Analysis of Global Business Environment for Yummy Food Ltd Expansion

This report provides a comprehensive analysis of Yummy Food Ltd's strategy for global expansion, focusing on the fast-food industry and the potential entry into the Malaysian market. It utilizes PESTLE analysis to evaluate the political, economic, social, and technological factors influencing the business environment. The report also includes a SWOT analysis to identify the company's strengths, weaknesses, opportunities, and threats. Furthermore, it addresses the challenges of international supply chain management, offering strategies to mitigate risks and ensure efficient operations. The influence of global business practices on organizational structure and operations is examined through the McKinsey 7S model and Hofstede's cultural dimensions. The report concludes with strategic recommendations for Yummy Food Ltd to overcome challenges, capitalize on opportunities, and successfully navigate the complexities of operating in a global environment.

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RUNNING HEAD: GLOBAL BUSINESS ENVIRONMENT
Global Business Environment

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Introduction
Yummy Food limited operates in fast food industry and based on Hong Kong. The company
is operating well in the domestic country and wants to expand their business in a global
market. This report includes analysis of the company using Pestle analysis tool and
considering that opportunities and challenges that the company will face in near future in
order to expand its business to global platform. The company can expand to Malaysia and in
order to expand challenges in international supply chain are explained and diversification and
risk strategies that the company can use in order to manage its supply chain at the global
level. Further, by applying McKinsey 7S model and Hofstede dimensions culture model the
influence of global business practices on the organization structure and operations is
analysed. At last recommendations are given about strategic routes that the organization can
use and the strategies that the company can follow in order to cope up with the challenges of
operating at the global level.
Globalization
According to Hill (2015), Globalization is considered as the growing interdependence of the
world’s economies, populations, culture, technology, flows of investment, people and goods
and services. Globalization is all about being together. As it empowers each country to
produce products that they are specialize in by using least amount of resources. The concept
of globalization gives competitive advantage to market, businesses and customers (Hamilton
and Webster, 2018). Businesses face many challenges while opting for expanding in other
countries.
Driving factors to Globalization
Globalization of production and market transform the ways in which nations interacts. Many
businesses nowadays are multinational businesses, that operates in more than one country and
globalizations provides this opportunity to businesses. Due to that multinational companies
able to survive in the market for long run.
The powerful force that drives the world towards a converging commonality is technology. It
has proletarianized, transport, communication and travel. As due this everyone everywhere
require things that they heard, experienced or seen via technologies and this resultant in

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emergence of global market. This driving force helps the multinationals to get benefit from
enormous economics of scale in distribution, production and marketing. With globalization of
market gone are the days when prices, profit margins at the global level were higher than the
domestic market. The globalization of market is in hand (Naz and Ahmad,2018).
The four main drivers of globalization are market, production, government and technology.
These external factors impact on the condition of companies and have potential of
globalization. Some of market drivers are transferable marketing and common customer
needs. Whereas emergence of global market for products that are standardized has enabled
corporations to cater demands in the new market by offering existing products (Behringer
et.al,2018). Trade liberalization is one of the drivers due to that export and import of services
and goods become cheaper and that promoted globalization. Other factors are stage of
development, demography and location, factors of production differ from country to country
due to that companies globalize production processes. Further, rapid changes in technology
improve the global connectivity. Mainly the most changes take place in terms of use of
mobile phones and internet to connect people. Hence, the drivers of globalization are
technology, market, production and government.
Analysis of Environment
The internal environment or condition of the company can be analysed through SWOT and
PESTLE. In order understand the environment in which the company is going to operate
pestle analysis of Malaysia fast food industry is done. Further strengths and weaknesses are
identified through SWOT analysis.
Strengths: Yummy food limited has ability to compete with the big players in the food
industry such as McDonald as the company offers hygiene and quality food to its customers
due to that satisfaction amongst customer is high. The services of the company are
experienced by China’s elite group and attract high class people due to that the company’s
market share is increasing in Hong Kong.
Weaknesses: Yummy food ltd. has not that big infrastructure and need to focus on
expansion of its business. Further, the food menu of the company has limited items in
comparison to other competitors this might be a drawback if the company is not able to
customize it as per the demand of people of Malaysia (Rashid et.al,2016).

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Opportunities: The opportunities that are prevailing at the global platform from which the
company can take advantage include varieties of products can be offered by the company by
targeting the changing needs of customer. This helps the company to widen its product mix
and to target the right market. Further, Yummy food ltd has opportunity to diversify its
product portfolio, broaden its menu and can take advantage of chaining habits and lifestyle of
people.
Threats: The changing taste of people and trend of organic food leads to threat to major
players. Further, the companies that are operating in fast food chain industry is facing stiff
competition from each other. Yummy Food Ltd will face issue in order to grow and survive
in this competitive environment. Further, changing policies and strict rules are made for
food industry in order to ensure food safety and food hygiene.
PEST Analysis
Political factors
 Stable political system
Less interference of government in the food
industry rules and regulations (Koberg and
Longoni,2019).

