Market Entry Strategy Analysis for Leon: International Business Report

This report provides a comprehensive analysis of market entry strategies for Leon, a fast-food restaurant chain, aiming to expand its business into the Portuguese market. The report begins with an executive summary that recommends a joint venture strategy, emphasizing the importance of local market knowledge and risk-sharing. It then delves into a detailed PESTEL analysis, examining the political, economic, social, technological, environmental, and legal factors influencing the business environment in Portugal. The report further evaluates three market entry strategies: sole venture, joint venture, and franchising, comparing their advantages and disadvantages to determine the most suitable approach for Leon. The analysis highlights the benefits of joint ventures, such as access to local market knowledge and shared risk, while also acknowledging the need for a well-defined plan for risk management and partner selection. The report concludes with recommendations for Leon to successfully enter the Portuguese market, considering the insights gained from the PESTEL analysis and the comparative evaluation of market entry strategies. The report also includes an introduction, table of contents, and a list of references.

Running head: MANAGING INTERNATIONAL BUSINESS
MANAGING INTERNATIONAL BUSINESS
Name of student
Name of university
Author’s note:

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Executive summary
Leon in order to enter into market of Portugal needs to ensure effective strategies to manage
market challenges and for this identifying a proper market entry strategy is required. It is
recommended that, Leon consider joint venture to enter in market of Portugal. This will allow
them to obtain detailed knowledge regarding local market, its consumers, their preferences
for food and along with this, it will also provide context to share risks in business. While
opting for joint venture it is recommended to define a common vision for joint venture while
integrating organizational missions and visions for ensuing success in this joint venture.
Although in joint venture, business risks are shared between organizations, it is important to
identify how these risks will be shared and for this designing a plan is recommended so that
organizations identify how risks in business will be shared between them. Another important
aspect that is recommended in this context is that while considering organizations for joint
venture, companies need to be analysed in terms of their reputation in local market and their
experience in restaurant industry as well.

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Table of Contents
Introduction:...............................................................................................................................3
NATIONAL ENVIRONMENTAL ANALYSIS:......................................................................4
PESTEL analysis:...................................................................................................................4
MARKET ENTRY STRATEGY:..............................................................................................6
Sole venture:...........................................................................................................................6
Joint venture:..........................................................................................................................8
Conclusion:..............................................................................................................................10
Recommendations:...................................................................................................................11
References:...............................................................................................................................13

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Introduction:
Leon is one of the leading restaurant chains offering fast food to its consumers worldwide.
This restaurant chain, established in 2004 with headquarter in United Kingdom servers
consumers worldwide (LinkedIn, 2020). Along with United Kingdom, it has restaurants in
countries like Ireland, Netherlands, Norway, Spain and United States. However, in order to
expand its international business, it has decided to enter into Portugal, a country it has not yet
explored.
It has entered in Scandinavian market and signed a franchise deal with UMOE restaurant that
also works for Starbucks, TGI Fridays, Peppes Pizza, Burger King and Blender franchises in
Norway. It will serve healthy fast food and coffee at the Oslo Central Station site. It has also
provided a food truck at Aker Brygge pier where a limited number of menu will be served
from its classic menu items.
Along with this, it has also opened its new restaurant in Gran Canaria Airport and this is a
flagship restaurant from the organization.
However, Portugal is still a new market for this organization and as they are trying to enter
into this market, they need a proper analysis of market to identify business strategies for
ensuing business success as well. In this consultancy report, a PESTEL analysis is provided
for that identifies political, economic, social, technological, environmental and legal aspects
of this market to ensure that business strategy is in accordance with these aspects required for
ensuring success in the business as well.
Along with this PESTEL analysis, this consultancy report has also provided analysis of three
market entry strategies that will help this organization in ensuing that strategy to enter into
this market is effective and efficient as well.

