International Business Strategy: Softwire's China Expansion Report

This report provides an analysis of Softwire, a UK-based software development company, and its proposed international business expansion into the Chinese market. The report covers key business drivers behind the expansion, including a PESTLE analysis which examines political, economic, social, technological, legal, and environmental factors influencing the venture. It also utilizes Porter's Five Forces model to assess the competitive landscape and potential threats. The report identifies and discusses trade barriers such as tariffs, quotas, and natural barriers that Softwire may encounter. Furthermore, the report highlights the importance of ethical and social considerations, cultural preferences, and appropriate expansion methods for successful market entry. The overall aim is to provide a comprehensive overview of the challenges and opportunities associated with Softwire's international business strategy.

International Business

Executive summary
Every organization aims to expand their business in other country by managing all
functions and activities which can help to develop organizational productivity. in other Words,
the movement of goods from country to another us known as international where number if
products and services are delivered to customers and supports to increase the productivity. This
involves cross- border transaction of goods and services between two and more countries.

Table of Contents
Table of Contents.............................................................................................................................3
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
CONCLUSION................................................................................................................................9
REFERENCE................................................................................................................................10

INTRODUCTION
International business refers to trade of goods, services, capital, technology, and thoughts
across the border and at the global or transaction scale. There is contractual agreement that
allows foreign firms to use products, services, processes from other nation. To improve
understanding about international business Softwire has been selected that is small size UK
based organization (Ferraro, 2021). The company is a dynamic and successful software
development company with offices in London , Manchester. The organization is providing better
quality of software to their customers who can help to attract number of customers and develop
organizational productivity. The company wants to expand their business by entering in to
Chinese market for their “UHT milk that will help to influence people and supports to increase
organizational productivity. The present report covers business drivers, trade barriers, ethical and
social issues, cultural preference, and expansion method.
MAIN BODY
Background
Softwire is the small size organization that develops software for their customers which
can help to develop organizational productivity. The company was founded earlier for the
purpose of providing different kind of software and services to their customers. The company
wants to expand their business in Chinese marketing that will help to attract number of
customers and increase organizational productivity. The company deliver innovative, and high
quality of software solutions to their clients involving BBC, and Google DeepMind. It has seen
that working environment is very relaxed and friendly, and there are opportunities to engage in
probono and charitable work. The company understand the customer requirement and design the
kind of software with optimum solution that can help to develop organizational productivity and
profitability (Bahoo, Alon, and Paltrinieri, 2020).
 Business drivers behind company’s expansion into the given country.
To expand a business and managing all functions there is need to analysis the
environment as it helps to know which factor might be affect business industry and how it could
be operate a business regularly. To start a business and enter in to new market, environment
analysis and competitor factor are used to introduced all functions and activities that supports to
manage business activities. In relation to Softwire company, management has analysed that
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environment to know which factor might be affected in expanding business into Chinese market
that are explained below:
PESTLE Analysis – This can be describe as framework of macro environment factors which are
used to scan the environment and formulate strategic decisions. This became most important for
organization to analysis all factors and describe how it supports to grow a business. PESTLE
Analysis of Softwire company is defined below:
Political factor – This factor relates to government policy, political stability, tax policy,
trade restrictions, and labour law which are followed to operate the business. There are trade war
between UK and European country and government has changed the regulations that affected the
business negatively. Moreover, due to Covid-19 it became challenging for Softwire company to
expand its business there are different rules and regulations which are formulated by government
for business industry that are difficult to follow and will might be impact (Fatehi, and Choi,
2019).
Economical factor – This factor involves economic growth, interest rate, inflation arte,
exchange rate, unemployment law that directly impacts on business industry. The inflation rate
of Chinese market is not stable as it changes continuously which might be affect Softwire
company negatively.
Social factor – The factor involves population growth rate, age distribution, career
attitude, safety emphasis, health conscious , safety and others that could affect a business. The
needs and wants of people is changing continuously where it became most challenging for
company to operate their business. By entering in to Chinese market Softwire company will
increase its organizational sales as it will help to influence number of people and business
concern to get better quality and design of software.
