International Business Report: E-commerce Venture in the UK

This report presents an international business analysis focusing on Rahat Continental's strategic proposal for expanding its operations into the UK market with an e-commerce platform selling organic cotton wear for infants. The report provides a comprehensive overview, starting with an executive summary and introduction to Rahat Continental, including its vision, mission, and a brief description of its business. A detailed SWOT analysis of the UK kids' wear market is presented, identifying strengths, weaknesses, opportunities, and threats. The report further explores market analysis, key business drivers, trade barriers, protectionist policies, and ethical, social, and legal issues, including a PESTEL analysis. It examines cross-cultural considerations and the market environment in the UK. The report concludes with a discussion of expansion methods, international marketing aspects, and the impact of Brexit on the venture. References are included to support the analysis.

Running Head: International business 1
International business

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Executive summary:
International business is an important face of the modern economy. This face was integrated by
various organizations in their core business strategy with the help of the progressed occurred in
the technology. In other words, international business is the combination of all the business
transactions which are conducted between different countries.
The most important element of the international business from business perspective is the
multinational enterprise (MNE). MNE is the organization which is able to pursue strategic
success across the globe in context of production and sales. It can be said that MNE operates
within the borders of different countries.
Global expansion is considered as costly and risky procedure, and for offsetting such cost and
risk, it is necessary that organizations must develop strong and effective strategic plan. This
strategic plan must focus on the three major areas that are global concentration, global
synergies, and global strategic motivations.

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Contents
Executive summary:....................................................................................................................................2
Introduction:...............................................................................................................................................4
Strategic business proposal:........................................................................................................................4
Vision of Rahat:.......................................................................................................................................4
Mission of Rahat:.....................................................................................................................................4
Brief description of business:..................................................................................................................5
SWOT analysis:........................................................................................................................................5
Goals:.......................................................................................................................................................5
Customer Targets:...................................................................................................................................6
Industry analysis:.....................................................................................................................................6
Research of market:....................................................................................................................................6
Key business drivers:...............................................................................................................................6
Trade barriers and protectionist policies:................................................................................................7
Ethical, social and legal issues:................................................................................................................8
Cross cultural issues:...............................................................................................................................8
Market environment of UK:.........................................................................................................................9
Methods of expansion:............................................................................................................................9
International marketing aspects:...........................................................................................................10
Impact of Brexit:....................................................................................................................................11
Conclusion:................................................................................................................................................11
References:................................................................................................................................................12

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Introduction:
Rahat continental is a business firm which is owned by an Indian family and established in
1986. This organization provides different solutions related to the supply chain. It is also the
part of the global WCA Network and through this organization conducts its operations in more
than 30 countries across the globe. Rahat generally make investments in such technology which
adds value to their business and customers such as automated process, increase team work
efficiency. This organization provides different services, and because of this wide portfolio of
services there is rapid increase in the geographical coverage and systematic operations which
helped them in establishing reputed business (Rahat, 2018).
Rahat decided to set new business venture in UK and in this new venture they decided to
introduce e-commerce platform which sell organic cotton wear for infants (0-2 years) in UK. It
must be noted that, international expansion of business is considered costly and complex
procedure. Before taking such big move, it is necessary that organization must evaluate both
internal and external factors (Lumen, n.d.).
Structure of this report is divided into three sections, and each section address different topic.
First section provide detail strategic proposal for this new venture. Second section defines key
business drivers related to this expansion, and trade barriers. This section also states ethical,
social, legal and cross-cultural issues. Third section defines the e-commerce option versus other
methods of expansion, aspects of international marketing, and Brexit impact on the venture.
Lastly, paper is concluded with brief conclusion.
Strategic business proposal:
A strategic proposal is considered as guide which is related to the growth of the business, and
this section states the strategic proposal for new business venture of Rahat (Lavinsky, 2013).
Vision of Rahat:
Vision statement of Rahat is to serve the customers and enhance their business. By using their
global network and local expertise, Rahat intended to provide organic and best quality products
to their customers. This not only improves competitiveness of their product but also help in
growing their business.
Mission of Rahat:
To become global supplier of the infants clothing, and provide best organic cotton clothing for
other children’s also.
Brief description of business:
Rahat intended to start new business venture in the UK, and in this they start e-commerce
platform which sell organic cotton wear for infants (0-2 years) in the UK.

