International Business: UK SME Expansion Report Analysis

This report examines the international business landscape, focusing on the expansion of a UK-based SME, potentially in the UHT milk sector within the Chinese market. It analyzes key business drivers for internationalization, highlighting the significance of competition and technology. The report uses PESTLE analysis to assess political, economic, social, technological, environmental, and legal factors influencing business operations. It explores the implications of absolute advantage theory and identifies trade barriers like ethical concerns, competition, and legal challenges. It also considers business uncertainties such as Brexit and the importance of ethical and social issues for UK SMEs, offering recommendations for successful international expansion. The report emphasizes the need to consider cultural preferences and business expansion methods while navigating trade barriers and ethical considerations. Finally, the report provides recommendations for success and concludes with a summary of the key findings.

International Business

Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Highlighting the 2 significant level of business drivers for the internationalization.............4
Some trade barriers occur while planning about expanding business....................................7
Ethical and social issues considered by UK SME..................................................................8
Cultural preferences to be considered by the business.........................................................10
Business expansion methods................................................................................................10
Recommendations................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Milk is considered as the perishable foods which is considered to be stored along with
being distributed without having the spoilage and the risk of pathogenic bacteria which is treated.
This is the best level of heat treatment which is needed to have destroy of the most pathogenic
organism. Milk the growth is slow at low temperature which is consequently pastured milk is
kept more level of refrigerated. As the slow down of the economy in the world economic growth
have the also sufferer the level of impacts but have still maintained the realistically optimistic
growth.
There is estimated growth of 5.9% CAGR during the time of 2015-2019 which is more
around the volume of the 107.4 billion liters in 2018. Asia pacific have the registration of
however the sustainable growth through the year 2019 in which china have been considered as
the largest level of milk consumers across the globe. As per the developing level in china, over
60% of populations is having major preference over the consumption of the UHT milk.
On in china UHT milk in more level of untapped opportunity to have the anticipation of
the ranking in demand of the personal's storage facts at the development of nutrition value. As
the discussion of the chine economy the urban populations 690 million is having more level of
influences from the western cultures sawing the better level of incomes which is considered to
half o populations.
MAIN BODY
Highlighting the 2 significant level of business drivers for the internationalization
As the international environments has been considered to have constants changes which is
impacting the development of business at the international level. At the companies have the
nociception the there is existence of different reasons in order to have the expansion of
business as such as
Competitors
The Go pro have the major allowing of the domestic level of compilators in abroad to have
the maintenances of the world wide level of market share. His is considered to have the
companies in retailer against level of foreign competitors in more way entering in host
country as to gains more level of competitive advantage. Th next way is that’s companies
have the maintained developing the extreme level of new products by entering in markets at
abroad.

Technology
On the other hand, there is major level of importance of having the more level of diffusions
of information which is more considered to be universal. On the other hand, the competition
in relation of the UHT products is having more level of preference as the chain market is
more influence with wester culture. So, the development of internet has clear allowances
trade with another. The positive association between precocity and niche positioning of the
business enforces the relevance of entrepreneurship because focalization is a reflection of
entrepreneurial orientation and strategic decisions.
PESTLE
This have the clear level of providence in the more level of operating challenges which are
prevalence the macro environment other than the level of competitive forces. This will be helpful
for company to have the strong growth trajectory it the unlimited level of situation.
Political Factor-
This play as significant role determining factor which have the clear impact were making
the long term profitability as the there are existence of risk along different types of the political
environment's ans the political risk. As the country have more level of political stability but there
is more involvement of various acts of corruptions which have the possible leading of
impeachment. The country don't have any law recreated to protection of the intellectual property
which will be find out more risky in order to invest. The next negative impact is that the trade
barriers with potentials trade partners will be harm form prevent saying the potential level of
export. There is higher level of risk of militarily invasions which will have proper demotivate of
Go pro.
Economic Factor
The development of economic systems has the inclusion of GDP which will have
effecting the growth of business in upcoming futures as the country is trying to have the higher
interest with greater investment which is efficiently raiser in capitals as fare pricing which is
keeping ion demand and supply. As the advantage the milk industry will have the more level of
political stability as the downfall in current y will have the internationalist insectivore. More
there is high level of the opportunity to have the greater supply and maintenance of demand at
the lower wages.

