International Business Expansion: Recommendations For An Organization

Assignment Focus

Expanding business in the current market is not simple for any organization, the level of complexities has increased drastically and that is why the approach strategies have been modified. The main focus of the report is going to be imposed on market expansion and in tis regard different models and strategies will be used. The aim of the report is to provide an outline of approach for Lion Nathan Australia, the reputed beverage company, to have a market in Indian grounds. The flourishing economy and high demand of beverages is the main reason why India is selected as a market for business expansion.

Company Background

Lion Nathan Australia is one of the prolific beverage companies, which mainly operates in Australia and New Zealand. Apart from this it is operating in thirty global cities some of them are Hong Kong, Singapore, Thailand and China (Lionco.com., 2018). It was found in October 2009 and initially it was named Lion Nathan National Foods.

The company changed the name in the year of 2011, because National Foods became a Melbourne based subsidiary company that majorly focused on dairy goods and drinks under the name of Lion Dairy and Drinks. The company has a diverse product line up and the prior focus has been given on beer, RTDs, juice, wine, cider, and spirits. Apart from this, the company has a good line up of dairy products like milks, yogurts, cheese and soy. The company has 7000 employees and the number is constantly increasing.

The services of the company do not only include selling beverages to the potential customers. The company provides health related knowledge to the customers who are seeking help in the relative field. Lion provides services to school canteens and gives children a healthy diet, which they need to have a healthy lifestyle. Apart from this BMI calculator, Calcium calculator and health balance checker are also incorporated in their service list. The yearly turnover of the company in 2016 was $694.3m which signifies a strong market hold in the Australian grounds (Lionco.com., 2018).

Host country

India is an attractive place for investment for any foreign company. There are reasons and some of them are low labor cost, large customer base, low production cost, availability of logistics services, high amount of FDI (foreign direct investment), acceptance of government, acceptance of new products etc. these are the factors which helps in gripping a newly penetrated market. Lion will have a significant development in India, because the economy supports the rate structure they have.

Home Country Organisation

The country supports globalization and in this aspect, the company will get appreciation from the political parties. Apart from this, the company will have a skilled workforce, which is going to minimize the cost. The recently published Ease of doing business index shows that India is in the top 100 countries in the world (Businesstoday.in, 2018). The last year ranking was 130 and in 2018, it has become 100. It can be considered as a major improvement in every aspect. These ratings and conditions of the market is a good sign that India can be a fruitful ground for Lion to make business.

