International Business Expansion Proposal: Red Rooster in New Zealand

This report presents an international business expansion proposal for Red Rooster, a major Australian fast-food chain, focusing on its potential entry into the New Zealand market. The report begins with an executive summary and company background, followed by a business proposal and situational analysis. It employs PESTLE analysis to assess the political, economic, social, technological, legal, and environmental factors of the New Zealand market. The report further examines the food market in New Zealand, highlighting opportunities and risks, including an analysis using Porter's Five Forces and a SWOT analysis to evaluate strengths, weaknesses, opportunities, and threats. The socio-cultural context is also considered, including the application of Hofstede's cultural dimensions. The financial status of international trading between Australia and New Zealand is also assessed, leading to recommendations for the company's expansion strategy and a final conclusion.

Running head: INTERNATIONAL BUSNESS EXPANSION PROPOSAL
INTERNATIONAL BUSNESS EXPANSION PROPOSAL
Name of the Student
Name of the University
Author Note

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INTERNATIONAL BUSNESS EXPANSION PROPOSAL
Executive Summary:
The purpose of the report is to present the scope of international business of a company. The
method of the report focuses on the market research of the new host market in terms of the
situational analysis of the host country in the international context and presents the opportunities
and risk in the same. The result of the research presents the favorable conditions for the company
for future business expansion in the specific chosen country. In addition, the report also discusses
some recommendations for the international business proposal of the company.

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INTERNATIONAL BUSNESS EXPANSION PROPOSAL
Table of Contents
Introduction:....................................................................................................................................3
Company Background:....................................................................................................................3
Business Proposal and the Chosen Company:.................................................................................4
Situational Analysis:........................................................................................................................4
PESTLE Analysis:.......................................................................................................................4
Food market of New Zealand and the scope of expansion:.............................................................6
Opportunities and Risks:..................................................................................................................6
Porter Five Forces:.......................................................................................................................6
SWOT Analysis:..........................................................................................................................8
Socio-Cultural Context:...................................................................................................................9
Financial status of International Trading:......................................................................................10
Recommendation:..........................................................................................................................11
Conclusion:....................................................................................................................................11
Reference:......................................................................................................................................13

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INTERNATIONAL BUSNESS EXPANSION PROPOSAL
Introduction:
International business entails the business transaction within two or more countries. The
international business is the process of business communication between two countries that
includes the transaction of service, goods, managerial knowledge, technologies and the capital
(Griffin and Pustay 2012). The international business also involves the export and import of the
business components. International business is often called the global business as it refers to the
global expansion as well as the boundaries. The growth of the international business is
determined by the several factors such as political, economical, and social and others (Dunning
2013). In addition, the country itself works as the factor for the determination of the business
growth and profit in the specific country. There are several challenges and considerations too
which can also be considered as the determining factors of the international business. However,
the following section of the report is based on an organization and the presents a proposal of the
future expansion of the same in other countries.
Company Background:
The Red Rooster is one of the major and popular fast food chains in Australia. This
family owned company was established in 1972. The company started to flourish from the year
1986. The parent company Craveable Brands owns and operates the company and presently the
Red Rooster has more than 360 stored in all over Australia and has more than 10,000 employees
(Red Rooster 2017). The company basically sells different kind of roasted chickens and the wide
range of food products of the company also includes fish, salads, beverages and desserts. Apart
from the wide product range the company also provides service that includes catering and home
delivery of orders.

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Business Proposal and the Chosen Company:
The company is currently trying to enhance the business in the international context by
expanding the same in other countries. The chosen country for the expansion of the international
business of the company is New Zealand. The Australian company has the potential and
numerous other advantages for the expansion of its business in the chosen country. New Zealand
is the most closely related country in terms of the trading and business of Australia (Dunning
2012). To internationalize the business operations of the company the following research has
been done on the present situation of the market of the proposed country.
Situational Analysis:
The situational analysis of the company is needed for the future expansion of the
company in the new market that contains different economical, social and political structure. For
the situational analysis of the company the PESTLE analysis is given below:
PESTLE Analysis:
The PESTLE analysis is the basic marketing analysis of an organization that makes the
organization understand the existing and current situation of the market including the risk and
privileges (Makos 2015). The PESTLE denotes the political, economical, social, technological,
legal and environmental aspect of the market:
Political: The political condition of New Zealand is stable but the government is directed
acceding to the political power.
Economical: The per capita income and the GDP of New Zealand is less than Australia, which is
a negative indication for the expansion of the company.

