INTERNATIONAL MANAGEMENT

Introduction

Skyfit Incorporated is an organization that deals primarily in the wholesale and retail of
sports apparel. The organization’s products are divided into 3 major categories: sports apparel,
equipment and accessories, and technologies. The organization operates primarily in America
but has physical locations in Mexico, China, Russia, England, Germany, and Italy. It is privately
owned, and the owners are looking to expand into a new emerging market. The emerging market
is identified for expansion in Qatar. This paper is an outline of Skyfit’s plan to expand into
Qatar.
PESTEL Analysis
This analyzes Qatar’s political, economic, social, technological, environmental, and legal
environment (Saylor Academy, 2012). The Pestel analysis will help to determine if Qatar is the
right fit for the organization’s expansion plan
Political
The Qatari government supports the immigration of individuals, and as a result, a
significant part of the population has expatriated into Qatar. The employment and immigration
laws are favorable for foreigners. Qatar is a member of the WTO, and as such, there are no
serious trade restrictions. Trade of some items such as firearms, alcohol, ammunition, and pork is
highly restricted. Since Skyfit’s products do not fall into restricted items, the company can expect
smooth operations.
Economic

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Qatar’s economy has been upward due to the stable oil market, solid industrial base, and
political support. As a result, Qatar’s economy is projected to grow, and such growth will benefit
the organization since a robust economy empowers citizens and provides a conducive
environment for environmental growth.
Social
The social environment in Qatar is male-dominated. The world banks’ population
statistics show that the country’s population of males is three times that of women. The social
cultures are primarily Arabic and follow the Islamic culture. The sports culture is male-
dominated, too, and the promotion of sporting culture is another reason Qatar hosts the 2022
world Cup (Reiche, 2014).
Technological
Qatar is a technologically receptive country, and such reception is attributable to a wide
internet. Most of the operations that Skyfit indulges in have technological backing. Therefore,
the transition into Qatar is expected to be smooth, and operations will commence and proceed
without any delays attributed to technology. Additionally, in Qatar, Skyfit will adapt to changing
sports technologies well in Qatar.
Environmental
Qatar’s environment is a major concern of oil exploration and construction activities. The
industries also contribute a significant portion of carbon emissions. The Persian Gulf war has
also caused significant pollution to Qatar’s air space, causing acid rain. Skyfit will adopt eco-
friendly practices and dedicate some of its corporate social responsibility (CSR) to
environmental conservation.

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Legal
Qatar uses Islamic law (Sharia) since it is a predominantly Islamic country. This is the
first country that Skyfit has ventured into that follows Sharia law. Skyfit plans to hire a
consulting lawyer on retainer to pride legal guidance on legal risks that Skyfit might want to
avoid.

Qatar’s Riyal and the United States Dollar

Skyfit incorporated operates in other locales globally and, as such, has to consider the
exchange rate fluctuations and devaluations against the US dollar. Since Skyfit is originally an
American-based firm, the exchange rate risk against the Qatari currency becomes an essential
factor for consideration. Exchange rate risk is defined as the risk that an organization’s
operations, value, and profits may be affected by currency fluctuations in the currencies it trades
in. The primary currency in Qatar is the Qatari Riyal. The Riyal has been exchanging at a stable
rate against the dollar. When writing this report, US $1 = 3.67 Qatari Riyal (QAR). Qatar’s
economic projection is positive, and as such, its currency is expected to continue trading steadily
against the dollar. The transactions in Qatar are expected to be carried out in Qatari Riyal,
meaning that the organization is exposed to transaction risk in exchange rates. The strategies
considered by Skyfit to reduce exchange rate risk are therefore not centered on transactions. For
example, Skyfit can access debt that is in American currency. This way, Skyfit avoids exchange
risk and gets access to credit at a cheaper cost. Skyfit can also use risk-sharing agreements.
Under this strategy, Skyfit can insert into its contracts a currency adjustment clause where the
losses arising from the exchange rate are shared. However, Skyfit e-commerce platform is based
on the US dollar denomination since it is considered universal and, as such, may reduce the
exchange rate risk.

