International Business Strategy: UHT Milk's Market Entry into China

This report provides an analysis of UHT milk's international business expansion strategy into the Chinese market. It begins by outlining the industry background and the rising demand for UHT milk, both globally and specifically within the UK and China. The report then delves into the business drivers, employing a PESTLE analysis to assess the political, economic, social, technological, legal, and environmental factors impacting the company's operations in China. Various trade theories, including the factor of production, comparative advantage, and absolute advantage, are discussed in relation to their applicability in the Chinese market. The report also identifies potential trade barriers, such as tariffs, regulations, and legal issues, that the company may encounter. Furthermore, it addresses ethical and social issues, cultural preferences, and suitable expansion methods for UHT milk in the Chinese market. The report concludes with recommendations for the company to ensure successful market entry and sustainable growth, emphasizing the importance of understanding local market dynamics and adhering to ethical business practices. Desklib provides a platform for students to access similar reports and solved assignments.

International Business
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EXECUTIVE SUMMARY
International enterprise consist of various sports that wishes to be carried out in powerful
manner. This will allows in improving income of services and products into new marketplace
area. It is crucial to recall different factors at the same time as supplying services or products to
new or distinctive marketplace area. This will aid in higher selection making so that it will
enhance logo photo in addition to boom profitability of organization. There are distinctive
exchange theories that wishes to be diagnosed and analysed nicely in order that organisation can
get most advantages from buying and selling merchandise at global level. There are numerous
boundaries so one can have an effect on organization to carry out enterprise at global
marketplace level. It is vital for organisation to behavior enterprise sports at the same time as
thinking about enterprise ethics and morals.
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EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Industry background....................................................................................................................3
BUSINESS DRIVERS................................................................................................................4
TRADE THEORIES....................................................................................................................6
TRADE BARRIERS...................................................................................................................7
ETHICAL AND SOCIAL ISSUES.............................................................................................9
CULTURAL PREFERENCES....................................................................................................9
EXPANSION METHODS........................................................................................................10
CONCLUSION..............................................................................................................................11
RECOMMENDATIONS...............................................................................................................11
REFRENCES.................................................................................................................................13
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INTRODUCTION
International business has been defined as process which is used trading of services,
technology, product, knowledge, capital across national and international border. These are
based over transactions come across border of products and service within countries. These
businesses has helped in developing global aspects of business performance which has been
made possible with globalization. The term international business is based on exchange of goods,
services, technology as well as knowledge outside national borders of country. In relation to this,
it focuses upon trade of goods and services across different countries. Scope of these businesses
are wider in nature which makes dynamic perspective created within business performed at
global level. International business are also known as globalization. The UHT milk organization
lays its focus on entering into Chinese market place for selling its goods and services. The firm
provides milk products to the pre-school aged childrens of the country . This report is related to
making expansion done of an organization within Chinese market for this PESTLE and porter
five force analysis required to be covered with trade theories. Then various kinds of trade
barriers has been explained with ethical and social issues. Also cultural preferences has been
covered with expansion methods.
MAIN BODY
Business background
The Need for high temperature milk is rising at fastest rate in the global markets. The
company provide customers with high quality milk which enhances its product demand in
market as there is change in demands of customer towards consuming high quality milk. UTH
milk is basically a liquid milk which is sterilised on very high temperature. The global revenue
related to ultra high temperature milk in the year 2012 was approximately US $ 60.8 Billions and
has been expected to grow around US $ 137.7 billions till the end of 2019 (Global market study
of UHT milk, 2019).
What is the need of UHT milk in UK market?
It was determined that UHT milk has been growing on consumption base which is rising
within UK market place. The different factors supported the firm in attaining growth of dairy
products in the European market as an emerging trend with life-style of consumer. Raw milk
requires to be stored in refrigerator with high cost of refrigerator within market allowing low
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space over refrigerator which has been increasing need of UHT company's milk.(Global UHT
Milk Market Size, Share, Development, Growth and Demand Forecast to 2020, 2020). This is
based over storing milk without refrigerator and increasing the shelf life of raw milk.
What is the demand of UHT milk in the market of china?
