The report reflects on the different situation and the challenges posed towards a company, during the expansion process. International expansion is a serious issue that requires more attention from the management, planning the process and setting up a good business module is important for the procedure to be successful. The report highlights a number of points that correlates with one another to form the setup to setting up a good business in a foreign land. Lion industry is an industry in an area that requires many planning and ethical integrated practices, the following of which will properly help in setting up the industry in a proper manner (Meyer and Peng 2016).
Lion company is a food and beverage company based in Australia and New Zealand, having the reputation of one of the finest companies to work in, this company is gradually leaning on global expansion. The expanding business position of the company has put it in a favourable situation for an international base, concentrated on serving a larger base of customers globally. In comparison to the ever-growing business spheres, the beverage and food industry takes quite a bit of time to spread its wings on a larger scale. The risks of expansion generally remain high in the case of the food and beverage industry that requires an elaborate market plan and the required strategy to expand in the international sphere (Bamiatzi et al. 2016).
Hong Kong being a market hub has attracted a potential market for the food and beverage industries in the long run. The scope of Lion to expand at such a ripe occasion draws the necessity of a market study to help in the prospective growth of the industry in the current market situation. Global expansion to Hong Kong will suffice for a more universal approach to the industry (Young et al.2014).
Saturated Market: There is a strong case of competition in the market where there remains a problem, regarding the communication system between the business and the other entities controlling the market.
Cultural Complexities: A cultural complexity remains between the Australian company and the Hong Kong people, the native have a problem in accepting the foreign market products. There remains
Foreign Laws: Expansion comes with a necessity where compliance with the international laws becomes a necessity; the foreign laws are often quite complex compared to the native land. The formation of policies remain an important part of compliance with the existing situation, whereby allowing space for entry and settlement for the industry on a whole (Gabrielsson and Gabrielsson 2013).
Political Risks: The political risk of a country is directly proportional to the business continuation in a country. The political scenario has to be studied and carefully sorted out to give space for a proper functioning of the business house on a whole.
Hong Kong’s financial situation can be easily derived from the ease of business that is present in the country structure, the financial analysis, shows a proper market where there is free competition. A presence of low taxation, proper market trade and the availability of labour make it a fine place of financial ease for the market to support. The increasing number of casinos and hotel shows the prospect of positivity that exists for the food and beverage industry to expand. The economy being a strong one yet has the implications of fluctuations that can adversely affect entry of an industry in the market. Food industry being a chief problem because the risk of growing of a food industry is quite high, reaching break-even points in years. A fluctuation of any of the business standards of the hospitality industry can result in problems for the food and beverage industry as well (Gereffi and Fernandez-Stark 2016).
Lines of recommendations are available for the expansion of the industry on a whole:
The recommendations are important to understand the situation of movement or expansion of the Lion industry to the Hong Kong region .
The requirement of different situations is required for the expansion of a business internationally. It is important to identify a proper module for the business to adopt into and make use for the new industry to enter a foreign market. The several factors relevant for the expansion issues are:
Market Strategy: The Hong Kong market is a more import based market, where 90% of the total market is dependent on the foreign beverages that are imported each day to meet market requirement. The Hong Kong market is thus a favorable place to set up a food and beverage industry that has potential for instant expansion in the market (Lechner and Gudmundsson 2014). The market research should include
Customer identification: Usually on a broad based basis the more the immediate customers, including the middle-income group should be targeted more, in comparison to the elite class that form a more niche based approach.
Marketing: Marketing in the form of advertisements, product promotion in the beverage sections, attractive offers can be good to promote the brand that is Lion.
Cultural Approach: The cultural approach is very important to identify, Hong Kong has a rich heritage in terms of food and beverage, the industry requires no less than innovative food products to attract the market. In terms of the said industry, Lion has to work on the proper requirements to satisfy the base of eager customer, having the heart for adventure for the foreign products.
Understanding the Finance: Unforeseen market situations can affect the best industries; hence, the requirement to understand the pros and cons of every situation is necessary. The taxation even though has a lenient approach cannot guarantee a positive market; fluctuations can affect the industry to bankruptcy. Understanding the costing and the finances thus becomes a requirement.
