International Business Report: UK SME Expansion in Global Markets

This report examines the international business expansion of UK SME, a UK-based company supplying dairy products, focusing on its potential expansion into global markets, specifically China. It begins with an introduction to UHT milk and its market dynamics, followed by an analysis of the business drivers behind the company's internationalization, including competition and technological advancements. The report then delves into PESTEL analysis, considering political, economic, social, technological, environmental, and legal factors impacting the company's operations. Porter's five forces are also analyzed to understand the competitive landscape. Trade barriers, ethical and social considerations, cultural preferences, and expansion strategies are discussed, providing a comprehensive overview of the challenges and opportunities for UK SME in the international market. The report also covers the factors of production and trade barriers affecting the business.

International business

INTRODUCTION
Ultra-excessive temperature, or UHT, milk is extremely-pasteurized milk that is available in
sterilized containers. It’s actual milk, much like the type human beings buy chilled inside the
dairy aisle, but its unique pasteurization and packaging technique offers it a shelf lifestyles of
several months. While maximum milk goes thru a popular pasteurization procedure, UHT milk
is going via extremely-pasteurization, which competently heats the milk to a higher-than-normal
temperature. This, like regular pasteurization, kills bacteria within the milk that may be harmful
or reason the milk to ruin, generating milk with an extended life (Hamilton and Webster, 2018).
It’s then packaged in sterilized packing containers, additionally called aseptic packaging, which
enables hold the milk more energizing longer. UHT milk can sit down out unrefrigerated for
about 3 months, and this will range through emblem. Once the field is opened, the milk needs to
be refrigerated and has the equal shelf life as other milk. The statistic suggests the overall profits
volume of UHT milk in Great Britain from October 2009 to October 2018. In the fifty week
period finishing at the October 7, 2018, approximately 229 million liters of UHT milk changed
into provided in Great Britain. Whereas in the first 1/2 of 2019, Inner Mongolia Yili Industrial
Group remained the main UHT milk marketplace player in China with the market percentage of
spherical 38.Eight percentage. The main 3 Chinese UHT milk manufacturers covered spherical
seventy four percentage of the marketplace, slightly extra than that within the first 1/2 of 2018.
China is the 0.33 biggest dairy manufacturer within the global; dairy intake in China has entered
a fast growth degree. Presently, dairy intake mainly concentrates in liquid milk and milk powder,
amongst which liquid milk call for in China is dramatically developing. Currently, greater than
ninety% of the place’s global locations specially consume pasteurized milk in liquid milk intake.
Pasteurized milk covers 70% of the area’s liquid milk market and covers ninety 5% in Europe,
90% in US and over 95% in Australia and New Zealand. For the completion of this assessment,
UK SME is taken in to consideration. It is a company based in the UK that supplies milk, cheese
and other dairy products. It is a farmer owned co-operative and supplies products to the UK and
international markets (Backus, Kehoe and Kydtand, 2021). This written document will discuss
about business drivers behind organisation’s expansion in to the particular nation, PESTEL and
Porter’s five forces analysis. Moreover, it’s going to talk approximately exchange boundaries,
ethical and social issues to be considered by means of the firm, cultural options and expansion
strategies.
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MAIN BODY
Business drivers behind UK SME Company’s expansion
1. 2 Significant business drivers for internationalisation for UK SME
The International business manner the buying & promoting of the products & services across
the border. These enterprise activities may be government or private establishments. The
International enterprise is defined as the worldwide exchange of products/offerings or funding.
Internationally lively corporations are more powerful and competitively feasible (Buckley and
Casson, 2019). Nevertheless, there are some conditions in this regard: a stable go back on sales,
loose cashflow, revel in and expertise. Here are some key drivers for a hit internationalisation.
