International Business: A Case Study on Utterly Milk's Expansion in China

This report discusses Utterly Milk's expansion in China and explores various aspects of international business such as business drivers, cultural factors, trade barriers, and more. It also includes a PESTLE analysis and a discussion on Hofstede culture model.

International Business

Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Background and UHT Milk Context......................................................................................4
Business Driver......................................................................................................................5
Cultural factors.......................................................................................................................7
Trade barriers (Tariff and Non-tariff).....................................................................................8
Ethical and Social Issue..........................................................................................................9
Methods of Expansion..........................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

EXECUTIVE SUMMARY
International business encompasses and formulates commercial activities and actions
which take place for promote and transfer all products, services, resources and ideas in the
international market. International business occur in the different formats and it include the
movement of products from one country to other through utilise the importing, exporting,
licensee, etc. The study of international business engaged model to understand external business
environment to understand all those perspectives which help for start and control operations in
international market. Further, the study of Hofstede culture model helps to recognise UK and
China culture. The multi-domestic organisation is managed to cope up with the uncertain market
and this helps to continue the global market. Further, trade barrier including the tariff and non-
tariff barrier is understand for manage the task in an organised manner and this helps for manage
work in the global market.

INTRODUCTION
The term international business relates with any situation or circumstances where the
distribution as well as production of products or services take place across the country borders.
In simple terms, international business incorporates full range of cross-border exchange of
products, resources and services between various nations. Business or organisation is expanding
their business at global level and globalisation aids them for perform their work beyond the local
region and traditional boundaries. This report is written from perspective of Utterly Milk and this
is an upcoming small and medium enterprise which performs work in the dairy industry (Alahlah
and et. al., 2020). The primary objective of the organisation is to perform work in the Chinese
market and to deliver the UHT milk in the local area. Moreover, this report highlights on the
external environment and trade theories for identify key business drivers. Trade barrier and
ethical as well as social issue related with UK SME will also include in this report.
MAIN BODY
Background and UHT Milk Context
According to present market conditions, organisation is expanding their business size at
global level. So with monitor and control overall work conditions this is easy for management to
perform work at global level by completion of work according to current global market
conditions. Further, dairy products such as milk, cheese, yogurt, etc. are required by all
individuals so the scope of dairy industry exists at international level.
UHT (Ultra-high temperature) is explained as ultra-pasteurized milk which comes in the
sterilized container. This also works as the real milk and similar as the customer buy from dairy.
But, with ultra-special pasteurization and packaging process the life-cycle of milk is retain for a
longer period. Moreover, with engage of the constant pasteurization process harmful bacteria are
exterminated which spoil the milk life.
Trade and consumption within China exists at local level at high volume because it is a
developing country with large number of population. Therefore, China is the world’s largest
importer of dairy products (Chen and et. al., 2014). This is because the China’s diary production
has been flat since 2008 and due to this there is a gap between demand and supply. So import is
the best option for china to formulate the constant process or delivery of foods. UHT milk is a
major product which is in regular demand of China dairy industry. Moreover, the approximate

demand of UHT milk in China is forecasted about 980,000 in the year 2021 and this create hype
with 5%. The demand of UHT milk is the first dairy product which gain demand among the
overall world. Competition from local dairy generates the cold chain distribution system and
this creates problems for UHT milk provider look into new market (Cui and et. al., 2019). EU is
the major milk provider of China and the expected growth is 17% within the year 2022. For this
competitive moves and current market conditions of China are predicated by the Utterly Milk for
sustain in the global competitive market.
Business Driver
Business driver is explained as the key action and activities which drive financial and operational
results for business. The common perspective of business drivers of UHT milk is salespeople and
the transport service provider. In simple terms, business driver is a process for the continued
success and growth of utterly milk. Further, authorities of the respective organisation identify
business drivers with induce of Pestle model and this helps for maximise the company efficiency
by performing work with analyse of the external market conditions.
PESTLE Analysis
The Pestle analysis is explained as a tool which was developed by Harvard Professor Francis
Aguilar and this helps for conduct the external analysis of organisation. One of the most
important steps for maximise the organisation profitability and sustainability is Pestle because it
provide valuable insight to management.
Political Factor- The term political factor impact on profits and also on survival of business
along with this political risk vary from sudden change among the existing political regimes.
Example- Utterly Milk faces problems due to change in existing political regimes from civil
unrest to government decisions. China is a developing country but they have high political
stability in the country (Du and et. al., 2019). Therefore, laws enforce about regular business
factors and this helps to perform work in a proper manner by provide UHT milk in all region.
Economic Factor- This includes all perspective which is related with monetary amount and it
refers to different changes related with inflation rate, foreign investment and exchange rate,
interest rate and GDP. All factors related with business impact on aggregate demand and
investment related with business climate. Also, the general economic factors provide potential
factors to utterly milk for improve overall profits of business.

