Critical evaluation of challenges performed by the business at the time of tapping into new international markets.
- Demonstration of major contemporary issues faced by international business.
- Identification and evaluation of business survival in the 21st century.
- Explanation of methods of international entry.
- Demonstration of the reason for internationalising the business.
- Examination of the influence of international business on home and host country.
Analysis and interpretation of gathered data.
International Business refers to the study of process of internationalization of multinational firm. It encompasses all the commercial activities which takes place in order to promote transfer of resources, ideas, goods, services, technologies and people across national boundaries (Aharoni, 2015). An understanding about legal requirements and trade regulations of country is needed to engage in international business. It includes transactions of goods and services at global level. In the present assignment, given organisation is Rahat Continental Limited which offers comprehensive air services to customers in cost effective manner. The report includes detailed strategy proposal on the basis of extensive & relevant market research. It also defines key business drivers behind firm's expansion, barriers to trade and protectionist policies that hamper new venture. Apart from this, legal, ethical, social and cross cultural issues are included that needs to be taken into consideration by proposed venture. At last, feasibility of venture is evaluated in United Kingdom market by considering various factors like methods of expansion, aspects of international marketing and potential influence of Brexit on venture is defined in this project.
Detailed strategy proposal
Effective strategies are formulated by firm in order to grow and sustain in market for longer term. Strategy proposal are the guidelines that provides direction to staff members to work in such manner so that goals and objectives of venture can be accomplished. For gaining effective outcomes, it is required to set some specific targets which needs to attain in particular time period. It is a complex process but, provides high competitive advantage to firm in market. Managers are required to formulate various strategies and policies regarding expansion of business (Buckley, 2016). Rahat Continental Limited wants to set up their new venture in United Kingdom. They intend to establish an e-commerce platform in order to sell organic cotton wear for infants. So, the strategy proposal for business expansion of company is defined below:
Rahat Continental Limited is an small medium enterprise based in India and administer comprehensive air services to clients in minimum cost and time. They want to expand their business by setting up an electronic commerce platform to sell organic cotton clothes for infants in UK.
Rahat Continental Limited is a high profile SME which offers air services to clients and is committed to reliable, safe and cost effective delivery of consignment. They have expertise and capability to move complex or simple shipments by air from any destination or at any time. They are agents registered with IATA which provides them access to major airlines that can offer competitive prices to customers (Cravino and Levchenko, 2016).
Firm wants business expansion in United Kingdom by establishing new electronic commerce platform for selling organic cotton clothes for infants. It has been identified that baby clothing market is increasing rapidly. For manufacturing clothes for infants, firm must use cotton cloth as it is soft and kids feel comfortable in it. There are various enterprises that deals in similar sector (Dinnie, 2015). It has been analysed that, the firms working under this sector gain profit of approximately US $ 10,125. Many big firms dominates the market of kids wear so firm needs to manufacture high quality clothes and offer them at competitive prices.
Various tools and techniques are used by company in order to analyse market effectively. More emphasis is given to mothers who have babies of 0 to 2 years. They offer high quality organic cotton wear to customers at affordable prices. Several kinds of techniques are used by company to communicate value and benefits of their product to customers in effective and efficient way.
In order to successfully establish new venture in UK, $24,500 are estimated by firm to invest. It includes various other expenses like bank account formalities, registration charges, website launch cost, etc.
It is required by firm to set a benchmark of performance. They need to compare their performance with industry standards. Baby Kay's Appliques is one of the well known e-commerce website for infants (Drogendijk and Martín, 2015).
a) Key business drivers behind firm's expansion in UK
Rahat Continental Limited is a small medium enterprise and wants to expand their business in UK. They want to set up new venture of infant organic cotton clothes. Some key drivers behind business expansion are:
Market relevant factor: Firm wants to develop e-commerce platform which is a relevant factor for them (Hovhannisyan and Keller, 2015). Rahat Continental Limited deals in air services and have ability to manage risk effectively which assists in eliminating chances of losses. Appropriate plans and strategies are formulated by company so as to establish their new venture in UK market. It has been observed that, India is one of the famous market for baby clothes. As the firm has good position in market, it may becomes easy for firm to grow in market if they offer high quality clothes for infants.
Financial resources: It is an essential resource that is highly required in setting up new venture. If firm had adequate finance, they are able to carry out their operations effectively and leads the company towards success. As the firm, Rahat Continental Limited perform their successful operations in India, they have good financial position. It assists them in expanding their business on e-commerce platform. For setting up new venture in UK, they also take assistance from financial institutions and banks.