Technological factor – To operate and start a business technology is considered as
important factor as it introduce new products and services with systematic manner that can help
to develop organizational productivity. In relation to Softwire company, new software are
developed by developer as per customer demand and sale to their customers in market. This can
help to expand business into Chinese market by offering better design and quality of software to
their customers (Hajro, Caprar, Zikic, and Stahl, 2021).
Legal factor – This factor related to rules and regulations which are formulated by
government for the purpose of operating and running the business. This is important for Softwire
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company to follow labour law, health and safety, and data protection and others are followed to
operate a business and increase the productivity as well as profitability. Thus, legal factor could
be appropriate to operate and run business into other country.
Environmental factor – This factor is related to environment aspects such as weather,
climate, pressure from NGOs, and others that are followed to run and expand a business into
other country. Softwire company has to follow environment protection legislation, minimum
wastages, and CSR participation in order to enter into Chinese market from UK that will help to
expand a business effectively and increase productivity (Peetermans, and Lambrecht, 2019).
From the above analysis it has been seen that there are many factor such as political,
economic, social, and technological, legal and environmental that affects the business positively
and negatively. This is important for each organization to understand what is running in
environment and how their customers could be satisfied which can help to develop to
organizational productivity.
Porter’s Five forces model -
Porter’s Five forces model – This can be defined as a method for analysing a company's
resources and competitiveness. The management is crucial because it conducts the analysis and
introduces the items in a way that affects the number of clients and the growth of the firm.
Porter's approach is being used by businesses to analyse the competition and gain competitive
advantages. The five forces of Porter’s model are as explained:
Power of suppliers – This means how easily suppliers can reduce the prices of their
products and services. This is important for each organization to understand what people want
and how their suppliers provide products and services to their customers by deciding prices. In
relation to Softwire company, power of suppliers is low as it offers different kind of software and
solution to their customers by deciding their prices which can help to develop organizational
productivity (Paik, Lee, and Pak, 2019).
Threat of substitute products – This means availability of similar products and services
which influences number of people and create challenges for organization to sale their products
and services. This is important for each organization to understand what their customers wants
and how they could be influenced so that kind of products and services are provided accordingly.
There is low threat of substitution which could be opportunity for Softwire company to expand
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its business into Chinese market as there is no substitution of software that could help to create
new customers and supports to increase productivity.
Power of Buyers – This means how easily people reduce the prices of products and
services in order to increase organizational performance and productivity. Softwire wants to
expand its business into Chinese market where people have low power as there is less number of
developers who develop software. This could be opportunity for chosen organization to improve
their business activities and productivity (Wahyuningsih, Sudiro, Troena, and Irawanto, 2019).
Industry competition – This explains to competition which is running in industry and
creates many challenges to operate their business. This is important for each company to analysis
what their competitor offering then need to provide products and services accordingly. In relation
to Softwire company, there is high level of competition in new market that could create the
challenges for organization and supports to attain business goals.
Threat of new entrance - This is a different type of organisational component that is
related to business organisation and assists in the company's operation. In this regard, there are a
plethora of people that can join a new market and oversee a company's success. This might pose
a threat to Softwire company since a new company with cutting-edge technology and capital
could enter the market to conduct business and boost the brand's image. Thus, it could affect the
business negatively (Andersson, Cuervo-Cazurra, and Nielsen, 2020).
As a result, this model is used by Softwire company to manage the business and maintain
activities by supplying high-quality and well-designed automobiles. Threats that an organization
faces must be overcome by developing proper tactics that aid in maintaining and expansion of
successful business. By using porter’s sources chosen organization can influence the number of
people as it offers better quality and design of software which can help to accomplish business
goals and increase the profitability. This is important for each organization to focus on
competitive market and introduce new products as well as services which supports to
development.
