International Business Report: Lucky Generals in Beijing, China

This report provides a comprehensive analysis of Lucky Generals' planned international business expansion into the Chinese market, specifically focusing on the UHT milk sector in Beijing. The report begins with an executive summary and introduction, followed by an in-depth examination of key business drivers, including PESTEL and Porter's Five Forces analyses to assess the political, economic, social, technological, environmental, and legal factors, as well as the competitive landscape. It then delves into the cultural factors influencing business operations, trade barriers, ethical and social considerations, and potential methods of expansion. The report concludes with a summary of findings and recommendations, drawing on relevant academic references to support its arguments. The analysis aims to provide Lucky Generals with a strategic roadmap for successfully entering and competing in the Chinese market.

International business

Table of Contents
Executive summary.........................................................................................................................3
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Business drivers...........................................................................................................................4
Cultural factor..............................................................................................................................9
Trade barrier..............................................................................................................................11
Ethical and social issues............................................................................................................12
Method of expansion.................................................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

Executive summary
In the below report it covers all aspect related with international business. The company is
planning to set up business in China Beijing of UHT Milk. There is a great demand has been
seen in this industry. The report aims towards business driver, trade barrier, cultural factor,
method of expansion, and ethical, social issues.

INTRODUCTION
International business is mainly concern with the trade related activity in terms of good,
technology, services, knowledge and capital which is associated with national border as well as
global level. This is the situation where company operates its business at global level. This will
encompasses overall activity related with commercial range in order to promote or support
variety resources, people, goods and services deals in the international channel. This type of
international business raise the scope of high competition in market but also deliver opportunity
to increase maximum level of revenue (Bullough, 2017). The chosen organisation in this report is
Lucky Generals. This is one the London base SME deals in marketing advertisement agency. It
is planning to expand its market in international at China country. By observing growing
importance and demand in segment of UHT milk in Beijing China, Lucky Generals plan to
operate its business. Other competitors are also dealing its business in this segment such as
Nestle. The report consist of business drivers, cultural factor, trade barrier, Ethical and social
issues and method of expansion.
MAIN BODY
Business drivers
Before going for any type of international business Lucky Generals must conduct external
environment analysis because this will strengthen strong position in the international market and
company will easily compete with its highly competitors like Nestle. The business drivers is
concern with optimum element, condition, resource, process that play major role in business.
This is something most essential part that influence business performance. The ultimate purpose
of manger is to enhance business driver in order to boost sale and revenue (Cairns, 2017). This is
the main reason why Lucy Generals need to recognise its own business driver before
international market expansion of UHT milk in China Beijing. The business driver can be
conducted by applying two model one is PESTEL and second one is Porter’s Five Force model.

Political-The element connected with political factor has important role in examine overall
impact upon Lucy General in log period of its profitability in parts of Beijing China. Here this
risk is connected with the political system and environment so that company will achieve success
while entering market of Beijing. For that company need to examine following factor such as
 Stability in political aspect and its significant in terms of China economy towards food
and beverage sector.
 Risk associated with military invasion
 Corruption level while regulating towards segment of food and beverage
 Administration in segment of Food and beverage by China government
 Legal structure in terms of contract enforcement
 Protection in terms of intellectual property
 Trade regulation concerned within this industry
 Favoured partner while setting trading
 The law of anti trust
 Mechanism related with pricing regulation.
 Rate of Taxation as well as incentives in industry
 Rate of minimum wage in the legislation along with overtime
 Work week form of regulation within this industry
 Regulation of mandatory benefits of employee.
 Guidelines related with safety industrial regulation
 Proper labelling in terms of product as well as several form of Food and beverage
Economic-The environment in terms of macro associated with inflation, saving, interest,
foreign exchange (Chan and et.al., 2018). The cycle concern with economic will determine
overall investment and demand in China. Here environment micro component in terms of
completion influence upon competitive edge of company (Collinson and et.al., 2020). In Lucky
General they examine China inflation and economic circumstances within industry. Here growth
and purchasing of consumer need to be forecast for successful expansion of company. This will
consider elements that is mention below-
 Overall china economic system And its operational stability in country
 Intervention upon food and beverage industry of China government
 Stability and exchange rate in terms of China host currency

