Global Business Expansion Strategy for CHEERS Company: Report

This report provides a comprehensive analysis of global business expansion strategies for CHEERS, a craft beer company based in Australia, considering entry into the Indian and Brazilian markets. The report begins with an executive summary and introduction, followed by an in-depth examination of the risks and opportunities associated with each market, including cultural, legal, and financial aspects. It explores market entry strategies, marketing approaches, and human resource considerations, such as staffing and training. The analysis highlights the importance of understanding local market conditions, government regulations, and consumer behavior. The report recommends a joint venture approach for market entry into India and emphasizes the need for tailored strategies to address the unique challenges and opportunities in each country. The conclusion summarizes key findings and recommendations, providing valuable insights for CHEERS's global expansion plans.

Global Business

EXECUTIVE SUMMARY
This report summarises process and strategies that are followed for introducing a business
globally. Expanding a business all over the world provides more opportunities to business to earn
more and capture more markets. A marketing strategy that provides detailed information
regarding legal system, economic condition and political conditions in Indian and Brazil needs to
be conducted. Before making expansion decision a critical study needs to be performed that may
provide basis for decision making of expansion in India and Brazil by CHEERS company. A
perfect pricing, distribution and product standardisation strategy are used by company in order to
make their product more marketable. Consumers of a product are available all over the world and
to satisfy their needs beyond geographical area business needs to be expanded globally. Risk
and opportunities available to business in both the countries needs to be identified to make right
decision. This analysis also helps to consider various factors that affects business negatively and
corrective actions can be taken to make business sustainable. This study helps to understand
business environment of host countries and business can be expanded easily by understanding
these factors. Staff selection process needs to be followed that helps them to employ efficient
employees. To retain these employees different training programs may be introduced that helps
them to improve their skills. It is recommanded for company to use joint venture for market
entry by introducing a range of products in Indian market.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Analysis of risk and opportunities of business in different countries..........................................1
Market entry strategies:................................................................................................................6
Marketing strategies.....................................................................................................................7
Human resource strategy..............................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business that is performed beyond geographical boundaries of a country or across all
over the world, is termed as global business. Long distance trade that is done beyond the
boundaries of country has shown a tremendous growth for last few decades. In this project
report, 5 business graduates started a business of craft beers in Australia. Their company is
named as “CHEERS” on the gold coast and brew 3 varieties of craft beer. As business is
experiencing growth, company wants to expand its business globally in countries like India and
Brazil. A market strategy will be identified to evaluate business environment and also to select
target market (Ferraro and Briody, 2013). This strategy will also help in product standardisation,
pricing and distribution. Resource strategy will also be discussed in this project that will focus on
staffing and training of human resource.
MAIN BODY
Analysis of risk and opportunities of business in different countries
When business expands at global level then it brings various risk and opportunities to a
company. Risk is the process of identifying, assessing and controlling threats of an organization's
capacity to achieve objective. It involves future uncertainties about deviation from expected
earnings or set standards. Opportunities are the situation which increases possibilities of success
in business by achieving its targeted goals. 'Cheers' is expanding its business globally and for this
countries like India and Brazil are considered as favourable options. Both the countries posses
various risk and opportunities that needs to be evaluated before making expansion decision
(Kose, Otrok and Prasad, 2012). Risk that is associated with Indian market is as follows-
Cultural and legal aspects - Cultural risk refers to the value and behaviour present in an
organization that shapes risk decisions of management and employees. CHEERS have to face
some cultural risk if they enter into India :-
Diversity of culture- India is known for its unmatched diversity and contrasting
character that leads to encounter some cultural surprises. Introduction of craft beer by CHEERS
company may face risk by this diversity. As beers are highly demanded in some areas in India
but on the other hand it is considered as bad habit and opposed by persons. In Indian culture
when it comes to decision making regarding trade then it is highly influenced by personal
relationships that existed between two business or consumer and businesses.
1

