MNG00723: Ausmed Pharma's International Expansion Strategy Report

This report analyzes Ausmed Pharma's potential international expansion into South Africa and China. It assesses the political, economic, social, technological, environmental, and legal factors (PESTLE) in both countries to identify risks and opportunities. The analysis concludes that China offers a more favorable environment for Ausmed due to its booming economy, large population, and technological advancements. The report recommends a licensing entry mode for Ausmed to leverage China's cheap labor and growing customer base. The report considers various factors influencing the company's strategic decision, including foreign direct investment laws and environmental concerns, highlighting China as the optimal choice for Ausmed's expansion.

Running head: INTERNATIONAL BUSINESS STRATEGY
INTERNATIONAL BUSINESS STRATEGY
Name of the Student
Name of the University
Author Note

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Executive Summary
The analysis in the report is based on the ways by which an organization can aim to expand
its operations in another country. The organization which has been taken into consideration in
this case is Ausmed Pharma which is an Australian company. The countries which have been
considered for expansion are South Africa and China. The analysis has further been made
based on the external factors that prevail in the environment. The external analysis has
thereby depicted that Ausmed will be able to operate in a profitable manner in China due to
the huge number of opportunities which are provided to the company by its external
environment on a social and economic basis.

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Table of Contents
Introduction....................................................................................................................3
Analysis of risks and opportunities in each country (South Africa and China).............3
The selected destination country....................................................................................7
Discuss and justify the proposed entry for the chosen country......................................7
Conclusion......................................................................................................................9
References....................................................................................................................10

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Introduction
The international expansion based plans of Ausmed, which is an Australian
pharmaceutical company is the main part of the analysis which will be made in the report.
The company has shown huge amounts of growth in the past few years which has led to plans
made for its expansion. The analysis will thereby be based on the proper study of the two
countries which are being considered as the destination for Ausmed. The countries which
have been selected for this analysis are South Africa and China (Tsang and Yamanoi 2016).
The different external factors that are able to affect the operations of Ausmed in any
of the two countries will be analysed in the report. The analysis will help in deciding the most
appropriate country for the expansion based plans which have been made by Ausmed. The
opportunities and risks which can be faced by the company after its expansion in any of the
countries is an important part of the analysis. The entry mode which can be used by the
company to operate in the new area is an important part of the analysis (Iyer et al. 2015).
Analysis of risks and opportunities in each country (South Africa and China).
External analysis of South Africa –
Political risks need to be analysed in an effective manner in order to decide the
effectiveness of the market in South Africa. The corrupt nature of the politicians has caused
major issues for the new organizations which decide to operate in the country. The
questionable political conditions have thereby been able to hamper the entry of an
organization like Ausmed (Monaghan, Tippmann and Reuber 2017).
Economic risks which can be faced by Ausmed in South Africa are high as the
currency of the country is quite low. The major problem is thereby based on the ways by
which the company is able to operate in the country based on fall of the currency. The

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operations of the company can thereby be affected in an adverse manner by the weak
economy of South Africa (Cuervo-Cazurra 2016).
The depletion in the currency rates and high rates of unemployment in the country
have been able to affect the buying power of people. People in South Africa are however
highly entrepreneurial in nature. The start-ups which are being opened up on a continuous
basis have been able to prove this fact. The lack of buying power is however a negative factor
which can affect the sales of Ausmed in the country (Smulders et al. 2017).
The technological advancements in the country have been quite low. The country has
not been able to show high rates of technological development due to high unemployment
and unstable political conditions as well. Ausmed will not be able to set up its operations in
an effective manner with the help of low technological capabilities of South Africa.
The labour laws which are followed in South Africa are immensely similar to laws
which are followed in the United Kingdom. The different taxes which need to be considered
by Ausmed mainly include, stamp duty, transfer duty, excise and customs duties, capital
gains. The value added tax based laws also need to be followed by the company in an
effective manner (Wolpe 2018).
The various environmental researches have been able to depict that South Africa can
be considered to be low risk based for the investors who are mainly looking for a
breakthrough in the market. The expansion and breakthrough based operations of Ausmed
will thereby be facilitated by the environmental condition of South Africa.
The external analysis of South Africa has been able to depict that the country is not
able to provide huge opportunities to the company in order to operate in a profitable manner
in the country. The environmental factors of the country are thereby able to provide

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opportunities to the company in order to continue its operations effectively (Denicolai et al.
2016).
External analysis of China
China has been considered to be an attractive country for the purpose of making
effective investments. The economic development of the country has been able to attract
various international organizations. The international expansion based plans of the companies
are thereby facilitated by the environment in China. The different factors which are able to
affect the operations of international organizations like Ausmed are as follows,
The political risks are a major part of the regulations which are able to affect the
operations of global companies. The government regulations which include different informal
and formal rules are able to impact the country. The development of e-commerce is an
important part of the operations of the government of the country. The political environment
of the country is thereby able to affect the ways by which Ausmed can operate in the
international market (Jiang and Holburn 2018).
The economy of China has been developed in an effective manner with the help of
significant growth of GDP. The reports have been able to suggest that China can develop
itself in a huge manner which can be helpful for the country to surpass the GDP based rates
of the US. The economic development of the country can play an important role in impacting
the organizations which operate in China. Ausmed will be affected in a huge manner with the
help of proper development of the economy (Bortoluzzi et al. 2018).
The cultural and the social aspect of the country has been affected by the constantly
changing demographics of China. The cultural and social trends are thereby able to impact
the purchasing based decisions which are taken by the people. The products which are

