International Business Context Assignment Sample

• Type Assignment
• Downloads732
• Pages14

Introduction

Get free samples written by our Top-Notch subject experts for taking online Assignment Help services.

Title of the research project

The title of this research project report is to expand the business of Elder Care, the UK is the host country of Canada.

Executive summary

This research project was conducted by using a small business organization in the UK which was Elder Care that renders products and services to older people such as emergency alarms, monitoring devices, home care services and social support to the elderly people who live alone. Elder Care makes use of the latest and advanced technologies in providing care to needy people. Some theoretical concepts, theories and models have been discussed such as the Uppsalla Model, network internationalization model, transaction analysis cost model, Ansoff matrix, Porter’s five forces model and BCG matrix. All these models were made understood for understanding the targeted market or host country of Canada and understanding its external factors.

The PESTEL model was applied for reflecting and evaluating the economic as well as the non-economic environment of Canada. The application of this model has demonstrated that Canada is a politically stable and technologically advanced country, but Elder Care would be required to follow the guidelines of preserving the natural environment. The suitable market entry mode has also been chosen and after evaluating the requirements and future aspirations of Elder Care, a partnership entry mode was chosen that would be best suited for Elder Care. Elder Care could formulate a written partnership agreement/ contract with NICE to run the partnership firm by complying with all the written provisions and guidelines. Though, Greenfield investment was also in an option to partnership to enter the market of Canada; but this option got rejected as it required a huge amount of investment from Elder Care and a higher amount of transaction cost.

Background

Elder Care UK provides greater support to old age people who live alone and it has been offering a wide variety of services for over 30 years. It was founded in the year 1987 in England and it is the private subsidiary of Doro AB. Eldercare UK is a live-in-care agency that offers traditional home care services and personal alarm to elderly people by making the best use of advanced technologies. The CEO of Elder Care is Chris Hopkinson. The vision of Elder Care is to help old age people to make the rest of their lives, the best of their lives. Elder Care helps the old age groups by offering them the services of personal alarms, alerts and emergency products and special support/ personal care at home. The services of Elder Care are being regulated and monitored by the Telecare Services Association (TSA).

Elder Care works in partnership with various large scale councils, charitable organizations and NHS trusts across the UK. The greater strength of the Company is that it offers technology-enabled care and response services to all the elderly and vulnerable people in the UK to make their lives safe and enhance their independent living. The weakness includes that it does not consider young disabled people as its targeted customers due to which its business growth and expansion has got reduced to some extent. Elder Care faces huge competition from various organizations such as Careline365, Trusted care, Brighter Kind and Telecare24. The estimated amount of annual revenue earned by Elder Care is $ 5.6 million and around 109 employees work for this Company. The Company combines the new and advanced technology with the personal attention of old age people to improve their lives.

Product/Service

Elder Care offers a wide variety of services to elderly people that can enhance its business expansion and bring more profits to the Company by rendering those services in the Canadian market. The services of personal alarms provide emergency signals to the people who are connected to the telephone to help the needy elder people (Elder Care, 2022).  Some other alerts and emergency products that can be sold by Elder Care to the people of Canada are personal alarm with monitoring, heat detector, police approved key safe, activity sensors, bed exit monitor, carer pager, etc.

Theoretical Concepts

According to the views of Vahlne and Johanson (2017), business organizations use and apply favourable international business models to not only enter into the targeted international markets but also achieve excellent financial results and attract a maximum number of qualified employees. Elder Care can adopt the Stage model or the Uppsalla model which was developed by Swedish researchers in the year 1970. Based on this new model, the underlying principle involves that the decision-making process of the business organization is the key to achieving sustainable growth and profitability in the long run. This particular model greatly supports business internationalization and supports the small scale business organizations to enter and initiate their business in the new markets. Vahlne and Johanson (2013) believe that the application of this model can help many business organizations (like Elder Care) to properly understand the favourable opportunities that exist in the target market and can enable those organizations to operate in the new markets by taking lower-level of risks. This model can further help the business managers of Elder Care to have an in-depth understanding of the political system, culture and language of the Canadian market. In addition to this, Elder Care can choose the most appropriate entry market strategy with the help of this model to enter into the targeted market of Canada.