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Qatar and the global economy

This section evaluates Qatar’s economic outlook and factors that may support the
expansion of Skyfit there. Qatar is a country in the Middle East considered a top emerging
economy (Apaydin, 2009). Its economy is largely supported by its major economic activity, oil
and gas mining, and exploration. Data from the World Bank shows that Qatar’s gross domestic
product for the 2020 calendar year was the US $ 144.41 billion. This was a significant drop from
the year 2018, which recorded a US$ 183.33 billion. This could result from the COVID-19
pandemic that affected many economies globally and had far-reaching ramifications on the oil
market. Qatar has, however, recovered, and data from International Monetary Fund (IMF) shows
that the Gross Domestic Product for the current year is projected to be US$ 225 billion and is
expected to increase to US$ 238 billion by the year 2025 (IMF, 2022). Bloomberg (2021) also
reports that the Qatar 2022 World Cup is expected to boost Qatar’s economy (Bloomberg, 2021).
This indicates a healthy economy. Its prospects for growth have supported the decision for Skyfit
to expand to this location.
Population and demographics
Data from The World Bank shows that Qatar’s population has increased at a stable
average of 1.7%. The population of the last census in 2020 showed that the population was 2.8
million. The male population was 75%, indicating that it was significantly higher than the female
population at 24% (The World Bank, 2012). This also explains the difference in the labor force
where males dominate the labor market. Statista reports that the most populous ages are between
20-44 years (Statista, 2022).
Internet and digital marketing

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Internet coverage in Qatar is at an impressive rate. Internet coverage and usage are
essential factors that Skyfit Inc. must consider to fulfill its marketing activities. Skyfit’s
marketing strategy relies heavily on the internet since it is centered around social media and
digital sources. This marketing strategy has been effective in other regions that Skyfit has
expanded into, and as such, it is expected to be applied for the expansion activities in Qatar. Data
from the world bank shows that the internet coverage rate stood at 100% and that 99% of the
population was using the internet (The World Ban, 2021d). This means that the entirety of the
population has access to the internet. Skyfit Inc. plans to continue marketing activities through its
official app, social media, and digital avenues.
Additionally, the merchandising activities through Skyfit’s e-commerce platform can
proceed without major challenges. Skyfit uses cloud-based data storage and retrieval systems to
fulfill its human resources management, inventory management, logistical, supply chain, and
some financial management activities. Internet coverage further supports Skyfit Inc.’s expansion
into Qatar.
Cost of debt
Lending rates are an essential factor for Skyfit to consider. In the cause of its expansion
into Qatar, Skyfit must evaluate the costs with which it can access credit. This is essential
because Skyfit’s capital structure is debt-financed. The cost of debt, access to such debt, and the
interest rate volatility are all important considerations for the cost of debt. Data from the world
bank shows that Qatar’s cost of debt was 3.9% in 2021 (The World Bank, 2022). The cost of
debt reduced from 5% in 2020, indicating a significant improvement in the cost of access to
credit. The rates are expected to reduce moving forward owing to the good economic

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performance, and as such, Skyfit may consider access to credit as a strategy to finance its
expansion.
History
Skyfit Inc. was formed in Navajo county Arizona. The proprietors set up a gym and
realized an opportunity to sell items to some of the gym subscribers. The opportunity was
identified through a problem where gym members would come to the gym from work without
apparel. Some of the individuals also needed to change apparel within a short while due to
changes in their bodies. Realizing an opportunity, the proprietor refurbished the business place to
include a retail section that first included apparel only. The owners prioritized providing quality
apparel and increased in size as its products grew in demand; the organization opened a
manufacturing plant, increased the size of its retail section, and opened another gym with another
retail section. With time, the organization sold its gym section to another party and opened its
first retail-only store in Colorado. The new store included the three categories that form its
current product offerings. The organization sells weights, machines, dumbbells, rubber floor fit-
outs, and barbells in fitness equipment and accessories. The organization sells wearable apparel
for children, men, and women in sports apparel. In terms of technologies, the organization sells
stopwatches, smartwatches, fitness trackers, and wellness apps with both free and paid versions.
The organization has competed with renowned apparel brands in the sporting industry
such as Adidas, Nike, Puma, Under Armor, Reebok, and Joma through these products. These
brands are considered global giants due to their countries of origin and investments in brand
equity (Azadi et al.,2015). In technologies, Skyfit also retails products from technology giants
such as Huawei, Xiaomi, Samsung, One Plus, and Apple. For equipment, the organization retails