Change in customer preference of China population development over need of UHT milk
has observed over increasing in apartment of culture with requirements of urbanization with ultra
high temperature milk increasing faster way. It has been developing country with action of
customers having attitude over food products has been transforming. The analysis is done on
60% of UHT milk which is consumed in China(Over 60% of milk consumed in China is UHT,
says new report, 2020).
Analysing Chinese economy and also assess the percentage of money comes by producing
milk?
The China is having one of the strong economy all over world. The economy pace of
China has been flourishing from 2018. The GDP of China is nominal rate of US dollars $ 13.4
that is based upon 65.3 % of the economy of US. (8 things you need to know about China’s
economy, 2020).
BUSINESS DRIVERS
Describing the PESTLE analysis of china country and analyse the impact on SME's of UK:
Political factors
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Illustration 1: Economy contribution.
Sources: 8 things you need to know about China’s economy. 2020.

Political factors these are those factors which has been used for developing understanding
about various political perspectives related to political stability, reforms, trade restriction, tax
policies, environment regulations and tariffs. In relation to organization like UTH milk political
factors of Chinese market like tax policies can impact organization's growth within market. UTH
milk has opportunity for making its expansion done within international market as it has made
international trade agreement with China. This agreement can be used for establishing UTH milk
within China. Thus trade policies of China are favourable making organization grow in right
direction with positive approach.
Economical factors
Economical factors are those factors which includes cost of living, unemployment rate,
inflation rate, wage rate and many more. (Khakhar and Rammal, 2013). The developed countries
has slow but stable growth of economy which becomes advantage for UTH milk. As per
slowdown in Chinese economy its is becoming threat to UTH milk as they are major contributors
towards there economy. In recent time demand of its product has decreased and people are not
ready to do investment. Also increase in export rate makes UTH milk face difficulties within
market.
Social factors
The social force is defined as the needs and demand of customers, population growth
rate, cultural values and many more. The rising number of health oriented people in china
provides the company an opportunity to satisfy their needs and gain higher profits. UTH milk in
Chinese market should understand customers needs and develop product as per it. This makes
customers satisfaction attained making customer base increased more effectively. Through such
factor customers of every segment is targetted. Thus UTH milk should focus over these factors
which makes customers preferences understood making expansion of organization done with
better pace.
Technological factors
The technological covers innovational as well as technological changes that can impact
the operations of the company(Caprar and et.al., 2015). UTH milk new scanners within the sales
counter making purchase easy for customer's efforts. The firm can gain higher customer loyalty
by practising online delivery systems. UTH milk can enhance its productivity level through
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enhancing production which makes expansion done within Chinese market in more faster
manner.
Legal factors
The legal factors includes the forces related to taxation policy, import and export policy
as well as employment laws. The McDonald company can pose a threat on the company's
profitability by giving competitive salary to the workers. The UTH milk firm should follow
correctly the legal laws of china country in order to ensure smooth operations.
Environmental factors
Environmental factors are those factors which is based over environmental conditions
existing within an country like China. UTH milk required to analyse the environmental issues
within China and should develop technology for dealing with it. Change in weather conditions
impacts sustainability of UTH milk by creating ecological friendly measures. Thus for making
expansion done within Chinese market its is required by UTH milk to solve problems like carbon
foot prints and waste management making organization achieve success.
TRADE THEORIES
There are various kinds of trade theory which has been supporting an organization for
making improved as well as effective decision over growth and development (Cantwell, 2017).
The trade theories helps an organization while tapping into new market with foreign trade. As
per this there are various kinds of trade theories which is based over production over advantage
and competitive advantage. Trade theories are based over effective allocation of resources with
specialization upon particular product.
Factor of production
The theory was developed by Eli Heckscher and Bretil Ohlin which has been focusing
upon factors of production helping in making effective products. The trade theory has been
developed with motive to attain competitive advantage making development of products that has
been utilized by those factors which are abundant within country. Factors of production are
supportive in nature which is based upon funds to be provided over investment while equipping
and plants. The factors is used over resources making demand of great supply fulfilled.
