Kirby and West's Expansion to China: Business Drivers, Trade Barriers, Ethical and Social Issues, Cultural Preferences, and Expansion Methods

This report evaluates the business drivers, trade barriers, ethical and social issues, cultural preferences, and expansion methods for Kirby and West's expansion to China with its UHT milk. It uses strategic models such as Porter's five forces and Hofstede's 4D model to analyze the market and form strategies.

International business

Table of Contents
Executive summary :........................................................................................................................3
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Business drivers behind Kirby and West's expansion to China : ...............................................3
Trade barriers for Kerby and West while expanding in the Chinese market :............................5
Ethical and Social issues related to the expansion of Kerby and West :.....................................6
Cultural preference of the people of Chinese market :...............................................................8
Expansion methods for Kerby and West using Ansoff matrix :...............................................10
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

Executive summary :
Kerby and West is a small scale company that is UK based and deals in dairy related
products such as – milk, eggs and cheese. The company is planing to expand in the Chinese
market with its UHT milk. Different types of business drivers, trade barriers, expansion
methods, cultural preferences, ethical and social issue are evaluated for Kerby and West. There
are several strategic models used in context of the company for its strategy building and
analysing different related methods.
INTRODUCTION
International business is the practise of operating a business entity that deals or
operates in global market or for any specific country(s). This provides a large market to the
business entities that lead them to targeting more amount of customers and increasing their
revenue generation (Piñeiro-Chousa and et.al., 2020). The chosen SME company for the report
file is Kirby and West. It is dairy company based in Leicester, United kingdom. It offers a variety
of dairy products to its customers such as – cheese, yoghurts, UHT milk and also some grocery
products like juices and eggs. The following report file is based on the factors that can influence
the objective of the company to expand in Chinese market and sell its UHT milk in it. It firstly
involves the business drivers behind company's expansion to China using relevant models. Then
there are several trade barriers that demonstrate the business uncertainties and opportunities.
It then involves ethical and social issues highlighting the importance of corporate social
responsibility following up with the cultural preferences using Hofstede's 4D model. Lastly in
the main body there are some expansion methods mentioned that are identified with the help
of using Ansoff matrix.
MAIN BODY
Business drivers behind Kirby and West's expansion to China :
Generally every type of business entity desire for achieving growth in its business and
lead the company to higher stages for earning high amount of profits. But the process of
growth needs different types of resources and processes such as – availability of funds that are

required, ideas, analysation of the market and many more. If the growth is practised without
acknowledging or studying the market then there are much chances for the business to get
failed (Boso and et.al., 2019). As in market where there is no demand of the product or service
that the company is providing then no one will buy those products and the company may face
losses. There are many other factors that a company needs to consider before entering into a
new market for analysing the needs and necessities of the market that should be followed.
Different types of models are used for analysing the marketplace such as – SWOT, Porter's five
forces and PESTLE. Porter's five forces is a strategic model that is made of five forces that forms
the shape of the market and evaluate the strengths and weaknesses of an industry. The porter's
five forces in context of Kirby and West have been discussed in the following points :
 Competition in the industry – This factor is about the determination of the level of
competition in a market. Different companies that operate in a similar industry or
provide similar type of products and service to a similar base of customers are each
other's competitors. There is no competition for Kirby and West in the Chinese market
for its UTH milk as this type of milk is not even commonly known in it. The company
needs to practices effective marketing for rasing the product awareness and forming
their demand towards it.
 Threat of new entrants – This is the power of other companies to enter in the same
market or to start dealing in the similar product / service category. It is based on the
amount of investment required in establishing the company and the complexity in the
operations (Fonfara, Ratajczak-Mrozek and Leszczyński, 2018). The threat of new
entrants for Kirby and West is very low as the other dairy company may become
interest in the product if it gets good response but the process of making UTH is not
known by them and the company has been doing it from many years.
 Power of buyers – It is the power of the consumers to influence the prices or amount
of the products demanded. The power of buyers for Kirby and West is high as the
consumers of the Chinese market have already being fulfilling their demands of milk
through other sources but as the UTH milk is considered good for children and does

not contain any type of bacteria or germs, it can provide higher level of satisfaction to
consumers.
 Power of suppliers – This is the power of the suppliers that are providing the raw
materials or other commodities that are used in the process of making end product to
make change in the price demanded and the amount of materials supplied. The power
of supplier for Kirby and West is very low as the company itself renders the end
product of it that are the – milk, cheese, yoghurts, eggs and many more and depend
on other suppliers very less.
 Threat of substitute products – These is the power of substitute products or services
present in the market that can effect on the sales of the company's products or
services (Li, C. and et.al., 2020). These substitute products are the products that are
similar in some way and provide a similar level of satisfaction to the consumers. When
these products are present in lower rates or renders some increased level of
satisfaction to the customers these can replace by them and effect the company's
sales. The threat of this force for Kirby and West is moderate. As there are milk
products already present in the market but the UTH milk is something different that
can become an attractive element for customers and provide them satisfaction that
other brand's milk do not provide because of absence of the bacteria and germs in it
that is considered safe for people especially children.
Trade barriers for Kerby and West while expanding in the Chinese market :
Trade barriers are some restrictions given by the government bodies for the practising
of international business. The government of a country examines and regulates the business
practices that are being practised in its country by the domestic Companies and specially by the
international based companies. Kerby and West is a United Kingdom based company and at the
time of its expansion in the Chinese market the company is going to face different types of
trade barriers in its business process (Alayo and et.al., 2019). Some of the major types of trade
barriers that are needed to be considered by the company to operate efficiently are mentioned
in the following points :