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INTERNATIONAL BUSNESS EXPANSION PROPOSAL
Social: The country is socially and culturally rich and there are no rigid barriers for the food
industry in New Zealand.
Technological: The country is well oriented with the technological equipments and to certain
extent is dependent on the external sources for new technologies.
Legal: The legal risk of the food industry is high as because the legal rules and regulation are
changed after every three years.
Environmental: The environmental condition of the country is in favor of the company for the
expansion of its business. In addition, the geographical location of the company is also a
advantage to the company.
Figure: 1
PoliticalEconomicalSocialTechnologicalLegalEnvironmental

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INTERNATIONAL BUSNESS EXPANSION PROPOSAL
Food market of New Zealand and the scope of expansion:
New Zealand to certain extent is dependent on Australia in terms of importing foods
which are unavailable in the country. However, the country has the sufficient quantity of meats
available, but the fast food chain like Red Rooster is certainly an added advantage to the food
market of the country. The diet of the people of New Zealand includes chicken; therefore,
opening up branch in the country will be profitable for the company (Caspi et al. 2012). In
addition, the fast food consumption in the country has been increased 5% in 2016 (De Vogli,
Kouvonen and Gimeno 2014). There are other fast food restaurants in the country which are
doing good business, and considering this fact the competition level is high in the country for
Red Rooster.
Opportunities and Risks:
To understand and evaluate the risk and the opportunities in the industry as well as of the
company the analysis of the Porter’s Five Forces and SWOT have been presented in the
following section.
Porter Five Forces:
Porter’s five forces is a framework that is used as the tool for analyzing the present
market condition for a company that is thinking of expanding its business in a new market (E.
Dobbs 2014). The five forces that determine the profit of the company are:
Bargaining power of the customer: There are few tough competitors in the New Zealand market
of fast food chain for Red Rooster – Maccas, McDonalds and KFC and others (Carter et al.
2013). The people of the country are given with the options of these two companies which

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increases the bargaining power of them. Therefore the bargaining power of the customers in the
new host market is high.
Bargaining power of the suppliers: The bargaining power of the suppliers in the new host
market is low because of the other fast food restaurants in the market of the New Zealand and the
dependency and liking of the people on the fast food, especially chicken reduces the bargaining
power of the suppliers.
New Entries: The threat for the new entries is high, because of the existing popular restaurants in
the New Zealand market. In fact, it will be easy for the Red Rooster to enter into the new host
market but difficult to sustain in the same. Hence, the threat for the new entries in the market is
moderate and is dependent on the sustainability of the same.
Competitive Rivalry: In the new host market of New Zealand, Red Rooster will have few tough
competitors Maccas, McDonalds and KFC and others. However, the rivalry is not high as the
primary product of the Red Rooster is of the same as the other fast food restaurants existed in the
market.
Threat of Substitute Product: The threat of the substitute product is less in the new host market
as because the people of the country have put chicken as their first priority in their diet chart. In
other ways, this is one of the main reasons for Red Rooster to expand its fast food chain in the
new host market of New Zealand.

