International Business Report: UHT Milk Expansion Strategies

This report provides a comprehensive analysis of UHT Milk's international business strategy, focusing on the drivers and challenges associated with its expansion into international markets, particularly China. The report begins by identifying two key business drivers for internationalization: liberalization and technological expansion, highlighting how these factors influence UHT Milk's growth opportunities. A PESTLE analysis is then conducted to evaluate the political, economic, social, technological, legal, and environmental factors impacting UHT Milk's internationalization process, incorporating relevant trade theory. The report also examines trade barriers, including tariffs, quotas, ethical considerations, and cultural differences, and their consequences for UHT Milk. Furthermore, it explores business opportunities and uncertainties, such as the impact of Brexit and the China trade war, and discusses the importance of corporate social responsibility and ethical considerations for UK SMEs. Finally, the report analyzes expansion methods and cultural preferences crucial for successful international business operations, offering valuable insights for UHT Milk's strategic decision-making.

INTERNATIONAL
BUSINESS
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TABLE OF CONTENT
BUSINESS DRIVERS....................................................................................................................3
1. Two significant business drivers for internationalization........................................................3
2. PESTLE with relevant trade theory.........................................................................................3
Trade barriers...................................................................................................................................5
1 Three trade barriers...................................................................................................................5
2 Various consequence that are to be faced by UHT...................................................................6
Business opportunities and uncertainty.......................................................................................6
Ethical and social issue that are considered in UK SME.................................................................7
1 Importance of Cooperate social responsibilities.......................................................................7
2 Theory of ethics........................................................................................................................7
Cultural preferences to be considered by the organization..............................................................7
Expansion methods to be chosen by company................................................................................8
REFERENCES..............................................................................................................................10
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INTRODUCTION
Internationalisation has become one of the most common growth opportunities for the
business. With flexible technology, globalisation and trade behaviour organisations are planning
extensively to undergo into internationalisation (Schworm and et.al., 2017). For successfully
entering into international market it is necessary for the organisations to analyse various trade
barriers, external and internal business environment factors and sustainability related issues. The
report will analyse the case study of UHT Milk Company and various opportunities available for
the organisation to seek growth options. It will also discuss the significant factors which drive
and affect the internationalisation process of the business. The flexibility of internationalisation
is also influenced and controlled by trade barriers which affect operational activities and
planning. The study will also evaluate the social and cultural aspects which have crucial impact
on the process of international expansion. Thus for achieving greater success in the diverse
markets it is very important for the companies to implement planning procedures in response to
cultural, social and trade environment.
BUSINESS DRIVERS
1. Two significant business drivers for internationalization
 Liberalization
UHT Milk Company is having the expansion opportunity due to increases connection
between all the nations in the world. This also increased the shared economy to improve the
quality of products and services. Liberalization helps to improve education and awareness level
of customers due to increase in competition. This also helps UHT to indulge in the effective
research in UK (Cui, J and et.al., 2019). As UK is very developed and has much competition in
market. With the help of competition company will be able to develop effective strategies and
analyse customer’s needs and wants to increase their satisfaction effectively. UHT milk also
provides better quality of products which helps to increase the opportunity of business to expand
in new market with better customer base and increase efficiency to achieve their goals. It is also
very essential for company to understand all the external factors as the demand of customers are
also changing which is increasing the demand of products and services to gain higher profits in
UK market.
 Expansion of technology
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Expansion of technology is the most essential and competitive factors which helps business
to grow and expand in different market effectively. It also improves and supports all the
activities of the company with reducing costs UHT milk also helps to increase the potential of
company to increase sales and gain better efficiency to gain profit margins effectively (Ye, A and
et.al., 2019). Technology also helps to improve the efficiency to manage all the resources and
develop better strategies to optimally utilize all the resources effectively.
2. PESTLE with relevant trade theory
 Political Factors
This factor also helps the business to understand the intervention of government actions
which impact the activities of business in growth. This also helps the UHT milk company to
analyse all the factors in china to invest in the market. As the china can have unstable political
situation which can impact quality of decisions of company and reduce the efficiency to attain
core competency effectively (Kolk, 2016). Brexit also impacted the UHT milk company to
export their products to china.
 Economic Factors
Economic factor provides understanding all the information about national economic
activities which directly influence economy of nation. This also reduces the efficiency of
business to gain profit and it is very essential to analyse economic factor. UHT milk is impacted
due to Brexit as the foreign exchange rates has declined and trade rates had also reduced which
impacted profit margins of the company.