 Efficiency in financial segment so that Lucky General can raise capital towards local
market
 High level of infrastructures quality within Food and beverage
 Competitive edge in China Food segment
 Level of talented workforce and its skill within industry.
 China level of education
 Cost of labour along with productivity
 Rate of economic growth
 Income in discretionary income, unemployment, inflation and interest rate.
Social-The culture of society is mainly concern in order to pursue things that will impact
overall environment of Lucky General (Dörrenbächer, 2019). The optimum level of shared
believes as well as attitude in terms of population that is associated with marker at Lucky
General in order to understand respective consumer market. It will design effective marketing in
this UHT milk. This will consider some essential points-
 The skilled level in terms of demographic with higher population.
 The structure in terms of hierarchy through structure power within society
 Education level with proper standardisation in industry of Lucky General
 Cultural connected with roles, gender, social convention
 The spirit of entrepreneurship in order to raise high volume nature.
 The overall attitude related with health, environment as well as consciousness
 Interest of leisure
Technological-In industry fast disrupting is seen in technology around the globe. In UHT
milk industry is growing so there is great scope with established in change with technology
(Eden, 2020). The speed of technology changes has been seen with high level of profitability by
securing competitive edge. In order to understand technology changes need to be analysis its
impact
 Existing advance level of change in terms of technology development in Lucky General
as well as its competitors
 Overall impact upon its UHT milk offerings and technology
 Optimal structure of cost within this industry
 The overall layout in terms of Value chain need to be covered in Food industry

 The diffusion type of rate in technology changes
Environment-The standard of environment concern with the overall impact upon to
company profit range to expand market in China Beijing. Lucky General have to go through
from lots of environment types of law along with liability law (Gereffi, 2019). The environment
disaster will leads to cover breakdown in healthy tax break.
 Weather, change in climate, laws or regulation related with environment pollution
 Air as well as pollution of water in terms of Food and beverage industry
 The management of waste within industry
 Attitude concern with green as well as ecological range of offerings
 Species related with endangered and the attitude that concerned with support of
renewable energy
Legal- In China country company need to work upon following its legal structure that robust
or protect in terms of intellectual rights of property in Lucky General. This is the reason why
they need to analyse while entering into the market. This will consider in order to expansion into
China market
 The Anti Law within this industry throughout in order to mange in China country
 Discrimination Law
 Consumer law in order to protect the overall law along with copyright, intellectual
property and patents.
 Employment, health and safety law with full protection of data.
Porter Five force model
Lucky General need to analyse porter five force model for its business driver as this will enhance
its sustainable profitable business UHT milk in China Beijing (Hamel, 2017). The Porter five
force model combine of holistic strategy and act as futuristic holistic decision to compete with
high level of competition in order to maintain sustainable competitive edge.
Threat of new entrants-New entrant in UHT milk industry contributes lots of innovation in
order to build new things along with high volume competition. as a result it will deliver low cost
to target consumer. Here Lucky General can give more value in terms of proposition in
respective consumer. They have to manage all types of barrier along with its safeguard towards
competitive edge. The Lucky General can manage its threat of new entrant by following ways-