 Pro-business government mentality
Economic factors
 The increasing number of tourism in
Malaysia can prove to be advantageous for
fast food industry. As 64,000 tourist landed
in the country on daily basis (Crane
et.al,2019).
 The economy of the country is growing at
the rate of 5% per annum (Crane et.al,2019).
 Stronger exchange currency
Social factors
 Increasing population of youth leads to
more consumption of fast food
 However, 50% of people are Islamic so
preference and taste of people are
different (Koberg and Longoni, 2019)
 Shift of people to health concerns
Technological factors
 Malaysian people are becoming technology
oriented
 Increasing number of internet users and IT
gadgets

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International supply chain challenges
Managing supply chain at the global level is a difficult task as it requires huge efforts of
organizations. The main challenge that small and large organizations are facing in order to
manage supply chain at the international level is fluctuating exchange rates, as at the global
level the companies set price according to the current rate any uncertain change in exchange
rate might leads to losses to the company or might reduce the profits as cost of logistics,,
shipping and carrying might increase because of change in exchange rate. Other challenges
for the companies that want to expand at the international level are cultural differences,
infrastructure, uncertainty in global environment such as chances of Third world war and
trade wars between the countries (Hill,2013).
As the supply chain is for acquiring and delivering products to the customers at the right time
and in the right quantity. It became difficult when the companies operate at the global level
to reach to the customers when demanded as there are many factors that affect the global
supply chain and any change in these factors directly impact on the supply chain and affect
the whole business operations. Further, it become hard to manage relationship with suppliers
across the world as each one has some different culture, beliefs and way of working (Koberg
and Longoni,2019).
These challenges related to international supply chain can be addressed by speculative
strategies, hedge strategies and flexible strategies. In order to solve these issues the
companies that are operating at global platform need not to depend on one supplier rather
should have multiple suppliers and manufacturing plants at various locations in order to
ensure the continuous supply of material and goods from region to region as per the global
situation. As Yummy Food ltd is going to expand at the global level it is important to
consider all these challenges and take precautions in order to avoid the losses and failure at
the global level.
Opportunity and challenges of globalization
Globalization is a new era that is approaching in each and every nation, every level of
business and in every industry whether food or apparel. It is a dynamic process that
“involves the integration of national markets through international trade, foreign direct
investment and portfolio investment”. The companies have many advantages of globalization

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such as their market base will increases, that means when the saturation level achieved at the
domestic level, the same product can be launched at the global level to increases the market
share. Further, due to globalization many companies get opportunity to understand the culture
and customers of different region get benefit of technology and resources of other countries
in order to reduce operating cost and to maximize profits (Parente et.al,2018).
The organizations get opportunity to use talent resources and high technology, this help the
companies to explore across the world. In simple words, the organizations because of
globalization get many opportunities such as technology advancement, increasing customer
base, and developing brand image across the world.
The challenges that the organizations will face at the global level or while going global are
physical distance, unfamiliar attitude and culture, changing marketing tactics, lack of
communication with team members, tariff and logistic fees, and documentation. The
physical distance is a challenge because it is not possible for the leader to be in all the places
and coordinate each and every activity rather communication is done using digital media and
technology. Another challenge is to deal with the cultural differences at the global level. On
the other side, formulating marketing mix for the company according to the culture of
country is a challenging task as for this proper market analysis need to be done by the
companies. Further, communication and coordination from domestic country to international
country require proper planning and protocols (Fossats and Mayrhofer,2018). At last
changing policies, tariffs, and changing exchange rate impact on the companies that are going
global.
Recommendations to overcome challenges and gain opportunity
Yummy food ltd will also face these challenges and in order to cope up with these challenges
that company need to focus more on market analysis and can develop a team that will help
in forming policies and practices for going global. As the company is going to expand in
Malaysia it is important to analyse the market situation and economic conditions of the
country so that challenges related to supply chain, food regulation and policies can be
addressed on time.
The challenge of culture can be overcome through mutual agreements and by focus on
localizing the food menu according to preference of Malaysian people. With that the