 Social Factors
Social factors are those which are related to behavior, attitude, culture, belief, of the customer
which influence them to make buying decisions effectively. UHT milk was also paced due to
decrease in income level of customer which reduced the demand and sales of products
negatively.
 Technological Factors
Technological factor is very important for globalization of a company which is why there is a
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use of latest technology in UHT milk so that they can fulfill the needs and demands of the
customers from time to time (Schworm and et.al., 2017). This will also improve the quality of
the products by having a better packaging for the milk.
 Legal Factors
The wages to the employees will increase in China because there is a law for the workers in
the country which will have to be followed by UHT milk. This is not going to be that profitable
but the demand is huge which can help the organization to function better.
 Environmental Factors
The packaging of the product will have to be recyclable and not a pollution for the
environment of the country (Mäkelä and Kinnunen, 2018). China has become very particular for
the products which are in the country so that they can have a better functioning for themselves
without harming the environment.
UHT milk can use the comparative trade theory by analyzing all the internal resources which
helps to compete in the international market which has higher value of the products to increase
market share in the market effectively. This also helps the company to understand competitive of
company with existing products and services effectively.
Trade barriers
Trade barriers are restrictions that are imposed by government on smooth operation of trade
across country through charging additional cost to import and export products and services.
Government made restriction in order to protect local industries by increasing cost of import
products thus making local products and service more competitive. There are various trade
barriers in effective import and export of UHT milk in china market such as:
1 Three trade barriers
Tariff: It stated that taxes imposed by government for import of good and service within country
to increase cost of product so that they can be expensive than local products and services. UHT
has to faces such trade barrier in effective expansion of business in Chinese market. It lead to
increase in cost of milk as compared to other local producers so removal of such trade import
helps in effective import and export of UHT products and service from UK to china (Legge,
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Schmid and Fensore, 2017). At the same time it helps in expansion of sales volume and
profitability of UHT in the industry and promote growth and development of economy.
Quotas: These are restriction related to specific quantity of particular products and services that
can be import for particular period of time. These helps in reducing quantity of UTF milk
products that are manufactured in UK in order to increase demand of local produce milk for
economic growth of china market. UHF by getting license from government of china can export
specific quantity of milk products in china market to increase its sales and profitability.
Ethical barrier: Due to continuous innovation in technology and digitalisation importance of
international trade has been increased for overall growth in gross domestic products. Thus there
are various international ethical practices such as UN Global compact that need to be considered
by UHF organisation to effectively export milk products from UK to china. Ethical barrier are
formed in order to facilitate mutual cooperation between countries and various benefits that need
to be provided to government, public institution and business. UHF by following international
ethical behaviour is able to expand its market share and brand image (Carter and Poast, 2020).
Thus, China is facing challenge of ethical practice and trade between country which bring
inequality and violate right of humans. Therefore ethics are another barrier for UHT for effective
expansion and growth of business in Chinese market.
Cultural difference: Another barrier in effective operation of UHT business is culture
difference between two countries china and UK. Both countries have different taste, preference
and trends that impact on effective trade between china and UK. It is difficult for UHT to expand
its business in Chinese market than UK as new market has different culture and tradition.
Therefore UHT must have complete knowledge and information about market condition and
preference of people living in china for long term growth and survival of business. Both
countries have different language which may also lead to conflict and confusion between two
countries- china and UK. So it can be stated that all such factors are effective barrier in trade of
milk products and services of UHT.
2 Various consequence that are to be faced by UHT
There are various consequences that need to be faced by UHT in case of avoidance of trade
barriers such as it can impact on long term growth and survival of business in china market.
Company is not able to expand its business in Chinese market due to ethical, social, tariff and
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quotes barriers (Grundke and Moser, 2019). It may lead to increase in cost of production and
impact adversely on profitability of organisation. Decrease in export is another factor that UHT
has to faced if it does not considered tariff rules while importing and export to and from china.
Business opportunities and uncertainty
Various uncertainties that impact trade between china and UK are impact of Brexit on
overall import and export of country. People of UK are unaware about the impact of Brexit for
particular period of time on economy of country. It thereby impact on sales volume and export of
UHT milk to china market. China trade war is another uncertain event that has lead confusion
among companies and decrease trade for unspecific period. But at the same time there are
various opportunities that help in effective trade of UHT milk product from UK to china as UK
is most favourable nation so china government allow import of products from UK.
