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International business is considered as an activity where the trade of goods, services as well as capital across the borders at the global level. The report is based on Greggs Plc. that is a bakery chain in the UK and selling their sweet products to a wide range of customers. The report is about the international business where Greggs Plc. is planning to expand its business to Pakistan and need to consider many positive and negative things that can affect the activities of the business. It includes the description of the business environment and the key elements of the international business, which can affect the firm. Further, it also helps to understand the recent patterns of international trade and investment (Cherunilam, 2020). Moreover, the report also describes the market selection techniques that help Greggs Plc. to their application in international business. At last, it covers methods of international market entry along with operational and managerial decisions for entering in the new marketplace. It also includes discussion about the business risks in the international market and how to mitigate those risks.
Business Environment
Key elements of the international environment that affect activities of the business (STEEPLED Analysis)
In the context of Greggs Plc. where the company is planning to expand their business to Pakistan, but the international environment affect the business. However, the growth in international trade allows Greggs Plc. to explore the new market in which there is no guarantee of success. The management of Greggs Plc. have no control on the external environment. Therefore, it is important to research about the environment of Pakistan before the expansion of operations. In this, the STEEPLED analysis of the target country helps to analyze some factors which an affect the activities of Greggs Plc.at the time of expansion.
The STEEPLED analysis is a technique that is used to analyze the rationality as well as the validity of the business with the targets and strategies of Greggs Plc. This analysis is applicable to the business at the time of monitoring, reporting the financial activities of the business.
Social-In this, Greggs Plc. need to make appropriate research on the cultural changes in Pakistan for judging the trends and patters of the country. The social factors mainly consider the growth of the population, changes in lifestyle, competition as well as the standards and diversity. It is important to consider the social factors as it has huge impact on the activities of business.
Technological-Technology has advanced around the globe and the changes in the methods of production give new opportunities to the Greggs Plc. The technological factor mainly lower the risks in the new industry f Pakistan and increase the efficiency of the production and decisions ofoutsourcing.
Economic- It is important for Greggs Plc. for understanding the present inflation level of Pakistan along with the growth rate. This factor affect the purchasing capacity of the customer as well as the cost of the business (Paltrinieri, 2020).
Environmental- the environmental factors mainly helps to assess the negative and positive impact of the environment on the business.however, the positive aspect of Greggs Plc. includes that the positive environment impact is about the process wasting where the pollution is considered as a negative impact from the business.
Political- There are several policies along with some alterations that are related to the legal, social and economic issues However, the intervention of the Pakistan government authorities such as increase in the interest can directly affect the demand patterns of Greggs Plc. The political factors including tax policies, regulation related to the environment need to consider for the establishment of business in international marketplace.
Legal- The management of Greggs Plc. need to check rules and regulation for completing the compliance process in Pakistan to avoid legal issues while doing business. Thus, it helps in determining the decisions or actions taken by the government in favor of business and the country.
Ethical-It is an important to consider the social values for Greggs Plc. to enter in new marketplace that understand the behavior of the organization. There are different factors in ethical values which is beneficial to understand and helpful to run the business with moral values.
Demographics- Greggs Plc. need to consider detailed analysis of the demographic interect of the brands and products. It helps them to consider the type of population for the selling of their products in Pakistan.
Evaluate the recent pattern of international trade and investment
In the present world, the patter of international rend has changed along with the changes in the services with some digitalization in the trade. To consider the relationship between the UK and Pakistan for managing international trade there are dramatic changes in the flow of investment and trade. Further, the investment in Pakistan is considered as a publication is organized by KPMG Pakistan to give information about certain topic regarding doing business by Greggs Plc. in Pakistan. The global growth of the UK Company Greggs Plc. is mainly accompanied by the help of changes in the pattern of trade that shows the running changes in the structure of the economy (Collinson, Narula, and Rugman, 2016).
In addition to this, in the present time the COVID-19 is a major humanitarian crisis on a global level, which can affect the international trade pattern and it, continue to affect businesses. Many consequences can be for many years and it has an immediate effect on the flows of investments. However, Greggs Plc. had to face issues while setting up business overseas in the pandemic as it is essential to have increased in sustainability as well as it is based the capacity to take certain benefits for the economic growth. The cooperation would be crucial as it requires sustainable development and it highly depends on the global policy that can affect the market of Pakistan. The recent patterns include that the policy must be monitor on a global level and proper documentation of the activities. The analysis of the various international private sector shows that there are many companies, which failed, enhance sustainability, and adopt the services as per the objectives. COVID-19 is also can be a game changer for the Greggs Plc. and the plans for expansion business on an international level in Pakistan. It includes the international production aspect, which considers the shorter value chains, high level of concentration that gives a decline in the investment and productive assets.
