Analysis of Macro Environment and Expansion Strategies for ABC Packaging Ltd in Germany

PROJECT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
OVERVIEW....................................................................................................................................3
PESTLE analysis....................................................................................................................3
Porter five force analysis........................................................................................................4
Different ways of expansion...................................................................................................4
ASPECTS........................................................................................................................................5
PESTLE analysis impact........................................................................................................5
Impact of Porter five forces....................................................................................................7
Better way of expansion.........................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11
APPENDIX....................................................................................................................................12
Company profile...................................................................................................................12
Country profile.....................................................................................................................12

INTRODUCTION
Macro environment analysis is very important for the companies to identify the changes
taking place within the competitive market. Also, it is very necessary for the companies to take
measures for expanding the business to new countries to meet the high competition within the
market. Thus, for a business to be successful it is very necessary to have different options of
market research and having knowledge of various options of expansion which can be used in
order to expand in other countries.
The present report is based on a small manufacturing company of UK that is ABC
Packaging limited. The company was established by Mark and Geoff Mellor in the year 1993
(ABC Packaging Ltd, 2020). The present report will outline the fact that this company is
planning to operate in Germany. For this the present report will outline the macro environment of
Germany with different macro environmental tools of analysis. In the end different ways of
expansion in the new country will be highlighted.
OVERVIEW
PESTLE analysis
The business exists in macro environment which keeps on changing very rapidly and if
the company does not adapt to these changes then it will not be able to meet the recent trends.
Thus, for this it is very important for the companies to properly analyse the external or the macro
environment. Thus, for this the method selected is the PESTLE analysis. This is a model which
analyses all the factors which are external to the business and which impact the business to a
great extent. In this method there are six external forces which guides the business which are
political, economic, social, technological, legal and environmental factors.
Thus, changes in any of these factors impact the working of the business either in positive
or in negative manner. Hence, it is of utmost importance to study all the elements of this model
and what will be the impact of these changes on the business and its operations. Thus, ABC
packaging Ltd will also use this model before entering into Germany to evaluate that whether the
products and services of the company will be successful in Germany or not (Christodoulou and
Cullinane, 2019).

Porter five force analysis
This is a model which helps the business in analysing the industry in which it is running
its operations. This is a business analysis tool which help the company in analysing the
competition within the whole industry and where the company is being positioned in the
industry. There are five competitive forces which need to be analysed to know the competitive
advantage present within the industry (Esposito, Tse and Soufani, 2017). These five forces are
threat of new entrant, threat of substitute goods, rival firms, bargaining power of buyers and
bargaining power of suppliers. All these forces need to be analysed by ABC Packaging Ltd so
that the company can know its competitive position in the manufacturing industry of Germany if
it goes for production in Germany.
Different ways of expansion
For being in the competition it is very important for the companies to expand their
business and range of operation in same and to other countries as well. This is necessary because
of the reason that the company cannot run successfully by having a single shop only and it is
necessary for them to expand. The major reason for this is the high competition and to face and
win over the competitors it is necessary to expand the range of business operations. Thus, for this
expansion in different countries is necessary. Thus, there are many different options available for
ABC Packaging Ltd for expanding in Germany. These options are discussed in the following
connected points below-
Franchising- this is a method under which the company provides its right to some other
company to operate in the same name. This is a method under which the franchisor license all its
rights, know- how and property rights to other people to operate their business in another
country.
Merger- this is also a good method of expansion because under this method the company
combines its operations with similar company. this is also an important and good source of
expansion as here ABC Packaging Ltd will not have to invest much in Germany. The underlying
reason for this is that the other company in Germany is already having a pre- established market
and this will help ABC Packaging Ltd to not much invest in the marketing of the product.
Foreign direct investment- this is a method under which the company directly invest in the
company in different country (Ge and Li, 2019). Here the investment will be done by investing
in the building or upgradation of the company in another country.