Business Strategy Report: ABC Continental's UK Market Expansion Plan

This report provides a detailed analysis of ABC Continental Limited's strategy for entering the UK market, focusing on establishing an e-commerce venture to sell infant cotton wear. The report begins with a proposed strategy based on market research, including direct exporting, licensing, franchising...Read More

International Business

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Detailed strategy proposal based on extensive and relevant market research.........................3
2. Research has identified...........................................................................................................4
a. Key business drivers behind company's expansion into the UK.............................................4
b. Important barriers to trade and it’s protectionist policies which hamper new venture...........5
c. Ethical, social and legal issues which are taken into account.................................................6
d. Cross cultural issues relevant to proposed venture.................................................................7
3. Evaluating feasibility..............................................................................................................8
a. E-commerce option versus other methods of expansion ........................................................8
b. Aspects of international marketing ........................................................................................9
c. Potential impact of BREXIT on the venture.........................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
International Business is a trade of goods and services across the national borders or at a
global level. This process includes cross border transactions of goods and services between two
or more nations. Main aim of this project report is to build an understanding about business
strategy for international business purposes. In order to fulfil this aim, ABC Continental Limited
is selected. This company wants to enter in international market by establishing their market in
United Kingdom. This company is planning to establish a new e commerce venture to sell infant
cotton wear. In this project report, various strategies are proposed which are based on relevant
market research. Key business drivers are also analysed in this report along with ethical, social,
legal and cross cultural issues. Barriers to international trade are also mentioned in this project
report in order to ascertain aspects of international marketing. Potential impact of BREXIT are
identified along with various methods for expansion in international market (Botha, Kourie and
Snyman, 2014).
MAIN BODY
1. Detailed strategy proposal based on extensive and relevant market research
ABC Continental Limited is planning to enter in international market by establishing a
new venture in United Kingdom. It is important to develop an extensive market research to
ascertain most suitable strategy to enter in international business. By considering the nature of
business which has been planned to launch by ABC Limited and the market demand, there are
few proposed strategies which are discussed below:
Direct Exporting - This is a tool which can be used to enter in a new market. In this
strategy proposal, products and services of ABC Limited can directly be exported to United
Kingdom for selling purposes. This proposal requires individuals in UK which can act as their
agents so that they can ensure smooth functioning of their business. There are various benefits of
this proposal, the most important advantage of this strategy is that there is no requirement of any
physical office in UK which can help in reducing cost of establishment. ABC Limited should
ensure one thing and that is to build a close relationship with their agents and distributors. These
representatives can act a their staff in new market and can have gather all important market
information about trends, changing choices and preferences (Hamilton and Webster, 2015)
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(Source: Proposed strategies for entering in International market, 2018)
Licensing - This is an another proposed strategy which is in which ABC Limited can set
up an arrangement in which they can transfer the rights to any other company in United
Kingdom to sell their products. In this strategy, ABC Limited can provide license to some other
company in order to provide them all the rights. This proposal can result in acquiring higher
market as they can provide license to some large retailer by which they can increase their market
share as well as their sales. There is a limitation of this strategy also as this brand image of ABC
Limited will automatically be linked with their licensed company.
Franchising - This proposed strategy is most common for business which plan to enter in
international market. Using this strategy, ABC Limited can expand their business. Under this
method, ownership of name is transferred to other party or existing business so that the entity can
use brand name of ABC Limited and can increase their sales. Using this proposal, this company
can sell their organic infant wear easily.
Joint venture - ABC Continental Limited can enter in international market by joint
venture. Under this proposed strategy, two business join together to conduct a lawful business.