Prohibition of alcohol- When it come to business related to alcohol products in India
then various legal risk needs to be faced. As manufacturing, sale or consumption of alcohol is
prohibited in states like Bihar, Gujarat, Manipur and Nagaland. Legal system of India for alcohol
is quite restrictive that may be a risk for CHEERS company to establish their business in India.
Country risk – While expanding beer business to India CHEERS company needs to
follow Indian government regulations for alcoholic business. As beer is added in food products
regulation of FSSAI for alcoholic beverages needs to be followed. As India is already largest
alcohol manufacturing country and government is quite restrictive to grant license to produce
alcohol in India. Together with this taxation policy of states in India differs and these
government regulations are considered as risk for the company. When it comes to corruption
then India is named in some of the countries that are highly corrupted. Political system is
manipulative in the country as corruption percentage index in 2018 is at 41 in India which is high
then last year. Level of economic and political freedom is significantly liberal when compared to
some other developing countries.
Financial risk – Finance is considered as most important part to perform various
business activities. Expansion of business by CHEERS company to India will create financial
risk related to liquidity, credit and currency risk. As business of craft beers is operated in
Australia and expansion in India may involve risk related to fluctuation in currency. Rate of tax
in India related to alcholic products are quite high then other countries and this gives risk to
business. Together with this new business in market do not possess credit worthiness and faces
risk related to liquidity of required finances (Peng, 2016).
Commercial risk- When presence of local partners are not high then it will affects on
distribution channel of beers introduced by CHEERS. Together with this family restriction in
India to enter in alcoholic products quite affects introduction of new beer in the market.
Opportunities that are available to CHEERS company when business is expanded to
Indian market are as follows-
Market size – This reflects number of potential buyers and sellers related to a
particular product and service. India is full of young persons and large number of youth id
attracted towards alcoholic products. This creates a large market size of buyers in India. This
large market size is served by various existing companies and CHEERS company can also
contribute by its craft beers to serve Indian market. Large consumer base of India when served
2

with craft beer helps in gaining large market share as large number of consumers are available
for alcohol consumption. India possess large consumer base with high percentage of middle class
consumers that possess restricted per capita income of individual.
Economic growth - Beer consumption increases with rise in income of an individual
and visa versa. Expanding business to a country which possess large consumer base for alcohol
products increases chances of success for cheers company. India is a developing country and
possess high GDP and growth rate that is termed as opportunity for CHEERS company. As new
market will provide more consumers and sales will increase that will have a positive impact on
revenue of the company. More profits will increase financial position of the company and this
will leads to economic growth of the company. High growth in future may increase efficiency
and lead to various factors to compasses all needs of customers in future (Vasishtha and Maier,
2013).
Trade agreements – When two countries agree on terms that helps them to trade and
make investments then it is considered as trade agreements. Alcohol control measures seek to
reduce access and consumption, raise prices and restrict advertising and promotion. It seeks to
influence agreements and can be expected to work through trade agreements to reduce tariffs,
increased market access and seek to restrict effective domestic regulations. Research is been
required for making trading agreements in India, counter industry influence and protect alcohol
control policies. Expanding business to India by CHEERS company will provide benefit of trade
agreement with countries to which Australia is not associated for any trade agreement.
Every country differs for risk and opportunities that are related to a particular business.
This difference is due to various factors that govern these risk and opportunities such as culture,
society, political factors, legal and government intervention. A business which is highly
profitable in Australia does not guarantee that it will be profitable in Brazil also. As CHEERS
company wants to expand its existing business in Brazil and before going to this process various
risk and opportunities for this business needs to be understood (Voegtlin, Patzer and Scherer,
2012).
Cultural and legal aspects- Cultural factor affects business through belief system and
practices, customers, traditions and behaviour of people in the country. As culture in Brazil
affects decision of consumers and changing in preference make it difficult to introduce new beer
product. When consumer uses a product for long duration and it becomes part of their daily life
3

then influencing new consumers to try a new product they quite resist. In Brazil, consumption of
beer is quiet high and there is large consumer group for beers. Ambev, Gurpo Schincariol,
Petropolis brewery are some brands in beers that are already existed in Brazil market with large
market share. Risk to CHEERS is that if consumers are not properly addressed according to their
preferences then it can become a reason of failure. Decision of the businesses are very much deal
oriented and not influenced by inter personal relationships between consumers and business
houses.
Legal environment relating to advertising of alcohol products is very strict in Brazil.
Advertising in Brazil is governed by Federal Constitution and as per health regulations
concerned Advertising of Alcoholic beverage is not allowed. This legal restriction do not allow
new business organisation to promote their products related to alcohol. Introducing craft beer
business by CHEERS company may face risk related to legal restriction on promotional
activities for products (Bapuji, 2012).
Country risk - Government of Brazil plays important role to grant permission to
establish business in country. Establishing a new business requires various permissions that
government of Brazil will grant to establish a business unit. These permissions are not easy to
grab as government of Brazil makes analysis before giving permission that all the laws are
followed or not. Violation in any rules and regulation of country makes it very tough to expand
business. Change in government and unstable government policies for business turns as risk for
CHEERS company to introduce their craft beer business. So, government of Brazil will resist to
some extent to grant permission to foreign companies to establish business relating to beer
products. When comparison is done for country as a whole then it can be seen that Brazil score
35 in corruption index and this has reduced from in 2018 from the last year. Economic and
political system in the country is quite restrictive for new business.
Financial risk – Finances are required to expand business to different countries and risk
related to capital structure, financing a business may be faced by CHEERS company to expand
their business in Brazil (Simic and Dimitrijevic, 2012). When investment is made in a foreign
country then exchange risk of currency may be faced by company. Arranging finances in the
country which is new for business will incur more expenses as high interest rate may be charged
to provide short or long term loans to company. This risk is considered as credit risk to company.
4