Comparative advantage
This is trade theory which has been helping and organization gain comparative advantage
which has been making ability of economy produced over god and lower operational cost. This is
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required by an organization to develop product and services over minimum cost for earning
profit. In this productive services are provided with minimum cost for earning more profit. As
per this competitive advantage is achieved over selling product at low price making high margins
on sales.
Absolute advantage
The Absolute Advantage theory has been formed by Adam Smith in 1776 and motive is
based over forming trade theory is based over incidence specialized over product and division of
labour. Through this absolute advantage is based over differentiating ability of an organization as
well as nation over manufacturing goods in effective way. This is base over particular country
and its manufacture of product.
Theory benefits in Chinese market.
The factor of products can be the most viable trade theory while viewing market of
China. It has been observed that cost of resource or function will have an impact on the supply
as well as demand of the product (Temiz and Gökmen, 2014). The Chinese market has
abundance of resources and labour which will support the company in doing business tasks in
better manner. In addition to this, it will support the Milky way company in delivering products
in effective manner as the factor of production can assist the UHT milk company to timely
supply products to customers.
TRADE BARRIERS
There are different kinds of trade roadblocks which can be faced by an organization over
conducting business activities at global level. It is important part of an respective organization
making trade barriers removed with better decision.
Trade relationships of UK and China.
China and UK has strong trade relationship related to different tools and regulations over
free trade between country. This is based over opportunities for SME companies making
expansion of business done within Chines market area. Imports and exports are based over
exchanging goods and services within various organizations. This is an effective methods used
for boosting international trade within UK as well as China.
The following are trade barriers which the company may face when exporting to the
Chinese market
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There are various trade obstructions which the company encounters during exporting
UTH milk to Chinese market place. Trade barriers leads to have negative impact over business.
This covers the the forces such as tariff rate, legal issues, ethical issues and many more. Tariffs and quotas – This is based upon taxes which has been imposed by government
when the firm export its products. Tariff quotas makes development with motivate
protection with profit and revenue generation. This makes negative impact over business. Regulations This includes different regulations formulated by political parties and
government of nation. The regulations pose direct and indirect impact on the
performance of business functions(Alessandria, Kaboski and Midrigan, 2013). It is really
hard for SME organization to meet with regulations during exporting process.
 Legal issues – This is important over respective organization for determining legal issue
and problem while exporting products within international market. Legal issues pose
negative impact on the performance as well as sales of services within new market.
Legal issues is faced by an organization leading failure of business in international
market.
As per this various consequences is faced by an organization in not following trade
barriers while performing business activities. The main issue faced by an organization which has
been ignored over less sales ad profit while improving performance of business.
Demonstration the business uncertainties.
There are various kinds of uncertainties which is based over conducting business task and
activities within international market. The main uncertainties affects SME company which
affects trade war between China and Us. This has been affecting trade relation which is based
over countries and increases trade restriction. Negative impact is over BREXIT on China
impacting over all performance.
There are different opportunities of SME an organization while making business operate
more effectively. This is based over most favoured nation providing equal opportunities within
business. The UK market area is based over land quality.
ETHICAL AND SOCIAL ISSUES
What is China's expectations about abroad companies and describing about social and
corporate responsibilities:
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This is an crucial part of an organization following ethics and moral while making
development products and services. It makes respective organization for enhancing business
activities as well as performance within an organization. This is respective organization to be
conducted business activities with ethical and social challenges of China.
Importance of following Corporate social responsibilities
There are different benefit of an organization making corporate social responsibility
within Chinese market. This makes development strong relationship over customers and
improving sales of SME organization. The term Corporate social responsibilities is based upon
creating brand image within market conditions These activities leads over creating high brand
image within market growth and developing of business. Its is used for solving issues and
making standard provided over Chinese citizenship.
RELEVANT THEORY ON ETHICS
The various theories that is formed upon rendering direction to organization. They are
performing business functions in ethical manner. Business ethics and moral play crucial function
within growth and development of business. There are various relevant theory over ethics are
discussed as follows: Corruption labour challenges – There are issues which is based over labour which is
working within organization. This is required by an organization over reducing issues of
corruption labour( Alon and Herath, 2014). This helps over making task conducting
effective and efficient way. Also through solving issues work is completed more
effectively.