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In this report, recommendations are also provided to help this organization to implement
strategies required for entering into this market while considering political, economic, social,
technological, environmental and legal aspects as described in PESTEL analysis.
NATIONAL ENVIRONMENTAL ANALYSIS:
PESTEL analysis:
Political analysis:
Restaurants around the world is subject to political rules and it is also applicable for Leon
which belongs to first food industry. While opening a restaurants in any country,
organizations need to comply with food safety rules and regulations applicable in that
country. Portugal is one such country where government emphasis on food safety and if any
restaurant is not capable of complying with these rules and regulations, then license for
business is not provided to that organization (Andraz and Rodrigues 2016). In Portugal, these
rules and regulations are provided by the Economic and Food Safety Authority (ASAE),
national administrative authority that supervise food safety and economic surveillance of this
country. They measures health and safety standard of food provided in restaurants and if this
standard is not in accordance with food safety rules and regulations, then that restaurant is not
allowed to do business in this country (Safecommunitiesportugal.com. 2020). From 2015 to
2017, ASAE, national health and safety authority of Portugal has closed down total 747
catering services including restaurants and bars, which provides an idea regarding how strict
authority is in terms of food safety and regulations (Theportugalnews.com. 2020). Therefore,
Leon needs to ensure that their food service comply with national standard for food safety,
otherwise, it will affect its business and it needs to be considered as well.

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Economic analysis:
Portugal is one of those countries where consumers have more disposable income and this is
because of enhanced economic condition of this country. Therefore, consumer has significant
buying power which is an effective condition for Leon to invest in this market (Bakas,
Duxbury and de Castro 2019). Along with this, Portugal is also a famous tourists spot and
vast number of tourist comes to this place for their holiday. There is a significant demand of
fresh and quality fast food among tourists. Therefore, Leon needs to capitalize on this
opportunity and invest into opening a quality fast food restaurant as economic condition is
favourable for investment. Consumers are ready to pay food if it meet their quality
expectations as they have buying power and this is also reflected in GDP of this country.
Therefore, if Leon is capable of ensuing quality in their food, it will be easier for them to
ensure a profitable return on investment or ROI. A national economy which is favourable for
investment and buying power of consumers provides context for opening a restaurant and
Leon should consider this opportunity as well.
Social analysis:
Busy social life of people provides them less opportunity to eat healthy and they often prefer
fast food which is not that healthy. However, increasing awareness and benefits of healthy
life has increased demand for fast food that is healthy. Therefore, it is an opportunity for
Leon as they offers healthy fast food options. However, they need to identify what types of
food people like most and which foods are mostly preferred by consumers (Brito, Pinho and
Azevedo 2020). If this is not identified then it will not be that easy for Leon to attract
consumers and therefore, it needs to be considered as well.
Technological analysis:

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Most of the flagship restaurants in Portugal has opted for automation for various services like
order processing, billing, obtaining consumer feedback and analysing them to obtain insight
regarding consumer satisfactions which is important for success in business. Therefore, it is
important for Leon to invest in automation for managing various business services as well.
Environmental analysis:
Enhanced buying power of consumers and popularity of Portugal as tourist destination are
what attracts organizations to invest in food industry. Therefore, there are significant
competition in the market to attract consumers and ensure brand loyalty (Coelho 2017). In
order to ensure that this competition does not affect business process of Leon, it is important
to offer quality food and services that helps consumers to differentiate this restaurant from
other restaurants existing in this market. Therefore, even though economic condition is
favourable for investment, there is significant competition in market which needs to be
considered as well.
Legal analysis:
Along with food quality standard, restaurants in Portugal needs to consider laws regarding
packaging, distribution along with waste management. In Portugal, not only restaurants, but
organizations from various industries also need to comply with waste management law
(Domingues, Sampaio and Arezes 2017). It requires organizations to promote application of
products that are possible to recycle so that it minimizes waste which is required for
minimizing pollution in environment as well.
MARKET ENTRY STRATEGY:
From the PESTEL analysis, it is identified that in order to ensure success in this new venture,
Leon needs to obtain proper idea regarding local market including consumer preference for
food, cultural consideration into designing menus and competition in market as well. Two