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SWOT analysis:
SWOT stands for strength, weakness, opportunities, and threat. This part provides the SWOT
analysis of kids wear clothing market in UK:
Particulars Detail
Strength Strength of this market includes product mix and quality of the product,
services provided to the customers, sales channel, brand identity, loyal
customer base, edited range, etc.
It also includes premium pricing, early parental engagement, high
demand, and strong wholesale presence (IBIS, 2017).
Weakness Weakness of this market includes low bricks and motor visibility,
Minimum promotions, rationality issues, range of the products are not
well established, suitability of products to kids, reliability on few brands,
etc. (Craik, 2015).
Opportunity It is predicted that this market show growth of 15.5% by 2019. It also
includes direct competition in same locations which ultimately results in
the increase in sales for all retailers and wholesalers (Dunbar, 2014).
Threat Decreases in child benefits may put negative effects on spend driving
sales for those retailers who are low priced. Some other threats are also
there such as similar products, loss of suppliers to competitors, new
entrants, etc.
Existing competitors can also be considered as big threat for Rahat such
as fat face, crew, etc.
Rahat continental can expand their business in the UK after considering above stated SWOT
analysis of kids wear market in the UK.
Goals:
Rahat continental has strong global network, and decision of organization to set new venture in
the UK. Goals related to this new venture are stated below:
 Rahat wants to enhance their full time trading proposition.
 Rahat aims to provide strong customers services.
 Rahat opens new stores in those locations which are attractive for customers.
For the purpose of improving their e-commerce business Rahat frame following objectives:
 Rahat aims to increase the volume of transactions, and also the percentage of their
revenue.
 Enhance the websites and develop existing channels.
 Increase the database related to the customers for the purpose of maximizing their
marketing activity.
 Rahat also aims to improve their range and gross margin.

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Customer Targets:
Rahat mainly targets infant market (0-2years) in UK, and for this purpose they can provide
different variety of cloths on the basis of seasons and occasions.
Industry analysis:
Higher inflation also affects child wear sector in the UK, and this also impose pressure on the
retailers to engross high cost prices or take hit on margins. While taking decision of purchasing
customers still give important to the quality of the product, and because of this retailers cannot
compromise with the quality and the designs of the product (CISION, 2017).
Research of market:
Key business drivers:
As stated by the Bernadette Kissane, an analyst at euro monitor, global children’s market racked
up the sales of €135.6 billion in 2015, up from €122.1 billion in 2010 because of the access of
fashion in children’s clothing. Kids clothing only contributes for 12% in the whole apparel
market. In last five years, growth in the children’s wear outperformed both the markets that are
menswear and women’s wear. Year of 2015 witnessed 6% growth in the children’s wear sector,
and both men’s and women’s markets grow only by 4%.
Demographic shifts are considered as major driver of the growth occurred in the Children’s Wear
market. In 2014, birth rates in UK began to rise again. Parents in the UK and US also plan
children’s later in their life, especially when they are able to spend more amount on bigger
wardrobes for their children’s or when they are able to purchase popular and high brands.
Ambitious consumption of the middle class and the fast expansions of the international brands
such as Adidas, Nike, H&M, etc. are considered as major drivers of growth. All these brands are
top ten brands of the children’s wear sector, and because of this kids wear sector is considered as
fastest-growing market across the globe. During the period of 2015, kids wear market of Asia
Pacific was worth €44.1 billion, and it is estimated to reach €65.1 billion by 2020 (Abnett, 2016).
Kids wear market also experienced a level of polarization like the adult clothing market, and this
provide benefit to both customer and designer, but it leaves the mid-tier players (specialist of
kids wear) struggling for the purpose of regaining the lost share in the market. At higher levels,
clothing of kids copy the designs of adult clothing, because parents want that their children’s
must follow the trends and this increase the consumption (Business Wire, n.d.).
Trade barriers and protectionist policies:

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Protectionist’s policies related to the trade is considered as thoughtful effort for the purpose of
limiting the imports and encouraging exports, and this is done by increasing trade barriers.
Protectionist is still widely practiced in UK (McGreal, 2017). These policies have number of
disadvantages, and the most noteworthy disadvantage of this policy is the pressure imposed by
these policies on the essential elements of the free trade. Some other disadvantages are also
there, such as it provides support to those firms which give preference to those firms who are
giving emphasis to the price over quality. It provides wrong security to the domestic firms and
ignores the sources through which customers can get easy access to the particular products.
Protectionism policies generally develop tariffs, duties, quotas and any other measures for the
purpose of restricting importing goods (Economics Online, n.d.).
The UK is considered as important part of the EU and commercial policy which is regulated by
the European commission. Generally, Department for International Trade (DIT) and HM
Revenue and Customs (HMRC) deals with the issues related to the trade policy, regimes, and
procedures which regulate imports in the UK. UK is an important part of the coordinated trade
systems which is introduced by the EU, and in this context both importing and exporting are
included in the regulations developed by EC.
It must be noted that, combined tariff of the UK is referred as ‘The Tariff’. Binding Tariff
Information (BTI) system is created by the EC and this system is considered as tool which helps
in obtaining the classification of tariff in context of import and export. Before shipping any
goods, it is necessary to get written BTI customs duty ruling, and this ruling is given by the HM
Revenue and Customs (HMRC).
Some non-tariff barriers are also there, and some of these barriers are stated below:
It is necessary to obtain import licenses for different items, such as agriculture products, plants,
medicines, food, textiles, etc. It must be noted that requirement of license is based on the country
of origin of the product (ATIC, n.d.).
When organization import kids wear, it is necessary for organization to comply with the
particular quality requirements if these goods are sold to customers in the UK. Following
regulations are applicable on the kids wear imported in UK:
 the General Product Safety Regulations 2005
 the Children’s Clothing (Hood Cords) Regulations 1976
 the Nightwear (Safety) Regulations 1985
Recommendations related to materials, design, and manufacturing guidelines are provided by the
BSI British Standards Code of Practice (reference number BS 7907:2007), and this code is
available for purchasing. These guidelines are provided for the purpose of encouraging the kids
wear safety.

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It must be noted that, as per the VAT rules in UK, maximum products related to children’s
clothing enjoy reduced rate of 0% VAT in the UK, which means there is on VAT on these items.
However, some exceptions are also there such as those business organizations which only sells
zero-rated items must sell necessary requirements related to imports (Gov. UK, n.d.; Veldi &
Cali, 2006).
Ethical, social and legal issues:
In this section we conduct PESTEL analysis of kids wear market in UK, and mainly discuss only
three issues that are stated below:
Ethical issue: some organizations specifically stated that they are using organic products for
manufacturing the kids wear, but in actual they are not using any such products. All these
practices are considered as unethical. In UK, customers give preference to the quality and not to
the price because of which it becomes necessary for the organizations to conduct such practices
which are ethical in nature.
Economic Issue: there are number of factors which directly affect the kids wear market in UK,
and these factors directly related to the current state of the economic environment. Those
business organizations which use differentiated strategy in the UK as opposed to the cost leader
strategy are able to deals with the UK economic environment and also get success (ISSU, n.d.).
Social issues: Numbers of social and cultural changes are occurring in the UK, and this directly
affects the performance of the kids wear sellers in UK. The biggest issue in this context is
diversion of culture. After the World War II, UK becomes the culturally diverse nation with an
invasion of diverse cultures, races and ethnicities. All these factors contributed as cultural
backdrop in the social system of UK.
Legal issues: like all other businesses, organizations who sells kids wear must complied with the
legal obligations imposed on them such as Rahat must complied with the guidelines stated
below:
 General Product Safety Regulations 2005
 the Children’s Clothing (Hood Cords) Regulations 1976
 Nightwear (Safety) Regulations 1985 (WAND, 2018).
Cross cultural issues:
There are number of cross-cultural issues in UK related to children’s clothing, and some of these
are stated below:
 UK is the country which is culturally diverse, and for getting success it is necessary for
organization to understand the UK culture and serve products as per their cultural beliefs.