Competition- With the worldwide marketplace, international inter-company competition
will increase and corporations are pressured to “play” international. Strong interdependences
amongst nations and excessive -way trades and FDI movements additionally help this cause
force. Competition is ideal. In truth, a wholesome rivalry challenges the firm to paintings smarter
with the sources they've. To achieve this, leverage their team’s specific abilities and construct a
enterprise competitors wouldn’t dare project. Even if other organizations of their industry try to
undercut their expenses and steal their clients, think undoubtedly about ways they can assist their
start-up grow. Rivals force enterprise to evaluate their strengths and weaknesses. Use their
superpowers to create an extra particular price proposition to clients. Understand their
shortcomings and locate approaches to overcome them. Competition signals sturdy client call
for. It gives validation for what the assignment is doing. In new markets, that is an opportunity to
sell a growing trend with a view to get customers and the media enthusiastic about their
paintings. Competition is a key and important driver of business expansion for UK SME because
if there is high competition in the market, then they will work regarding their milk or dairy
product in order to make them more innovation which will able to meet the demand of global
consumers (Lundan, 2018). Also, this will also support them in managing the global market
share and provide chance to them to make more development in their business in context of
increasing sales, profits as well as customer base.
Expansion of technology- Technology fashioned and set the muse for present day
globalization. Innovations in the transportation generation revolutionized the industry. The most
vital tendencies amongst the ones are the commercial jet plane and the concept of
containerisation inside the overdue Seventies and Nineteen Eighties. Inventions in the region of
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microprocessors and telecommunications enabled exceedingly effective computing and
communique at a low-value diploma. Finally the fast growth of the Internet is the present day
day technological motive force that created international e-commercial company and e-change.
Along with this, diffusion of information is universal so in order to make the flow of information
transfer the management of respective company can adopt this drivers in order to globalisation.
Because when this venture operate in different market of world like China and others, then they
make proper delivery of required information with use of new, innovative and updated
technology (Aguilera and Grøgaard, 2019). Additionally, competition for products is globally
and the use of internet permits venture to trade internationally. So by using internet and other
technology, the firm can make innovative milk products and launch in the different nations of the
world with the support of internet and effective technical support. Use of marketing technology
also supports the firm in creating awareness about its innovative dairy products and milk
commodities.
2. PESTEL and Porter’s five forces with relevant trade theory
PESTEL analysis-
Political factor- The political region has a huge impact upon the regulation of companies,
and the spending energy of customers and exceptional corporations. They need to bear in mind
troubles including: Every Business has affected by the unstable authorities and the political
problems. The UK SME isn't always the incredible. But the happiest bear in mind is that on the
political Hortal state of affairs the transportation automobile of this form of food is out of the
sports activities. The government coverage have an impact on prison tips that adjust or tax are
strongly affected the financial agency in UK. The authorities’ proper proper right here is the very
powerful agent for establishing the regulations and regulation. For that cause the commercial
enterprise agency’s business enterprise are affected. The respective company is also fall in this
location.
Economical component- Marketers want to assume the kingdom of a shopping for and
promoting financial system inside the small and long-phrases. This is in particular actual while
schooling for global advertising. The respective firm require searching at: Due to Brexit, the
volume of inflation Employment stage can be very high. Another depend the un-emplacement
fee is likewise excessive. So the business organisation get the exertions with a minimal value and
UK SME moreover extend the personal dairy agencies and employ the hard work in there with a
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completely low value (Bahoo, Alon and Paltrinieri, 2020). Long-term prospects for the monetary
machine Gross Domestic Product may be very super. Day to day the financial system is growing
and those’s dwelling elegant is turning into excessive because of the overseas direct investments
and SME loans make the people self impartial by way of doing small enterprise.
Social aspect- The social and cultural influences on enterprise variety. To united states of
america, it can be very important that such factors are taken into consideration (Sharma and et.
Al., 2020). Factors consist of: Though in this dairy corporation the product is perishable and the
product is regionally produce so the people can not buy the product with excessive charge from
the distant places.
Technological thing- Technology can be very crucial for lively benefit, and is a high motive
stress of globalization. Consider the subsequent elements: Technology permit for food and
offerings to be made greater affordably and to a superior modern of remarkable. Technologies
gift customers and corporations greater pioneer services and products alongside facet UHT Milk,
High tech packaging, the same antique maintaining and so on. For distribution and communiqué
altered via the use of approach of recent technology just like the innovation of freezing machine
lorry, tune the position of the distribution automobiles and so on.