This company can join with any organisation which already based in United Kingdom (Huang-
Horowitz, 2015).
2. Research has identified
a. Key business drivers behind company's expansion into the UK
Key business drivers are the aspects which impact on the performance of the business.
ABC Continental Limited is planning to expand their business by entering into market of United
Kingdom. There are various external and internal key drivers for this business which are
discussed below:
Infrastructure - The most important driver of expansion is the infrastructure of that
location or area where company is planning for expansion that is United Kingdom. In order to
ensure suitable growth and development of this company it is important to develop appropriate
infrastructure. This element includes various facilities which are important to business and their
lacking can even adversely effect organisation performance. This involves IT systems, processes
and many more.
Funding - Another key driver of expansion of ABC Continental Limited is finance and
funding by which operations of this organisation conducts. Funds is the capital which can help
business to grow faster. For example: ABC Limited can attain more funds from various sources
of finance such as shareholders capital, merger and acquisition, long term debts and many more.
This driver is the most potential factor by which operations of an entity can develop (Guay,
2014).
People - Here, people are the employees and manpower of the company which operates
an business effectively. This key driver helps in providing business a better vision and mission so
that organisation can direct their operations towards growth. In the case of ABC Continental
Limited, management should employ individuals which has experience of working within the
environment of UK so that expertise can be attained. Teamwork along with trust can highly drive
a company towards its expansion.
Strategy - These are plans and procedures which are developed for expansion of a ABC
LIMITED. In order to effectively execute the proposed strategy of expansion, it is important to
build a idea which can drive entity towards expansion. For example: ABC Limited is planning to
expand their activities in United Kingdom by selling their unique product of organic infant
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cotton wear in this country. In order to ensure this expansion, strategy must be selected and
formulated effectively (Nonaka and Reinmoeller, 2017).
The above drivers acts as a factor which impacts the expansion of ABC Continental
Limited.
b. Important barriers to trade and it’s protectionist policies which hamper new venture
ABC Continental Limited is a manufacturing company which produces clothing items.
This company is planning to expand their activities by entering into the market of United
Kingdom. There are various barriers which restricts the international trade. these barriers are
discussed below:
(Source: Trade barriers, 2018)
Tariffs - This barrier refers to the duties and taxes which are levied by the government of
that country in which expansion is planned. If the tariffs are high, company can even face the
situation where profitability can decline. These duties are imposed according to the current
business law and has the aim of earn duties for government of the country. These tariffs can vary
according to the products and services which are offered and can even vary according to the
location. For example: If ABC Limited is planning to offer other products or services rather than

organic infant cotton wear then there is a possibility in variation of their taxable amount. These
tariffs restricts small companies to expand in countries where duties are high (Ricciardi, Zardini
and Rossignoli, 2016).
Licensing - These are the formalities which are necessary to be followed by the
organisation if they want to expand their business. Licensing are the rights which allow business
organisation to freely trade in particular product or organisation. ABC Continental Limited is
planning to expand in United Kingdom by offering clothing products. For this expansion, this
company should get suitable license so that they can lawfully conduct their business activities in
the market of UK.
Trade restriction - Besides tariffs and licensing, there are few other non tariff
restrictions also present which limits a business organisation from conducting there activities in
international market. These restrictions include policies which are made with aim of protect
environment and other aspects of society. For example: Manufacturing of few types of plastic is
banned in areas where agricultural activities used to be performed. The reason behind this
restriction is the harmful fumes which are extracted from the manufacturing of plastic. In the
case of ABC Continental Limited, they are operating in producing organic infant wear for which
restrictions are less.
Currency deviations - Another restriction or limitation of trade is currency deviations.
This limitation refers to the variation in currency valuation between to countries due to which
profitability and sales revenue gets affected. In the case of ABC Continental Limited, if the
valuation of United Kingdom's currency is less than the currency in which ABC operates then
they have to face problem of low earnings (Reuer, 2017).
Along with these barriers, there are few protectionist policies are also present which act
as rescue policies. These policies are the tariffs which result in low taxes for ABC Continental
Limited. Other policies are the intensive research and pre developed strategies which enables this
company to effectively operate without any issue and fear of trade barriers.
c. Ethical, social and legal issues which are taken into account
If a company wants to expand their business activities, they have to consider all the
aspects which can influence their business activities. It is important to pre determine all the
issues so that the process of expansion can be conducted smooth. These issues are classified as
ethical, social and legal issues and discussed below:
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Legal issues - Under this type of issue, the most influential aspect is operational legal
issues. It is possible that the operations which are performed by the company and not acceptable
in other countries or want some legal forma to be fulfilled. ABC Limited is freely operating in its
native country but there is a high possibility that the activities of cloth manufacturing requires
legal formalities to be performed in United Kingdom. Another legal issue which can be faced by
ABC Continental Limited is taxes. To earn reliable profits in international market it is important
for ABC to look for the jurisdiction in which they have to pay low taxes and duties (Charter,
2017).
Ethical issues - These issues are based on ethical considerations of a company. These
ethics are often related with social issues as the ethics which are developed and followed are
pinned by the society only. In the case of ABC Continental Limited, the most influential ethical
issue which should be taken into account is social responsibility. This company is planning to
expand their business in United Kingdom. And it is ascertained that in this country it is important
to fulfil social responsibilities for every organisation.
Social issues - These issues are related with social aspects of a country. For example: it is
considered as normal in various countries to accept gifts, commissions and other favours against
business advantages. But in some countries like United Kingdom this activity is considered as
the crime of bribery. It is important for ABC Limited to research about the social aspects of
United Kingdom so that they can operate smoothly (Datta, Mukherjee and Jessup, 2015).
d. Cross cultural issues relevant to proposed venture
It is considered that when a company enters into international market, they face various
issues due to cultural differences. Cross cultural issues for the new venture of ABC Continental
Limited are discussed below:
False communication - While establishing a new venture in new location, the most usual
issue which is faced is communication barrier. Languages used in various countries is different
due to which even after getting familiar with languages there are high chances of false
communication. For example: language or signs used for communication in United Kingdom
may vary from different countries.
Perception - This is the mind set of people which is perceived by experiences and
choices of the public. This is socio cultural issue which states that perception of different people
of different locations vary from each other. For example: People of United Kingdom has a