Social Factor
The UHT milk have the major targeting of the urban people are more populations is been
influence by the western cultures by the having the proper targeting of the populations which is
more influence. On the other hand, the company will not be able to the promotion of products in
the public. As the Go pro have the negative impacts of the educational background in order to
have relationships in order to targets market efficiently.
Technological Factor
The company has the opportunity to have the technological development in more gaining of
popularity as it is growing the disrupting the to have analysis of competitors revenue. This would
have level of urgency which equality to have proper responding to innovation towards the level
of alternative (Reyes-Heroles, Traiberman and Van Leemput, 2019). The company has the
opportunity to have proper transportation which will helps the Go pro to gain competitive
advantages.
Environmental Factor
The level of change in the climate of the makes the product more level of new consumer with the
armed as the UHT milk in more level of untapped opportunity to have the anticipation of the
ranking in demand of the personal's storage facts at the development of nutrition value. As the
discussion of the chine economy the urban populations 690 million is having more level of
influences from the western cultures.
Legal Factor
As per the new legislation which have clear impart of the frogging food traders. The
policy is to have the clear statement which is targeting the local Chinese brands which is set to be
80 % of markets have will have the drastic level of changes in status quo. The country in having
the stricter level of regulations for the both local as the foreign companies with having proper
level of mergers and acquisition.
The implication of trade theory for the business expansion.
The implication of the absolute advantage theory as it is the idea in which the two of the
countries are considered to be specialized in developing the same kind of products. on the other
hand, one country is considered to have development of better quality lower in prices. His is
considered to be the absolute advantages to the he one respective as compositive to other. This
theory has been based on the notion of increasing the efficiency in term of production process in

compositive to two countries. From the development of another point of view this can help in
influencing the specialization on entire developing of products which have localities by having
trade with each other. As in the above case, the UK is been identified as the country which have
the considered to be more level of efficient in developing the UHT milk which have the chance
of better development in china.
Some trade barriers occur while planning about expanding business
Trade barriers refers some restrictions which government and its policies induce to
companies while international trade and business (Egan and Guimarães, 2017). It can also be
said that there are several factors which can occur due to competition, cultural differences and
others. There are different types of trade barriers occur and create problems in the path of the
success of GO PRO company in expanding its business UHT milk product in China. Some main
problems and trade barriers include:
Ethical issues: Ethical issue is one of the main issues and trade barrier in international
business. Some common factor which can create in the path of the success and should be
considered by the company include: working standards, human rights, integrity, bribery,
corruption and other opportunities and threats of the country in which it wants to operate. Every
culture has their own history and effectiveness and adapting that culture and way of performing
is one of the main trade barriers.
Competitors: Competition is one of the main factor which can create several problems in
trading or performing business activities in other country GO PRO country wants to expand its
business in China so, it is important for this company to analyse all factors as well as identifying
intensity of competition in an existing market and existing companies in this industry. It is stated
that in China, there is a slow-down in the growth of the dairy industry. But on the other hand, it
is also identified that there is an increasing availability of growth and competitive pricing
through the growth of online channels due to fast growth of import milk (China's Dairy
Industry's Challenges, 2015.). This company face problem in making a strong position in the
market and make people believe as well as aware that its products has several features. There are
several popular brands in China such as: China modern dairy, Arla foods, Nestle and others.
Legal issues: Some legal issues include tariff as well as some non-tariff barriers. Tariff
refers tax which is imposed by a nation on imported goods. It is being applied as per the currant
rate and the type of products or total value of goods. This tariff and tax can make imported and

