Module: Strategic Management in Global Context

Student Name: Akhtar Ahmed

Student ID: 229974076
Date:
1.Introduction

In today's quickly changing global economic environment, the strategic management of

multinational firms is a challenging and important duty. It demands a thorough comprehension of
the challenges presented by diverse cultures, international markets, and rivalry. Our goal as a
senior business consultant at Armani Business Solutions (ABS) Limited is to assist our clients in
making wise choices as they pursue global expansion. This essay examines the field of strategic
management in a global context to help a corporation with a variety of strategic business units
(SBUs) select the best SBU for entry into a certain foreign market (Stead and Stead, 2014). To
ensure the success of our client's business in the target country, our study will include
suggestions, market entry tactics, standardization vs. adaption considerations, competitive
advantage techniques, and a strategic implementation strategy. Strategic management in a global
context is not only a business practice but also a requirement for long-term success and wealth in
a world where borders are becoming more permeable.

Over the past few decades, the Chinese dairy industry has grown and developed tremendously,
changing from a largely traditional and fragmented business into a contemporary and dynamic
player on the international stage (Küng, 2016). Due to increased urbanization, rising wealth, and
shifting dietary habits, China's dairy industry, which has a history extending back thousands of
years to old farming traditions, has seen a major development in the production and consumption
of dairy products. The growth of the Chinese economy and providing for the country's vast
population depend on this industry. Today, it makes a huge variety of goods, such as fresh milk,
yogurt, cheese, and baby formula.
2.Recommendation of a business and a country

I have been given the job of assisting a firm with a portfolio of several strategic business units
(SBUs) in its goal of entering a new global market as an experienced business consultant
working for Armani Business Solutions (ABS) Limited. The main goal of this advising job is to
select the most suitable business unit and target nation for this expansion project. A thorough
awareness of the market's potential, the company's capabilities, and the intricate relationships
between internal strengths and weaknesses and external possibilities and dangers is required for
this important decision (Keup pel at., 2012). A thorough internal and external study is essential to
our client's overseas venture's success because it will not only showcase the market's alluring
chances but also flag any potential problems that could harm their effort. This research will
establish the groundwork for informed decision-making, enabling us to offer practical solutions
that support the objectives of our clients while reducing the risks noted.

2.1 Internal analysis of the chosen business

SWOT:

Strengths of the China Dairy Industry:

The dairy business in China benefits from a number of important factors that have facilitated its
expansion and survival. One of its greatest strengths is the size of the domestic market, which
has more than 1.4 billion customers. For the adjacent dairy farmers, this broad base of demand
guarantees a steady and possibly lucrative market (Bai el at., 2012). A vast variety of dairy
farming environments are made possible by China's diversified terrain, enabling the production
of a variety of dairy products. Additionally, Chinese dairy firms have been able to enhance their
production procedures and product quality, boosting their competitiveness on both the domestic
and international markets. This is made possible by technological breakthroughs and greater
investment in research and development.
Weaknesses of the China Dairy Industry:

China's dairy business is expanding, but there are some serious problems. The frequent food
safety incidents, particularly in the infant formula industry, which have eroded consumer
confidence in domestic brands, are a major cause for concern. The sector has also encountered
problems with environmental sustainability, specifically worries about water use and the effects
of large-scale dairy farming activities on the environment (Bei el at., 2020). It has become more
challenging for the industry to quickly provide fresh dairy products to customers due to
inefficiencies in the supply chain and distribution network, particularly in more rural areas. One
of the biggest issues with China has historically been its enormous population, underdeveloped
terrain, and limited water resources. Therefore, it would be incorrect to believe that China can
produce milk at a low cost.

Opportunities in the Chinese Dairy industry:

There are many exciting chances for the dairy business in China to grow and advance. One of the
biggest opportunities is the growing concern that customers have for their health and wellbeing.
Two dairy products that have witnessed a surge in demand as healthier alternatives are yogurt
and low-fat milk (Gao el at., 2021). Premium dairy products and foreign brands have a sizable
market due to the growing middle class and their increasing disposable money. China's
participation in international trade agreements and steps to relax import/export restrictions also
present chances for foreign dairy companies to enter the Chinese market as well as for Chinese
businesses to expand their worldwide reach.

