Report on International Expansion Strategies for ACMC PLC Business

This report examines the international expansion of ACMC PLC, a UK-based software solutions company, focusing on its potential entry into the US market. The analysis centers on the role of Foreign Direct Investment (FDI) and its impact on the company's decision-making process. The report explores the benefits and challenges of FDI, including political factors, national security concerns, and supply chain issues. It also discusses various market entry modes, such as franchising and joint ventures, and provides recommendations for strengthening ACMC PLC's global expansion strategy. The report highlights the importance of understanding FDI regimes, tariff variations, and entry/exit barriers. The report uses the 4P framework. The conclusion emphasizes the significance of strategic decision-making for successful international business ventures. The report provides valuable insights for businesses seeking to expand globally.

INTERNATIONAL EXPANSION OF ACMC PLC
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Executive summary
Internationalization of business is crucially required for progressing the business more
effectively to increase the growth rate in an efficient manner. This research revolves around the
impact of FDI on decision making of business organisation that desires to expand its business in
international market. Moreover, this research also discuss the positive and negative impact of
FDI issues that either lead an organisation to grow or fall.
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Table of Contents
1. Introduction..................................................................................................................................3
2. Company overview......................................................................................................................3
3. Discussion....................................................................................................................................3
3.1 Analysis of FDI of Acme Plc.................................................................................................3
3.2 FDI issues that make or break the decision to expand...........................................................5
4. Mode of entry..............................................................................................................................7
5. Recommendations........................................................................................................................7
6. Conclusion...................................................................................................................................8
Reference List..................................................................................................................................9
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1. Introduction
International expansion in business is too vital for any organization to enhance their business
growth by acquiring huge profit which is equally applicable for the case of Acme Plc. Actually,
it can enable them to get a global footprint as well as be able to avail new audiences for
proceeding with further expansion. FDI is a very efficient element for getting funding for
companies for improving their infrastructure as well as grow business in a sustainable manner. In
this regard, the FDI analysis of the UK has been provided and here, the description of the
attraction of the market will also be paid heed to.
2. Company overview
Acme Plc has been running its operation in the software sector to give the best possible solution
to businesses. It has been seen that they have been giving services by focusing on delivering
flexible clients. They have been working on an agency model and due to this reason; they have
been able to provide proper services that enable them for discarding unnecessary things so that
focus should be only on business. Apart from that, it has been seen that they have also been using
partnership models that enable them to get enough flexibility to give satisfaction to their clients
for getting sustainability in business.
3. Discussion
3.1 Analysis of FDI of Acme Plc.
Acme Plc. which is a UK based SME is trying to expand its business in the US market.
However, the company has recently had several challenges in the field of investment. With the
growing presence of foreign investment in the US Acme Plc. has been facing issues in investing
in foreign assets to ensure the expansion of the business organization. Brainlabs being a software
solutions company has started investing in foreign assets prevailing in the US (Demir and Im,
2020, p.2463). Apart from this, the company is also using the digital marketing factors to search
for potential assets in the international market to ensure the expansion of the business
organization. In order to improve the productivity of the company the management of Acme Plc.
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have decided to invest in other software solutions companies based in the US to gain knowledge
regarding the work culture of such industry in the US.
Apart from that, the company has also executed several digital execution programmes that are in
search of potential foreign assets in the US. One of the sources of foreign direct investment or
FDI of Acme Plc. is through social media programmes. In recent times, Acme Plc. has done six
acquisitions in the US including Hanapin. On acquiring such a digital agency based in the US,
Acme Plc. has been able to gain insights on the financial structure of the US information
technology industry. The major issues faced by the management team of Acme Plc. are the
political factor prevailing over the target market, which is the US (Driffield and Karoglou, 2019,
p.559). The policy makers of the UK have also shown concerns regarding the potential national
security threat that can damage the economy prevailing in the UK. However in this case Acme
Plc. have chosen US for market expansion where the company has to go through various review
processes so that the policy makers of US can ensure the originality of the foreign investment
along with its impact on their economy (Simionescu, 2018, p.6).
In the last decade, many countries have adopted national security measures regarding foreign
investment including the US so that they can prevent certain foreign investment from amending
the existing investment laws prevailing in the US. Various countries tend to have various policies
regarding foreign investment. In the case of the US, certain strict measures have been taken
including a thorough review process that could help certain foreign investment from disrupting
the entire economy. In this case, Acme Plc. being a software solutions company can contribute to
the annual foreign inflow of the country, which is around $59.63 billion (Koyuncu and Ünal,
2020, p.291). However due to the presence of several loopholes in the national security system in
the US foreign investment department the policymakers have formulated some rigid policies
within the nation. Apart from this Acme Plc. hacked issues in the supply chain prevailing within
the US, as it seems vulnerable in the field of security.