internationalisation
 Trade Barriers
International trade is carried out by both businesses and governments where no one puts
up trade barriers. It became most important for each organization to identify what problems and
issues could be rise while entering into new market and how it could be resolved. By identifying
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Trade barriers management requires to bring new functions and thoughts which can be used to
resolve problems. Free trade refers to elimination of barriers to international trade. The most
common barriers to international trade are tariffs, quotas, and natural barriers which are
explained below:
Tariff – This means tax on imports, collected by federal government and which raises the
prices of the good to consumers. This is also known as duties or import duties, tariffs aims to
limit imports and second raise revenue. It has been seen that tariffs are kind of regulations and
taxes which are puts on business industry that could create the challenges for individual or
business concern to operate their business. This might be affect the international business while
go to international. The government has major role in creating trade barriers as it formulates
different or strict regulations that could be challenging for organization to operate their business
by entering into new market. The Softwire might be face the challenges of tariffs while
expanding its business into Chinese market as it affect the organizational productivity and
profitability (Kumar, Singh, Purkayastha, Popli, and Gaur, 2020).
Quotas – This could be explained as a limit on the amount of certain type of good which
can be imported into the country. This can be legally and voluntary enforced that creates the
issues in operation and go international market. This limits imports and protects domestic
producers from foreign country. This is important for each organization to have right quotas as it
would help in regulate the volume of trade between them and other countries. In relation to
Softwire, lack of quotas information could be challenging for individual and business concern to
operate or expand their business in international market. To introduce new regulations and
follow them properly could be effective for business concern to operate their business and
manage all functions as well as activities.
Natural barriers – This could be explained as trade barrier could be either physical or
cultural. It has seen that whenever someone enter into new country and market then people
behave differently as they have different language and traditions that does not met with offering
products and services. This is important for each organization to focus on their functions and
activities which are used to expand their business into other country and attain business goals.
Due to different language people cannot communicate effectively and they are not able to
negotiate trade agreement or might be deliver wrong products and services. Thus, it is a trade
barrier which might be face by Softwire while operating or entering into international market as
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people who lives in China use different language and demand that could be challenging to start
and manage their business effectively. To make smooth operation and entering into new market
there is need to have proper planning and strategies that could help to operate a business
effectively and maintain higher performance (Arregle, Hitt and Mari, 2019).
Government intervention – This is another barrier, arises while operating a business
and go to internationally. It has been seen that government plays important role in establishing
and managing a business into particular country. It puts some rules and regulations which needs
to be follow while operation and managing the activities. The government should be formulating
flexible and right regulations which could help to develop the organizational productivity and
profitability. In relation to Softwire company, government regulation are imposed by Chinese
government could be barrier to go internationally as it creates problems to follow and manage
the all functions and activities (Petrou, Hadjielias, Thanos, and Dimitratos, 2020).
In above section number of trade barriers are discussed that might be occurred while
operating and entering into new market. The barriers are physical barrier, quotas, tariffs, and
government regulations that arises in operation and expansion of business. This is important for
each organization to identify what people are looking for and how they could be satisfied so that
kind products and service should be provided at different location by getting government
permission and approval which can help to enter into new market and supports to develop
organizational productivity. The aim of Softwire company is to expand its business or go
internationally by entering into Chinese market where it needs to follow right regulations and
managing all activities that can help to influence number of people and supports to increase
business profits.
Opportunities to international business
The meaning of international business is to enter into new market and location for the
purpose of expanding their business and generating profits. Each organization aims to explore
their business by bringing changes time to time and go internationally as it helps to understand
how each products and services are delivered to their regular and other customers. This could
help to maintain higher performance and productivity at the workplace and manage all activities.
Softwire is a type of SME that design or develop software as per client requirement that helps to
influence number of people and encourage making buying decisions. The company is planning to
enter into Chinese market by following government regulations and trade policies that could help
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to accomplish business goals and increase organizational productivity. There are various
opportunities for selected company to go internationally such as:
To attain competitive advantages – By entering into international market an
organization targets larger audience and supports to increase number of customers which can
help to operate a business regularly. In relation to Softwire, by entering into Chinese market and
providing good quality and design of software could develop organizational sales and
productivity in changing environment. Thus, it has determined that chosen organization will
attain the business goals and profitability by managing all functions and activities (Gereffi,
2020).