In Comparison: The food market is extremely competitive, with a base of strong import in Hong Kong, the food market, especially remains competitive. Lion industries hence, have the requirement to fit into a market having 94% of its base standing on import. Competition is a necessity but over competition is a curse, Lion industry requires to chalk out the strategies and kill of a certain amount of competition for its survival.
This model or rather steps are important to be followed for any industry that is there to it. The Hong Kong business market is a futuristic design with a lot of requirement for abiding the principles.
A specific code of ethics requires following in case of any industry, especially when the industry is a food and beverage based industry where many fluctuations regarding employees are concerned. Certain ethics like duty performance, learning, maintaining confidentiality, the rectification of errors, a continuous avoidance towards conflict of interest and all the other necessary requirements to run an industry. The expansion will require the hiring different individuals, thus a continuous approach towards the maintenance of records in proper manners. Ethics and proper approach is the necessity for maintenance of proper situation during the international expansion process (Achtenhagen, Melin and Naldi 2013).
The plan with reference to the development and creation of positions relating to international business is based on the contemporary economic theories. Such kinds of economic theories include David Ricardo’s theory of comparative advantage, Raymond Vernon’s theory of product life cycle and the eclectic theory postulated by John Dunning.
The theory of comparative advantage propounded by David Ricardo implies that the people who produce by delivering a good quality service at a lower rate (Moran 2012).
The theory of product life cycle postulated by Raymond Vernon implies that in the first stage of the life cycle of the product, the ingredients and the labor involved in the product have their origins in the place where the product was manufactured (Bilir 2014).
The theory of eclectic paradigm postulated by John Harry Dunning implies that the framework in terms of economic advantages is based on three factors that include ownership, location and internationalization (Dunning 2015).
The key events in the contemporary business world include the mass industrialization, liberalization of national economies, and economic policy of globalization in order to converge world economy as a whole and decentralization of business entities from government control that implies liberalization.
The industry with respect to food and beverage is widespread in the world. It is a booming industry with reference to the promotion of hospitality and tourism worldwide. Such boom has resulted in the sprawling up of hotels and other kinds of such lodgings. The economic theories of comparative advantage, product life cycle and eclecticism are quite useful with reference to the food and beverage industry.
Additionally, the most important events taking place in the contemporary business world such as mass industrialization, liberalization of national economies, and economic policy of globalization in order to converge world economy as a whole and decentralization of business entities from government control that implies liberalization are also influential for the food and beverage industry. Furthermore, Foreign Direct Investment also plays a crucial role with reference to the growth of food and beverage industry.
Moreover, the application of the economic theories of comparative advantage, product life cycle and eclecticism are quite beneficial in the enhancement of the food and beverage industry. The occurrence of the events in the contemporary business world such as mass industrialization, liberalization of national economies, and economic policy of globalization in order to converge world economy as a whole and decentralization of business entities from government control that implies liberalization have also resulted in the advancement of the food and beverage industry. In a nutshell, the economic theories of comparative advantage, product life cycle and eclecticism.
In addition, the events in the contemporary business world such as mass industrialization, liberalization of national economies, and economic policy of globalization and liberalization have played an important role in the shaping up of the food and beverage industry at an international level. The marketing of a product in a different country is dependent upon the economic policy of the country, the level of Foreign Direct Investment in the country, the extent of globalization in the country, the low level of business restriction imposed by the government and the consumer behavior in the country.
The food and beverage entity is the Australia based Lion which is well known for the production and marketing of food and beverage products in Australia and New Zealand. In order to expand its market in Hong Kong, it has to determine the policy with reference to Foreign Direct Investment in Hong Kong. As implied by the 2017 World Investment Report published by the United Nations Conference on Trade and Development, Hong Kong in the year 2016 stood fourth in the world as far as Foreign Direct Investment is concerned (Moran 2012). Furthermore, factors such as the taxation system, geographical location, political stability, efficient economic system and open floodgates for entry of foreign conglomerates are quite attractive for establishment of businesses in Hong Kong.