Boom in clothing sector: As clothing sector has rapid growth, Rahat Continental Limited has an opportunity to attain high growth in engaging in this sector. By expansion of business, firm can increase their customer base. E-commerce is considered as the most suitable platform that assist firm in its rapid growth in UK market.
b) Essential barriers to trade & protectionist policies that can hamper new venture
Protectionism refers to a policy related with prohibition of import and export which define trade openness. If any restrictions takes place in flow of goods and services, it acts as trade barrier (Kolk, 2016). One of the obstruction that is face by company is import tax as it leads to increase in service tax. Every nation implement protectionism so that industries or firms can be protected from unfair competition. Some trade barrier that can hamper new venture are as follows:
Tariff barrier: It is a barrier to trade between some countries. In this, high taxes are levied by government on imports and exports for supporting balance of payments and increasing revenue.
Non tariff barrier: It includes policy measures other then tariff which can impact trade flow.
Voluntary export restraint: It is a limit on quantity of some goods that is imposed by government.
Embargo: It is an official ban on commercial activities or trade with particular country. It is mainly created as an outcome of unfavourable economical or political circumstances between nations (Meyer and Peng, 2016).
Rahat Continental Limited needs to consider all the trade barriers before entering into new market so that operations can run smoothly and firm can attain growth and sustainability in market.
c) Social, legal and ethical issues that requires to be taken into consideration
Many issues can face by company for establishing new venture in UK market. Rahat Continental Limited needs to evaluate some legal, ethical and social issues for proper functioning of business. For successfully operating business in other country, it is required by firm to be aware of all the laws and regulations of that place. Some legal facets should also examined by firm like information rights, governance system, property right, public welfare etc.
It has been evaluated that firm needs to employ staff who work with same mind set and culture. So, it makes difficult for business to implement changes at workplace. As Rahat Continental Limited expand their business activities in new market, culture of that place is different. Manager needs to examine market trends or situations as well as they also require to be aware of all the regulations and policies made by government so that operations and activities can be performed effectively (Narula and Verbeke, 2015).
Some social, legal and ethical issues that needs to be taken into consideration by firm are:
Employment: Policies related to employment made by UK government is entirely different from India. Firm needs take into account these policies so that good relations can be maintained with employees. It is essential to adhere all the policies so that any company may not face any issue related to employment.
Taxes: It is one of the big issue that can be face by company in expanding their business in new market. Various taxes are levied by government related to import and exports of goods and services. This may creates problem for firm. So, it is important for Rahat Continental Limited to evaluate all such components that facilitates in generating high profits by paying lower tax rates (Neelankavil, 2015).
Marketing: Market research needs to be conducted by firm so that proper knowledge can be gained regarding taste and preferences of customers as well as strategies of competitors. Various promotional tools needs to be utilized by firm in order to gain attention of large number of customers towards their organic cotton wear for infants.
Compliance and governance issues: It is expected by business to comply with federal & state safety regulations, environmental laws, monetary and fiscal reporting statues etc. In setting up business at new market, it becomes very difficult for firm to comply with such issues.
Apart from this, firm needs to use such technologies and machineries for manufacturing of clothes which do not harm environment and society. There are various issues face by company at the time when they expand their business in another market. So, it is required by them consider all such issues in order to run business operations successfully (Zander, McDougall-Covin and Rose, 2015).
d) Cross cultural issues relevant to proposed venture
Difference in culture may leads to occurrence of various conflicts among employees within organisation. There are some situations due to which various issues takes place. Some of these defined below:
- Ignorance of culture.
- Conflicts among different nationalities, religion etc.
- Different culture practices.
- Life styles or living standard of people who resides in country are different.
- Misinterpretation as well as miscommunication due to cross culture.
- Distinction in illness (Penrose, 2017).
Due to difference in cultures, attitudes, backgrounds etc. of individuals, there are more chances of occurring conflicts among individuals within firm. The firm, Rahat Continental Limited wants to expand their business in new market and in this, they may face various cross culture challenges. For instance: Western culture is more prevailed in UK market in comparison to India. In order to gain high growth and success, it is essential for firm to manage problems regarding cross culture in more effective and efficient manner. It is required by manager of company to provide effective training programme to workforce so that they are enable to deal with such issues in more effective way.