PESTLE Analysis

Political	The political factors of India play a vital role in developing the business environment. Most of the times, the political leaders are well aware of the terms that are oriented with extending business (Charfeddine and Mrabet, 2017). To understand the factors of the country, Lion has to follow the political environment of India. Indian political situation is showing affirmative attitude to the businesspersons, and in this context, they have normalized the norms related to the business establishment. They are also promoting FDI, and this is gaining them profit from the outer countries as well. It can be further deduced that the factors that are related to the business establishment are flexible. The political environment also supports globalized business, these are some very intriguing facts for foreign investor companies and in this manner and Lion Nathan is going to get the upper hand than others in the market.
Economic	The economic factors of India make a vast contribution while a company newly set up its roots in the grounds of India. There are many factors, which the economy of India influences, and among them, an essential factor is GDP(Saleem, 2017). Lion needs to focus on those specific regions where the Indian government makes more investment to develop its economic condition. Depending upon the economy, Lion should introduce its products, and in this manner, they are going to get reasonable cost management and sales rate in the current environment. At the same time, the price of AUD also increase in compare to Indian rupees so that it will provide the organization with higher competitive advantages ( Refers to Appendix 1)
Social	The population of India is increasing rapidly, and that is one of the significant opportunities for this organization to expand their business in this emerging market (Refers to Appendix 2). Identification of social factor is essential for all the business organization during expand the business in foreign countries. A social factor can hamper the overall sales volume as well as the business of an organization so that majority of organization research about local communities during trade before business expansion (Kannothra, Manning and Haigh, 2018). There are different factors requires to achieve the success for that reason it is essential for Lion Nathan Australia to research the behavior of local community people such as their trends, buying behaviors, feeding habits before expanding the business in India. India is the highly religious country for that reason the objection of local people can hamper the overall market, and that will affect the overall financial position of this organization (Hiremath et al., 2018). The organization needs to collect he no objection certificates from the people of the local community as well as the government for opening the shop’s different region. After implementation, the organization needs to communicate with all the local people to build good relation, and it will help the organization to grab the attention of customer as well as increase sales volume.
Technological	Identification of technological factors also important for all the business organization because it will provide the organization higher competitive advantages in operating market leads to improve overall financial position and brand image. For expanding the business in another mark, a sizeable technological implementation is needed. If the local suppliers have this technology in reasonable rate then it will be easier for the organization to continue its business otherwise it will also increase the overall cost of the organization leads to reduce profit percentage (Kew and Stredwick, 2017). By research, it has been identified that India is an emerging country and the overall technology of India also developed in comparison to previous years so that Lion Nathan Australia will get all the required materials from Indian suppliers at a reasonable price so that it will hell the organization to maintain the business effectively. On the other hand, the use of social networking and another technological advantage also helps this organization to triggers its sales volume by grabbing the attention of the public.
Legal	Lion Nathan Australia needs to follow all the rules regulation and taxation policies of India to continue its business as well as avoid the legal issues. Every country has their fiscal policies so that the organization also needs to identify the fiscal policies of India before entering this country. Based on the qualitative study, it has been recognized that the fiscal policies and overall regulation of India are perfect for this business and government of India also supports the foreign investors to continue the operations smoothly (Hiremath et al., 2018). Apart from that the tax rate of India government generally depends on the type of business, and it has been identified that in case of alcoholic beverage, the tax rate is very high but is not a problem for the organization. The organization needs to set the pricing strategy by overall expenses.
Environmental	A good environment is needed to continue the operation perfectly. For that reason, the organization needs to research the current environment of the country. Different environmental factors such as lack of water transport and other resources can increase the travel expenses of this organization leads to hampers profitability of Lion Nathan Australia. Understanding the current environment of India is very tough for the organization so that company needs to enter jointly with other local organization and that generally helps the origination to understand the current environment and competition in India (Claybaugh, Ramamurthy and Haseman, 2017). This company also identifies the threats of existing company, and it is vital to implement instant policies to gain more competitive advantages in the Indian operating market.

STPD Customer profile

Segmentation- among the marketing strategies it is important to make sure that a company is taking the best kind of methodologies to have better customer segmentation. Companies can never target every person as a customer and in this regard, they have to set specific people as customers. The customers have to be targeted depending upon the products that are being manufactured. In case of Lion, the most reliable option to go for is the adults of India, who are legally able to take alcohol and other beverages. Segmentation should be done on the basis of race, age, necessity and demand of the customers.

Targeting- Proper evaluation is going to help in a proficient manner and in this process, the company will find legible targets from the selected groups. There are different kind of groups selected on the basis of products and depending upon the necessity the service providing organization has to proceed. Selecting one organization or going for different variables depend on the needs of the company. Lion should target the adults who are more enthusiastic to take on beverages.

Differentiation- Differentiation is a process of differencing a particular product for the customers who are targeted in the above section. The most of the times differentiation depends on the needs of the customers and in this manner a better kind of relationship develops with the company. The company gains a stable place in the minds of the customers.

Positioning- Positioning the products is related to having a good kind of idea of what to be enlisted in the selling outlets. In this manner, Lion can have better place in the customer minds and the company will gain more profit than other companies will.  In this manner, the company will get a proper place in the mind of the customers and they will gain more revenue from it.

Host country

Theory/Model

IB Expansion Model 

The International Baccalaureate expansion model generally based on the growth of business and it generally provides detail information with a view to the current condition of economic globalization and other important factors of market expansion. This model also shows the different stages of organizational growth such as the traditional society, preliminary conditions for takeoff, organizational take off, drive to product maturity, and high mass consumption.