perception that infants are the delicate creature and it is not justifiable to experience with their
clothes and use organic cotton wear from them. This perception can result in failure of ABC
Continental Limited's venture in UK. Mind set of people can be changed but it requires time and
trust. This cultural difference can be resolved but for that an organisation has to make high
efforts.
Trust issues - It is an another cross cultural issues which can be faced by ABC
Continental Limited in United Kingdom. Usually it has been seen that people do not trust
companies and their products which belongs to foreign countries. This lack of trust due to cross
cultural differences can result in low brand equity of the organisation and can ultimately result in
venture failure. For example: Products which are offered by ABC Limited are for infants and if
people of United Kingdom has trust issues on foreign countries and there is high possibility of
failure of there new venture (Dereli and Altun, 2013).
Demographical culture issues - These issues arise due to variation in values of different
demography. In the case of ABC Continental Limited, they are planning to expand their business
activities by entering into the demography of United Kingdom. Culture of two demographics are
usually seen to have variation in them. For example : cultural values of United Kingdom are
different from the cultural values of .
3. Evaluating feasibility
a. E-commerce option versus other methods of expansion
E commerce is the method by which a company can expand their operations in any
location. This method is considered as one of the most effective strategy proposal of businesses
which are planning to enter in international market. ABC Continental Limited can has use this
method by providing two segments and that is B2B and B2C. Under the segment of business to
business, this company can sell their products to other businesses of United Kingdom and can
deal with them using their online website or application. In the segment of business to customers,
ABC can directly contact with their customers and can fulfil their demands. In order to expand
their operations, ABC Limited can use both of these segments of e commerce. Besides e
commerce, there are few other methods of expansion which can also be considered by this
company and they are discussed below:
Merger & Acquisitions - The first method which is shortlisted for ABC Limited is
mergers and acquisitions. In this method, ABC can merge with any company working in United
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Kingdom or can acquire them in order to buy their brand name so that they can build a trust in
the eyes of people. This method is considered as beneficial when business is willing to invest
high investment. E commerce allow to expand business activities without any high investment
whereas method of merger and acquisition requires ample of amount to be invested. As buying a
whole company requires a lot of funds and a e commerce website can be maintained with a
comparatively lesser amount of capital.
(Source: Contribution of M&A in expansion of international business, 2018)
Dealer Agreements - This method is related with direct exporting under which dealers or
agents are hired by the company as their staff members which can carry out their business
activities in United Kingdom. When compared e commerce method, this mode also requires less
capital. But unlike e commerce, risk of brand equity is high. ABC Continental Limited can not
directly deal with their clients, they have deal with their agents and the goodwill and image of
the firm is in the hands of those dealers. Whereas in e commerce, whole control is in the hands to
ABC Limited and they can be responsible for their goodwill.
Joint venture - This method is again considered as costlier than e commerce method as
under this mode ABC Continental Limited is required to join their business name with any other