Magni et al. (2021) guide using another model of business expansion i.e. the network model of internationalization which focuses on developing strong networks to make the business organizations get connected through the way of exchange of goods and services. The basic idea of this model is that no business organization can run its business in the international market without depending upon the products and services of other companies. Some major aspects are being highlighted by this model that reflects the link between companies within the global market such as the technical, legal, administrative, cognitive, social and economic aspects. For example, Elder Care would need to develop networks with other organizations of Canada to come into partnerships or arrange the necessary resources for operating the business in Canada.

In the words of He et al. (2016) the transaction cost analysis model includes the core determinants of business internationalization. By making use of this model, Elder Care can ensure the standard expansion of its business in the international market of Canada by ensuring and maintaining the standard balance between the internal cost and external cost of performing the transactions relating to the business internationalization. By supporting the importance and benefits of this model, Lee and Kim (2018) reflected that the analysis process of this model can help the organizations to focus on some essential aspects of searching for the targeted international market, monitoring and enforcement of the business internationalization and contracting by which the overall transaction cost can be controlled.

According to the perspective of Loredana (2017), the suitable frameworks of market expansion can greatly help in growing the business organizations by guiding them about the decision-making process and helping them to sell their products/ services in the new market. The Ansoff Matrix can be adopted which is an expansion framework that breaks down the relationship between the products and services of the business organization and the target market. This framework involves four expansion strategies of diversification (introducing the new products/ services of Elder Care in the market of Canada), product development (introducing the new products in the existing market of UK), market development (introducing existing products and services in the new market) and market penetration (selling existing products in the existing market).

Figure: The Ansoff Matrix

Source: Loredana, 2017

According to Hossain and Kader (2020), the BCG growth-share matrix is another suitable framework that mainly focuses on determining the relationship between market share and growth rate so that the business organizations can get to know about the potential profitability of different opportunities relating to the business expansion. This framework differentiates the target market into four categories of cash cow (reliable revenue can be expected by Elder Care if the market growth rate is low and market share is high), dog (Elder Care should avoid entering in the markets that have low market share and low market share as they don’t bring long-term success to the firm), question mark (the markets that have high market growth rate but low market share should be evaluated by Elder Care as they have the potential) and star (the market has high growth rate and high market share have the greatest potential). By using these market categories, Elder Care can identify and critically evaluate the suitable target market within which it should invest to optimize the long-term growth and success.  

Figure: BCG Matrix

Source: Hossain and Kader, 2020

Based on the research conducted by Dälkens (2014) it has been demonstrated that before getting entered into the new target market, it is very important for the business organizations to explore and evaluate the external environmental factors of the target market. For this purpose, Porter’s five forces analysis works as the best framework/ approach that can help in understanding the external factors in-depth and their respective impacts can be evaluated on the potential success of the firm. The five forces that must be critically evaluated and studied by Elder Care concerning the Canadian market include the competitors (Help Age Canada, Charity Village and Canadian Association for Retired Persons), the threat of new entrants (Canadians are aware of providing proper care and social support to the old age people and therefore the threat of new business entrants in this industry is high), the threat of substitute products (the threat of substitution is low because there are no substitutes to emotional and social support to elderly people), bargaining power of buyers (it can be high as the customers have the option to buy services from any of the organization as there are so many in Canada, but none of them offers the personal support to old age people through the use of technology as Elder Care does) and bargaining power of suppliers (due to the high competition in the market, suppliers’ bargaining power can be high).