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 There is lack of awareness of the different social lifestyle practices in UK, and while
offering products to the UK consumers, organization must ensure that their products
match with the requirement of their customers.
 In India ethic wear is widely used and appreciated, but because of the different culture,
customers in UK do not prefer more ethnic trends and follow fashion trends (Shavitt, Lee,
Torelli, 2008; Buckingham, 2007).
Market environment of UK:
Methods of expansion:
Electronic commerce or e-commerce is consider set of online business activities for products and
services. It can be used for conducting any type of business transaction, and at this platform
parties to the transaction interact electronically with each other instead of physical contact. In
Europe, UK is the clear leader in e-commerce activities. In 2017, experts estimated US$110bn
sales in UK through e-commerce transaction. For future, it is predicted that sales through e-
commerce in UK show growth of 15% as compared to other Western European countries in the
period of 2017-2021. Germany and France holds second and third position respectively in
context of e-commerce sales, and it is estimated that Germany witnessed the growth of 11% to
reach US$65bn in 2017, while sales in France will rise by 9% to US$42bn. This major driver of
this growth is mobile commerce.
However, Nordic countries rare more mature in context of e-commerce transactions, and this is
reflected through 10% increase in retail sales in Nordic countries through e-commerce. In UK,
Germany, France, Italy and Spain e-commerce sales only contributed sales of 9% in average.
In rest of Europe there is slow growth in e-commerce, and sales related to e-commerce sales in
Central and Eastern Europe will reach US$43bn in 2017, which is equal to just 4% of retail sales.
Share of e-commerce in retail sales will continue to be low throughout the next five years
reaching only 5% by 2021 (IPC, n.d.).
After considering these figures, it can be said that e-commerce platform is the best option for
Rahat to expand its business in UK. However, some other methods of business expansion in UK
are stated below:
Direct export- business organizations in UK take orders from the international customers and
directly ship those orders to the international customers.
Selling through overseas- a distribution or agency contract is made with one or more
intermediaries. In this both Distributors & agents purchase the stock for the purpose of meeting
the local demand of customers. Generally, customers are owned by the distributor or agent in this
method.

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Operation at overseas- in this business organization establish physical stores at different
locations in the target market. Initially, these stores are only sales office, and this based on the
production facilities.
Joint venture or overseas business purchase- in this business organization can acquire or make
investments in an existing business which is already operating in the existing market (Business,
n.d.).
International marketing aspects:
This part states different aspects of international marketing which are appropriate for this new
venture:
Supply and demand- supply and demand aspects is considered as most important element of
international marketing and it play major role in trying to market the products manufactured by
organization across the globe. In this company analyze deep analysis of potential markets for the
purpose of selling products in right way and at right time. In this organization evaluates the
demand of product in potential market and supply the product as per the demand (Anastasia,
2015).
Financial transactions- for the purpose of funding the products and services marketing offered by
organization it is necessary to consider and evaluate different financial options. In those
countries which are prosperous, it is normal that customers can buy goods internationally and
make payment through credit cards, debit cards, online payment processors, etc. but this scenario
is not same in every country. This type of option affects the marketing strategy of organizations.
Therefore, financial aspects must be evaluated before expanding the business.
Laws- generally, every country frame few rules related to product advertisement and other
marketing strategies. Business organizations must comply with these rules before framing
marketing strategy.
Export research and planning- when organization decided to expand their business, they
generally target those companies which are similar to their country in different aspects. Both
India and UK are culturally diversified countries. Before expanding the business in an unfamiliar
market, companies must prepare themselves in proper manner (Varghese, 2015).
Impact of Brexit:
On 23rd June 2016, referendum known as Brexit was introduced in which UK voted to leave the
European. The residents of the UK decided to leave the benefits of unified monetary body for the
purpose of getting the advantages of free movement of immigration.

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Economy of UK witnessed the growth in the last three months of 2016, and this is stated in the
official statement. As stated by Office for National Statistics (ONS), GDP of UK is increased by
0.7% up from 0.6%. This growth is the result of continuous efforts of manufacturing industry.
Estimates of growth by ONS are cut down in 2016 to 1.8%, which is less than 2%. Some hints
are there which state that Brexit hit the confidence of business organizations. ONS further stated
that there is reduction in business investment which is fell by 1% as compared to previous
reporting’s (Bowler, 2017).
Whether Brexit provide any benefit to the business will completely depends on the negotiations
made by government in context of trade, access to high-skilled migration and other factors.
Interest of business organizations are considered by the government while making those
negotiations. Still there is uncertainty for business organizations (Market inspector, n.d.).
However, as stated by the experts Brexit supports the free trade and encourage international
business. Therefore, there are chances that Brexit provide more opportunities to Rahat.
Conclusion:
After considering the above facts, it can be said that UK witness high growth in the child wear
market in future and it provides different opportunities to the overseas business organizations.
Global expansion is considered as costly and risky in nature, and for offsetting such cost and
risk, it is necessary that organizations must develop strong and effective strategic plan. This
strategic plan must focus on the three major areas that are global concentration, global
synergies, and global strategic motivations.
This report provides detailed strategic proposal for new venture initiated by Rahat in Uk, and
also defines key business drivers related to this expansion, trade barriers, ethical, social, legal
and cross-cultural issues. It states e-commerce option versus other methods of expansion, aspects
of international marketing, and Brexit impact on the venture.

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