Managing International Business

This document discusses the concept of managing international business and explores the strategies for market entry. It includes a PESTEL analysis of a new national market and discusses the different types of market entry strategies. The document also provides insights into the political, economic, social-cultural, technological, environmental, and legal factors that impact international business.

Managing
International Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................2
TASK- 1......................................................................................................................................2
TASK- 2......................................................................................................................................4
CONCLUSION AND RECOMMENDATION...............................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
International business refers to commercial activities which involves movement of
goods, services, resources, people, ideas and challenges beyond the national boundaries.
Transactions are done between entities that exist cross borders (Meyer and Peng, 2016). Every
business organisation looks for opportunities to expand the operations in other locations and
international countries are preferred after attaining target profit in the home country. The
dynamics of economic environment is changing with the time resulting in higher competition
and other global needs. This increases the requirement for organisations to enhance its customer
base, number of suppliers, international colleagues and many more. It is a part of international
business strategy which is undertaken by number of eligible individuals who can work
effectively. Restaurants are one of the high revenue generating sectors in Hospitality Industry
and there is always an undying demand for the foods and beverages that are being served in
there. When a business operates at such a scale, it becomes imperative to have a team who is
capable of handling the activities smoothly. However, conducting several analysis of the country
and market which the organisation is targetting, should be done before it starts commercialisation
in that particular nation. There are many variables relevant to the operations of an entity which
should be assessed in the context of international business. In addition to this, management
should make strategic decisions which can make the expansion or other activities successful. It is
significant as expansion requires huge investment and if it is done outside the national
boundaries, the amount of investment gets multiplied. A business organisation taking business in
other countries have to understand demands of its people so that necessary changes can be
incorporated in existing processes and systems (Dzhandzhugazova, and et. al., 2016). Along with
this, there should be adequate resources such as funds, manpower, technologies, etc. Making
decisions related to the raising required resources and their application within the organisations
become the top priority. In this report, Leon has been chosen which is a fast food restaurant
chain located in United Kingdom. It was established in the year 2004. it is considering the
proposal to expand the business to a new international location which is Krakow. Krakow is a
city in Poland which is famous for its heritage and other ancient places in the country. Also, it is
one of the oldest cities in the country which can be a suitable nation for the growth of its fast
food business. It is also considered as a busy trading centre in the region of Europe. The culture
and lifestyle of people living in the country is colourful. Furthermore, this report covers PESTEL
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analysis of new national market which is going to help Leon analyse the macro-environment
factors. In addition to this, a comparative evaluation of minimum two market entry strategies for
entering in the target market, has been conducted. The results obtained from this are likely to
help Leon to mark a position in the marketplace.
MAIN BODY
TASK- 1
National Environmental Analysis
It is a framework used by organisation/entities to track activities of market. This tool is
mostly used to analyse the external factors which are affecting the business. The result is then
surpasses to swot analysis. These external factors does not directly effect decision of
organisation. It act as support system for the firm to tackle from the uncertainty. Also, it is most
useful when new business or firm is about enter in the national or international market (Nurmi
and Niemelä, 2018). So, a brief market research is required to adopt the analysis otherwise one
wrong move can make the organisation sick. Krakrow has been chosen as a national market for
conducting PESTEL of this country. Analysis of macro-environment factors prevailing in the
market of Krakrow is going to provide necessary information to Leon. It has been presented
below:
Political factors- These factors are connected with the contribution and interference of
government which may impact the ability of organisations. It is related with the political
conditions in a country which play a major role. It also takes into consideration political stability
and instability. Currently, Poland has council of government which comprise of Prime minister
and other ministers. The government has provided relaxation in income tax rules and also have
adequate infrastructure for initiation business activities. Furthermore, there is huge scope for
restaurants as the risks of political factors are low. It follows unitary semi-presidential
representative democratic republic. Therefore, Leon can operate freely in the city of Krakrow as
it entities are supported by the government of the country.