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company can gain advantage of the huge market by offering a wide product mix. If this is
done from the starting it will help the company to establish its positive brand image at the
global platform. On the other side, the challenges of changing policies and regulatory
problem can be solved by managing the supply chain, and by making sure that market entry
in Malaysia is done by using proper entry mode. The company need to filter information that
is valuable than with the help of training employees, encouraging employees and with
improved communication all these challenges can be overcome by Yummy food ltd.
McKinsey 7S
This model is used to learn how to manage change and improve performance in the
organization by ensuring that all the activities are coordinated and work in harmony. The
seven elements are categorised in as hard elements and soft elements. Hard elements are
strategy, structure, systems and soft elements include shared values, skills, style and staff
(Salvarli and Kayiskan,2018). Here, McKinsey framework for Yummy food ltd is given.
Strategy: Yummy food ltd strategy will be to expand in Malaysia by providing customized
menu and wide range of products to its customers in the food retail industry. This helps the
company to compete with its competitors such as McDonald and Burger King (Hill,2013).
Structure: Division structure can be opted in order to expand in Malaysia as the company
will divide its activities in domestic country and at international platform. There will be two
divisions and in that one division for Malaysia in which following departments will be
included such as personnel, accounting, marketing and operations (Shenkar et.al, 2015).
System: The basic activities include customer service, reporting, kitchen procedures,
reservation handling and cleaning guidelines. All these processes will be followed by staff on
daily basis.
Shared values: The core values of Yummy Food Ltd are customer services, quality of food
and organizational culture and ethics. In the food industry, organizational ethics and culture
are two important criteria that will be reflected in the company operations (Hamilton and
Webster, 2018).
Style: The leadership styles that will be followed in order to expand at the global level
include consultative leadership that is a combination of democratic style and autocratic style.

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Here employees or staffs have some responsibilities and authorities to take daily decisions
but big decisions will be taken by the top executives or managers.
Staff: The staff members include management, chefs, and servers. Further, the marketing
manager, personnel manager and operations manager will be one for all the branches in
Malaysia (Shenkar et.al, 2015)
Skills: In the fast food industry in order to operate efficiently, the skills that are required are
organizational skill, communication skills, food service skills, ability to deal with customers
to different cultures, and attention to details.
McKinsey 7S Framework
Source: (Shenkar et.al, 2015)

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Hofstede Culture
In order to expand in Malaysia it is important to analyse the culture and attitude of people for
that hofstede cultural model is used. There are six elements in this model that are power
distance, individualism, masculinity, uncertainty avoidance, long term orientation and
indulgence (Schellenberg et.al,2018).
Power Distance: Malaysia stands high in this order as score is 100. This indicates that people
of Malaysia accept a hierarchal order and centralization is popular in the country. Hence,
culture of Malaysia has high power distance.
Individualism: It is analysed that Malaysia is a collectivistic society with score of 26,
loyalty in group members and long term commitment is the collectivist culture of people in
Malaysia. Such a country encourages strong relationship and societal regulation and rules.
Masculinity: High level of masculine indicates that the country is driven by achievement,
competition and success. Malaysia scores 50 in this category that indicate that there is
balance in society and mentality of people (Schellenberg et.al,2018).
Uncertainty Avoidance: This dimension focus on how society deals with the uncertain
events. Malaysia stands at 36 on this dimension, this indicate that the country has low
preference for avoiding uncertain events. This means people in Malaysia are not able to work
in more rules and rigid environment rather they require flexible and positive environment
(Lehenert et.al,2016).
Long Term orientation: This dimension focus on the long term aspects and planning by
people for sustainable future. Malaysia scores 41 in this dimension that indicate that people
of Malaysia follows normative culture. They have great respect for culture and traditions of
the country and have small propensity to save for future (Schellenberg et.al,2018).
Indulgence: Malaysia culture is one of indulgence as the country scores 57 in this
dimension. High indulgence indicates high level of desire and willingness to realize their
impulses. People in Malaysia have positive attitude and tendency towards optimism.

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Ethical and sustainable factors in global market
The organizations that operate at the global level also require taking care of moral, ethical
and sustainable factors. Some of the issues related to ethics are outsourcing, working
conditions, working standards, equal opportunity, corruption, bribery, human rights, religion,
political arena and workplace diversity. The businesses that are going global need to comply
with state and federal safety regulations, fiscal and environmental laws and civil light laws
(Crane et.al,2019).
Sustainability becomes an important aspect for local players and for international players also
in order to compete and to ensure that resources in the organizations are used efficiently so
that future needs can also be fulfilled. The company at the global market operate under
global consideration and need to promote sustainable practices in order to address the global
issue.
Yummy Food Ltd also need to take care of ethical and sustainable factors while going
global, as ethical factors in the food industry are area of concern. Food safety, sustainable
agriculture practices, and food hygiene are areas where the company need to focus. On the
other side, corporate social responsibility activities also bring transparency and positive
image of the company at the global platform.
Impact of these factors on decision making
The impact of above mentioned factors related to ethics and sustainability can be seen on the
decision making process as the companies need to take care of these factors while
formulating policies and practices for the company to operate at global level. Yummy food
ltd need to take care of international food policies, standards and practices and keep in mind
the global considerations in the food industry. Further, decision related to workers,
organization culture and diversity get affected by all these factors. On the other side,
corporate sustainable factors are related to environment, society and economy. The decision
regarding packaging, water usage, suppliers, and consumption of raw material by the
company are also affected because of these factors (Lehenert et.al,2016). Hence, it can be
said that ethical factors and sustainable factors impact on the decision making process of the
organization while going global
Ways to overcome these barriers

