The Strategy of International Business

This report analyzes various strategies for expanding business internationally, with a focus on the case of Rowlinson Knitwear planning to expand in Canada. It discusses theoretical background, such as PESTLE analysis and Dunning's eclectic theory, and assesses corporate and functional strategies for international expansion.

The Strategy of
International Business

Table of Contents
EXECUTIVE SUMMARY (200)....................................................................................................3
INTRODUCTION...........................................................................................................................3
THEORITICAL BACKGROUND..................................................................................................4
ASSESSMENT OF CORPORATE AND FUNCTIONAL STRATEGIES....................................7
Strategy that company use to expand internationally.............................................................7
Analysis of the international corporate strategy adopted by any company............................9
Analysis of foreign market entry strategy............................................................................10
How Rowlinson organise their strategy...............................................................................10
factors affecting strategy......................................................................................................11
CONCLUSION AND RECOMMENDATIONS..........................................................................11
REFERENCES..............................................................................................................................12
REFERENCES..............................................................................................................................12

EXECUTIVE SUMMARY
Expansion of the business on International level enables the organisations to ensure their
sustainability of the business. For this they have to undertake various analyses to determine the
impact of various factors that can influence the strategy so formulated by the company. In this
report various strategies are analysed that can used by the company for implementing their
expansion plan. The Rowlinson is planning to expand their business in Canada for which
PESTLE analysis is undertaken with the help of which the impact of various factors can be
identified. In addition to this the theory of Dunning’s eclectic theory is also used that will enable
them to understand various aspects related to the investment and expansion. It is important for
the businesses to understand various entry strategies so that the best suitable to the business
operations can be used due to this various such strategies are identified for Rowlinson but they
must focus direct exporting initially. For determining the strategy of international business the
strategies so adopted by the various companies are analysed that enables the managers of
Rowlinson to formulate their strategies but the focus of the company must be on the
multinational strategy as this will help them to expand their business in future as well.
INTRODUCTION
With the globalisation the interdependence on the world economy is increasing due to which the
organisations are expanding their businesses in terms of size by tapping into newer markets at
global level. This enables the businesses to ensure the long term sustainability of the businesses
as their market share and market size increases (Yuliansyah, Rammal & Rose (2016)). The
international business is refers to as the trade of goods and services across borders due to which
cross border transaction takes place and this leads to mobility of funds and offerings from one
country to another. By tapping into new global market the companies can increase the level of
profitability s with this they can increase their customer base. The efforts of the businesses are to
solve the problem of customer by offering goods and services as per their needs and wants so
that they can be satisfied and by expanding businesses on international level the options to the
customers can be increased. Moving to the different nation facilitate the company to have an
access to various resources such as availability of funds, human capital, lower restriction of
operating in comparison to the home country. This enables them to use such resources and also
offers various advantages to the people of host countries. The expansion strategy facilitate the

businesses to diversify the market of the company that they are serving which enables them to
shift to other areas in case any natural drastic shift takes place in one areas. Going global is not
that easy as with this various challenges emerges before the company that they have to deal with
so that they can ensure the success of the business. For this they formulate various business and
corporate strategy that enables them to identify their activities, determine the actions that they
have to take to deal with the challenges effectively. Such policies and strategies are formulated
on the basis of the market research which is conducted by the teams of the companies in context
of the opportunities and threats present in the different locations where they want to expand their
business. For this they have to analyse various internal and external factors that has impact on
the expansion strategy of the business (Xu & Hitt (2018)). With the help of various theories and
analysis the internal abilities, resources of the companies are analysed in comparison to the
situations prevailing in the external business environment. In this report a UK based uniform
manufacturing company is taken into consideration which is Rowlinson Knitwear. This company
manufacture uniforms for schools and corporate houses on the basis of orders placed by them
and they make their offerings available to them at their premises as they do not have any store
from where they can sale their products. The company is planning to expand their business in
Canada as it is a developed country and has many organisations and better schools to which they
can provide their uniforms. With the help of this report various strategies for the expanding their
business are analysed. This report includes the background of various theories that helps in
internationalisation and identification of various opportunities as well as threats in the targeted
country. Apart from this the various business and corporate strategies are discussed which can be
used by the company for expanding their business internationally. Various foreign market entry
strategies are discussed that are used by the various other companies operating in the same
industry or other industry. On the basis of this various recommendations are made to the
company with the help of which they can plan their expansion in the new international market.
THEORITICAL BACKGROUND
For entering into the international market it is important to have an understanding of the
various theories that can facilitate internationalisation. Also it is important to understand the
influences of various external factors so that the opportunities and threats within the country can
be identified. Due to this the PESTLE analysis and the Dunning Eclectic theory is being
discussed below that will facilitate Rowlinson Knitwear in their expansion:

