GBM6AEN Applying Entrepreneurship in a Global Context Report Writing Sample

GBM6AEN Executive Summary

International expansion, innovation and strategic opportunity identification is increasingly becoming the drivers of global entrepreneurship. However, those small businesses, which manage to analyse the global market trends and design effective value propositions, will be able to grow sustainably in the international markets. This report gives strategic recommendations to a local specialty coffee business that is willing to go international to the United Arab Emirates (UAE).

The report assesses the market trends in coffee industry at the global level and determines the potential opportunities in the UAE by screening and opportunity identification methods. To assess the competitiveness in the industry and the external environment, a PESTLE analysis and Porters Five forces framework are implemented. The value proposition and business model are also built in the report to back the international expansion strategy.

The concepts of innovation like disruptive innovation and open innovation are taken critically to determine the best approach to use in order to sustain the competitive advantage. Lastly, the report analyses entrepreneurship in terms of innovation in promoting economic growth and development in the world economies.

These findings imply that the UAE is capable of a good opportunity of international expansion based on its emerging cafe culture, high purchasing power and thriving tourism sector. New innovative strategies, along with the offered business model, can allow achieving sustainable development and global competitiveness.

Introduction

Entrepreneurship is also a critical component in the economic growth of the world because it generates innovations, employment and makes the economy competitive. As the world continues to globalise, entrepreneurs are no longer confined to the local markets and may go international with their operations in order to reach new customers and growth prospects.

Expanding internationally needs to be considered, studying the market opportunities, demand, and trends of the industry. To attain sustainable growth, entrepreneur will need to find the right international markets, formulate effective value propositions and initiate new business models (Hisrich, Peters and Shepherd, 2017).

The report is the examination of international expansion plan of a local business specialising in coffee but with a desire to penetrate the UAE market. The report analyses the market trends of coffee worldwide, finds the opportunities in the international markets and gives strategic recommendations on how to effectively enter the international market.

Global Coffee Market Trends

The coffee industry has grown remarkably fast across the world with growing consumer preference to the premium coffee experiences. The specialty coffee market has grown enormously with the consumers appreciating products of high quality coffee, ethical sourcing and distinct cafe atmosphere.

The emergence of the third-wave coffee culture that focuses on quality, sustainability and arts and crafts brewing methods is one of the most important trends in the coffee industry. There is rising tendency among the consumers to buy their specialty coffee products at premium prices.

The growth of the cafe culture within the emerging markets especially the Middle East is another important trend. The UAE and other countries that have been experiencing a high rate of growth in coffee consumption have witnessed this development as a result of urbanisation, increasing disposable income and the development of tourism.

UAE has emerged as a destination of international hospitality companies and high-quality cafe franchises. Dubai and Abu Dhabi are cities with a great number of international residents and millions of tourists every year. These aspects present powerful opportunities to the businesses dealing in specialty coffee that want to go international.

Identifying International Market Opportunities

Systematic approaches should be employed by entrepreneurs to detect and determine international business opportunity. Trend observation, competitor analysis and market gap identification are some of the methods that can assist an entrepreneur to find promising markets.

Trend Observation

Trend observation entails studying the consumer behaviour around the world, and it also entails recognising the current trends. The rising demand of specialty coffee and high-end cafes shows that there are high chances of expansion internationally.

Market Gap Analysis

Though the UAE coffee market is full of large international corporations like Starbucks and Costa Coffee, the demand is growing to the independent specialty coffee brands with unique experiences.

The possible market gaps are:

• socially responsible coffee products.
• considerably localized cafe settings.
• tasting experiences with premium coffee.

These loopholes open up possibilities to competitors.

Opportunity Screening

Opportunity screening is a process that is involved to screen out potential markets on the basis of market demand, economic conditions and regulatory environment. The UAE is regarded as a market that is appealing, because of:

• strong buying power of consumers.
• strong tourism industry
• favourable business climate.

The international business expansion in the UAE is a prospective one due to these factors.

PESTLE Analysis of the UAE Market

PESTLE analysis assists an entrepreneur to learn how the external environment influences the international business operations.

