International Business and Government Relations

This assignment is about international business-government relations research from 1945 to 2015. It involves studying concepts, typologies, theories, and methodologies related to this field. The objective is to understand how governments interact with businesses and how these interactions affect the economy. The assignment requires analyzing case studies, research papers, and articles to identify key findings and implications for businesses. It also involves using references from books and journals to support the analysis.

International Business

EXECUTIVE SUMMERY
In these report it has cover the topic international business which refers to trade of goods and
services, technology, capital and knowledge across national boarders and at a global or
transnational level. This report will highlight UHT milk by which the company launching in
Chinese market. It has cover the demand and supply , process and business drivers . It has also
discussed porter's five forces and PESTEL analyses which help to identify the macro factor. It
has cover the trade barrier and ethical and social issues which are to be considered by the SME
and at last it has discussed the expansion method to be chosen by Maple dairy.

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Background of company ........................................................................................................1
Trade Barriers .......................................................................................................................4
Ethical and Social issue to considered by UK SME ..............................................................4
Cultural preferences to be considered by UK SME...............................................................5
Expansion method used by company.....................................................................................5
The advantages and the disadvantages of the expansion method ..........................................6
Recommendation....................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES ...............................................................................................................................8

INTRODUCTION
International businesses refers to a type of business which is done across the geographical
boundaries of the country that is the cross – border trade and other transaction between the
government and the companies. The Maple dairy is a high profile company based in the United
Kingdom. And planning for expanding and launching new product in the Chinese market. The
report will outline the background of the company Maple dairy. After that the report will
highlight the PESTLE analysis and the Porter's five forces model of the company which affect
the company Furthermore the report will outline the trade barriers affecting the business it
includes quotas, tariff , regulation and sanction. Also, it will outline the ethical and some social
issues which the company need to considered by the United Kingdom SME. Further it will
demonstrate the cultural preferences considered by the business. At last the report will outline
the expansion method which can be used by the company to expand the business.
MAIN BODY
Background of company
Maple dairy is a high profile company in United Kingdom. This industry produced milk
that costs £1 for four pints at the supermarket isn't the freshest or healthiest on offer. The
company now sell over 2,000 litres of milk each week on doorsteps, in restaurants and is sold at
the local shops for £1.20 a litres under the label Maple Field Milk. The focus is very much on
keeping and maintaining the welfare standards high to produce superior quality product. The
dairy has eleven cows, with nine cows of them producing milk at one time , which gives a dairy
an average of 60 litres a day. Maple dairy is planning to expand its business in china with the
product name UHT milk which is targeting children aged from 3-11 years (French, 2016).
UHT – It is the food processing technology that sterilizes liquid food , chiefly milk , by heating
it above 132 ºC in which the temperature required to kill spores in milk for 2 to 5 seconds .
Demand/ supply -There is increasing demand for dairy products in china . The apparent
consumption of dairy products in China reached about 31.79 million tones , representing a
CAGR of about 2.7% from 2013 to 2017 (Lunnay and et.al, 2015) (Understanding Supply and
Demand: Dairy.2018)
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UHT Milk Business in Chinese Market – In Chinese market over 60 % of the total milk
consumed in china is UHT milk . So the demand of UHT milk is very high and besides Maple
Dairy have chances to earn more revenues and profits for the long run (Fozer and et.al, 2017).
Business Drivers – Basically business drivers are the key inputs and activities that drive the
operational and financial results of a business . Innovation is one of the major business drivers
which played the main role in the success of the business . There are many types of business
drivers such as -
Quality product- the main business driver is selling quality products' ti the customers is one of
the important aspect of the business.
Price of the products- the second important driver is price of the product is the key of the
successful business .
Innovation – the third key point in success of the business in innovation which helps to run the
business to the long run.
PESTEL Analyses- The issues such as political, legal , social, technological , legal and
environment issue in Chinese market for UHT milk. Pestle analyses help the company to
identify all the macro factor which are present in the environment and it helps to run the business
for the long term basis and likewise it helps to achieve the goals of the organisation.
 Political Factor – it involves taxation policy , different policies free trade regulation ,
fiscal policy , trade barrier which give major impact on operation of new products that is
UTH milk of Maple Dairy. This factor influences the company . For example if the
taxation policy changes in china then it will affect the company to the large extent.