Ethical and social issue that are considered in UK SME
1 Importance of Cooperate social responsibilities
Corporate social responsibilities are important for UHT while operating its function in
international trade as it helps in getting opportunity to expand business quickly in other countries
such as china market. It also helps in building strong brand image and satisfying need of
customers beyond their expectancy. Therefore it promotes growth and expansion o business and
helps in increasing sales volume and profitability. Corporate social responsibilities help in
development of other countries by generating job opportunities for other people. Therefore it can
be stated that corporate social responsibilities helps in generating employment opportunities,
economic development and meeting needs of people by enhancing market share and sales
volume of firm (Cohen, 2019). It reduces number of trade barrier and helps in effective operation
of import and export of products and service between countries. Corporate social responsibilities
also build strong relationship among two countries such as china and UK so that UHT can easily
export products to china market.
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2 Theory of ethics
China looks at ethical practices of UK while trading with it in order to protect itself from
malpractices and corruption that impact on growth and development of economic. There are
three theories of ethics such as:
Deontological ethics: This theory of ethics stated that ever people need to be treated with dignity
and respects so china government oversee that UK treat each and every individual with dignity
and high respects (Bhandari and Javakhadze, 2017).
Unitarian ethics: It stated that decisions of government are made on the basis of benefit
provided by it to number of people.
Virtue ethics: It stated that which virtue method can helps in maintaining good relationship
among countries thus china government oversee labours laws are followed by government of
UK. Virtue ethics theory is an effective theory enables to build healthy relations with other
countries and the organisation in such new destinations in order to develop effective
development and growth policies. This theory also guides to deal with various issues in order to
bui;t healthy relationship. Issues like corruption, environmental, unethical work practices and
other issues play huge role in establishing growth opportunities. It is crucial to deal with all such
issues in order develop a healthy relations with other cou tries. Corruption is an important
aspects in order to develop relation. Corruption spoils the relation directly irrespective to how
long the relations has established as it directly heat the loyalty. Loyalty play huge role in
growing healthy relationship (De Villiers and Marques, 2016). As loyalty is the bridge that
endorse effective and healthy relationship between organisations and countries. Company also
promote its products and services in order to build a trust in the minds of customers. This theory
also indicates to deal with other associated issues effectively. Dealing with issues is a important
factor work behind establishing the relationship. Issues like selling eco friendly products are an
important tool. This factor directly improves the relationship with not just customers but also
with all stakeholders associated with the organisation.
Cultural preferences to be considered by the organization
There are a lot of barriers which can come in the international marketing of UHT milk
because of a various factors which are going to be discussed in the further report. The milk
packaging of product will have to have the local language printed on it so that the customers can
read the factors and ingredients of the product easily (Xiong and et.al., 2016). English is not a
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common language which is spoken or read in China which is why changes will have to be made
in the product according to the customers. The people of China will also have a lot of issues
accepting the new product in the market because it is packed and the culture of China is to have
fresh milk. It is very important that the milk is fresh which is being consumed therefore the UHT
milk will have to change the design and language on the packaging so that they can make the
people understand that the milk they are serving is not unhealthy and is fit for drinking. Making
the customers get friendly with the product is very important and when the product will have
factors which are liked and appreciated by the customers then the company will be able to
capture more customers in the market which is going to increase the productivity of the
organization. Chinese appreciate things in their own culture and language is a very important
barrier which the organization will have to overcome if they want a better future in the
organization so that they can have a better functioning for themselves in the organization. This
product is covering over 74% of the market which is a great sign for the organization (Meyer and
Peng, 2016). The population of the people in the country is huge which means there will be a lot
of demand of the product in the country and if the cultural barrier is overcome by the
organization then the organization can easily capture the market.
Expansion methods to be chosen by company
There are various range of potential international methods which can be used for
expansion into new untapped economies to gain wide range of market growth among customers
with goals of high goodwill and long term profitability revenues. International expansion
methods elaborate functioning efficiency within company framework, with high diversity factors
and optimum business strategies to reach high end global trends among competitive business
environment. These factors explain potential internationalization methods onto which further
goals are constructed, lately It defines various paradigms on which company management
focuses to highly innovate, reform and keenly address customer satisfaction levels. UHT Milk
Company which is SME of UK, for expansion into China can go on for joint venture with
another company with the sane functional operations, where goals of business can be segregated
into various models and creative ideas. Joint venture can be understood as one of the most
innovative strategic evaluation framework which defines the formation of business goals within
two companies having similar business goals, functions and operations of products and services.
UHT Company by going under joint venture can efficiently establish its business expansion into
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china where by partnership and continuance with an already established brand, will serve
company goals profoundly (Wulansari and Fernando, 2019).
The business will reach new high end goals where company within joint venture will go
under amalgamation of all activities, commercially being viable on all strategies to serve best
optimum functional strength. UHT Milk Company for further business expansion into Chinese
market with joint venture framework regulates business goals and productively restructures its
functional goals diverse departments. Shareholders and stakeholders are the top priorities which
go under viable restructure and are affected variably with expansion of business functions.