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products from Life Fitness, Sports Art, Fitline, Viva Fitness, Icon Health and Fitness, Cybex,
Turfiness, Nordic Track, and ProForm.
Financial Performance
Revenues from multinational operations have boosted the organization. The revenues and
profit had been upward until the COVID-19 pandemic, which occurred in late 2019 and affected
revenues in 2020. This was due to the closure of stores and interruption of supply chains as some
of the products that the organization uses and manufacturers of key inputs suspended operations.
As a result, the revenues declined drastically, and as such, Skyfit has been unable to reach the
heights it did in 2019. The firm’s profits were also reduced, and some of its strategic plans had to
be readjusted to fit the ongoing expansion.
For the first time in many years, the organization took up debt to meet some obligations
during the lockdown period. At the time, Skyfit was 100% financed by equity. The acquired debt
helped Skyfit remain afloat, and since the resumption of full operations in the 2021 calendar
year, the revenues have begun to pick. The e-commerce platform was also instrumental in
maintaining revenues over the period that Skyfit’s physical stores had been closed down. Skyfit’s
shareholders and directors have not received any dividends and emoluments over the last two
years. The organization’s two-year balance sheet has been attached in the appendix and shows
the profit movements over the last two years.
Organizational structure
Skyfit uses a hybrid organizational structure that has both geographical and functional
levels in the organizational structure. This organizational structure has been adopted to ensure

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the organization fulfills its activities in the different locations. The organization structure has
been illustrated as shown below.

CEO &
President

Vice President
(Mexico)

Mexico Staff

Vice President
(Germany)

Germany Staff

Vice President
Italy

Italy Staff

Vice President
(China)

China Staff

Vice President
Russia

Russia Staff

Vice Presisent
(Finance)

Vice President
(Operations)

Vice President
(Sales)

Vice President
(Supply Chain)

Vice President
H.R

The organization is headed by the Chief executive officer, who sits in the headquarters in
the United States, where Skyfit was first founded. Reporting to the CEO are the vice presidents
who represent the functional levels on the global scale. The five functional levels are human
resource management, finance, sales and marketing, logistics, supply chain, and operations.
Every geographical location has a group president, the five functional levels, and the staff who
operate in each department.

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Expansion and analysis strategy

Product and Brand
Skyfit manufactures apparel for men, women, and children in sporting activities. This is
the main product it deals in, but it also includes other products in its merchandising activities. In
the technology segment, the organization has fitness watches and fitness bands. Skyfit also has
standard weights and bars from manufacturers and brands them to bear the organization’s logo.
Due to the cultural requirements of the new location, Skyfit will manufacture hijabs for sports.
The operations department is expected to move with speed to ensure that the organization
ensures the commencement of the manufacture of the new product. The operations department is
also expected to research material that is comfortable, durable, and adaptable to the weather
pattern in Qatar.
Production
Skyfit’s production center is in Nevada. This center only manufactures apparel sold
through the organization’s physical and digital avenues. Skyfit only does the embroidery since it
sources processed fabric from Egypt, Indonesia, and China. Skyfit has an online supply chain
management system to fulfill its material sourcing and production planning.
Pricing
Skyfit uses a market penetration pricing strategy. Under this strategy, Skyfit sets low
prices to sell more and establish market share (Saylor Academy, 2012). The downside of this
strategy is that Skyfit makes little margin. However, Skyfit has an aggressive marketing strategy
to ensure that Skyfit makes enough profits to sustain operations and return good value to the
organization.