Characteristics of a host country

For demonstrating and evaluating the characteristics of the chosen host/ target country (i.e. Canada), the PESTEL model is applied. This model has greatly helped in analysing all the external environmental factors of Canada and their impacts on the growth as well as the success of Elder Care, UK.

Economic Environment

• Economic factors: The annual GDP of Canada was at the rank of 16^th highest position in the World in 2020 i.e. 1590 billion dollars. The advanced infrastructure, banking system, strong economic position and entrepreneurial mind-set of the people contributes to the highest GDP in Canada as these factors attract the leading business investors. Due to the rising cases of Covid-19, the unemployment rate in Canada has got increased by 13.5% in 2020 (Arancibia et al., 2020). The country follows a mixed economic system where the contribution is being made by both the government and private sector organizations towards the growth and development of the economy. The major exports of Canada include crude petroleum, telecommunication equipment, gold, motor vehicles, industrial machinery, spare parts and cars. Some of its major imports include delivery trucks, laptops, spare parts of automobiles, computers and cars. The leading trade partners of Canada are the UK, Japan, the USA, Germany, China and Mexico (Dubé et al., 2016).

Non-Economic Environment

• Political factors: Canada is said to have a parliamentary democracy and it is the strongest country in terms of technological and economic power. The country has maintained good political relations with many countries like the UK, China, France and USA. The crime rate is very low in the country due to which it has a peaceful image in the international business markets. The level of political risks in Canada is very low as it is considered the safest country in the World with a stable political environment. According to the World Investment Report of UNCTAD’s 2021, Canada attracted 24 billion dollars of FDI in the year 2020 which got decreased by 50 % as compared to the year 2019. The smooth diplomatic relations in Canada help it to not only develop cheap trade but also control the economy to do business with less taxation (Arancibia et al., 2020).
• Legal factors: Canada has defined various laws and regulations for the public-sector, private-sector and small scale business organizations to protect the rights of ordinary workers and employees. The standard rules and legal regulations have been made concerning dealing with the issues of working hours, vacation leaves, holidays, sick days and minimum wage rates. To resolve the issues regarding inequality and discrimination, CHRA (Canadian Human Rights Act) is applied. The strict laws are followed against the corrupted activities; therefore Canada ranks as the 12^th least corrupt country in 2019 among 180 countries of the World; based on the reports of Transparency International’s Corruption Perception Index (Garde Lucas, 2019).
• Social factors: Canada is the second-largest country in the World in terms of its area and size as it is spread within an area of 3.85 million square miles. As compared to the total size of the country, the population rate is low; hence its per-capita income is very high (47,500 PPP Dollars in 2020). There is a shortage of skilled and qualified workforce in Canada that can negatively influence the overall growth of Elder Care as it may not be able to find out a good workforce and unable to provide high-quality services to the older people of Canada. People have the freedom to speak any language and more than 200 languages are spoken by the people of Canada (Dubé et al., 2016). Mostly, French and English languages are spoken; so Elder Care would need to interact with people by using these languages as spoken commonly. The living standard of Canada is very high as the people are confident about their job markets; therefore, to meet the requirements of Canadians and make them satisfied, Elder Care would need to offer high-quality services and products to the target consumers.
• Technological factors: Canada is a technologically advanced country as the people of Canada have been increasing the use of new technologies for their jobs, career, educational purpose and other reasons. Elder Care provides services and personal/ social support by combining its services with the new technologies; therefore, it might not face any kind of issue regarding the technological products and supply because of the internet providing companies in Canada. Also, the stable political environment of the country attracts various potential investors towards the IT industry of Canada (Garde Lucas, 2019). Due to this increased investment in the technological sector of Canada, many young professionals and experienced IT workers have been planning to relocate to Canada. This relocation can positively affect the success of Elder Care in Canada as it can hire such experienced workers and offer highly efficient technological services/ care to the elderly people of Canada.
• Environmental factors: The natural beauty and landscape of Canada have been attracting millions of tourists from different parts of the World and by gaining the attraction of such tourists; Elder Care can grab the opportunity of further expanding its business in their respective international countries to which they belong. Canada faces some environmental issues due to excessive use of technology and rising population such as smog, air pollution, noise pollution, etc. For managing these issues, the government of Canada has decided to reduce the carbon rate to zero % by the end of 2050. Concerning these issues, Elder Care would also need to follow all the guidelines relating to preserving the natural environment and controlling the excessive use of technologies that may cause harm to nature (Fertel et al., 2013).