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offered by Ausmed and their sales can be affected by the choice of consumers. The high
literacy rates of the people are thereby able to affect the buying decisions in an effective way
(Kaufmann and Panhans 2017).
The major issue which is faced by the technological development of the country is
related to the proper development of business to consumer industry. The online payment
based system which has been developed by the country is an important part of the issue faced
in technological development. China has been able to set its position as the leader in
technology and science. The spread of entrepreneurship is thereby an important part of the
technological advancements of China. The expansion based operations which have been
planned by Ausmed are highly facilitated by the technological development which has been
made by the country (Jin, Ramkumar and Chou 2018).
The high rates of economic development of China has caused many negative effects
on the environment. The major issues which have been faced by the country based on
environmental changes are air pollution, water pollution, industrial waste and deforestation.
The steps which have been taken by the government are based on addressing the different
environmental concerns. Ausmed can operate in the environment of China in an efficient
manner with the help of proper planning of the production related processes (Yu and Ma
2015).
The legal environment of Chins is another major factor that needs to be analysed by
Ausmed in order to operate in the industry effectively. The laws which are able to regulate
the business in China thereby need to be considered by Ausmed in order to start its operations
in the country. The huge population of the country will thereby be helpful for the company to
increase its revenues and further use the low cost labour as well. The foreign direct
investment of the company is an important part of the laws which have been established by

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the government of the country. The legal conditions of the country will thereby play a major
role in proper operations of the company in China (Huang, Rice and Martin 2015).
The external analysis of China has been able to depict that the country can be able to
provide huge opportunities to Ausmed in order to increase its revenues in an effective
manner. The Labour Contract based laws which have been applied by the country will also
provide an opportunity to the company in order to increase its revenues with help of low cost
based operations.
The selected destination country
The country which has been selected for the expansion based operations of Ausmed
pharma is China. The company will be provided with huge opportunities by China in order to
operate in the country. The booming economy of China is able to provide an opportunity to
Ausmed in order to increase its revenues in an effective manner. The huge population of the
country is an important factor that can affect the labour based requirements of the company
On the other hand, the company can also gain huge number of customers in China (Hawke
2018).
The customer base, revenues and reach of the company will be increased effectively
in order to operate in the country. The revenues and profitability of Ausmed Pharma will be
increased effectively with the proper help of the huge population which is present in China.
The economy of the country can thereby be effective part of the proper increase of revenues
of the company (Gulanowski, Papadopoulos and Plante 2018).

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Discuss and justify the proposed entry for the chosen country
The market entry based modes which have been used by the company to enter the
Chinese market is licensing. The international licensing based agreement which can be made
by the company is based on the exclusive or non-exclusive entry which can be made in order
to manufacture the products of the proprietor. This foreign market entry mode is mainly
based on the ways by which the company is able to maintain its position in the market in an
effective manner (Visser and Tolhurst 2017).
The most important part of the operations of organizations which enter the foreign
market with the help of licensing process is based on the proper development of products that
are provided to the customers. Ausmed Pharma can thereby use the process of licensing in
order to enter the Chinese market. This will play a major role in the proper operations of the
company in the market. The company will be able to take advantage of the cheap labour
which is provided by the Chinese market. The people of China will also play a major role in
increasing the profitability of the company (Alden and Aran 2016).
The customer base which can be developed effectively by the company in China will
play a major role in its operations and increase of revenues as well. The company can thereby
develop its profitable position in the industry with the help of proper operations of the
company. The revenues can also be increased in an effective manner with the help of
technological advancements which have taken place in the country. The technological
environment of the country will play a major role in the ways by which company is able to
develop its position in the industry (Fernández-Méndez, García-Canal and Guillén 2018).
The economic condition of China is also able to affect the ways by which Ausmed
can gain its revenues. The boom in economy has been able to increase the buying capacity of
the customers. This an important factor which can affect the operations of Ausmed in the

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environment. The economic condition of China is a major factor which can effectively
change the ways by which Ausmed is able to operate in the country. The Ausmed will be able
to take the advantage of effective economic situation which prevails in the country in order to
increase its reach and customer base as well. The licensing based decision which has been
taken by the company will also be highly profitable for its proper operations in China (Alden
and Aran 2016).
The company will be able to increase its growth based opportunities and revenues in
order to operate in a profitable manner. The levels of profitability of the company and its
customer base can be increased in an effective manner with the proper help of which is
provided by the economic and technological situation in China. The most important part of
the operations of the company is thereby based on the ways which are used by it to increase
its international presence and further increase its growth as well. The company will be able to
increase its operations in an effective manner with the proper help that is provided by the
Chinese economy (Visser and Tolhurst 2017).
Conclusion
The analysis can thereby be concluded by stating that the proper operations and
expansion based plans of Ausmed can be provided with effective support from its operations
in China. The company will be able to gain from the expansion related operations which are
made in China with the help of its economy. Ausmed will thereby be able to develop an
effective position in the industry by expanding its operations in China. The external analysis
of China has thereby been able to depict that the company can increase its profitability in an
effective manner with the help of the customer base which will be developed in China. The
human resource base of the company will be supported in the most effective manner by huge

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population in China. China will thereby prove to be the most suitable market for the
successful expansion of Ausmed.

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References
Alden, C. and Aran, A., 2016. Foreign policy analysis: new approaches. Routledge.
Bortoluzzi, G., Kadic-Maglajlic, S., Arslanagic-Kalajdzic, M. and Balboni, B., 2018.
Innovativeness as a driver of the international expansion of developing markets’ firms:
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Cuervo-Cazurra, A., 2016. Multilatinas as sources of new research insights: The learning and
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Iyer, G.R., Grewal, D., Javalgi, R. and Radulovich, L., 2015. Franchise Expansion into
International Markets: The Role of Entrepreneurial Orientation and Knowledge Resources.
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