PESTLE ANALYSIS: It is the framework prepared to analyse macro environment
before expanding the business operation within national as well as international periphery. It
comprises of several elements that illustrate the where the external condition or circumstances
are feasible enough to be absorbed by company and exploit the untapped opportunity by gaining
immense loyal customer base and market efforts (van Hoorn & Maseland (2016)). Based on this
expansion method efforts are taken to mitigate the chances of risk and expands the operations of
business successfully.
 Political factor: It encompasses the government rules, polices, regulation as well as
political situation of the state based on which high authority of company takes decision of
internationalization. Generally if the potential market comprises of desirable regulation
and political condition are stable then entity carry out the process of portfolio investment.
In relation to Rowlinson Knitwear design and deliver the garments for official purposes
within UK and thinking to expand the business at Canada. It offer the opportunity to
company in terms to gain wide platform where they can understand the potential
candidate and cater wide emerging demand. Along with that creation of groups like
PETA totally boycott the companies whose products are obtained from animal skin or
fur. Thus, the company need to understand several groups otherwise this may leads to the
threat while existence of business (Santangelo & Meyer (2017)).
 Economical factor: Economic condition, inflation rate, disposable income of the local
residence and interest rate needs to be clearly stated before diversification of business in
new territory. It is basically desirable for Rowlinson Knitwear to expand its operations in
Canada as the disposal income of the people is high leading positive impact in terms to
generate high revenue. On contrary, existence of economic conditions like recession or
inflation contract the profitability of entity due to low demand in the market leading to
negative impact (Beazley (2019)). Thus, strategy needs to be build accordingly in order
to sustain the growth of entity successfully.
 Social factor: It comprises of the fashion habits as well as existing taste and preferences
of the company need to be researched by the consigned authority to match with the pace
of target market. The manager of Rowlinson company needs to track the favourable trend
of the host country in order to accumulate the formal clothing requirement. As most of
the families including both male and female members work outside due to which

company explicitly gain the wide opportunity to address the formal needs of students and
people who work together professionally. Similarly, the trends and fashion pattern
constantly changes so it is the responsibility to constantly bring innovation in the fashion
leads to high research work and expenditure (Buckley (2016)).
 Technology factor: Development of technology and dependency on latest innovation is
the signification solution for globalisation to build wider choices for customer leading to
rise in sales and circulation of foreign exchange. Although Rowlinson Knitwear is known
for its well developed design, quality and effectively fulfilment of personalised order for
clubs, offices or school student due to effective use of the technology. Adoption of
innovative innovation and positive influence the efforts of employee in terms to expand
the operations in Canada. Initially, high operation cost and instalment of machine can
leads to burden which contribute high effort, energy and time (Sanden (2016)).
 Legal factor: Each and every country has its own legal legislation that needs to be
necessarily adopted by both national and international company. It includes employment
regulation and an export restriction that needs to be studied by Rowlinson Knitwear
company to strengthen its operation. As respected company have effectively abide by
legislation of UK like maintain health and safety law or gender discrimination.
Additional taxation or legislation policies leads to the burden on company as its restrict
its growth and negatively influences its progress (Picciotto & Mayne (2016)).
 Environment factor: External surrounding like environment and society need not to get
hampered while processing the functioning of business otherwise it may leads to the
interest of several external authorities like government that can even cease the operations
of entity. Herein, Rowlinson Knitwear the wool is natural obtained along with that
animals are not harmed for the raw material due to which it has effectively maintained
the balance within economy.
Dunning’s eclectic theory: This internationalisation theory was given by Dunning 1988
under which attention is given on the diverse aspects to expand the business in foreign market.
The variable related to foreign investment decision needs to be considered in order to enhance
the international production activities successfully. Application of theory can assist Rowlinson
Knitwear company in terms to strength the operation from UK to Canada and accommodate the
requirements of local residence effectively (Peng (2016)). Focus is given on the potential of eth