Productively there is high reach of expansion and keenly leverages promotional avenues with
large focus towards an optimistic outlook of company. UHT Company being a new start-up and
profound services being leveraged into various parameters of functional efficiency will have
strong positive impact within its professional services and sales management services as the
company will highly look forward to new customer preferences within products, through which
there will be dynamic growth. Moreover joint venture explains reformation of company goals
with partnership among other company where internal strength becomes highly strong and also
there is profound impact on capital funds which is not only enlarged but also further investment
opportunities are renewed. Management goes under vital transformation which productively
enables large skills, new talents and functional efficiency to promote business goals (Lintong,
Massie and Tasik, 2019).
Ansoff matrix model
Ansoff matrix is another business expansion model formed for strategically enabling
companies to formulate company functions with high focus towards gaining high optimization
and working ethics which enable to potentially reach high global market trends. The model
explains 4 phases product development, market penetration, diversification and product
development which explains further distribution of all business activities a company plans to
formulate for establishing high strategic expansions within international horizons. UHT
Company shall prefer market development factor within this model to operate and expand its
business into Chinese market where company explains various factors, legally broaden the
horizon on which further productivity will profoundly impact. Chinese market is not only highly
competitive, but highly promotes innovation and creativity within its functioning models but is
strong to give platform to SME companies for expanding their business horizons. Market
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development is one of the most important and effective phase by which company can formulate
new diverse business strategies and profitability goals to reach high end global business
benchmarks and serve customers profoundly. There is high focus toward new research
paradigms and methods of enhancing product quality, delivering services among customers.
UHT Company with the business goal to leverage high productive delivery of milk products,
new services and researching various new working ethics within internal structure through which
company can extend and establish competitive pace within international market. UHT through
market development factors gain strong access to dynamic working models through which there
will be enhanced diversification into international global market (Yu, 2019).
Recommendation
Business expansion is an effective tool provides growth and development opportunities to
organisations. In order to expand the business operations in China management of the UHT
Company can work on the aggressive marketing and promotional campaigns in order t built the
customer loyalty in the Chinese market. Marketing campaigns will also support organisation in
improving the brand presence in the Chinese market. Company can also grow strategic
partnerships with other organisations and stakeholders like suppliers. This will play key role in
improving the market presence of the company in the market of Chinese. Social media and
relationship marketing techniques can be considered as crucial and cost effective marketing
techniques. These techniques help to understand different cultures and social environment of the
target market so that better marketing mix strategies can be development and implemented.
Developing strategic partnership with suppliers will improve the supply chain management
system of the UHT Company in the market of China which will also ensure availability of
company’s products. Company can also enter into franchising with other local entities. This is an
effective strategic companies use to ensure effective growth in the new market. As the Chinese
market is irrelative to the UHT Company company is entering into the market for first time. This
will support company in dealing with the needs of the customers effectively. Company can also
improve the brand reach with the support of social media and different information technology
networks that can support company in establishing healthy public relations in China. It is
recommended that developing effective public relation in Chinese market will provide effective
growth and development opportunities to the UHT Company in the Chinese market. New market
requires company to develop a positive brand image and this strategic tool will support company
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in developing a strong brand image in the new market. All the above mentioned justification will
ensure the effective growth of the company by achieving the effective customer satisfaction in
the new market. This will also support company to grow in the market by developing an
effective brand loyalty in the Chinese market.
CONCLUSION
It can be concluded from the above study that while entering into international markets
business can face several challenges. These challenges may be imposed by trade barriers and
diverse consumers. Thus for accomplishing success objectives it is necessary that these factors
must be identified by the organisations and suitable actions must be taken against them. It has
been also analysed from the above discussion that developing nations such as China have great
potential for growth which can be explored by focusing on building brand loyalty. Along with
the profit equal emphasis must also be given to the corporate social responsibility. The active
participation and concern of organisation towards society plays a great role in building loyal
customers and to gain competitive advantage. It can also be concluded from the report that
companies must choose their entry option with suitable strategies so that success probability can
be optimised.
REFERENCES
Books and Journals
Legge, S., Schmid, L. and Fensore, I., 2017. Human Barriers to International Trade.
Carter, D. B. and Poast, P., 2020. Barriers to Trade: How Border Walls Affect Trade
Relations. International Organization, 74(1). pp.165-185.
Grundke, R. and Moser, C., 2019. Hidden protectionism? Evidence from non-tariff barriers to
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