The overall value of the outward earnings of the UK becomes halved when it falls from "£101.7
billion in 2019” to “£50.8 billion in 2020". However, it seems that the earnings from FDI
outwardly are increasing in certain business areas such as information as well as communication
along with manufacturing. As per the view of Kacperska et al. (2020), the inward earning from
FDI has a positive impact on the economy of Great Britain. On the other hand, it is also noticed
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that FDI is committed to improving all the major keys in the economy. This inward and outward
earning from the FDI impacts directly on Acme Plc. The revenue generated by this company also
has a positive impact on the inward earning of FDI.
3.2 FDI issues that make or break the decision to expand
Foreign Direct Investment (FDI) is necessary for those countries whose economy is developing
and emerging where SMEs need funding and expertise to expand their business at the
international level. In this concern, it is analysed that FDI can make a business organisation grow
and expand its business in the global market as well as affect it negatively to take unfavourable
decisions that lead to its downfall (Drahokoupil, 2018). This section of research work revolves
around the multiple issues concerning FDI that make or break SMEs to expand globally.
The FDI regime, variations in tariffs, entry and exit barriers are some of the key issues that affect
an organisation through taking decisions that might be favourable or unfavourable for expanding
their business. It depends on the SMEs what technology is used based on its capability to take
advantage of the source of energy to grow in the global market. Moreover, FDI includes
significant ownership as well as access to transfer the existing technology. Considering the
current FDI policy of the UK, it has been analysed that it helps existing international or foreign-
owned businesses to grow, expand and make profits in the UK (Thompson and Zang, 2018). As
FDI provides economic growth, employment and productivity, the host company formulates
favourable policies to attract foreign investors that can invest in their country (Haudi et al. 2020).
Additionally, its distribution varies from one region to another. It is observed that London has
the highest and Northern Ireland has the least distribution FDI in the UK. A graph has been
presented below that states the distribution of FDI in UK.
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Figure 1: Spatial distribution of FDI in UK
(Source: Department of International Trade, 2021)
Apart from that, the other side of FDI leads a business organisation to take unsupportive
decisions that lead to its fall down. Sometimes, the hindrance between domestic and foreign
investment affects a business organisation to choose local or domestic resources over foreign.
The political stability of a country also affects the FDI policy as the political issues of a country
may be volatile and that significantly affects the FDI (Drahokoupil, 2018). That is why Foreign
investment considering the current political condition of that country must be done else it seems
risky. The changeable or deformable regulations and policies of multiple governments of a
country create pressure on the organisation as well as foreign inventors as there is the uncertainty
of change in current rules and that finally leads affects their profit margin. High levels of
political issues such as political stability or instability also influence the business organisation to
decide accordingly.
The social and cultural influence of a country also attracts foreign investors to invest in their
country. The representation of a country in terms of its social and cultural consideration helps
foreign investors to critically analyse, evaluate and predict whether their investment will be
fruitful or not. Additionally, restrictive FDI policy, high taxes on imports, poor infrastructure
quality of the country make an unattractive environment for FDI. Issues such as “stringent
labour laws'' have a direct impact on the making and breaking of the decision to expand the
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business of Acme Plc. Therefore, laws related to employment impact the business more
specifically in certain areas such as harassment and bullying, age and sex discrimination,
grievance and discipline, race discrimination, equal pay and employment rights. As opined by
Haudi et al. (2020, p.13), the poor labour laws can be manipulated for Acme Plc. and can
significantly break the decisions of global expansion. Moreover, “the very limited scale of
exports” is another issue in FDI that impacts the business negatively and can break the decision
of expanding. With limited exports Acme Plc. will be restricted to business internally which can
directly limit the global expansion of the business. Restricted scale in exports makes the business
inefficient in the international market (Zélity, 2022). However, minimum issues associated with
the UK’s FDI are the major factors that make the regime attractive for better investment options.
4. Mode of entry
In order to proceed with international business, it has been required to pay heed to the mode of
entry for international business. Sharma et al. (2020) highlighted the fact that international
business is very much vital and in this regard, using FDI is too efficient a technique. It is very
much effective for creating funds and growing the infrastructure of the business. Haudi et al.
(2020) made an argument on the fact that FDI depends upon the capacity of attracting businesses
that are effectively influenced by political matters of a country.