Economic factors- Economy shows the standards of living and status of a country.
Economic factor comprises of tax rates, policies, laws, government rules and regulations etc. In
context to Poland, their economy has been increasing at a maturity rate and market growth of
country is considered as average. Poland is developed country, and everyone enjoys the freedom
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of expression. After adoption of EU legislation in the year 2004, there was huge favourable
change in market growth rate as well as its economy. It is also known for its diversified market
as during the recession time it was the only country who neglect or say avoided the situation.
Business is at higher ladder in this country. Hence, Poland has mixed economy which includes
both capitalism as well as socialism. The GDP of the country has landed it to 21st rank in the
world and 24th in Ease of doing business as claimed by World Bank.
Social-cultural factors- These are the variables related to demographics elements such
as norms, customers values, population, beliefs etc. Poland follows traditional family values in
which young generation people bring a fusion of western culture. According to the date provided
by Knoema, it has been observed that approx. 60% of the population lives in urban areas which
means that, there may be some problem in attracting the customers towards the services offered
by Leone. It is comparatively low because there are 83% of the population lives in urban
locations in UK (Urban Population in Poland, 2020). This directly impacts the behaviour of
individuals when it comes to spending the income. The target customers of Leon, who falls in the
category of millennial are about 50% which shows Leon have limited market to target. However,
the education, work, attitudes and income distribution and many other factors are included in
this.
Technological factors- Technology has widen the market area for business. Scarcity of
resources is spreading like a virus across the globe. Poland is one of the emerging and developed
countries when it comes to it sectors. Stable economy, specialised it professionals and source to
inputs for raw materials attracts many it hubs and countries to start their business. Also, with
support of better funding there has been a moderate rise in growth of market research and new
up-gradation of technology. As per the data released in 2017, Poland stands at 24th rank out of
the 28th EU members states when it comes to Digital economy and Society (GDP in Research &
Development, 2020). Furthermore, it always undertake activities to improve the rank in
connectivity and human capital. According to the data as provided in 2017, the GDP on research
and development in Poland has reached 1.03% of the whole GDP. This states an upward shift in
the graph which means Poland is spending good amount on Research and Development because
of which it find new innovation.
Environmental factors- Another important factor is environmental factor which
includes climate change, availability of resources, weather etc. In this, Poland has been facing
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many problems as compared to other countries. Because people uses a huge amount of coal and
fuel, above the average. Thus, creating a serious threat to society. No matter what, country is
famous for its greenery but that is also for about two percent mostly reserved for farmers. As per
the reports on Global Environment Performance Index, the rank of Poland is 50 which is
appreciable. In this way, the business of Leon can be successful if it undertakes processes which
are beneficial for Leon (Environmental Performance Index, 2020).
Legal factors- These factors are connected with legal provisions relevant to the business
entity. The current as well as new laws should be followed by companies in order to avoid legal
obligations. The government in Poland has balance between legislative, executive and judicial
remedies. It is a unitary state which combines presidential and parliamentary systems.
Furthermore, there are different types of courts which can provide justice in case of any disputes.
Also, some of the legislations are Civil Code, Commercial Code, Labor Code, Foreign Exchange
laws which are for the benefit of entities operating in the country.
TASK- 2
Market Entry Strategy
Entry
Basis Strategic Alliance Joint Venture
Meaning Strategic alliance refers to agreement
which takes place between tow or
more people fore achievement of
specific set of objectives by
independent organisations (Tjemkes,
Vos and Burgers, 2017). This is a
type of legal partnership which can
take place between various
corporates, entities, agencies or
partnerships. There is mutual benefit
for people who are part of this type of
strategic alliance as they work for a
A Joint Venture is temporary form of
partnership agreement in which two
more parties come together to form a
business for short period of time.