Rate of tax charged by government keeps on fluctuating may hinder business of the company in
negative manner.
Commercial risk- Having availability of competitive market restricts local partners in
introducing new products related to alcohol. Together with this families restrict from involving
in business related to beers and non availability of staff and workers leads to high wage rates in
the Brazil market for CHEERS company.
In each business, risk is involved but risk always brings rewards that can be in terms of
opportunities to earn more, survive longer, good market image or many more. Introducing a
business in Brazil will have opportunities like-
Market size – Brazil is a country with high population that provides large consumer
group to target. Expanding business to country that have more consumers will increase market
size and brings more profits to company. Brazil is the third largest beer market in the world. Beer
is the most competitive sector of alcoholic drinks market in Brazil. Availability of large market
share for beers will provided a growth opportunity to CHEERS company. High volume of
consumption will provide benefit to the company by economies of scale.
Economic growth – Brazil is a developing country and establishing business in
developing country will bring more government support. New businesses will increase foreign
investment in economy and this will termed as positive sign for development. When new
business is introduced in developing country then it will contribute towards growth rate of the
country. Also GDP of country will increase and business in developing country possess high
chances of success. Government will promote this business and CHEERS company will be
benefited through this (Kasemsap, 2014).
Trade agreements between two countries – When business is introduced in different
countries then benefit of trade agreement that is possessed by Brazil with other country will be
enjoyed by CHEERS company. Free trade agreement of Brazil with India helps Australian
company to expand its business towards India in indirect manner. These trade agreement benefit
company to expand its business in countries where Australian company can not trade.
Considering various growth opportunities and analysing various risk associated with
these opportunities it will be profitable and suitable for CHEERS company to establish their craft
beer business in India. As India is a developing country with young generation that provides
large consumer base to company for its beer products. Beer market in India is at growing stage
5

and this provides more opportunities to company to have successful expansion. There is no legal
restriction on advertising alcoholic beverages in India that makes promotions of new product
more easy. Arranging of finances in Indian market is quite easy in comparison to Brazil as
government of India quite supports businesses that brings FDI in country. Opportunities are more
then availability of risk in India and that is the main reason to select India as targeted for
expansion at international level. Together with all these benefits, low competition in beer
industry in India while comparing with Brazil. All these factors helps CHEERS company to
make decision of expansion in Indian market.
Market entry strategies:
For expansion business of craft beers Indian market is selected by CHEERS company.
Decision to enter an overseas market, there are variety of options that are open to CHEERS
company to enter into Indian market. These options vary on cost, risk and degree of control that
can be exercised by them. Mode of entering into a internation business is most important
strategic decision for CHEERS company. To select market entry strategy various entry methods
will be analysed and most appropriated will be selected (Kankaanranta and Salminen, 2013).
Direct exporting- When goods are exported directly into market by using own resources
then it is considered as direct exporting. Agent selected by company becomes face of the
company and make representation of product to target consumers. This method of entry is not
appropriate for CHEERS company as control on operations of agent will not be in the hands of
company. Control over operations that are performed by agent on behalf of the organisation at
international level are with the agent only and company will loose its power to take decision in
another market.
Buying a Company- In some market, buying a existing company is most appropriate
entry strategy. This strategy is recommended when existing company have huge market share
and can be a big competitor when entry is made to target country. Buying a company reduces
burden to fulfil all government regulation that is required to establish a new business.
Requirement of large investment will make this market entry strategy unsuitable for CHEERS
company. As business is going to be launched in market with is totally different from the
existing country on various basis such as culture, financial condition, economic growth and legal
system. This will make investment in the company very risky and non attractive investment
decision.
6