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Promotion
Skyfit uses both digital and traditional promotion methods. The analysis of internet
penetration in Qatar support’s the organization’s objective to use digital promotion methods.
Skyfit has already identified an age group of between 20-44 years to market the products.
Place
Skyfit has invested in a robust supply chain management process to ensure that the
products reach their customers at the required place and time. Skyfit intends to retain its
manufacturing plant in the USA for this project, and products will be shipped by flight to Qatar.
Qatar has one of the regions and the world’s most renowned airlines in Qatar Airlines.

SWOT Analysis

This analyzes Skyfit’s strengths, weaknesses, opportunities, and threats and how the SWOT
analysis supports the organization’s expansion into the new location.

Strengths

Multinational operations
Skyfit operates in multiple locations globally. These operations have provided Skyfit with
the experience and expertise of global operations. Skyfit has adapted to the different cultures,
navigated increased operations, and planned logistics and supply chain activities in other
countries. This experience will help Skyfit to settle in Qatar. Skyfit can choose one of the models
it used to implement
Focus on sports

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Skyfit’s venture in the sporting industry has provided it with a competitive advantage.
Skyfit has accessories for almost all sports. The sporting culture is practiced for fitness, as a
profession, and in schools as part of the curriculum. As such, most of the products that Skyfit
sells are in constant demand throughout the year. The sporting culture has been accepted in
Qatar, and it is one of the reasons it has been chosen as the host for the 2022 World Cup.
Technology
Skyfit has invested in technology to fulfill its core activities: supply chain, marketing,
human capital management, financial operations, and customer information. Skyfit’s technology
gives it a competitive edge and lays the foundation for expansion into Qatar. Access to the
internet in Qatar is an advantage that will help Skyfit in its operations.

Weaknesses

Reduced revenues
Skyfit has been facing reduced revenues for the years 2020 and 2021. The year 2022
started on a good note. Still, the reduced revenues in the previous two years have significantly
affected Skyfit’s strategic plans since it has left very few resources for investing in new markets
and product research. The expansion into Qatar is expected to help the organization increase its
revenues to become more competitive.
Employee attrition
Skyfit has been facing employee attrition over the last three years. One of the most
recurring complaints has been a salary rise that the organization has not implemented due to
reduced revenues and profits. Employee attrition has reduced employee retention due to

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increased turnover. The expansion into Qatar is expected to provide a solution for this through
increased revenues.
The high price of inputs
Skyfit has been struggling with increased prices for some of its products. Since Skyfit’s
strategy is centered on market penetration and an increase in prices leaves the organization with
reduced revenues. A change of strategy is considered by offering premium products to the Qatari
market.

Opportunities

E-commerce
Skyfit’s e-commerce platform provides another marketplace that Skyfit can use to
implement its sales strategy. Skyfit aims to expand its e-commerce marketplace by increasing
more products. The e-commerce marketplace is expected to be implemented in Qatar to
complement physical store sales.
Expansion of sporting activity
There has been an expansion of sporting activity over the years, which has contributed to
driving revenues and creating opportunities for the sale of new products. One of the most in-
demand products is the e-sports games and gaming consoles. The e-sport niche has grown, and
Skyfit has taken advantage by stocking the most in-demand e-sports activity. This is one of the
products that Skyfit intends to advertise in Qatar.
Threats

Competition and low margins

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Skyfit faces stiff competition from other well-established and renowned organizations in
all its product classes. Skyfit is forced to adopt a price reduction strategy to remain competitive
as one of its core strategies. While this ensures that the organization makes more than average
revenue for an organization its size, the disadvantage is that Skyfit makes low margins. The
expansion into Qatar will help increase its revenues.

Cultural Integration

Skyfit has to consider cultural integration issues in the new location. As it is the first time
the organization is venturing into a predominantly Islamic country, it will have to create a niche
for some products that fit the Islamic culture. For example, as a matter of religion, women, even
in sports, are expected to cover their heads. As such, Skyfit can offer hijab for sports. Top brands
such as Adidas have already ventured into the trade. Another area for cultural integration is in
the operations. Skyfit expects and anticipates hiring locals. The official language in Qatar is
Arabic, and as such, operations will have to be run in both Arabic and English to report to the
headquarters. Hiring locals will help Skyfit with cultural integration.
There are clear differences between Qatar and the United States systems. For example,
the United States follows a Monarch system of governance while Qatar follows a Monarch
system. The system of governance may not necessarily be a challenge as long as the organization
stays within its required legal mandate. Skyfit has a code of conduct that it uses in all its
locations. It was designed to be universal and, as such, is applicable in the expansion in Qatar.
The code of conduct covers several issues such as employee relations, financial reporting,
contributions and gifts, fair competition, and handling company information. Skyfit trains its

