INTERNATIONAL BUSINESS

By Shazia Kamal

ID NO. 21361941
Executive Summary
The paper focuses on the startup of an e-commerce venture in UK. A company named Rahat
Continental which has a business of air services to deliver the consignments. Rahat is IATA
certified and has access to all major airlines of the world. They are planning to set up an online
shop for the sale of organic cotton garments for infants in UK. This would be totally an unrelated
diversification of their business which will be posing risks in the new market; on the other hand,
it could either open new avenues of business for Rahat. This paper focuses on devising a thorough
strategy for establishing e-commerce business in UK and sustainability of the business model. The
epicenter of the paper is the implications of the business strategy on the e-commerce business as
well as the effect of Brexit on the business. Furthermore, other external factors like legal, political
and social factors are also discussed in the paper related to the new business of Rahat Continental.

The market of infant clothing is highly competitive and there are a lot of entry barriers to enter this
market. According to some researches, people have disposable money for clothing of their newly
born babies, but at the same time due to competitive environment they tend to look for better offers.
Furthermore, studies suggest that the birth rate in UK is declining with time which make this
industry even more competitive.

Another major factor affecting the new businesses in UK includes the upcoming economic decline
and uncertainty which Brexit is posing to the economy of the country. In this scenario, international
investments may be risky due to expected lowering of value in pounds, and economic implications
on import/export tariffs.

The target market of the company would be the first-time-parents as well as experienced parents
who have babies of upto 2 years. The target parents are aged between 25 to 35 years and are well
connected to the digital world, know use of mobile applications and all the social media buzz.

On the whole, this new venture is exposed to high competition in the market and instable
political condition. As there could be high level of risk involved in entering this business, Rahat
need to cover these risks before entering the market. Local partnerships and joint-venture could
be good option to hedge the risk which are expected to arise.
Contents
Executive Summary -------------------------------------------------------------------------------------------------------------- 1
Introduction of Rahat continental Limited R.C.L) with a focus on the UK market -------------------------------- 3
History of company -------------------------------------------------------------------------------------------------------------- 3
Business Activities of the Company: ----------------------------------------------------------------------------------------- 3
BUSINESS STRATEGY FOR RAHAT CONTINENTAL ORGANIC CLOTHING FOR INFANTS (E-Commerce Bases
Business) ---------------------------------------------------------------------------------------------------------------------------- 3
Mission:-------------------------------------------------------------------------------------------------------------------------- 3
Keys to Success: --------------------------------------------------------------------------------------------------------------- 3
Products: ------------------------------------------------------------------------------------------------------------------------ 4
MARKET ANALYSIS --------------------------------------------------------------------------------------------------------------- 4
SIGNIFICANT BUSINESS DRIVERS --------------------------------------------------------------------------------------------- 5
Spending Power of the Parents: ------------------------------------------------------------------------------------------- 5
Change of Social Habits: ----------------------------------------------------------------------------------------------------- 5
Cultural Difference: ----------------------------------------------------------------------------------------------------------- 5
Barriers of Entering the UK Market: ----------------------------------------------------------------------------------------- 5
Price Sensitivity: --------------------------------------------------------------------------------------------------------------- 5
Economic Decline: ------------------------------------------------------------------------------------------------------------ 5
Political Instability: ------------------------------------------------------------------------------------------------------------ 6
Other Implications of Exiting Brexit:-------------------------------------------------------------------------------------- 6
ETHICAL AND LEGAL CONSIDERATION -------------------------------------------------------------------------------------- 7
Ethical Implications: ---------------------------------------------------------------------------------------------------------- 7
Legal Implications: ------------------------------------------------------------------------------------------------------------ 7
THE ASPECTS OF INTERNATIONAL MARKETING RELEVANT TO THE PROPOSED VENTURE --------------------- 7
Competitive Edge ------------------------------------------------------------------------------------------------------------- 7
Marketing Strategy ----------------------------------------------------------------------------------------------------------- 7
Pricing Strategy: --------------------------------------------------------------------------------------------------------------- 8
Sales Strategy: ----------------------------------------------------------------------------------------------------------------- 8
THE E-COMMERCE OPTION VERSUS OTHER METHODS OF EXPANSION -------------------------------------------- 8
Brick & Mortar: ---------------------------------------------------------------------------------------------------------------- 8
E-Commerce: ------------------------------------------------------------------------------------------------------------------- 8
Brick & mortar against digital --------------------------------------------------------------------------------------------- 8
Recommendation and Conclusion:------------------------------------------------------------------------------------------- 9
References ------------------------------------------------------------------------------------------------------------------------ 10
Introduction of Rahat continental Limited R.C.L) with a focus on the
UK market