Social Factor- The current market conditions are too dynamic and it directly impact or reflect on
the organisation. With encompasses and understand the society culture, attitude, value and belief
majority of the population impact on company operation. On the other side, Utterly Milk use
demographic factors specifically, age because it support company to develop and deliver UHT
milk to children.
Technological Factor- Due to technology overall operations and functions of an organisation is
impacted. Along with this price structure and competitive landscape of business industry retain
for a short time period (Huimin and et. al., 2014). Therefore, this is extremely important for the
Utterly Milk to adopt technology for make constant innovation in the organisation. Cold supply
chain management is established by competitors so to deal with it technology factor are adopted
in a quick manner for make innovative alternative in business.
Environmental Factor- There is various industries operates in a similar environment and
according to current market scenario, pollution is one of the major problem because this create
challenges for business to perform work in a proper manner as strict regulations are difficult to
follow by the companies. Utterly Milk deal in perishable products so this is important for
management to follow the environmental guidelines for safe company existence.
Legal Factor- The government institutions develop framework for a country and then all work is
done by management of respective organisation according to the guidelines of government.
Moreover, government policies and rules generate procedures which help management for
completion of work according to ethical and legal manner.
UHT Milk includes a unique perspective and this helps for improve the overall capacity to retain
in milk. With understand of political factors it is identified that the China government follow
autocratic style and due to this it is complex for Utterly milk to enter in China market. Economic
perspectives perform an important role and economic of China is at developing stage so utterly
milk engage and introduce milk as per local market of China. The current market scenario,
consider business drivers perform an important role and TECHNOLOGY is first business driver
and with adopt of innovation this is easy for management to generate better results specifically,
to perform work with new approaches. Moreover, Wuhan is the target city of UHT milk and
most of them are induced with automated system also, individual follow strict and rigid schedule
due to which they have less time to invest in shopping products (Khaneghahi Abyaneh and et.

al., 2019). Therefore, UHT milk is offered to them so it is easy for person to retain milk for
longer period.
TRANSPORT SERVICES perform an important role as they support utterly milk for deliver all
products and UHT milk from European Union to China. Also, the current information and
market conditions define engaged persons face difficulty to get better results because of
pandemic. So TRANSPORT and PROCESSING UNIT setup are the business driver factors that
help to manage demand and supply of milk products.
Cultural factors
According to current market conditions, the business world takes place at global level and
due to this workforce identifies different perspectives and they face competition from someone
who belongs to another country. Moreover, individual negotiate with business of other country
which follow or belong to different culture. A Dutch Social Psychologist, Geert Hofstede
develops a model culture model and this is used for collective programming of individual mind
and this distinguishes the member of one group from another (Li and et. al., 2017). The primary
goal of Hofstede culture is to tell people who they are, which behaviour is appropriate and which
is difficult to accept in society. Basically, this depends on five different factors and this help to
identify key cultural factor which is useful to gain success in China.
The Hofstede dimension of cultural variability identifies all dimensions and this helps authorities
of Utterly Mild to gain high success in the China business market. The UK markets conditions
consider that there are different task performed by management and this helps for engage various
culture factors. So all task are completed according to uncertainty avoidance, individualism vs
collectivism, power distance, long term versus short term. In terms of masculinity (it emphasis
on success), uncertainty avoidance (level of comfort at the time of risk and uncertainty). Both of
this factor are difficult to select. On the other side, other dimension has substantial differences.
Example- When individualism factor (it play role or degree by which individual take care of
themselves) in context of the Eastern Asian country such as China it is likely to have 20 which
refers to a low score. But, in Western country like, UK the score is above 80. So as the result of
China Collectivistic culture, UHT Milk use the individualism factor because this helps workers
to feel motivated that their organisation take care of engaged workforce (Li and et. al., 2017).
Chinese project manager play an important role and the relationship between two individuals is
induced in proper manner. While, the UK worker generate emphasis on interdependence and