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employees using the code of conduct and will sensitize the employees hired in Qatar on the
importance of observing the lessons covered in the code of conduct.
Stakeholders and their impact on business decisions

Skyfit considers customers, suppliers, shareholders, employees, and the government key
stakeholders in the business. Stakeholder analysis evaluates the different stakeholders and the
power and influence over the business decisions (Missonier & Loufrani Fedida, 2014).
Customers
Customers are the most important stakeholders in any business. They ensure business
growth and continuity due to their ability to affect a business’s revenues and reputation. The
expansion into Qatar is considered a means to increase Skyfit’s customer base and create new
market share by establishing new customers. In the sport apparel industry, customers prefer to
associate themselves with brands and as such are more likely to buy branded apparel (Mishra et
al., 2017) Therefore, the customers will affect the pricing decisions, marketing decisions and
strategies, human resource planning, and other logistics such as the location to locate the stores.
Employees
The employees are key stakeholders in this expansion plan since they are the key
implementors of the expansion decision (Saylor Academy,2012). Employees are the direct points
of contact with the customers. Strategic human resource planning includes talent acquisition,
employee retention, and motivation. When employees are motivated, their work output increases
and businesses experience success.
Government

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The Qatari government is a key stakeholder in this process. The government provides
trade licenses, controls the key economic aspects such as currency, and is the determinant of
regulations that affect the business and its customers directly (Saylor Academy,2012). As such,
the government is a key stakeholder that will determine the success of the expansion plan. For
example, if the government at some point passes laws that increase the tax rate for foreign
businesses, it may affect Skyfit’s profit projections and its strategic goals.
Business Owners
The business owners are key stakeholders due to their decision-making powers in the
expansion plan. Shareholders make business decisions that maximize their returns and increase
business value. They determine the number of resources assigned to the expansion process and
assess the operations sometime after implementation to determine if the profits generated from
the expansion support the decision to continue operations in the new location.
Suppliers
Suppliers affect the production process. Without suppliers, the business cannot fulfill its
promise and commitment to customers and, therefore, cannot generate revenues and profits.
Skyfit aims to continue its manufacturing process in the United States, and it may need more
suppliers to fulfill the market requirements in Qatar.
Market Entry Strategies
There are several entry strategies that Skyfit can evaluate for adoption and expansion into
Qatar. The most common methods are licensing, franchising, direct selling, and joint ventures.
Skyfit would offer a license to another organization with the right to market its product in a
licensing arrangement. This strategy may work if the licensee has a large market share in the host

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country. The advantage of this method is that it has fewer risks and costs, and the disadvantage is
that
Under a joint venture arrangement, Skyfit would partner with another organization
already operational in the market to sell its products under one joint organization (Saylor
Academy, 2012). Joint ventures reduce the risk inherent to the foreign company since it is shared
between the two firms. However, Skyfit would have to relinquish some control in a joint venture
arrangement to the other company.
Under a franchise arrangement, Skyfit (franchiser) would allow a franchisee to use its
brand to sell its products in exchange for royalties (Saylor Academy, 2012). Skyfit could lose
some of the control in a franchise arrangement, especially in operations, but it could also benefit
from reduced risk and increased brand presence.
Skyfit uses the direct selling strategy in all its operations. Skyfit sets up Skyfit stores in
the host country, exports its products, and sells them directly to the customers. The advantage of
this strategy is that it allows Skyfit to control the entire process. As such, it is easy to make and
implement the decisions that affect the implementation of the expansion plan. The disadvantage
of this method is that the organization bears all the risks inherent to the expansion in relation to
the customers, market, product, and brand.