Expansion of business – By entering into new market and running small business could
get opportunity to convert into larger business as it influence number of people and supports to
develop organizational productivity. This is important for each organization to analysis the
market and formulates effective plans to go internationally as it helps to expand the business and
maintain higher performance. In relation to Softwire, management formulates different planning
and strategies to covert its small business into larger that can help to develop higher profits.
To improve the organizational performance – While operation and running a business
there are many problems that could be rises needs to consider as it helps to develop
organizational performance. This is important for each organization to introduce better quality of
products and services that could help to reach targeted customers and attain higher productivity.
In relation to Softwire company, by establishing its business into Chinese market could improve
their organizational performance and profitability as it supports to manage all functions and
activities effectively (Kozlenkova, Lee, Xiang, and Palmatier, 2021).
Maintaining high level of standard – By establishing new start up and growing it
continuously an organization could maintain high level of standard of their company and
increase the performance. The management of Softwire, analysis market and introduce various
changes that are developed to complete business goals and productivity.
Thus, from the above it has been explained that Chosen organization attains higher
productivity and profitability by managing all functions and activities. The company goes to
international market by following all regulations and policies which can help to accomplish
business goals.
 Ethical and social issues to be considered by the UK SME.
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While operating and managing a business it is needed to focus on ethical and social
aspects which can help to build customer trust and supports to increase organizational
performance. The ethical issues that could arise in UK SME is CSR as companies are facing the
issue of lack of customer due to less social responsibility that encourage people to switch the
company in getting particular products and services. CSR refers to corporate social responsibility
which is form of international private self-regulation business aims to contribute in social goals
and increase business productivity. This is important for each company to participate in CSR
activities as it helps to reach the targeted customers and increase organizational sales. The issues
relates to CSR are combating corruption, Disclosure information, corporate governance, and
occupational integration. It has seen that sometimes business concern and employer does not
behave positively with their staff and customers where it feels to change as it creates challenges
to operate their business. Disclosure of information and occupational integration is another
challenge that faces by company in running their business and it affect the organizational
productivity. In relation to Softwire company, management faced the issue of lack of customers
due to disclosure information, and corporate governance that affected the business negatively.
The another issue is changes in customer’s buying behaviour that creates challenges for
organization to operate their business effectively.
To solve ethical and social issues Softwire company, should participate in CSR activities
by increasing participation that build customer’s trust and encourage customers to make buying
decisions. It has explained that each organization should be participate in CSR activities by
providing details about particular products and services which can help to attract the large
number of customers and attain higher productivity (Graafland, and Noorderhaven, 2020).
 Cultural preferences to be Considered by the business
Moreover, cultural difference is another aspects which needs to be consider while
operating a business and managing activities. If there is cultural difference then would be
challenging to operate their business and complete task. To operate a business and go
internationally there is need to understand the culture of country and state where it wants to sale
its products and services as it helps to develop the organizational performance. In relation to
Softwire company, management needs to understand Chinese culture where it could offer kind of
products and services, helps to develop organizational performance as well as productivity. This
can help to provide competitive advantages by establishing business into other country.
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 Expansion Methods to be chosen by company
There are different methods to expand their business by entering into international market
as it helps to develop organizational productivity. Softwire company can use different method to
enter into international market such as:
Licencing – A licence is an official permission or permit to do, use or own something. This
is granted by a party to another party as it helps to create relationship between parties. Softwire
can use licence to expand its business into Chinese market that could help to grow a business
continuously and maintain higher performance.
Joint venture – This is another way of business expansion which is created by two and
more than two parties, basically characterised by shared ownership, shared return and risks. This
can help to expand their business in other country. Softwire, can be use this method to expand
business into Chinese market by creating two parties which can help to develop organizational
performance.
From the above it can be explained that Softwire has adopted Licence as the effective
way to business expansion that can help to reach the targeted customers and develop business
productivity.
CONCLUSION
From the report it can be concluded that international business refers to activity in which
business concern decides to go internationally and maintain higher performance. This is
important for each organization to understand what people wants and then provide better quality
of products and services. There are different ways which can be used to go internationally and
bring higher productivity.
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