Also, this form of business does not
follow the rule of going concern of
accounting because business is not for
longer period of time. The members of
joint venture also known as co-
partners. It is totally different concept
from merger (Albers, Wohlgezogen
and Zajac., 2016).
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common objective.
Benefits These alliances are very helpful in
developing outsourcing relationships
for achievement of mutual benefits
and more innovations for all the
organisation which are forming part
of these strategic alliances. Partners
provide various resources such as
manufacturing capabilities, capital
equipments, intellectual property to
each other which in turn helps them
in collaborating fir achieving their
laid objectives (Russ and Cesarani,
2017). The alliances are usually
involved in transferring of
technology, benefits from economic
prospect and sharing of cost & risks
associated with the project. This
helps in creation of a new entity
which is made to supplement each
other in due course of working
towards their common goals.
Main advantage of joint venture is that
a strong network is created amongst
the business and market. In this
temporary business, both the parties
share profit as well as loss at equal
proportion. It build news market and
distribution networks leading to more
business. Furthermore, it helps in
obtaining knowledge and expertise
together with specialisation in the
employees. This helps in bringing the
greater opportunities to organisations.
There is better sharing of resources
such as technology and finance which
are the most important for carrying the
business. For a Joint Venture, it
becomes easy to raise financial capital
and borrow funds from the investors.
Also, synergy is achieved as there are
companies operating as one unit. This
gives a chance to use the resources on
a combined basis in order to create
results which can benefit both the
parties.
Disadvantages The risk factor in this type of
business is huge as compared to
other. There may be increased
conflicts between the owners of
businesses involved. This may lead to
Joint venture helps in creation of new
insights and utilisation of resources up
to maxims capacity. Objectives of
joint venture are not clear as well as
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lawsuits which can result in financial
burden on the organisation. Biggest
disadvantages of strategic alliance is
crossover of staff members. When
companies come together owner of
company putting them at risk because
they may loose good peoples as
strategic partner will able to pay
more that cannot be affordable by
another organisation. Apart from this,
cultural conflict will be major
challenge which now a days business
working in alliance are facing. These
problems involve language, egos, and
different attitudes to business can
make it tough. Out of this, first thing
which will create problem include
language barriers which company
will face.
rarely communicated with the people
who are involved in this. Along with
this, in Joint venture flexibility is
restricted as well as it is time
consuming and difficult procedure in
which challenges are poses. Because
success of joint venture is totally
depended on research and analysis of
the objectives (Killing, 2017).
Moreover, there can be imbalance
within the level of expertise,
investment as well as assets which
bough within venture by the partners.
Main reason behind this imbalance is
that different companies are working
together. As result it may have
negative effect on effectiveness of the
joint venture.
Independent
Organization
Strategic alliance gives an
opportunity to the organisations to
operate individually. There is no such
option for the business entities to
integrate and become one.
There is no incorporation of a new
entity in this type of entry strategy. In
other words, when a joint venture is
formed, the business of two
companies become one and they lose
their individual identity.
Separate legal
entity
There is no separate legal entity for
this business structure. This can
create a major issue in carrying the
business activities as no legal
protections can be gained directly
A joint venture has legal entity in legal
provisions. It gives a sense of
separation in the business which
protects it from various frauds and
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(Connelly, and et. al., 2019). other issues.
Contract This type of business may or may not
have a contract. As the business
operates individually, each
organisation may have their separate
contracts.
It is compulsory for the business entity
to have contract for every transactions.
Without a valid contract, no deal can
be made.
Objective The main objective of this business
structure is to increase the reward. In
other words, maximisation of reward
is the prime motive according to
which people involved in the
business gets higher return with their
investment.
A joint venture has the main objective
of limiting risks associated with the
business. Efforts are carried to reduce
the risks involved in business
activities.
Management In this, the management is delegated
to the people engaged in business.
This helps in making the activities
work effectively.
It covers bilateral management as the
management of both the companies
give their contribution in achieving the
goals and targets.