POLC Framework

The POLC Framework is a strategic planning tool businesses use to achieve their
strategic goals. It includes Planning, Organizing, Leading, and Controlling. Skyfit will use the
POLC framework to implement the expansion plan.
Planning.

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The planning process begins with a SWOT analysis which evaluates the organization’s
internal and external forces that affect its operations (Saylor Academy,2012). Skyfit’s SWOT
analysis has been considered a key aspect of the expansion plan. The second part of the planning
is establishing deliverables and their timelines, identifying ways to achieve goals, and monitoring
processes.
Organizing.
The management at Skyfit will perform the organizing function by coordinating the
available resources with the people to achieve the organizational objectives (Saylor Academy,
2012). As shown in the organizational chart, Skyfit uses a hybrid of a functional and
geographical organization structure to carry out its activities. The organizational structures show
the hierarchy of power within the organization and the different requirements for each
department. Organizing function may also require the managers at Skyfit to form multi-
department teams to ensure successful interdepartmental collaboration.
Leading
Leading is the function of managers to motivate individuals to perform (Saylor
Academy,2012). Skyfit leaders go through periodic training sessions to equip them with skills
they can use to manage employee personalities and, therefore, find ways to motivate or rally
them towards achieving organizational goals. Leading people also requires the leaders to find a
way to communicate with employees and encourage communication across all hierarchical
levels.
Controlling

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This function is undertaken to monitor performance (Saylor Academy, 2012). Planning,
organizing, and leading are important, but the only way leaders can identify the efficiency with
which the organization achieves organizational goals is through controlling function. Through
controlling functions, Skyfit will be able to design corrective measures for the processes that the
organization is struggling to achieve or those that it is achieving with less reduced efficiency.
Human Resource Planning
Qatar’s economic unemployment status is an essential factor to consider for human
resource planning. This is to enable Skyfit incorporated to make informed decisions for staffing
and strategic human capital decisions. Data from the international labor organization (ILO)
shows that 88% of the employable population is employed in various sectors of the economy
(ILO, 2022). As of 2020, the employment to population ratio was 86.3%. Out of these, 94.1%
were male, while 56.65 were female. Qatar supports several other industries, such as agriculture,
which employs 1.3%, 42.4% in industrial activities, and 56.2% in services (ILO,2022). The
unemployment rate was 0.1%. The significance of such a low unemployment rate, besides
indicating a strong economy, is that its shows that the expansion of Skyfit into Qatar requires the
organization to consider strategies to provide its employees with competitive packages and
attractive working conditions. The average working hours per week in 2020 were 48 hours.
However, 29.3% of the population worked for more than 48hours. The essence of this to Skyfit
is that Skyfit would have to conform to the Qatar working hours, which may guide the
operational hours that Skyfit stores should remain open. The United Nations Development
Program ranks Qatar’s HDi at 0.84, placing it 45 th out of 189 (UNDP, 2022)

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Organizational Values
Skyfit has intended to incorporate organizational values through its code of conduct. The
code contains modalities that the organization uses to manage interactions between the
organization and other stakeholders who interact with the business on several levels. Skyfit’s
organizational values are excellence, quality, and customer service. Skyfit’s management
encourages employees to practice these theories.
Ethical Theories
In addition to Skyfit’s organizational values, Skyfit will adopt the utilitarian ethical
theory. The theory suggests that individuals should always take the course of action that delivers
maximum utility to the largest number of people (Bright & Cortes, 2019). Skyfit’s employee
training curriculum includes ethical theories, importance, and application in the modern-day
business world. The utilitarian theory is applicable in all organizations and ensures mutual
respect and that decision-maker consider the ramifications of their actions.
The workings of the Shareholder theory bind managers. This theory states that managers
are expected to use their skills and employ organizational resources to create wealth for their
shareholders. This theory also advocates that the organization’s purpose to make profits should
be done within the confines of the law.
Target population
The population that Skyfit targets for its merchandising and marketing activities include
individuals both male and female, between the ages of 13 -55 years with a net annual from
lower, middle- and high-income households. Considering the digital marketing activities, Skyfit
anticipates that this expansion plan will increase revenues by 10%. Within the first 6-12 months

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after expansion, it is expected that Skyfit will have gained at least 7.5% market share in the sport
apparel, technologies and equipment sales industry in Qatar. With such kind of success, Skyfit
will embarked on an aggressive marketing campaign with the aim of attaining at least a 40%
market share in Qatar alone. This vision is considered feasible because Qatar lacks an established
and dominant market brand. The current revenues and revenues after expansion have been
provided in the appendix.