 By introducing more innovative concept in product and service offerings. Because new
range will attract new potential consumer along with proving strong reason for existing
consumer to stay with company.
 Developing economy of scale in order to low their fixed cost as per unit.
 Generating more capacity in order to expend more finance upon research department.
The new entrants will entrant but company will sustain with its standard form at regular
basis. This will decrease extraordinary profit range for new entrant and demotivate them
to enter into China market.
Bargaining power of supplier-All company in UHT milk deals in raw material along with
supplier (Hamilton, 2018). Here supplier play role of dominate in order to reduce profit margin
of Lucky General. Here influencing supplier deals in negotiating power so that they can raise
high price of product in field of UHT milk. This will influence high range overall impact upon
and lower its profit range. Lucky General can mange bargaining power of supplier by following
ways-
 In order to build high efficient chain of supply with effect of multiple supplier.
 Through experiment along its product design by the use of material to update price range
of material in company while changing other.
 Creating chain of dedicating range of supplier on which performance of business can
depend. Lucky General must learn from its competitors like Nestle as they develop other
manufacture and attached with business wholly so this will reduce the power of supplier.
Bargaining power of buyer-I this industry buyer demanded very much as it want high range
of product offerings at very affordable price range. But this will generate pressure for lucky
General in long period of time (Hampden-Turner, 2020). Here small range of consumer leads to
cover higher ability by providing higher discount range. The lucky General will manage
bargaining power of buyer by following way-
 By creation of large consumer base that will advantage in two method. This will decrease
power of bargaining in terms of buyer. This will deliver opportunity to strengthen sale
and process of production.
 It will rapidly generate more concept of innovation in offerings and well established of
offerings. The new range of offering will restrict buyer bargaining power.

 New range of product will decrease current range of consumer with defection in terms of
its competitors.
Threat of substitute-In new range of product must accomplish actual requirement of
consumer in several manner. As a result industry will suffer more range of profit. It competitors
are dealing in same line with high standardise services (Hartmann, 2017). They also value in
form of Unique proposition in the current range of industry that is quite different. Lucky General
will manage threat of substitute in following ways-
 Here the services is being oriented in compare to product range.
 By generation o understanding actual requirement of consumer base and the reason
behind their purchasing habit.
 This will increase highest switching cost in terms of consumer.
Rivalry in existing competitors-The company face intense range of competitors that will
leads to cover more downing price range and reduce profit range of the industry (Hill and et.al.,
2017). The Lucky General will deal in high competitive market in food segment. High
competition will influence company long term profitability. Lucky General manage existing
completion by following ways-
 Creation of sustainable differentiation.
 Generation of scale while competing in better form.
 While collaborating in terms of high competitors in order to increase large size of market
while compare with other market.
Cultural factor
The factor of culture is very important while doing business of UK in parts of China
Beijing. For company Lucy General they adopted Hofstede’ cultural dimension factor so that
they can easily address national cultural of UK and China. This will enhance company
understanding related with cultural factor. Hofstede structure framework understand and gives in
depth knowledge related with several culture of country while expanding business in
international business around the globe. This will consist of Six category that is mention bellow-
Power Distance Index- The index associated with power Distance in order to consider form
of inequality along with power that can be tolerate. Here the dimension or power associated with
the actual view point from high to low-

 The power in high distance sate concept of culture linked with proper inequity along with
the difference that motivate high level of bureaucracy. This will show higher amount of
respect from ranking to the authority.
 Lower power in terms of distance index leads to cover more cultural motivation in terms
of company structure that associated with flat as well as feature in terms of
decentralisation while decision towards the responsibility in format of participative
management prominence towards power distribution.
Collectivism Vs Individualism-In context of collectivism Vs Individualism this cultural
dimension connected with level related with the society in terms of integrated type of group that
is obligation or terms of dependency in it.
 The Individualism consider higher gap significant while achieving goal at personal level
in form of personal self image.
 Collectivism associated with greater significant goal related with full of well being. This
will carry out self image.
Uncertainty Avoidance Index-This type of Index in terms of Uncertainty to avoid he extent
of Uncertainty that can be ambiguity tolerated (Killing, 2017). It considered some short of
unknown situation that act as unexpected form of event which can be easily deal in terms of-
 The high avoidance in term of uncertainty will indicates some aspect related with low
tolerance, in term of uncertainty. This involve high risk taking in terms of ambiguity.
This will leads to minimised certain strict rules as well as regulation etc.
 The low form of uncertainty consider some indicates in terms of high level of tolerance
towards risk, ambiguity as well as uncertainty. It is openly related with acceptance
towards rules and regulation
Femininity Vs Masculinity-The dimension connected with Femininity Vs Masculinity is
also termed as tough vs tender (Kolk, 2018). This will cover preference in terms of society in
order to accomplish optimum level of attitude, behaviour, equality sexuality etc.
 Masculinity consider by adopting following characteristic in terms of roles, distinct,
assertive. This is fully concentrated upon material achievement towards wealth building
 Femininity consist following aspect that is fluid role of gender modest nurturing with
full connection through optimum quality of life.