 Economic Factor – This factor plays a major role as it include many factors such as
inflation rate, population, income level , employment level etc. which impact the
expansion of Maple company in China. If the income level of the consumer decreases
then it will impact the sales of the product. Therefore, it is important for company to
determine the all factor which impact the company. And also if the GDP of China is not
stable then it will affect the business of Maple dairy.
 Social Factor – the company need to determine consumer demand, trends, attitude,
behaviour, education and their preferences then they are expanding their business in
relation to new products' development that is UTH milk. It is important to study the china
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market carefully and with that the preferences of local people . If the local people Of
china are not educated or don't have enough knowledge about the UHT milk then it is
very difficult for the Maple dairy to sustain.
 Technological factor – nowadays technology is changing day by day. And it will affect
the dairy company to the large extent . As it is important to innovate the products to run
for the long term bases. And it is important to use advance technology for the long run
basis. As China use very advance technology so it very important to use technology
which helps to earn more profit.
 Environment Factor – It is very important for the Maple company to study the
environment factor of China as this factor affect the operation of organisation. It will
include the regulation related to environment, green practices and waste management.
For example Chinese people are more aware of environmental factor and don't prefer
using plastic so Maple company avoid using plastic and reuse waste.
 Legal Factor – Maple Dairy needs to determine and follow all legislation for business
expansion in relation of new product. And follow the various laws such as employment
law , labour law and consumer protection law in order to smooth flow of company. It is
important to understand the law of China so that it will be beneficial for the Maple dairy.
Porter' s five forces
 Threat of new entrants – Threat of new entrants is the major factor that influence the
organisation in to the large extent . Maple Dairy can overcome this factor by innovating
new products and services and by providing the customers the products and services at
lower prices and spending money on research and development so that it reduces window
of extraordinary profits for the new firms thus discourage new players in the industry
(Francois and et.al, 2015).
 Bargaining Power of Suppliers – Suppliers in dominant position can decrease the
chances of profit for the organisation. As powerful suppliers use their negotiating power
to extract higher prices from the company. So the Bargaining power of the supplier is
relevantly high. As in China the supplying power is very high so it is important for Maple
dairy to build strong relationship with the suppliers.
 Bargaining Power of Buyers – Nowadays buyers want the high quality of product in
low prices, so this will pressurize on Maple Dairy (McDermott and Payvision, 2015).As
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in china the customers are considered as the king of the market and Maple dairy is new in
China so this will be very high for the company.
 Threat of substitute Products – Its influences the organisation as if the competitor offer
a value proposition that is uniquely from present offering of the industry. As this will
affect the profitability of the organisation for the long term as customers might switch to
other product if the prices are not suitable for them . As Maple company is new in China
so threat of substitution will be high as local people doesn't have much faith on the
companies' product.
 Bargaining power of suppliers- Nowadays buyers wants high quality of products with
low prices . This will pressurize the Maple Dairy 's profitability for the long run bases.
The smaller and more powerful customers base influence the pricing policy of the
products.
 Rivalry among the Existing Competitors- As UHT milk is the new product which is
launched by the Maple Dairy. As the existing competitor will give tough competitor to
the new product. As existing companies will give a tough competition to the Maple dairy
as they are already establish and has attract large audiences
 Competitor- the local competitor gives tough competitor to the Maple Dairy . And it is
very important and crucial for the organisation to build strong relationship with the
suppliers (Engelken and et.al, 2016).
 Identify gaps in the market- Identifying gaps means identifying the opportunities that
are present for the company . For example the first and foremost opportunity for Maple
Dairy is increasing demand for the milk products that will help the company to sustain in
china and the local industry that are present in china are not able to fulfil the demand of
the market so it will emerge as the opportunity for the dairy company to expand
business .
Trade Barriers
Trade Barrier are government induced restriction on international trade. By trade barrier it is
determined that it decrease the overall economic efficiency. If two or more nation repeatedly use
trade barriers against each other , then a trade war results. Barrier is in two form such as tariif
which is imposed a financial burden on imports and non- tariff barriers to trade which are uses
other overt and covert means to restrict imports and occasionally exports. And classified by the
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import charges , quotas , import licensing , customs practices , standards , testing and various
other type of certificate (Mathooko and Ogutu, 2015).
 Quotas – it is basically a restriction placed on the amount of particular goods that can be
imported. For example China may place a quota on the volume of imported citrus fruit
that is allowed. It will impact the Maple Dairy to the large extent. This sort of barrier is
often associated with the issuance of licenses. Quotas are very important as it is important
for the company export and import in the proper qauntity which is mention by the
government.