 Environmental issues – This is important for an organization which makes issues of
environment solved while manufacturing the products delivered with products. The
ethical theory supporting organization for conducting business task with perfect manner
without harming environmental factors.
CULTURAL PREFERENCES
This is essential to pick the subculture of China at the same time as acting commercial
enterprise sports on this marketplace area. Recognition of purchaser possibilities and subculture
will assist in higher selection making a good way to result in boom and improvement of
commercial enterprise. Culture cooperate vital position in boom and improvement of commercial
enterprise at this allows in carrying out venture and sports in powerful manner. Culture includes
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various factors along with speech, approach, notion of clients and so on. This will result in
having primary effect on UK SME organisation this is acting commercial enterprise action is
China marketplace.
What is Chinese culture like?
Chinese tradition has been growing over quicker tempo in the direction of exclusive
towns and urbanization. This leads upon growing intake of UHT milk evaluating to uncooked
milk. This leads over growing intake of UHT milk that is as compared to uncooked milk. Now
an afternoon maximum of dad and mom are operating and condo tradition is much less area at
home. This has been lowering area for refrigerating with the aid of using improving choice of
UHT milk for children. Language is most important barrier which affects individual employer
even as making overall performance over enterprise sports completed inside Chinese
marketplace. Chinese words could be very exclusive which enables over expertise approximately
substances and utilization in extra powerful manner. The product in nearby language of China
enables people to apprehend in element approximately ingredients suing them properly. There
are exclusive approaches thru which UK SME organization can gift UHT milk product to clients.
It is important for Milky manner organization to apply appealing and innovative techniques to
persuade clients
EXPANSION METHODS
There are distinctive kinds of growth approach that might be followed via way of means
of enterprise at the same time as increasing services and products in new worldwide marketplace
area. Different techniques of growth is point out below.
 Acquisition – This refers to growth of business enterprise via way of means of shopping
stocks of different enterprise (Driffield, Jones and Crotty, 2013). In acquisition approach
enterprise can imparting its services and products to new marketplace regions via way of
means of acquiring property of enterprise.
 Licensing – This is an powerful approach as on this enterprise wishes to complete fill
criminal formalities and method at the same time as accomplishing commercial enterprise
sports at worldwide marketplace area. In licensing approach commercial enterprise
wishes to are seeking for unique permission to carry out mission and sports.
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 Franchising - This may be describe because the preparations wherein each events is of
the same opinion to paintings collectively for increasing commercial enterprise
operations at worldwide marketplace.
Thus, maximum appropriate approach for Milky manner enterprise for increasing
commercial enterprise operations at China marketplace is Joint project. This is an powerful
manner that guide respective business enterprise to behavior mission in correct manner.
Combined project can be greater useful for enterprise to carry out mission at worldwide
marketplace area.
CONCLUSION
From the above discussion it has been concluded that it's far critical for corporation to
decorate and develop commercial enterprise sports at global marketplace. This will assist in
boom and improvement of United States in addition to aid to boom profits. There are diverse
theories of global alternate with a view to allows organisation to choose maximum suitable area
to marketplace providing of united states. Trade boundaries will result in have primary effect on
performance of commercial enterprise at global marketplace. It is critical for corporation to
examine alternate boundaries which will increase higher techniques for commercial enterprise
boom. Ethical and social problems desires to be keep in mind even as engaging in commercial
enterprise sports as cultural possibilities will aid in organisational usual performance.
RECOMMENDATIONS
There is diverse advice for respective organisation on the way to carry out commercial
enterprise sports at worldwide marketplace area. It is essential for supervisor of this corporation
to don't forget those elements on the way to beautify commercial enterprise sports in addition to
accomplishment of goals. Recommendations are point out underneath in detail. It is vital for
respective organisation to don't forget one-of-a-kind cultural values and ideals even as appearing
commercial enterprise sports in new marketplace area. This will assist organisation to increase
powerful relationship with personnel in addition to carry out assignment in correct manner.
Organisation desires to increase techniques as in step with requirement of clients in
addition to their preferences. It is vital for examine the marketplace hole on the way to take
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