Furthermore, there is slow down in the pace of treaty-making due to the COVID Pandemic and the company need to negotiate with the investment treaties that help to further procedure (Cantwell, 2017). Although, the recent pattern of international trade shows that there is a slow down in the export and import of products, which is considered as a negative impact on the companies.
Market selection techniques and their application in international business
The starting of business in Pakistan market is quite complicated and complex procedure for Greggs Plc. as there are different perception of people in international market. It includes certain decisions related to theissues, whichare faced by Greggs in order to understand the market selection techniques and its implementation in the internationalbusiness of Pakistan. It is important for Greggs Plc. to articulate the reason behind the entering into the Pakistan market for the expansion. In addition to this, the consequences of market technique helps to analyze the influence of Greggs Plc. There are certain market techniques, whichneeded to be adopted by Greggs Plc. for expanding the business in Pakistan (Nambisan, Zahra, and Luo,2019).
Figure 1: Market Selection Techniques
International Marketing Objectives: The international marketing objectives is considered as a first step for market selection technique and it helps to analyse theexporting market of Pakistan and exporting the marketing objectives of Greggs Plc. The marketing objectives need to be implement in the international business for considering the market technique for the objectives.
Parameters for Selection: It is important for Greggs Plc. to lay down the parametersand analyse the criteria for Greggs Plc. in order to manage the evaluation and selection of the market in Pakistan. However, the varied parameters need to consider including firm resources, market situation along with competition while implementation in the international business activities.
Preliminary Screening: This is other technique which can be utilized by Greggs Plc. to eliminate not enough potential market. However, the parameters which can be use mainly changes from product to product by Greggs Plc. In this, the size of the population, income as well as the structure of economy of Pakistan and there are certain political conditions that can be used to determine the international business activities (Cavusgil, and et.al.,2020).
Short Listing of Market: In order to short list of market, there is requirement to enable the preliminary for eliminating not required consideration at the outlets. However, it can be implemented by Greggs Plc. to screenthe marker by getting information which are used at the time of screening.
Evaluation and Selection: Now, the evaluation can be done with the help of cost-benefit analysis and probability that is based on the short listed market by Greggs Plc. However, it can be ranked as per the activities of attractiveness. Thus, this technique can be implement by Greggs Plc. at the time of product launch by considering the resources of company and external environment of international business.
Test Marketing: The test marketing technique is considered as a testing of activities on a small level by launching of products in the market of Pakistan. It helps Greggs Plc. to get a feedback to the different producer regarding the market and assess the response of consumer in an individual market. Thus, it can be implemented on some specific area for testing success and it helps the company to take their production procedure to the next level (Doh, and et.al., 2017).
Commercial Production: In this, the Greggs Plc. go with the mass production in the market of Pakistan and introduce their products to the wide range of customers. This can be implemented by Greggs Plc. while starting the market procedure.
Therefore, the market selection techniques can be used by Greggs Plc. to analyse the market and implement in the Pakistan business which can be beneficial for the development and growth of the business.
Intended strategy
Select methods of international market entry
In order to explore some methods of international market entry for Greggs Plc. to enter in the Pakistan market as it is important to know about the different possibilities that help to consider the system.
Type of Entry
Advantages
Disadvantages
Exporting
Low-risk and fast entry
It has a negative environmental impact of transportation.
Partnering and Strategic Alliance
Requirement of investment with reduced cost
Higher cost and the issues of integration between two different culture
Licensing
Low risk with low cost
In this, licenseconsidered as a competitor and there is less control.
Acquisition
Established operations with fast entry
There is high cost and integration problems with the home office
Wholly owned subsidiary
Need to know local market with maximum control
There is high risk ad slow entry because of setup time.
Source-Internet
Exporting- It is one of the easiest way for Greggs Plc. to enter into the market of Pakistan and it begins with the expansion by using this method. One of the advantage for Greggs Plc. is that they can avoid expenditure of operations in the new place (Shahbaz, and et.al.,2020).However, Greggs need to concentrate on the packaging, as well as pricing strategy for the new market. While, the disadvantage includes cost of transportation that is high and it can effect negatively on the environment.