control holds to cooperate. PD (Power Distance) is the extent of culture which defines that power
is distributed among workers unequally. By comparing between China and UK business culture
power distance demonstrate great difference between British Negotiators and Chinese partners.
So small PD is induced by Utterly milk as this helps to perform work in a democratic manner.
With understand of the UK culture, it is estimated that culture factors perform an
important role for the business because they support or helps an organisation for complete all
work according to company culture. Moreover, with compare of UK and CHINA culture this is
understand that management should engage all those perspectives that consider some similar
factors to perform the work in an organised manner within new market or geographical area.
Sensitivity cultural factors related with China
There are various difficulty faced by management of Utterly milk while performing and
expanding their work in the market of China. Like, China has huge and diverse territory sector
and this create regular barriers due to which foreign market players are restricted to make
investment in local market of China. Some factors which are considered to maintain culture are
mention as follow:
 Social Structure- Majority of the Chinese organisation follows hierarchical and formal
culture. So the respective organisation identifies factors which help to grow their market
size without abiding the social culture and structure. Hofstede’s culture power dimension
helps to manage work in communist country.
 Business Relations- While performing business in the China, be ready for socializing
because according to Chinese social time is more important for business (Lin and et. al.,
2017). While, in UK origin business deal are more important so Utterly Milk see the
culture sensitivity factor at the time of social gathering.
 Morals- Society of China place high value on the moral of their local individuals and
according to this they follow traditional culture to show their honour and respect towards
Culture. While, UK culture is more relaxed so the Utterly Milk local workforce will
follow strict regulations in China market also.
Trade barriers (Tariff and Non-tariff)
Tariff and Non-tariff barrier for trade are the most common measure for control the
import and export. Also, for China trade barrier the main factor is to raise tax and this introduce

about limits to amount of traded products. With less common trade barrier are import quotas and
bureaucratic procedures.
CHINA TARIFF TRADE BARRIER- A tariff is essential the tax or duty which imposed towards
particular class of export and import. Tariffs barrier is increasing at worldwide level and this
imposed towards the products of China. In context of Milk industry, the imposing tariffs relate
with 0 to 100% on the imported of products (Liu and et. al., 2019). With the Tariffs worldwide
factors manage and control the work through divide categories by consider value-added tax and
custom duties.
BOUND RELATED WITH DAIRY PRODUCTS- Various prospects rebound within the US
agriculture exports and this remain constrained towards China and it increasing opaque factors.
The legal system related with business of tariffs China make assess on different US food and
agriculture. With more information about the China food and agriculture products consider to
make trade actions and this helps to see FAS Global Agriculture information network. New entry
requirements consider certificates, registration and policy to ensure food safety system of China.
Non-tariff Barrier
TO ENGAGE THE PROGRESSIVE QUOTA- Most of the progressive results are rescinded in
China and these quotas mostly import the China trade barrier and this seek towards the imposed
of quantitative limit towards company product for protecting the domestic industry (Shixian,

Caiping and Junfei, 2017). China implement the excessive bureaucratic procedure and this define
about increase threats related with communist government control. Moreover, the locally
produced goods consider to applies the mining of local produce products.
IMPORT QUATA- The current Chinese imposed quota and this define about all those
perspective which is related with different amount of dairy products. With understand of current
market conditions the China market overview the licenses and this is one of the most common
Non-tariff barrier. Also, there are two different categories of Milk exists such as UHT and fresh
milk. So this is important to see and identify about work management to manage it with
European and China related rules.
With understand of above trade related barrier this is identified that China market restrict
different factors and due to this Utterly Milk face challenges to get licensee for expand work in
the China market. But, high demand of UHT milk also provides opportunities to business as this
helps in completion of work in a proper manner. The bureaucratic procedures consider different
tax and export factors. It defines about excessive factor such as change in tax policy moderate
overall rates of organisation products.
Ethical and Social Issue
There are various different places exist in the China and UK market where organisation
performs business and this relates with different social and ethical issue. This is the natural for
each organisation to complete work according to the ethical perspectives and it define about all
those matter and problems which influence the large population of country (Silva and et. al.,
2015). China government develop strict regulations because they monitor and control
government with communist role.
Social issue define the problems which impact on large number of individuals and the major
challenge related with social issue is that they are the not controlled by society. Utterly Milk
identify problem of UK and China social environment both because both society are different
from each other. Further, Ethics refer to the moral conduct and philosophies adopted by
individuals who are used for identify what is good, bad, wrong and right. Some major social and
ethical issue of China market are mention as follow:
Unemployment- One of the major social issue related with market of China is unemployment
and this is because a large-scale of workforce has theoretical knowledge. But diary products
require constant monitoring and skilled employees so this identify as major social issue. In the