History of company

The company Rahat Continental Provide supply chain services to the global businesses who need
such services. It was established in 1986 and is owned by an Indian business family. The company
since its inception has expanded worldwide and is part of the WCA network and has clientage in
more than 30 countries globally. [Rahat Continental. (2018)]

Business Activities of the Company:

The company is involved in several business activities which are quite diverse and lucrative,
activities are as under:
 Air Freight
 Sear Freight
 Supply Chain
 Warehousing services
 Healthcare
 Fashion & retail
 Automotive
 Manufacturing

BUSINESS STRATEGY FOR RAHAT CONTINENTAL ORGANIC

CLOTHING FOR INFANTS (E-Commerce Bases Business)
Mission:
Rahat Continental’s mission is to present consumer organic cotton clothing for their children
(infants aging 0-2 years) which will be both healthy and hygienic for the newborns and to provide
a premium shopping experience online.

Keys to Success:
 Easily reachable website which is engaging to visit. Just like going to the most favorite
store where one generally finds something new that one needs.
 Setting up a solid advertising campaign in a conventional media vehicle; i.e. magazines
  A Good relationship with vendor that will promotes quality production of garments
made of organic cotton for infants and brisk shipment
 Securing an outstanding design staff [bplans. (2018)]

Products:
Rahat Continental will sell infant garments made of organic cotton online. We will offer we will
center on the seasonal garments demands of our customers including the Following:
1. "Coming-home" outfit 8. Gowns with an elastic bottom
2. One-piece outfits 9. Hats
3. Stretchy pull-on pants 10. Socks or booties
4. Snap-crotch T-shirts 11. Fleece bodysuit
5. T-shirts with side snaps 12. "Wearable blanket" sleeper
6. Sweater 13. Dress-up outfit
7. Jacket

MARKET ANALYSIS
The estimated worth of the infant clothing market in UK was £782 in 2013, which means that the
approximate per child (upto 4 years) sale is £193. The average monthly spending of the parents on
their infant’s clothing £65. [Pragmauk, (2017)]

The full potential of the organic cotton clothing for infants can only be comprehended by blue
ocean strategy. Since the organic clothing market is highly monopolistic, since there is no market
leader which can provide an organic product for infant clothing. As suggested by the research
that ethical clothing has a special importance among the consumers. Since the number of
competitors in the normal infant clothing market is high customers switch from one brand to
another easily.
The infant clothing market of UK has a number of well-established competitors running their
businesses globally such as:

 H&M,
 Asda (George),
 Next,
 Riverisland,
 Mothercare,
 Primark,
 Disney etc.
The market is witnessing a decline in sales since the entry of retail, fast fashion and e-
commerce sellers is rapidly increasing. [Euromonitor, (2017)]
SIGNIFICANT BUSINESS DRIVERS

Spending Power of the Parents:

Today the parents are mostly interested in providing their children a healthy lifestyle, mostly the
organizations in UK do not hold any data on the spending of parents on their children. However a
number of studies have confirmed that the raising cost of a child increase by 63% since 2003.
[Halifax, 2017 and LV, (2016)]

Change of Social Habits:

The birth rate has dropped by 9% from 2008 to 2016 since the adults delay in having a child due
to the economic downturn and uncertainty [Euromonitor, (2017)]. Even though the average child
baring age is approximately 30.5 now but still the grandparents have more disposable income
making the infant clothing a very attractive business. [Craik, (2005)].

Cultural Difference:
Rahat Continental as compared to India will have to face a huge difference of culture in UK where
communication is more open in contrast to the Indian culture. Hence an adaption approach
incorporating the polycentric strategy will be more viable in UK.

Barriers of Entering the UK Market:

Price Sensitivity:
After the birth of a child the parents mostly put a cut on their consumption of different commodities
e.g. dining out, socializing with friends, spending on holidays and vacations. This growing trend
helps them to spend more on their children and their needs like clothing and toys and hence they
try getting more value out of what they pay for so RCL will have to be more competitive in setting
the prices of their products.

