International Business Strategy

This document discusses the international business strategy of Pablo & Rusty's Coffee Roasters and explores their potential for expansion into the New Zealand market. It provides background information on the company, industry trends, micro-environment factors, and SME internationalization. The document also highlights the suitability of the New Zealand market for the company's expansion and concludes with key takeaways.

Running head: INTERNATIONAL BUSINESS STRATEGY
INTERNATIONAL BUSINESS STRATEGY
Name of the Student
Name of the University
Author Note

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Table of Contents
Background................................................................................................................................2
Key Descriptive Information......................................................................................................3
Part 1:.....................................................................................................................................3
Description about Pablo and Rusty’s-................................................................................3
Industry trends-..................................................................................................................4
Micro-environment factors-...............................................................................................4
SME Internationalization-..................................................................................................5
Part 2:.....................................................................................................................................6
International market-..........................................................................................................6
Conclusion:................................................................................................................................7

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Background
The Small and Medium firm selected for the practice of applying internationalization
is Pablo & Rusty's Coffee Roasters. Saxon Wright instituted the business in the year 2003.
The reason for establishing this name was passion of their brother in laws for coffee. The
concept was firstly shaped into a café in the north shore side of Sydney. The business grew
rapidly by opening stores all around Sydney. After the initiation of wholesale business, the
main focus of the cafés became directed towards roasting coffee. There are two café stores in
Brisbane CBD and in Sydney CBD, which is used as sand pits for testing coffee, ideas and
equipment for creating and understanding best café experience. The business aims at
becoming one of the examples for constructing a positive environment for the planet through
the implication of innovation and technology. The business belongs to coffee industry with
the association of café institution.
Australia is one of the main coffee consumers in the Oceania region. However, the
coffee consumption of domestic areas in Australia has reflected a decline in the past two
years. In 2016, the rate of national consumption reached to around 1.78 million of sixty
kilograms bags. The results were different in the year 2018, the rate reduced to approximately
1.710 million of sixty kilograms bags. In the year 2017, Coffee market revenue reached up to
$1.433 million (US-Dollars) (Beamish et al. 2016). Australia is experiencing a change in
demand for the coffee segment offerings, as the increasing awareness about the curiosity on
the brewing method and coffee origins. The demand for cold drip and pour over coffee is
increasing /originating. The industry position of Pablo & Rusty's Coffee Roasters is evidently
significant due to the process of integration technology, café presence and coffee business
under a single name. Technological advancements like cashless system, mobile application.
Pablo & Rusty's Coffee Roasters mainly targets the office-going population for a coffee

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break. Their concept of accompanying a coffee break will be similar in case of the strategy of
internationalization (Wang, Ling and Zhang 2016).
Key Descriptive Information
Part 1:
Description about Pablo and Rusty’s-
The coffee business and café’ establishment was instituted in the year 2003 in the
form of café at North Shore in Sydney.
The business was initiated by Saxon Wright
The business was nurtured by the opening numerous channels across whole of
Sydney.
After the establishment of coffee selling outlets, the business evolved with the core
focus on wholesale business through cafés.
Two cafés of Pablo & Rusty's are located in Sydney and Brisbane with the aim of
constructing and understanding the customer preference for positive café
environment.
The Sydney CBD is considered to be one of the most spacious and well-known brands
of coffee.
The café is commonly known for the concept of creating an accompanying space for a
‘coffee break’ for the occupation population or for the workers.
The coffee business of Pablo & Rusty's offers a wide range of coffee beverages, cold
brew, trailblazer for espresso and the presence of draught coffee.
The business also offers authentic food varieties in the café outlets.
The spacious café is considered to be the first amongst the six-star expansions of
Sydney.

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The brand have incorporated various technological innovations for improving
customer experience and for eliminating environmental impact, like cashless
experience, using bio-generator, which is known for burning paper waste from offices
in the surrounding blocks for utilizing it as a source of energy in the café.
Café also sells coffee, equipment and tea
Industry trends-
In 2016, the rate of national consumption reached to around 1.78 million of sixty
kilograms bags. The results were different in the year 2018, the rate reduced to
approximately 1.710 million of sixty kilograms bags. In the year 2017, Coffee market
revenue reached up to $1.433 million (US-Dollars).
The café industry of Australia has grown in the year 2018, with more than 20,000
cafés and 140,000 people (Huang et al. 2017).
Increasing awareness about coffee origins and brewing methods
Increasing preference for cold brewed coffee
Increasing competition in the coffee market with the introduction of new coffee
brands and innovative coffee concept (O’Mahony and Lobo 2017)
Target market is majorly concentrated on office-goers (occupational segment).
Micro-environment factors-
Competitors- Pablo and Rusty’s competitors ranges from the local coffee shops to
major coffee brands. Few of the popular coffee shops of Sydney are Gumption of
Strand Arcade, Paramount Coffee Project of Surry Hills, Barefoot Coffee Traders of
Manly and Cabrito Coffee Traders of Circular Quay. Competitors from Brisbane are
Workshop Co. Espresso Bar, Dandelion and Driftwood and Ltd Espresso. The
competitors can also be the packaged coffee brands like Nescafé (Charbonnier et al.
2017)

