International Business 601: Micro Focus Global Expansion Strategy

This report examines Micro Focus's potential global expansion into Latvia and South Korea, exploring the drivers, strategies, and market entry considerations. It assesses the impact of globalization on trade and compares the decision-making processes in Latvia and South Korea using P...Read More

Going Global
Module: International Business and Globalisation
601 MAN
Assessment Number-2
3000-word report

EXECUTIVE SUMMARY
The report of Micro Focus is prepared on “Going Global” which means expansion of
existing market of a company. Micro Focus is a British multinational IT company which is
looking for expanding its market in Latvia and South Korea. Several internationalisation drivers
such as risk management capacity, cost reduction, market competition lays a firm to expand its
market. Various related strategies are formed for the purpose such as adopting a licensing
strategy and choosing a right kind of export channel.

Contents
EXECUTIVE SUMMARY.............................................................................................................2
Contents...........................................................................................................................................3
1. Introduction..................................................................................................................................1
2. Impact of globalisation on trade..................................................................................................1
3. Difference between decision making process of two international markets is given below.......3
4 An analysis of the pattern of internationalisation taken by IB.....................................................4
5. Critically applying theories that are used to formulate solutions during planning for various
international markets.......................................................................................................................7
6. Conclusion...................................................................................................................................8
7. List of References......................................................................................................................10
8. Appendices................................................................................................................................11
Company background................................................................................................................11
BCG Matrix of Micro Focus......................................................................................................11

1. Introduction
Internationalisation can be understood as process which aid organisational managers in
facilitate their expansion practices within international markets in an effective manner. It is
considered as important as it help in providing a lot of opportunities to business houses for
expanding their operations in a strategic manner. It is a strategy which led companies to sell their
commodities outside their domestic market. For understanding the practices in regards with
globalisation and internationalisation, Micro Focus is taken into consideration. It is a British
multinational organisation which deals in information technology and has its headquarters at
Newburry, England (Micro Focus International Plc. 2022).
This project report comprises of understanding of internationalisation drivers, market
entry strategies in a strategic manner. It also consists of an understanding of international
strategies which needs to be undertaken by selected organisation for their expansion.
2. Impact of globalisation on trade
Globalisation provides a way for increment in interconnection of local and nationalistic
economies across the world (Balcet and Ietto-Gillie, 2020). This impacts the trade between two
countries or companies globally. Globalisation decreases the manufacturing costs of different
operations prevailing in business. This facilitates the firm like Micro Focus in cost cutting of its
several business operations by operating them through a global network channel. Several
internationalisation drivers are taken into consideration while formulating the expansion
strategies for reaching the global market.
Internationalisation drivers
Internationalisation drivers are those factors that lays a company to felt a need to expand
its territory beyond global markets. Various internationalisation drivers in context to Micro
Focus is underneath:
 Risk Management: Risk management is taken into consideration when the company is
capable of handling higher risks in order to increase their profitability by the means of
market expansion (Castagna and Et. Al, 2020). This can be taken into consideration by
the companies such as Micro Focus.
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 Need for cost reduction: Cost reduction is the process of reducing the amount of
excessive expenses prevailing in the firm. Internationalisation benefits many firms like
Micro Focus to reduce their cost of production. Market competition: Excessive market competition lays a firm to expand its march
globally. Micro Focus felt a need for market expansion to gain a competitive edge in the
market industry.
Strategies for entering into international markets
Several strategies are needed for transforming the network of a firm from domestic
market to international market. They are given below:
 Adopting a license strategy: Licensing offers several businesses like Micro Focus, an
arrangement which gives another company to manufacture its products in exchange of
monetary exchange. Adopting for a licensing strategy may benefit the firm in cost
cutting, thereby increasing profitability. Choosing a right kind of export: Exports can be either direct or indirect, in case of
Micro Focus the direct exports may proves to be suitable. As this is an IT industry, there
could be a requirement of specific parts or engines to develop a particular kind of
software. Direct export may prove to be beneficial in this regard (Siemieniako and Et.
AL., 2022).
Comparison of international market of Latvia and South Korea
Every internationalisation market differs from another in terms of operations such as the
international markets of Latvia and South Korea differ from each other. Higher inflation rates in
Latvia decreases the buying or spending power of customers which in turn may lessen the
profitability of Micro Focus. Whereas, foreign exchange rates of South Korea benefit the firm in
free flow of trade of goods and services of this company. In Latvia, there is weak social
structures due to less dense population offering very less workforce. On the other hand, South
Korea is highly dense country which offers companies such as Micro focus with large employee
base.