Environmental aspect- The programs those are used by the Milk vita this is perishable and
may be recycle. For that motive the environment isn't always polluted. The cow-dung is used for
the Bio-Gas tool and the fuel is used for the cooking, lights device. For that way the humans of
the village isn't always used the wooden for the cooking purpose.
The UK SME is not blending any type of comical those are harmful for the clients.
Legal factor- The Company, wherein surroundings is gambling need to comply the policies
and law of that authorities (Peterson, Arregle and Martin, 2020). UK SME get the crepitate from
the UK Testing Institute for running the state. They also give the tax and different costs to the
government.
Factors of production- The 4 elements of manufacturing are land, hard art work, capital, and
entrepreneurship. They are the inputs needed for deliver. They produce all the products and
services in an financial gadget. That's measured with the aid of the usage of gross home product.
Land as a Factor of Production- Land is short for all the herbal assets available to create
deliver. It includes raw assets and some thing that comes from the ground. It may be a non-
renewable beneficial useful resource. That consists of commodities which encompass oil and
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gold. It moreover can be a renewable beneficial aid, together with timber. Once guy changes it
from its right scenario, it will become a capital precise.
Labour as a Factor of Production- Labour is the art work finished thru the usage of human
beings. The charge of the staff relies upon on humans' education, skills, and motivation. It
moreover is based upon on productivity. That measures how an lousy lot every hour of employee
time produces in output. The reward or income for labour is wages.
Capital as a Factor of Production- Capital is short for capital items. These are man-made items
like machinery, tool, and chemical materials which may be applied in production. That's what
differentiates them from patron devices (Hamilton and Webster, 2018). For example, capital
devices encompass organization and commercial houses, but not personal housing. A business
employer aircraft is a capital splendid, however a private jet isn't always.
Entrepreneurship as a Factor of Production- Entrepreneurship is the pressure to increase an
idea right right right into a commercial enterprise corporation. An entrepreneur combines the
possibility three factors of producing to feature to deliver. The maximum a achievement are
cutting-edge hazard-takers
Trade barriers
A barrier to alternate is a central authority-imposed restraint at the glide of international
items or services. The maximum commonplace barrier to change is a tariff–a tax on imports.
Tariffs enhance the price of imported goods relative to domestic goods. International alternate
will increase the wide variety of products that home purchasers can select from, decreases the
cost of these goods via multiplied competition, and permits domestic industries to deliver their
merchandise overseas. The description of some trade barriers which create restrictions in order to
operate international business as below:
Regulations- It refers to laws and rules which are designed and framed by national
authorities of the countries. Regulation is the controlling of an activity or process, basically by
means of rules. There is different kind of rules and regulations are formulated and developed by
the government so that organisations can operate their business at global scale (Backus, Kehoe
and Kydtand, 2021). The changes in these laws and regulations create barriers in the trading of
goods and services of business organisations.
Legal issues- Legal difficulty or difficulty of regulation is a felony query that is the
foundation of a case. It calls for a courtroom's choice. It can also refer to a point on which the
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evidence is undisputed, the outcome of which is predicated upon at the courtroom's interpretation
of the regulation. This kind of obstacles can be faced through UK SME because of taxes on
product imports and subsidies for farmers in evolved economies result in overproduction and
dumping on international markets, therefore reducing expenses and hurting poor state farmers.
Competitors- It refers to other businesses who can offer the same or similar goods and
services to their consumers. It is also a key trade barrier for the business of UK SME Company
(Buckley and Casson, 2019). Because there are number of organisations which offer similar kind
of products and services in the market which create restrictions for the respective venture in
order to operate its business in other nation like China.
3. What possible consequences may occur if these are ignored by the SME?
The increase in import expenses translates right into a confined choice of products. Small
corporations, as an example, may not be capable of come up with the money for to pay those
expenses in order that they may provide fewer items. Trade obstacles bring about higher
costs for each customers and companies. As a manufacturer or distributor, you could need to
pay extra for the goods required to run your commercial enterprise easily. Trade obstacles
affect monetary boom in developing countries, which might be unable to export goods due to
high price lists, for this reason limiting their capability to prosper and extend their operations.