 Tariff – basically tariff is tax on import and exports. And the money collected under the
tariff is known as the duty or the custom duty. Tariff are used by the government to
generate the revenue or to protect domestic industries from competition. And China has
imposed many taxes on the export which will impact the dairy company to the large
extent. It will be important for the company to have the knowledge about the different
taxes .
 Regulation - There are many trade barrier regulation that are imposed by the china. It is
compulsory to understand the rules and regulation of the country before expanding into
China.
 Sanction – Sanction means the things which are forbidden in the country. There are
particular standard in the china and many things which are not allowed by it . For
example pasteurized milk is eligible in china and sterilized milk.
Ethical and Social issue to considered by UK SME
It is important to consider Ethical and Social issue by UK SME . As when companies
operate in their home market , most of the employees come with the same sense of culture . It is
important to share the social and ethical standard of company staff and management to large
extent. It is very important to study the ethical and social issue for the business before expanding
its business . As social issue are the problem that influence number of individual in society
members (Burns and Dewhurst eds., 2016).
Significance
The first and foremost importance is that it will help to grow the business and by
considering the social and ethical issue company can increase the productivity of the company .
And if it considers the ethical issue it will beneficial for the Maple Dairy to earn profit
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(Boddewyn, 2016). And the organisation must fulfil corporate social responsibility so that it will
help to increase the goodwill of the company. By following the certain rules and regulation of
the country the company can attract the customers to the large extent.
Cultural preferences to be considered by UK SME
These are generally defined as the indication of the culture or the sub culture mainly in
regard of the traditional or the customary practices of the particular ethnic or cultural group. The
attitude of the Chinese people towards the western products has changed tremendously (Dovern
and van Roye, 2014). The Chinese people have started preferring the cheese products more as
there has been a increase in the growth rate of cheese by 15- 25 % from 2015- 17. Another
research shows that yoghurt and the cheese consumption by the Chinese too increased. This is
evident from the increase in the sales growth by 20 %. Similarly the Chinese people prefers milk
and yoghurt to be more healthier and nutritious because it helps them in increasing immunity and
is as well good for children ageing between 3- 11.
There are many conflicting preferences among the people because some people feel that
the milk has more nutrition and some feel that the butter and cheese are more beneficial (Mura
and Buleca, 2014). Some feel that the yoghurt is high in protein and nutritious and some feel that
cheese is high in calories and fat.
The government has put a ban on the import of milk and related products including
chocolates from China. It was imposed due to the fact that there was a presence of melamine in
some milk consignment from China.
Expansion method used by company
The expansion method present for the company are as follows-
 Mergers- it is a form of expansion wherein an agreement is signed between two or more
existing companies to form a new company. It is a voluntary mixture of two or more
companies into one legal entity (Yan and Luo, 2016). Mergers are mainly done to gain
and increase the market share, to increase and grow the quantum of the revenues and
profits, to expand into new territories, to reduce the cost of the production, to gain the
benefit of the economies of scale.
 Joint venture- the another method for expansion is to go for a joint venture. It is a
method in which a business enterprise contracts with another business entity for a
specific purpose and when the purpose is over the venture ends (Kankaanranta, Louhiala-
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Salminen and Karhunen, 2015). It is a business entity which is created by two or more
parties which are generally characterized by the shared return and risk, shared ownership
between both the firms and the shared governance of the company.
 Acquisition- it is a method of corporate restructuring or expansion wherein one company
purchases another company's shares in order to have equivalent control in accordance
with the share purchased. It occurs when purchasing company purchases more than 50 %
shares of the target company.
 Partnerships- it is a type of expansion method whereby two or more parties agrees to
manage, control and operates a business operations in order to share the profits and the
losses suffered among the partners in the agreed ratio.
The advantages and the disadvantages of the expansion method
 Mergers- the major advantage of this type of expansion is that it allows each partner to
concentrate on activities that are fit according to their capabilities. But the disadvantage is
that when two companies comes together then many a times there are conflicting
objectives and strategies.
 Joint ventures- the main advantage of joint venture is to it has opportunity to utilise the
existing sales network and the customer base (Jaef and Lopez, 2014). The another
advantage is that it allows division of the risk because it is shared among both the
participating companies. But the disadvantage is that it is difficult to find out a
trustworthy partner to go for a joint venture.
 Acquisition- the major advantage of using this method is that it quickly builds the market
presence for the company as it increases the market share because with acquisition the
number of competitors reduces. But the disadvantage of using this method is that the cost
of acquisition is extremely heavy.