expanded products less attractive. In this context, it can be said that tariff raises prices which can
discourage free trade and create problems in profitability of business (Wilson, 2016).
Consequences of ignoring all issues
It is important for …..to consider all these factors in order to make its business successful
and expanding business in an effective manner. If SME does not consider all these factors and
barriers than it may have to face several problems such as:
Poor brand and legal challenges: If SME and ….GO PRO business does not follow or consider
all these barriers than it will directly impacts on its brand and image. For example; If it ignores
regulations and some laws imposed by the government of a country in which it wants to operate
and expand, then it will be restricted from importing as well as exporting its products. It may
have to face some legal challenges like some lawsuits which directly affect its brand (Reyes-
Heroles, Traiberman and Van Leemput, 2019).
Failure of business: When an organization does not consider all these trade barriers like
intensity of competition and operate (business) than there are high chances of getting failure of
business. If an organization operate in a location and country where competition is already high
and people do not switch their shops than it will difficult for the company to influence people
and attract them.
Business uncertainties
Brexit: Rather, trade barriers there are several other factors and business uncertainties
which are also creating threats for companies who are thinking about business expansion. Brexit
is one of the main examples. According to this, several people have lost jobs across Britain as
political turmoil hold back the economy. It is giving stress on the UK as it is discarded from EU
union. So, it can be said that it can create several other problems in trading internationally.
Opportunities
Well-developed nation: UK is considered one of the developed nation. There are several
skilled workforces and SME's who bring innovation and creativity in the market. These features
can provide several benefits to this company.
Ethical and social issues considered by UK SME
There are several ethical and social issue which SMEs of UK face while operating in an
international market such as: working condition as well as standards, bribery corruption,
Corporate social responsibility etc.

Bribery and corruption: Different countries have different rules and in some countries'
bribery are considered as a normal. For example: Latin American countries. It is expected that
performing activities by bribes and corruption is a normal. Whereas, some countries have strict
policies regarding this as they prohibit companies from paying bribes to foreign government
officials. It is one of the main ethical issue. In the context of China, it is stated that it has strong
as well as strict anti-corruption laws (Bribery and Corruption, 2020.).
Working conditions and standards: Quality and working standards are one of the other
factor which needs to be considered. There are several countries where, it is important for
companies to provide effective working conditions to employees and satisfy all needs of them.
China has both mandatory and voluntary standards (Standard Used in China, 2018.). They have
some strict standards as per them companies are liable to protect human health, safety as well as
personal property.
Human rights issues: There are several countries who have effective laws regarding
human rights. As per this, companies require paying effective salary to workers, working
environment, follow discrimination act in order to make their employees feel valued as well as
address grievance of employees (Grayson and Hodges, 2017).
Importance of CSR: Corporate social responsibility refers a business model which support
companies in becoming socially accountable. With this use, companies can make their business
sustainable and can have several positive impacts on economic, social and environmental factors.
Some other benefits of CSR which this....GO PRO company can take include:
 One of the main importance of maintaining sustainability and CSR is it Improves brand
awareness by committing themselves to ethical practices (Ortiz-Avram and et.al., 2018).
 Company can take competitive advantages by considering all social and environmental
factors.
 With the help of CSR and using all resources in an efficient manner, they can engage
customers to the great extent.
Relevant theory of ethics
From the above discussed issues of ethics and social, it can be said that with the help of
using ethical theories, all these can be solved out. One of the main theory by which all above
discussed issues can be solved out such as: triple bottom.

Triple Bottom theory: It is an effective theory which recommend companies that they should
focus on environmental as well as social concerns as like they focus on increasing sales and
profit. This theory believes that by focusing on these both areas, they can make profits as it is
interrelated with them (Hammer and Pivo, 2017). One of the main aim of using this theory is to
measure social, financial as well as environmental performance of an organization. It also states
that by ignoring people and planet and only focusing on profit, an organization cannot account
for the full cost of doing business.
Cultural preferences to be considered by the business
in the global business culture sensitivity is important as the global market place tuned out to be
more level of accessible for small business. In more way the business has the need to have the
better level of understandability of foreign market to have succession at international level.
Communication is considered as the important aspect where the company will face the
major level of issues in order to have the clear expansion over the British to chines. There is
more development of language barriers as the people are speaking in more of different
languages.
The next issue will lie in hand of the following the bias customers, mannerism and the
gestures which is considered to be commonly accepted behaviors. as the lack in knowledge in
performing the business activities hat might be commonplace in one culture could be unusual or
potentially offensive to a client or colleague overseas.
The difference in level of perception are considered to be more level of different in the
managing different cultural attitude as to have proper level of defining the role in terms. So, there
is important in order to be aware for the business regarding the priorities of targets market along
with cultural approach towards the development of organizational culture.
Business expansion methods
There are several ways of expanding business and entering in international market such as:
Acquisition: Acquiring new business of the country or nation in which company wants
to expand and operate is one of the main method. It is one of the fastest way to expansion as well
as growth. Merging and acquisition of other companies can help SME in double up the size and
sales (Sakagami and et.al., 2016). There are several factors on which selection of this type
depend such as financial stability and image of that company.