• Political Factors: UAE is politically stable and has a good government support towards entrepreneurship and international investment. Free trade zones also permit foreign companies to use their own ownership under minimal regulatory limitations.
• Economic Factors: The UAE boasts of one of the best economies in the Middle East which is sustained by tourism, international trade and investment. It is also a competitive market in terms of high disposable income, which is a premium market like specialty coffee.
• Social Factors: The UAE boasts of an international population that is very interested in international food and beverage experiences. There has been an increase in cafes culture especially among the young consumers.
• Technological Factors: The UAE has also developed the digital infrastructure, as well as the usage of mobile technology. Companies can use online marketing, online ordering and delivery systems to access consumers.
• Legal Factors: Local licensing rules, business laws and food safety standards have to be followed by the entrepreneurs. The UAE government has however put in place policies that promote foreign investment.
• Environmental Factors: Sustainability is a new consideration in consumer buying behavior. Companies which focus on greener activities like sourcing coffee in a sustainable manner will be able to benefit competitively.

Porter’s Five Forces Analysis

Porters five force paradigm assists in the analysis of the competitiveness of an industry.

• Competitive Rivalry: The UAE coffee industry has a high level of competition related to the international brands and independent cafes. Nevertheless, competing pressure can be mitigated with the help of differentiation via specialty coffee and special customer experience.
• Threat of New Entrants: Entry barriers are moderate. New businesses can easily penetrate the market despite the fact that the café industry is an industry that requires investment and licensing.
• Supplier Power: The coffee beans are obtained worldwide and this decreases the power of suppliers. Nonetheless, specialty coffee companies can use particular suppliers of quality beans.
• Bargaining Power of Customer: There are numerous choices of coffee available to the customers, which provide the moderate bargaining power. Companies need to work on the quality of products and customer experience to retain customers.
• Threat of Substitutes: There are other alternatives like tea and soft drinks and yet coffee is very popular and especially in cafes.

Value Proposition

A strong value proposition helps differentiate a business from competitors and attract customers.

This value proposition is concerned with:

• product quality
• sustainability
• customer experience

These are in tandem with the global trends of coffee consumers and facilitate differentiation in competition.

Business Model Canvas

The Business Model Canvas is an approach to a sustainable business model design.

Key Partners:

• coffee bean suppliers
• franchise partners
• logistics providers

Key Activities:

• coffee roasting and brewing
• brand promotion and marketing.
• franchise management

Key Resources:

• coffee brand and intellectual property.
• skilled baristas
• café locations

1. Value Proposition: High quality specialty coffee and sustainable sourcing and experience in its cafes.
2. Customer Relationships: Customer retention initiatives, customer-centric service and online communication.
3. Channels: Cafes, online delivery and mobile ordering applications.
4. Customer Segments: Urban men, tourists and coffee lovers.
5. Revenue Streams: Sale of coffee, food products, franchise charges and branded products.
6. Cost Structure: Rent, salaries of staff, sourcing of coffee, marketing and operation costs.

Innovation Strategies for Competitive Advantage

To sustain the competitive advantage in the global markets, innovation is necessary.

• Disruptive Innovation: Disruptive innovation is the adoption of new technologies or business paradigms that shake the industries. It can be digital ordering systems and automated coffee machines.
• Open Innovation: Open innovation promotes the development of cooperation with the outside community: suppliers and technology firms. This strategy will enable the businesses to tap into new resources and ideas.

In the case of the coffee business, the use of digital ordering with special cafe experiences will help to make this business more efficient and satisfy customers.

Entrepreneurship and Economic Growth

Entrepreneurship is significant in the growth of the economy. Business people are those who start new businesses, create job opportunities and innovate in any industry.

International entrepreneurship also leads to development of economies all over the world by uniting markets and ease of sharing of knowledge. As the businesses go global, they bring about economic value to both the home and the host countries.

The entrepreneurial businesses also promote competition, something that may result in better quality of products and price reductions by the consumer. Consequently, entrepreneurship is well recognised as an economic growth and wealth generating activity.