socialist China, each grown-up, quite far, was required to work. As a trade-off for work,
government authorities ensured each individual a portion of what was delivered (Xiong and et.
al., 2020). This 'contract' among state and individuals was known as the 'iron rice bowl'. Today
the 'iron-rice bowl' has been 'crushed' and the assurance of work has gone. It create challenges
related with the working standard and conditions to manage work properly. Moreover, Covid-19
generate serious conditions and this results that without abilities results in unrewarding enterprise
have ended up jobless because their work performance not match with high working standards of
Utterly milk.
Environmental Issue- China has 16 of the world's 20 most dirtied urban areas and as per
Chinese government sources, about a fifth of the metropolitan Chinese populace inhale
vigorously contaminated air. Numerous spots are contaminated with exhaust from high-sulphur
management and leaded gas. Approximate 33% of the 340 urban areas that are checked meet
China's own contamination standards. This create problem because it delegate the difficulties for
manage work because it delay the equal opportunities. UHT milk is highly pressurised so this
also create environmental problems for manage work in proper manner. The quickly developing
economy and the more prominent urbanization of the populace have left the nation persistently
because of heavy workload.
Ethical issue- A typical method to comprehend Confucian morals is that it's anything but an
excellence ethic. For certain researchers this will be a self-evident, uncontroversial truth. For
other people, it's anything but a misconstrued that forces are impacting on the current human
rights, due to change in western culture this is difficult for workforce to manage their task in a
total new country (Xiong and et. al., 2018). In easy terms, UK government identify local
problems related with UHT milk. Considering this debate, indicate the sense where it is generally
uncontroversial to guarantee that temperance comprises a significant focal point of consideration
in these writings. This governs another breach related with the ethical perspective is that UK
local individuals not prefer to consume the products of other country and due to this workforce
perspective is impacted. Ethics in the important sense are characteristics or attributes that people
could have and that are suitable objects of earning to figure out overall problems related with
human and business.
Importance of CSR in International market

CSR demonstrate about the business perspectives and this defines about all interest related
factors which are related with wide and large social level. Current market scenario, define about
profit margins that attract customers who share same value. It helps to make effective business
sense for operate business in sustainable manner. IMPROVED PUBLIC IMAGE is used to
assess the corporate social responsibility factor and this help to decide right purchase factors. It
also formulates favourable benefits for business. COST SAVING implement simple changes and
most of them favour the sustainability factors by manage the production cost.
Methods of Expansion
There are different methods exists and this is used for expand the organisation at the
global level. With require the specific background it is understand that there are various routes
exists and this helps management to perform work in international market (Yu and Huatuco,
2016). Some of the route with benefit and challenges are mention as follow:
Importing-Exporting- This method is identified as a process in which all products or services
are offered by the Utterly Milk directly to the individuals of other country. From the perspective
of international market this is understand that import-export is one of the best method for enter in
foreign especially, China market. Cost effectiveness is an advantage of the import-export
method. But, China market also generate barrier because UHT milk are costly to import.
Licensing- This permit the business or organisation for perform organisation action and
activities in the international market or region. The main role of Licensing is to perform business
beyond geographical conditions by managing organisation property such as to provide brand
name, creation method, license, etc. Licensee will pay the amount to obtain the license and it
help to promote the products in the new or unknown market. The major challenge faced by UHT
milk provider and Utterly Milk is high charge to obtain licensee.
Foreign Direct Investment- FDI is identified as a point which is used by management directly
by managing the resources and offering them in the unfamiliar market. The main motive of FDI
is to manage work by controlling expenses related with company premises, staff and innovation.
On the other side, FDI also provide possible factors and this helps to set and secure current
organisation position. But, this is difficult for utterly milk to set direct investment and this
defines about the lack of knowledge related with foreign market.
With understand of the above market this is identified various routes exists and this is
used for perform the company operation in international market. Import-export is one of the most

appropriate method for respective organisation because this is one of the traditional and simple
method to perform work in the international market. China market is rigid and complex because
this is controlled by communist government. One of the major challenges faced by management
of Utterly is to select appropriate option for perform work in international market.
CONCLUSION
With understand of the above report, this is concluded that globalisation factor generate
and offer same platform to small and large organisation. This aids management for completion of
work according to the international market conditions which monitor the competitor position and
the information for generate better position in a foreign market. Along with this, relevant theories
and model such as PESTLE is also implemented for understand external market conditions as
this aids management for completion of work according to market positions. Further, information
related with culture factors is also understood through this report for manage work according to
the UK and China culture.

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