Threat in the China Dairy industry:

The dairy business in China is not exempt from problems, some of which are quite difficult to
solve. Food safety issues continue to be a significant challenge because any recurrence of
contaminated dairy products can negatively impact the industry's image and erode consumer
confidence (Food el at., 2023). Local dairy businesses, in particular, may be put in peril by
escalating domestic and international competition if they are unable to maintain cost and product
competitiveness. Smaller businesses may find it challenging to fund the substantial investments
and operational adjustments that environmental rules and the demand for sustainable practices
may necessitate. Finally, the industry's ability to export goods and overall profitability may be
impacted by economic turmoil like recessions or trade disputes.

2.2 External analysis of the selected country

Political Factors The political environment of the chosen nation has a significant impact
on how business is conducted there. A robust administration with firmly
established standards and policies characterizes the country's stable
political environment (Gorodov el at., 2019). The government generally
supports cross-border cooperation and regards international trade and
investment positively. To minimize potential disruptions, businesses must
constantly watch political risks that may occasionally be linked to
changes in leadership or changes in policy direction.
Economic Factors This nation's economy is generally strong, with steady growth and a
sizable consumer market. An economic climate that is stable benefits
from a favorable exchange rate and low inflation rates. The nation's
economy is varied, with many different sectors, including manufacturing,
services, and agriculture, providing potential for different business
models. But it's important to keep in mind that issues with income
inequality and differences in regional growth could manifest throughout
the nation and have an impact on consumer and market demand.
Social Factors The urbanization, the expansion of the middle class, and the
demographic shifts in this nation all contribute to its socioeconomic
environment. This shift in customer preferences has made comfort,
sustainability, and health more important (Ding el at., 2019). A benefit
for sectors that need specialist labor is the nation's educated workforce.
Businesses must, however, adapt to local cultural norms and beliefs
because they may have an impact on marketing plans and product
offerings.
Technological Technological developments in the chosen nation are fostering
Factors innovation across a wide range of industries. The country has a solid
infrastructure for innovation and technology and a strong commitment to
 research and development. Businesses can leverage contemporary
technology to boost production and competitiveness. Rapid technical
advancement can, however, occasionally pose problems, particularly for
industries that depend on swift market reactions.
Environmental The importance of environmental issues is growing in the chosen nation
Factors as a result of growing sustainability and environmental conservation
consciousness. Regulations have been put in place by the government to
encourage environmentally friendly behavior and lessen its negative
effects (Zhong el at., 2022). Businesses in sectors that have a big
influence on the environment could need to follow stricter rules and face
pressure from customers to use sustainable methods. However,
companies that place a high priority on environmental responsibility
could also discover potential for growth in eco-aware markets.
Legal Factors Trade laws, standards, and a number of ancillary e-commerce elements in
China address current legal issues such intellectual property rights, tax
laws, consumer rights, etc. The Chinese economy would benefit
significantly from e-commerce, a relatively new industry, becoming
more legitimate.

2.3 Possible opportunities and threats

The Chinese dairy industry offers businesses a wide range of alluring opportunities. The nation
has a significant population and a growing middle class, which together provide a sizable
consumer base hungry for dairy goods. Second, as Chinese consumers become more health
conscious, the market for premium and healthier dairy products, such as yogurt, organic milk,
and functional dairy items, is expanding, opening up opportunities for innovation (Huang el at.,
2016). Thirdly, productivity can increase while costs decrease thanks to technical developments
in dairy farming and processing including automation and precision farming. Not to mention, the
government's initiatives to improve food safety and environmental sustainability give businesses
the chance to embrace environmentally friendly methods and rigorous quality controls.
3. Critically assessment of three modes of market-entry

In general, market access by exporting is viewed as being relatively low-risk, especially for small
and medium-sized enterprises (SMEs). It enables companies to launch their products or services
in foreign markets without having to make substantial upfront investments in global operations.
However, there are disadvantages to exporting. Lack of control over product marketing and
distribution in the target market is a significant impediment. It may be difficult to comprehend
and adapt to local consumer preferences, laws, and competition as a result (Andersen el at.,
2014). Profitability may be impacted by changes in currency exchange rates and trade
restrictions. When combined with thorough market research and a clear strategy for overcoming
logistical, legal, and cultural challenges in the target market, exporting is most successful.

Joint ventures entail collaborating with a local organization to launch a new business in a foreign
market. This entry method may have a number of advantages, including alliances, knowledge of
the local market, and access to established networks. However, there are additional risks that are
unique to joint ventures. A major concern is potential conflicts and divergent objectives between
the participating corporations (Schellenberg el at., 2018). Differences in managerial styles,
corporate cultures, and strategic goals may lead to disagreements that could harm the venture's
chances of success. Businesses might also only have a little level of control over the joint
venture, which could limit their capacity to decide and accomplish their own goals. For joint
ventures to be successful, precise agreements, thorough due diligence, and a common goal are
required.

