International Business Report: Caobisco, China Market Entry, MBAE

This report analyzes Caobisco's international business strategy, focusing on its market entry into China. The report begins with an executive summary and introduction, explaining the rationale for choosing China. A comprehensive literature review and critical analysis follow, incorporating PEST and SWOT analyses of the Chinese market, along with Porter's Diamond Model to assess international competitiveness. The analysis examines cultural considerations, including communication barriers and workplace etiquette. The report also details market development strategies, advertising media, and associated risks, such as government regulations and quality control. The conclusion highlights challenges like customer differences and linguistic barriers, alongside opportunities like licensing and franchising. Recommendations are provided to enhance Caobisco's international business performance in China, including addressing cultural and linguistic challenges. The report is based on the assignment brief requiring a detailed country analysis and market entry strategy.

Marketing
International market
Student’s name
8/17/2019

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Executive summary
This report majorly highlights about the international business entry mode, which is adopted by
the famous Europe confectionary, and chocolate and biscuit shop named as caobisco. As
caobisco applying Greenfield investment as a market entry strategy developing its initial position
in china marketplace. Further, through the critical analysis, it was seen that they’re a lot of
different in culture, economic aspects, legal, political as well as technological aspects.
Furthermore, to settle in china, Caobisco also performed SWOT analysis of china on which they
have various opportunities to tap on to new market, new demand and new customers. Moreover,
this report also carries certain issues such as gap in between the customers’ difference as well as
the cultural or the linguistic challenges.

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Contents
Introduction......................................................................................................................................2
Literature review and critical analysis.............................................................................................2
Conclusion and recommendations...................................................................................................7
References........................................................................................................................................9

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Introduction
International business mainly highlights about the trade of goods, services, technology, capital
and knowledge across the national boundaries or we can say at global level, which also includes
cross border transactions of goods and services between one or more countries (Shenkar, Luo, &
Chi, 2014). Other than this, along with the trade we also have to know about the other countries
offerings, demand, supply, companies and individuals. As successful international businesses
are, recognize the diversity of the market place and along with this, they are able to cope up with
the uncertainties and risks related to them (Raff, Ryan, & Stähler, 2012).
This entire report is based on the Caobisco- the chocolate, biscuits and confectionery outlet,
which is based in Europe. This aim of this report is to investigate and analyze the potential of the
Chinese market. This study also entails about the market entry strategy of the caobisco company
followed by the market research, risk analysis and appropriate recommendations and the
conclusion sections.
The analysis of the Chinese market is multifaceted and the multi-dimensional mission, who
mainly includes the valuation of the various market issues, environmentally friendly
circumstances, the degree of attractiveness and the current opportunities and fears are to be
considered. This study highlights about the market factors, which will help the company to
facilitate the decisions making over the market entry strategy and the expansion options
(Cadogan, 2012). Hence, it is seen that caobisco while entering into china will apply green field
investments market entry strategy, which makes the caobisco to keep the high level of control
over the business operations in an international market, along with this they are also creating job
opportunities for china economy. However, they also have a high investment risk because of the
potentially higher market entry cost will be applied, higher cost is involved in establishing the
Greenfield location and lastly the company is majorly affected by the government regulations
that may prevent to the foreign direct investments.

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Literature review and critical analysis
Pest analysis of china, majorly highlights about the countries regulatory system and what are the
strings points on which the new company makes the entry in the market-
Firstly, if we talk about the political aspect, china has strong political systems, which helps them
in boosting the entire economy. As, various and numerous regulations are considered and helps
the economy to become stronger in political terms. Even various industrial sectors and
government is also majorly focusing over the development of the e-commerce aspects within
country. Hence, such mindset clears that the government of china has strong and firm decisions
to flourish and increase their production, which helps them in boosting the economies and
generates the correct path of growth and success.
Economic factors- Economic condition of china is excellent and along with this, they continue
its development on regular basis. There are also large numbers of skilled workers and along with
this; they have the extensive export business, which majorly contributes to the success. The GDP
rate is favorable which add more value to the society and works over the purchasing power of the
customers. Other than this, the interest rate is also increasing and the reserves of the commercial
banks are also higher (Ho, 2014).
In terms of social factors- demographics and the population, growth plays a important role on
the social and the cultural basis. In this, there are various other factors such as lifestyles, religion,
education and emigration, which affect the working, growth and development of the country.
China literacy rate goes up to 90%, which plays major role in economic development of the
country.
Technological factor involves the development of the new product, new production, new
technology with new mechanism of distribution, new methods of workings also leads to the
success of the organization. As china is moving from the labor intensive economy to the
innovative driven economy. As, with time they are adopting various opportunities for both
domestic as well as internationally to grows and generate more success in terms of technology
aspect (Dunning, 2013).
SWOT analysis of china market highlights that-