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In order to operate at the global platform the organization need to change its policies and
focus on building a strong food supply chain and a standard should be set for suppliers so that
transparency, clarity and efficiency in the operations can be achieved. The decisions are taken
by considering various factors and ethical factors are important to consider as business ethics
highlights the ethical behaviour that are expected by employees at the global level. Strong
decision making requires leader to consider all the factors such as corruption, bribery,
workforce diversity, gender equality, political conditions and human rights. Then
accordingly the companies make decisions keeping in mind acceptable situation at the
international platform. For instance; when the company formulate policies to recruit people in
Malaysia the ethical factors that keep in mind are gender equality and workforce diversity so
that transparency in the operations can be achieved.
Strategic expansion routes
Foreign direct investment, licensing and franchising and joint ventures are the mode that
Yummy food can use to enter in the Malaysian market.
FDI includes entering of a company in the overseas market by making a substantial
investment that includes green field investment and brown field investment. The main
advantage of this strategy is to control activities at the global level and to reduce cost of
manufacturing. But on the other side using this strategy leads to high level of political risk
and competition from local businesses (Schellenberg et.al,2018).
Join venture is used by businesses that require high knowledge and expertise to run business
in another country. This is a way of joining hands with local businesses at global level. An
agreement includes using of assets and sharing of losses and profits in an equal; proportion.
The main benefit of this mode is efficient utilization of resources, less political risk due to
local partners, and using of patents and copyrights of other company at the greater extent.
Some of cons of this mode are conflicts between partners and high cost of dissolution of
agreement (Lehenert et.al,2016).
Licensing and franchising is used by companies that want to establish in the global platform
with minimum risk and investment. It allows another person on behalf of the company to take
risk at the global level in behalf of using name person will pay commission and royalty. This
mode provides benefits such as low cost entry, knowledge of local market, reducing risk of

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external factors and expansion with minimum investment. But some of its disadvantages are
less control and tarnishing brand image (Rugman et.al,2017).
From the analysis of internal environment of Yummy food ltd and global environment it can
be said that the company can expand its business operations in Malaysia through licensing
and franchising. As the competitor of the company at global level also use this strategy for
expanding its operations across the world. This helps the company to enter into the new
market at low cost and after establishing the business the company can choose for strategic
alliances of acquisitions to stay in the competition (Schellenberg et.al,2018).
The franchising and licensing is the best suitable business strategy for expansion because the
company has limited resources and wants to deliver good quality services and products to its
customers. Franchising is better strategy to expand in Malaysia because of low cost, reduce
risk of business failure, already establish networks and relationship accessibility and
franchisor has idea about the domestic market that helps the company to customize its menu
according to taste and preferences of local people and helps small business like Yummy food
ltd to compete with big players in the fast food industry in Malaysia such as McDonald and
Burger King. Further by using this strategy the company is able to deliver its value
proposition to its target customer that is good quality food with wide range of options
(Rugman et.al,2017). Some of the drawbacks of franchising business are lack of control of
head on the operations at the global level, chances of negative image builder by franchisors in
the market as they are not able to meet the standards and criteria of the business that leads to
poor brand image in the country.
Conclusion
It is concluded from the report that globalization is seen i9n each and every industry and
become important element of every business. There are few drivers of globalization such as
political factors, technological factors and economic factors that influence the businesses to
take advantage of the opportunities at the global level. In relation to Yummy food ltd, the
company can enter into Malaysia in order to expand its business at the international level.
There are many challenges that the organizations face while going global such as challenges
related to supply chain, ethical factors and sustainable factors. Further, in order to
understand the environment and market of Malaysia, hofstede cultural model is used. Hence,
it is concluded that the company can expand at the global level using franchising and

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licensing strategy and can enter in Malaysia in order to deliver its value proposition to its
customer that is providing quality products and wide range of customized menu to its
customers.

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