Global Business In Context(BMG705-30744)

Analysis upon
CafePod Coffee Co.

Submitted To: Mr. Isaac Osei-Kwame

Ulster University

London

Submitted By: Bipana Yonjan

Student No.: 10216116

 Table of Contents
Section 1: Introduction....................................................................................................................1

Organization Background............................................................................................................1

Justification of expansion decision..............................................................................................1

Section 2: Environmental factors and their influence......................................................................1

2.1: Australian Market size......................................................................................................1

2.2: Use of technologies..........................................................................................................4

2.3: Infrastructure quality........................................................................................................6

Section 3: Entry mode evaluation....................................................................................................7

Section 4: Recommendations..........................................................................................................8

Section 5: Conclusion......................................................................................................................9

References......................................................................................................................................10
 List of Figures
Figure 1: Gross Domestic Product of Australia till 2022................................................................2
Figure 2: GDP of the country from 1987 and projection till 2027..................................................3
Figure 3: Domestic consumption of coffee in Australia till 2022...................................................4
Figure 4: The technology sector of Australia and its contribution to GDP.....................................5
Figure 5: Infrastructure market overview – Australia.....................................................................6
Section 1: Introduction
A global business is a company that focuses on operating the facilities and activities in parts of
the country it is classified that international business is further been divided into three main
categories such as foreign direct investment known as FDI, international trade, and international
finance (Peng, 2022).

Organization Background
The organization that has been selected in this assessment is CafePod Coffee Co. which operates
within the UK and has the aim that they run with a single-minded ambition and a competitive
spirit (cafepod, 2022). The organization was founded in 2011 and become one of the best at
selling coffee innovation is the key for the brand with this they have around $7 Million of total
revenue and have 25 employees working as an SME. The Headquarters is in Greater London,
UK (ZoomInfo, 2022). The statement of the company is clear that quality is everything that
matters to them and above craftsmanship is excellent that states that coffee is more than white or
black.

Justification of expansion decision

Justification of the expansion decision within Australia is best suited as the country’s coffee
culture is fast and developing and 88% like instant coffee to some extent and 1.91kg is consumed
per person (Kate,2022). The assessment is based on determining the factors which are needed for
the organization while having internationalization of the business.

Section 2: Environmental factors and their influence

The business must consider environmental factors especially while entering into a market base as
it helps them in having a better insight into the business and has a positive impact on the
internationalization process (Altman, Larsen and Buchanan, 2018). Here are the three factors in
context with the chosen organization.

2.1: Australian Market size

The market size of the country is one of the key determinants that escort to influence foreign
direct investment inflows. It could also be said that dominant views that a large market of the

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host nation attracts a superior quantum of FDI (Kadi, 2018). In the year 2022, revenues of the
coffee segment have amounted to US$6.12bn, and it has also been predicted that it will grow
annually by 6.60% by the year 2025 and more in Australia (Statista, 2022). If the market size of
the country is not steady, then there are chances that it might generate an impact on the FDI and
also affect the operational activities of the selected business. At the current time, there are about
2,929 café and coffee shops that are operating within Australia. The market for the café and
coffee has been enhancing by 4.5% per year on average over five years (IBIS, 2022). It has also
been assessed that there is raised competition in coffee café and it might generate a direct impact
on the business expansion process since a high level of competition can impact growth potential
and profit.
Australia is a highly developed country with a mixed-market economy, and the 14th-largest
nation by nominal GDP indicating that an organization having an idea of setting up the business
is an excellent choice as the country is developed and advanced.

Figure 1: Gross Domestic Product of Australia till 2022

(Source: Trading Economics, 2022)
The Gross Domestic Product within Australia was worth 1542.66 billion US dollars in 2021
representing 1.15 % of the world economy(Trading Economics, 2022). Hence, it is identified
that growth in Australia is at a higher pace. This provides the companies with an excellent
chance of business growth so that the projected economy of the country can rise positively.