Case for expansion
For the purpose of expansion, Micro Focus should focus on opening its next chain in
South Korea. This country is an amazing hub for IT industries or software developer industries
due to its advancement in engineering sector, even robotics. Economic factors of South Korea
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such as free floating foreign exchange rate would spread attractiveness of its products across the
globe. Along with this, Micro Focus can also get a large employee base for carrying out its
operations. South Korea may provide the firm with associated benefits legally, technologically
and socially. Therefore, South Korea is considered the best suited location for Micro Focus to
expand its market globally or internationally.
3. Difference between decision making process of two international markets is
given below
Every organisation requires to take various decisions regarding several operations
prevailing in a firm (Braga, Marques and Serrasqueiro, 2018). For this, they need to analyse their
external environment to know their market well. PESTLE analysis is a tool required to get a
clear image of macro environment of a company like Micro Focus. This is used by the
companies to form strategies for their market expansion. Micro Focus has its business in
England, UK, this company is now focusing on expanding its market in the several other
countries like France and Australia. With the help of PESTLE analysis of these two countries,
the company can finally make a decision regarding expansion. PESTLE analysis of these two
countries is given below:
PESTLE Analysis of Latvia is given below
Political: Latvia follows a democratic republic policy which involves the hybrid
parliament political system. This country provides a great opportunity for expansion to the
companies like Micro Focus for global trade of their software and related services. Corporate
sectors have good scope in the country as they have less government interventions like trade
regulations in terms of trade.
Economical: Economical factors like high inflation rates of Latvia may decrease the
purchasing power of customers. This would affect the sales and productivity of Micro Focus
while expanding in Latvia.
Social: Social factors like traditional outlooks of Latvia may affect the culture within the
organisation. This may decrease the employee base of the Micro Focus as Latvia is a country
with less population.
Technological: However, water based technologies may benefit the IT companies like
Micro Focus due to the coast surrounded in Latvia. The company may set up satellite imagery
for monitoring its automation in the dense forests of Latvia.
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Legal: Although the company like Micro Focus need to check the legal aspects of Latvia
which includes consumer laws and environmental laws. This company may establish their
technical hubs at the countryside which checks for availability of required resources.
Environmental: Micro Focus would get facilitated by the natural resources in the dense
forests of Latvia. However, the company needs to focus on environment friendly methods of
operating its business at such place.
PESTLE Analysis of South Korea is given below
Political: Political factors of South Korea involves fiscal policy in regards of global trade.
This would help the companies like Micro Focus to stimulate growth in the time of recession.
Economical: Economical factors prevailing in a South Korea would get affected by
foreign exchange rates of home country with the countries abroad. Micro Focus would get
benefited by investing into a chain due to free floating exchange rate system of South Korea.
Social: Social factors prevailing in South Korea might include highly dense population
that would facilitate Micro Focus with large employee base for smooth running of its business
operations. This company could get a clear vision of the needs or requirements of the people in
South Korea and design their software to satisfy the needs of its customers.
Technological: Technological environment of South Korea involves aerospace
engineering as well as advancement in robotics. That would provide an excellent scope for Micro
Focus to enhance technical aspects used within the company.
Legal: Legal aspects incorporates legality of certain business related objects or structures
that would affects the corporate sector of South Korea. This country offers a wider scope for
imports and exports prevailing in and outside the company due to its trade agreement with
around 18 countries. It proves to be beneficial for the companies like Micro Focus for conducting
trade related practices in terms of less custom duty for the smooth flow of goods and services.
Environmental: Due to extreme population base of South Korea, this highly developed
and advanced country has to suffer through air pollution. This may cause the health hazards to
the staff of various companies like Micro Focus, which would in turn affect the growth of this
company.
4 An analysis of the pattern of internationalisation taken by IB
Swot analysis is a tool of management to identify risks and benefits that can be arise
in business operations. It mainly includes strength, weaknesses, opportunities and threats
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for business organisation (Kamsaris, 2021). In context to Latvia and South Korea, Micro
Focus can face many problems and can also enjoy different benefits as per this tool. Swot
analysis for Latvia to understand viability of Micro Focus are mentioned below as:
Strengths Weaknesses
 Having reliable suppliers can be
considered as great strength of Micro
Focus to penetrate.
 Strong cash flow also helps business to
capitalise its new branch in Latvia.
 Major weakness to enter Latvia's
market is their traditional technologies
of operations.
 They have low investment in research
and development that can be limitation.
Opportunities Threats
 High political freedom of trade in
Latvia can be considered as opportunity
to Micro Focus.
 Technological advancement in Latvia
can also help their business.
 Dynamic customer's behaviours of
Latvia can raise threat for Micro
Focus's operations.