Joint venture: It is a other way of business expansion in which 2 or more than 2
businesses or parties agree to make a pool of resources with the main aim of achieving the same
common goal and completing the same task.
Licensing: In this business arrangement, one company authorizes another company by
issuing licence. By doing this, licensee company get intellectual property rights of licensor
company which may include; their brand name, copyright, patent, technology etc. In this
exchange,. Licensor company charge royalty to the licensee.
Franchising: In this type, one party or organization or franchisor licence some rights as
well as authorities to another party which is known as franchisee. It is considered one of the best
way of international business and business expansion. In return, franchisor charge commission or
one time fee from franchisee.
Greenfield investment: It can be defined as a foreign direct investment in which an
organization can establish their operations in a foreign country by constructing some new
facilities. In this type, an organization can get the highest degree of control over all their foreign
activities (Jaworek, Karaszewski and Szałucka, 2018).
The most suitable way
Selection of the type and way of business expansion mainly depend upon the nature of
the business as well as size of the company which wants to expand. So, in this context, it can be
said that franchising and licensing is the best way. There are several benefits of franchising and
licensing ways such as;
Advantages of licensing
 One of the main advantage of selecting this type is company can create opportunity of
making passive income (Georgiou, Kollin and Kang, 2018).
 There are fewer risk for product development, manufacturing as well as distribution.
 No requirement of investing money to commercialize products.
Advantages of Franchising
1. Lower requirement of capital.
2. Ease in management and controlling function of day to day operations.
3. Limited risk as well as liability is other main benefit (Rosado-Serrano, Paul and Dikova,
2018).

4. Less investment in promotion and marketing function because business already have
effective image.
Ansoff matrix
As per this matrix there are different ways by which ….GO PRO company can expand as well as
make its business successful. 4 strategies of this matrix include:
Market penetration: As per this strategy company can increase its sales by expanding
its existing products in an existing market. Focus is on strategies to sell existing products.
Product development: In this strategy of Ansoff matrix, company can increase sales by
developing new products and sell them in an existing market. So, the focus is on new products.
Market development: As per the market development, company needs to focus on
entering into a new market and offer its existing products. So, the focus is on new market
(Dawes, 2018).
Diversification: It is somehow different and risky in which company enter into a nee
market with new products.
…. company wants to enter into a new market so, it can be said that it may choose either market
development or diversification strategy.
Recommendations
On the basis of above discussed ways of expansion of business, it can be suggested to
….GO PRO company that it should make an effective use of franchising. By using this way it
can attract wider range of customers and it will also not require investing in promotion and
advertising activities. In the context of pricing strategy.
Differentiation
The company should have the appropriate level of developed in the price penetration strategy in
order to gains the compositive advantage in Chinese market.
Advertising
There should more use of the digital marketing with the use of the social median and other
communication tools in order to have targeting the children’s and parents. There should also be
providence of the different discount and referral offers in order to increase the sale.

CONCLUSION
From the above study, it has been summarized that On in china UHT milk in more level
of untapped opportunity to have the anticipation of the ranking in demand of the personal's
storage facts at the development of nutrition value. As the discussion of the chine economy the
urban populations 690 million is having more level of influences from the western cultures.
the company include: working standards, human rights, integrity, bribery, corruption and other
opportunities and threats of the country. Several people have lost jobs across Britain as political
turmoil hold back the economy. One of the main importance of maintaining sustainability and
CSR is it Improves brand awareness by committing themselves to ethical practices. There is
more development of language barriers as the people are speaking in more of different
languages. So, there is important in order to be aware for the business regarding the priorities of
targets market along with cultural approach towards the development of organizational culture.
Franchisee is considered one of the best ways of international business and business expansion.
In return, franchisor charge commission or one-time fee from franchisee. Focus is on strategies
to sell existing products

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Online
China's Dairy Industry's Challenges. 2015. [Online] Available through:
<https://www.kantarworldpanel.com/global/News/China-dairy-industry-challenges-and-
opportunities>
Bribery and Corruption. 2020. [Online] Available through:
<https://www.globallegalinsights.com/practice-areas/bribery-and-corruption-laws-and-
regulations/china>