Furthermore, it has a direct effect on wages and global members of the family. Duty tax
increases the general price of imported items and services. When a government levies this tax
on imports, it ambitions to deter neighbourhood customers from uploading.
4. Demonstrate the business uncertainties and opportunities created by the trade policies
of the national government of China.
The enterprise uncertainties in China are related to falling growth price, export driven
economy to intake driven economy, manufacturing & banking viability, tax sales & prices and
local imbalances (Lundan, 2018). The possibilities in China are related to start deliver of healthy
merchandise, import and export trading, small scale manufacturing, trading platform or online
purchasing and net enterprise.
Ethical and social issues considered by the UK SME
1. Highlight the significance of corporate social responsibility when operating
internationally
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A worldwide commercial enterprise thru definition is a business enterprise that transacts on
the global degree. Corporate social obligation is self-regulation with the aid of a international
organisation with the goal of embracing responsibility for the company's actions and growing a
effective impact via its sports on its clients, personnel, corporations and the environment.
Although direct consequences have not been proved and much grievance has risen round CSR,
companies pick out some apparent advantages. Implementing the values and desires of CSR
enhance the judgment and reputation of the business enterprise among customers (Aguilera and
Grøgaard, 2019). In a robust, competitive sell it additionally makes the company stand proud of
its warring parties. CSR may additionally spark off contemporary and potential employees to
dedicate themselves to the employer and sell its values in their non-public lives.
Discuss reliable theory on Ethics
Deontological Concept- The deontological principle of ethical theories states that human
beings should adhere to their responsibilities and responsibilities when engaged in decision
making at the same time as ethics are in play. This manner that someone will observe his or her
obligations to another person or society because upholding one’s responsibility is what's taken
into consideration ethically correct. Deontology includes many high quality attributes, but it
additionally includes flaws. One flaw is that there may be no reason or logical basis for deciding
a man or woman’s responsibilities. For instance, a businessperson may additionally decide that it
is his/her duty to usually be on time to conferences. Although this seems to be something
suitable, we do now not realize why the individual chose to make this his duty. Sometimes,
someone’s obligations are in struggle. For instance, if the commercial enterprise character that
should be on time to meetings is running past due, how is he/she imagined to drive? Is speeding
breaking his/her responsibility to society to uphold the regulation, or is the businessperson
presupposed to arrive on the meeting past due, now not pleasing the obligation to be on time?
Ethical issues:
Environmental issues- There are different kind of atmospheric issues which can be faced
by the company during internationalisation (Bahoo, Alon and Paltrinieri, 2020). These issues can
be related to natural resources, waste products, green audit, carbon footprint, climate change,
waste reduction, sustainability and pollution etc.
Labour issues- The common absence of minimum requirements and negative labour
control relations have predictable results, which encompass high labour turnover, absenteeism,
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stress and fatigue, low prices of productivity, immoderate wastage of materials and labour unrest
that are although too commonplace. Cultural preferences to be considered by the business
(a) Highlight the significance of culture within various activities related with
international business in the Chinese market
Each culture has underlying subject matters. Values and attributes which includes frugality,
believe and staying power may be regarded in another way in other international locations. In
some instances, those topics may translate into various expectancies for enterprise partnerships
and negotiations. An organisation should pick the best employees. The approach to pick out them
will take, in account, the individual-lifestyle suit in addition to individual activity healthy
(Sharma and et. al., 2020). For example, UK SME can see candidates who can deliver alternate
as an opportunity, not a chance and feature a passion for excellence. In addition, language will
represent any qualities which the distinction among people who are, and aren't, a hit at the firm.
The organisation garnered a lot of reviews and in hiring people whose talents suit their entry-
degree jobs, it will allow to future employees to attain a couple of jobs within the firm. All those
new entrances will bring a higher culture match.
Language barriers- The concept of being Chinese isn't primarily based on race. Rather, its
miles a cultural concept. To speak and behave like a Chinese--in quick, to just accept the Chinese
machine of cultural values--is to be Chinese. Traditionally, the definition of a minority
nationality in China is a collection of people who communicate a not unusual language, occupy a
common region, and percent a commonplace sense of social values. This can create a language
barrier and gin communication for UK SME as well as the business of this firm can affect due to
this barrier.