Data has been able to highlight that the FDI is constantly increasing in the UK market and due
to this reason, it can be easily said that this chosen organization can be able to get an effective
scope for heightening their business up and here usage of 4P framework can be very useful to
pay heed to it. According to Iammarino (2018), it is an effective element for becoming more
proficient economically. As a result, they can be able to get more scope for increasing their sales
by increasing their capability and getting more agility in proceeding with business not only
efficiently but also effectively for sustaining.
5. Recommendations
In order to strengthen the business expansion of Acme Plc. certain recommendations can be
provided. Application of these strategies will help the organisation in global expansion:
Recommendation 1: Franchising with other companies
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In the origin, country franchising with other companies will be beneficial for Acme Plc. as it will
help the business in global expansion with higher brand recognition. It also minimises the failure
rate by providing business assistance (Haudi et al. 2020). FDI risk will also be lower for Acme
Plc. if they franchise their business in their origin country. Franchising a business will also
enhance the profit rate along with improving the bases of built-in customers.
Recommendation 2: Adopt joint venture as market entry mode
Another suggestion for Acme Plc. will be related to adopting the joint venture entry mode
strategy to easily access the distribution networks and new markets. Moreover, joint venturing
also allows Acme Plc. to improve capacity along with sharing the cost as well as a risk with
partners (Zélity, 2022). As Acme Plc. is a technology-based company the opportunity to access
maximum resources will also be there with adopting a joint venture market entry strategy.
6. Conclusion
This can be concluded that business growth is critically required and it can be gained through the
assistance of internationalization. In this regard, it has been seen that Acme Plc wants to make
growth and for this reason, analysis of the UK has been shown that is clearly showing that they
can proceed with this objective. Actually, the UK market has been becoming agile and due to
this reason, they are capable of attracting more FDI thus by taking assistance of it, this
organization can be capable of heightening their growth rate through here; they have to focus on
the issues that have been arising to get a more vivacious result.
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Reference List
Journals
Demir, F. and Im, H., (2020) Effects of cultural institutes on bilateral trade and FDI flows:
Cultural diplomacy or economic altruism?. The World Economy, 43(9), pp.2463-2489.
Drahokoupil, J., (2008) The investment-promotion machines: the politics of foreign direct
investment promotion in Central and Eastern Europe. Europe-Asia Studies, 60(2), pp.197-225.
Driffield, N. and Karoglou, M., (2019) Brexit and foreign investment in the UK. Journal of the
Royal Statistical Society: Series A (Statistics in Society), 182(2), pp.559-582.
Haudi, H., Wijoyo, H. and Cahyono, Y., (2020) Analysis of Most Influential Factors to Attract
Foreign Direct Investment. Journal of Critical Reviews, 7(13).
Iammarino, S., (2018) FDI and regional development policy. Journal of International Business
Policy, 1(3), pp.157-183.
Kacperska, E., Kraciuk, J. and Wojtaszek, M., (2020). FDI IN A NEW THEORETICAL
APPROACH. AND PRACTICAL ASPECTS OF CSR IMPLEMENTATION BY FOREIGN
INVESTORS, p.17.
Koyuncu, C. and Ünal, H.S., (2020) The Linkage between Inward FDI and Average Wage
Levels in the Host Economies: A Panel VAR Analysis. Sosyal Bilimler Araştırma Dergisi, 9(4),
pp.291-306.
Sharma, P., Leung, T.Y., Kingshott, R.P., Davcik, N.S. and Cardinali, S., (2020) Managing
uncertainty during a global pandemic: An international business perspective. Journal of business
research, 116, pp.188-192.
Simionescu, M., (2018) The impact of Brexit on the UK inwards FDI. Economics, management
and sustainability, 3(1), pp.6-20.
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Thompson, P. and Zang, W., (2018) The foreign business and domestic enterprise relationship:
Its implications for local entrepreneurial resilience. Local Economy, 33(1), pp.10-39.
Zélity, B., (2022). The welfare effects of FDI: A quantitative analysis. Journal of Comparative
Economics, 50(1), pp.293-320.
Website
Department of International Trade, (2021) Understanding FDI and its impact in the United
Kingdom for DIT's investment promotion activities and services. Department of International
Trade. [Online] Retrieved at 30th March 2022 from
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/
file/966936/Understanding-FDI-and-its-impact-in-the-United_Kingdom-for-DIT_s-investment-
promotion-activities-and-services-phase-2-analytical-report.pdf#page=10&zoom=100,72,113
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