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market entry strategies are considered in this context which are sole venture, joint ventures
and franchising. A comparative analysis is provided in this context to identify which is the
best market entry strategy for Leon.
Sole venture:
Sole venture refers to any business venture which is completely owned by on organization
and they are having 100% share in this. In order to identify how effective this market entry
strategy will be for Leon to enter into market of Portugal, it is important to analyse some of
its advantages and disadvantages of this market entry strategy.
Some of the advantages of this market entry strategy are the followings:
Complete control on business strategies:
One of the major benefits of this market entry strategy is that it provides organizations
complete control over design and implementation of business strategies (Gonçalves 2018).
Business decision are taken by one organization, therefore, there is less chance of conflict
which provides greater autonomy in business administration.
Scope for experimenting with new business ideas:
It provides organizations context to experiment with their ideas and no requirement for
considering suggestion and input from other organization (Palos-Sanchez and Correia 2018).
Therefore, business ideas are easy to implement and helps organization to consider some
effective business strategy that provides them competitive advantage.
However, along with this benefits, there are some important disadvantages of this strategy
which are the followings:
Lack of knowledge regarding local market:

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In sole venture, as the organization does not work with any local company, analysis of local
market is not always effective as it does not have that much idea as a local company would
have about market requirements, competition in market along with consumer preference
regarding a service or product that is important for business success (Pinto 2018).
Lack of knowledge regarding consumer requirements:
If organizations do not have proper idea regarding what is the market requirement and most
importantly what consumer wants, then this will affect business process and therefore, it is
not that easy to ensure business success as well (Piaskowska, Nadolska and Barkema 2019).
Lack of risk sharing:
In sole venture, if business strategies are not properly implemented and there is financial loss
in business, then it will affect only one business organization as they own 100% share in
business (Lee 2017). Therefore, this is significantly risky in business, especially when it
considers entering new market where chance of success in business is less. Therefore, this is
a significant disadvantages of this market entry strategy.
Joint venture:
Joint ventures refers to any business venture which is not completely owned by on
organization. In joint ventures, no company has 100% share and each company own some
share in this venture. In order to identify effectiveness of this market entry strategy for Leon
for entering into market of Portugal, some of its advantages and disadvantages of this market
entry strategy are provided in this context.
Some of the advantages of this market entry strategy are the followings:
Knowledge regarding local market:

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In sole venture, as the organization does not work with any local company, analysis of local
market is not always effective as it does not have that much idea as a local company would
have about market requirements, competition in market along with consumer preference
regarding a service or product that is important for business success (Killing 2017).
Knowledge regarding consumer requirements:
As in joint venture, an organization collaborate with local organizations, it provides a proper
idea regarding what is the market requirement and most importantly what consumer wants. It
enhances business process and therefore, it is easy to ensure business success as well.
Risk sharing in business:
In joint venture, as there are more than one organization is involved, not only they take part
in business decision making and strategy implementation, they are also responsible for
sharing risk in business. One of the significant risk of new business when organization
consider to enter into a market is less chance of that business being successful and it leads to
financial loss as well (Hollender, Zapkau and Schwens 2017). However, in joint venture,
business risks including financial risk are shared between organizations which makes it easy
to ensure that it does not affect business process as well.
However, along with this benefits, there are some important disadvantages of this strategy
which are the followings:
Lack of control on business strategies:
One of the major disadvantages of this market entry strategy is that it does not provide
organizations complete control over design and implementation of business strategies.
Business decision are not taken by one organization and many organizations are involved in

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decision making process (Lee 2017). Therefore, there is chances of conflict and therefore
affects autonomy in business administration.
Lack of Scope to experiment with new business ideas:
It does not provide organizations context required for experimenting with their ideas. It needs
to consider suggestion and input from other organization. Therefore, it is not easy to
implement business and it is not easy for an organization to consider required business
strategies that would provide them competitive advantages as well.
Preferred market strategy for Leon to enter into market:
From analysis of these two market entry strategies it is identified that each of these strategies
has its own advantages and disadvantages. Therefore, it is important to ensure that market
entry strategy that is selected in this context is in accordance with business requirement. As
identified in PESTEL analysis, in order to be successful in its new venture, it is required to
obtain extensive idea regarding local market which includes consumer preference for food,
cultural consideration into designing menus and competition in market as well (Coelho
2017). Local organizations will have effective knowledge regarding these aspects and it is not
possible to obtain these information only through market survey. Therefore, Leon needs to
consider joint venture as it will help them to design proper business strategies which will
ensure business success as well.
Conclusion:
PESTEL analysis is an important tool for analysing any new market. It provides organization
idea regarding political, economic, social, technological, environmental and legal aspects of
market that might affect business strategies. As Leon is trying to enter into Portugal, which is
a new market for them, this PESTEL analysis is important and they need to obtain as much