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 Figure 2: GDP of the country from 1987 and projection till 2027
(Source: Statista, 2022)
The statistic depicts Australia’s GDP which is growing steadily and the country's economy is the
key factor. Almost half of the 23 million residents of Australia are employed helping carry the
largest economy worldwide. The current GDP of the country is 1.7 trillion US dollars with
higher life expectancy and quite a stable fertility rate (Statista, 2022). Examining the market size
through GDP which affects FDI, creates a positive influence on the business and boosts the
presence of the firm as well.
Now, having an overview of Australia’s domestic consumption of coffee from 2014 to the
financial year 2022, it reached over 2125 for thousand 60-kilogram bags and the data show that it
steadily increased till the latest results (Statista, 2022).

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 Figure 3: Domestic consumption of coffee in Australia till 2022
(Source: Statista¸2022)
The country’s data show that cafes and coffee shops industry revenue in Australia predictable to
amount to 5 billion Australian dollars by 2022 (Statista¸2022). Thus, it can provide CafePod
Coffee Co. with excellence within the overall business growth and the conclusion comes across
by estimating the total revenue of cafes and coffee shops with domestic consumption of coffee at
a stable position.

2.2: Use of technologies

The technological advancement of Australia is extremely good and profound as it can facilitate a
reduction in cost and the available technological advances help in improving the overall
condition of the country. If look at the innovation credential of Australia it is classified that in the
robot Olympics it is ranked 2nd with excellence in the thriving tech sector and this is the industry
that aims in contributing positively to the advancement of the GDP (Austrade, 2021). There are
chances that the business experience lesser responsiveness thereby, having an
internationalization process impacts the business in a positive manner, especially in terms of
expansion of the business.

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 Figure 4: The technology sector of Australia and its contribution to GDP
(Source: Austrade, 2021)
As there was fast digital adoption during COVID-19 eventually led to a growth of about 26%
(A$34 billion) in the technology sector of Australia in the year 2021. As per the conducted
survey, it is noticed that around 38% of Australia’s manufacturers have adopted emerging
technologies within the business that aims in increasing productivity (Austrade, 2021). Over 30%
of manufacturers expect to witness an increase in profit and revenue which as a result helps in
having investments in emerging technology and has a positive influence on FDI for growth and
development for CafePod Coffee Co.
Australia’s technological sector is positive which result in contributing positively to the
organization and the higher technical reputation of the firm further results in gaining better
revenue and sale for the organization (Dean, M. and Spoehr, 2018). As per the views of Lyons,
(2020), Australia is home to a high-talent workforce with high-skilled labour and thus it makes
the country with innovative elements that drive the growth of the business and leverage the
image of CafePod Coffee Co. The goal of the brand is to make a great taste of coffee with high-
quality technological use and this is the main element that is most exciting for building the
reputation of the firm (Bottomley, 2020).

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2.3: Infrastructure quality
The infrastructure quality could be defined as the private and public institutional framework that
is required to execute standardization. However, several factors lead to contribute to poor
infrastructures, such as the insufficient provision of developmental resources, shortage of
resources, poor repair or maintenance and many more (Bakar, et al. 2022). Moreover, the
openness degree of the economy enhances any business, and more FDI is horizontal to make the
entry into the economy. Several factors lead to impact the FDI, such as the cost of raw materials,
market dimension, and also less demand for the product or the services; if such kind of
circumstances are not considered by the business during the time of expansion that it might
generate a direct impact on their investment as well as profitability in the competitive
marketplace.