Partnering and Strategic Alliance-This is considered as another way for Greggs to enter a new market of Pakistan through the strategic alliance that includes a contractual agreement between the enterprises and include certain parties for achieving common goal. For instance, Greggs Plc. form a strategic alliance with international firm of Pakistan to offer products in Pakistan. It allows Greggs Plc. to share the level of risks and resources to enter the new market. The alliances mainly proves to bebeneficial as it enhances marketing efforts, share of technology and improvement in products. Further, it is important for the entrepreneurial firms, which need some investments for the business (Teniwut, Betaubun, and Djatna, 2017).
Acquisition-It is other method by which the aim of Greggs Plc. to enter into the international market of Pakistancan be achieved. It can be accomplished by controlling other business by buying the stocks and by paying the price of purchasing the stocks. This can be appealing for Greggs Plc. business and it can establish an access to the new market.
Licensing-In the context of entering new market for Greggs Plc. it is important to consider the licensing agreements with the Pakistan government. It allows them to sell their products by using intellectual property in return with royalty fees. It will permits Greggs Plc. in Pakistan to use the stuff of the licensor. There is low risks and reduction in the cost for the management of Greggs Plc. where the strategies of licensing mainly control and provide valuable returns to the business.
Wholly owned subsidiary-It is considered as a procedure of developing a new venture in Pakistan that is quite complex as well as costly. However, it has a maximum control with Greggs Plc. and provide maximum returns to the business. It is essential for Greggs to acquire appropriate knowledge along with expertise of new market as compared to the competitive market.
All of these are some of the international market entry methods for Greggs Plc. that helps them to setup the business. It is important to manage the organisational development of Greggs Plc., which is crucial for dealing the activities of business in Pakistan. Thus, the recent patterns of international trade and investment is change that is a huge aspect while dealing in international business activities (Georgiadou, and et.al.,2019). Further, Greggs Plc. need to face many challenges in the process of their foreign investment and follow proper guidelines as per the regulations of Pakistan. They need to manage proper strategies for dealing with the policies of another country which is considered as a significant value as per the management.
Operational and Managerial design
The business relationship is an important part of doing international business, as it is a formal activity to support and understand the business activities of each other. There is a requirement to have proper relations between Pakistan and the UK where Greggs Plc. want to expand their business and increase in sales and profit.
In this, to expand the business by Greggs Plc. in Pakistan they have to look after the marketing and sales department at starting time that helps to analyze the low sales. However, the control over the expanded business is in the hands of Greggs Plc. only and their home-based office must be in the UK where they keep an eye on the overseas activities. In addition to this, the role of the human resource department is mainly confined for the planning and recruiting the employees for export where they give training as well as compensation. All of the HR activities in international business are managed by the home country itself along with the marketing department by taking some advice from the HR department (Rahanu, and Ross, 2019).
The foreign operations of the Greggs Plc. the business analyst that there are many growth opportunities and development of international division that can be handled with the help of international operations of Greggs Plc. however, all of the activities are directly reported to the CEO as well as varied coordinators who monitor all of the foreign activities. The subsidiaries also report to the international division and give their formal reporting to the financial departments. Greggs Plc. needs to cooperate with the HR department of Pakistan to implement the process of training and development activities for learning the processing of doing business. The organisation need to ensure that all level of people gets proper attention towards offering services and implement a unified approach to international operations. There are some points which are required to consider for an organisational and managerial design for the trading relationship mainly includes:
The organisational design needs to be considered as a self-reflection of Greggs Plc. by setting some bold direction and motivate the people towards achieving the objective. They need to understand the priority of the activities by following rules and regulation to manage trade relationships. The appropriate framework which helps to decode the required elements where the decisions of people are based on how people respond to the performance. It is important to consider the organisational policy of the international business and employees must learn circumstances for getting success.
Further, Greggs Plc. make appropriate use of top talent while doing overseas business where the personality and capabilities of team members help to create an attractive design for the development and growth of the business. The managerial and technical skills of employees help to make sure the success of the collaboration as well as the required empowerment is helpful for the growth of the business. The business in Pakistan required more technical skills due to the changes in the level of customers. Thus, it is important to ensure the relationship between competences and leadership skills. It helps to organise the business based on the use of innovation and response to the alterations in the marketplace.