business to gain immense amount of competitive advantage in order to generate desirable brand
awareness. Explanation of different conditions is listed down below:
Ownership advantage: Entity that carry out international production or operate both in
home and host voluntary gain high ownership advantage in relation to the other national
companies that have confined area to serve. Generally the advantage is desired in form of
intangible asset as well goodwill of company that helps to rest the interest of existing and
potential candidate. Thus, Rowlinson Knitwear needs to acknowledge how effectively they can
build up the favourable reputation in diverse countries (Park & Hwang (2016)).
Location advantage: Diversification of business is possible if the company has desirable
labours, capital, technology as well as resources to operate the business in other part of the world
as well. Similarly, existence of transportation and communication facility helps in better
implementation of plant otherwise lack of such attribute restrict the growth of entity. As Canada
being developed country offers location advantage to Rowlinson Knitwear.
Internationalization advantage: It is the responsibility of internal manager of entity to
exploit external opportunity effectively in order to grow the operations in international unit.
Favourable circumstances leads to better delivery of the product within international market by
building the unique image and leads to possibility of long term sustainable advantage (Buckley,
Burton & Mirza (2016)).
Therefore, immense attention needs to be given on all three advantages including
ownership, location and internalization in order to significantly carry out the operations and
accommodation the preferences of both home and host country effectively. This leads in building
up the favourable image and gain explicit growth and development.
ASSESSMENT OF CORPORATE AND FUNCTIONAL STRATEGIES
Strategy that company use to expand internationally
For expanding the business it is important that they have understanding of the new market
and along with various strategies with which they can enter into new market. Companies focuses
upon their potential for efficiently entering into the market as this will ensure them with
additional sustainable income for long term if they expand their business successfully
(Monaghan, Tippmann & Coviello (2020)). The expansion strategies consisted of various entry
strategies along with this the identification of the target market, distribution channel strategy,

allocation of resources must also be focussed so that the operations can be facilitated. Various
entry strategies that Rowlinson Knitwear must focus upon are:
Direct exporting: This is the most common strategy which is used by the businesses that
are willing to enter into international market. In this entry strategy the company sells their
product directly to that market in which they are attempting to break into. The first step to follow
under this strategy is to make dealers and agents so that to represent them into the international
market as per interest of the company. They acts as the face of the company so it is to be kept
into mind while making dealers that they are reliable enough. It is a way similar to selling a
product or service into the domestic products so all other constraints such as logistics and labour
will be the same (Conconi, Sapir & Zanardi (2016)).
Franchising: Franchising is an agreement between two parties where one party gives
license to another party so as to transfer rights and other authorities of the business for the
purpose of business expansion. Basically it is a contractual agreement between franchisor and
franchisee in which franchisor provides right to use intellectual property and to manufacture or
sell product in the market. By using this strategy a company may enter into international market
as under franchise, the business is already an established venture which is having high
recognition and goodwill within marketplace. At the same time this strategy is risky as brand
name is associated with the business, if business is a failure in international market then this may
hamper the brand image of the company in adverse manner.
Joint ventures: This is another form of partnership where two parties are involved. In
joint venture two parties agree to form another managed company which is totally independent
and formed to execute functions of joint venture. In this strategy two companies agree to perform
their operations within a specific market or some demographic location and agree to pool their
resources and to share ownership, risk and reward in order to sell their product or service for
which joint venture has come into force. In joint venture both the parties are equally responsible
for all profits, losses and each type of costs but at the same time both the parties are working to
expand their business into international market and to earn profit with high (Dutta, Malhotra &
Zhu (2016)).
Greenfield investments: This a type of foreign direct investment in which a company
starts to operate their business in some foreign country as the subsidiary company and make
investments in plant, sites, building etc. This is the most expensive and risky strategy but at the

same time due to governmental rules and regulations the company is required to undertake all the
risk and overall costs. This involves huge research and development as just by proper
researching the most suitable market can be decided so as to enter into foreign market. This
strategy is helpful in creating more job opportunities in which investment is taking place that
enhances brand image of the company and put impact on potential customers in the new
international market sustainability (Hamilton & Webster (2018)).
Rowlinson can focus upon the direct exporting initially as with the help of this they can
develop the products as per the needs of the clients in their existing factories by using in-house
capabilities. This will also reduce the requirement of investment of setting up new factory n
Canada for them. But they have to be dependent upon the foreign merchant initially then they
can expand their operations by establishing factories there.
In addition to this the Rowlinson also need to focus on the internationalisation path that
facilitate expansion of the business cross borders. Internationalisation is associated with the
process of planning and implementing various products and services in such a manner that it can
be easily adopted by the local people. There are four internalisation paths which can be adopted
by the Rowlinson on the basis of their suitability which are:
 Traditional Path: This is the path in which the companies focus upon expansion stages
in sequence i.e., initially they focus upon their local market then they focus upon entering
into their neighbouring countries. After settling down there, they shift their focus upon
high regional dispersion (Hoffman, Munemo & Watson, S. (2016)).
 Born Global: This is the international path in which the company right from the starting
targets the international market and due to this they carry out their operations in
international market from starting. But in this their focus is on the niche market segment
so that they can gradually target more and more customers.
 Born-Again Global: With the help of this path the company directly and spontaneously
acquire international market by targeting the clients. This helps the businesses to
strengthen their entities and ensure the growth of their businesses.
For Rowlinson the adoption of traditional path for international expansion is suitable as it is a
medium sized company with limited resources so that they can efficiently operate in
neighbouring country such as Canada where people have almost similar taste and preference
along with mindset.