Licensing- Licensing is an arrangement in which a firm transfers the right to use name of
company and its products to another firm. It is a useful market entry strategy when purchaser of
license has relatively large market share in which entry is planned. It is not an appropriate
strategy for CHEERS company as purchaser of license may spoil brand image in Indian market
by not meeting standard of the product set by company (Global business, 2019). Intellectual
property law of India is week and that makes licensing less attractive method to expand business
at international level. Laws of Indian country are not binding and strict to business for spoiling
any rule so licensing will be treated as irrelevant option for the company.
Joint Venture- Joint ventures are a particular kind of partnership that involves creation
of a third independent company in which existing two business are partners. Joint venture can be
done for a product or for specific area (Khilji, 2012). Risk and profits are shared equally. When
two business joins hand for a particular project creates more market value of brand name.
Selecting a already existing company in beer industry for expansion by CHEERS company will
provide access to already existing market of partner in join venture. As business environment of
alcoholic beverages is highly competitive. Entering in competitive market through joint venture
may bring competitive advantage to CHEERS company.
Entering in a divers market like India through joint venture will turned out positive for
business operations. As joint partner who already existed in the country will be well known with
the Indian culture and market. New businesses required more finances in comparison to
established one so joint venture will bring resources of two organisations. This will help in rising
more finances required by CHEERS company. As India is developing country with large size of
market will increase chances of success of the business. Availability of human resource to
perform various operations in the organisation will be their in the country at affordable price to
minimise cost of the business.
Marketing strategies
An organisational strategy that brings all the marketing goals of company together
through one comprehensive plan is termed as marketing strategy. These strategies should be
drawn after market research and focus on the right product is done in order to achieve maximum
profits and sustain business. Research also includes details regarding competitors, consumers,
market size and potential for market growth. Survival of a business depends on its marketing
strategy as it is done for making a product and service reachable to consumers. Target market of
7

craft beers in India is consumers above age of 21years. For target consumers marketing strategy
combines the 4 Ps of the marketing mix is selected. It is designed to meet the company's
marketing objectives by providing its consumers the value. These four Ps includes product, price,
place and promotions (Kasemsap, 2015).
Product – Product is either tangible goods or intangible services that meets consumers
needs. Having a logical product life cycle that is vital for marketers to understand those problems
that a product is attempting to solve. A product offered to consumers must satisfy all the
requirements. A product must be segregated as per consumers requirements and standardisation
must be done on products. Product strategy named as local an international environment is
suitable for company. Consumers in the Indian market are quite appreciating taste of beers and
by introducing similar taste product large consumer group can be attracted towards craft beers.
Designing of the product also influence consumers to buy the product and attractive designing
must be done by the business organisation. As this strategy will help CHEERS company to
provided product as per requirement of consumers in different countries. Consumers first
experience with the product induces them to buy it for more times.
Price – Price of the product must be as per target consumers. As craft beers is a premium
range of beers that targets consumers of high society. Consumers who belongs to low income
group are also targeted in Indian market and rage of craft beers are introduced for different
consumers. As consumers in India is highly diverse in terms of availability of finance and new
product needs to be provided in different prices to attract more consumers. Premium pricing
policy for premium products and economic pricing policy to capture large market needs to be
introduced by company. This strategy of CHEERS company will help to succeed its business in
India. (Diebold and Yilmaz, 2013).
Place – Location of business plays very important role in its success. Beer is a beverage
product that must be reachable to consumers. To make craft beer available throughout the
country, proper network of distribution needs to be followed. For this, CHEERS company can
take advantage of distribution channel which is already established in India by partner.
Distribution channel must consist of dealers, traders and retail shops that makes available of
product through out the country. A optimum length of the distribution network will be
established so then any delay can be avoided. A proper distribution will enhance chances of
survival for the business of craft beers.
8

Promotions – Promotion is a stage where product is introduced to the public. This
includes advertising, sales promotion, special offers. A promotional method needs to be suitable
for the product and to targeted consumers (Popescu, 2013). This method is also be cost effective
to CHEERS company. Promotions is just the communication aspect of entire marketing function.
To promote craft beer in India a celebrity face can be connected to the brand as Indians are
highly influenced by celebrities. Promotions of product helps business to attract target group by
introducing them with all the features of the product. Using same promotional technique for long
duration leads to loose consumer interest in the products provided by the company. Using
different and attractive strategy as per current market scenario will help organisation to gain
competitive advantage in long run. Promotions must be influencing to attract and invite target
consumer.
Human resource strategy
Human resource in an organisation are considered as biggest resource as they make up
the workforce of an organisation or business sector. Human resource is a department in business
that is responsible for all things related to workers. This includes recruiting, selection, hiring,
promoting and firing and employee. As business of CHEERS company related to craft beers is
going to expand globally in two new countries. To establish business in different countries
human resources required to be hired by company. Human resource in organisation will be mix
of some trained and experienced persons but some of them will be freshers. Hiring trained and
experienced persons is important to introduce a new business in totally different market. Human
resource will be hired by CHEERS company from India only as this will be cost effective for
them. Employee who belongs to same country understands business environment of country
most effectively (Wirtz, Tuzovic and Ehret, 2015).
For staffing in CHEERS company unit that is expended to India selection of staff will be
mix of Parent Country National (PCN)and Host Country National (HCN). This means some
employees will be hired from Australia and some of them will be from India. This combination
will enhance productivity of the company in Indian market. As employees from parent country
are well aware regarding manner in which company perform its operations in different working
conditions. When employees are hired from host country then they will be well aware regarding
business environment of the country and cost of hiring will be less. When business is expanded
at international level then a trained and experienced staff to manage FDI will be selected. This
9