Conclusion With the use of this as a market entry
strategy, it can beneficial in gaining
the market at individual level. This
gives a freedom to make decisions
which can be used by Leon in their
business after its expansion in
Krakrow.
Joint venture is useful, if Leon is
considering to involve technology
with other resources. Furthermore, it
also involve integrating of different
resources to create a place in the
market. Leon may not find it
appropriate to use as it is a restaurant
which serves food and beverages.
CONCLUSION AND RECOMMENDATION
It is recommended that Leon should consider strategic alliance with the already
established businesses in the same industry. It can carry the activities in its own way without
losing the individual identity. For a business like Leon which is popular, it should continue to
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carry the operations without being mixed with the business of that entity which the organisation
is considering to form strategic alliance. Poland is a country which can provide it numerous
opportunities that can be explored for the growth. The main motive of its is to bring health
focussed fast food in the markets of Krakrow. It is always recommended that business should
take an idea of the market before it invest huge amount of expenditure for acquisition in order to
initiate the business operations. Also, it is cost effective as it requires low investment as
compared to Joint venture. This can save a lot of costs which can be used in something
productive. In addition to this, employees can be given training by the management in order to
make them familiar with the circumstances of the country. Also, it is easy for it to move out of
the strategic alliance contract as there is no collaboration. It is beneficial in exploring and using
the chance for further growth. Along with this, it is recommended that Leon should focus more
on millennials as they like fast food, however, it can also target those people who are health
conscious but have a strong liking for fast food. Also, it can contact local suppliers for obtaining
fresh ingredients for making the food. This can push the development of local farmers which can
lead it to set an example among its competitors. Together with this, it should use technologies
which are environmental friendly as being involved in CSR activities can help it gain more
popularity and acceptance. Apart from this, it should keep the prices low in order to attract the
target customers.
From the above report, it has been concluded that hospitality industry is growing at a
rapid pace which provides number of opportunities to entities operating in other countries.
Furthermore, there are analysis such as PESTEL which should be conducted in the context of a
country to decide whether the business is going to be successful or not. Along with this, a
comparison should be made in different strategies for entering the market for deciding the one to
be use for the entry. Also, restaurants should not forget to determine the behaviour of target
customers and their demands in order to make the appropriate food for increasing the sales and
profit. In this way, a business can be successful at international level.
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REFERENCES
Books & Journals:
Meyer, K. and Peng, M.W., 2016. International business. Cengage Learning.
Dzhandzhugazova, E.A., and et. al., 2016. Innovations in hospitality industry. International
Journal of Environmental and Science Education, 11(17), pp.10387-10400.
Nurmi, J. and Niemelä, M.S., 2018, November. PESTEL analysis of hacktivism campaign
motivations. In Nordic Conference on Secure IT Systems (pp. 323-335). Springer,
Cham.
Tjemkes, B., Vos, P. and Burgers, K., 2017. Strategic alliance management. Routledge.
Albers, S., Wohlgezogen, F. and Zajac, E.J., 2016. Strategic alliance structures: An organization
design perspective. Journal of Management, 42(3), pp.582-614.
Russo, M. and Cesarani, M., 2017. Strategic alliance success factors: A literature review on
alliance lifecycle.
Killing, J.P., 2017. How to make a global joint venture work. In International Business (pp. 321-
328). Routledge.
Connelly, B.L., and et. al., 2019. Shareholder influence on joint venture exploration. Journal of
Management, 45(8), pp.3178-3203.
Online:
Environmental Performance Index. 2020. [Online]. Available through :
<https://epi.envirocenter.yale.edu/epi-country-report/POL>.
Urban Population in Poland. 2020. [Online]. Available
through :<https://knoema.com/atlas/Poland/Urban-population>.
GDP in Research & Development. 2020. [Online]. Available
through :<https://www.statista.com/statistics/420993/gross-domestic-expenditure-on-
research-and-development-gdp-poland/>.
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