Analyzing FDI Issues in Global Business Expansion: CafePod Coffee Co.

This report examines the Foreign Direct Investment (FDI) issues relevant to CafePod Coffee Co., a UK-based food and beverage company, as it considers expanding its business into the Netherlands. It defines global business and FDI, highlighting different types of FDI and the specific context of CafePod's potential horizontal FDI in the Netherlands. The report analyzes the political and economic factors in the Netherlands that could influence CafePod's decision, including government policies, economic development, regulatory transparency, tax policies, investment screening mechanisms, bilateral tax treaties, and corporate social responsibility. It also suggests licensing and franchising as potential modes of entry. The report concludes by recommending that CafePod Coffee Co. proceed with its expansion into the Netherlands, citing the country's favorable business environment and supportive FDI policies, while emphasizing the importance of adhering to local guidelines and regulations to maximize profitability.

Global Business

Contents
INTRODUCTION...........................................................................................................................1
COMPANY OVERVIEW...............................................................................................................1
MAIN BODY...................................................................................................................................1
Foreign Direct Investments issues of a country which make or break the decision of expand...1
MODE OF ENTRY.........................................................................................................................4
RECOMMENDATION...................................................................................................................5
CONCLUSION................................................................................................................................5
...........................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
A global business is refers to a term of doing business in many countries. It create huge
competition in between companies in order to operate their business in effective manner
(Amponsah and Ahmed, 2017). It helps companies to expand their business as well as earn
maximum profit buy selling their product and services in different countries people in effective
and efficient manner. For this report, selected company is CafePod Coffee Co. of UK which is
type of food and Beverages industries.
This report covers issues of Foreign Direct Investment of a country which make or break
the decision the decision of expand.
COMPANY OVERVIEW
CafePod Coffee Co. is a small sized company of UK which is a privately held company.
It is founded by Peter Grainger in 2011. It is a food and Beverages industries and its specialities
are Coffee, FMCG, Drinks, and Hot Drinks (Meckling and Hughes, 2018). It has 11 to 50
employees in order to provide their services to their potential customer in effective manner and
its headquarters is in London. It provides various categories of coffee to their customer such as
intense, smooth, arabica lungo, ristretto, origins colombia hulia, decaffeinated, compatible pods
and origins sumatra lake tawar.
MAIN BODY
Foreign Direct Investments issues of a country which make or break the decision of expand
Foreign Direct Investment refers to that investment in which investor controlling its
ownership of their business in new country which based on another country. It is divided in to
three important categories as vertical, horizontal and conglomerate. In a vertical type of Foreign
direct investment, foreign investor acquires a complementary business of other country. In a
horizontal Foreign Direct Investment, company introduce same type of business in other country
and operate its function from its same country. Whereas in conglomerate type of Foreign Direct
investment, a company invests in that foreign business which is not related to its field. In
context of CafePod Coffee Co., its owner want to expand their business so, they choose
Netherlands in order to horizontal type of Foreign Direct Investment where he want to operate its
same operating functions in that country. Foreign Direct Investment issues of Netherlands which
affects decision of CafePod Coffee Co. in order to expand their business in that country.
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In today's changing environment many companies want to expand their business in other
countries in order to earn maximum profit and make strong position in competitive environment
in effective manner. Company wants to expand their business in Netherlands because its FDI is
most effective than other countries it can be said that it comes in number one in order to get
investment from foreign countries. Netherlands is a seventeenth largest country in world and its
GDP is over $910 billion along with it is a third largest source and economy for Foreign Direct
Investment in all over the world. According to Foreign Investment agency of Netherlands, due to
Brexit condition many companies from all over the world make their decision in order to expand
business in Netherlands (Berman and Dalzell-Payne, 2018). In respect of CafePod Coffee Co.,
its owners expand their business in Netherland because its political environment is stable,
developed country, easy tax rules, qualified labour and good communication environment.
Foreign Investment Agency of Netherlands provide actively support to the foreign investor
effectively. These issues of Netherlands are more analyse in order to affect the decision of
CafePod Coffee Co. are discuss below:
Political issue- Liberal and flexible government policies of Netherlands government in
order to influence foreign investor in order to expand their business in their country in effective
manner. There government create effective changes in their important policies which includes
housing sector, labour market, health care, pension system and energy market. This make their
FDI policies linear in order to influence investor to invest their business in effective manner
(Kasemsap, 2018). In respect of CafePod Coffee Co., flexible political environment and
effective FDI policies of Netherlands influence its owners in order to expand their business and
gain maximum profit from it in effective manner.