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Customers- The customers of Pablo and Rusty’s are majorly concentrated on the
segment of occupational population (demographic segment) as the cafés are located at
office blocks. College students can also be considered as their customer segment
along with the segment of ‘lifestyle’ (psychographic segment) (Maciejewski, Mokrysz
and Wróblewski 2019).
Suppliers- The suppliers of Pablo and Rusty’s include raw material suppliers, coffee
beans of speciality grade from the coffee estate farmers, milk supplier, supplier of
technological and physical parts of coffee brewing equipment. The other set of
supplier includes, infrastructural resources for cafés and energy sources with the
association of government support.
Public- The increasing awareness of ‘public’ or coffee consumers in Australia and the
preference of public towards sustainable companies majorly contribute to the growth
of Pablo and Rusty’s.
From the understanding of the microenvironment factors of Pablo and Rusty’s, it can
be deduced that the business has the potential of entering into the international market with
the capacity of innovating the product offerings and advanced equipment. The coffee
business is also capable of maintaining the quality factor with the association of a spacious,
positive and lively atmosphere for constructing an overall effective consumer experience. The
country where the company can expand its operation is New Zealand due to the similarity in
culture and due to the constraint of lesser employee strength.
SME Internationalization-
Small and medium firms in Australia has less than or equal to 200 employees. The
small business has 5-19 employees, micro-business has 1-4 employees and medium business
reflects employee strength of 20-199 employees. In Australia, the SME constitutes of 98
percent of the total businesses by producing around one third of the total GDP. In Australia,

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the SMEs differ from the large firms based on their size of business and the organizational
structure. Large firms of Australia can be recognized by the presence of 200 plus employees
(Graves and Seet 2017).
In accordance with the Australian data for SME, entering in an international market
will be challenging due to the constraint of lower employee strength, operational reach and
financial backing in comparison with the larger firms of Australia. However, Pablo and
Rusty’s potential of continual improvement and growth with the integration of quality and
consumer experience. The business has grown with their innovative skills and the adoption of
sustainable initiatives even being a smaller café business. Pablo and Rusty’s reflects the
potentiality of entering into the international market with their innovative concept and the
aim of creating a positive impact with their technological integration with good quality coffee
(Menzies 2017).
Part 2:
Locate an emerging market you believe is appropriate for the firm to enter.
International market-
The growing international market for Pablo and Rusty’s is New Zealand. Being the
neighbouring country of Australia, it reflects little similar culture like the coffee culture and
preferability. The small business size and comparatively lower employee strength of the
business can act as a constraint for tapping international markets but New Zealand can be a
suitable option for the strategy of internationalization. The suitability of the international
market can be assessed with the help of PESTEL framework:
Political environment- The risk of the political environment of New Zealand is based
on the change of government every three years. In spite of the risk, the change in the

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political environment reflects the application of new rules and transparency. The
labour market of New Zealand is very expensive (Fitt et al. 2018)
It can be challenging but the organization does not require a large number of
employees for operating the cafés.
Economic environment- The score of economic freedom is 84.4 in the year 2019. The
policies of New Zealand include increasing the minimum wage for employees,
incorporating union-friendly reforms for labours and higher taxes (Pecotich and
Shultz 2016). .
Higher tax rates can be challenging for the SME but government support can help
with the implementation of sustainable coffee business concept.
Socio-cultural environment- The socio-cultural environment of New Zealand is
diverse and it reflects similarity in regards with the cultural background. The literacy
rate of New Zealand is 99 percent (O’Brien 2017).
Pablo and Rusty’s product offerings can respond to the diverse preferences of the
coffee lovers in New Zealand.
Technological environment- Technological sector is the fastest growing sector in New
Zealand. Six percent of country’s workforce is employed by the technological sector.
The technological advancement like Internet application and the utilization of IoT can
be worth 34 billion dollars and 2.2 billion dollars respectively (Kaplan 2015).
Pablo and Rusty’s can utilize the support from the technological sector to improve the
product offerings and overall customer experience. Technological innovation can
majorly contribute to the factor of creating competitive advantage.
Conclusion:
Therefore, it can be concluded from the paper that New Zealand can be considered as
the most suitable international market for Pablo and Rusty’s. The suitability can be observed

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by the positive social, economical and technological factors of New Zealand as well as
through the innovative and sustainable practices of Pablo and Rusty’s. Pablo and Rusty’s
reflects the capabilities like, targeting working officials by creating a positive and lively
concept of ‘coffee break’, the ability of incorporating sustainable practices for the purpose of
becoming an energy efficient and sustainable business. The capability of understanding the
changing customer needs of the consumers by the integrating technology and quality.

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