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INTERNATIONAL BUSNESS EXPANSION PROPOSAL
Figure: 2
SWOT Analysis:
SWOT denotes the strengths, weakness, opportunities and threat for the company that is
going to expand the business. With the help of this analysis the company will be able to
understand the internal capabilities and the resources of the company as well as the external
opportunities and threat existing in the market for the future business and accordingly can set
strategies for the same (Salar and Salar 2014).
Strengths Opportunities
 Unique recipe
 Continuous innovation in recipe
 Strong brand image
 Abilities to adapt with the local taste
 Chicken as the primary diet of the
people of New Zealand
 Existence of trained and experienced
customers
CompetitiveRivalryThreatofNewEntriesBargainingPowerofSuppliersBargainingPowerofCustomers

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INTERNATIONAL BUSNESS EXPANSION PROPOSAL
 Wide range of taste
Weakness Threats
 Poor expansion strategies
 Not an example of first mover
 No experience in international business
 Lack of experience
 Challenge for nutrition values
 Existence of other popular fast food
chains
 Shifting the attention to the new brand
Socio-Cultural Context:
For the expansion of the fast food chain in New Zealand, understanding the cultural
dimension of the same is important. In regards to this, the theory of cultural dimension by
Hofstede can be considered. This theory of cultural dimension deals with the power distance,
individualism, masculinity/feminity, uncertainty avoidance and virtue of a country (Minkov and
Hofstede 2012). The cultural dimension in New Zealand is low which indicates the power and
culture equality in the country (Unitec.researchbank.ac.nz, 2017). In the second dimension, the
emphasis on the individualistic culture is high, which again is the indication of the good cultural
condition in the country. The next dimension of the cultural dimension refers to the masculine
prevalence on the society, which is not really a negative indication, but not entirely a positive
indication too (Words of Wisdom 2017). Uncertainty avoidance is the next dimension that
indicates the country still needs some generalize and expert in handling the risks and hazards in
appearing in the diverse culture. The last dimension of the country refers to the search for virtue
in that is focused on the different traditions and fulfilling of the social obligations.

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It is evident from the above passage that the cultural dimension of the country indicates
towards the cultural stability and healthy understanding within the society. The country is ready
to accept new business expansion as there people in the country is supportive and open to the
new business. The cultural dimensions do not create any boundaries in the society for entering
new business. In short, the cultural dimension of the country is favorable for the Red Rooster to
expand its business.
Financial status of International Trading:
For the expansion of the business of the fast food chain of Red Rooster, the financial
status and the trading ethics and law must be assessed for both the countries. The economical
condition of New Zealand is one of the basic factors that determine the sustainability and the
profit of Red Rooster in the country. It is discussed and stated above in the report that the food
consumption of the people of New Zealand to certain extent is based on the chicken. Therefore,
the stage for the international business in New Zealand is set in terms of the demand and market
in the same. In other hand, the economical status of the county must be taken into account before
expanding the business in New Zealand. However, the economic condition of the country is
found to be table. In other hand, Australia comes in the first rank in terms of international trading
with New Zealand. It is found that from the year 2018 onwards the trading of the terms will be
upgraded (Newzealandnow.govt.nz 2017). However, the ASEAN Australia-New Zealand Free
Trade Area (AANZFTA) will be favorable for Red Rooster to expand the business of the same in
New Zealand (Bath and Nottage 2013). The interests and the benefits for the agreement refers to
the elimination commitments and tariff reduction, regional rules of the origin providing
opportunities for the Australian companies in the international business, certainty to the

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Australian investors and service suppliers, business outreach activities and economic cooperation
(Department of Foreign Affairs and Trade 2017).
Recommendation:
It is recommended to the company that before entering the new host market for the
international business in New Zealand, the company must take a thorough research in the
economical and social condition of the market based on the same industry in terms of the
demand and trend of the market. Another recommendation for the company refers to the
establishment of the partnership of the same with local company belonging to the same industry,
which will help Red Rooster to attract more customers. In addition, the company must strategies
and follow certain business model in order to effective a successful business in the new
international market.
Conclusion:
It is evident from the above discourse that for the expansion of the fast food business of
Red Rooster in the international market, New Zealand will be best country. The PESTLE
analysis of the new international market presents favorable market situation for the company. In
other hand analysis of the Porter’s five forces and the SWOT explains the condition of the
present market as well as the resources and capabilities of the organization for the expansion.
Moreover, the socio-cultural context also presents positive and structured context for the
company to expand the business in the international context. In addition, the trading terms and
condition for the international business of Australia is another favorable aspect for Red Rooster.
However, the recommendations imply that the company must have a thorough research and the