Autumn 2014 Individual Assignment
The International Environmental Assessment and Strategic Plan is a major piece of work that runs throughout the course. If you ever felt you had an international business idea (or dream) in you, this is your chance to pursue it! Even if it is unlikely that you will actively carry it through in real life, here is the opportunity to test your theories, and see if your learning can translate into a real overseas venture.
This project will cover all aspects of a real business plan for doing business offshore. As a group, you will choose a UAE-based business and an overseas country that you think will be ideal for the chosen business. The group should work as if they represent the UAE-based business that is planning to expand its operations to a new country and prepare varying strategies which make entry into this new country successful. Your success depends on accurate forecasting of the external environment and a realistic appraisal of internal company strengths and weaknesses.
Students will be formed into groups of four. Each group will be responsible for putting together an international environmental assessment of the country that you would like your UAE-based business to expand into. Based on this environmental assessment, you will then work individually towards the preparation of a detailed strategic plan consisting of your recommended strategies for a successful entry into the foreign market.
The written analysis will be a word report. This word limit is meant to be an approximate guide only. Reports will be graded on the quality of your content.
Part II (Individual) Strategic Planning 15% (50 marks)
The result of your environmental analysis will provide the input into strategic plan. There must be a clear link between the information gathered in the environmental assessment and the strategic analysis.
1. Industry Analysis (7 marks)
? After analysing the new market describe the industry environment of the company in the new market environment (Porter). Here, you need to discuss on general information of the industry, along with the competitive environment and information about labor and supply chain.
2. Target Market and Positioning (7 marks)
? Define your target consumers and the positioning of your product.
? How do you plan on marketing your product in the new country?
3. International Competitive Strategy (8 marks)
? What is your international competitive strategy?
? Why was this strategy chosen?
4. Market Entry Strategy (8 marks)
? What is your mode of entry?
? Why was this entry mode chosen?
5. International Human Resources Strategy (8 marks)
? What is your international staffing policy?
? Why was this approach chosen?
? Discuss how you plan on carrying out other human resource activities such as recruitment, selection, training, etc.?
6. Conclusion (10 marks)
? Based on the environmental assessment, make recommendations on how you plan on dealing with major cultural, economic, political and legal issues that you will face in the chosen country.
? Based on the environmental assessment and your individual strategic planning, discuss the chances of success for your firm in the chosen country.
References (in-text and end-text using the APA format) (2 marks)
Internationalization is progressively becoming imperative to the competitiveness of enterprises of all sizes. In today’s environs, both small as well as medium sized enterprises are in an enhanced position to take on an international strategy that can help them move rapidly to take advantage of cross-border activities, which offer prospects not only for the profits growth but also the exchange of information, as well as the development of competences, which reinforce the long-term effectiveness of the firm (Postiglione, 2013). This has been possible simply due to emergence of internationalization.
Internationalization has been of huge benefit to UAE. For instance, it has become a key driver of the country’s economic development. Internationalization has enhanced the formation of SMEs across UAE, which in a huge way has led to job creation, economic growth through accelerating innovation as well as promoting the full use of human, financial as well as other key country’s resources (Postiglione, 2013). The vitality of the new firm sector, which comes as a result of internationalization, has enhanced local competitiveness, which in turn has influenced the national economic performance in UAE.
United Food Company
United Food Company is an UAE based firm, established back in 1976. Primarily, the company focuses on the production as well as marketing of cooking oil, butters hydrogenated vegetable ghee as well as bakery and industrial product (AMCUAE, 2014). The company wants to export various brands of healthy products such as Nawar as well as Mumtaz, which are largely known within the Middle East region, and it feels it is the high time to introduce it to China, which is a country, with the rapid growing middle class group at the present.
United Food Company is devoted to manufacture great quality food brands so as to attain far-reaching customer contentment at the utmost opportune charge (AMCUAE, 2014). The company strives to progress unceasingly the efficacy of its excellence administration system through continuous training of its staffs, increased process expansion and enhancing machinery performance.
The company, operate in the competitive food and beverage industry in UAE, where is has achieved a great success both locally in in several international markets especially across middle East as well as North Africa. United Foods is a large sized firm with a total number of 500 employees (AMCUAE, 2014). The key goal, the firm is trying to achieve is to be the largest firm, with a capacity to supply various industrial food brands globally.