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Strength of china country highlights that government structure has a custom design to govern
the people out there. Other than this, they country also have a supreme powers and the
governance with the specific other powers which helps them in making a decisions clear and
simple. Other than this, telecommunication boom was also seen which helps the country for the
steady growth and the success of the country. They also have cheap labor, which helps the
country to increase their economic prospects profusely (Xu, Hu,, & Fan, 2011).
In terms of weaknesses, china have a bit disordered financial sector, along with this, they also
have slow increase in energy, transportation and important raw material. Moreover, they also
have inequality in rural and urban, production in cities are displaced the rural workers and also
having inequalities in the income distribution.
In terms of opportunities, china nowadays are focusing more over advanced technologies and
through this it is easy for china to target the bottle neck industries of energy, communication and
transportation. Along with this, they are also having a plan a lot of financing infrastructure
projects. Moreover, china after agriculture and manufacturing workings they are now entering in
service sector. As considering the huge population of the country leads to an lucrative
opportunity for the service businesses (Chen, et al, 2011).
Lastly, threat to china highlights that the ageing population within the country majorly hampers
the china’s long-term competitiveness. Other than this, they also have an issue or threat in
concern to education, social inequality, demographics and various environmental issues, which
generates the serious issues for the country to grow.

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(Source: Luo, & Shenkar, 2011).
Porter diamond model of china majorly highlights about the international competitiveness. As
this model mainly covers the six factors which mainly comprises of factors of productions,
demand conditions related and supporting industries, corporate strategies , market structure and
competitors, government and opportunities which mainly highlights about the counties
international competitiveness.
Firstly, factor conditions mainly highlights about the skilled workers, infrastructure,
technological base. In china, the workers are moderate skilled and educated. They also have low
cost skilled workers with the necessary experience and experience, which helps the china to
compete in the global market. As such factors makes the china a highly competitive nation in the
business value chain (Luo, & Shenkar, 2011).
Secondly, demand conditions highlights about the level of home market demand for the
particular product or the service, which the country is offering. China is famous for its
machinery, technology aspects, rubber, textile and electronic products. Further, such as
foodstuffs, chemicals are also generates the competitive advantage and are in high demand by

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the residents. Therefore, it states that if the company tries out to start the new venture in the new
market. People over there have high demand for the products and services.
Thirdly, related and supporting industries which helps in enjoying the greater cost advantage and
the innovate resources. As in terms of china, the supporting industries add the value to the
advantage of the cheap labor, large market and mass production. As in china there are various
organization which tries out various marketing activities for meeting the demand of the
customers.
Lastly, in china the firm strategy, their structure and rivalry are also the main determinants of
competitiveness. The presence of the strong rival helps the companies in refining the superiority,
creation of the merchandise innovations and lowers the cost. Other than this, the local market of
the china offers the great intense competition to the global players. By seeing this competition,
local players are continuously improving their quality of products. Hence, in china the most
appropriate market entry strategy is the licensing strategy to do the business. As, this strategy
help the newly formed company to develop the good relations with the country and its suppliers.
As this helps the newly company to build the strong business relationships and further helps
them in increasing the number of profit for longer period (Luo, & Shenkar, 2011).
If we talk about the market development strategies, caobisco – the chocolate, biscuit and
confectionery shop needs to adopts the market development strategy in which firm will enter into
a new market with their existing products. This highlights that Caobisco is opening in new
Geographic’s, tapping china’s people and the region out there.
Through the adoption of the market development strategy, it will affect the strategic choices of
the business as caobisco is to sell the same variety of chocolates, a bit change in the taste and
preferences of the biscuits and many other items according to the customers’ preferences and the
choices made. In terms of corporate culture, when the companies try to moves on to different
country or we can say international market then the companies needs to face certain issues such
as communication barrier as we all know that for any business, effective communication is really
important for their success (Verbeke, 2013). Other than this, workplace etiquette which the
countries businesses follows. A concept of punctuality, along with the differences in etiquette,
handling the difference in attitude is very important. If company after the adoption of the market