 High impact of pandemic also increase
threats of low supplies in Latvia.
Swot analysis in context to South Korea to understand viability of Micro Focus is
mentioned below as:
Strengths Weaknesses
 Micro Focus have strong distribution
network that can help them to operate
in South Korea.
 Strong brand portfolio of company can
provide benefit in penetrating.
 Micro Focus have limited success
outside core business which can be
weakness for them.
 The company needs more investment in
introducing modern technologies which
can also the weakness for them.
Opportunities Threats
 Lower inflation rate of South Korea is a
great opportunity for Micro Focus.
 Low transportation cost can give
 Strict laws of South Korea can increase
number of lawsuits on Micro Focus.
 Availability of large competitors can
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benefit of logistics in South Korean
market.
slow down their success rate in their
economy.
Focussing opportunities and strengths from above table to analyse the viable factors for Micro
Focus
From the above SWOT analysis, key opportunities and threats can be identified to
penetrate Micro Focus in Latvia and South Korea. These opportunities and threats can be
described as:
OPPORTUNITIES
 In context to Micro Focus, the company have different opportunities in penetrating to
Latvia like freedom on trade restrictions given by government and advancing technology
of the country. It affects the position of company in their home country also.
 Whereas in South Korea, company can take benefit of low inflation rate and can provide
goods at cheaper prices. This can help the business to gain competitive advantages and
increase productivity.
STRENGTHS
 In relation with Latvia, Micro Focus can enter their market by taking benefits of strengths
like reliable suppliers and strong cash flow of business. South Korea is providing strengths to Micro Focus like strong distribution network and
strong brand portfolio.
Advantages for focussing on the country appropriate to Micro Focus penetration
There are many advantages availed to Micro Focus to focussing on penetrating into South
Korea. It is a developed country that can provide many benefits like reliable suppliers, large
number of customers and many others. The company can easily start their business operations in
new market through enough supply and capital (Müllner and Filatotchev, 2018). Management
have to take help of SWOT analysis that can derive strengths and opportunities to Micro Focus
for being viable in penetrating to South Korean market. The main advantage of focussing on
South Korea is large number of strengths and opportunities. These factors can make their
penetration more viable for the company.
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5. Critically applying theories that are used to formulate solutions during
planning for various international markets
A business must need different strategies for entering into new economies as these
strategies can help them to capture customers and resources of international markets (Lu and Ye,
2022). It can lead in expansion of organisation and new entity also demands resources like cost,
labour and many others that can be managed by business. In context to Micro Focus of UK,
company is trying to penetrate the Latvia's market but also facing problems in their planning.
They can also use strategies mentioned below as:
International strategy: These strategies are to be framed by management of business
organisation using factors positioned at international level among various economies (Sinha,
2020). These are the macro factors that helps an entity to overcome different issues of
penetration. Micro Focus can also use international strategy for penetrating their business
operations in market of Latvia. It can provide utmost benefits of entering new market as Latvia
have developed economy so, their service could be in demand. International strategy covers
international areas like different regions and markets that can be used by businesses to enter.
Localization strategy: In accordance of this strategy, business make policies and plans to
capture the culture of another country. Under this strategy of penetration, the company tries to
know about behaviour and habits of customers’ existing in international market (Nogueiro,
2020). Latvia's economy has various kinds of customers available in their market. They have
different tastes, preferences and behaviours that is a difficult task for Micro Focus to analyse.
Management of company have to do proper research about localization of Latvia and make plans
accordingly. It can make their penetration easier as compared to before. Micro Focus can also
become aware from different threats that can create practical problems for their business.
Global strategy: This strategy is a wider aspect that covers standardisation, international
and multinational strategies for business organisation to expand its market area (Shameenda and
Kanyengo, 2019). It helps to increase sales of the company across global market. In context to
Micro Focus, global strategies are also used by management to reduce problems arising at the
time of making plans and policies for penetrating in Latvia's market.
They can use domestic exporter to sell their offerings into market of Latvia. It can
increase their profitability and sales figure (Dörrenbächer and Gammelgaard, 2019). It is a
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strategy that demands low cost for expanding business into different market. Global strategy also
covers transnational strategies in it.
Transitional strategy -This leverages high degree of local responsiveness as well as
global integration in their operations (Thrift, 2020). Under this strategy, companies try to localise
its offerings to global markets while also practising standardisation practices in an effective
manner. Manager of Micro Focus can take adopt this strategy by making their products
standardised in regards with global market.
Managers of Micro Focus can adopt global strategy which will help to enhance their sales
and foster brand awareness on the basis of global level. It will also help them to diversify varied
risks in a significant manner.
