International Business Strategy: SME Analysis and Market Entry Report

This report analyzes the international business strategy of Barkly Smokehouse, an Australian SME, focusing on its potential expansion into the Chinese market. The report begins with an overview of the company and then delves into the micro-environment, examining the firm's resources using the Resource-Based View (RBV), including tangible and intangible assets. It then explores market entry strategies. The macro-environment is assessed using Porter's Five Forces and a PESTLE analysis to understand the external factors influencing the business. The Dunny's electric paradigm (OLI framework) is applied to evaluate ownership, location, and internationalization strategies. The report concludes with recommendations for the company's expansion, emphasizing the use of partnership strategies. The report also includes an industry-based view, CSR model and CAGE analysis to give a holistic view of the company's expansion strategy. The report uses these analyses to provide a comprehensive understanding of the challenges and opportunities for Barkly Smokehouse in the Chinese market.

INTERNATIONAL BUSINESS STRATEGY

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Contents
Introduction......................................................................................................................................2
Part 1................................................................................................................................................2
Barkly Smokehouse in Australia..................................................................................................2
Overview of the firm....................................................................................................................2
Part 2................................................................................................................................................3
Micro Environment..........................................................................................................................3
Resource Based View..................................................................................................................3
Tangible Assets........................................................................................................................4
Intangible Assets......................................................................................................................4
Market entry strategy...................................................................................................................6
Macro Environment.........................................................................................................................6
Porter’s Five Forces.....................................................................................................................6
PESTLE Analysis........................................................................................................................8
Dunny's electric paradigm............................................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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Definition
Small and Medium-sized enterprises or small and medium sized businesses are
businesses who have employees less than the certain limits. In this report, Barkly Smokehouse in
Australia has been taken into consideration to analyses the internal and external environment to
expand the business in the market of China.
Difference in SME and large firm
SME’s is different from large firm in the terms of limited number of employees and
operation areas. SME’s has more risk of insolvency as compare to the large firms. Entrepreneur
and employee style makes the SME’s different in terms of strategic and decision (Wilson, 2017).
SME’s in Australia
As per the rules of Australia, the firm who has less than 200 employees is considered as
the small-medium enterprise (SME) company. SME are different from large firm in the terms of
employees or operation areas.
Barkly Smokehouse in Australia
Barkly Smokehouse is SME Company in Australia that manufactures and sold wholesale
European small goods to polish delicatessens around Melbourne. The products it mainly
manufactures are hams, presswurst, sausages, leberkasse, kranski and more. Now, the
organization wants to expand the business in the market of China. It has been observed that the
organization has the capability to expand the business at the international market because it
provides the variety of services to consumers with the high quality (Barkly, 2019).
CSR model

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The four stages of pyramid explain the behavior of the organization towards the society.
It has been observed that the organisation serves the services to the organisations that contribute
in the economy that satisfy the stage philanthropic. The company follows all rules of SME’s as
per Australia. SMEs are the vast majority of 99% of businesses in Australia and they are also
sustainable in the market that satisfies the legal and ethical values towards the society. It
performs all responsibilities towards the society as per the CSR activities (Handley, Wright, &
Evans, 2018).
Industry Based View
Food and Beverage industry in Australia earned the revenue with the amount of US
$1443m in the year 2019. It is expecting that the industry will grow with the rate of 15.9%,
which results the market volume of US$2605m by the year 2023. It has been found that the
average revenue per users is currently US$279.75. The most of the revenue is generated by the
industry in China with the amount of US$21945 m in the year 2019 (Statista, 2018).
Resource Based View
RBV is the model that helps to analyses the resources of the organization.

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(Source: Jurevicius, 2013)
Tangible Assets
Human Resources
It has been seen that Barkly Smokehouse has less than 200 employees but the employees
of this organization is considered as the beneficial factor (Barkly, 2019). The employee helps to
maintain the quality of services by putting their efforts.
Market development resources
Barkly Smokehouse uses the manufacturing and packaging machines in order to deliver
the quality of services to consumers. The company also uses the computers and technology to
connect the people from different areas. It also uses these machines or technology to evaluate the
financial accounts (Barkly, 2019).
Intangible Assets
Brand Image

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Barkly Smokehouse is a SME company in Australia that is why; it can be said that the
brand image of the organization is low as compare to the large firm.
Brand Reputation
The reputation of brand is also moderate just because of its dedication towards the quality
of small goods.
VRIO Framework
Resources Valuable Rare Inimitable Exploitability
by
Organisation
Competitive
Advantage
Human
Resource
Yes No No Yes Temporary
Advantage
Market
development
resources
Yes No No No Temporary
Advantage
Brand
reputation
Yes Yes No No Strong
Advantage
Brand Image Yes Yes No No Strong
Advantage
Technology Yes No No Yes Temporary
Advantage