This model also indicates the market entry modes such as joint venture mode, exporting, licensing, etc. this particular model also helps management to identify the best opportunities of the foreign market. The launch of Own subsidiary is the best option for this organization to enter in India. This process is also known as Greenfield ventures (Oh and Oetzel, 2017).

The major advantages of this entry modes are to gain better knowledge with a view to local markets ad it provides the organization maximum control leads to increase sales volume as well as financial profitability. The investment cost is very high and needs time to complete the overall setup, but wholly own subsidiaries in India will provide the organization with different competitive advantages lead to improving brand value as well as brand recognition. At the same time, the risk of this market entry is also high for that reason organization needs to implement strategic planning during the internationalization process.

Marketing Mix (4ps)

In order to have better idea on how to approach for a particular kind of market it is essential for Lion to have an analytical detail of the market. In this aspect, the 4ps marketing mix can be taken under consideration.

Product In case of Lion, their product is the beverages they are planning to serve in the Indian market. In this context, the product can be anything and the services offered by Lion can be considered as their products. The life cycle of their product has to be capitalized well in order to have better kind of market grip in a competitive market like India.	Place Selling place of the product plays an important role in gathering revenue from the market. Distribution system has to be very accurate and in this context, the management of Lion has to analyze the market well in order to have idea of their product-selling place. According to the cost structure and income of people, Lion should place the products in different parts of the market.
Promotion Promotion plays a vital role in gaining market revenue and in this aspect; Lion has to make sure that they are promoting their products well. In this case, advertising, exhibition and other aspects has to be considered properly. Promoting properly is going to help in finding a proper kind of growth in sales rate in the Indian market.	Price A Company must consider the GDP of the country where it is planning to make business. In this regard, it is essential to have better knowledge of the cost structure of them. If the beverages are rated higher than the current market standings then it is impossible for the company to have better kind of revenue generation.

Key success factor

In the sustainability report of Lion Nathan Australia it is seen that the management is focusing on spreading the boarders. Apart from that, the Balanced Business Strategy of Lion is a big factor, which is contributing to its success (Lionco.com, 2018). The company uses different types of Alignment Models that provide a strong hold on the market. The company promotes healthy living and drinking culture which is often absent in other companies’ approach strategies. The sustainability report provides proof that the company has a strong economic background, which is necessary to attract potential investors. These facts are capable enough to attract more customers and investors in a highly competitive market.

Risk Management

Indian market is a risk prone flourishing market, which can provide a reasonable amount of ROI (Return on Investment) if invested carefully, Risks like strike, government change, legislation, taxation system turn over are also a part of the country (Cole et al., 2017). Apart from this, sudden ban on alcohol is also a big risk for the company. In this regard, Lion has to understand the need of the people and the reasons why they are facing these issues. The company has to take rational approach in order to mitigate the risks to gain profit from Indian market. Providing adequate services will definitely minimize the chances of being eradicated from the market.

PESTLE analysis

Evaluation and control

In order to minimize the risks the company has to think according to the market risks. Understanding the needs of the employees will help in minimizing the possibility of employee dissatisfaction oriented risks. The company has to build a good political relationship with the leaders so that they can have some relaxation during their business. Lion has to use necessary machines to avoid accidents in the working place. Providing employee satisfaction will increase the market capitalization rate and in this manner, Lion will be customer satisfying employee friendly work place (Kristina and Wijaya, 2017). However, sudden political change cannot be overlooked and in these cases, the company has to take the most authentic step to nullify the unconstructive effects.

Conclusion

From the above analysis, it can be assured that the company Lion can have a better market capitalization in India. It can be concluded that the management needs to focus more on the aspects that are related with market analysis. The market analysis is going to provide a better and proficient knowledge of what to be done and what not. It can be further deduced that the company has a possibility of gaining profit if they have a good focus on the aims and objectives of them.

Reference lists

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