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development strategy will not able to work over these issues then the company will not be able to
perfrom well on the international market (Chidlow, Plakoyiannaki, & Welch, 2014).
According to the analysis, china’s major advertising media highlights about the Internet ads
which mainly captures half a total while mobile advertising has become the most popular online
media advertisement type. Other Than this, programmatic purchase is also seen which helps the
country for the deepening development, in this the company not only focuses over the efficiency
and effectiveness but also over the quality of advertising resources and advertising environment
(Yan, Xia, & Bao, 2015).
In terms of risks which are associated with the company when they works internationally are-
likewise, when caobisco entering into china, the risk which they will face are- majorly the
government control and the regulations in terms of locations, industry, scale and many other
complex factors. Other than this, quality control is also one of the major risk associated with the
company. Moreover, intellectual property laws in china are not consistent with foreign laws and
they often require the significant amount of information to deal with it (Ge, & Ding, 2011).
Conclusion and recommendations
The major challenges which the company majorly faces while going international are-
The most common challenge which the company faces are the customers difference which
mainly highlights that people with the different taste, preferences are there. Other than this,
understanding and recognizing the differences by hiring, someone local who can helps the
company to bridge the gap in between the customers’ difference as well as the cultural or the
linguistic challenges. However, in terms of opportunities, licensing is being lucrative or the door
opening opportunities for the businesses. As this process, maximize the potential of working
internationally through licensing. Other than this, it also highlights about the franchising
opportunities, which opens the door for the more profits and gives the company the chance to
grow its brand in many other countries at the same time.
Diversification is also one of the market development strategies, which the company can adopt.
When company starts with their branding or when it became the most preferred company , then
the company should go with the diversification strategy and diverse the various products in order

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to attract more of customers and also helps the company to grow and being successful at long
run.
Other than this, it is suggested that the organization should engaged in scheduled market action
and come into an contract with the solid, consistent and well-known native businesses for
creation and transactions the varieties of chocolates and biscuits. As through also the company
will got to know about the market well, about the customers preferences and accordingly the
company can adopts various and appropriate business strategies to further enhance in the
international market.

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References
Cadogan, J. W. (2012). International marketing, strategic orientations and business success:
reflections on the path ahead. International Marketing Review, 29(4), 340-348.
Chen, Y., Xiao, B., Fang, L., Ma, H., Yang, R., Yi, X., & Li, Q. (2011). The quality analysis of
cultivated land in China. Scientia Agricultura Sinica, 44(17), 3557-3564.
Chidlow, A., Plakoyiannaki, E., & Welch, C. (2014). Translation in cross-language international
business research: Beyond equivalence. Journal of International Business Studies, 45(5), 562-
582.
Dunning, J. H. (2013). Multinationals, Technology & Competitiveness (RLE International
Business). Routledge.
Ge, G. L., & Ding, D. Z. (2011). Determinants of internationalisation strategies: A study of
Chinese multinational enterprises. International Journal of Business and Emerging
Markets, 3(2), 137-157.
Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European
academic research, 2(5), 6478-6492.
Luo, Y., & Shenkar, O. (2011). Toward a perspective of cultural friction in international
business. Journal of International Management, 17(1), 1-14.
Raff, H., Ryan, M., & Stähler, F. (2012). Firm productivity and the foreign‐market entry
decision. Journal of Economics & Management Strategy, 21(3), 849-871.
Shenkar, O., Luo, Y., & Chi, T. (2014). International business. Routledge.
Verbeke, A. (2013). International business strategy. Cambridge University Press.
Xu, Y., Hu, S., & Fan, X. A. (2011). Entry mode choice of Chinese enterprises: The impacts of
country risk, cultural distance and their interactions. Frontiers of Business Research in
China, 5(1), 63-78.

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Yan, J., Xia, F., & Bao, H. X. (2015). Strategic planning framework for land consolidation in
China: A top-level design based on SWOT analysis. Habitat International, 48, 46-54.