Customer perception- It is another cultural barrier which can affect the business of UK based
SME. Each and every person has different needs and demands (Peterson, Arregle and Martin,
2020). In China, the needs or perception of consumers will be different regarding products and
services of particular firm, this can influence respective venture.
Expansion methods to be chosen by organisation
Identify the range of potential internationalisation methods
Acquisition- Acquisition have end up a popular commercial enterprise method for groups
seeking to amplify into new markets or territories, advantage a competitive facet, or accumulate
new technologies and ability units.
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Joint Venture- A joint project is a commercial enterprise association wherein or greater
events agree to pool their assets for the motive of carrying out a selected task. This undertaking
can be a new undertaking or any other business hobby.
Licensing- An enterprise association wherein one company offers every other company
permission to fabricate its product for an exact price (Hajro and et. al., 2021). There are few
faster or greater profitable ways to grow the enterprise than by using licensing patents,
trademarks, copyrights, designs, and other highbrow assets to others.
Franchising- Franchising is a shape of business by means of which the owner
(franchisor) of a product, carrier or method obtains distribution via affiliated sellers
(franchisees). If buying an existing commercial enterprise would not sound proper for they but
beginning from scratch sounds a bit intimidating, they might be proper for franchise possession.
Greenfield investment- Greenfield investments are a type of foreign direct investment
where a agency begins its operation in the different nations as its subsidiary and invests within
the production of places of work, flora, sites, building merchandise, and so on., thereby coping
with its operations and accomplishing the best stage of the controls over its.
In order to expand business in Chinese market, the management of UK SME can consider
Joint venture a growth strategy. Joint Venture allows the corporations to scale up with their
restricted capacity. The energy of one organization may be utilized by the opposite. This offers
the competitive gain to each the organizations to generate economies of scalability.
By using Ansoff matrix, the management of respective venture can make business
growth in Chinese market. The explanation of them as under:
Market penetration- Market Penetration is ready selling greater of the company’s existing
merchandise to current markets. To penetrate and grow the customer base inside the current
market, an agency can also reduce prices, enhance its distribution community, invest extra in
advertising and growth current manufacturing capacity.
Product development- Product Development is set growing and promoting new products to
present markets (Hrechyshkina and Samakhavets, 2019). Companies may want to as an example
make a few modifications in the existing merchandise to offer expanded value to the clients for
their buy or develop and launch new products alongside an organization’s current product
imparting.
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Market development- Market Development is about selling greater of the business
enterprise’s gift products to new markets. This strategy is ready reaching new purchaser
segments or increasing internationally with the aid of manner of focused on new geographic
areas.
Diversification- This method is ready coming into new markets with new products which
are either associated or absolutely unrelated to a company’s current imparting (Hennart, 2019).
With the adaptation of this strategy, the management can either expand its business by
developing its products and services or by making market development.
In context of respective firm, the management of UK SME in order to making growth in
its business, they can adopt market development strategy. With the support it, they can expand
their business in Chinese market and growing the business.
CONCLUSION
This has been concluded from the defined information that international business is an
activity of operating business in different geographical areas of the world with the support of
different rules, laws and strategies. There are different external factors and trade barriers which
affect an organisation during operating at global scale. In order to expand business in successful
manner, they can adopt different methods of expansion. Along with this, Ansoff matrix also
assists the firm in growing their business through expansion of the firm.
RECOMMENDATIONS
In order to make development in the business for targeting the Chinese market, there are
some suggestions which can be the management UK SME is a below:
 In order to increase profitability and maximising consumer base, they adopt different
pricing strategy as per the perception of the customer of the particular market.
 In order to meet consumer need and demands, they can make differentiation and adopt
differentiation strategy regarding their product and prices as well as make changes to
customer requirements.
 To increase customer base, they use different promotional tool by following advertising
strategy.
 With the use of distribution strategy, they make changes in their distribution o products
by making it easy and providing goods in consumer’s hand in easy manner.
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