International Market Entry Strategy

Choosing the correct market entry mode is a key aspect in business which wants to venture in a foreign market. Some of the issues that entrepreneurs need to consider keenly include investment requirements, market risks and control of operation before venturing into foreign markets. Companies that are going global with their activities tend to adopt several types of entry strategies such as export, franchising, joint venture, and wholly owned subsidiary (Hill, 2021).

In the case of the proposed specialty coffee business venturing in UAE, franchise model alongside strategic relationships is the most appropriate entry option. Franchising will enable the company to grow in other countries with minimal financial risk and complexity of operation. In a franchise agreement, the local entrepreneurs run cafes under the brand, products and working systems of the business owner.

The franchise system has a number of benefits in international expansion. First, it allows a company to penetrate the market fast without the need to invest much in infrastructure and operation management. Franchise partners in the local areas understand the local consumer choices, cultural and regulatory measures, which may enhance the chances of business success.

Second, franchising enables the brand to remain consistent in the quality of the products and customer experience. The operation and supply chain management, and standardised training programmes make sure that the customers get the same quality experience when drinking coffee in various locations.

Nonetheless, there are also some challenges of the franchise model. The business has to make sure that franchise partners are strict in quality and do not discredit the brand. The brand image would get harmed by bad management by franchise operators.

The company needs to adopt effective monitoring and training systems to reduce the effect of these risks. It should be noted that franchise agreements should contain clear standards of operation, frequent performance reviews and continuous assistance to franchise partners.

Along with franchising the company can also think of establishing strategic alliances with hospitality businesses like hotels and shopping centres. Such collaborations would also access popular spots and promote the brand awareness in the global patrons.

Financial Strategy and Funding Opportunities

The international expansion must be well planned in terms of finance to ensure growth and profitability. Entrepreneurs need to get the necessary funds to cover market entry, marketing operations and costs of operations.

There are numerous sources of funds that can be used by companies intending to act internationally. Venture capital funding is one of the options in which investors can supply funds in exchange of shareholding in the business. Innovative businesses that have high growth potential are usually backed by venture capital investors.

Angel investment is another possible source of funds. Angel investors are usually rich people who can support the start ups with finance. Besides financial capabilities, the angel investors usually come with a lot of business knowledge and strategic planning.

Another option the coffee business can give a consideration will be the crowdfunding platforms, which enable business people to raise funds through a large number of small investors. Another marketing tool that may be used through crowdfunding campaigns is to create awareness of the brand among the population.

Moreover, companies going global can enjoy government support programmes which promote entrepreneurship and global trade. Most nations have monetary incentives, either in terms of grants or tax break to companies expanding into the international market.

The coffee business should also employ a diversified revenue strategy in order to remain afloat financially. Besides selling coffee, the firm would be able to sell merchandise, packaged coffee products and online coffee bean subscriptions to specialty coffee.

Through revenue diversification and establishing strategic alliances in investments, the business will be able to build a stronger financial base and enable it to grow internationally in the long run.

Risk Analysis and Risk Mitigation

There are various risks associated with international business expansion that should be addressed very well. Entrepreneurs need to establish what risks may occur and devise ways of reducing their effects on the operation of the businesses.

• Market Risk: Market risk is anything that has unpredictability in terms of consumer demand and acceptance of the product in the market. Despite the fact that the UAE coffee market is expanding at high rates, the consumer preferences in that market might not be the same as in the national market. The company ought to carry out market research and trial its concept by opening piloting cafes in the market before it goes on a mass scale market.
• Financial Risk: International business operations can be impacted by currency variations and non-stability in the economy. Alteration of the exchange rate can affect the prices of imported coffee beans and operations costs. Financial risk may be contained through adoption of currency hedging measures and ensuring the sustenance of diversified revenue streams.
• Operational Risk: Operational risk occurs due to the difficulties in the area of supply chains, logistics and management of foreign operations. To ensure the brand reputation, it is necessary to maintain the quality of coffee beans and their stable supply. The company must reduce this risk by developing associations with various suppliers of coffee as well as developing effective supply chain management.
• Regulatory Risk: Regulatory requirements in different nations may be different in terms of business licensing, food safety and labour laws. Non-adherence to these rules may result in monetary fines or loss of business. The firm must hence liaise with local partners and legal advisors to be in compliance with all the regulatory requirements.