Short term Vs long term Orientation-Long term Vs short term dimension needs to be
consider with full extent towards society as well as time horizon.
 Long orientation aim towards futuristic vision, this consist delay towards short type of
success. This shoe gratification for accomplish long term success. This will emphasizes
overall persistence as well as perseverance in terms of long period of growth.
 Short orientation will leads to consider more focus upon near by future. This is associated
with the strong emphasizes upon gratification in the present. The short term level of
orientation cover quick result in terms of tradition.
Restraint Vs Indulgence-This type of dimension state tendency with society extent to
accomplish desire level all around the impulse and desire.
 The indication towards indulgence relatively society so that free level of gratification are
leads to enjoy fun event of life.
 Overall restraint covers society suppresses form of gratification that is necessary to
regulate norms towards social.
Trade barrier
While expanding business in market of China Lucky General have to go through from
various type of trade barrier that limit profit and long period of sustainability While expanding
business in UHT milk (Kourula, 2017). Here are some trade barrier that is discuss below-
Tax imposed on imports-This is the tariff or termed as tax imposed that is imposed by
China government. The supranational type of Union towards outlook with reference of import
and export related with goods and services (McWilliam, 2020). This is the source of revenue foe
China government as in form of import duty that act with suitable regulation in terms of foreign
trade along with policy related with foreign goods and services in order to motivate more
safeguard policy concerned with domestic industry.
Licensing-This is term as one type o business arrangement that Government will give
permission from one to another company in order to manufacturing respective range of product
through specific payment. Basically licensing consist of allowing organisation with full
utilisation towards patent, copyright, trademark, design, intellectual exchange in terms of
revenue and fee. In context of Luck General they have to take permission form China
government to pass their licensing to operate business expansion.

Excessive bureaucratic procedure- This refers as idiom where all type of regulation need
to be conformity for its formal regulation standard so that they can claim excessive bureaucratic
procedure in order to prevent some sort of actions in the decision of company. This is applied at
large scale and know as red tape.
Import quotas- This is one type of imposed limit regulate by the China government with
reference of Quantity towards respective goods that is imported within country of China. This is
used by government in order to protect domestic as well as vulnerable producer.
Ethical and social issues
There are some ethical as well as social issues that is faced by Lucky General while in its
operating international business (Pucik, 2017). Here are some list of Ethical and social issue that
is mention bellow-
Child labour-This is one of the major issue of ethical and social where most of the
exploitation has been seen childhood as they use to work rather than going to school (Tyran,
2017). This ethically and socially wrong that is practice in business operation. In China almost
70 % percentage are child labour working in business practices.
Bribery and corruption- The bribery is unlawful code of conduct that is taken in
business in order to gain more advantage of revenue. This will leads to cover wrongful decision
making for generating revenue. This will refers as reinforce as well as intention with move of
obligation act of honesty where no ethical business practice executes.
Environment- As organisation uses resources of environment so it is their responsibility
to protect environment by adopting process of business or tool of environment friendly. No
pollution that is water or air must be restricted in the process of business to protect the
environment. The company must follow some certain regulation related with environment that is
imposed by China government.
There is great importance of Corporate social responsibility in order to operate in terms of
international level. CSE attract consumer towards business because company gives back to the
society in terms of good work so that organisation will uplift more benefit of community. This
will boost consumer loyalty with strong brand image. This also raise the level of productivity in
business.