scale
industry and its decision to enter the emerging economy like China, it is discussed how the
company will attract the investors through its low-cost processing facilities. Further it is
discussed about the primary aim of Maple Field Milk primary goal to improve small scale dairy
farming and on low cost basis and how the aim will be achieved through attracting the investors
and customers in different markets.
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REFERENCES
Books and Journals
Bisson, C. and Diner, Ö.Y., 2017. Strategic Early Warning System for the French milk market: A
graph theoretical approach to foresee volatility. Futures. 87. pp.10-23.
Farmer, S., Singh, M.D. and Maharaj, R., 2015. Using Locally Produced Milk To Produce Fresh
Yoghurt And Cottage Cheese: The Potential For The Local Dairy Industry (No. 539-2016-
38647).
Forney, J. and Häberli, I., 2016. Introducing ‘seeds of change’into the food system? Localisation
strategies in the Swiss dairy industry. Sociologia ruralis. 56(2). pp.135-156.
Gbadebo, O., 2015. Understanding The Milk Consumption Patterns Of The Nigerians: A Market
Potential For Finnish Dairy Product.
Gopal, N. and et.al., 2015. The prevalence and control of Bacillus and related spore-forming
bacteria in the dairy industry. Frontiers in microbiology. 6. p.1418.
Gramotina, V., 2018. EVALUATING THE POTENTIAL OF CEYLON ORGANIC FOOD
PRODUCTS IN THE FINNISH MARKET: Case company: Epic Life Food LTD.
Klepakova, Y. and Wolf, F., 2017. Dairy farming on the cusp of innovation. Why SMEs in
mature industries innovate their business models and what they achieve with it. Dublin.
Lampe, M. and Sharp, P., 2019. A land of milk and butter: how elites created the modern Danish
dairy industry. University of Chicago Press.
Min, D. and Wood, B., 2017. Investigation of brand awareness for NZ dairy products in South
Korea.
Ngo, H., 2018. POTENTIAL DAIRY INDUSTRY IN VIETNAM: Case Study: Vinamilk LTD.
Oukemeni, S. and Muthee, E., 2018. The Use of Sustainable Business Models in Emerging
Markets: How is it Influenced by Macroeconomic Trends? A Case Study of the Indian Dairy
Industry.
Singh, K. and Grant, B., 2017. Better marketing strategies for the dairy shop.
Sischo, W.M. and et.al., 2019. Calf care personnel on dairy farms and their educational
opportunities. Journal of dairy science. 102(4). pp.3501-3511.
Weary, D.M. and Von Keyserlingk, M.A.G., 2017. Public concerns about dairy-cow welfare:
how should the industry respond?. Animal Production Science. 57(7). pp.1201-1209.
Online
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Pestle analysis. 2016. [Online]. Available through: <
https://www.professionalacademy.com/blogs-and-advice/marketing-theories---pestel-
analysis>
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