Figure 5: Infrastructure market overview – Australia

(Source: GIHUB, 2022)

From the above figure, it could be evaluated that infrastructure quality within Australia is high-
performing social infrastructures sectors by the international principles, and it has been estimated
around 79. From a political point of view, Australia is the sixth oldest democratic nation
operating a two-party system in which the administrative body concludes that voting is
compulsory. The economy of Australia has a resilient political environment and infrastructure
quality that is stable and this is the utmost factor that is considered favourable for the business to
have expansion. The frameworks of government are regulatory and work with sound systems
which makes excellence for the firm as it is pretty transparent.
However, it is opposed by O’Bryan, (2018), where some issues regarding Indigenous Rights are
overrepresented within the criminal justice system. Another challenge is fighting against the

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rights of children as around 500 children under the age of 14 were put behind the bars. Also, new
punitive bail laws for children introduced in the Northern Territory have led to an increase in the
detention rate of the children and the majority of them were Indigenous.
As per the views of Falk and Martin, (2020), during the Covid-19 pandemic, there are norms and
regulations which are strictly imposed upon the individual, and with this, there were inflexible
restrictions on domestic travel. The impact was so severe that all the families were unable to
return home and others were separated. This shows that there was a fluctuation in terms of
political conditions as individuals were refused at that time to have permission to travel across
state borders for medical treatment or any other compassionate reasons apart from this there was
a willingness to abide by the imposed restrictions because of quarantine.
As various factors are included within infrastructure quality where restrictions built and freedom
of the individual were hindered as a result, harming the business which is aim to expand
internationally (Carroll, et al. 2020). Thus, considering the infrastructure quality is a must while
expanding any business.

Section 3: Entry mode evaluation

There are various entry modes through which business can expand their services internationally.
Among them selected market entry mode is Exporting, which is the direct sale of commodities
and amenities to another country and it is also determined that it is one of the best methods
through which businesses can have production facilities. It is argued by Gregory, Ngo and
Karavdic, (2019), Joint venture is not a better approach for a business that is aiming to expound
its services internationally as it consists of two companies that are establishing a business that is
jointly owned. The level of expertise needs to be accurate to disturb the services equally which is
not that better
As per the views of Ghauri, Strange and Cooke, (2021), CafePod Coffee Co. focuses on
establishing the business in the new market place and this can be further done by drawing
attention to exporting. This provides the business with significantly greater production while
expanding the business into a new market which is Australia. Another benefit associated with
exporting is it provides an overview of the diversified market and with this CafePod Coffee Co.
can have opportunities for growing markets and leveraging the image and services into the
country to expand. Considering this entry mode makes it possibly the best-known way for the

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business while having an entry within the foreign market, as it prevents the business from having
the lowest risk and also the cost-effective method. Lastly, one of the main factors in considering
this particular mode of entry is that it drastically expands the lifecycle of services and hence it
offers profit to the business (Dau, Morck and Yeung, 2021).

Section 4: Recommendations
From the aforementioned analysis, it is recommended that for expanding into new markets there
is a need for further recommendations here are some of them.
 It is suggested that CafePod Coffee Co. should consider factors like having an overall
understanding of Exporting among the various entry mode. This particular entry mode is
selected as it is a very convenient way for the business to expand as the selected
organisation is an SME and this mode can provide an excellent result (Gaubert and
Itskhoki, 2021).
 It is recommended that CafePod Coffee Co. needs to have further understanding upon
analyzing the execution of factors that help in gaining higher benefits for the company.
Through digital media, building an image is easily gained so that businesses can develop
growth and leverage their performance at the same time (Su, Cai and Huang, 2022).
 It is suggested that CafePod Coffee Co. should examine other factors which involve
elements like understanding FDI as it helps in reaching better capital as well as finance
which results in enhancing the existing image of the firm.

Section 5: Conclusion
Easy to prepare at home with having great taste is all is needed for coffee lovers thereby the
assessment concludes that CafePod Coffee Co. which operates within the UK is launching its
new presence in Australia. Henceforth, the assessment highlights the factors like Australias’s
market size, infrastructure quality and use of technology affecting the FDI of Australia. Further
understanding of the factors and creating benefits for the brand selected to root in another nation
was detailed. Where exporting is the best mode of entry though there are various entry modes.

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