company of United Kingdom to perform operations in UK. This method will enable them to gain
goodwill of existing company and trust of people (Grimm and Jaenicke, 2012).
b. Aspects of international marketing
To expand the business operations in international market it is important to effectively
promote products and services so that familiarity among the international market can be made.
ABC Continental Limited is planning to expand their business activities by entering into the
market of United Kingdom. And for this activity, they have to ensure proper international
marketing. There are various aspects which should be considered while marketing the products
in international market and they are mentioned below:
Research - This aspect is considered has the efforts which should be made by the
company before entering into a market. These efforts must be made in right direction. In the case
of ABC Limited, management of this company should conduct a intensive research about the
market of United Kingdom and perception of their society. This company is planning to
introduce a new product that is organic infant cotton wear. Management of this company should
research about estimated demand of this company, perception of society about these type of
products, legal formalities which should be fulfilled for launching such item in UK and many
more. This aspect is considered with the aim of effective planning for the expansion.
Infrastructure - This is an aspect which must be considered by ABC Continental
Limited as on the basis of this aspect decision of expansion is relied. Infrastructure are the
facilities which are mandatorily required in the country in which expansion is planned. For
example: to manufacture organic infant cotton wear, it is important to have facilities of proper
raw material from which this type of product can be manufactured. If in the case where
infrastructure facilities are not enough then they has to make an additional investment to make
the expansion work.
Localised product and marketing - Under this aspect, ABC Continental Limited should
make sure that they are localise their product so that it can fulfil the demand of people of United
Kingdom. Along with the product, marketing strategies should also be localised so that people
can build a demand for their products.
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c. Potential impact of BREXIT on the venture
(Source: Impact of BREXIT on UK's businesses, 2018)
BREXIT or British exit lead UK to be separated from European union. BREXIT has a
intense impact on the venture of ABC Continental Limited. Usually the companies which
operates in United Kingdom has the opportunity to capture whole market of European union but
now this opportunity is not available for ABC. Another potential impact of BREXIT is increased
cost of procurement. UK is a developed country but unlike various countries they do not have a
hub of raw materials due to which they are procured from various areas of European union. But
after the BREXIT, those raw materials can not be procured without paying high tariffs and
duties. Another potential impact of BREXIT on ABC Continental Limited is limited scope of
marketing. Unlike pre BREXIT scenario, now ABC Limited has to only capture customer and
market of United Kingdom due to which their chance of additional expansion reduces (Hsieh,
2013). Due to additional tariffs and taxes, profitability of this company can also gets affected.
ABC Continental Limited is planning to launch their product in market which is organic infant

cotton wear but the organic raw material has to be procured from other countries on which this
company has to pay high tax due to overall profit rate of this company will decrease.
CONCLUSION
From the above project report it has been concluded that managing international market
affairs is a crucial task to perform but it can be conducted effectively with the relevant research.
Various proposed strategies are identified in this project for entering in international market from
which it has been ascertained that for ABC Continental Limited can attain high success if they
use strategy of direct exporting. Key drivers and barriers for international trade are also
identified but there are several issues which can be faced due to different markets preferences
and perceptions of society. Cross cultural issues are also determined which provides an clarity
about alternative options for expansion. Impact of BREXIT is also discussed in above project
report which is identified with the aim of ascertaining external business environment for the
chosen company.
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REFERENCES
Books and Journals
Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business
environment: Knowledge management and knowledge management technology.
Elsevier.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Huang-Horowitz, N C., 2015. Public relations in the small business environment: Creating
identity and building reputation. Public Relations Review. 41(3). pp.345-353.
Guay, T R., 2014. The Business Environment of Europe: Firms, Governments, and Institutions.
Cambridge University Press.
Nonaka, I. and Reinmoeller, P., 2017. Knowledge creation and utilization: promoting dynamic
systems of creative routines. Creating value: winners in the new business
environment. pp.103-126.
Reuer, J., 2017. How real are real options? The case of international joint ventures. Creating
value: Winners in the new business environment. pp.59-81.
Ricciardi, F., Zardini, A. and Rossignoli, C., 2016. Organizational dynamism and adaptive
business model innovation: The triple paradox configuration. Journal of Business
Research. 69(11). pp.5487-5493.
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Datta, A., Mukherjee, D. and Jessup, L., 2015. Understanding commercialization of
technological innovation: taking stock and moving forward. R&D Management. 45(3).
pp.215-249.
Datta, A., Reed, R. and Jessup, L., 2013. Commercialization of innovations: an overarching
framework and research agenda. American Journal of Business. 28(2). pp.147-191.
Dereli, T. and Altun, K., 2013. A novel approach for assessment of candidate technologies with
respect to their innovation potentials: Quick innovation intelligence process. Expert
Systems with Application. 40(3). pp.881-891.
Grimm, H. M. and Jaenicke, J., 2012. What drives patenting and commerzialisation activity at
East German universities? The role of new public policy, institutional environment and
individual prior knowledge. The Journal of Technolog y Transfer. 37(4). pp.454-477.
Hsieh, C. H., 2013. Patent value assessment and commercialization strategy. Technological
Forecasting and Social Change. 80(2). pp.307-319.
Online
Proposed strategies for entering in International market. 2018. [Online]. Available
through: <https://eeledge.wordpress.com/marketing-concepts/entering-foreign-markets/>
Trade barriers. 2018. [Online]. Available through:
<https://blogs.imf.org/2016/06/20/how-lowering-trade-barriers-can-revive-global-productivity-
and-growth/>
Contribution of M&A in expansion of international business, 2018. [Online]. Available
through: <https://www.statista.com/statistics/267369/volume-of-mergers-and-acquisitions-
worldwide/>

Impact of BREXIT on UK's businesses, 2018. [Online]. Available through:
<https://www.businessinsider.com/oecd-charts-how-brexit-has-damaged-the-british-
economy-2017-10?IR=T>
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