Nawar, is a pure sunflower oil, packaged in different capacities of 5litres, 10 litres as well as 20 litres, with golden color; Mumtaz, on the other hand is a pure vegetable oil, that is cholesterol free, meant for al cooking purposes. They are mainly in different sizes of 5, 10, 15 as well as 18 litres (AMCUAE, 2014). Both products are of high quality value, both suitable to be used in cooking various meals. They are edible oils, preferred in this generation that people are largely becoming health conscious. They are cholesterol free hence advocated for every cooking done both in the hotels as well as in home use.
China has an overall populace of 1.4 billion people. This equivalently represents around 2% of the total global population. The current population density is estimated to be round 145 people per square kilometer (Starr, 2014). Currently, 54% of the total Chinese population is urban. It has a median age of 35 years, which represent the most productive age of human beings. This has led to massive increase in middle class group, which is hugely becoming health conscious, thus offering a very promising market of United Food Products, that are mostly cholesterol free hence healthy.
The country, has a GDP of $12.4 trillion, which represent a massive 7.8% growth from the previous year; 2013 (Starr, 2014). The nation has a minimal inflation rate of 2.7% thus making its economy a very stable as well as conducive for external investors such as the United Food Company. With the increased rate of urbanization in the country, China has invested in substantial infrastructure development project, where it has constructed modern roads, railways as well as airports, thus making transport very efficient. The country also has a well-connected communication infrastructure, with reliable internet to accelerate the operations of business through E-commerce. This is huge boost to foreign investors such as the United Food Company, as they will be able to easily reach their target customers’ across the country. China has made assurances in all major service sets with rational changes to abolish most foreign equity restrictions. This implies that the country is largely focusing in lowering the tariffs as well as quotas that initially hindered investment in the country.
Legal and political analysis
Intellectual property rights have been recognized and are highly getting significant protection by the Chinese authorities (Starr, 2014).The country has agreed to the main international pacts on protection of intellectual property rights .this implies that there is huge protection of both local and foreign intellectual property rights.
Chinese economy is a well-balanced economy with blends essentials of socialism and capitalism (Starr, 2014). Whereas its leaders endeavor to create a communist economic system, much of its development occurred after it adopted some capitalist practices. Presently, the country economy is aligning to capitalist system of economy, thus making it a suitable country for investing.
The country initial set of rules regarding foreign investors are with time fading away, as it has begun embracing open trade policies, which encourages for free trade with other foreign countries (Postiglione, 2013). This implies, that doing business in China at the present is easier than it was a decade ago; when the government had put in place a lot of special rules and barriers concerning international venture capitalist. The republic has a stable, government, which is largely advocating for open, free economy.
Chinese families are always bigger as opposed to western familes.The families and children reaching adulthood are more mobile, and they tend to relocate to where jobs exist (Wu, 2014). This means a lot of families are largely settled in urban areas.
? Indulgence scores: in both the UAE and China, the indulgence scores are highly limited
? Orientation scores: China has a high long term orientation score, estimated to be 118; whereas in UAE; it is quiet low (Wu, 2014).
? Masculinity: In UAE, masculinity scores are relatively high, whereas it is very high in China.
? Individualism index: China has very strong collective values, whereas UAE has middle values (Wu, 2012).
? Uncertainty avoidance scores: both the Chinese culture as well as UAE culture advocates for lower uncertainty avoidance scores (Wu, 2012).
? Power index: China and UAE though from different continent, shows very high scores of power index distance; where UAE registers a 90 on the cultural scale of Hofstede’s analysis and China registering an 86 (Wu,2012).
The health food industry is one of the fastest growing business sector in China due to the emergence of large scale as well as well-educated middle class, in addition to the increase of consumer health awareness; thus it is the prime country, the united Food Company has to export its healthy, cholesterol free oils, that are in huge demand by people who are becoming more health conscious.
AMCUAE. (2014, February 4). Brands – United Foods Company UAE is a manufacturer, supplier and exporter of oil, ghee, butter and margarine brands across the Middle. Retrieved from http://www.unitedfoods.ae/brands
Postiglione, G. A. (2013). Education and social change in China: Inequality in a market economy. Armonk, NY: M.E. Sharpe.
Starr, J. B. (2014). Understanding China: A guide to China’s economy, history, and political structure. New York: Hill and Wang.
Wu, D. D. (2012). Discourses of cultural China in the globalizing age. Hong Kong: Hong Kong University Press.