Economic Decline:
It is expected that the UK’s GDP growth will slow down in 2018 due to exit from Brexit and cuts
on public spending. There could be no or a little change in the unemployment and the growth in
the wage rate is expected to be low [Trading Economics, (2018)]. It has been explicitly signaled
by the Bank of England that there will be an increase in the inflation rate in near future.
Furthermore the UK economy after leaving EU has seen a rise in inflation from nearly 0 to 3%.
This has also resulted in the devaluation of pound which has effected the international trade.
Political Instability:
Since the UK has separated herself from Brexit it poses a possible uncertainty on the future of the
country’s textile industry. UK also expects further devaluation of the British Pounds which will
result in a low confidence of the customer effecting the retail sales in the longer run. After the exit
from Brexit, a restriction is expected on the free movement which will resultantly be effecting the
foreign employees. Furthermore it will become more difficult to recruit and retain employees.
Furthermore, trade tariffs on imports and exports may also be faced by companies, as we speak
India has a 10% export duty whereas UK does not impose any duties on these goods [CBEC,
(2015)].

Other Implications of Exiting Brexit:

Since the Article 50 has been triggered, it is still to see what would be the future of UK businesses
and how will they evolve and absorb the changes. A clarity is required on Soft or Hard Brexit. the
difference between these options is altogether different. As a Hard Brexit is relied upon to be the
chosen course, this will prompt a full sense of duty regarding leaving the Single Market posturing
significant turmoil, particularly whole deal.
As a matter of fact that this piece has concentrated on e-commerce, it's significant to recollect the
brick and mortar stores that have online shopping available. As the CRR traces, with the present
level of growth in the e-commerce space, physical stores will "unavoidably decrease” reducing
their market share which derive the economists to study how to tackle with this alarming aspect of
the economy. Looking practically comparable statistical data we will learn that between 2015-
2017 the retail sale stands at +32% and +3.4%. From the information featured in this article, it's
likely to infer that e-commerce business has and will keep on eclipsing the physical store exchange
paying little mind to more extensive political components. [Digital State Marketing. 2018]
In a general sense, in any case, innovation is a medium that isn't controlled by limits. Similarly
that the UK grasped online technologies, while different economies dithered in adopting such tech,
the industry will keep on indicating flexibility, adaptability and advancement. As an economy in
view of administrations and learning based businesses, the UK is all around set to profit by change
and innovation setting up a dominant economy.
It can be seen that despite of the macroeconomic climate companies running on micro scale are
now becoming increasingly competitive. Market share isn't anything easy but difficult to get on a
household level and companies will keep on having to compete with their international
competitors.
The picture can't be seen as a totally negative one. Leaving the EU and Single Market implies that
affiliations can appreciate better edges on their supply chains, list their things on a more prominent
number of commercial centers (Amazon have turned out to be exceptionally responsive and
imaginative in giving cross-fringe openings) and participate in new associations with nations
around the globe free from the objectives of existing exchange bargains.
ETHICAL AND LEGAL CONSIDERATION

Ethical Implications:

The major issues being faced by the clothing industry are related to worker’s rights and child labor.
Since the world has become a global village the consumers are now concerned with the source of
clothing products, in this case RCL will have to keep a close check on compliance of the labor and
employment laws. Moreover the consumers are also concerned with the ethical compliance of
environmental laws like the use of pesticides, the disposal of the garments and the damage to the
environment by the operations of the production plants. [Goworek, (2011)]
Moreover it should be kept in mind that data security is not compromised at any point and
information provided by the consumer is safe. This new venture of RCL should have to adhere
with the privacy laws set by the UK Government and also will have to disclose all the necessary
information regarding the products being offered accurately and honestly.

Legal Implications:

In UK it is required by the companies to adhere to certain laws which include the “General Safety
Regulations 2005”,”the Children’s Clothing (Hood Cords) Regulations 1976” and “Nightwear
(Safety) Regulations 1985”. Safety practices prescribed by the “BSI British Standards Code of
Practice.

THE ASPECTS OF INTERNATIONAL MARKETING RELEVANT

TO THE PROPOSED VENTURE

Rahat Continental will win market share in the newborn child natural cotton garments niche by
aggressively seeking after perceivability with its target customers.