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Institution based view
Barkly Smokehouse works in the fast food industry. The company continuously achieves
success due to its high quality of small goods services. It believes in quality instead of making
high profits that is why; it also achieve the different awards such as Gold Medal award 2015 for
fine food, silver medal winner 2014. The approach of providing the quality of services is
beneficial for the organization in long terms. It is a long term process as it takes time to develop
the strong brand image in the market. The company operates in Food and beverage industry in
Australia. The company has high threat of competitors as there are large number of competitors
such as George Weston foods, Teys, Bidvest and many more. The company has high competition
as it is growing in the market. The company target market in Australia and overseas is youth who
likes to eat the fast food. It has been evaluated that the organization has less than of 200
employees.
New Market entry strategy
It has been analyzed that the organization is capable to expand the business at the
international level. The company has to expand the business in China as it has the capacity and
capability to provide the different flavor of services to consumers in order to attract the large
number of consumers. It has been recommended that the company has to enter the market with

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the strategy of partnership. The method of partnership is appropriate for the organization in terms
of revenue and cost of production.
Porter’s Five Forces
The threat of new entrants  Higher level of threat
 Less amount of capital required
 Easy to enter the market
Bargaining power of suppliers  High Power of Bargaining
 Large Number of suppliers in the
market
 The raw material use by the company is
easily available in the market
Bargaining power of buyers  High Bargaining Power
 Large number of companies provides
similar services (Briefing, 2019).
 Companies provide the different prices
to consumers to attract the consumers
towards the services.
 Consumers have various options to
deliver the services

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The threat of substitute  Moderate level of threat of substitute
 There are many brands who
manufacture the different type of
sausage such as Oktoberfest sausage,
honey and garlic, and many other
favours.
 However, there are few companies who
produce the smoked sausage that is
why; threat level is moderate (Sa’udah,
Amit, & Ali, 2015)..
The threat of competitors  High level of threat
 Various companies produce the similar
services such as Zoo Holding Group,
Amoy Food, and many others
(Linkedin, 2019).
Dunny's electric paradigm
This model is used to evaluate the benefit factor for the Barkly Smokehouse while
expanding the business at the international level. This model is also known as the OLI
Framework. As per the analysis, it has been seen that the organization has to implement this
model to evaluate the ways to get the maximum benefits on the basis of three tires

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Ownership-
It is required for an organization to analyses the ownership style while entering or
establish the business in host country. As per the analysis, it has been found that the organization
has limited number of employees or it is a SME Company due to which it faces some issues in
terms of revenue or high cost. It has been recommended that the organization has to enter the
market with the partnership so; that it has to invest the money in business as per the percentage
of contract. It is less cost consuming as compare to the other style of ownership.
Location-
This tire defines the location where the company can gain the higher profit. Barkly
Smokehouse has to provide the services in the city of China where the percentage of youth is
high as compare to the others.
Internationalization-
It helps to evaluate that how the organisation can expand the business at the global level.
It has been recommended that the Barkly Smokehouse has to take the approval or license from
government of China. It also has to develop a contract of partnership before enter the market.
PESTLE Analysis
Political
 In China, the single party run the
 Single party framework is a beneficial
Economic
 China comes at the second position in
largest economy in terms of GDP in the

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factor for the organization as the rules
and regulation will not change.
 Government promotes the food and
beverage industry as the industry
contributes the high amount in the
economy (CNBC, 2019).
world.
 The purchasing power of consumers
is high as the economy of China is
also world largest economy in
purchasing terms (Heritage, 2019).
Social
 It is one of the fifth populated countries
in the world and mark as the fastest
growing economy.
 Tourists are also the beneficial factor
for the organization as their demand of
product is increases.
 People of China are believes to follow
their tradition and taste that is why; it is
beneficial for organization to
manufacture the sausage as per their
taste and flavors.
Technology
 Technology is developed in China
between the years 1990s to 2010s.
 China is growing with the innovative
ideas and it also working on the
weaknesses.
 China Government made the rapid
advances in the many areas such as
infrastructure, high tech, education,
manufacturing and many others.
 Legal Environment

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 Government of China develops the
different acts to protect the consumers.
 The government of China promotes the
organic and healthy food product in the
society that would be an issue for the
organization.
 Financial institutions are also support
the organization.
 China is the populated country in the
world which is beneficial for the
organization as the large number of
people means high demand of product.
 Changing weather will raise the issue
for the organization as it manufactures
the sausage with the natural ingredients.
CAGE
Cultural Distance Administrative
Distance
Geographic
Distance
Economic
Distance
Country
Pairs
(Bilateral)
 People of
China use
the Chinese
language for
conversation
.
 People of
Australia
and China
follow
different
 Different
currency in
Australia
and China.
 Political
Hostility is
another
factor that is
a major
difference
among the
 7,470 km
distance
from
Australia
to China
 It is
difficult
for the
organizat
ion to
 China is
more
develope
d as
compare
to
Australia
in
economi
c terms