After considering all the above factors and characteristics of the host country (Canada), Elder Care should formulate the strategies of entering into the Canadian market, accordingly. Many of the above-discussed factors such as strong economic position, stable political environment and high growth of the IT sector would positively influence the growth of Elder Care; but some other factors such as environmental issues and strict laws must be taken into consideration.

Entry mechanism

It has been researched by Ang et al. (2015) that choosing the most suitable market entry mode is one of the most important strategies decisions to be made by the business managers of SMEs. This particular decision involves the critical evaluation of ascertaining risks associated with the targeted market, profit return, control and many other factors. For entering into the foreign market of Canada, Elder Care may adopt one of the two best market entry strategies of partnership and Greenfield investments. The Greenfield investments would require the greatest involvement of Elder Care in the international market of Canada as the organization would need to buy the land, develop the necessary facilities and operate the entire business through an ongoing approach. Though, it is one of the most effective and suitable entry modes; but possesses some of the major disadvantages that shift the mindset towards another market entry mode of partnership (Shen et al., 2017).

Greenfield investment market entry strategy may require Elder Care to incur a higher amount of cost and may go through a higher level of risk due to the changing government regulations by the Canadian Government, paying off a high amount of transaction costs and the unstable ability to have the access of skilled workforce or latest technologies. Because of all these issues, it is better to adopt the market entry mode of partnership which is considered as the necessity by many of the researchers while entering into the foreign/ international business markets (Ang et al. (2015)). The partnership can be applied in a variety of ways, starting from the simple co-marketing arrangement to the sophisticated strategic alliance agreement. The partnership strategy can prove to be the most useful and effective market entry strategy for Elder Care as it would get easier for the firm to develop faith and confidence among Canadians to use the products and services of Elder Care. The local partners would be helping Elder Care to bring the market knowledge, contacts and let the firm choose its customers wisely.

Elder Care can develop a partnership agreement and come into partnership with NICE (National Initiative for the Care of the Elderly) which is a strong network of students, practitioners and researchers who work internationally to provide proper care and support to old age people, living in Canada and other countries. The reason behind choosing NICE as the business partner of Elder Care is that it is already a well-established and well-reputed firm in the international markets and therefore, by working with NICE, Elder Care can explore many other favourable opportunities and choose other international markets to work in/ operate in. NICE formulates effective and positive policies for ensuring the proper care of older adults. Elder Care can also recruit/ hire experienced practitioners and researchers from the organization of NICE to continue working on its business and rendering high-quality services to the elderly people of Canada (Shen et al., 2017).

The contribution of each partner will be made equally. NICE will be investing the financial resources in terms of marketing and advertising the services that are being offered by Elder Care. Some experienced and well-trained human resources can also be provided to the firm of Elder Care. In return, Elder Care would need to give an equal percentage of profits to NICE after earning and getting stable in the Canadian market. The partnership agreement between NICE and Elder Care will be governed by the Partnership Act, 1990 of Canada. Based on this act, the business partners are equally liable to repay the number of losses and share the number of profits among them (Schellenberg et al., 2018). Also, each partner will be having the right to participate in the decision-making process and all the provisions will be followed in associated with the written partnership agreement.

By forming the partnership agreement with NICE, Elder Care would be able to incur less amount of cost while entering into the international market of Canada. The firm will be further able to have the complete knowledge and understanding of the local market of Canada along with the changing p