Competitive Edge
Rahat Continental's competitive edge is its attention on the procedure than on the product. The
only the outcome of marketing campaign is to drive clients' passion for organic cotton garments.
In spite of the fact that we believe in the quality and appeal of our items, we realize that building
the street to the site is our most essential activity.

Marketing Strategy
Rahat Continental's marketing strategy is a very simple. In kids and women magazines, Rahat
Continental will acquaint clients with their items and site.
For the initial two months, Rahat Continental will offer 10% off for all buys under 75 pound and
15% off all buys more than 75 Pounds. We will offer a similar markdown methodology three more
circumstances amid the year when new occasional dress is presented.

Pricing Strategy:
Rahat Continental's pricing strategy is to pass on a large portion of the markup of the store to the
customer by giving them low priced garments. There is no negative effect of this decision on the
benefits of our business and will on the other hand retain a portion of the underlying expense of
offering price reductions amid our initial few months of activity.

Sales Strategy:
Rahat Continental will initiate a £120,000 advertisement campaign. Rahat Continent’s enthralling
logo will be a part of the advertisements aggressively. We gauge it will take a large portion of time
to increase our sales until we start earning any profit.

THE E-COMMERCE OPTION VERSUS OTHER METHODS OF

EXPANSION

Brick & Mortar:

Brick and mortar organizations are based on physical business. The businesses are mostly street
side shops involved in selling of goods directly to the customer, mostly related to daily
households and grocery stores. [Investopedia. (2018)]

E-Commerce:
It is a type of business model that helps the entrepreneur to operate virtually. It is mostly related
to online selling of goods like grocery, clothing and technological gadgets. The business has less
operating cost and can do better than brick and mortar. [Investopedia. (2018)]

Brick & mortar against digital

Brick & mortar E-Commerce
 Sale of tangible products  Offering on the web
 Internal inventory  Offering computerized products
 Paper indexes  Online synergistic stock gauging
 Physical marketplace  Savvy e-indexes
 Physical and limited sell-offs  Electronic market-space
 Broker-based service exchanges  Online sell-offs all around, whenever
 Paper-based charging  Electronic Info-mediaries, esteem
 Paper-based tendering included administrations
 Push creation  Electronic billings
 Mass creation (standard)  Draw creation
 Physical based commission marketing  Mass customization
 Associate, viral promoting
  Word-of-mouth moderate  Touchy viral promoting
advertisement  Center point based store network
 Linear production network Selling in  Less capital required
physical stores  Little settled cost
 Large measure of capital needed  Cost=value
 Cost>value

Recommendation and Conclusion:

The infant clothing market is a polarized and a highly competitive market. The buying power in
of the consumers in this markets specifically parents is high which averages to £537 per month
for an infant. It has however also seen that this could also result as financial burden for the
parents and result in parents looking for better price competitive alternatives. The birthrate in
UK has gone down due to delay in having children by potential parents which on the other hand
has resulted in the increase in the disposable income of the grandparents which eventually
increases the sales of the infant garments. Luxury infant clothing is also becoming an emerging
market in UK since the people are now turning more brand conscious.
Since the UK has left Brexit it will result in an economic decline and raise in inflation which will
not be good for the emerging businesses in UK. Furthermore this will also create a sense of risk
in the minds of foreign investors due to the devaluation of pound, restrictions on the free
movement of the foreign employees and introduction of new import and export tariffs. Moreover
a global shortage of cotton may also result in the economic downturn.
To start a business in UK the company must adopt a polycentric strategy which aligns with the
culture of the country where the communications are more direct and clears. However the
business model of the company is quite sustainable and is being support by the government.
The parents of the newborns and parents to be and experienced parents with babies upto the
age of 2 to 3 years will be the target market of the company. The parents will mostly be well
educated and tech savvy and will age between 25 to 35 years who are price and quality conscious.
The cost saved by not having display centers but only an online store will be transferred down to
the consumer to set competitive prices of the products.
The strategy will be to advertise the ranges as attractive as they could making the product stylish
infant wear which will be playful, stylish, soft and durable.
Conclusively this new business of Rahat Continental is being threatened by the UK’s political
instability, high market competition and a challenging economy for working and middle class.
There is a moderate to high level risk for this business to be started and the company should
enter in this market with high precautions. It is suggested that the business should first enter the
market with strategic partnerships while creating an image and market for this business and then
later enter the market after the risk of failure is lowered.

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