 Partnership- the main advantage of using partnership as the mode of expansion is that in
case of any financial failure or loss then all the loss will be shared by all the partners and
not by a single partner. The major disadvantage of partnership is that as there are a
number of people being partner so there may be difference in opinions and thoughts of
the partner which may lead to disharmony and belongingness among the partners.
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Recommendation
Out of the above mentioned methods the best suited method is joint venture because it
gives an opportunity to utilise the existing sales network and the customer base. it gives one
company to use and access the other partner's existing resources. it lowers the cost of the
production because two companies employ there resources and optimally use the resources.
Another reason for the popularity of the joint venture is that it helps the business to grow more
faster, increase the productivity and increased productivity leads to the greater profits. Another
reason is that both the joint venture partner's customer database to market their product (Narula
and Verbeke, 2015). they can have access to the new marketing and distribution channel for the
product and service distribution. For expansion the China should consider marketing strategy
because every market and its dynamics will not be same as like China. So it should take into
consideration the marketing strategies which will suit the market in which China is expanding.
For example it can use marketing strategy like mobile marketing, big data marketing, search
engine optimisation, social media tactics etc. Out of these marketing strategies the most popular
is Programmatic Ad buying. In this technique the company uses a software to purchase digital
advertising which meets the needs of the internet advertising more easily.
CONCLUSION
International business refers to a type of trade of goods and services, capital, knowledge,
technology etc. among the national borders and at the global or the international level without
any restrictions. The report outlined the background of the company Maple dairy. After that the
report highlighted the PESTLE analysis and the Porter's five forces model of the company.
Furthermore the report outlined the trade barriers affecting the business. It further demonstrated
the ethical and some social issues which the company need to considered by the United Kingdom
SME. Further it demonstrated the cultural preferences considered by the business. At last the
report outlined the expansion method which can be used by the company to expand the business.
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REFERENCES
Books and journals
Boddewyn, J.J., 2016. International business–government relations research 1945–2015:
Concepts, typologies, theories and methodologies. Journal of World Business. 51(1).
pp.10-22.
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
Dovern, J. and van Roye, B., 2014. International transmission and business-cycle effects of
financial stress. Journal of Financial Stability. 13. pp.1-17.
Engelken, M and et.al, 2016. Comparing drivers, barriers, and opportunities of business models
for renewable energies: A review. Renewable and Sustainable Energy Reviews, 60,
pp.795-809.
Fozer, D and et.al, 2017. Life cycle, PESTLE and multi-criteria decision analysis of CCS
process alternatives. Journal of cleaner production.147. pp.75-85.
Francois, J and et.al, 2015. Reducing transatlantic barriers to trade and investment: An
economic assessment (No. 1503). Working Paper, Department of Economics, Johannes
Kepler University of Linz.
French, S., 2016. The composition of trade flows and the aggregate effects of trade
barriers. Journal of international Economics. 98. pp.114-137.
Jaef, R.N.F. and Lopez, J.I., 2014. Entry, trade costs, and international business cycles. Journal
of International Economics. 94(2). pp.224-238.
Kankaanranta, A., Louhiala-Salminen, L. and Karhunen, P., 2015. English in multinational
companies: implications for teaching “English” at an international business
school. Journal of English as a Lingua Franca. 4(1). pp.125-148.
Lunnay, B and et.al, 2015. Ethical use of social media to facilitate qualitative
research. Qualitative Health Research. 25(1). pp.99-109.
Mathooko, F. M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management.29(3). pp.334-354.
McDermott, K. and Payvision, B. V., 2015. Key business drivers and opportunities in cross-
border ecommerce. Payvision, Amsterdam.
Mura, L. and Buleca, J., 2014. Trends in international business of the Slovak small and medium
food enterprises. Procedia-Social and Behavioral Sciences. 110. pp.905-912.
Narula, R. and Verbeke, A., 2015. Making internalization theory good for practice: The essence
of Alan Rugman's contributions to international business. Journal of World
Business. 50(4). pp.612-622.
Yan, A. and Luo, Y., 2016. International Joint Ventures: Theory and Practice: Theory and
Practice. Routledge.
Online
Understanding Supply and Demand: Dairy.2018[online]. Available through. :
<https://www.cmegroup.com/education/courses/introduction-to-dairy/dairy-price-
reporting-and-settlement-prices.html>.
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