Additionally, Hong Kong has bilateral agreements with Australia and New Zealand with reference to Foreign Direct Investment. This further implies that the food and beverage entity ‘Lion’ would not face any major challenge with reference to setting up of their operations in Hong Kong. However, there are challenges faced by any business entity with reference to setting up of operations in Hong Kong. Such kinds of challenges include high price of real estate with reference to buying and renting of areas for office space, heavy emphasis over the financial sector of Hong Kong. Additionally, such kinds of challenges also include the future of Hong Kong with reference to the question regarding whether it would continue to remain an autonomous region of the People’s Republic of China or would it merge with the People’s Republic of China.
Furthermore, the salaries for employees in business entities in Hong Kong, especially the multinational companies are quite higher in comparison to the Asian economic giants such as India and China (Groh and Wich 2012). Despite such kinds of challenges, Hong Kong is still deemed a haven for multinational companies to set up their businesses given its liberal policy of Foreign Direct Investment and low rate of taxation for the operations of such businesses (Oxelheim 2012). Furthermore, till now no controversy has been taken place with reference to the setting up of business by a multinational company in Hong Kong. Furthermore, the economic theories of comparative advantage, product life cycle and eclecticism would be extremely beneficial with reference to the expansion of Australia based ‘Lion’ in Hong Kong since they lay emphasis over the economic policy of globalization, liberalization and privatization.
This further gives more room to Foreign Direct Investment and widening the scope with reference to the opening of floodgates for the entry of multinational entities in the local market in order to strengthen the national economy by setting up business operations through investment in the country in question. Moreover, Hong Kong has carved a niche for itself through an incredible Export-Import (EXIM) policy thereby being one of the impeccable economies of the world and a global business hub for the multinational companies of the world (Naughton 2012).
Conclusion:
The report reflects that the entry into foreign territory is very difficult, if in any case planning is not done. Proper market research, a thirst for expansion in nexus with many other factors plays important roles finally bring about the entry of the industry in the foreign sphere. Lion industry being a traditional industry in the beverage industry has a lot of playing factors involved in their expansion process. The recommendations in connection with a proper business research can work wonders for the food company. It can be easily stated that the requirement of Lion Company’s expansion completely depends upon the requirement of understanding the beverage industry on a whole. The industry is generally a food based one, thus the marketing factors, understanding the shortfalls of the company and formulating policies is required, if Lion company looks to set up a base properly in Hong Kong.
Reference:
Achtenhagen, L., Melin, L. and Naldi, L., 2013. Dynamics of business models–strategizing, critical capabilities and activities for sustained value creation. Long range planning, 46(6), pp.427-442.
Bamiatzi, V., Bozos, K., Cavusgil, S.T. and Hult, G.T.M., 2016. Revisiting the firm, industry, and country effects on profitability under recessionary and expansion periods: A multilevel analysis. Strategic Management Journal, 37(7), pp.1448-1471.
Bilir, L.K., 2014. Patent laws, product life-cycle lengths, and multinational activity. The American Economic Review, 104(7), pp.1979-2013.
Dunning, J.H., 2015. Reappraising the eclectic paradigm in an age of alliance capitalism. In The Eclectic Paradigm (pp. 111-142). Palgrave Macmillan UK.
Gabrielsson, P. and Gabrielsson, M., 2013. A dynamic model of growth phases and survival in international business-to-business new ventures: the moderating effect of decision-making logic. Industrial Marketing Management, 42(8), pp.1357-1373.
Gereffi, G. and Fernandez-Stark, K., 2016. Global value chain analysis: a primer.
Groh, A.P. and Wich, M., 2012. Emerging economies’ attraction of foreign direct investment. Emerging Markets Review, 13(2), pp.210-229.
Lechner, C. and Gudmundsson, S.V., 2014. Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal, 32(1), pp.36-60.
Meyer, K. and Peng, M.W., 2016. International business. Cengage Learning.
Moran, T., 2012. Foreign direct investment. The Wiley-Blackwell Encyclopedia of Globalization.
Naughton, B. ed., 2012. The China circle: Economics and technology in the PRC, Taiwan, and Hong Kong. Brookings Institution Press.
Oka, T., 2017. The New Theory of International Values in the Context of the Ricardo-Sraffian Theory of Value and Distribution. In A New Construction of Ricardian Theory of International Values (pp. 77-98). Springer Singapore.
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