FDI involves acquiring an existing business or establishing a wholly-owned subsidiary in a

foreign market. With this method of entry, the most strategic and operational control is possible,
but it is also the riskiest and resource-intensive. A major advantage is that the parent company's
goals and standards are aligned with the global operation (Rolinger el at., 2020). However, FDI
calls for large financial resources, including cash for building infrastructure, making purchases,
and covering ongoing operational expenses. It is also less flexible than other admission
modalities because it typically calls for a longer-term commitment. Political, legal, and
operational issues, as well as potential cultural and operational challenges, are all inherent risks
of FDI. A detailed risk analysis and an understanding of the local business environment are
necessary for a successful FDI plan.

4. Standardization of the business in the chosen country with a proper

justification

Over the past ten years, the Chinese milk industry's entire value chain has been modernizing, but
the industry has not yet fully embraced the shift. Technology advancement, vertical processor
integration, and genetic research will all continue. These innovations will raise the quality and
security of food while broadening the selection of inventive dairy products that are easily
accessible. The top three milk processing companies control around half of the global market
share, and modernization and innovation are occurring along the whole value chain.

The biggest barrier to China's ambitious growth goals is the country's high cost of domestic
manufacturing. Products made with imported dry milk cost less to create than those made at
home. The lack of domestic food and fodder crops greatly exacerbates the price discrepancy.
Large dairy farms in China rely on imported soy and alfalfa, while processing enterprises
frequently use foreign milk powder (Van den Berghe, 2012). Decreased manufacturing costs are
a result of a variety of reasons, including higher labor costs, stricter rules governing food and
environmental safety, and others. Growth and the creation of new products will be fueled by
improvements to the cold chain and an increase in discretionary income. The initial type of milk
that was extensively used was UHT milk, but as cold chain distribution technology advances and
consumers look for products that are perceived as healthy, fresh milk is growing in popularity.
Sales of yogurt recently surpassed those of liquid milk because of the demand for new yogurt
variants, which is driven by competition.

In order to increase consumption of pasteurized and dry goods like cheese and support strong
domestic milk brands, it will be necessary for it to actively develop effective laws in this area.
Effective policies must be promoted by the company. Due to their fragility and the fact that
children are its most vulnerable customers, dairy products, in particular IMF, are among the
foods and beverages on which China has the strictest regulations (Franke and Richey, 2010). For
more than 10 years, China has been one of the world's top producers of milk. The large rising
nations are now far more advanced than they are in complexity, and their enormous farms and
industries increasingly mirror those of modern industrial dairy nations. High levels of
pasteurization should be used throughout production to keep milk products clean. The client
would benefit greatly from entering the Chinese dairy market if these conditions were satisfied
because of the rising sales, which would present a wonderful opportunity for the client to turn its
dairy goods, such as milk, butter, and cheese, into a cash cow.

5. Application of Porter’s Generic strategy to gain competitive advantage

in the chosen market

It is now more difficult for new dairy companies to maintain market leadership and develop their
market share without making significant investments in China due to the heightened competition
in this industry. Despite this, dairy companies are nevertheless attracted to the current economic
situation since it offers more opportunities to gain a significant long-term competitive advantage.
The client's company must develop a competitive positioning strategy based on a number of
essential components that give rivals a sizable competitive advantage with most clients. The
client is an internationally renowned company with a considerable following in China (Bordean
el at., 2010). The competitive advantage strategies utilized by the dairy industry are evident when
seen from the perspective of Michael Porter's comprehensive and intensive model of growth. To
respond to competitive pressures, the company may combine cost leadership, differentiation, and
focused tactics. The client's business could be able to accomplish its objectives of customer base
building and sales growth by focusing on these effective strategic techniques. The next
paragraphs outline a few potential strategy trajectories.

Cost Leadership

Cost management has allegedly been optimized to the point of competitive advantage, according
to cost leadership initiatives. Cost minimization is the company's main strategy for a range of
consumer segments. cost management Maintaining market leadership through efficient value
chain management is the key objective of this strategy. The dairy company may be able to grow
its market share with this strategy by focusing on the Middle Class, which comprises the largest
portion of the entire consumer mix in the majority of countries (Islami el at., 2020). Given that
costs are typically quite significant to medium-sized consumers, cost reduction is the best
strategy to meet their needs. The company may also place a major emphasis on pricing,
accessibility, and a sizable worldwide competitive edge, which generates a strong sense of brand
awareness and quick sales growth. In order to meet its sales targets and deal with the competitive
pressure from its closest rival, the company may often provide discounts and coupons in addition
to lowering prices by cutting production costs and improving supply chain efficiency. These
pricing and promotion initiatives are meant to boost brand recognition and boost consumption.