Suggestion and Recommendations

Skyfit’s expansion can be successful if properly implemented. The economic analysis of
Qatar shows that the country is experiencing an upward growth trajectory. Particularly, the 2022
World Cup is an opportunity that can be exploited as an event that promotes sporting culture
(Brannagan & Giulianotti, 2014). The influx of sports enthusiasts can help Skyfit if it can be
implemented before the December 2022 date. The market entry strategy suggested is direct
selling and ensures that Skyfit maintains control over its operations.
One issue that managers and business owners have to consider is cultural integration.
Cultural adaptation can signal the success or failure of an expansion project when poorly
implemented. Hiring locals is one recommended way to ensure cultural integration. Adapting the
POLC framework as a strategic management tool can help many companies plan and actualize
their expansion strategies and anticipate and manage risks. In any expansion process, it is
recommended that managers and leaders train and motivate their employees. Employee
motivation is a key determinant of employee retention. It encourages employee productivity,
creativity, and innovation, which can be beneficial to expanding organizations.

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Finance managers need to research the economic conditions of a country before planning
to expand into them. Economic conditions carry essential information such as individuals’
purchasing power, affecting revenues, labor market conditions, human resource management,
gross domestic product, which may affect business performance, and exchange rates for
expansions involving expatriates.
Conclusion
This analysis has is evidence that business expansion decisions require business owners
to consider several strategic factors that may determine the success with which the expansion
process is achieved. The document has critically analyzed the country as an emerging economy
in the international business context.
For business owners it is essential for practitioners to evaluate culture cultural and
political differences. A PESTEL analysis ca help business practitioners in analyzing the
organization’s external environment. Management practices, ethical theories and Corporate
Social Responsibility all help in cultural integration. An environmental analysis also influences
business decisions that concern the expansion.
Another analysis of similar importance is the stakeholder analysis. Business practitioners
and managers need to understand the different power and influence levels that stakeholders have,
and how such power plays affect business decisions. The POLC management framework also
provides excellent utility as a strategic planning tool. The success of any business activity
depends on how the business owners, employees and other stakeholders are invested in its
success and committed to see it to fruition.

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25

Appendix

Projected revenues and profits after a 10% increase in Revenues
Particulars 31st Dec 2022 31st Dec 2023
millions millions

Revenues (All locations) 1,689.40 1,858.34

Expenses –
Payroll expenses 132.00 138.00
Bills and utilities 559.45 640.12
Administrative costs 112.00 115.00
Repairs Maintenance 117.66 120.00
Internet and software 22.68 30.55
Total Expenses 943.78 1,043.67
Gross Profit 745.62 814.67
Depreciation 110.18 96.41
Interest 38.00 38.00
EBIT 597.44 657.18
Tax/Provision for Tax 59.74 65.72
Net Earnings 537.69 591.46

Balance Sheet for two years of implementing the expansion

26

ASSETS

Assets 31/12/2022 31/12/2023

Fixed Assets Balance Balance
Machinery 628.73 550.14
Motor Vehilces 37.72 33.01
Movable Assets –
Computer 31.66 27.70
Appliances and
accessories 12.84 11.24
Office furniture 60.29 52.75
771.25 674.84
Total assets 771 675
Current Assets

Cash at bank and
in hand 52 213

Total Current Assets 823 888
Current Liabilities

Accounts Payable
Tax payable 60 66
Loans 30 36
Total Accounts
Payable 90 102
Other Current
Liabilities 28 40

57 43

Total Other
Current Liabilities 85 83
Total Current Liabilities 175 185
NET CURRENT ASSETS 649 703
Capital and Reserves

Owners Equity 61 61
Debt 50 50
Profit for the Year 538 591
Shareholder funds 649 703