Although, the control over the activities of a business in Pakistan is considered as a managerial aspect for the trading relationship as it is important to manage control for reducing the scarcities and constraints in business. The rules and regulations are needed to be followed as per the other countries and manage the activities as per the demand of customers (An1a, and et.al., 2016).
The designing of the organisation is easy for people to manage the accountability of the work with clear decisions. The organisational and managerial designing of work by Greggs Plc. need to consider important for dealing with the overseas activities. It helps in managing the business in Pakistan with some strategies and goals for covering the marketplace.
Therefore, the organisational and managerial design by Greggs Plc. helps to manage the trading relationship that can be beneficial for the growth of the business. The strength is an essential point for dealing with the changes in the environment and it creates a customer-oriented business. Thus, the employees follow certain rules to enhance the business activities which is important for dealing with the environmental impact in the other country.
Managing international business risks
The international business not only include risks but it also cover the business growth risks like intellectual property risks, currency, ethics as well as credit. The management of Greggs Plc. analyze that the major international business risks includes the political as well as foreign exchange risks. Greggs Plc. has their own investment opportunities before the expansion and need to be aware about the additional risk for the foreign trade market. However, the risks can obstruct the running of Greggs Plc. and they required to consider appropriate measures for limiting the effects. There are some international business risks with its mitigation are describe as follow:
Figure 2: International Business Risks
Cross-Cultural Risk- This situation occurs when there might be possibilities of miscommunication that put some human at stake. In context of Greggs Plc., the risk includes the differences of customs, religion along with the lifestyle and mindset. These can have impact on the lifestyle of employees and their activities that reduces the performance and it has impact on the shopping patterns of the different types of buyers. It can be manage by providing guidance to the employees before the establishment of business in Pakistan. Thus, it can be easier to mitigate the risks and providing better products and services to the customers.
Country and Political Risks- This risks include non-tariff barriers and sale of some products in Pakistan by Greggs Plc. However,some of the countries which have banned and the products which can affect the health. Further, these kind of risk never be control like sanction and need to prepare for solving the issues.
Credit Risks- In case of Greggs Plc. while doing business with Pakistan wherethecredit risk is associated with amount of not collecting the receivable. There are different ways where the Greggs Plc. can guard the activities against the risks at the time of expansion of business. In addition to this, the risk can be managed by Greggs Plc. by the commitment that is issued by financial sector where the institution agreed to the amount for products in return for the delivery in a given time period.
Intellectual property Risk- The risk includes the third party where they make illegal use of information of a property, which affect the products, and services of Greggs Plc.ina direct or indirect manner.
Foreign Exchange Risk- This risk is mainly concerns about the account payable as well as receivable for the contracts and need to take some actions for the dealings by Greggs Plc.the foreign exchange rates are mainly changes and Greggs Plc. forced to make some conversions of the funds, whichare generated at low rates in Pakistan. In order to mitigate the risks, the Greggs Plc. need to analyze the foreign exchange risks for framing some actual policy. Thus, it is important to consider the different tools that are available for hedging the risk and analyze the comparative analysis based on the regular activities.
Ethical Risks- It is essential for Greggs Plc. to manage the high ethical standards while offering their products to Pakistan due to the international business activities. However, the social conditions as well as customs are different in Pakistan and it is important to be vigilant. It is essential for Greggs Plc. that the foreign suppliers consider the values and policies for operating the business.
Commercial Risks- The commercial risks includes the loss or failure from the executedbusiness strategies and need to understand the policies for Greggs Plc. to be followed in Pakistan (Zhu, and Sardana, 2020). The managers make bad choice in the area of business selection with creating features of product. In the market of Pakistan, terminating the partners of business, which can costly because cost is high due to the regulations.
Conclusion
From the above study, it can be concluded that international business is challenging for Greggs Plc. and need to consider many points for expanding business in Pakistan. However, it provides detailed about the different factors affecting the activities of international business expansion, which is important to consider the growth of the business. It gives an idea about the different methods of international market entry that helps to deal with the activities in other countries. Along with this, there is an assessment of international business risks, which are analyzed and need to provide aspects for mitigating the risks. It helps to deal with the issues in the outside market and consider the demand of people and offering products and services. Greggs Plc. need to manage the operational and managerial design for the setup of their expanded business and consider the changes according to the requirements of the business. Thus, the company follow certain rules and policies of the Pakistan government and make appropriate changes as per the demand of customers.
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