Analysis of the international corporate strategy adopted by any company
While planning for the expansion it is important for the Rowlinson to formulate various
corporate and business strategy with the help of which they can achieve their goals. For this they
must understand the strategies of other companies that supports them expansion (Hoffman,
Watson & Preble (2016) ). Example of some of such companies is given below:
 Multi-domestic corporate strategy of Nestle: This is the corporate strategy with the
help of which the companies aims to meet the requirements of the local people
worldwide by customising the needs of the people that they are serving to. They have
decentralised strategy with lose structure so that their subsidiaries can accommodate
themselves. Along with this the focus is upon the marketing and sales so that they can
attract their customers towards their products and services.
 Transnational corporate strategy of Unilever: This is the corporate strategy in which
the focus of the company is on the needs of the local people and to aging to benefits of
global integration. With this strategy they aim to increase their economies of scale by
improving their value chain and down streaming their other activities such as their
marketing and sales activities. All their subsidiaries are connected with each other due
to which they can achieve excellence in their strategic objectives and can achieve them
efficiently (Mäkelä & Kinnunen (2018)).
Analysis of foreign market entry strategy
For entering into the international market the companies must take into consideration
various entry strategies with the help of which they can efficiently enter by reducing the impact
of various factors such as legal regulations imposed, requirements of the funds, selection of
various strategy as per the taste and preference of the customers etc. Various strategies that are
adopted by the companies for entering into the market include:
 Nestle has always focussed upon acquiring any company in the host country which has
been offering similar products as with the help of this they can easily enter into the
market with minimum efforts. Also they focus upon the merger with the companies
having horizontal nature of products. This strategy is used only in case of their strategy of
market development (Meyer & Peng (2016) ).
 Tesco has planned their expansion in Japan and for this they conducted extensive
research for analysing the retail market of the country and then they acquired a local

convenience store operator C Two Network that had 78 discounted supermarket stores.
Tesco then renamed the stores with their names and acquired some other stores as well to
expand their business.
 Subway has been using the Franchising strategy for entering into different international
markets as in this they enter into licensed agreements with the local organisation along
with various terms and conditions of operating. With this the Subway expanded their
business and improved their market presence throughout.
How Rowlinson organise their strategy
Before entering into any international market it is important for the company to take into
consideration various factors that can have influence on them. Along with this they must
formulate various strategies. Various factors that Rowlinson must take into consideration are:
 They must analyse the impact of various macro factors while selecting the strategy so that
as with they will can analyse the impact of various factors along with various
opportunities.
 The ability of the business must be identified in terms of the strengths and weaknesses of
the company.
 The core competencies of the company must be identified which includes the resources
of the company and their special abilities.
 The international strategy must be identified which is based upon the objectives of the
company that they want to achieve (Johnson (2016) ).
Rowlinson can adopt the multinational strategy as with the help of this they can gradually
expand their business to other nations. Along with this they can focus upon the traditional
industrialisation path as with the help of this they can efficiently target the neighbouring
countries and then the global market.
CONCLUSION AND RECOMMENDATIONS
On the basis of above analysis of various factors, strategies and theories, it is identified
that the Rowlinson must take into consideration the impact of all factors so that they can reduce
its influence. For this various recommendations are provided to the company that can facilitate
them to expand their business efficiently in Canada:

 The culture of the targeted group must be analysed efficiently so that they can reduce the
chances of the resistance of the people. Also the must consider the cultural norms which
may vary from country to country, this will enable them to attract the customers easily as
their norms are take into consideration.
 Control on the brand and establishing its identity must be focussed as with the help of this
they can create brand awareness among the clients such as schools, factories, companies
etc. at initial level. After this they can establish their own factory in Canada.
 Legal implications must be analysed efficiently and must be complied as this will have
positive impact on the operations of the many ad will have better image before the
clients. Complying with all the laws will also ensure that they do have to face any legal
proceedings throughout which can affect their business operations tremendously.
 The identification and formulation of efficient strategy must be communicated in such a
manner that the employees take it positively and contribute in its successful
implementation. This will also ensure that their existing business does not get affected.
It is concluded from the above report that the organization has to efficiently analyse both the
micro and macro environmental factors before formulating any strategy for the expansion as with
the help of this they can hey reduce the influence of such factors. The managers must consider
various strategies and tactics adopted by other companies so that they can accordingly formulate
their strategies by taking into considerations the problems and challenges do faced by them with
such strategies. Apart from this various foreign market entry strategies and internationalisation
paths must be analysed with enables to determine the efficiency of the any strategy out of all.

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