Differentiation

Differentiation is a typical strategy for gaining a competitive advantage. To achieve growth

goals, differentiation may be used in conjunction with a cost-controlling strategy. Businesses can
expand their consumer base by focusing on the distinctive qualities of the product and employing
differentiation as a secondary general approach. The business aims to recognize and address the
escalating health worries of the customers by utilizing contemporary technologies. The business
may decide, for instance, to differentiate itself from rivals and increase the range of possibilities
after considering the altering tastes of its clientele. By combining creativity and cost discipline,
milk firms may develop a loyal and constant consumer base (Leitner, 2010). A firm may employ
a differentiation-generic strategy to set its product line apart from alternatives offered by
competitors. The corporation, which has a solid base, use uniqueness as a strategy to minimize
the pressure from other companies. Significant marketing, advertising, and celebrity support
expenses have been paid to differentiate the brand from other companies. The organization's
marketing and communication strategies can be distinguished by a number of factors, including
the fact that it is the oldest brand and that it has a significant global presence. The logo of the
company also helps to define identity. The distinctive brand logo may give the buyer a strong
first impression of the company. The brand has seen numerous changes, but its core stays the
same, which could also be a key distinction.

6. Strategic business plan

6.1 Formulation of strategic objectives using SMART

Specific Measurable Achievable Realistic Time-bound

 Enhancement of 20% more To quickly To rapidly and Time in 12
publicity and awareness of and expand and build efficiently months to
reputation on comprehension a huge customer expand its core improved brand
Chinese internet of the image of a base while clientele through quality.
sites. company. maintaining a the provision of
pricing outstanding
advantage. service
opportunities.
The expansion To encourage a Should present a To efficiently To efficiently
30% increase in
of revenue in the strong product and quickly and quickly
sales.
Chinese proposition in grow its core grow its core
industry. order to draw a clientele by clientele by
broad audience offering offering
(Lee el at.,2013). exceptional exceptional
service service
opportunities. opportunities

6.2 Action Plan

Objectives Tasks Success Criteria Time Frame Resources

Build up webpages Being able to 2 months Skilled workers
and internet-based
convert a large
programs to publish
online sales and amount of
business.
internet traffic
into sales within
a month
Putting an Has to conduct a Obtain a 60 days Enough capital
emphasis on complete analysis of following of
outstanding the customer market, loyal customers
service understand what they to launch the
like, and connect business.
their purchasing
 behavior to their
interests.
To be preferred Should research the Cooking exotic 45 days Reliable
by the group of competition and find foods that aren't technology
experts. any weaknesses they available in your
haven't fully area will help
exploited in order to you stand out
differentiate oneself from the
as a distinct brand. competition.
Being a well- To set up social Be a social 50 days Sufficient
machinery
known dairy media channels in media
preference order to promote the phenomenon to
upcoming restaurant attract the
and achieve market's
recognition (Jia el at., attention to
2012). detail, resulting
in a successful
launch for the
firm.

6.3 Performance Measurement

The organization must create efficient performance indicators if it wants to achieve remarkable
efficacy in its business structure. In this sense, thorough KPIs for the essential performance
indicators the business must meet might be created. As a result, several potential KPIs for
evaluating the company's performance in accordance with SMART are created in the parts that
follow.

 Increase brand awareness and knowledge by 20% in the first year.

 To promote a 30% increase in revenues within two years
 Increase costumer interested and apricated of the company by 40% of the initial year.
7. Conclusion

The aforementioned analysis suggests that the customer would have a good chance of succeeding
in its objectives by looking to the dairy industry in China, which is recognized for its well-known
cash cows. The Chinese dairy milk market presents enterprises looking to acquire a competitive
edge with both enormous potential and formidable obstacles. Businesses can adopt a strategic
stance in this competitive market by utilizing Porter's Generic Strategies (Hill el at., 2014). By
offering dairy products that are incredibly good, safe, and economical, market share can be
expanded. To continue to be profitable, strict cost control and efficiency measures are required.
Instead, a strategy for distinctiveness that produces great, fresh dairy products can increase
customer loyalty and confidence. This strategy must place a strong emphasis on brand image and
effective marketing.
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