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information as possible for ensuring that design and implementation of business strategies are
effective and efficient as well.
There are various market entry strategies that are considered for entering into new market. In
this report two marketing strategies are provided which are sole venture and joint venture.
Sole venture has various benefits for example it allows organizations to ensure complete
control on business strategies and this is one of the major benefits of this market entry
strategy. Organizations are allowed to design and implement business strategies according to
business requirements. Only one organization is responsible for making Business decision
which means there is less chance of conflict. It provides greater autonomy in business
administration as well. However, lack of information regarding local market, consumer
preference for food, competition in market are some of the important drawbacks that needs to
be analysed while considering this strategy to enter into a market that this organization has
not explored yet. Along with this, lack of scope for sharing business risks is another
significant drawback of this strategy.
Joint venture which offers Knowledge regarding local market, Knowledge regarding
consumer requirements and scope for sharing business risks, are some of the most important
features of this market entry strategy. However, it has some drawbacks as well. These
disadvantages incudes lack of autonomy in business decision making process, complexity in
designing and implementation of strategies for input from various stakeholders. As there are
various stakeholders involved in decision making process, it is not easy to experiment to new
and innovative business strategies which is often required in ensuring success in business,
especially when it considers entering into a new market that is significantly competitive.
However, Leon needs to consider joint venture for launching new restaurant in Portugal as
obtaining detailed information about local market, consumer preferences for food and market
competition is required. Along with this, it is also important to share business risks in case

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this project is not successful including financial issues as well. Therefore, Leon should
consider this market enter strategy for launching its restaurant in Portugal, a new national
market for this organization.
Recommendations:
Although from this analysis, it is identified joint venture is better than sole venture, it is
important to identify proper strategies regarding its application and for this some
recommendations are provided in this context.
Before signing contract with partner organization, it is recommended to identify whether this
is in accordance with organizational strategies. It is important to ensure that strategies for
joint ventures are supported by organizational mission and vision and this needs to be
considered for all of the organizations involved in this joint venture. Otherwise, it will affect
success of this joint venture as well.
Although it is important to consider mission and vision of each organization, it is also
important to define a vision for this joint venture. It is recommended that each of the
organizations review this vision of joint venture and comply with this as well.
While partnering with local restaurants for joint ventures, it is important to analyse company
profile in details. It includes reputation of this company in local market, their market value,
experience in local market and projects it has successfully completed along with its
experience to work in joint venture. It is recommended that Leon should chose companies for
joint venture according to this analysis. This will help to ensure success in this joint venture
and therefore, it is important as well.
While entering in a new market, there is always chance of business not being successful and
organizations in joint venture should share responsibility for any business issue. It is

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recommended to design a plan that will help regarding how organization will share business
risk and every organization should comply with this plan regarding business risk as well.

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References:
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management: Empirical evidence for Portugal. Tourism Management, 56, pp.1-7.
Bakas, F.E., Duxbury, N. and de Castro, T.V., 2019. Creative tourism: Catalysing artisan
entrepreneur networks in rural Portugal. International Journal of Entrepreneurial Behavior
& Research.
Brito, A., Pinho, C. and Azevedo, G., 2020. Indebtedness of Restaurant Firms in Portugal:
Application of Theories of Capital Structure. In Entrepreneurial Opportunities. Emerald
Publishing Limited.
Coelho, L., 2017. New restaurants and their intra-industry effects: evidence from
Portugal. Tourism & Management Studies, 13(1), pp.33-42.
Covin, J.G., Garrett, R.P., Kuratko, D.F. and Bolinger, M., 2019. Internal corporate venture
planning autonomy, strategic evolution, and venture performance. Small Business Economics,
pp.1-18.
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health and safety management systems in Portugal. International Journal of Occupational
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attractiveness of intercontinental restaurant in Lisbon-Akla (Doctoral dissertation).
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and foreign venture performance: The moderating effect of international experience and
product adaptation. International Business Review, 26(2), pp.250-263.

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321-328). Routledge.
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Rutgers University-Graduate School-Newark).
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consumption in Portugal? (Doctoral dissertation).
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Available at: https://www.safecommunitiesportugal.com/asae/ [Accessed 6 Mar. 2020].
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Mar. 2020].