6. Conclusion
From the above report it is concluded that Internalisation refers to designing a product in
the unique way which can be readily consumed across multiple countries. This process is beings
used by those companies which needs to expand their business globally. Globalisation is the
process of interaction and integrating people, organisations and government. Globalisation helps
to decrease the cost of manufacturing which means companies can offer goods at a lower price to
customers. Customers can also have wider variety of products and increase their living standard
due to globalisation. Some of the internalisation drivers are consideration of local situation,
organisational structure, active management of risk, financial resource, personal resources etc.
There are so many marketing strategies used by business to expand itself which includes
exporting of products and services, countertrade, licensing, joint ventures, company ownership,
franchising, outsourcing, greenfield investment, turnkey projects etc. The report also inculcates
comparison and contraction between two international markets. It includes a case related to
expansion of business one or two countries. PESTLE analysis refers to a framework which is
used by organisation to evaluate its external environment. PESTLE analysis aids the organisation
in minimising risk and taking opportunities. It includes PESTLE analysis for both the industries
and analyse their external environment. SWOT analysis is the framework used by organisation to
evaluate their internal strength, weakness, opportunity and threat. An international strategy is the
first approach most of the business take with global expansion like export or import of goods
while maintaining activities in their head office or the offices in home country. Transnational
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strategy refers to operating with only one head office in a single country which coordinated local
subsidiaries in global markets.
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7. List of References
Books and Journals:
Balcet, G. and Ietto-Gillies, G., 2020. Internationalisation, outsourcing and labour fragmentation:
the case of FIAT. Cambridge Journal of Economics. 44(1).pp.105-128.
Braga, A., Marques, C. S. and Serrasqueiro, Z., 2018. Internationalisation strategy of knowledge-
intensive business services. Journal of the Knowledge Economy.9(2). pp.359-377.
Castagna, F. and Et. Al., 2020. Assessing SMEs’ Internationalisation Strategies in Action.
Applied Sciences.10(14). p.4743.
Cherunilam, F., 2020. International business. PHI Learning Pvt. Ltd..
Dominguez, N. and Mayrhofer, U. eds., 2018. Key success factors of SME internationalisation:
A cross-country perspective. Emerald Group Publishing.
Dörrenbächer, C. and Gammelgaard, J., 2019. Critical and mainstream international business
research: Making critical IB an integral part of a societally engaged international
business discipline. critical perspectives on international business.
Kamsaris, D. P., 2021. Diplomacy and International Business: Bonded Together. BookRix.
Lu, W. W. and Ye, M., 2022. The global construction market. In Research Companion to
Construction Economics. Edward Elgar Publishing.
Müllner, J. and Filatotchev, I., 2018. The changing face of international business in the
information age. In International Business in the Information and Digital Age. Emerald
Publishing Limited.
Nogueiro, T., 2020. ERASMUS PROGRAMME: SWOT ANALYSIS APPLIED TO THE
INTERNATIONAL CREDIT MOBILITY. A CASE STUDY. In INTED2020
Proceedings (pp. 3149-3158). IATED.
Rana, P. B., 2021. COVID-19 and Its Impact: Is Globalisation Dead?.
Rugman, A.M., 2019. From globalisation to regionalism: The foreign direct investment
dimension of international finance. In Shaping a new international financial system (pp.
203-219). Routledge.
Shameenda, K. L. and Kanyengo, C. W., 2019. University of Zambia libraries and their support
for teaching, research and public service: a SWOT perspective.
Siemieniako, D. and Et. AL., 2022. Power in Business Relationships: Dynamics, Strategies and
Internationalisation. Taylor & Francis.
Sinha, V. C., 2020. International Business. SBPD Publishing House.
Thrift, N., 2020. Virtual capitalism: the globalisation of reflexive business knowledge.
In Virtualism (pp. 161-186). Routledge.
Online:
Micro Focus International Plc. 2022. [Online]. Available through:
https://www.microfocus.com/en-us/home
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8. Appendices
Company background
Micro Focus International Plc is an UK based multinational establishment as well as
information technology business which deals in provides consultancy services and software to
their differentiated clients. This belongs to IT sector and has its headquarters at Newburry,
England.
BCG Matrix of Micro Focus
The products or services of Micro Focus International Plc in quadrants of BCG Matrix are
as follows:
Cash Cows- These products comprises of Accu Rev and Acu4GL which have low growth
and high share in market.
Stars – These involves Acu Connect which have high growth as well as high share.
Question marks- These category involves Acu To Web which provide them high growth
and low share.
Pets- It includes AI Images Analytics which help them to cover low share and low growth
in significant manner.
in a significant manner.
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