 Tariff barriers – These are the taxes imposed on the products that have been imported
by a multinational company from its mainland or from any other country. The Kirby and
West being a dairy company it does not need to bring any types of products form the
outside China but the machineries needed fro the operations can lead to taxes.
 Non – tariff barriers – These are some rules and regulations formed by the government
bodies that business entities need to follow. When not followed these rules and
regulations can lead to make the labile for any punishments or fines. China is a country
that is full of rules and regulations made in favour of the company, Kerby and West
need to consider these rules and regulations and give them importance to efficiently
operate in the Chinese market (Mazboudi, Sidani and Al Ariss, 2020).
 Subsidies - A domestic subsidy that renders monetary subsides
to the domestic companies that deals in the essential type of goods or services. Dairy is
an industry that deals in essential type of goods that can be subsidies by the
government of China to its domestic company. This can help those companies in
minimising their cost which they can use in maximising their products or to sell goods at
lower prices and providing them a competitive advantage over the international
companies such as Kerby and West.
 Foreign investment restrictions – This is a trade barrier that mentions the restrictions of
government in investment of international companies in their business. There is a fixed
amount of investment above which the government charges high amount of taxes on
the investments made.
Ethical and Social issues related to the expansion of Kerby and West :
Ethics is basically the moral philosophy of right or wrong behaviour that can harm the
beliefs of the people of society. In context of business, the ethical issues are the negative
impact that a practise or operations of a company is making through its operations (Ketteni and
Kottaridi, 2019). These ethical issues occur when an activity, decisions or any scenario is
creating a conflict through harming the principles of the society. The social issues are the similar
type of issues that are related with the demands, beliefs, behaviour, personality and different

other related aspects of the people of society. These issues many not seem important but play
a very huge role in forming the goodwill of the company in the market and attracting customers
towards the company's product or service and directly impacting its revenue generation. When
not considering these issues, the business firm may also face some legal issues. The ethical and
social behaviour in United Kingdom and in China is far different. Some of ethical and social
issues that Kirby and West needs to consider are :
 Consumer's rights – Many business scandals have been happended in the past years in
China. This leaded to harming the health of many people by the providng of harsh
chemical based food / milk products, for example the milk scandal in 2008, in which milk
and infant formula was adulterated with melamine. This issue raised the concern of
food safety and consumer rights in China and leaded to different types of rights and
laws issues accordingly (Kaplan, 2018). Kirby and West need to review the products or
chemical which use is ban in China to avoid their use in its operations.
 Safety in workplace – The past problems of unsafe workplaces and related incidents
created a concern and issue of the people to limit the work load providnded to the
workers /employees in a company and keep their operations fully secured and safe. The
concerns of employees in UK is very high than China, if the related company follows
those practices and keeps its employees / workers happy than it will become a centre of
attraction that can positively affect the goodwill of the brand in the market.
 Environmental issues – These are the issues related to the pollutions and other matter
that relate with the sustainable practices of a business entity and assuring that it is not
harming the environment and keep its surroundings clean. This issue is becoming
important in the evolving world as people are becoming concerned about their
environment to keep it healthy for them and the future generations (Polonsky and
Waller, 2018). The industries have been harming the environment of China very much
due to the cheap way of using resources and disposing the wastes, it leaded to new
policies in the related matter by the government. The practices of a business entity in
favour of the environment by planting tress or using sustainable commodities lead to
attracting the customers and having positive effect on the company's goodwill. Kirby

and West do not have much operations that can harm the environment but it can use
sustainable practices to attract the customers.
 Demand of the people – The considerations of the demands of people of the market is
very important to render them the goods and services that they want and are ready to
pay even higher for them. There are less companies that deal in UHT milk in the market
of China. Kirby and West can form the demand of UHT milk in the market by using
marketing modes that shows the benefits of it. If the company could hit and form the
demand of UHT milk in the market then there will be ready customers for buying it from
the company and increasing its sales.
 Building trust with overseas partners – The customers of the society believe much the
companies that are based natively as it is human nature that they automatically believes
more in the quality of product / service of their natives companies even when the
international company is providing cheaper products (Urbach and Röglinger, 2019).
Kerby and West needs to build trust and connect with the people of the society of make
them believe in the quality and practises of the company. The company should either
make their customers feel native or provide them a different experience that they
would like. Managing sales and distribution – The company should analyse their target base of
customers and use methods of sales and distribution that can directly target them and
provide them good buying experience. Different base of customers have different
demanded or desired way of buying their essentials. The company could use delivery
services to provide door step service to them and increase their satisfaction level.
Cultural preference of the people of Chinese market :
Culture is the set of religion, beliefs, values, behaviour and many other related aspects.
The culture varies on the basis of demographics, religion, age and so on. The culture of the
United Kingdom market in which the company has operated and it situated is very different
from than that of the culture of the Chinese market (Treviño and Doh, 2021). The culture highly
influence the way in which the customers pretend, behave, think and communicate. All of this
affect the buying preferences of the customer and directly effects on the revenue generation of