Developed Economy- Netherlands is a Developed country and its open market economy
and free trade economy attract foreign investors in order to expand their business in effective
manner, this makes their FDI policies most effective. FDI in Netherlands make new
infrastructure as well as create various opportunities in order to make various jobs for their local
workers in effective manner. In case of CafePod Coffee Co., its owner want to expand their that
country which is developed and have free trade policies in order to get maximum profit while
performing their business function in that country so, they choose Netherlands because of its
effective FDI policies and open market economy.
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Transparent regulatory system and legal policies- Commercial laws and regulations
along with international legal practices and standards of Netherlands are Transparent which
means they apply equally in foreign as well as domestic company. Its corporate law designed
their legal and fiscal framework flexible in order to attract foreign investor in order to operate
their business in their country in effective manner. Transparent regulatory system and legal
policies increase their FDI in order to attract investors (Jansson, 2018). In regard of CafePod
Coffee Co., Transparent regulatory system of Netherlands and their effective FDI policies
influence its owner to make decision in order to expand business in that country.
Friendly tax policies- Countries tax policies also affects its FDI policies in order to
influence foreign investors in effective manner. Tax policies of Netherlands is friendly and
harmonize in nature which attract foreign investors in order to invest their business in their
country and make their FDI effective. There corporate taxation generally allows various
exemption in dividends and on capital gain that arrived form foreign investor. In accordance with
CafePod Coffee Co., its owner wants to expand on that country where taxation policies are
liberal so, they select Netherlands because its nurturing fiscal environment help them in order to
earn maximum profit from it.
Investment Screening Mechanisms- Foreign Investment Agency of Netherlands
introduce two FDI screening mechanisms that impacts on transaction practice of that apply on
both domestic and foreign investors in order to considered important for their national security
and public policy. This two screening mechanism are Infographic and Podcast of FDI screening
in the Netherlands (Takino, 2020). This screening mechanism mainly establish for
telecommunication sector. The Netherlands has make some specific limitations for its critical
sectors that affects its critical national interest includes defence and security, energy,
transportation, postal services, public broadcasting, finance, and the media. In context of
Cafepod Coffee Co., Investment screening mechanism of FDI in Netherlands may create issues
in order to expand their business in that country.
Bilateral tax treaty- This tax treaty are provided various benefits to the investors or the
company of other countries in order to invest in Netherlands. This makes Netherlands to apply
lower rate of return on their investments. This helps country ins order to increase FDI in their
Country. In respect of CafePod Coffee Co., Bilateral tax of treaty of Netherlands help them to
make their FDI in the country. In order to manage Foreign Direct Investments of Netherlands
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their government has special agency that is the Netherlands Foreign Investment Agency that
provide helps to foreign investors ion order to invest in their country. They also support and
advice them in their establishment, expansion and rolling out their activities in Netherlands in
effective manner. They also suggest their government in order to make effective rules and
regulation for FDI.
Corporate Social Responsibility- Corporate social responsibility is also affected the
decision of foreign investors in order to invest in another country in effective manner.
Government of Netherlands is also focused in order to maintain corporate social responsibility.
Principle of CSR are described and promoted through a manner if governmental, corporate and
international guidelines in Netherlands (Alshare and Sewailem, 2018). It is important for the
company in order to maintain their CSR reputation in order to increase their customer in order to
purchase their products and services that are produced in sustainable and ethical manner. This
makes FDI effective in Netherlands. In case of CafePod Coffee Co., its owner is also maintain
their CSR while conducting their business in Nether land in order to make their FDI effective.