Sustainability Strategy

Sustainability is a concept that is taking center stage in the contemporary business plans. Customers are becoming environmental aware and seek those companies that are ethical and sustainable in their operations.

Coffee industry has a number of environmental issues such as deforestation, climate change and unfair labour practices in coffee producing areas. Companies that respond to these issues will be able to build on the strength of the brand image and find socially responsible customers.

The specialty coffee enterprise needs to employ sustainable sourcing concept by acquiring coffee beans that were produced by suppliers with fair trade and environmentally friendly farming methods. Fair trade certification guarantees farmers of coffee fair price of their products and working conditions that are safe.

Besides this, the company ought to adopt green operational strategies (cutting down on single-use plastics, reusable cups and waste minimisation in the operation of the cafes).

The environmental effects of the business can also be mitigated using energy saving equipment and green packaging materials.

A holistic approach to sustainability will help the company to improve its brand image and attract consumers that are environmentally sensitive.

Digital Marketing Strategy

Online marketing is one of the key aspects of contemporary entrepreneurship. Companies that are expanding to the international market are forced to rely on online channels in order to access international markets and create brand awareness.

Instagram, Tik Tok and Facebook as social media offer coffee brands with an effective marketing tool. Through these platforms, businesses are able to promote their products by communicating with the customers and form a strong brand community.

The coffee business ought to have a robust online marketing plan that entails:

• The social media marketing campaigns.
• Influencer partnerships
• Online advertising
• Mobile loyalty programmes

The food and beverage industry has experienced the greatest success when it comes to influencer marketing. Working with well-known food bloggers and lifestyle influencers can considerably increase the brand awareness.

It is also necessary to introduce a mobile ordering application that will enable customers to order their goods online and pick them at the actual location. This will make customer life easier and will also improve customer experience.

The business, by combining the digital marketing strategies together with the traditional marketing strategies, will be able to attract customers and create a brand loyalty.

Future Growth Opportunities

After the successful entry of the business in the UAE market, a number of other growth opportunities can be realized.

Another opportunity that can be exploited is the expansion to the other Middle Eastern markets like Saudi Arabia, Qatar and Kuwait. In these markets, the consumers and the cultural environment are similar, and expansion into the region is possible.

There is also the opportunity of diversifying products of the company. Besides coffee drinks, the company may also roll out bakery products, specialty desserts and branded merchandise.

The company may also establish internet based stores to market packaged coffee beans and brew machinery to the overseas buyers. Through e-commerce, the world market can be tapped without necessarily being physically located in the stores.

Moreover, the firm has the opportunity to invest in coffee educational programs that include barista training sessions and coffee tasting sessions. Such efforts may reinforce the customer interaction and make the brand a leader in the specialty coffee culture.

The company can remain successful in the international markets over time by keeping on investigating new growth opportunities and adjusting to the dynamics of the market.

Conclusion

The global growth offers big chances to entrepreneurial enterprises that desire to grow and gain competitive edge. This report has assessed the possibility of a local specialty coffee business to enter the UAE market.

The report conducted opportunity screening and strategic evaluation through market analysis and discovered that there is a high demand of specialty coffee in the UAE. The suggested business model and value proposition are a viable expansion strategy to foreign markets.

Additional competitive advantage could be achieved through innovation strategies, including disruptive innovation and open innovation. Besides, entrepreneurship is key in economic development in the sense that it provides jobs and leads to innovation.

In sum, the effective realization of the suggested strategies will be able to promote sustainable growth of the business in the global markets and promote the development of the global economy.

References 

• Drucker, P. (2014) Innovation and Entrepreneurship. London: Routledge.
• Hisrich, R., Peters, M. and Shepherd, D. (2017) Entrepreneurship. 10th ed. New York: McGraw-Hill.
• Kotler, P. and Keller, K. (2016) Marketing Management. 15th ed. London: Pearson.
• OECD (2023) Entrepreneurship and Innovation Report. Paris: OECD Publishing.
• Porter, M. (2008) Competitive Strategy: Techniques for Analysing Industries and Competitors. New York: Free Press.
• Schumpeter, J. (2011) The Theory of Economic Development. New York: Routledge.