the company. Hofstede 4D or Hofstede cultural theory is developed by Greet Hofsetde which is
framework that works in analysing the major cultural factors that affects a business entity. It
make the process of understanding the cultural differences of different countries and compare
it in a easy and effective way. Different types of cultural preferences of the Chinese market that
affect the operations of a business entity operating in it are mentioned in the following through
using Hofstede 4 D model comparing it with the cultural preferences of UK market :
 Power distance index – It is the extend to which the difference in power and other
types of inequalities are tolerated. The problems is considered from the point of view of
the lower level people (Miller and et.al., 2021). Higher the power index indicates, more
the power of workers to accept inequality and vice versa. The power distance index of
China is very high, the lower level people expect and accept the inequalities that they
face in their work life. They are not listened by the upper level of management and even
the government. Whereas the people of United Kingdom shows low power distance
index and their fortitude level towards inequality and justice towards them is very low.
 Collectivism / Individualism – In the culture of China, the operations done in groups
are honoured and appreciated than that of the individual tasks. The collectivist oriented
Chinese culture leads to stronger team work, better decision making, spreading of
information efficiently and decreasing the problems faced by the employees through
helping of each other. This leads to define the higher power of collectivism in the culture
of China. In UK, the individualism is considered more important and is appreciated by
the workers. They want to show their best and want a individual identity from others.
 Muscularity / feminity – This is the cultural factor that defines the sexual equality
between men and women in the society. It is also considered as “tough vs tender”
dimension. Muscularity is considered as distinct gender roles and concentrated on
materials achievements whereas feminity is considered as fluid gender roles and
nurturing. The level of gender baisness in both of the market's cultures, China and UK, is
not much very higher nor much lower. The male are considered more powerful and
dominant than the female. The female are expected to perform easy and firm work
whereas the males generally perform the strength needed and stressful work.

 Long term orientation vs short term orientation - This factor is about the focus of
people towards achievement of goals in fixed period of time. The cultural preference of
China is long term orientation that forces on achievement of long term goals and short
term success is not celebrated and not even focused (Arregle, Hitt and Mari, 2019). The
main objective is to get achieve the vision of the company in the planned period of long
time duration such as one years or even five years. This tells the people or workers to
not get diverted from the small wins or achievements.
 Indulgence vs restraint – It is the tenancy of the people to fulfil their desires. This is
around how the people of the society can control their desires and impulses. Higher the
level of indulgence more the people are stress free and want to enjoy their life by
having fun and want they want to. Restraint is the indication of the people suppressing
their gratitudes and consider social norms more. The culture of China is restraint, people
spend less time and money on enjoying, travelling and spending happy time with their
loved ones and friends. The same distinction is opposite in the case of United Kingdom's
society.
Expansion methods for Kerby and West using Ansoff matrix :
Expansions methods are the strategies used by business entities to achieve growth and
expand in their postilion in the market (Wentrup, Nakamura and Ström, 2018). Ansoff matrix is
a strategic framework that includes four types of expansion ways the can be chosen and
adopted by a company according to its market. Following is the extended Ansoff matrix in
response of Kerby and West :
 Product development – This strategy is about evaluating the need in the market for a
product and providing it to them. New type of products or services are introduced in
the same market in which the company deals. Kerby and West, after reading the
market through spending some time in it can bring new products that can fulfil the
demands of the market.

 Market penetration – This is the method in which the focus is on increasing the sales of
the actual products / services of the company in the present market. Kerby and West
can use marketing modes and customer satisfaction for this.
 Market development – It is the development of the market and selling the existing
products /services of the company in a whole new market. The company is practising
market development during its expansion in the Chinese market and selling the same
dairy products / UHT milk (Sarabi and et.al., 2020).
 Diversification – This is the concept in which a business entity expands into a new
market and also deals in new types of products or services according to the needs of
the market.
CONCLUSION
From the above report it has been concluded that operating a business entity is a
complex process but it becomes more complex when the business operates on a international
level. The international business needs different types of considerations that are either
necessary for tis operations or provide it effectiveness. There are different types of business
drivers that lead a company to success. Trade barriers that impact the company in a negative
way when not considered. There are also variation in the cultural preferences of the people.
Expansion methods are used by a company to achieve growth in the market.

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