MODE OF ENTRY
For selling their products and services in other country an company had to choose an
effective mode in order to enter in another country market form various modes of entry. Types of
modes of entry are exporting, Licensing and Franchising, partnering and strategic alliance,
acquisition and greenfield venture. In context of CafePod Coffee Co., its owner may use
Licensing and Franchising mode in order to enter in Netherlands market because it is a fast mode
and may take less cost in order to enter as well as it is less risky (Chang, 2018). In licensing
mode, it create international licensing agreement which allows foreign company in order to sell
their products or use their intangible assets such as trademarks, copyrights, patents, etc. in
exchange of royalty amount. This also help them in order to get huge amount of rate of return
and decrease their cost. In Franchising mode, it create international franchise agreement where
they allows foreign company in order to use their brand name and sell their products in
Netherlands. In this mode owner of CafePod Coffee Co. is responsible for its all functions but
they agree in order to operate them by using foreign company methods.
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RECOMMENDATION
Owner of CafePod coffee Co., should expand their business in Netherlands because their
liberal policies help them in order to operate their business in effective manner. Various FDI
policies of Netherlands should help them in order to support their decision to expand
Netherlands Foreign Investment Agency(NFIA) should also provide their support and advice
them in order to operate their business in effective manner (Trad and Kalpić, 2017). Due to their
flexible government and their policies should also support them as well as influence them in
order to expand their business in Netherlands. Various benefits such as effective business
environment, stable and flexible legislative system, highly educated and qualified workforce as
well as effective infrastructure of Netherlands help them in order to expand their business in
effective manner. They should maintain their guidelines and follow their rules in order to expand
their business in effective manner. Netherlands taxation policies are also liberal which support
their decision effectively and also help them to earn maximum profit (Hartmann, 2018). Legal
policies and regulatory system of Netherlands is transparent as well as equal for domestic and
foreign industry is also an important reason which helps them to establish their business in their
country in relevant manner.
CONCLUSION
From the above mentioned report, it is concluded that global business helps companies to
sell their products and services in another country in order to increase their customers and sales.
Foreign Direct Investment is an important method in which company expand their business in
another country in effective manner. Many factors of country affects expanding decision of a
company such as their government policies, taxation policies, rules and regulation, etc.
Company should always considered FDI policies of that country where it want to expand. Using
effective mode of entry help companies in order to enter in another country to sell their products
and services in effective manner.
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REFERENCES
Books and Journals:
Amponsah, C. T. and Ahmed, G., 2017. New global dimensions of business
excellence. International Journal of Business Excellence. 13(1), pp.60-78.
Meckling, J. and Hughes, L., 2018. Protecting solar: global supply chains and business
power. New Political Economy. 23(1), pp.88-104.
Berman, S. and Dalzell-Payne, P., 2018. The interaction of strategy and technology in an era of
business re-invention. Strategy & Leadership.
Kasemsap, K., 2018. The role of information system within enterprise architecture and their
impact on business performance. In Global Business Expansion: Concepts,
Methodologies, Tools, and Applications (pp. 1078-1102). IGI Global.
Jansson, H., 2018. Internationalization processes in South-East Asia: An extension or another
process?. In Global Business (pp. 78-102). Routledge.
Takino, M., 2020. Power in international business communication and linguistic competence:
Analyzing the experiences of nonnative business people who use English as a business
lingua franca (BELF). International Journal of Business Communication. 57(4), pp.517-
544.
Alshare, K. and Sewailem, M. F., 2018. A GAP ANALYSIS OF BUSINESS
STUDENTS'SKILLS IN THE 21st CENTURY: A CASE STUDY OF
QATAR. Academy of Educational Leadership Journal. 22(1), pp.1-22.
Chang, C. Y., 2018. Localization and Chinese Banking in South-East Asia. In Global
Business (pp. 351-367). Routledge.
Trad, A. and Kalpić, D., 2017, June. A neural networks portable and agnostic implementation
environment for business transformation projects the basic structure. In 2017 IEEE
international conference on computational intelligence and virtual environments for
measurement systems and applications (CIVEMSA) (pp. 153-158). IEEE.\
Hartmann, M., 2018. Internationality within business elites and national elite educational
institutions. In Elite Education and Internationalisation (pp. 75-91). Palgrave
Macmillan, Cham.
Online
CafePod Coffee Co. 2021. [online]. Available through. <https://www.cafepod.com/>
FDI issues of Netherlands that make and brake decision to expand. 2021. [online]. Available
through. <https://iclg.com/practice-areas/foreign-direct-investment-regimes-laws-and-
regulations/netherlands>
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